Estate Planning for Seniors

by Jenny Ling, Esq.

Estate planning is an essential step for everyone, not just those that are extremely wealthy.  Just about every adult, regardless of age, can benefit from smart estate planning, and failing to make a plan can have some very serious and unfortunate consequences for your family.  Though estate planning for seniors can be an uncomfortable subject, making a plan can give you and your family the peace of mind that they know exactly what your wishes are and have the plan to make that happen.  You’ve worked your whole life to build up assets that you can pass on to give your family and loved ones a better life.

Plan for your assets.  Your estate is comprised of everything you own – your car, home, other real estate, checking and savings accounts, investments, life insurance, retirement, and personal possessions.  No matter how large or small, everyone has an estate.  By having a plan in place, you will help your loved ones to have clarity of how assets should be distributed and managed. You will be able to provide certainty for them during an already difficult and emotional situation.

At The Law Offices of Jenny Ling, PLLC, we can help you create a plan that handles your assets in the exact manner you wish, taking into account all of your family dynamics, so your death won’t be any more painful or expensive for your family than it needs to be. 

Estate planning is governed by state laws and those laws only recognize two kinds of people – single or legally married.  It is unfortunate that the law does not recognize the spectrum of relationships that people create.  If you have a partner and are not legally married, when you die or if you become incapacitated, the state will view you as single and will treat you as such.  Your partner would not have any rights and would be considered a legal stranger.  They will be at the mercy of the choices of your family –like adult children or siblings.  A comprehensive estate plan can ensure that assets are distributed to the person you have chosen to spend your life with.

Plan for your incapacity.  Estate planning is not just planning for death.  What would happen to your family and assets if you became incapacitated, whether from an accident or illness?  You should ask yourself, “If I am ever incapacitated and can’t make my own decisions, who do I want making decisions on my behalf?”  You need to select someone to make healthcare, financial, and legal decisions on your behalf. As people age, they can become targets of financials scams or victims of elder abuse.  When planned correctly with an experienced legal professional, an estate plan can help prevent elder abuse.

A Revocable Living Trust can be another effective tool when planning for incapacity.  In the event of your incapacity, your selected Successor Trustee can control the assets you have placed in the trust according to your instructions. Your Successor Trustee has a fiduciary duty to carry out your wishes. 

Plan for your loved one.  As you get older, it is only natural to start thinking about the financial well-being of your youngest family members. For many grandparents, that might include leaving money to grandchildren to help with expenses like college or their first home.  You might be thinking of directing money to your children when you die with the expectation that they will help their children when the time comes.  Or you might be considering leaving gifts outright to your grandchildren. Both of these options can have unintended consequences.

For those with grandchildren with special needs, it is especially important that you make a plan for them.  If you leave money directly to your child with special needs, it may make them ineligible for means tested governmental assistance such as Medicaid and Social Security Insurance.  A “special needs trust” allows a parent, grandparent or guardian to provide funds for a person with special needs to improve the beneficiary’s quality of life without disrupting support from governmental assistance programs.

Plan for estate taxes.  You might be surprised to learn that you are at risk of paying estate taxes when you die.  Afterall, you probably are not a member of the Walton family and do not own a family farm.  Our vision of who owes estate taxes is very influenced by the federal estate tax conversation.  But Washington State has an estate tax as well.  In fact, Washington has one of the lowest thresholds in the entire country.

In Washington State, estates valued at more than $2.193 million dollars are taxed at a rate of 10-20%.  I know that $2.193 million sounds like a lot but use this worksheet to see what your estate is worth.  Your estate will include everything you own – the equity in your home, your cars, any retirement accounts, investments, savings, and even your life insurance. 

What happens if you don’t make a plan?  Your estate could receive a hefty tax bill soon after your death.  Your family may have to liquidate your assets, like selling the family home, in order to pay the bill. 

Plan for your death.  A Health Care Directive will give your family guidance about your wishes if you become terminally incapacitated and are placed on life support.  Another essential document is your Final Disposition Instructions and Authorization.  This document details what you would like done with your remains after you die (burial, cremation, etc.), any wishes for your funeral or memorial service, and designates a loved one to carry out these wishes.  Both of these important documents give your family peace of mind that they are making the decisions that you would want.

Keep your plan updated.  An estate plan that is out of date can put you and your family at risk.  You spent the time and effort needed to create an estate plan that will protect your family – make sure it can grow with your family.  You should review your estate plan at least every 3 to 5 years or after a major life change.

If you are concerned that you don’t have a plan or that your plan won’t work when your family really needs it, Contact Us for a complimentary 15-minute phone call to learn how we can help you Make a Plan.

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.