Aging the Right Way

A will is part of estate planning

Top Four Estate Planning Tips.

When it comes time to consider downsizing, many seniors and boomers focus on the obvious tasks at hand, including decluttering their home, making preparations necessary to place their home on the market and deciding whether to live in a retirement community or elsewhere.

But what some of them may overlook is one of the most crucial parts of the downsizing process: estate-planning. Estate planning involves officially recording one’s wishes for their end-of-life plans, which includes naming heirs and distributing their estate.

Seniors who forget this task may come to regret it later. Let’s take the example of a senior couple who sells their estate and decides to use the profits to help fund their retirement in a retirement community. One of them passes away soon after, and the inheritance ends up in the hands of a child from a previous marriage. This could cause an unnecessary hardship for the surviving spouse.

Estate planning can help to prevent this and other unfortunate situations as we age. At Upside of Downsizing conferences, our experts help seniors and boomers to take control of their futures with the four necessary components of estate planning. Let’s talk about each of those four steps and how to implement them in such a way as to maximize your retirement years.

Component #1 – Drafting a Last Will and Testament

According to the AARP, two out of every five Americans over the age of 45 do not have a will. Drafting a last will and testament is one of the most important parts of estate planning. If you do nothing else, at least make sure you have your final wishes for how you want to divide your assets in place before you start retirement.

Failure to prepare a will means that the laws of the state where you are residing will determine who inherits your assets. This can include everything from cars to property to savings accounts and other assets you or your spouse may be planning to use to fund your retirement.

Seniors who have a lot of assets will want to work with an estate-planning attorney to draft a will. If you decide to work with an estate-planning attorney, seek out recommendations from family, friends and business associates. If you work with an accountant or financial advisor, ask them for a referral. Many financial planners recognize the importance of estate planning and will be able to recommend reputable professionals who can assist.

If all else fails, seniors can call their state’s Bar Association and request a referral.

Among the things you will need to work out once you find a professional to assist in the estate planning process is whether you and your spouse should have separate wills or a joint will. You also will need witnesses at the time your will is signed and notarized and you will need to name an executor.

Component #2 – Establish a Living Trust

A living trust is a bit different from a will in that it is put into place while the grantor is still alive. Living trusts are a written legal document that is designed to place an individual’s assets into a trust to be used during that person’s lifetime to support them. Following the grantor’s death, the estate is then transferred to designated beneficiaries. Some grantors elect to turn over what is left of their estate to the trustee who managed the living trust for them.

There are several benefits to establishing a living trust. Two of the most notable benefits are:

  • Living trusts avoid probate – Even with a valid will, an estate is subject to probate, which are court proceedings where assets are distributed according to your wishes. With a living trust, assets are not required to go through probate, which can speed up the process of distributing your estate more quickly.
  • Living trusts provide privacy – living trusts offer a level of privacy that a regular will and testament doesn’t offer. Wills are public records, and all transactions resulting from a last will and testament are made public. Living trusts are not public documents and since they are not subject to probate, how you have chosen to handle your estate after your death remains private.

Component #3 – Establishing Power of Attorney

A power of attorney gives an individual legal authority to act for another person in all legal or financial matters.

For a senior who is in good health at the time of their retirement, it may seem odd to grant power of attorney to someone; however, life is unpredictable, and as with so many other things, it’s better to plan ahead to ensure your wishes are being followed should you ever become incapacitated.

Seniors who do not establish a power of attorney are placing themselves – and their family members – in a difficult position should there be an emergency situation and your wishes are not being followed. Without power of attorney, family or friends have no choice but to seek a court ruling, which can be costly and time-consuming.

Power of attorney can be granted to a family member or a trusted friend. The thing to remember is to choose someone who understands your wishes and can be counted on to follow them should you be unable to speak up and make your own decisions.

Component #4 – Gift Giving

An important part of estate planning – especially for those with considerable wealth or those who have no convenient heirs – is planned gift giving. Charitable gift giving is a great way to support organizations and causes you believe in, and to establish a legacy that will carry on long after your death.

As with other components of estate planning, establishing gift-giving strategies is best done with the assistance of a professional. It is important to note that gifts that are designated as payable after the donor’s death are exempt from estate tax, ensuring the gift you leave behind is not subject to additional strings before it can be put to use by your beneficiary.

Want to learn more about estate planning and other tasks related to downsizing? Consider attending an upcoming Upside of Downsizing conference. Learn more here.

Mary Spann

Mary Spann

Mary Spann is the founder and president of Upside of Downsizing®. In addition to her 26 years in construction, interior design, and home staging, Mary also holds a Bachelor’s Degree in Social Work, making her uniquely qualified to assist with the downsizing process. Mary learned the key components of construction and interior design at an early age. Her father was a prominent custom home builder in Minnesota and Texas, and her mother was a successful interior designer and a real estate broker.
Mary Spann

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