Save Money, Make Money Challenge

I have a tough "what would you advise" question for Ms. Epperson and all of you:

I was diagnosed with inflammatory breast cancer in April 2006 and was treated with chemotherapy, a modified radical mastectomy and then radiation. I finally completed my chemotherapy in August 2007 but last month I discovered two nodules in my scar tissue that the lab found cancerous. I've had to take this month off to recover from a 5.5-inch long incision.

All of the financial advice that I read is based on the assumption of a full life expectancy. Now with the cancer returning six months after my last treatment, it makes deciding how to manage the inheritance I recently received that much more difficult. With the type of breast cancer I have, according to the National Cancer Institute, only 25% to 50% diagnosed with IBC make it past five years and I'm two years into this.

Here are the specifics: I'm 51, single, no kids and self-employed as a photographer. I had to be the caregiver to my mother since May 2004 until she died on November 10, 2006 and that wiped out whatever emergency cushion I had. I rent an apartment. What little credit card debt I have, I pay off entirely every month. Last month my mother's irrevocable trust provided me with a disbursement check of $130,000. However I expect to spend $10,000 in legal action because when I asked the trustee, i.e., my brother, for a copy of the trust and a proper accounting of the estate, he refused. When I inquired about buying our mother's house in November 2006, his idea of fair market value was $350,000 which I felt was anything but fair. I decided this was a bad offer and was never offered a lower price. Nine months later, the house was sold to strangers and brought in less than $240,000 into the trust. So obviously I have a problem with the shortfall and his lack of initiative to get the trust to earn more than $77 a month interest in a money market account valued at $477,600. So I'm budgeting for upcoming legal fees.

So...if I plan with the utmost of optimism, I think I should contribute $5,000 to my ROTH IRA for 2007 and then another $6,000 for 2008. My IRA accounts are currently worth $34,000 and invested in Vanguard's Total Stock Market Index and I haven't been able to afford to contribute in recent years. I also plan to establish my own living trust ASAP. And then I'm stumped. If I was cancer free I would certainly consider buying a house as a first time buyer. I would certainly love to upgrade my equipment for my photo business. I haven't gone on a vacation in ten years. The worst case scenario is that my health gets worse, I can't work and I have to make the inheritance last as long as I live. The disbursement is currently parked in a money market account that accrued $363 in the first month. What should be my next financial move?

Thank you for sharing your story and for seeking my help. I am contacting some of the best financial advisors I know to help me answer your specific questions.  I'll have more suggestions shortly - but here's a start....

For now, here's a general checklist issues you may want to considered from the Institute of Certified Financial Planners:

• Learn disease costs. What are the costs expected with the illness and at what point during the course of the disease will they occur? Talk to the doctors and to the American Cancer Society.

• Budget. Budget not only the disease costs and daily living expenses, but special wishes, such as a dream vacation.

• Keep working? Work may provide critical financial, medical or psychological benefits. Or you may want to change to a less demanding job.

• Review health insurance. Is the illness a pre-existing condition under the current policy? What are the lifetime maximums? How much must be paid out of pocket? Will it cover experimental treatments? Might coverage expire? (Also, one financial planner suggested to me that you find out if there is a case worker at your hospital who can help you navigate the insurance process. There may be a fee involved, but she says it is well worth it.)

• Consider COBRA. A worker leaving an employer may be able to continue group policy coverage up to 29 months under a federal law known as COBRA (36 months for spouse and dependents). Ask about it before leaving work.

• Review disability insurance. Is disability insurance through work or a personal policy available? What percentage of earned income will it replace? What is the waiting period before benefits kick in? Are the benefits taxable? Any state sources available?

• Establish care. Where will you go for care? A nursing home? The hospital? A hospice care facility? Can family members help at home? Each option has associated costs to consider.

• Review life insurance. What type of policy do you have? Can you tap the cash value in your life insurance to cover expenses? The policy also may pay what's called "accelerated benefits." Obviously, keeping insurance premiums paid up is critical.

• Revisit investments. It may be smart to move at least some money from higher-risk, long-term investments such as stocks into readily accessible, less risky investments like a money market mutual fund or short-term bonds.

• Assess other assets. Is money available from IRAs, qualified retirement plans, or equity in property such as a home? (I know that you're a renter, but this is general info.)

• Review government resources. People with few assets and little income usually can qualify for Medicaid to pay for nursing home care. Medicare and Medicaid can pay for hospice care. Social Security might pay disability income. (More GENERAL INFO)

• Consider tax issues. Many of the checklist items may pose tax planning issues that need to be addressed, such as early withdrawals from IRAs or selling highly appreciated investments. Find an accountant to help you by contacting the American Institute of Certified Public Accountants (http://www.aicpa.org/Consumer+Information/Find+a+CPA/).

• Draft or update estate planning documents. Every adult should have a will. A durable power of attorney lets a trusted person make and carry out legal and financial decisions on behalf of another person. A living will describes what life-saving medical treatment the person wants or doesn't want. A health care proxy gives a trusted person the power to make medical decisions if the dying person is unable to do so. (Find an estate planning attorney in your area at www.lawyers.com.)

• Review beneficiaries. Be sure beneficiaries are up to date in your will, on insurance policies, retirement plans and so on.

• List financial documents. Let a trusted person know where important financial documents are located.

• Hire professional help. A qualified financial planner, an estate planning attorney and other financial professionals can be of immense help in making sure that the best plan is created and carried out. (Find a planner in your area at www.fpanet.org or www.napfa.org.

You are most welcome.

Here are a few other suggestions from financial advisors that I contacted specifically about your situation:

* Review beneficiaries and consider hiring a case worker to do all of the book keeping for medical bills. 

* She might consider to whom she will leave her own money when she passes.

* While she is updating her estate docs, she should have a medical
power of attorney as well as any medical directives (living will) if she
chooses.

* If she has life insurance, and needs the funds now, she could
shop around to sell her existing policy.  There are huge commissions in
this for the agents, so she should look to receive several quotes.  Keep
in mind that they do reverse underwriting for the sale; in other words,
the lower her prognosis, the great amount she will receive.

*  I would hold off on any Roth contributions, as she may need the
funds in the future.  If she is earning very little while she has huge
medical costs, there is a high likelihood that she is in the lower (or
zero) tax brackets.

* Her recent trust disbursement should remain in safe short-term
instruments until she has a better idea about her future photography
income and/or future treatments.  The benefit of gaining 15% on a great
year in the market is not worth the risk of losing a third over the next
few years.

I wish you the best. I hope that you obtain the financial advice you need.  God bless your health!  (please forgive me if you don't believe in God). Statistics are just numbers that many beat.   I wish you many happy birthdays.  Sorry if this is off topic!