According to a study conducted by Caring.com, the percentage of people aged fifty-five and older who have created a will has fallen from 60 percent to 44 percent since 2019. Although creating or updating your estate planning may seem like a daunting task, a proper estate plan can help address the concerns you may face as a senior citizen. We are here to help you.
Who can help me if I am unable to manage my own affairs?
According to a survey conducted by the US Census Bureau, approximately 69 percent of survey respondents who were age eighty-five and older had at least one type of disability. As you get older, it is more likely that you may need assistance in handling your financial and medical affairs.
A financial power of attorney allows you to choose a trusted person (an agent or attorney-in-fact) to handle your financial matters (sign checks, pay bills, file taxes, etc.). Without a financial power of attorney, a court will need to appoint someone if you need someone to handle financial matters on your behalf. This can take time and money that may not be optimal in the midst of a crisis.
A medical power of attorney allows you to appoint a trusted person as your decision maker to communicate or make healthcare decisions on your behalf if you cannot do so. If you do not have a medical power of attorney, the court may be required to name someone to make these decisions for you, costing your loved ones time and money and infringing on your privacy.
Can someone help me if I am out of town?
A recent New York Times article explored the trend of individuals over age sixty-five traveling more now that a COVID-19 vaccine is available. Whether you are visiting loved ones in another state or crossing countries off your bucket list, you, too, may be traveling more now than you did before. However, the world does not stop just because you leave home for a period of time. A financial power of attorney can allow your agent to handle financial matters on your behalf while you are out of town. Although it may seem scary to allow another person to manage your financial affairs, take comfort in the fact that you can still act on your own behalf if you are able, and if your agent makes a decision you do not like, you can remove them as your agent. This means that you can go out of town and feel assured that your agent can handle your financial affairs, if necessary, while you are gone.
How do I protect my loved ones after I am gone?
Unfortunately, no one is immortal. At some point in time, you will pass away. Although you will no longer be with your family, you can still have a direct impact on your loved one’s financial future. A trust is a great tool to hold the money and property you want to give to your loved ones. Whether the trust is a revocable living trust or a part of your last will and testament, it allows you to set aside a portion of your accounts and property for the benefit of a loved one. You can name someone to oversee the money and property and instruct that person on when and how the money and property must be used. When establishing a trust, there are a few different options for how your loved one can receive the money and property:
We want you to enjoy your golden years to the fullest. One way to make sure that you live a full and happy life is to address your concerns with a proper estate plan. To learn more about the ways in which we can help you and your loved ones, contact us at your earliest convenience.
As a single individual, you may feel overwhelmed when you think about who will step in and make decisions for you if you cannot make decisions for yourself and who will receive your money and property when you die. You may consider your parents or siblings, but depending on whether they are living and the nature of your relationship, they may not be an option. Having an estate plan is important to ensure that your wishes are carried out during your life and after your death. If such worries are preventing you from completing your estate plan, we are here to help you.
Choosing the Right Decision Makers
A time may come when you will need someone to handle financial transactions or make or communicate medical decisions on your behalf. If you have not already chosen someone in a properly executed document, the court will step in and, using state law, choose the person who will make the important decisions for you. Below are a couple of the important roles that, to properly protect yourself, you should name someone to fill.
Agent under a Financial Power of Attorney
The agent in a financial power of attorney is the individual who carries out financial transactions (such as signing checks or opening a bank account) on your behalf. The duration and scope of the agent’s authority are spelled out in the financial power of attorney. No matter whom you choose, it is important that your agent be responsible, keep detailed records regarding the financial transactions they undertake on your behalf, and have the time to dedicate to the role. If you have no family member or friend whom you trust to manage your financial transactions, you can hire professionals to assist you.
Agent under a Medical Power of Attorney
If you cannot communicate or make medical decisions, someone else will have to do it for you. By properly naming this person in a medical power of attorney, you retain control over who will make medical decisions on your behalf instead of allowing a judge to select someone to make such decisions. When choosing this person, you must make sure that they will follow your wishes regarding your medical decisions and are available to make or communicate them. If you have no trusted family member to be your medical agent, consider a close friend or a trusted professional. However, state law may prevent certain professionals, such as doctors, from acting as an agent, unless an exception exists.
Choosing the Right Recipients
If you do not have an estate plan prepared, your state’s intestacy statute will determine who receives your money and property (owned solely by you and not controlled by a beneficiary designation) and the amount each legal heir will receive. Intestacy laws vary by state, but generally speaking, money and property go first to a surviving spouse, then to descendants (children or grandchildren), parents, siblings, and siblings’ children, in that order, depending on who survives you.
If you have a life insurance policy and fail to designate a beneficiary, the proceeds from the policy may be paid to your estate, necessitating the costly and time-consuming probate process, or may go to individuals according to the order outlined in the policy agreement. Similarly, if your retirement account does not have a named beneficiary, that account may also end up going through probate, which may cause unintended income tax consequences or distributed according to the default rules of the account agreement.
Proper Tax Planning
The federal tax system gives preferential treatment to married people. Married couples can take advantage of the estate tax marital deduction and transfer an unlimited amount of money and property, tax free, to the surviving spouse when one spouse dies. In addition, married individuals are allowed to add any remaining part of their deceased spouse’s exemption amount to their own exemption amount. As a single person, you have only your lifetime exemption ($11,700,000 in 2021).
Similar to a married individual, you can give away up to the annual exclusion amount ($15,000 in 2021) without having to file a gift tax return and pay gift tax. However, married individuals can make larger gifts and split the amount between them. For example, Spouse 1 and Spouse 2 can give $30,000 to their child without having to pay gift tax. In this case, a return may still be necessary, but if Spouse 1 and Spouse 2 agree to split the gift, each is technically giving only $15,000 to their child.
Because you can use only your lifetime exclusion amount and the annual exclusion amount, if you are very wealthy, you may need to engage in tax planning earlier and it may be more complex.
We Are Here to Help You
Completing your estate plan allows you to take control by providing instructions about what is to happen during your life and at your death. Estate plans can be drafted in a number of different ways to ensure that your unique wishes are carried out. Call us today to learn more about how we can help ensure that your legacy is protected and that the people and causes you care about are provided for.