It’s said there is nothing so constant as change. We are faced with shifting goals and priorities from the day our life begins until the day it ends. As we travel through life, though, certain stages become obvious: young parents, empty nesters, retirees, senior citizens, and over 80’s. One way to address our life evolution from one stage to the next is through estate planning.
Basic Estate Planning Documents Stay The Same
In some ways, an estate plan is pretty simple to understand. The same three documents typically make up a basic estate plan:
- Your Last Will and Testament (the Will) addresses how your property will be handled after you are gone.
- A Durable Power of Attorney can address potential incapacity issues, and
- A Health Care Power of Attorney authorizes a trusted agent to make health care decisions for you, if necessary.
Other documents are optional based on your estate and circumstances:
- A Mental Health Care Power of Attorney authorizes an agent of your choice to make mental health care decisions for you.
- Your Living Will states your preferences for end-of-life care – in other words, what you do and do not want medical providers to do.
- One or more Trusts may offer tax assistance, efficient wealth transfer, asset protection, and more.
Though the basic documents remain the same, the person making the estate plan should tailor those documents for their current needs. And those needs will change as life goes on. A strategy that works for a young parent, for example, may not be the best thing for an empty nester or super senior citizen. Read on to learn more about how to do estate planning for every stage you may go through in life.
People in this stage of life are busy! Young adults may have been focused on careers and relationships, but that all changes when kids come along.
After the birth of even one child, young parents think beyond themselves to providing for a surviving spouse and children. Life becomes more complicated as priorities adapt.
Their Will most likely is simple, with all of one spouse’s possessions going to the surviving spouse. There’s another important part of a young parent’s Will – naming a guardian for their minor children. You’ll want to choose someone trustworthy who will care for your children as you would if both you and your spouse pass away.
If estate is sizable or a family business is involved, you might consider setting up a living trust or a family limited partnership. This could protect your assets, provide tax breaks, and transfer assets to loved ones more efficiently if something happens to you.
Include a durable power of attorney in your estate plan. You may make it effective immediately or effective if you become incapacitated. A health care power of attorney prevents confusion if your surviving spouse or other family members have to make medical decisions for you.
Young parents need to remember something – and this is very important:
If you don’t choose guardians for your children, a judge will do it for you.
Fortunately, you don’t have to leave such an important decision to someone else.
What To Do Next?
Young parents should take the following steps:
- Talk over estate planning with each other.
- Decide who will be guardian if something happens to both of you.
- Gather contact information for agents, guardians, executors, etc.
- Make an appointment with an attorney or buy a good estate planning package online.
- Draft your documents, sign them, then keep the originals and copies in a safe place.
The next stage also involves children. Instead of coming into your life, though, they are spreading their wings and jumping the nest.
Parents whose children have moved away from home are often called empty nesters. Some people feel a great sense of loss when their children leave. Others look forward to starting a new chapter in their lives. Wherever you fit in that spectrum of emotions, your life events will probably alter your estate planning goals.
Even though the kids are on their own, you may still help them out financially. In fact, you may want to teach your children good financial principles. Talking to them about your estate plans is one way to do that.
As you probably know, Wills deal with the disposition of your assets are you are gone. When you observe your kids handling their newfound independence, you may restructure your inheritance to them. Instead of receiving a lump sum settlement from your estate, a spendthrift or discretionary trust may offer some protection for reckless young beneficiaries.
But it’s not just the next generation’s financial wellbeing that occupies the minds of empty nesters.
They also have to secure their own future, especially if they plan to have a fun and rewarding retirement!
Empty nesters may explore trusts that offer annuities during their retirement years. If they have not done any incapacity planning, there’s no time like the present! People at this stage should talk to an attorney as soon as possible.
What To Do Next?
People in this stage of life may need to:
- Thoroughly review their estate plans.
- Prepare an estate plan if they don’t have one.
- Explore trusts and advanced estate planning in addition to the basics.
- Look into incapacity planning, including disability insurance.
Transitioning to the next life cycle is like opening a new chapter in a book.
People at this stage have retired from their full-time jobs. They certainly have not retired from life! Many retirees enjoy an activity-filled retirement. It’s important, though, to take time to review your estate plans. It’s very likely that your estate planning documents need a good overhaul.
For example, your Will may include bequests you’d like to change. Maybe you’ve named an executor who is no longer a trusted friend. Make changes now. If something happens to you, it may be more difficult to settle your estate with out-of-date documents.
The same holds true for your durable power of attorney and health care power of attorney. Do you need to name new agents or successor agents? Make those changes as soon as possible after a life change. As an example, it’s very common for a man and wife to name each other as agents and personal representatives. However, if they divorce, they both need to name new agents and personal representatives as soon as possible.
And if they have not done this already, it’s definitely time to talk to an attorney about incapacity planning. As we age, we may need more assistance. When skilled nursing or residential care is needed, costs escalate quickly. People see their carefully tended nest eggs evaporate in a few years when nursing care is involved.
When planning for long-term care, consider buying long-term care insurance. It can become more expensive as the policyholder ages, but it is certainly worth looking into. In addition, there are trusts that may help you maintain your lifestyle and protect your assets as you age.
What To Do Next?
Retirees should take a few moments to do the following:
- Review current estate plans.
- Prepare and sign estate planning documents if you don’t have a plan yet.
- Carefully consider the people you name as trustees, agents, and personal representatives.
- Discuss incapacity planning with your attorney.
Before heading into the next stage of life, make sure you and your estate plan are ready.
Super Senior Citizens
This group can be as fun-loving as prior groups but will be experiencing age-related changes. Senior citizens also typically become more frugal as they stretch their dollars to cover their current and future needs. You might think that seniors are set when it comes to estate planning. However, their estate planning goals have changed, and they still have things to accomplish.
Strategies to pay for long-term care should be in place. If not, then talk to an attorney as soon as possible. One public benefit – Medicaid – looks back at your financials for the five years prior to your application for benefits. Any transactions made during that five years could delay or prevent Medicaid eligibility.
Seniors typically live on Social Security, retirement accounts, and savings. Medical care may be covered by private policies, but Medicare and Medicaid may be needed. The application process and eligibility rules are complex. As noted above, it’s not too early to start planning.
In addition to preparing for their own needs, seniors may be exploring asset protection options. Do they have enough money to live on and also leave some for heirs? There are methods to make this more likely. Your friendly neighborhood estate planning lawyer can help with this.
Overall, a senior citizen’s estate plans need to be reviewed and altered to match their new lifestyle. Increases or decreases in net worth should be addressed in Wills and any trusts they have. Executors and agents may have moved away or passed on and should be replaced.
What To Do Next?
Senior citizens should tackle their estate plans head on:
- First, review your plans for any obvious changes.
- Next, have an attorney review your plans to make sure you are doing everything you can to maximize your estate planning.
- Make sure long-term care plans are do-able.
- Explore asset protection strategies, like life estate deeds or trusts.
As senior citizens head into the next phase of their lives, they still have important decisions to make about their estate plans.
Legacy & Care
People aged 80+ may be primarily concerned about:
- Protecting their legacy,
- Dealing with an increased level of care,
- Remaining independent and controlling their assets as long as possible.
Fortunately, there are estate planning tools that can help. However, competency can become an issue, so estate plans should be done as soon as possible.
What To Do Next?
Our over-80 citizens can do the following to make sure their estate plans are up-to-snuff:
- First, consult with an estate planning attorney who understand elder law, especially Medicaid eligibility and VA Aid & Attendance.
- Talk to their families. Let them know they have an estate plan and where their documents are saved.
- Have peace of mind knowing they and their families are cared for.
Take action to sure your assets go to the right people, that the inheritance you hope to leave can be protected, and that your end-of-life medical care can be what you want it to be.
We Can Help In Writing Your Estate Plan
Everyone needs an estate plan, no matter where they are in life. Those documents need to be signed in compliance with Arizona law, something your attorney can help you with. Then, two more things are very important:
- Keep your original documents in safe place; and
- Talk to your family about your estate plans.
We help people like you, make smart estate planning decisions. To schedule an appointment, call us at (480) 418-8448. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.