Although many baby boomers nearing retirement have accumulated considerable assets over their lifetime, it is predicted that a number of boomers will end up having to pay out trillions of dollars in estate taxes—the most ever witnessed in history.
With so much on the line, it’s critical that baby boomers have a solid estate plan. However, recent studies have found that many baby boomers have not even made basic estate plans. Some seniors are overwhelmed by the complex and weighty process of estate planning, while others may balk at the prospect of facing their own mortality.
But the vast majority of seniors we’ve spoken to are simply unaware of the important role estate planning will play in protecting their lifestyle. Many boomers have neglected to create an estate plan because they don’t believe their estate is large enough to warrant special plans.
However, even the smallest estates require careful estate planning if you want to ensure your assets go to your intended loved ones, and you and your family don’t suffer the high costs incurred by lack of planning.
If you or someone you care about is a baby boomer who has reached or is nearing retirement age, there are a variety of estate planning tools and documents you should be aware of. That’s why we’ve composed this basic guide to estate planning for baby boomers and their families.
Estate Planning: Defined
To fully comprehend the importance of estate planning as a baby boomer, you must first understand what it is. Estate planning is the process of organizing the distribution of your assets while you are still alive. Assets may be defined as your money and personal property, including bank accounts, life insurance, retirement accounts, real estate, and cars.
If you take time to plan your estate during your lifetime, you can protect your assets for the benefit of you, your family, and the people you care about. Proper estate planning will protect your assets from being greatly depleted because of taxes, court costs, and administrative fees. A good estate plan will ensure both you and your surviving family members and loved ones are cared for, while clarifying your wishes regarding important decisions such as asset distribution and life-prolonging medical procedures.
Five Estate Planning Documents Every Baby Boomer Should Have
In order to stay in control of your money and medical care of your lifetime, while ensuring your assets are protected for your family and friends, there are five estate planning documents you must have, as listed below.
A will. Your will clarifies instructions on how to distribute your assets to your beneficiaries after your death. In your will, you appoint a personal representative to be in charge of distributing your assets, as well as paying any remaining debts and taxes. Without a will, Florida courts will decide who receives your assets, and how your final expenses will be paid.
A revocable living trust. By setting up a revocable trust, you can arrange for the continued management of your finances while you are alive, provide for the possibility of your disability, and distribute your assets to your heirs after your death. Your trust can help limit estate taxes and avoid other legal challenges, protecting your assets for your beneficiaries and saving them the time, stress, and costly fees associated with probate.
Financial power of attorney. This document appoints a trusted agent to act on your behalf if you are unable to manage your assets and daily financial affairs. This is an important document to have in order to avoid conservatorship in the event of your incapacitation.
Medical power of attorney. Much like a financial power of attorney, the medical power of attorney authorizes a trusted agent to make medical decisions on your behalf if you become unable to do so yourself.
A living will. A living will addresses your wishes regarding the use of life-prolonging medical procedures in the event of a terminal illness or irreversible coma.
Of course, these are only the most basic documents you should have in your estate plan. Every estate is unique, which is why it’s important to consult with a Florida estate planning attorney when making such plans.
Your attorney can help you determine the documents necessary for your family’s situation, and help you prepare those documents in a way that protects the interests of you and your loved ones. Your attorney can help you craft a comprehensive estate plan that honors your wishes, while ensuring your assets are protected for the benefit of you, your family, and friends.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.