Most people, by the time they reach their mid-50s, are enjoying an empty nest. Kids are on their own, probably either graduated from college and starting a career, or already in stable jobs or careers and even thinking about a family of their own some day. This is also the time when empty nesters start thinking about the next 20 years…and retirement…and hopefully, estate planning.
What is Estate Planning?
First, understand that an “estate” is simply everything a person owns, including money, investments, and most personal property. When a person dies, where does it all go? Ideally, it will go to a person’s named heirs: children, siblings, other family members, etc. The key word here is “named.” Estate planning is simply the formal, legal procedure that makes sure the right people get your money and your property. Estate plans may be as simple as a legal document called a will, which lists who gets what. Other estate plans may include trusts, which are longer documents with specific directions about how an estate should be divided and distributed. Trusts typically allow an estate to bypass the probate (more on that below) process.
Trusts come in different forms, including irrevocable, which means once it is signed by the person who created it, there’s no going back. Revocable trusts, on the other hand, can be altered or changed by the person who created it, until he or she dies.
What is Probate?
Laws vary from state to state, but probate in any state is basically the legal process in which a will is reviewed by the courts, with the help of a probate attorney or executor (the person named to be in charge of distributing the assets, paying off bills, and finishing up taxes and other business of the decedent) in order to figure out how the decedent’s assets are distributed and to whom. If there is no will, the process is more complicated. If there is a will (or better yet, a trust), the probate process is usually much simpler, shorter, and less expensive (yes, it costs money to go through the probate process).
At the end of the day, getting your estate situated by the time you are in your 50s is a good idea. If for some reason your mental or physical health declines rapidly, or in the event of accidental death, everything can already be taken care of and your heirs will have a significantly easier time wrapping up legal loose ends after you are gone.
How Estate Planning and Long-Term Care Planning Are Connected
Some recently published statistics the the U.S. Department of Health & Human Services illustrate just how important long-term care planning is, and why your estate planning should be done sooner, rather than later:
- Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years
- Of those turning 65 today who do need long-term care, 20% will need it for more than five years
- Women need care longer (3.7 years) than men (2.2 years)
There are ways to protect your estate (think, real property, certain investments, savings, etc.) from being depleted in the event you need long-term care. In other words, it is possible to be prepared for the potential costs of long-term care and protect your estate for your heirs.
May is National Elder Law Month, which means that attorneys across the U.S. are offering pro bono (free) assistance to low-income and other seniors who need help protecting their assets and preparing for the possibility of long-term care. For more information, visit www.naela.org.
If you have questions about long-term care coverage or how NPFBA can help serve you, feel free to reach out to us via our website, phone, email or schedule a zoom meeting and let’s grab some face time!