Do you have an estate plan? If so, you know how important and powerful it can be. Even at its simplest, an estate plan helps the courts and your loved ones determine how you to distribute your assets after you pass away. Your estate plan could simply involve a will, or it may be so complex that it requires a trust and other legal documents.
An estate plan isn’t just for what happens after you pass away, though. It’s also for issues that could arise in the final years or months of one’s life. For many seniors, it’s obvious when they’ve entered the end-of-life phase. Their health may be in constant decline. They may struggle with cognitive challenges. They might have even received a terminal diagnosis from a doctor.
The end-of-life period has unique complexities that can cause substantial stress for your loved ones. If not properly planned for, these issues could drain your estate, cause disagreement and anxiety among your family, and even impact your care and treatment. Below are a few end-of-life issues to address in your estate plan:
While it may not be pleasant to think about, this is an unfortunate reality for many seniors. They suffer from Alzheimer’s or other cognitive issues that make them unable to participate in their own treatment. Or they suffer a stroke or from some other condition that limits their ability to communicate.
In this instance, who would be making decisions on your behalf? And are you certain they’d make the decisions you’d make for yourself?
There are a number of planning tools you can use to provide guidance to your doctors and loved ones. A living will helps doctors answer challenging questions about when to use lifesaving procedures. A medical power of attorney lets you designate a trusted individual as your medical decision-maker. Consider implementing these tools into your plan.
You also may find that during your end-of-life years, you don’t have the ability to manage your bank accounts, investments and other assets. It’s not uncommon for seniors in their final years to make risky investment choices or questionable changes to their will or trust. They may make large, unnecessary purchases that drain their estate. Or, again, they simply may not be in a condition in which they can communicate their wishes.
You can use a number of different tools to manage your assets in this scenario. A power of attorney allows you to designate a financial decision-maker. You can use a trust with specific instructions to govern the management of your assets.
Your will and trust may be the core components of your estate plan, but you likely have assets that aren’t governed by those documents. For instance, life insurance policies, annuities, 401(k) plans and IRAs have beneficiary designations, which means their distribution isn’t controlled by your will or trust.
Many people make the mistake of forgetting to change their beneficiaries after major life events. They may inadvertently leave a former spouse on a life insurance policy after a divorce, or they may forget to add a new spouse or a child. Unfortunately, beneficiary designations usually are final, regardless of whether you’ve made a mistake. If you’re approaching the end of life, now may be a good time to revisit your beneficiary designations to make sure they’re correct.
Think your estate plan may be missing some elements? Contact us at Protecting Your Retirement. We can review your plan, identify any risks and help you develop a strategy. Let’s connect soon.
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