Difficult Delicate Situation

[Rianne]

Quote:

Originally Posted by urn2bfree That’s great for you and has nothing to do with my friend’s situation. This is METASTATIC CANCER THAT HAS NEVER BEEN CURED. EVER. It may be controlled but it has so far - in Millions of cases - NEVER been cured. All cancers are not alike.

I understand. There is nothing positive about metastatic cancer. I was quoting "Calico" to say people are not statistics and cancer is unpredictable. Regarding your original post, you seem to be asking for financial advice from a forum for a friends' wife dire health and financial situation. IMHO, unless they specifically asked for your financial advice, I would stay clear of that situation.

[Bir48die]

So I'll give you a real world example of this. When my wife was 35 she was diagnosed with an "incurable" cancer. In the shock at the beginning we read extensively on this. Even with a bone marrow transplant the prognosis was 3-5 tops. In the process of meeting others with this cancer we found the time line to be pretty accurate.

After a bone marrow transplant and a stem cell transplant years later, my wife lived a total of 15 years after diagnosis. Depending on attitude and maybe just luck people can live much longer. I get the idea of cashing in but I wouldn't do it. I will say a very good friend who was actually an insurance agent cashed in on her policy about six months early when she was not responding to any treatment.

[RunningBum]

Reread post 10, folks, OP WAS asked for financial advice, and the situation is terminal. If I were in OP's position, I'd want to give good advice for helping them make the most of their remaining time together in a smart financial way.

I like the cash out refi of the home pb4 suggested in #11. This is a great time for it with low rates.

Stopping reinvesting divs in the taxable account will help if they have a lot in taxable.

Harvest unrealized capital losses and small gainers out of taxable could help a lot more. Hopefully they use SpecID on any mutual funds.

Use up the HSA on medical expenses.

Tap Roth accounts.

Borrow against the life insurance.

[CaliKid]

Would be easy to sell that life policy on the secondary market as a life settlement I think it is called or you can take out living benefits by proving death is imminent (not sure of exact criteria for that). Life insurance (whole life or term) can be flexible. They should talk to their life insurance agent if the agent is sophisticated at all.

[NW-Bound]

Quote:

Originally Posted by RunningBum Reread post 10, folks, OP WAS asked for financial advice, and the situation is terminal. If I were in OP's position, I'd want to give good advice for helping them make the most of their remaining time together in a smart financial way...

+1

Stage 4 cancer is terminal. The remaining time depends on the cancer type, and if one manages to linger on for a couple of years, that is usually on experimental drugs with hideous side effects.

I am a layman, and I know that much. And the OP is a retired oncologist.

In the shoes of the couple, I would not care that much about the extra taxes to pay, as long as it does not bankrupt the surviving spouse.

[Brat]

The comment about cash out refi with mortgage insurance is interesting. The trick is can the insurance list the wife only, can the mortgage be written on her income? If that is an option worth considering see a smart mortgage broker.

[Teacher Terry]

I would definitely use this time to travel. My friend had a aggressive breast cancer that metastasized everywhere. She was given 4 months with or without chemo so she didn’t do it. She lived 2 1/2 years with only being sick the last month. The thing is you don’t know if you will be a outlier.

[HI Bill]

Carpe diem, while there still is one. Take out a HELOC. Take out a loan. Pay some taxes on the sale of taxable accounts. Do the travel now. Only one chance, and the duration sounds ominously short. Travel while it's enjoyable, and if it were me, I'd end the travels in Switzerland.

[SpinDoctorTX]

Quote:

Originally Posted by Aerides I would not be even thinking of bringing up financials with this friend, especially not usage of life insurance. "you know, you could tap into some of that life insurance money now since...eventually..." - nope, no way to make that sound good. And despite the likely reality of their situation, hey, maybe it's not actually as dire. Maybe the spouse falls onto the edge of the curve and has many more years than it looks like right now. Unless your friend specifically asks you about ways to get access to money now, I would stay well clear. Just be a friend in every other way.

+1

[mickeyd]

Stay out of this. Let them handle it.

[urn2bfree]

Quote:

Originally Posted by RunningBum Reread post 10, folks, OP WAS asked for financial advice, and the situation is terminal. If I were in OP's position, I'd want to give good advice for helping them make the most of their remaining time together in a smart financial way.i

Thank you.
I WAS SPECIFICALLY ASKED because I often know about these things, though I never considered this particular situation. So I guess I could just say that and wash my hands. Or I could try to help my friends who asked me for this help. Thank you to those that answered with helpful information and strategies.

[Rianne]

Quote:

Originally Posted by urn2bfree Thank you. I WAS SPECIFICALLY ASKED because I often know about these things, though I never considered this particular situation. So I guess I could just say that and wash my hands. Or I could try to help my friends who asked me for this help. Thank you to those that answered with helpful information and strategies.

I did miss the part where they specifically asked for your help. There is good advice here. My concern, if I were in your shoes...what if my advice was completely wrong or harmful to the situation? Of course, with good intentions. That would be a burden I would carry for the rest of my life. Could ruin the relationship.
This forum is awesome at offering valuable advice and counsel. Every situation is different. I have a great relationship with my DB's, family and all. We get together often and I consider them my friends as well as siblings. I might share a good experience with, say a surgeon or doctor. They may have a horrible experience with that doctor. One DB tells me about how he picks stocks (individual). We go for index stocks. I don't expect them to follow my advice, but what if they did and it turned out all wrong? Something to think about.

[pb4uski]

Quote:

Originally Posted by Sunset How about doing a cash-out refi, and taking the mortgage insurance offered by the lender (which is payable on death of mortgage holder). Collect on 2 insurance policies.

Good idea.... from what little I can find mortgage insurance is guaranteed issue.

[Maidensong]

In one of my previous jobs, I was a personal banker and originated a lot of mortgages and refi's. One of the other bankers in my office helped a couple refi their home a few years before the wife was diagnosed with cancer. When she died, her husband came in, thinking his mortgage was going to be paid off by the insurance that was part of their loan. Their previous mortgage would have paid out, but the refi insurance stipulated that the death had to ACCIDENTAL. So there was no pay out. Either my cohort failed to explain the difference, or the guy forgot, but he walked out of the bank looking like the saddest, most beaten-down fellow I've ever seen.

If your friends decide to refi with insurance, make sure they know what sort of death will result in a pay off.

Normally, I believe reverse mortgages are of the devil, but your friend's situation might be tailor-made for one. If they don't have heirs to consider, and the house is paid off, they could pull the extra tax free money they need from their house without worrying about ever paying it off.

Years ago, a friend of mine who was diagnosed with liver cancer was told to "do everything you want to this summer." I think it sort of applies to us all.

[NW-Bound]

Quote:

Originally Posted by urn2bfree Thank you. I WAS SPECIFICALLY ASKED because I often know about these things, though I never considered this particular situation. So I guess I could just say that and wash my hands. Or I could try to help my friends who asked me for this help. Thank you to those that answered with helpful information and strategies.

You have been around here a while, so I am sure you have seen posters making comments without reading through and understanding what someone else is saying.

So, don't let it bother you.

[RunningBum]

Quote:

Originally Posted by Rianne I did miss the part where they specifically asked for your help. There is good advice here. My concern, if I were in your shoes...what if my advice was completely wrong or harmful to the situation? Of course, with good intentions. That would be a burden I would carry for the rest of my life. Could ruin the relationship. This forum is awesome at offering valuable advice and counsel. Every situation is different. I have a great relationship with my DB's, family and all. We get together often and I consider them my friends as well as siblings. I might share a good experience with, say a surgeon or doctor. They may have a horrible experience with that doctor. One DB tells me about how he picks stocks (individual). We go for index stocks. I don't expect them to follow my advice, but what if they did and it turned out all wrong? Something to think about.

I'd feel worse if someone asked me for my somewhat expert help, and I turned them down, and then watched them make financial mistakes I would've warned them against. And we're not talking about picking single stocks or anything like that, just trying to tap funds in a sensible way.

[Katsmeow]

I think part of depends on what kind of money we are talking about both for the insurance policy and the bucket list stuff.

There is a difference between, say, a $25000 policy and a $2,500,000 policy. Also, it makes a difference just how important large policy proceeds are to the surviving spouse and who will only have one SS.

Let's say the policy is $1,000,000 and the surviving spouse needs to keep most of it available (which depending on their age seems reasonable). It still might make sense to spend $50,000 on travel (or whatever). But, would it be reasonable to spend $500,000?

I would probably just ratchet up spending a bit. The percentage depends on what they can afford to do. The surviving spouse who sounds relatively young may living for a long long time and the lack of SS from the spouse over time is a huge hit.

I would do this:

1. Look at how much income will be lost from the ill spouse over time. Is it $25000 a year? $50000? Be sure and consider that SS does increase over time.

2. Look at how expenses will change when your friend. I think people often don't like to think about doing that, but it is important. I have looked at it for myself if DH wasn't here. Some expenses would clearly go away entirely while others would stay unchanged and a few would increase. The friend needs to have a clear idea of this.

3. Compare the income available in future to the new expenses? Is there a shortfall? How much? How much of the life insurance is needed to cover that shortfall?

[Cayman]

If you think it appropriate, you might suggest that they carefully consider the financial impact of spending $ now, versus preserving whatever financial assets they have. Per your post, they are not FI, and the healthy spouse still must work.

Not to say they should not spend $, *but consider all potential alternatives that will yield happiness and quality time together.*
If that's their goal.

Only this couple can decide what is right/best for them, and I'd hope they assessed (risk/reward/value) of any expenditures, considering the current and future needs of both spouses.

[dirtbiker]

I would pose two situations to my friend; kind of opposite ends of the spectrum of worst-case scenarios:

1. They spend their savings up to the value of the life insurance payout, travel and do bucket-list things, and then the spouse lives longer than initially anticipated and they feel the monetary crunch due to it.

2. They don't spend the money and don't do bucket list things and the spouse does die 'on time' or sooner.

Which scenario would leave them with the most regrets? This answer should make it obvious which direction they should take.

[SpinDoctorTX]

Quote:

Originally Posted by urn2bfree Thank you. I WAS SPECIFICALLY ASKED because I often know about these things, though I never considered this particular situation. So I guess I could just say that and wash my hands. Or I could try to help my friends who asked me for this help. Thank you to those that answered with helpful information and strategies.

Sorry, I missed that it was requested by the friend as well. I hope that some of the good advice in here helps them (and you). We have been dealing with "what if"s for a while now as DH and I deal with his St 4 cancer. We didn't retire wealthy, but we have been going on every trip that we can afford as energy levels permit.