Planning for Retirement
Serving Families and Individuals throughout St. Petersburg and Tampa Bay, Florida and the Surrounding Areas
You have arrived. Just a moment ago you were Nearing Retirement. When did you get to this place in life so quickly? Yikes, what do you need to do right now in preparation for that day?
This is often an exciting, yet bittersweet time of life.
Chances are good that all of your children have left the nest with lives and growing families of their own. If they are living, perhaps you are becoming parents to your parents (or the surviving parent) just like their parents before them. This includes taking care of their personal, health care and financial responsibilities.
This is often an exciting, yet bittersweet time of life.
As when you were Nearing Retirement this would be a good time to create (or revisit) your estate plan, make sure your adult children and parents have their legal ducks-in-a-row, too. After all, you likely have witnessed what can happen when families are not up-to-code with their estate planning.
Unfortunately, many married couples mistakenly believe that they can make personal, health care and financial decisions for one another should either spouse become legally incapacitated due to a serious injury or illness. Nothing could be further from reality!
Without proper estate planning in advance to appoint your spouse as the incapacity decision-maker, he or she will not have legal authority to make even fundamental decisions for you (or affecting both of you). For example, medical privacy laws will bar access to your medical records and the ability to consult with your attending physician, financial laws limit control over your finances, and IRS regulations will prohibit filing a “legal” joint income tax return … for starters.
Unless you legally appoint the decision-maker of your own selection in advance through proper estate planning, then a probate judge will select one for you. While the judge will likely appoint your spouse, the probate court process to accomplish this is expensive (it employs at least three attorneys), discloses your private personal and financial information to the public record and is a real hassle for your spouse.
Did you know that in the absence of proper estate planning, your assets may be distributed after death based on “one-size-fits-all” state laws written for people who do not have their own estate plan? Of course, this impersonal estate plan written by state lawmakers may not reflect your own unique circumstances and objectives for your spouse and assets.
In fact, depending on how you titled your assets and how your beneficiary designations are arranged, you may disinherit your own spouse and force your spouse to sue your estate!
Now, let’s consider something no married couple wants to think about.
What if one spouse dies and the other remarries?
Well, if you want to risk losing about half of what you have should the remarriage not work out or disinheriting your own children and grandchildren, then do nothing. On the other hand, it is best to go into a new relationship with both eyes open.
In short, the surviving spouse will need to have a legally enforceable premarital agreement inked before saying “I do” on his or her wedding day.
In a recent University of California study, researchers found that 60% of widowers are involved in a new relationship within two years after losing their wives, while only 20% of widows have a new relationship.
According to the U.S. Census Bureau, men are 10 times more likely to remarry after age 65. And the average time before they are remarried is just 2.5 years. When dad remarries a new wife some 20 years his junior, that can trigger all kinds of drama in the family, to say the least.
As you can see, planning for being single again includes planning for any new relationships on the future, while preserving (and protecting) the relationships you already have.
When it comes to your children and grandchildren, great care should be given to protect any inheritance both for them and from them. For starters, wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited. In addition to good, old-fashioned squandering, an inheritance can quickly vanish through divorces, lawsuits and bankruptcies.
Fortunately, with proper (and very careful) estate planning, you can provide an inheritance that is protected for and even from your own children and grandchildren. Remember, two things you cannot choose in life are your own folks and the spouses of your children.
What is your plan to pay for long-term care, if you need it?
Have you noticed how expensive the continuum of care is? From in-home assistance to assisted living to skilled nursing the expenses can destroy savings and investments created over a lifetime of hard work and thrift.
Now that you are planning for retirement, do not delay. Lock-in a long-term care insurance policy while you are still able to qualify physically and mentally. Some versions of coverage only pay if you need long-term care assistance, but others can now do double-duty and turn into life insurance if you do not need such assistance. That is a popular alternative to traditional long-term care insurance.
There is a 70% risk of needing long-term care once you reach age 65. Curiously, 70% of people think they will not be among those 70% needing care (i.e., denial) and 70% of people think Medicare will pay for it (i.e., ignorance)! We do not want to be in that 70% who are in denial, ignorant or both.
If you will need assistance with the activities of daily living (e.g., eating, bathing, dressing, toileting, and transferring), then you may want to hire a professional to take care of you instead of your children.
When you are ready for help with your long-term care planning through appropriate insurance, then we can help you find that, as well.
Fortunately, we can help you avoid probate and replace that impersonal, state-written, one-size-fits-all estate plan with one we design together for your unique circumstances and objectives.
We even help you coordinate the beneficiary designations on your life insurance and retirement plans with your estate plan to avoid unpleasant, unintended consequences. For example, all beneficiary designations for your retirement plans need to be revisited, especially due to a U.S. Supreme Court decision handed down on June 12, 2014, (See Clark, et ux v. Rameker).
The Clark case sent shock waves through the estate planning community after a unanimous court ruled that inherited IRAs are not “retirement funds” within the meaning of federal bankruptcy law. According, if your children or grandchildren are “direct” designated beneficiaries of your IRA, then the distributions may be subject to their divorces, lawsuits and bankruptcies. Careful planning is required to protect these important assets, while at the same time preserving the ability to stretch distributions as long as possible for your beneficiaries.
This is not a do-it-yourself project.