Handling Crisis: Financial Planning After a Tough Diagnosis

Plan With The Tax Man

Life can throw unexpected challenges our way, and dealing with a tough medical diagnosis is one of the hardest. In today's episode, we'll discuss a real case study of a young family dealing with the heartbreaking reality of a terminal illness. Listen in as Tony shares practical steps to take when faced with such difficult news, including handling taxes, planning for the future of a business, and ensuring loved ones are financially secure.

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Transcript:

Marc Killian:

This week on Plan With The Tax Man, let's talk about tough medical diagnosis and financial situations that unfortunately maybe come out of the blue and how to handle those. So we're going to spend some time looking at a case study with Tony here on Plan With The Tax Man.

Hey, everybody. Welcome into the podcast with Tony Mauro and myself as we're talking investing, finance and retirement. Tony is the owner at Tax Doc Inc, and he's CPA, CFP and EA with 30 plus years of experience and a great resource for you to tap into and turn to if you need some help with situations. And unfortunately, situations like the one we're going to discuss this week. Tony, you want to share a little bit on some tough times, financial planning and dealing with things when the unexpected pops up. And in this particular case, you wanted to share some things about a tough diagnosis if you've unfortunately received one of these, what that might look like and how that might change things. How are you doing this week, by the way?

Tony Mauro:

I'm doing fantastic. Thank you for asking. And yeah, some of these types of things creep up on us, and so I wanted to just take a break from what we normally talk about. It still has some financial planning relevance, I think everybody can get something out of.

Marc Killian:

Well, and I think these things are also very important because it's life, right?

Tony Mauro:

Right.

Marc Killian:

Unfortunately, things happen to us in life and we can't see them coming and they're heartbreaking and then unfortunate, but we still have to deal with them or our families might be left behind to deal with them. So why don't you just go ahead and jump in and lay this out for us and share some things?

Tony Mauro:

Okay. Well, as we've done taxes for such a long time, you do see a lot of this kind of thing. And it's funny, it even affects us, but in a different way than if our own family, this was happening to because sometimes my aunts are here and then they're not.

Marc Killian:

Yeah, and you form relationships with folks and it's like them finding out bad news is obviously heartbreaking for them and their family, but it's very personal for you guys as well, especially when you're a boutique firm where clients... It's cliche, but clients become friends.

Tony Mauro:

They do. They become friends and in this situation, this is a younger family in their 40s, and we have them as an accounting client. They have a small business and we also do some financial planning for them. So they're in the wealth accumulation stage with where they're at. They've got three little kids.

Marc Killian:

Okay.

Tony Mauro:

Husband is a firefighter, and anyway, they got a horrible diagnosis last year that the wife has brain cancer and she's not going to make it. She's got maybe a year and a half left. So they've got a business they're trying to run. He is going to have work for a long time, but he is going to be left with three small children to have to take care of. You start thinking of some of this stuff.

Marc Killian:

Right? That's daunting.

Tony Mauro:

And they're trying to figure out... Well, let me back up a minute. On top of that, before we got them, they had a few issues that they still have some unpaid taxes with the IRS. We're trying to get that caught up and paid, but we've really shifted years immensely from, okay, trying to operate the business as a profit, accumulating things for retirement, to 180 degree turn of what are you going to do with the business when you're gone? Husband's not going to run it because he's a firefighter.

Marc Killian:

He's busy. Yeah.

Tony Mauro:

How's this going to look for them and whatnot? And he's going to have to carry on. We've basically been working with them on three areas. One, make up with a plan to make sure that we get the back taxes paid so the IRS is not hounding him several years down the line.

Marc Killian:

Right.

Tony Mauro:

Now, two, how are you going to sell this business? Because that's what we're looking at is trying to find a buyer either internally or externally to [inaudible 00:04:00].

Marc Killian:

So you're going through valuation processes and so on and so forth there.

Tony Mauro:

Yeah. And then now the shift has been in the financial planning area. It's really been more so a little bit towards advising on, well, how do we wrap up her affairs when she's gone? And then he's got to continue on and try to keep saving and build his own retirement plan. That's going to look much different than I'm sure... You just put yourself in that situation, just even mentally, what that would look like by yourself and possibly having a lot of years by yourself. I think to tie this to financial planning, I think we all... I don't care what age you are, I think you need to have a few things in place. One, a will. Two, a life book. We've talked about that before, and both spouses need to know what's going on with the finances and everything else so that if something like this were to happen, besides all the grief and all of that, you can carry on as best as possible.

Marc Killian:

Well, that's a good point, Tony because you mentioned being in their 40s. When I was 41, I had to have a quadruple bypass and it came out of the blue and it was like, "Okay, if I don't survive this surgery," and the odds were pretty good of surviving it, but there still was risks. Obviously when there're completely opening you up and doing stuff, it's like, "We don't have any of these things in place yet," because I was thinking, "I'm 41, I got plenty of time." Right? And I think people do tend to do that. And that was the point of having this conversation today is that we're all one blood test away from maybe being uninsurable or being hit with devastating news and you start scrambling. And so that's again, the importance of working with somebody so that God willing, you're not going to get these kinds of news.

Tony Mauro:

Right.

Marc Killian:

But if you do, you've got some pieces already in place, which will hopefully make it a little smoother. Yeah?

Tony Mauro:

I think so. And I always tell everybody, and I tell my own wife that too, my motto, everybody that's married, is that one day one of us is going to be alone.

Marc Killian:

Yes.

Tony Mauro:

And meaning that one of us is... We're probably not going to die together and we're going to be faced with that and carrying on, whatever age that might be.

Marc Killian:

Indeed.

Tony Mauro:

And we have to have a plan, and my own personal plan, besides the will and some of that legal stuff because that's a given, is really having a playbook, if you will, especially in this digital age of where everything's at, especially if the spouse is the one that doesn't do the finances.

Marc Killian:

Well, let's drill that down for just a second, Tony. So think about that. Everything we have out there nowadays, if one person's in charge of it, and let's just for the sake of the argument say that unfortunately this person that received the terrible diagnosis is the one that handles that, and they may no longer be here sooner than expected. You've got to get the other person up to snuff, right? They've got to get up on all the things. Where are the accounts? Passwords, geez. Think about the complicatedness of that.

Tony Mauro:

Yes.

Marc Killian:

Or even just someone even passing unexpectedly, a car accident, and you don't even know how to get into some accounts, or even into their computer maybe, right?

Tony Mauro:

That's it.

Marc Killian:

So a lot of these things, you really got to put together. And I know a lot of advisors provide tools and resources to help their clients with that kind of stuff.

Tony Mauro:

We do. With our advising clients, we spend a lot of time, and part of every annual meeting, we talk about that, of just these kinds of things is, "Have you checked this off that you've got a password keeper?" So to speak.

Marc Killian:

Right.

Tony Mauro:

And they know where it's at.

Marc Killian:

Or a notebook somewhere where everyone knows where it's at. Right? Is it in the sock drawer and everybody knows which one it is? Or something.

Tony Mauro:

Right. So I think a lot of that, sometimes... Well, I know people don't think about it, not to the extent that I go into it with them, but it's just going to make... I think if you have some devastating news or just all of a sudden, like you were talking about, hit by a car or a car accident type thing, where you're just here today, gone tomorrow, at least these people have a little bit of time to at least plan. You got to think about some of these things because I think it's going to make that transition a whole lot... I don't want to say easier, but at least tolerable, I guess.

Marc Killian:

Yeah, it's tough sometimes to find the right word, right? It's like you've got to be able to... Like it or not, life moves on. Right? Life continues on for the people left behind, and I think we all go through the... Obviously there's the stages of grief. Right? I sat there in the hospital, but they kept me a full... I want to say 36 hours before they actually did the surgery. And when my wife and daughter left for a little bit to go pick up some things to come to be with me, and it was maybe no more than an hour and a half by myself, but boy, your mind goes through a whole lot of stuff in that hour and a half. And you find yourself going, "How are they going to get on without me?" And then you kind of go, "Well, they are going to have to move on without me." And then you feel like, "Well, all the things I'm going to miss," and you get angry and you get sad, and you're all over the map on that kind of thing.

But I think once you had a chance to... In this situation you've brought up today, unfortunately that's not a lot of time left for this individual, and the heart certainly breaks for them, but maybe it gives them time to at least get some of these things checked off and planned, versus something like a car accident or an emergency surgery that you don't wake up from.

Tony Mauro:

I agree. A lot of times, even with this situation, and I ask my staff that, is, "Put yourself in this person's situation. How would you elect to spend the next year and a half or two? What would you do?" And just let that settle in a little bit as the person receiving the diagnosis.

Marc Killian:

True.

Tony Mauro:

Obviously there's some planning to do, but there's all kinds of emotions.

Marc Killian:

And they want to enjoy their time that they have left. Right?

Tony Mauro:

Yeah.

Marc Killian:

So unfortunately, and if you are caught a little off guard, maybe you're a little younger and this happens, you are having to do some work, some scrambling to some of the things that you're helping this young couple with, but at the same time, knowing that you and your staff want to make that as efficient and painless as possible so that the person can enjoy, maximize their time that they have left with their loved ones. You and I talk every... Twice a month, we do a podcast and we do some fun stuff. We do some serious stuff, but we go all over the map in the podcast. But ultimately, at the end of the day, what you guys do is very, very serious. Whether it's dealing with folks' retirement money and a good long life that they've enjoyed to the fullest or bad situations or whatever the case is.

But what you guys do is very, very serious and important stuff when you really stop and think about it, because we get to a point in life where you don't have that time on your side anymore to this, that, or the other, whatever that might be in your little world. And so it's really important to be working with somebody, I think that can help you, again, to my point a second ago, be as efficient as possible so that you can maximize your time, because even if you get blessed with a long life, Tony, do you really want to sit around and stress over your finances in your retirement years when you could be hopefully living that up and enjoying those years that you have left? Whether it's a short amount of time, like this poor unfortunate person, or a nice 30-year retirement. Whatever the case is, you probably want to spend that doing the things that you love doing.

Tony Mauro:

As much as possible. Yeah, I would agree totally. Because even if you are blessed enough to get into retirement, have a long one, the key is generally, the health starts going down a little bit and how much of that is really good time versus total time?

Marc Killian:

Sure. Yeah. My mom's 83 in about a month, and her mobility is now starting to suffer a little bit more, and she's pretty frustrated by it, but you've got to find... Like everything in life, we have to find these silver lining points where we can.

Tony Mauro:

That's right. That's right, because my dad's going through the same thing at 83, and he is still relatively healthy, but he cannot do the things he did 10 years ago.

Marc Killian:

Even five years ago.

Tony Mauro:

Yeah. He's had to readjust and find new things that he can like to do. So yeah, it's all over the board, but it just was a good... I don't want to say story, but-

Marc Killian:

Definitely not a good story, but an important one I think, because folks, again, you never know what's going to happen. We're all literally one blood test away from terrible news sometimes or whatever the case is.

Tony Mauro:

[inaudible 00:12:47].

Marc Killian:

Or one diagnosis going in. I just went in because I was like, "Hey, I'm winded. Why am I winded? I'm a little fat, but I shouldn't be that winded at 41." And they're like, "You're not winded. You have four massive blockages. You can't leave." They wouldn't let me leave the hospital. So you just never know when these things are going to happen, and that's the importance of... Even if you feel like you're in a place in life, Tony, where, "Hey, I am not quite ready for a financial professional yet," maybe you are, and maybe it's worth looking at a little sooner than... I think a lot of people feel like, "Hey, I don't need to talk to a retirement professional until I get over 50." But to your point, luckily for these folks, I guess a little silver lining, if you will, as they were already tax clients. So they had you there now to help start guiding them with some of these other pieces.

Tony Mauro:

Yeah, yeah. No, I agree because I do think the younger people certainly don't give it as much thought as they need to.

Marc Killian:

No, and understandable. None of us do.

Tony Mauro:

No.

Marc Killian:

We're all invincible till we're not.

Tony Mauro:

Yeah. That's it.

Marc Killian:

Yeah. Well, folks, again, it's terrible to have to share stories like this, but it is part of life and it's why it's important to have a team on your side, some people that are there to help you finding the right financial professionals for the time of life that you're in, and the things that you might need to tackle events, whether it's traditional retirement or a sped up timeline, like this situation, this story here. So if you need some help, reach out to Tony and his team at yourplanningpros.com, yourplanningpros.com. Don't forget to subscribe to the podcast on Apple or Spotify, whatever platform you like using. We're on all the major ones there, so just type in, "Plan With The Tax Man," in the search box, and you can find it that way. Or of course, just go to Tony's website, yourplanningpros.com. Tony, all my best, my friend, and thank you so much for sharing the story and the very best to these folks as well.

Tony Mauro:

See you on the next episode.

Marc Killian:

All right, my friend. We'll see you the next time, right here on Plan With The Tax Man.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.