Estate Planning for Every Stage of Life

Q. I am a middle age divorcee who lives in a condominium complex with people of all ages, some who rent and others who own. My next door neighbors are a 60-year-old couple who have been married for 35 years, and on the other side of me is a single mom with a daughter in college. The people across the hall from me are newlyweds, and the ones directly above me are an engaged couple, both embarking on their second marriages.

Recently, we had a building get-together and I got to talking to some of the neighbors about Estate Planning and Incapacity Planning, among other things. I was surprised to learn that the daughter of the single mom has her planning done, while the couple married for 35-years does not. I don’t have my estate planning or incapacity planning done either, but I don’t own my condo or have much in the way of financial assets. When the topic came up, I told my neighbors that you answer Elder Law and Estate Planning questions in your newsletters, and that I would ask you about Estate Planning and Incapacity Planning at different stages of life to clear up any confusion. What we want to know is: when is a good time to get Estate Planning and Incapacity Planning done, and why is it important for someone like me, or my neighbors, to have it in their stages of life? Thanks for your help!

A. When most people hear about Estate Planning or Incapacity Planning, they hold the misconception that it is aimed only at older, wealthier people. This is a common belief among many, as a new survey from Caring.com found that only 4 in 10 American adults have a Will, Living Trust, or Advance Directive in place.

What most people don’t realize is that every adult, in every stage of life, should at least have an (comprised of a General Power of Attorney and an Advance Medical Directive with a Long-term Care Directive, and a Real Estate Power of Attorney if you own real estate). Without a properly-drafted and comprehensive Incapacity Plan, if you ever become incapacitated, someone will have to petition the court to have you declared incompetent and become your legal guardian and conservator. Once a person is appointed as your conservator (sometimes called a financial guardian), that person will be required to hold your assets as part of a court-supervised “living probate,” identical to the nightmare of probate that happens after death when a Will goes through probate or when someone dies without a Will – detailed record-keeping, dreaded annual accountings, and all the other complications, hassles, and expenses of after-death probate. But with “living probate,” your conservator has to do all this work for the rest of your life. A simple and inexpensive Incapacity Plan, prepared by an experienced Elder Law and Estate Planning attorney, eliminate the need for living probate by naming people you trust to make legal and financial and medical decisions for you

Once you are in the stage of life where you own any assets, no matter how few, you need an Estate Plan (using a living trust to avoid the nightmare of after-death probate) that will ensure that what you own is distributed upon your death to the beneficiaries you desire. An Estate Plan will not only preserve your legacy, but will help to avert family disputes once you are gone.

Life is full of surprises and whatever your age today and whatever assets you have, it’s wise to have your planning in order. To appreciate the reason you need to have an Estate Plan and an Incapacity Plan in place, here is a breakdown of some stages in life and the relevant planning needs:

Incapacity Planning is Important for Everyone

Once a child turns 18, a parent no longer has the legal right to make financial and medical decisions. Since incapacity can strike anyone at any time, all young adults should establish their Incapacity Planning documents at this time.

In most cases, parents incorrectly assume that if they are paying for college or if the child is still living under their roof, that they have the right to make legal decisions, but that isn’t the case once a child turns 18 and becomes an adult. The Health Insurance Portability and Accountability Act (HIPPA) protects the privacy of all adults’ medical records and may prohibit parents from receiving vital medical information or making informed decisions for the child – even if that child is unconscious and unable to communicate. And, this is regardless of whether the child is living at home or is financially dependent on you.

To avoid this situation, it is important for young adults to set up an Incapacity Plan that appoints trusted individuals to make medical and financial decisions in the event they are unable to do so.

Estate Planning is Often Important for Young Singles

Whether you’re young and single or in a long-term relationship, you should consider creating a Revocable Living Trust if you want your life partner or other desired beneficiaries to inherit your possessions without having to endure the nightmare of after-death probate.

Estate Planning and Incapacity Planning for Those Who are Engaged

A premarital (or prenuptial agreement) isn’t only for people who have a lot of money. It can be essential for anyone entering into a new marriage with children (minors or adults) from a prior marriage. The most important reason for a premarital agreement is to determine how your estate will be distributed if one of you dies during the marriage, especially if your marriage becomes a long-term marriage (which, of course, is the intended goal of all marriages).

Even if you have already completed Estate Planning and/or Incapacity Planning of your own, a new marriage typically calls for significant changes to your plan.

Estate Planning and Incapacity Planning for Newlyweds

If you don’t have documents in place, now is a good time to get them done. As a newlywed, it’s wise to specify the person you’d like to make financial and medical decisions on your behalf if an accident incapacitates you and your spouse.

If you already have your documents in place, be sure to revise your Financial Power of Attorney, Advance Medical Directive, and HIPAA release, if you want to name your new spouse to handle your financial affairs and make medical decisions for you if you become incapacitated.

And of course, all married couples who have any assets need an estate plan to determine who inherits their assets upon death, particularly if both spouses die at the same time.

A lot of people think when they get married, those things change on their own, but they don’t.

Estate Planning and Incapacity Planning for New Parents

New parents always need to update their Estate Planning documents or create new ones. As a parent of a newborn, you may not think you have the time, but it’s one of the most important things you can do to care for your child in the event some tragedy befalls you. For new parents, one of the most important documents is a Will, because that’s the only document that can nominate
guardians for your minor child – a person or couple to raise your child if tragedy strikes

Naming a guardian should be a top priority after the birth of a child. If you don’t name a guardian, a court will determine who raises your child. If your guardian(s) don’t live nearby, you may also need a Child Protection Plan™

Retirement Planning and Long-Term Care Financial Planning in The Middle Years

If you are an empty nester in your 40s or 50s, you may be feeling comfortable financially. Perhaps you’ve accumulated some wealth and you’re thinking about retirement. This is when your Estate Planning strategy and retirement planning efforts must complement one another.

Whether your retirement is coming up soon or many years away, it is important to protect your hard work and your golden years with effective retirement planning and long-term care financial planning. Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my company Lifecare Financial Services, LLC (in business since 2006). Learn more here.

In addition, at this stage you may need to make changes to your earlier estate plan, if you have one. If you don’t, you probably have more wealth and a Revocable Living Trust will come in handy in managing your estate.

If you or a loved one is nearing the need for long-term care or already receiving long-term care, don’t put off planning for it. Nursing homes in the DC Metro Area cost $10-12,000 a month. To protect your family’s hard earned assets from these catastrophic costs, the best time to create your long-term care strategy is before you actually need long-term care. If you’re over 45, we recommend that you begin your planning now. Even if you are currently receiving services for yourself or a loved one, it’s still not too late to plan.

Estate Planning and Long-Term Care Planning During the Golden Years

If you’re a senior or ill – or have parents that are in this life stage – you will want to be sure that you have your Estate Planning and Incapacity Planning and Long-term Care Planning documents in place and, if you already do, that they are up-to-date and reflect your current assets and your current wishes. Make sure your loved ones have copies of your important papers or know where to locate them.

As a senior, your kids are likely all grown, if you have any, and you may have grandchildren or even great-grandchildren. You need to review your estate plan at least every 5 years and make necessary updates accordingly.

Again, if you don’t have long-term care planning in place, now is certainly the time to get started!

As you can see, at every stage in your adult life you need an effective Estate Plan and Incapacity plan. Please call us today if you don’t have your planning in place or if you would like to make any updates.

Estate Planning is Important for Everyone

We here at the Farr Law Firm have strategies in place to help all types of people at all ages to plan for themselves and their loved ones. By planning in advance, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their family’s needs will be adequately and properly addressed. If you or members of your family have not done Incapacity Planning, Estate Planning, or Long-term Care Planning, or if a loved one is beginning to need more care than you can handle, please contact us as soon as possible to make an appointment for a no-cost initial consultation:

Estate Planning Fairfax: 703-691-1888
Estate Planning Fredericksburg: 540-479-1435
Estate Planning Rockville: 301-519-8041
Estate Planning DC: 202-587-2797

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