Inflation affects all consumers, but older Americans are facing an especially dramatic loss of buying power.
In most cases, people’s lives follow predictable patterns. Your concerns are probably different at 60 than they were at 40.
You may be looking at retiring soon, considering the potential for needing long-term care, or leaving your assets to the next generation or a favorite charity.
Hopefully, you started creating legal documents like medical advance directives, trusts, wills, and insurance policies when you were younger. If you didn’t have them drawn up before, don’t worry- you can start now! Turning 60 is a great time to consider creating a plan or revising previous documents.
Long-Term Care Planning
The costs of long-term care can be staggering. According to Genworth, home health aides averaged $61,000 per year in 2021. Meanwhile, a private room in a nursing home averaged $108,000 annually. Unless you are wealthy, you could easily go through all your assets to pay for your care. Spending down your assets leaves you with two problems.
- Spending all of your money while still needing years of care, forcing you to rely on Medicaid.
- Not being able to leave any assets to heirs.
What are our chances of needing long-term care? According to the Department of Health and Human Services, someone turning 65 today has a 70% chance of needing some long-term care services in their remaining years. Sixty is a good time to consider purchasing long-term care insurance, setting up a Medicaid Asset Protection Trust (MAPT), or combining both. If you are a wartime veteran, there are additional cash assistance programs available through the Veterans Administration that you may also explore.
By planning before a health care crisis, you have more options for protecting and passing on your assets. A MAPT is a specially designed irrevocable trust. A portion of your estate would transfer to the trust and the remainder would stay in your name or be held in a revocable trust.
Living Will and Durable Power of Attorney
Doctors and your loved ones want to choose the therapies you would choose for yourself. A living will tells people what treatment you would want in certain situations. A living will can include a Do Not Resuscitate directive, but often it describes other cases too.
Of course, you can’t predict every medical situation that could occur, so some decisions must be made as they come up. A durable power of attorney names a person to make these decisions on your behalf. If you named a person as your medical proxy twenty years ago, the relationship or shared values that brought you together might have changed. You may no longer feel they understand your needs or goals. You can name another person you want acting on your behalf in a durable power of attorney. You can have two different people make financial and medical decisions on your behalf.
Revocable Living Trusts and Last Wills and Testaments
After you pass away, your property transfers to your heirs. However, sometimes this process gets complicated, ruining relationships and costing a lot of money in probate fees. To avoid that happening to your estate, clearly outline who gets what asset and how you want it distributed. For example, if a house is involved, you may want to specify that the heirs sell the property. Or you could say that the house should not be sold and used in another capacity.
A will can include details beyond asset distribution. You could put in burial or cremation instructions if you want a certain type of service, who becomes the guardian of pets, minors, or adults with cognitive impairment in your care.
A trust is a method for transferring property. As the grantor or trustor, you give the right to a trustee to manage the assets for the beneficiaries. The main benefit of a trust is that they avoid probate proceedings, so the executor can start distributing property immediately. Another advantage is that they can often significantly reduce estate taxes, so your beneficiaries receive a larger percentage of your estate.
Getting Started and Reviewing
The first step in the process is checking what documents you already have. Starting from scratch can feel daunting, but we can walk you through the process. If you already have some plans, start thinking about how your life has changed since you created them. If you married, divorced, or have new grandchildren, you will want to revise old legal documents. Even if your life didn’t change, laws probably did. The strategy from years ago may not be the best anymore. We will review everything and update anything that should change. The more frequently you update these documents, the easier estate administration and probate will be for your family. Please contact us at 914-498-8709 and schedule a consultation to discuss your legal matters.