Many people assume that estate planning is only for those who are extremely wealthy. But just about any adult can benefit from smart estate planning, and failing to plan can have some very unfortunate consequences. Though estate planning for seniors is often an uncomfortable subject, having the answers to a few common questions can help you find the right solutions for your own circumstances.
What is estate planning?
Estate planning primarily involves planning the details of what will happen with a person’s assets when they pass away. That includes financial accounts, property, vehicles, and even sentimental knickknacks. But beyond assets, estate planning for seniors can include a variety of end-of-life decisions. For example:
- Planning to limit estate taxes.
- Naming a guardian for dependents.
- Naming an executor for your estate.
- Updating the beneficiary on life insurance & IRA plans.
- Making funeral arrangements.
- Establishing a power of attorney.
Is estate planning the same as a will?
A will is one way to help decide what will happen with a person’s possessions, and it can be an important part of estate planning. But it’s also a single element of a larger process. In fact, estate planning can make use of a living trust instead of a will. Or you can have a trust and a will in order to protect assets you forget to name.
Why is estate planning important?
Without estate planning, possessions will be assigned in accordance with state law. You may not have an executor to handle your estate if you become physically or mentally incapacitated. And you may leave behind a burden for your loved ones, who will be left with the task of figuring out how to best respect your wishes.
When is estate planning needed?
Estate planning is necessary anytime a person has assets they would like protected when they are no longer able to do so. People as young as 30 might want to consider drawing up a will in case of an accident, and it’s never too early for an adult to name someone in a power of attorney.
But estate planning is also an ongoing process, and you should revisit your plans every five or ten years. That can give you time to think about updating beneficiaries and making other important changes.
What do estate planning attorneys do?
Creating your own estate planning involves navigating the legal system. You can end up in situations where you fail to use the right documents for your locality, and a bank might refuse to acknowledge the validity of your Power of Attorney. Seniors might give up too much power in their PoA, or encounter unintended tax consequences. Estate lawyers can help navigate these problems.
What to ask an estate planning attorney will depend on your circumstances. You might want to know about the advantages and disadvantages of a living trust, or if your state has any unique laws pertaining to estate taxes. For example, have there been any important changes to estate laws recently, or proposed changes to the law that might affect your estate planning?
What estate planning documents are needed?
Establishing a will or trust is at the core of estate planning. But you may also need a letter of intent, power of attorney, guardianship designations, beneficiary designations, and documents related to life insurance products.
How much does estate planning cost?
Completing a medical/financial power of attorney (PoA) will usually cost around $200-$400. Along with establishing a will or trust, the average cost of estate planning is roughly $1,000. However, these costs can become much higher if you need more sophisticated and detailed planning.
Are estate planning fees tax deductible?
Estate planning fees used to be tax-deductible under specific circumstances, but the Tax Cuts and Jobs Act of 2017 has changed that. Those provisions are set to elapse in 2025. However, Congress may vote to extend them, and the legislation itself may be repealed in the future.