Whether you are young and single or a senior over the age of 65, there are different tools you need in your estate planning tool box to make sure that you have all your planning in order. As we age, circumstances change and the need to change your estate planning is also necessary.
- Young and Single – I have written about this on several occasions, and it always surprises me when people don’t realize that when a child reaches the age of 18, their parents’ rights go away because they are an adult. This means that no one has the right to make financial or health care decisions for an adult child. Therefore, it is important to have, at the very least, a Last Will and Testament, Durable Power of Attorney, Living Will and Health Care Surrogate Designation. Although you might think you do not have anything, so why do you need these documents, you may be overlooking the fact that you have life insurance, or a vehicle, or a bank account which is solely in your name. If you are involved in an accident and become incapacitated in some way, and you do not have a Durable Power of Attorney and Health Care Surrogate Designation in place, your parents or other loved ones may have to file for guardianship over your person and property in order to make financial and health care decisions for you. This is a costly process that could be avoided by having the proper documents in place. For more information about why you want to avoid guardianship, check out this blog post - http://ohalllaw.com/2011/09/why-is-a-guardianship-necessary/.
- Young and married (or in a committed relationship) – you may have just gotten married, or perhaps you do not see the need to get married, but you and your significant other are living together, sharing finances, maybe even purchased a house. Once we are in a committed relationship, we usually start acquiring assets and these may need to be allocated among two families in the event that something happens to both of you at the same time. Again, a Last Will and Testament, Durable Power of Attorney, Living Will and Health Care Surrogate Designation should be prepared for both parties so that, in the event of a sudden illness or accident, the surviving spouse/significant other and/or the parents of either party, have the proper documents in place to help make decisions for the other person or their estate. Also, it is important to note that, just because you are married to someone does not give you the right to make health care and financial decisions for the person – have you ever heard of Terry Schiavo? She was married and 26 years of age when she collapsed in her apartment from cardiac arrest and became unconscious. She was diagnosed with being in a persistent vegetative state about a year later and was on a feeding tube . Her husband and her parents fought a long and expensive battle in guardianship court over who would be her guardian, who would make health care decisions, and whether Terry would have wanted the feeding tube removed, given the state that she was in. All of this could have been avoided if Terry had a Durable Power of Attorney, Living Will and Health Care Surrogate Designation in place.
- Married with young children – the next stage of financial and estate planning occurs when a couple of have children together. While the need for the other documents discussed above are still important, equally as important is the need to nominate a guardian for the minor children, and the need to nominate someone who can manage your assets for the minor children should you die. Should both parents pass away, a court will appoint a guardian over the person of the children to handle health care decisions, maintenance and welfare of the children. Many couples with minor children also have a Revocable Living Trust in place to handle the assets for the children. A revocable trust can specify that the money be used to pay for any bills realted to health, maintenance and welfare and that the money be distributed to the children as certain ages (for instance, 1/3 at age 25, 1/3 at age 30 and 1/3 at age 35) rather than giving a lump sum at one age. A revocable trust avoids probate of the assets at death whereas a Last Will and Testament presumes that assets will go through probate. Confused about what I mean? Check out this blog post - http://ohalllaw.com/2012/12/avoiding-probate-everyones-doing-it-or-are-they/. Equally important is making sure that you have life insurance in place so that, if you pass away, your spouse and/or minor children have the resources to continue on without you. Check out this blog post to understand when and why you might want to consider life insurance - http://ohalllaw.com/2016/03/do-i-need-life-insurance/
- Going through a D-I-V-O-R-C-E? You may want to consider updating your planning documents. In Florida, any reference in your Will, Durable Power of Attorney or Health Care Surrogate Designation to an ex-spouse is as if the ex-spouse died before you (so your next choice would be in line to make those decisions). However, what if you did not list a back-up to your ex-spouse? Or what if you had a trust with your ex and now you (and your assets) have gone separate ways? You should definitely consider updating your estate planning documents.
- Middle age stage of life – I hate that term, “middle age”. Makes me feel so old. But, as you reach your 40’s and 50’s, not only is it important to make sure that the estate planning documents we discussed previously are done (or are up-to-date), but you should also consider purchasing long term care insurance to help cover the cost of long term care in assisted living or nursing home. The younger you are, the less expensive the premiums. Not sure about why you need long term care insurance? Check out this blog post - http://ohalllaw.com/2012/07/why-do-i-need-long-term-care-insurance/
- Over 59 ½? Are you an empty nester? At this point, it is important to make sure you have a thorough review of your retirement planning. Each type of deferred compensation plan such as an IRA, 401(k), SEPP, etc., has rules and regulations that govern when you can withdraw money and how that money gets passed on to heirs after your death. Additionally, if you have not already done so, you should consider the basic documents – a Last Will and Testament, Durable Power of Attorney, Living Will and Health Care Surrogate Designation. You haven’t done that already? What are you waiting for??? I’ve already discussed the importance of each document and what their purpose is. Equally important is beginning the planning for future long term care – if you are still healthy, consider looking at long term care insurance. You might also have parents that you are having to take care of at this point (or maybe earlier) – both you and your parents should consider meeting with an elder law attorney to discuss asset protection planning for future long term care.
- The Golden Years – age 65 and over. As I have stated previously, everyone should have the basic documents and if you have waited this long, and haven’t had a problem, count yourself lucky. But please, go get your estate planning documents prepared. As a society, we are living longer, and there are more of us having to go into assisted living or nursing home care (or receiving care at home). Chances are, you may reach a stage where you need help with financial and health care decisions and you do not want your family having to go through the expense of filing for guardianship in order to make those decisions for you. If you already have the documents, and it’s been awhile since they were prepared, you may want to consider having them reviewed to make sure they still do what you need them to do. And finally, if you have concerns about long term care and how to pay for those expenses, you should seek the advice of a qualified elder law attorney to discuss your concerns. Not sure how to choose an elder law attorney? Click this blog post - http://ohalllaw.com/2014/10/choosing-elder-law-attorney/.
I hope that these stages of planning give you an overall idea of when it is important to see your financial and/or estate planner. An estate planning attorney can help you create and/or update your plan, advise you through issues regarding income and estate tax, and help you plan for long term care issues in the future. To schedule a complimentary phone consultation with Attorney Laurie Ohall, please contact her office at 813.438.8503.