When you are nearing retirement you may be looking forward to having extra time to pursue activities you enjoy, such as gardening, reading, traveling, and spending more time with your family. You might also be wondering how you will be able to make the most of the assets in your estate and pay for assisted living if it ever becomes necessary for you or your spouse. You may also be thinking about how to revise any estate plans you have created previously.
Risks of Failing to Have an Estate Plan
If you do not have an estate plan, you are at risk of losing assets in your estate, disinheriting your spouse, and having decisions made for you by a court rather than by you.
If you ever suffer from an accident or illness that renders you unable to manage your finances or make decisions regarding your medical care, failing to have important estate planning documents signed in advance means that you may not receive medical care according to your wishes.
A common misconception many people have is that if they become incapacitated their spouse or closest relatives will be allowed to make financial and medical decisions for them. This is not the case. If you do not have essential estate planning documents declaring your wishes for medical treatment and appointing a person to make decisions for you in the event of incapacity, a court may be asked to make important financial medical decisions instead and may appoint a person to manage your affairs.
Distribution of Assets With No Will
If you pass away without a will, your assets will be distributed according to one-size-fits-all state statutes. If you have children, your children may receive a large portion of the marital estate, leaving your spouse struggling with expenses.
Careful estate planning strategies ensure that your assets are distributed according to your wishes.
Updating Your Estate Plan
If you already have an estate plan, periodically reviewing it once a year or when you experience any life changes will ensure that your plan reflects your current wishes.
When you are nearing retirement it is a good time to speak with an attorney about your plans for retirement and any major life changes you have experienced that could influence your estate plan.
If you need to amend your estate plan documents, you should consider discussing it with an attorney. The following are examples of life changes that may make amending your estate plan necessary, especially when you near retirement:
- you have divorced;
- you have remarried;
- your children have married and/or have children of their own;
- a child of yours is contemplating divorce; or
- a child or grandchild of yours is receiving government needs-based assistance.
Planning for Future Care
When you are planning for retirement, it is important to consider how to pay for the costs of long-term care. Planning ahead can save a large portion of your estate that could otherwise be spent on medical care. Residential care in a nursing home can cost on average around $7,000 per month (in some areas as much as $25,000 per month).
If you or your spouse need long-term care unexpectedly, you may be in a position where you need to do Medicaid crisis planning. Medicaid has a 5-year look back period (2.5 years on California) for any asset transfers that can delay the start of benefits for an applicant who is otherwise qualified. Having a plan in place well before a need for residential care arises can prevent penalties and delays in receiving benefits.
Contact an Experienced Estate Planning Attorney
If you have questions about estate planning when nearing retirement, contact attorney Nina Whitehurst at Cumberland Legacy Law, located in Crossville, Tennessee, by calling (931) 250-8585 or fill out our online form.