A well-crafted Estate Plan will contain some or all of the following documents:
- TRUST - whether Revocable, Irrevocable or Special Needs
- LAST WILL AND TESTAMENT
- MEDICAL POWER OF ATTORNEY
- LIVING WILL
- DURABLE POWER OF ATTORNEY
- PROPERTY DOCUMENTS – Beneficiary (Lady Bird), Warranty or Quit Claim Deed
Your choice of which documents should be included in your estate plan may depend on many factors including your age, health, marital status, financial status, assets, type of assets, whether you have children, the ages of your children, and the health of your children.
As I discuss each age group, I will suggest factors that may prompt you to create, review or update your Estate Plan
In Your Teens
Prior to reaching 18 years of age, your parents have the right and ability to make medical decisions for you. Once you turn 18, it's a different story. Your medical information and medical records are ONLY available to you. In 2003 the privacy laws known as the Health Information Portability Accountability Act (HIPAA) went into effect.
These laws were intended to protect the confidentiality of your medical records and health care information. Only you or your designated agent can access information about your medical condition or medical history. You could be hospitalized while you're away at school, or on vacation and no one, not even your parents would have access to any information regarding your medical condition.
It is recommended that you designate someone, in the event that you are injured or disabled, to make medical decisions for you. This is accomplished through a Medical Power of Attorney.
Although many teens don't have savings accounts or investments, and very few own homes, it is still important and recommended that you designate someone to act for you regarding your financial affairs. This is accomplished through a Durable Power of Attorney. Recommended Estate Plan in your Teens – Both Medical and Durable Powers of Attorney
In Your 20's
During your 20s you may be concerned with completing your education and getting a job. You may have purchased a car or quite possibly a home. You may have found your true love and are married.
Fortunately, my daughters completed college before the HIPAA laws went into effect. I have had clients whose children were hospitalized while away at college, and they were unable to get any information about their child. It is important to have that Medical Power of Attorney in place.
You have managed to complete your education. You now have that skill and have found a nice paying job and are generating an income. Hopefully, you're banking some of that cash. As you begin to accumulate assets, you need to consider who would manage your assets if you become disabled and who would receive your assets if you died.
Your Durable Power of Attorney can designate someone to make those financial decisions for you or do things that you are unable to do because of your temporary or permanent disability. That person can be a parent, sibling or trusted friend. If you have assets, your Last Will and Testament can designate who would receive your assets in the event of your death.
If you have found the love of your life and are living together or are married, you should definitely designate your “significant other” to be your power of attorney for both medical and financial decisions and you would likely name that person as your beneficiary, in the event of your death.
Recommended Estate Plan in your 20s – Medical and Durable Power of Attorney and Last Will and Testament
In Your 30's
During your 30s you may be concerned with getting married and having children; saving for or buying a house. As you mature and take on more responsibility, your Estate Plan will become more sophisticated. Let’s consider whether you are single or married and with or without children.
The plan for a single or married person in their 30s includes the same documents as you had in your 20s, the Powers of Attorney and Will. However, once you have children, the situation changes.
You now have to consider the welfare of your kids, if something happens to you and your spouse. Your Will must now contain provisions naming a Guardian and/or Conservator for your children. The Guardian is responsible for raising your children and making all medical decisions for them, and the Conservator is responsible for managing the assets, cash or other assets, that you have left for your children.
The Guardian and Conservator may be the same person, or you may name one person to be the Guardian because you know that person will raise your children properly, but he or she is not particularly good with money.
In that case, you may name another person as Conservator; someone you know that can invest and protect your children's’ inheritance. You have to know that the Guardian and Conservator are Court supervised positions. Your Will must be probated for your assets to transfer to your children through your designated Conservator and for the appointment of their Guardian.
These Guardians and Conservators will annually report the welfare of your children and the status of their assets to the Probate Court. There are always expenses when you deal with the Probate Court. The expenses are minimal for the Guardian but the expenses for the Conservator can be substantial.
These expenses will be assessed each year until your child reaches 18 years of age. At age 18 child, your child receives all of your assets. Do you really want an 18-year-old to have all of your assets, your home, cash, and investments? If you would prefer to avoid the costs of probate the better option to your Last Will and Testament would be a Revocable Living Trust.
Not only will you avoid the 4-10% cost of probating the will itself, but you will also avoid the annual expense of the Conservator. Additionally, rather than your child receiving your assets at age 18, you are able to defer the transfer of your assets until an age that you feel the child is financially mature. I recommend age 25 or older.
Recommended Estate Plan in your 30s – Medical and Durable Powers of Attorney, Last Will and Testament and/or Revocable Living Trust.
In Your 40's
During your 40s you may be concerned with investing your savings for retirement or for your children’s education.
Once again, the estate plan that you have in your 40s includes the same documents that you had in your 30s, the Powers of Attorney, Will, and/or Revocable Living Trust. Every decade of your life brings on different considerations; by the time you reach your 40s, you should have a stable job.
But who wants to work for the rest of their life? Our jobs give us the opportunity to save for our retirement through contributions to a retirement savings account such as an IRA, 401K, or 403B. All these plans allow you to designate a beneficiary, someone who would receive this savings account if you die.
If you are married, you will likely name your spouse as the principal beneficiary, and if you have children they can be named as alternate beneficiaries.
So too with life insurance- the death of the main breadwinner in a family may create financial turmoil. To avoid this calamity, it is wise for a family to ensure the life of the working spouse.
Each life insurance policy should designate a beneficiary; as with the retirement accounts, you will name your spouse as the principal beneficiary and your children as alternate beneficiaries.
What if your spouse were to predecease you or what if you were divorced and had minor children. For your children to receive the life insurance proceeds, a conservator will once again be necessary.
A better option may be to designate your Revocable Living Trust as the beneficiary of your life insurance. If you are married, your spouse will likely be the principal beneficiary of the trust with your children as the alternate beneficiaries. If your children were to receive the proceeds of your life insurance through the trust, not only will you avoid the probate court but also you will be able to defer payment of your life insurance until an age that you feel the children will be financially responsible.
Whether you are getting married or divorced, these events trigger changes to any estate plan. As you enter a marriage, each of you will make your spouse the Co-owner of your assets and principal beneficiary of your retirement savings and life insurance.
If you had any of your estate planning documents in place before your marriage, it is now appropriate to revise all the documents to include your spouse in your estate plan. Your spouse should be named as the agent in your Powers of Attorney, the Personal Representative of your Will, the Trustee of your Trust and the principle beneficiary of your Will, Trust, life insurance, and retirement accounts.
Conversely, if you were to get divorced, you need to revise all of your estate planning documents to remove your spouse as your agent, personal representative, trustee and beneficiary
Recommended Estate Plan in your 40s - Medical and Durable Powers of Attorney, Last Will and Testament and/or Revocable Living trust, Beneficiary designations for life insurance and retirement savings, Property Documents to revise ownership of your home.
In Your 50's
During your 50s you may be concerned with your children completing their education, getting married, moving out of your home, and quite possibly giving you grandchildren; planning for retirement; the death of your parents; accumulation of assets and asset protection; changes in real estate; a residence in a different state; becoming a snowbird.
It goes without repeating that any and all documents that are included in your estate plan to date should always be reviewed and revised to incorporate changes in your life or lifestyle. If you haven't taken the time to create an estate plan, you should consider and create all of the documents described in the previous sections of this article.
With the cost of your children’s college education and wedding behind you, thoughts of downsizing or a vacation home enter into the picture. As you buy or sell real property or land assets, the transfer of ownership is always accomplished by way of a Deed. Different states may have different names for deeds such as a Warranty Deed, Trust Deed, Quit Claim Deed, or other such names. They all accomplish the same result. Each deed will transfer ownership of the property.
If you own land in the name of one person and that person dies, the only way to transfer that property is through the Probate Court. Your Last Will and Testament will tell the court who is to receive your land another property.
However, if your property is owned by your Revocable Living Trust, the person may die, but the Trust continues to live and to carry out its terms. When you create a trust, you are the manager of all the assets contained in the trust. The manager of the trust is known as the Trustee. The trust names Successor Trustees that will take over the management of the trust if you are disabled or you die. The trust contains your wishes as to the disposition of your assets after your death.
It is very important to transfer ownership of all of your assets into the name of your Revocable Living Trust. If a person owns the land and dies, his or her estate MUST be probated. If your Revocable Living Trust owns the land and you die, the Successor Trustee simply transfers the land to your designated beneficiary without the time and expense of probate.
So as you downsize or acquire other land assets, it is recommended that you acquire or transfer ownership into the name of your Revocable Living Trust.
Recommended Estate plan in your 50s - Medical and Durable Powers of attorney, Last Will, and Testament and/or Revocable Living Trust, Beneficiary designations for life insurance and retirement savings, property documents to revise ownership of your land.
In Your 60's
During your 60s you may be concerned with retirement; planning for social security; the death of a spouse; downsizing your residence.
Throughout my 45 year career as an Estate Planning Attorney, I have found that I have prepared more estate plans for individuals and couples in their 60s than in any other age group. Some of these couples have no estate plan whatsoever. Others want to revise their 30-year-old Will.
They explain that they now have the time and money to prepare an estate plan. The kids have moved out, the grandchildren are growing, they have already retired or are preparing for that last day in the workforce, and they are now receiving or will soon receive Social Security.
It's time to get things in order. Very often the thought of preparing an estate plan is triggered by the death of a loved one or an unexpected health issue. No matter what the reason, anyone in their 60s should definitely have an estate plan.
At a bare minimum, it is essential to have your Medical and Durable Powers of Attorney. I often tell my clients that you never know when you will need the power of attorney, but when you need it, and you have it, you're really glad. It is simply being prepared for the unexpected event or happening.
The next document to consider would be a Will or Trust. Remember that a will mandates probate. A Will MUST be probated. Probate will take 6 months to 2 years to complete and will cost 4 to 10% of the value of your estate. The Revocable Living Trust will “completely” avoid the time and expense of probate.
It is entirely possible with a Trust, that you could die on one day and your assets could be delivered to your heirs the same day by your Successor Trustee.
Recommended Estate plan in your 60s - Medical and Durable Powers of Attorney, Last Will, and Testament and/or Revocable Living Trust, Beneficiary designations for life insurance and retirement savings, property documents to revise ownership of your land.
In Your 70’s
During your 70s you may be concerned with settling into retirement; traveling; health issues; protecting and preserving your assets; providing a legacy to your loved ones.
Are the 70s really the Golden Years? That term was coined to suggest the leisure years of your life when you leave the job force and look forward to retirement. A time to relax, travel, play golf, and spend more time with the grandkids. It is without a doubt, the time to create your Estate Plan or to revise, amend or “tweak” your existing documents.
Take a look at your Powers of Attorney. Many Powers of Attorney designate only one person to act as your agent. The husband will designate his wife or wife to designate her husband as their agent in their medical and financial powers of attorney.
If the spouse is deceased or incapacitated, your power of attorney is no longer effective. It is very important to designate alternate agents. You may designate your spouse as your agent, with your children, siblings, or trusted friend as alternates.
Take a look at your Trust or Will. For one reason or another, you may decide to change the beneficiaries of your assets or the share that each beneficiary should receive. It is possible that a beneficiary has predeceased you, or you no longer wish for that person to receive anything.
Make sure that your Successor Trustees or Personal Representatives are still able and willing to manage your assets. Again, the person may have predeceased you or moved out of the area and it is no longer practical for that person to handle your affairs
If you desire to change your Trust or Will, the revisions must be made by a formal amendment to your Trust, or a Codicil to your Will. I have seen documents in which a name was crossed out and another name inserted, or an entire paragraph was scribbled out. This type of revision could potentially VOID the entire document. You should consult with your attorney to make these revisions.
Recommended Estate plan in your 70s - Medical and Durable Powers of Attorney, Last Will, and Testament and/or Revocable Living Trust, Beneficiary designations for life insurance and retirement savings, property documents to revise ownership of your land.
In your 80’s
During your 80s you may be concerned with the death of a spouse or child; health issues; Assisted Living; Nursing Home and Long-Term Care planning.
A consistent concern of octogenarians is, “Will I have enough money to pay for my care in a nursing home?” “Will I wipe out my life savings to pay for my care?” These are legitimate concerns with the cost of a nursing home estimated at $7000 to $10,000 per month.
Quite possibly, you may have a long-term care insurance plan which would pay for some or all of a nursing home. If you don’t have long term care insurance, do the math. If you have invested your savings wisely you may have accumulated enough to pay for nursing home care for a year ($84,000 - $120,000) or two ($168,000-$240,000) or three ($252,000 - $360,000).
There are perfectly legal methods to protect and preserve your assets from the devastating costs of a nursing home. Once you hit that 80-year mark, I recommend that you consult with an Elder Law Attorney regarding the use of an Irrevocable Trust and a Beneficiary (Lady Bird) Deed as part of your Estate Plan.
Recommended Estate plan in your 80s - Medical and Durable Powers of Attorney, Last Will, and Testament, Revocable or Irrevocable Trust, Beneficiary designations for life insurance and retirement savings, Beneficiary (Lady Bird) Deed, other property documents to revise ownership of your land.
No matter what your age, you need to create an Estate Plan to protect your well being, your family, and your assets. There are no cookie-cutter Estate Plans. Your plan should be tailored to your needs and your wishes.
When you are ready to move forward with your estate plan, make sure you consult with an experienced attorney to ensure protection for your loved ones and assets.