This quarter’s Act 3 LIFEies deals with terminal illness and living your life through the finish line. Jonathan Clements was a WSJ personal-finance columnist beginning in 1994. He passed in September. He wrote the column below after his terminal diagnosis, and I thought I would share the column and some thoughts:
First, get your affairs in order. When he got the news, Clements wanted to talk about his finances, while his family wanted to share their last months with him and begin to grieve. I have spent an inordinate amount of time getting organized for just this reason.
Second, spend time with your people. This is my takeaway, not his, but it’s important. This is an ‘all the time’ for all of us, and even more so as we age. We know this, and most of us are doing it, but the advice does not age.
Finally, while you can….do everything you can. Live. Jonathan got married after his diagnosis…good for him.
I know you are living your best life…make sure you keep doing it all the way until your last breath.
Some Final Personal-Finance Advice From Jonathan Clements
The former Wall Street Journal columnist faces a terminal cancer diagnosis the only way he knows how—with practical suggestions about family finances
By Jonathan Clements
Nov. 3, 2024
I started writing a personal-finance column, Getting Going, for The Wall Street Journal in 1994, and soon earned a reputation as a relentless proponent of indexing. In 2024, at age 61, it seems I’m becoming renowned all over again—for dying.
Yeah, this is a little weird.
Ever since I learned I had cancer and might have just a year to live, I’ve been working like crazy to make sure I bequeath a well-organized estate and leave my family in good financial shape. I’m determined to have as good a death as possible, not least from a financial point of view.
Here are some steps I’m taking:
So much talking
Two days after my diagnosis, I sat down with my wife, Elaine, and my two children, Hannah and Henry, and told them what they could expect from my estate. I’m glad I did. Countless conversations have followed. All the stuff that seems so straightforward to me—the different sorts of retirement accounts, which assets will go through probate, what will be subject to taxes—can be baffling to others.
I’m more than happy to talk about such things. I’m not sure Elaine, Hannah and Henry are quite so happy. I’ve been endeavoring to approach these final months as a cheerful warrior, making the most of each day and avoiding anger over my grim prognosis. But that also means I’m not grieving my own demise, while others around me clearly are. As I’ve discovered, my unwillingness to join in my family’s distress makes it harder for them. How so? It seems my cheerfulness leaves a void that they then fill with even greater grief.
Death is hard work
I thought my finances were well-organized and pretty simple. Yet, since my diagnosis, I’ve spent endless hours trying to simplify them even further.
I’ve closed a small inherited IRA, canceled two of my four credit cards, made Elaine the joint account holder on two bank accounts, and rolled my solo Roth 401(k) into my Roth IRA. This should save my family a bunch of work after I’m gone. I’ve also revised my will, had financial and medical powers of attorney drawn up, and updated the beneficiary designations on various retirement accounts.
There’s still more to do. For instance, if time allows, I’d like to move various utility bills and insurance policies into Elaine’s name. All this might seem rather tedious. But at a time when I’m losing control over my life’s trajectory, it feels good to have control over something, even if it’s just humdrum financial matters.
Jonathan Clements says to help his family, he is throwing out old paperwork, including tax returns that go back to 1986. Michelle Gustafson for WSJ
Built for ease
It’s important to be financially resilient, with enough set aside to carry us through rough times. But it’s also important to be financially flexible, able to get our hands on money without worrying about, say, retirement-account restrictions or the difficulty of selling real estate and other illiquid investments.
Even though most of my money is in retirement accounts, I haven’t had any issues accessing cash because the money is in IRAs, rather than an employer’s plan, and because I’m over age 59½, so tax penalties aren’t an issue. It would be a different story if, say, much of my wealth was in real estate, private partnerships or tax-deferred annuities with hefty back-end sales commissions. As I’ve come to appreciate, financial flexibility is a virtue that doesn’t get nearly enough attention.
Giving it all away
Even before my diagnosis, I’d been making regular financial gifts to Hannah and Henry, limiting those gifts to that year’s gift-tax exclusion. In 2024, the exclusion is $18,000. If you give more than that sum to any one individual, you need to file a gift-tax return, with the sum over $18,000 reducing your federal estate-tax exclusion, which is $13.61 million in 2024.
I won’t be bequeathing anything close to $13.61 million—hey, I spent most of my career in journalism—so eating into my lifetime estate-tax exclusion isn’t a big deal. That realization prompted me to forgive the private mortgage I wrote for Hannah in 2015, when she bought her home. One result: I’ll have to file a gift-tax return for 2024. But forgiving the loan now, rather than as part of my will, should make settling my affairs that much easier.
Taxing matters
There’s another reason to forgive the loan now. If I manage to live another year after making the gift, Hannah won’t have to pay Pennsylvania’s 4.5% inheritance tax on the sum involved.
Hannah and Henry will, however, owe that 4.5% on the Roth and traditional IRAs I’ll be bequeathing to them. I briefly thought about emptying part of the Roth—which I could do at no tax cost—and passing the money to them now, in hopes of sidestepping the inheritance tax. But I realized the Roth’s tax-free growth, which Hannah and Henry could milk for another 10 years after my death, would more than compensate for the 4.5% inheritance tax. Indeed, I’ve encouraged the children to leave the money in the Roth until year 10, so they squeeze the most out of the tax-free growth.
Hanging on
If I manage to live another year or so, that won’t just ease the tax bite on Hannah’s forgiven mortgage. Hanging in there could also mean a larger Social Security check for Elaine.
We got married on May 25, four days after I got my cancer diagnosis. We’d already planned to get married, but moved up the date. One financial advantage: If I live nine months after our wedding date—until Feb. 25, 2025—Elaine will be eligible for Social Security survivor benefits based on my earnings record.
Jonathan Clements says, ‘Even at this late stage, I can’t bring myself to throw out the values I’ve lived by for my entire adult life.’ Michelle Gustafson for WSJ
Emptying the basement
I’ve moved four times over the past 13 years—yes, you read that right—and with each move I’ve unloaded more stuff. Yet there’s still paperwork I need to throw out, including old insurance policies and financial account statements, as well as tax returns that go back to 1986. When I’m gone, my family may struggle to figure out what’s important and what’s not, and the best way to avoid that confusion is for me to throw away the unimportant stuff now.
Opening my wallet
Even as I get things in good shape for my family, I’m looking to do a little spending myself. But the emphasis is on the word “little.”
In theory, I could live in the lap of luxury in the months ahead, flying first class, staying at the finest hotels, eating at the best restaurants and purchasing the most desirable concert seats. After all, I now have no need for all the retirement savings I’ve amassed over the past four decades.
And yet I can’t bring myself to spend with wild abandon. Partly, it’s because every dollar I spend is a dollar that Elaine, Hannah and Henry won’t inherit and that won’t go to charity. But also, after decades of frugality, living large would be deeply uncomfortable. Even at this late stage, I can’t bring myself to throw out the values I’ve lived by for my entire adult life.