Estate Planning for Nearing Retirement

Serving Families and Individuals throughout Pleasanton, California and the Surrounding Areas

Just a moment ago you were in the thick of your busy, busy Peak Earning Years. Now, you can see a new adventure is rapidly approaching your front windshield. What is it? Retirement. Are you getting ready? Is estate planning when nearing retirement important?

Chances are good that your children have left the nest. Perhaps you are assisting your aging parents with their personal, health care and financial responsibilities.

As in your Peak Earning Years, this would be a good time to create (or revisit) your estate plan, and make sure your adult children and parents have their legal ducks-in-a-row, too.

Many married couples often mistakenly believe that they can automatically make personal, health care and financial decisions for one another should either spouse become legally incapacitated due to a serious injury or illness. Nothing could be further from reality!

Without proper estate planning in advance to appoint your spouse as the incapacity decision-maker, he or she will not have legal authority to make even fundamental decisions for you (or affecting both of you). For example, medical privacy laws may bar access to your medical records and the ability to consult with your attending physician, financial laws limit control over your finances, and IRS regulations will prohibit filing a “legal” joint income tax return … for starters.

Unless you legally appoint the decision-maker of your own selection in advance through proper estate planning, then a probate judge will select one for you. While the judge will likely appoint your spouse, the probate court process to accomplish this is expensive and lengthy (it employs at least three attorneys), discloses your private personal and financial information to the public record, and is a real hassle for your spouse or children.

Did you know that in the absence of proper estate planning, your assets may be distributed after death based on “one-size-fits-all” state laws written for people who do not have their own estate plan? Of course, this impersonal estate plan written by state lawmakers may not reflect your own unique circumstances and objectives for your spouse and assets. It also often involves a court process called probate, a burdensome, public, expensive process to transfer property out of deceased person’s name.

Fortunately, we can help you avoid probate and replace that impersonal, state-written, one-size-fits-all estate plan with one we design together for your unique circumstances and objectives. We even help you coordinate the beneficiary designations on your life insurance and retirement plans with your estate plan to avoid unpleasant, unintended consequences, and ensure that everything is properly integrated.

Now, let’s consider something no married couple wants to think about…What if one spouse dies and the other remarries?

Well, if you want to risk losing about half of what you have should the remarriage not work out or disinheriting your own children and grandchildren, then do nothing. 

The risk is greatest when a wife passes first, statistically speaking. In a recent University of California study, researchers found that 60% of widowers are involved in a new relationship within two years after losing their wives, while only 20% of widows have a new relationship. According to the U.S. Census Bureau, men are 10 times more likely to remarry after age 65. And the average time before they are remarried is just 2.5 years. When dad remarries a new wife some 20 years his junior, that can trigger all kinds of drama in the family, to say the least.

When it comes to your children and grandchildren, great care should be given to protect any inheritance for your children in the case of a remarriage. Through proper estate planning, you can ensure that a surviving spouse is provided for as appropriate (based on your assets and values), and also ensure that your children aren’t later disinherited if a spouse remarries down the line. 

You can also protect your children (and grandchildren) from themselves as it relates to their inheritance. Wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited. In addition to good old-fashioned squandering, an inheritance can quickly vanish through divorces, lawsuits and bankruptcies. We can help arrange for your assets to be distributed to your children or grandchildren through an inheritance trust to protect them from the potential pitfalls that come along with inheriting wealth and property.

Finally, what is your plan to pay for long-term care, if you need it?

Have you noticed how expensive the continuum of care is? From in-home assistance to assisted living to skilled nursing the expenses can destroy savings and investments created over a lifetime of hard work and thrift.

Now that you are planning for retirement, do not delay. Consider a long-term care insurance policy while you are still able to qualify physically and mentally. Some versions of coverage only pay if you need long-term care assistance, but others can now do double-duty and turn into life insurance if you do not need such assistance. That is a popular alternative to traditional long-term care insurance.

There is a 70% risk of needing long-term care once you reach age 65. Curiously, 70% of people think they will not be among those 70% needing care (i.e., denial) and 70% of people think Medicare will pay for it (i.e., ignorance)! We do not want to be in that 70% who are in denial, ignorant or both.