Today’s seniors are tomorrow’s seniors. In just about any scenario, that means they will be moving into a retirement community, assisted living facility, or continuing to live in their own home with help from family members and friends.
Preparing for the future should not be something you put off until tomorrow. Seniors need to create an estate plan that documents how their assets will be distributed in the event of death or if they can no longer manage those assets themselves.
An estate plan is also known as an end-of-life plan or last will. There are many different types of estate planning documents available to seniors today. Each type has its advantages and disadvantages. Make sure to research all your options before proceeding with anyone in particular.
Why Seniors Should Have an Estate Plan
One in three seniors will enter a nursing home at some point in their life. And the average length of stay in a nursing home is two years. Seniors who have lost the ability to make their own healthcare decisions and manage their finances or who have no family members to help them are at risk of having their assets depleted.
This is why it’s so important to have an estate plan in place and to update it as life circumstances change. Your estate plan is your last chance to make sure your assets are distributed the way you want.
You do not want anyone going through the ordeal of trying to figure out what to do with your assets once you are gone. With an estate plan, you can make sure your assets go to the people who need them the most and avoid a lot of headaches for your loved ones. Having an estate plan can also help you avoid expensive probate fees that come with estate litigation.
How to Create an Estate Plan
Begin by listing all of your assets, including any real estate, cash, stocks, life insurance, and anything else of value. Next, write down who you want to receive each of those assets. You can use software to simplify this process.
Once you have your list of assets and their recipients, you can outline how you want those assets distributed. This is known as the distribution method. While it may seem simple enough, creating an estate plan is not a one-and-done process.
Every five years, you should review your estate plan and make any necessary changes. This ensures you stay on track toward your goals while also keeping up with any changes in the law.
What is a Will?
A Will is a legal document that describes how you want your assets distributed following your death. If you have children under the age of 18, you must also name a legal guardian for them. A Will is very useful for people who have already named beneficiaries for their assets.
It is also helpful for people who have minor children or disabled loved ones. A Will goes through probate, which is a court-supervised process in which your Will is proven valid, and a judge distributes your assets according to your Will. The probate process can sometimes take years.
If you own real estate or stocks or have substantial savings, probate could be a lengthy and expensive process. There are ways to avoid probate, but they typically require you to use different estate planning documents.
Living Will/Advance Care Directive
This legal document is also known as an Advanced Care Directive. It allows you to express your end-of-life care wishes to your loved ones and your healthcare team. This can help ease decision-making and disputes among your loved ones when you are no longer able to communicate your wishes for medical care.
Having an Advance Care Directive can help you avoid being placed on a ventilator or receiving other burdensome medical procedures. It can also help prevent family members from fighting over what you would want in those final moments of your life. Having an Advanced Care Directive can help your loved ones make end-of-life decisions that are consistent with your wishes.
It can also help prevent disputes among your loved ones. An Advance Care Directive is sometimes referred to as a Living Will.
A trust is a legal document that you create and fund during your lifetime. You can use trusts to distribute your assets to the people you want to receive them while you’re still living. You can also use them to distribute assets after your death.
Trusts are often used to distribute assets to young children or disabled loved ones who are unable to manage their finances. Trusts can be created in many different ways, with various levels of flexibility.
You can select a trust that is consistent with your goals and matches the distribution method you have outlined for your assets. There are also trusts for special circumstances, such as special needs trusts for disabled loved ones, trusts for minors, and trusts for military members and veterans.
An irrevocable trust is a trust you create during your lifetime. It is fully funded during that lifetime. After you die, the trust is no longer under your control. It is managed by a trustee you name in the trust. Seniors use irrevocable trusts to avoid probate.
They also use them to protect their assets from future creditors, lawsuits, and claims from heirs who might want a larger share of the assets. Irrevocable trusts can be complicated legal documents. If you want to create one, you should work with an attorney who specializes in estate planning.
A discretionary trust is a trust that gives you the power to change the way it distributes assets. It also gives you the power to change the beneficiaries of the trust. You can use a discretionary trust to avoid probate if you have substantial assets.
You also use a discretionary trust to protect your assets from future creditors, lawsuits, and claims from heirs who might want a larger share of the assets.
At some point, everyone is going to die. That’s a fact that we can’t change, but we can make sure that our loved ones are taken care of when we’re gone. This can be incredibly difficult when you don’t have an estate plan in place.
Having an estate plan can save you and your loved ones a lot of heartache and headaches. It can also ensure that your assets go where they need to go. It’s important to remember that the only way you’ll be able to take advantage of these benefits is if you go through with creating an estate plan.