Many milestones in life can serve as reminders to create or review an estate plan. Retirement is certainly one of them. People preparing to retire may need to go over their finances carefully to ensure that they have the resources necessary to live on a fixed income.
The months leading up to retirement are also an ideal time to create an estate plan or modify an existing one. The estate planning decisions people make during the last months of their careers can protect them during retirement and solidify their legacy after they pass.
What estate planning choices are typically beneficial for those preparing for their golden years?
1. Planning for incapacity
As people age, their health may shift dramatically. Some people experience a slow decline in physical capability and cognitive function. Others experience much more rapid changes due to underlying medical conditions, such as Alzheimer’s disease. Planning in advance for incapacity can protect people from vulnerable situations. Durable powers of attorney, for example, can designate trustworthy friends or family members to act as the agent for an older adult who has become permanently incapacitated.
2. Preparing for long-term care
As people age and their health changes, their need for medical and practical support also changes. Many older adults eventually move into nursing homes or require the support of nursing professionals to age in place in their homes. As Medicare does not cover those expenses, people may have to plan in advance to qualify for Medicaid. Moving assets to trusts, taking on co-owners and engaging in asset protection planning can help people qualify for Medicaid and preserve their resources when they cannot live fully independently anymore.
3. Updating testamentary instruments
In addition to planning for incapacity and long-term care, retiring adults may want to revisit the legacy they intend to leave. Their family circumstances may have changed. They may have had a late-in-life baby or may already be grandparents. They may have lost close loved ones or divorced. Changes to the family unit may change a testator’s priorities regarding their beneficiaries and who administers their estate. People may also need to update their documents to accurately reflect the assets that they hold, especially if they transfer certain resources to trusts while preparing for retirement.
Reviewing and updating estate planning documents with a skilled legal team can help older adults better ensure their comfort and the protection of their loved ones as their circumstances change while they age. Retirement is one of several major life transitions that can remind people of how important proper estate planning is.