Estate planning is important for everyone, regardless of age. After living through the unprecedented pandemic, many people have a new perspective on life. However, although the pandemic generated more interest in estate planning, a 2021 study conducted by Caring.com found that the percentage of people aged fifty-five years or older who have a will fell from 60 percent to 44 percent since 2019.[1] Although creating or updating your estate plan may seem like a daunting task, a proper and up-to-date estate plan can help address some common concerns you may be facing as you enter your golden years. We are here to help.
Who can help me if I am unable to manage my own affairs?
As we get older, it is likely that we will need assistance handling our financial and medical affairs. A financial power of attorney allows you to choose a trusted person (an agent or attorney-in-fact) to handle your financial matters (sign checks, open a bank account, etc.). An immediate power of attorney goes into effect when you sign it, meaning your agent can act immediately. If allowed in your state, a springing financial power of attorney is a specific type of power of attorney that allows your agent to act only after there has been a determination that you cannot manage your own affairs. Without a financial power of attorney, a court will need to appoint someone if you need another person to handle a financial matter on your behalf. This can take time and money that may not be available in the midst of a crisis.
A medical power of attorney allows you to appoint a trusted person as your decision maker to communicate or make healthcare decisions on your behalf if you cannot do so. Absent this designation, the court may be required to name someone to make these decisions for you, costing your loved ones time, money, and privacy.
Can someone help me if I am out of town?
Whether you are visiting loved ones in another state or crossing off countries on your bucket list, being a senior citizen may allow you to travel more than you did before. Just because you may decide to leave town for a period of time does not mean the world stops. As discussed above, a financial power of attorney allows your agent to handle financial matters on your behalf, and if the financial power of attorney is immediate (as opposed to springing), the person you have selected can begin to act on your behalf immediately (or shortly thereafter if the agent is required to sign an acceptance of the appointment). Although this may seem scary, take comfort in the fact that you will still be able to act on your own behalf, and if your agent does something you do not like, you can cancel the appointment. This means that you can go out of town, and if something needs to be done, your agent can do it for you.
How do I protect my loved ones after I am gone?
Unfortunately, no one is immortal. At some point in time, we will all pass away. Although you will no longer be with your family, that does not mean that you cannot have a direct impact on your loved one’s financial future. A trust is a great tool for holding the money and property you want to give to your loved one. Whether the trust is created under a revocable living trust or as part of your last will and testament, it enables you to set aside a portion of your accounts and property for the benefit of a loved one. A trust allows you to name someone to oversee the money and property and to instruct that person as to when and how the money and property will be used for the benefit of your loved one. When establishing a trust for your loved one, there are a few different options for how your loved one can receive the money and property:
- Outright distribution. The terms of the trust could either instruct the trustee to distribute all of the money and property to your loved one or give your loved one the right to withdraw all of the money and property in their share of the trust at any time without any strings attached.
- At certain ages. Depending on the age of your loved one, you could dictate that a certain percentage be distributed at different ages, such as one-third at age forty, one-half at age forty-five, and the remainder at age fifty.
- After reaching certain milestones. If there are certain things you want your loved one to attain before receiving access to the money and property, you can instruct the trustee to distribute a certain percentage or a certain amount once that milestone has been reached. Examples of milestones include attaining a degree from an accredited college or university, or successfully completing a drug rehabilitation program.
- At the trustee’s discretion. If you are concerned about what your loved one may do with the money and property, or if your loved one has a high-risk job, creditor issues, an unhealthy marriage, or an addiction, allowing distributions to be made only at the trustee’s discretion is a good way to protect the money and property you have set aside for your loved one. You can include provisions that allow your loved one to receive enjoyment from the money and property while the money and property remain protected from creditors and predators.
These are your golden years. We want you to enjoy them to the fullest. One way to ensure that you live a full and happy life is to address these concerns with a proper estate plan. Schedule an appointment so we can create or update your estate plan for the next chapter in your life. Call 708-448-5169 or email Eileen@KerlinWalshLaw.com.
See also my Facebook Live ‘Lemonade on the Porch’ topic about the Union of Life Insurance and Estate Planning.
[1] 2021 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/.
