There are certain times in life when estate planning may become a priority. Many people think about the need to plan when they have children or achieve financial success. For others, the loss of a loved one or a looming medical issue can prompt them to establish or expand estate plans.
For many people, retirement is the first time that they start honestly thinking about what happens when they die. They want to provide for their loved ones and ensure that people remember them in a positive manner. Estate planning prior to retirement is a smart decision. Even those with existing wills may want to review and update their documents.
Why do those getting ready for retirement often need to think about estate planning?
The desire to leave a legacy
As people start thinking about what happens after they die, they often plan ways to leave a positive impact on their loved ones or on the world in general. They may fund charitable trusts or leave resources for their children and grandchildren.
People who do not plan in advance are subject to intestate succession laws that prioritize immediate family members. Those hoping to leave resources for grandchildren or charitable causes generally need to plan carefully.
The need for long-term support
When people retire, they have to adjust to living on a fixed income. They could be at risk of creditors making claims against their property if they fall behind on their financial obligations. They also have to consider whether they can afford long-term care as their health declines.
Qualifying for Medicaid can be quite difficult, particularly if people make transfers or provide gifts to others in the five years before they apply. By making strategic moves prior to retiring, professionals can make it easier to qualify for Medicaid and receive the long-term care they require.
The possibility of decline
As people age, their health changes in predictable ways. Their physical capabilities diminish, and their mental acuity may decline as well.
People may need to plan in advance for incapacitation. They can create advance directives explaining their medical wishes. They can also draft powers of attorney to name people they trust to manage their affairs when they cannot.
Creating or revisiting an estate plan is an important component of preparing for retirement. Older adults may need help identifying the support that they may require and drafting appropriate documents.
