When one of your clients becomes terminally ill, you, as their financial advisor, find yourself with a great responsibility.

While we all may certainly try our best to plan for every eventuality, there are few among us who truly understand what a terminal illness can mean for our family’s finances. In addition to immediate healthcare costs, clients have to consider the potential need for long-term care, estate planning, and how to utilize or distribute any assets - including life insurance policies.

So what can you do to make this difficult time a little bit easier for your client and his or her family? Here are a few guidelines for helping terminally ill clients protect their finances.

Start the discussion as early in the illness as possible. 

Just as families with aging parents will find it much easier to discuss finances if they begin before a crisis hits, try to initiate the discussion of financial matters related to the illness as soon after diagnosis as possible.

Obviously, tact, kindness, and open communication are vital here. After you find out about a client’s illness, open up the discussion with assurances that you are here to help your client and the family during this challenging phase. Let them know that you’ll be looking out for their best interests, and that you’ll let your client know when he or she needs to make a decision or enact a change.

Starting these conversations early on will allow your client to voice any concerns he or she has before they become urgent. This decreases the likelihood that he or she will make any hasty or ill-advised financial decisions as the illness progresses.

Work through any estate planning issues with your client.

Although your client may feel that deciding who will get the heirloom wardrobe is a ridiculous thing to worry about in the face of serious illness, make sure you encourage him or her to finalize any estate plans.

Unfortunately, money and inheritance are huge considerations toward the end of life. Not making thorough, clearly documented plans can wreak havoc on your client’s family after his or her passing, making an already wrenching time even more difficult.

This also includes learning how probate works in your client’s state. Different states have different rules that govern whether an estate can go through Simple Probate or pass into a much more complex estate settlement.

If you don’t have expertise in this field, you may want to check with an estate planning attorney to see whether your client should take measures to decrease the assets to be inherited, for example, or other legal measures to simplify the inheritance process.

Check the beneficiaries of any life insurance plans. 

Financial planners working with terminally ill, or even just elderly, clients should double-check that the beneficiaries on any life insurance policies are correct and current. For example, an ex-spouse may still be listed as the beneficiary, or someone whose drug or alcohol problem makes them unfit to receive a large amount of money.

Make sure that the beneficiary on any policy is current according to your client’s wishes. This may also be a good time to look into the possibility of a life settlement, especially if your client is facing major medical or long-term care expenses that will create a financial burden.

Life settlements can allow clients to convert an asset they may no longer need into a lump sum of cash worth more than the policy’s cash surrender value. The money can then be disbursed as cash, to be used however your client wishes, or paid to a long-term care provider through a long-term care settlement.

Dealing with a terminal illness causes enough pain and worry in a family. As a financial advisor, you have the ability to ensure that your client doesn’t also suffer from unnecessary financial woes.

To learn more about helping your older clients plan well during this time of life, read our post “Building Strong Relationships with Your Senior Clients - and Their Families.”