Baby Boomers are growing older and the “greatest generation” from the World War II era are now 80 years of age plus. This should add to financial planning discussions the unpopular topics of failing health and eventually death. What a way to brighten your day, right? However, choosing to plan for these certainties now can improve the quality of life, not only for grandparents and parents, but also children -- potentially for generations to come. What are a few of the questions to consider?
1. Do I want my heirs to deal with the probate process?
This can be costly and is always time consuming. Why not choose now how assets will pass to your heirs? This is easy in the case of IRA’s, annuities and life insurance accounts. Simply review the beneficiaries each year to ensure they adhere to your wishes. In the case of real property, simple fixes such as deeds with life estates may be appropriate. When all else fails, various types of trusts often fill this need. Even checking and savings accounts can have “transfer on death” agreements added to avoid the probate process.
2. Who handles my affairs if I am unable to do so?
A well drafted power of attorney can solve this problem. Planning for death is important, but planning for incapacity of some type is also critical.
3. What happens if you need assistance with daily living activities longer term?
Would you like to remain in your home or would you prefer a facility for this purpose? The answer could be a combination of the two. How will I pay for this care? Will you utilize long term care insurance or make plans to protect assets and attempt to qualify for Medicaid? With assisted living facility and nursing home costs easily exceeding $65,000 per year in most states, this is an important consideration.
4. What about final arrangements?
If you choose burial -- where, how and by whom? Same questions apply to cremation. Are these costs covered?
5. Do I need to protect assets for my heirs?
This relates to question one above. What if you have a spendthrift or special needs heir? Special provisions may apply for financial and physical care.
6. Would you like to assist with the education expenses of future generations?
Plans can be made well in advance.
1. Do I want my heirs to deal with the probate process?
This can be costly and is always time consuming. Why not choose now how assets will pass to your heirs? This is easy in the case of IRA’s, annuities and life insurance accounts. Simply review the beneficiaries each year to ensure they adhere to your wishes. In the case of real property, simple fixes such as deeds with life estates may be appropriate. When all else fails, various types of trusts often fill this need. Even checking and savings accounts can have “transfer on death” agreements added to avoid the probate process.
2. Who handles my affairs if I am unable to do so?
A well drafted power of attorney can solve this problem. Planning for death is important, but planning for incapacity of some type is also critical.
3. What happens if you need assistance with daily living activities longer term?
Would you like to remain in your home or would you prefer a facility for this purpose? The answer could be a combination of the two. How will I pay for this care? Will you utilize long term care insurance or make plans to protect assets and attempt to qualify for Medicaid? With assisted living facility and nursing home costs easily exceeding $65,000 per year in most states, this is an important consideration.
4. What about final arrangements?
If you choose burial -- where, how and by whom? Same questions apply to cremation. Are these costs covered?
5. Do I need to protect assets for my heirs?
This relates to question one above. What if you have a spendthrift or special needs heir? Special provisions may apply for financial and physical care.
6. Would you like to assist with the education expenses of future generations?
Plans can be made well in advance.
This list is certainly not exhaustive but should help you begin this important part of any well-structured financial plan. These issues may not be fun to discuss, especially between parents and children or grandchildren, but that does not make it any less critical. Why work and save for a lifetime and not be a good steward of the assets for those you love most?
Gary James, CFP®, AIF®, CPA
Financial Advisor
Gary James, CFP®, AIF®, CPA
Financial Advisor