According to financial planners interviewed for an article in USA Today, Baby Boomers are neglecting or simply ignoring the importance of estate planning. They are more focused on their retirement and focused on whether they will have sufficient income to provide for their needs and to do what they want during retirement. Ignoring the need to have an estate plan is not just a problem for Baby Boomers — no one really wants to think about their own death. People tend to put off estate planning because they think, “I will do that later.” Unfortunately for some, “later” is too late.
Why Do Baby Boomers Need to Have an Estate Plan?
Estate planning is an important part of your retirement plan. Your estate plan is more than telling your loved ones what you want to do with your property and financial assets after your death. Your estate plan also allows you to take care of your minor children, or grandchildren, and it allows you to make decisions about your medical care in the event you are unable to do so in the future.
What Estate Planning Tools are Available?
Depending on your financial situation and your goals, there are several estate planning tools that your attorney will discuss with you. Each document is designed to meet a specific need in an estate plan.
Durable Power of Attorney – A durable power of attorney allows you to designate a specific person to handle your financial affairs if you become incapacitated. However, discuss this carefully with your attorney. A durable power of attorney may allow this person to act on your behalf at any time. You can limit the actions your power of attorney can take. A power of attorney ends upon your death.
Advance Heath Care Directives or Living Wills – You can appoint a person to make critical health care decisions on your behalf in the event you are unable to do so yourself. This is important if you do not want lifesaving medical intervention in the event you are in a vegetative state or terminally ill.
Last Will and Testament – Your will distributes your assets and appoints someone to handle your financial affairs upon your death.
Trusts – Trusts can be used during your lifetime or after your death to provide financial support for loved ones and protect assets. There are a number of different options depending on your needs and goals.
Beneficiary Designations – It is very important that you designate beneficiaries on your retirement accounts, life insurance policies, and other assets or those assets will be paid to your estate and be distributed according to your Will. This could have serious tax consequences for your estate and your heirs.
Review Your Estate Plan Periodically
If you have completed your estate plan, congratulations — you are ahead of most Baby Boomers. However, you should periodically review your estate plan to ensure that it reflects your current priorities and your current situation. Reasons why you need to review your estate plan include:
Your financial situation changes – As you go through life, your financial situation periodically changes. Hopefully, it improves and you have greater financial wealth. You accumulate more belongings and assets.
Your children grow up – When your children are minors, you need to have a plan in place to provide and care for them should you die before they are adults. Once your children have grown up, many of the protective measures that you used in your estate planning documents are unnecessary and need to be revised to reflect that you have grown children.
You have grandchildren – Just as you provided for your children when they were minors, you may now want to use some of those same protective measures for minor grandchildren. Likewise, as your grandchildren grow up, you may want to revise those terms.
Your health changes – As you continue to age, your medical needs can change. You need to review the provisions you made with regard to end of life care, medical decisions, and death to ensure that they reflect your current medical needs and your desire about health care decisions.
Relationships change – We hope to maintain our relationships with close friends and family throughout our lifetime; however, this is not always the case. Relationships change over time, as do your priorities and perspectives. Your estate plan should reflect your current desires and priorities.
Estate planning can seem overwhelming and complicated; however, consulting with an experienced estate planning attorney can make this process much easier. Your attorney will guide you through the process, explain various documents, and advise you of the best way to ensure that your wishes are carried out upon your death or incapacitation.
For more information we invite you to request a consultation with the attorneys at Estate Law Partners, LLC. Their experience and knowledge can help you have the peace of mind of knowing that you have a plan.