Though Baby Boomers do focus on cash flow in retirement, planning beyond that with an estate plan is often not on their radar.
“The secret of getting ahead is getting started.” Mark Twain
Well put, Mr. Twain, and thank you for making this pithy quote one for the ages. It should be on the desk of financial professionals and heeded by baby boomers everywhere. Indeed, it’s one thing to save and invest wisely, but all is for naught without that all-important estate plan.
Michigan Boomer’s of the ‘60s turn 50…
Although ‘boomers’ fall into that Netherland somewhere between 1946 to 1964, the 21-million boomers actually born in the early ‘60s, whom AARP said turned 50 last December, may still roam terra firma with a piece of parchment on which they’ve written their last will and testament.
While this may hint of brontosaurus-like thinking, boomers most certainly are not doomed to extinction just because they’ve fallen into the tar pit of indecision when it comes to making an estate plan—even at age 50, there’s time.
Estate Planning: It’s simply not on their list…
Still, Baby Boomers biggest retirement planning mistake is having a workable financial strategy without an estate plan. That scenario is tantamount to running an eight-cylinder car on four pistons during its lifetime, and failing to deliver you across the retirement threshold in good stead.
Call it short-sighted, or being in denial, but thinking about ‘death’ is simply not on the Baby Boomer’s radar, according to a recent USA Today article. Unwittingly, they may forever remain oblivious that death-by-dying without an estate plan can create untold tax consequences that might be avoided by placing assets into a living trust, for example.
“’If you are looking at Baby Boomers, they are looking at what their cash flow will be in retirement,” says Carol Kroch, managing director, wealth and philanthropic planning at Wilmington Trust in Wilmington, Del. “Can they do the things they want to do? Can they retire? Can they keep the house? They are not focused on death’.”
Don’t leave your heirs with a bundle of tax problems…
But boomers may not have the second chance Mark Twain did when he read about his own ‘death’ in a newspaper paper while on a trip abroad. Perhaps his quote (“The reports of my death have been greatly exaggerated.”) playfully serves as a reminder for boomers to develop an estate plan to complement their financial strategies, thereby ensuring continuity of one’s estate.
A ‘will’ is one component of the overall estate plan.
In short, your will lets you choose which heirs should receive your antique car collection, or who will become guardians of your children.
The estate plan protects assets from probate; provides a power of attorney for someone you’ve appointed to step in to make vital health/financial decisions for you; Do you want trusts for your children…grandkids or a favorite charity? These desires need to be discussed in context with your entire estate.
Looking beyond the ‘now.’
As noted in the USA Today article, the focus on developing the estate plan falls on three critical areas that include property and financial assets, children, and medical decisions. In the latter case, the purchase of a long-term-care insurance policy can protect assets from depletion in the case of nursing home care, or extended care in the home.
In the case of second marriages, the plan also can guard against losing assets if that marriage doesn’t work out. Such scenarios often call for a “firewall” of prenuptial, or postnuptial, agreements.
Start the ‘family conversation.’
Owners of a small business may want to pass on the business to their offspring, but make sure it’s something they truly want to do.
The conversation should be an open-ended one, where that vacation home, or family boat, can be passed on to a family member without it being a complete surprise later.
Other must-conversations is the one about choosing the executor of your estate—your daughter may say ‘no’ because she doesn’t feel confident in handling financial matters.
To start the conversation about your estate plan, including your will, powers of attorney and other specific documents, contact us.
The post USA TODAY: ‘Baby Boomers’ biggest retirement planning mistake is not having an estate plan. appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.