It’s never too early to start thinking about the future. Putting key legal documents in place can give your loved ones clear guidance and help ensure your wishes are respected when you can’t make decisions for yourself.
However, a recent survey revealed that nearly 60% of seniors do not have an estate plan. Sometimes, the challenges that come with aging can make it harder for some seniors to plan ahead. It can also be a tough conversation for many families. If that’s the case for you, we’re here to help guide you through every step of the process.
In this blog, we’ll cover what you need to know about estate planning for seniors to help you plan for your own future or assist someone you love.
Why Estate Planning Is Especially Important for Seniors
As you age, it’s always a good idea to ensure your wishes are clearly written down and legally protected, but estate planning isn’t just for seniors or the wealthy; it’s something almost every adult can benefit from.
Here are some key reasons why estate planning is especially important for older adults:
- Helps Ensure Wishes Are Honored: An estate plan allows you or your family member to decide, in writing, how you want your money, property, and even personal items to be handled should you be unable to make decisions. Without an estate plan, the court may have to make decisions for you based on your state’s laws. In some cases, this might not match an individual’s true wishes.
- Helps Ease the Burden on the Family: Without an estate plan, families are often left making difficult decisions during an already emotional time. It might lead to confusion, disagreements, or delays in handling important matters, like decisions about health or additional assistance.
- Covers Important Health Decisions: It’s normal for our health needs to change as we age. An estate plan allows you or your loved one to plan for situations where you might not be able to speak for yourself, like outlining the type of support you would want if an unexpected health concern occurs.
- Helps Protect Seniors Against Financial Abuse: Recent surveys show that older adults are increasingly being targeted for scams and financial exploitation. Estate planning for seniors may help safeguard you or your loved ones from being taken advantage of, so it’s a good idea to keep your documents updated, and only share details with people you trust. You should also review your estate plan every few years, or more often, if your situation changes.
- Addresses Potential Support Needs: Sometimes, age-related changes may require us to seek additional help for ourselves or our aging parents. Estate planning can help seniors and their families prepare for these changes by outlining how support needs should be handled in the years ahead. Consider working with a financial advisor or elder law attorney to help create a plan that reflects your wishes and circumstances.
Core Components of an Estate Plan
As you plan ahead for yourself or help your aging parent, understanding the main parts of an estate plan can help you make an informed choice.
Here’s a closer look at several key components of estate planning for seniors and what each one means:
Will
A will is a legal document that outlines what should happen to a person’s belongings after they pass away. You or your loved one can also name a trusted person to carry out these wishes and help ensure they’re honored and respected.
Having a will in place can ease the burden on your family and help prevent disagreements or legal disputes down the line. An elder law attorney can help you create a will that reflects your unique situation and personal wishes.
Trust
A trust is a legal arrangement that allows a person to decide how their financial assets, like a home, savings, or investments, should be managed and distributed. It typically involves a legal agreement with a trustee, someone trusted to manage these assets on behalf of chosen beneficiaries, like children or grandchildren.
One potential benefit of a trust is that it gives beneficiaries access to these assets without going through lengthy legal processes, such as probate.
Common types of trusts:
- Revocable (Living) Trust: A revocable trust allows you or your loved one to manage assets for as long as possible and decide who should receive them later on. This type of trust can be updated at any time to reflect current wishes or changing needs.
- Irrevocable Trust: As the name suggests, an irrevocable trust typically can’t be changed once it’s been set up. When someone places assets in this type of trust, those assets are no longer considered part of their personal estate. Depending on the laws in your state, an irrevocable trust may offer valuable financial benefits.
- Special Needs Trust: If you have a loved one with a disability, a special needs trust may allow you to set aside money for additional support without affecting their ability to receive government benefits like Medicaid or Supplemental Security Income (SSI).
Power of Attorney
A Power of Attorney is a legal document that grants someone you trust the ability to make decisions on your behalf. This person, known as the agent, can act in your best interests should you become unable to make decisions for yourself.
Types of Power of Attorney:
- Durable Power of Attorney: This type of power of attorney remains in effect even when someone cannot make decisions. It helps ensure your chosen person (called an agent or attorney-in-fact) can step in and assist with managing bills, handling bank accounts, or making medical decisions on your behalf when needed.
- Springing Power of Attorney: A springing power of attorney goes into effect only when a specific event happens, like when a doctor confirms that a person can no longer make decisions for themselves. Unlike a durable power of attorney, it only becomes active when necessary.
- General Power of Attorney: A general power of attorney permits an agent to handle various legal and financial matters on your behalf. These may include signing documents, filing taxes, or buying or selling property. However, it typically ends if you become incapacitated, unless it is specifically made durable.
- Financial Power of Attorney: This power of attorney focuses on money-related matters. It allows you to appoint someone to pay bills, manage accounts, collect benefits, or make investment decisions on your behalf.
- Medical Power of Attorney: A medical power of attorney (also called a Health Care Proxy in some states) allows someone to make medical decisions for you should you become unable to do so yourself. This might include decisions about treatments, surgeries, or long-term support.
Probate Court
Probate court refers to a legal process that usually takes place after someone passes away to ensure that their estate, which includes their money, property, and belongings, is handled properly.
However, if the person has a valid will, the court helps ensure those wishes are followed. Without a will, the court may decide how the estate is managed or distributed based on state-specific laws.
Health Care Directives
A health care directive, also known as an advance directive, is a legal document allowing a person to share their wishes about medical support in case they’re unable to speak for themselves during a medical emergency.
It may contain instructions about the kind of medical support you or your loved one would or wouldn’t want, like life-extending treatments, resuscitation, or the use of a feeding tube. You can also name someone you trust (called a health care proxy or medical power of attorney) to make medical decisions on your behalf.
Beneficiary Designations
Beneficiary designations let you name the individuals who should receive specific assets after you pass away. These are commonly used for things like life insurance policies, retirement accounts, and even some bank accounts. With this arrangement, assets can often be transferred directly to your chosen beneficiaries without going through probate court.
Letter of Intent
A Letter of intent may include practical details about how someone would like their belongings handled, preferences for funeral arrangements, or even guidance on caring for a pet. While it’s not usually considered a legal document, it can still provide valuable direction and help ensure a person’s wishes are understood and respected.
When Should Seniors Start Estate Planning?
You may ask yourself, “At what age should you start estate planning?” Many experts recommend setting up important paperwork as early as possible. That might be in your 50s, 60s, or even earlier.
Most legal documents usually require the person signing them to fully understand what they agree to. If someone you love is experiencing memory-related challenges, such as early signs of dementia, then it may be a good idea for them to begin estate planning for seniors as soon as possible.
Building an Estate Plan: A Step-by-Step Approach for Seniors
While estate planning for seniors offers many important benefits, it’s common for families to feel unsure about where to start.
Here’s a step-by-step guide to help you get started with senior estate planning:
Step 1: Take Inventory of Assets and Debts
Many wonder, “What is the first step in estate planning?” The first step usually begins with getting a clear picture of everything you have. This includes your belongings, savings, property, and anything else of value, along with any debts or bills you’re still paying.
Grab a notebook or open a document and list out the following:
- Property you own, like your home, a car, or land
- Bank accounts and retirement savings
- Life insurance policies
- Investments, stocks, or bonds
- Valuable personal items, like jewelry, heirlooms, or collectibles
- Any outstanding loans, credit card balances, or medical bills
- Digital assets like online banking, email, digital photos, and even your social media accounts
Step 2: Think Through Your Wishes and Goals
Now that you’ve listed what you have, it’s time to think about what matters most. The clearer your wishes are, the easier it will be for your loved ones to carry them out when the time comes.
Here are a few questions to help guide your thoughts:
- Who would you want to receive your belongings one day?
- Are there special items you’d like to leave to someone in particular?
- Who do you trust to make medical or financial decisions if you’re unable to?
- Would you like to support a charity, church, or cause that means a lot to you?
You don’t need to have every answer right away. Take some time to reflect on your goals and wishes and how you would want everything to be handled should you be unable to manage things on your own.
Step 3: Involve Legal Professionals
During estate planning for seniors, you may ask, “Do I really need a lawyer?” or “Who’s the right person to help with estate planning?”
While many people might be able to tackle some aspects of estate planning on their own, it’s always a good idea to speak with a legal professional to ensure everything is done correctly and that you don’t miss any important details.
Here’s who might be most helpful:
- An estate planning attorney can help create wills, trusts, and other legal documents.
- An elder law attorney may help with long-term support, Medicaid planning, or navigating memory-related concerns.
- A financial advisor can help you understand how your estate fits into your financial picture, including tax planning and investments.
Step 4: Communicate Your Plan With Loved Ones
Estate planning for seniors can be an emotional and challenging conversation for many families. However, avoiding this discussion could lead to even more difficult situations in the future. Once your plan is set, it’s important to let your loved ones know about it. This might include your adult children, your power of attorney, or a close family friend.
These conversations can feel uncomfortable at first, but they’re also a chance to explain your decisions in your own words and give your family clarity when they may need it most. It’s also helpful to check in occasionally to ensure everything is up to date and reflects your wishes and preferences, or those of your loved ones.
Common Mistakes and Misconceptions in Estate Planning
Estate planning can help seniors protect their assets and ensure their wishes are honored. Even with the best intentions, seniors and their families may overlook key steps in the estate planning process.
Here are a few common mistakes to watch out for:
- Hesitating to Make a Plan: Some people think estate planning for seniors is only necessary for the wealthy or much older adults. But the truth is, the earlier you start, the more time you have to explore your options and make decisions that truly feel right for you and your family.
- Failing to Update: Once you have your estate plan in place, it’s important to update it regularly to reflect your current situation. If your documents aren’t reviewed regularly, they might no longer reflect your current wishes.
- Choosing the Wrong Fiduciary: When setting up legal documents, it’s important to choose the right people to carry out your wishes, ideally someone who has your best interests at heart. This might be a responsible adult child, a trusted friend, a close sibling, or even a professional like an attorney or financial advisor.
- Not Involving Professionals: While online templates may seem convenient, they might not best suit your specific personal or family situation. Consider working with a legal or financial professional to help ensure you don’t overlook important details or run into unexpected legal issues.
- Overlooking Digital Accounts and Online Assets: It’s important to include digital assets, including email accounts, online banking, and even cryptocurrencies, in your estate plan to help ensure your loved ones can access them if needed.
Common Misconceptions
There are a few beliefs about estate planning for seniors that hold many people back from getting started.
Let’s clear up a couple of the most common examples:
- Estate Planning Is Only for the Wealthy: Many people believe estate planning for seniors is only necessary if you have a large amount of money or property, but that’s not the case. Estate planning can help protect your assets, ensure your wishes are respected, and spare your loved ones from legal complications down the road.
- A Will Is Enough: While having a will is an important part of estate planning, it’s not always enough on its own. A will only takes effect after someone passes away and mostly covers how belongings should be distributed. It doesn’t help if you become unable to make decisions while you’re still living. That’s why it’s also important to have other documents in place to make sure all your bases are covered.
What to Do After You’ve Created Your Estate Plan
Once you have an estate plan in place, make digital copies for backup and store the paperwork in a safe, fireproof place, like a locked cabinet. Additionally, it’s often a good idea to let someone you trust know where to find the documents if needed. You may also want to review your estate plan every few years or after any significant life event, like losing a spouse, moving to a new state, or experiencing changes in your health.
Laws and personal wishes can also change over time. To keep everything up to date and ensure your plan still reflects what’s best for you and your family, consider seeking additional guidance from an elder law attorney or financial advisor.
Let StoryPoint Group Be Your Guide
At StoryPoint Group communities, we understand the unique challenges that sometimes come with aging. That’s why we believe you deserve the best support every step of the way. If you or someone you love could benefit from additional support, we’re here to help guide you.
To learn more about what it’s like to live with us or just to say hello, feel free to contact us or give us a call at 1-844-275-9990. We’d love to hear from you!
