Estate Planning for Seniors

In our last installment, we explored estate planning for established families. This article moves to the next stage, planning for seniors, where the need to plan for younger generations becomes secondary.

At this stage, the focus of estate planning shifts back to seniors and the need for additional protection and oversight. For couples in this stage of life, priorities often move from travel and wealth accumulation towards care needs and preserving assets for long-term financial security. Planning for younger generations has not gone away, but it is important to recognize that, as we age, we may require more assistance with asset management and financial decision-making.

Investment portfolios tend to become less growth-oriented and more conservative. A couple’s assets typically include their home, retirement accounts, and investment accounts. Those investments are no longer in a “no touch” growth mode and are now being used for ongoing spending needs. Estate planning at this stage centers on meeting the couple’s own financial needs throughout retirement while maintaining a plan for the long-term benefit of the children and grandchildren.

Recognizing that abilities may diminish, the time to address that possibility is before it before it becomes a serious concern. Adding layers of protection within an estate plan and clearly identifying the circumstances, along with the identification of the triggering mechanisms, can help create a more secure and less worrisome future. Doing so not only protects seniors from costly errors in judgment but may also help preserve the plan for future generations.

For seniors concerned about potentially diminishing abilities, a typical estate plan should include:

• Wills will likely, but not necessarily, contain mirror provisions that designate specific bequests to individuals or charities and direct the remaining assets to a trust for the benefit of the surviving spouse, followed by the children. Specific bequests should be considered carefully and discussed with family. The sudden appearance of a large bequest to “a new friend” may be a tip off that there is elder financial abuse occurring.
  
  
• Trusts may provide the surviving spouse with more restricted access to trust assets for purposes of health, maintenance, and support. The surviving spouse can still have the power to direct how assets should be distributed upon the second death without having the ability to alter the overall plan.
  
  
• Durable Financial Powers of Attorney allow one spouse to manage financial, banking, and tax matters if the other becomes ill, incapacitated, or unavailable. Naming a second person to serve as a co-agent provides protection from the spouse being taken advantage of by unscrupulous third parties.
  
  
• Health Care Directives, including Living Wills, Health Care Powers of Attorney, and HIPAA Authorizations, become more important as end-of-life decisions become more likely. Consideration should be given to selecting those more capable of making those decisions, and not reluctant to enact a parent’s instructions at an extremely difficult time.

While a Will remains a personal and private document, there is no prohibition on discussing its terms with loved ones. The decision-making authority remains with the individual but having a trusted family member provide guidance and listen to the explanation for why the new gift has appeared may alleviate disputes after death. While each spouse typically serves as executor for the other, adding a co-executor also may allow for a smoother administration of the estate.

As in earlier planning stages, the ability to direct where assets pass at the second death is important because the needs of the children or grandchildren may change substantially after the death of the first spouse. Updating an estate plan as a senior may also involve revisiting the terms that were previously established for distributions to children or grandchildren as those individuals are now more mature and established. Their ability to handle an influx of a large inheritance is likely to be less problematic than when the child/grandchild is 40 than it was at 21.

Identifying a succession plan for trustees becomes increasingly important as the likelihood of change grows. As with the will, the surviving spouse may serve as successor trustee but adding a co-trustee may allow for smoother administration of the trust.

For seniors, most decisions are made by the family as a unit, but the spouse has the main responsibility. Identifying the best-placed family member to help understand the situation and the options can relieve some of that burden when the spouse may be too emotionally close to the situation to make critical decisions objectively.

Revisiting an established estate plan to address concerns about taking too much financial risk, not having the ability to make critical decisions, or being free from outside influence, is essential to ensuring long established goals remain intact. Protecting oneself and a spouse from mistakes that may arise from diminished capacity should be a primary consideration during this stage of life. At the same time, preserving a plan for passing wealth to future generations remains an important objective.

Achieving this balance requires honest conversations and careful planning with trusted financial advisors and estate planning professionals.

If you would like to schedule a consultation to discuss your estate planning needs, our Estate Planning team is here to help.