A terminal diagnosis is never something anyone wants to receive. It’s heavy. It’s unfair. And it changes everything.
I’m writing this not just as a financial planner, but as someone currently navigating this reality with an immediate family member. When a diagnosis like this enters your life, it can feel as though control disappears overnight.
And yet—quietly, unexpectedly—some clarity arrives too.
Knowing doesn’t make the situation easier emotionally. But it does create something that prolonged illness and accidents do not: motivation and a more defined time frame to be intentional.
Over the years, I’ve helped clients walk through this stage of life. And now I’m walking through it personally. One thing I want to say clearly, because I hear it so often, is this:
You do not need to apologize for being practical.
Clients will say things like:
“I’m so sorry we’re even talking about money right now.”
“This feels selfish given what’s happening.”
“I feel guilty focusing on logistics.”
I totally get it.
And I want you to know: this instinct isn’t cold or callous. It’s human. It’s grounding. It’s something you can control when so much else feels uncontrollable.
Financial planning after a terminal diagnosis doesn’t change the outcome, but it can change how much clarity and control a family has during an otherwise overwhelming time.
When Health Coverage Decisions Suddenly Matter More
For many retirees, Medicare choices can be a guessing game if there has been no major health concern. A serious diagnosis changes that math.
When you have clearer information about likely treatments and medications, you can:
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Evaluate Part D plans based on real prescriptions, not hypotheticals
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Understand potential out-of-pocket exposure under Medicare Advantage
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Decide whether the flexibility of Medigap offers greater peace of mind
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This isn’t about optimizing every dollar. It’s about avoiding surprises later and feeling confident that coverage aligns with what’s ahead.
That reassurance alone can be meaningful.
Turning an Estate Estimate Into a Real Number
In Massachusetts especially, estate planning can take on new urgency. With a state estate tax threshold around $2 million, families are often surprised to find themselves exposed to “death” taxes.
When timelines change, plans may need to change too.
Many families originally intend to make annual exclusion gifts over many years. Or help in a meaningful way given the right opportunity (such as a downpayment). A terminal diagnosis may shorten that window, and that’s okay. Larger gifts are often not taxable; they simply need to be reported and tracked against the federal lifetime exemption through a gift tax return.
The goal isn’t rushing. It’s aligning the plan with reality.
Using Retirement Assets Thoughtfully
One of the more complex decisions often involves retirement accounts.
With the elimination of lifetime stretch IRAs for non-spouses, inherited retirement accounts now must be fully distributed within 10 years. That means someone will pay the tax. The real question becomes who and when.
In some cases, it can make sense for a single person with the diagnosis to:
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Take distributions themselves
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Pay the income tax now
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Make gifts using those after-tax dollars
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Why might this make sense?
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They may be in a lower tax bracket than their beneficiaries
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They reduce their estate to minimize or eliminate state estate tax
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Consolidating accounts now means less administrative work for the heirs
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In certain situations, distributions can even be spread across two tax years, late in one year and early in the next, to smooth the tax impact while still making a single consolidated gift.
These are numbers that can be modeled. There is no universal answer, but there are informed choices.
The Documents Everyone Thinks They Have (Until They Don’t)
This is the moment to confirm—not assume—that the basics are in place:
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A will
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A durable power of attorney
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A health care proxy
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I’ve seen families confident everything was handled, only to discover one missing document at exactly the wrong time. Each plays a different role. Having “most” of them is not enough.
This is also an appropriate time to talk through:
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Burial or cremation preferences
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Existing family plots
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Celebration-of-life wishes
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Which personal items matter, and which do not
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These conversations may feel uncomfortable, but they are deeply kind to the people who will eventually be making decisions.
Practical Financial Planning After a Terminal Diagnosis Can Mean a Time Adjustment
Terminal does not always mean immediate. Sometimes the outlook is measured in months. Sometimes it’s years. But likely you’re still planning around a shorter timeframe than you just were. Because most of my clients are worried about outliving their assets and wanting to plan until age 95 – 100, and this situation turns that kind of thinking on it’s head.
Review Beneficiary Designations
Beneficiary designations often control how assets transfer, regardless of what a will says.
This is a good time to confirm:
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Retirement accounts reflect current intentions
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Life insurance beneficiaries still make sense, and whether any death benefits could/should be converted to an accelerated benefit to support cash flow now
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Assets are directed to the right person or trust, especially if timing has changed
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In some cases, naming a trust instead of an individual may offer better protection or flexibility in administration. If a trust has been something you’ve put on the back burner due to time or expense, now may be the time to get serious.
Don’t Overlook Benefits That Exist for Exactly This
I’ve worked with families where the person diagnosed was relatively young and still working, and unexpectedly eligible for benefits they never expected to use.
Depending on circumstances, this may include:
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Critical illness coverage
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Short- or long-term disability benefits
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Long-term care coverage
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Social Security Disability Insurance (SSDI)
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Just because an illness is terminal does not mean benefits aren’t available or worth pursuing. In many cases, they absolutely are. But they often require active coordination and paperwork. And I’ll tell you, I’ve been helping someone pursue a short-term disability benefit and it’s been over a month with no decision on an extremely straight forward claim. Don’t be afraid to ask for help and reinforcement in pursuing benefits.
Cash Flow, Property, and Living Arrangements
When timelines shift, practical questions often follow:
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Does it make sense to sell a property now to simplify the estate or avoid probate?
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Would an ADU or shared living arrangement make sense to keep family close?
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Is liquidity needed sooner to support care or living expenses?
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These decisions don’t need to be rushed, but they benefit from being considered while options remain open.
A Final Thought
A terminal diagnosis narrows time, but it can widen clarity.
If you find yourself wanting to organize, plan, and make practical decisions, please know this: you are not doing anything wrong. You are responding in a very human way to an impossible situation.
Planning doesn’t diminish love, grief, or presence. It reduces friction. It creates calm. And it can be a meaningful gift to both the person who is ill and the family who will carry things forward.
If you’re facing this kind of transition and want help sorting through the financial and estate questions, without pressure or long-term commitments, Powwow offers project-based and hourly planning designed for moments exactly like this. And Powwow can also offer this checklist as a DIY approach to thinking through financial matters.
You don’t need to have everything figured out. You just need a place to start.
