Financial Planning and Taxes
The Ultimate Guide to Estate Planning for Seniors  

The Ultimate Guide to Estate Planning for Seniors  

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Estate Planning for Seniors

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Over the last decade, estate preparation among seniors has slowed significantly. Even today, many families do not discuss their estate intentions openly. As a result, more than half of American adults still do not have a will prepared for their assets. Moreover, according to Gallup, only 53% of Americans between the ages of 50 and 64 currently have a will. This number increases to 76% of Americans 65 and older having wills of their own, which is still not enough to secure their assets before it’s too late.  

estate planning checklist for seniors
Number of Americans with Will

Dying without a will is commonly known as dying intestate. In this situation, the courts will decide who gets your possessions. Therefore, you should draft a will and update it on a regular basis to avoid this predicament. Furthermore, proactive estate planning can save families time and money by avoiding time-consuming and costly probate court proceedings and reducing family drama caused by estate disputes.  

Creating legal paperwork to manage and pass on property and expressing wishes for end-of-life affairs should be high on your priority list if you haven’t already done so. However, before you contact an attorney or start filling out paperwork on your own, it’s essential first to understand some of the most basic estate planning arrangements and the safeguards and guarantees they can provide. 

What Exactly Is an Estate?

An estate is the total value of a person’s property and assets. This includes money in savings and checking accounts, stocks and bonds, real estate, personal belongings, and life insurance. When a person dies, their estate is used to pay any debts and final expenses, such as funeral costs. The remainder of the estate is then distributed to the person’s heirs.

The executor of the estate is responsible for distributing the deceased person’s assets in accordance with their will. If the deceased person does not have a will, their estate will be distributed according to state law.

What Does Estate Planning Mean? 

Estate planning means determining how one’s money and other assets will be managed during their lifetime and after death. It also frequently involves a related issue: instructions on the type of medical care they want to receive if they are unable to express their wishes directly.  

Any asset you have are considered your estate in the eyes of the law. They can include any bank accounts, properties, vehicles, retirement funds, life insurance, and events. In addition, any interest you receive from the financial accounts is also part of your estate.  

Estate planning contracts often include detailed funeral arrangements, such as whether to be buried or cremated. More advanced estate plans may even address delaying or reducing estate taxes or closing down a firm.  

While these issues require some soul-searching and deliberation, estate planning is not the controlled step-by-step process that the phrase suggests. In reality, it just entails drafting and signing one or more documents that provide legal weight to someone’s claims.  

Many people think that estate planning is only for the affluents of society. But that is a complete myth. Your assets are important to you, and you should allocate them accordingly before you pass away.  

Importance of Estate Planning for Seniors  

Now it’s time to start thinking about the legal paperwork you may need to safeguard the decisions you’ve made regarding your estate. In addition to trusts and wills (which are explained in-depth in the following sections), here are several forms of estate planning documents you might consider, depending on your unique circumstances.  

1. Joint ownership  

When properties are held in shared tenancy (also known as tenancy by the entirety), they immediately pass to the nominated survivor. Property held in joint tenancy, like living trusts, is not subject to probate. If the survivor is a spouse, close cousin, or close friend, this is a suitable setup since they can be trusted not to sell or squander their portion of the property.  

2. Transfer or pay-on-death designations  

Payable-on-death accounts allow people who hold an account with a bank, savings, loan, or credit union to name a beneficiary who will automatically receive the cash when they die. A transfer-on-death designation, a similar legal arrangement, allows them to register stocks, bonds, and brokerage accounts so that they are automatically transferred to a named survivor upon death. Both options avoid the need for probate.  

3. Powers of attorney for finances

This agreement permits you to choose a trustworthy attorney to handle your financial aspects if you cannot do it yourself. Durable financial powers of attorney are mostly precautionary documents. If you don’t have them and become mentally incapacitated, a judge will be forced to appoint someone to manage your funds for you, even if the person is unfamiliar with you or your financial affairs.  

4. Health care directives and powers of attorney for health care  

These advanced health care directive documents allow you to tell healthcare providers what life-prolonging treatments you want and don’t want if you’re no longer able to communicate—and to name someone to oversee your care to make sure your wishes are carried out, sometimes in a separate document called a durable power of attorney for health care. Although state laws vary, these directives usually are only followed if someone is near death or in a lifelong coma.  

5. Final arrangements  

This document will add legal weight to your intentions to be considered for organ and body donation and whether you want to be buried or cremated. In addition, you can name someone to monitor that your stated wishes are carried out as written, just as you might with other sorts of documents that take effect after death.  

Reasons for Estate Planning: It’s Time to Plan Your Estate

The majority of people who have money or a family should make a will. However, not everyone requires a will. The decision is a personal one that is influenced by factors other than the amount of an estate. Take into account the following:  

1. A future for your children  

A number of significant life events shape the necessity and breadth of an estate plan. The birth of a kid is especially momentous. Consider a newlywed couple who is expecting their first kid. How would the child be cared for if either parent (or both) died?  

2. Size of the estate and state of residence

The size of the estate is another essential consideration. Is the value of the estate greater than the exclusion for estate taxes? In 2022, if you are married, you can each pass on $12.06 million without having to pay any federal estate taxes. When one spouse dies, their exclusion from estate taxes can be transferred to the surviving spouse, meaning that they can exclude $24.12 million (or more as the omission could be subject to indexed for inflation) from federal estate taxes. A comprehensive and robust estate plan would also lay out provisions and instructions that would come to effect in the event of simultaneous death.

3. Privacy concerns associated with probate

Another strong reason to prepare an estate plan is to avoid the costs, delays, and breaches of privacy associated with the probate procedure. However, probate has a number of drawbacks, including:  

  • Time consuming: One potential drawback of uncontested probate is that it can be a time-consuming process. In some cases, it can take months or even years to complete. A well-thought-out plan could save these delays.
  • Breach of privacy: Another potential disadvantage of probate is that it is a public process. This means that the financial details of the estate are open to the public. This can be a problem for families who want to keep their affairs private.
  • Expensive: Probate can be expensive. The executor of the estate is typically responsible for paying the court fees and other expenses associated with probate (approx. 5% of total estate value). This can put a financial strain on the executor and the beneficiaries.

4. Preparation for becoming incapacitated  

Many individuals consider estate planning to be a procedure that must be followed to arrange what will happen after they die. However, in the event that you become incapacitated, paperwork is an essential part of estate preparation. In addition, a financial power of attorney will permit you to appoint someone to manage your finances if you are unable to do so yourself.  

5. Philanthropic goals 

There are several ways to incorporate philanthropic aims into an estate plan if the estate has substantial assets and the owner wishes to gift to charity. Leaving assets to a charity through your will may be more advantageous from a tax perspective than leaving Roth IRA assets to the charity. This is because the assets that pass through your will are not subject to income tax, while Roth IRA assets are. 

6. Business succession 

Have you thought about how to effectively plan for your business after you pass away if you own one? If you plan to keep it in the family, think about creating a structure that makes the transfer process easier, such as a family limited partnership or a family limited liability company.

7. Life stage  

Estate planning can be advantageous for any adult. New parents will undoubtedly want to think about and plan for their child’s well-being. As children grow, you face increased complexities in your financial life. So, it is important to review your estate plan as your assets grow and change to make sure it’s still adequate to fulfill your current needs, and that any future needs are anticipated.

Important Elements of Estate Planning  

What elements should be considered as part of an estate plan? Here are the key parts of estate planning.  

1. Wills

A will is a legal document that you prepare to deal with your assets and minor children’s custody after you die. The implementation of a will is not in effect until the individual dies. Therefore, a Will is extremely important for any adult who has children or owns the property.  

Living will  

“Advance Healthcare Directives” is another name for a living will. It’s a legal document that outlines your end-of-life care wishes in the event that you are unable to communicate them. For example, if you were seriously injured and rendered unconscious, your living will would effect.  

Pour-over will

A pour-over will works as a legal document that assures that an individual’s remaining assets are immediately transferred to trust after their death. A pour-over will is combined with a living trust.  

2. Trusts 

A trust is a fiduciary relationship between the trustor and the trustee. Here, the trustor grants the trustee the power to hold title to the assets on behalf of the beneficiary. Trusts provide legal protection to the trustor’s assets. Moreover, trusts allow trustors to transfer their assets accordingly. A trust is a sort of closed-end fund that works as a public limited company in finance.  

Revocable Living Trust 

revocable trust means when the grantor or the trust’s founder can change or cancel the trust’s provisions. During the trust’s life, income is dispersed to the grantor, and property is transferred to the trust’s beneficiaries only after the grantor’s death.  

Irrevocable Trusts 

An irrevocable trust doesn’t allow any modification or termination once signed. This distinguishes it from a revocable trust, which can be changed or terminated at any time and becomes irrevocable only when the trust creator, or grantor, dies.  

After creating an irrevocable trust, the grantor relinquishes control over the assets placed in it. Because the trust is not administered or controlled by the grantor, and the beneficiaries do not yet control it. It creates a wholly independent tax entity.  

3. Power of attorney  

A Power of Attorney is a legal document that grants your attorney almost complete control over your finances and property, including banking, signing checks, purchasing or selling real estate in your name, and purchasing consumer goods. He or she does not own any of your money or property; instead, he or she is merely authorized to handle it on your behalf. Your attorney cannot write a will for you, amend an existing Will, change a beneficiary on a life insurance policy, or assign someone else power of attorney on your behalf.  

Healthcare Power of Attorney

A Healthcare Power of Attorney (HCPA) refers to a legal document that allows someone to delegate decision-making authority over their medical treatment to another person. An HCPA is a legal document as well as a specific individual who has legal authority.  

Property Power of Attorney

A Power of Attorney for Property is a legal instrument that allows you to appoint someone you trust to make financial and property decisions for you.  

You are referred to as the grantor. Your attorney is the person you name. A family member, a close friend, or anybody else you trust can be your attorney.  

Unless you limit your attorney’s powers, they can do practically anything you do with your money and property. This contains the following items:  

  • doing your banking  
  • signing cheques  
  • getting a loan  
  • buying, selling, or leasing real estate  
  • buying consumer goods and services  

4. DPOA  

A durable power of attorney, or DPOA, is a legal document that protects the independence and decision-making of aging parents while simultaneously easing the transition to elderly care. In the case of mental or physical incapacitation, a durable power of attorney ensures that a trusted appointee has the legal authority to make critical decisions on behalf of another person.  

A general durable power of attorney enables you to act on your behalf in a variety of legal and business situations. It stays in force even if you are unable to do so. A DPOA for finances is also known as this instrument.  

When you are unable to make decisions about your care due to a medical emergency, a durable healthcare power of attorney can help. It appoints someone else to speak with doctors on your behalf and make medical decisions.  

5. Care contracts

Contracts entered into one or more of the obligors with local authorities, the Department of Social Security, local health authorities, or private residents to provide residential and nursing care services to residents of a care home are referred to as Care Contracts.  

A personal care contract, sometimes known as a caregiver agreement, is a sort of personal services arrangement in the healthcare industry. In exchange for money, caregivers are hired to provide specific services to medically challenged or older adults in their homes. Oral agreements are possible, but written agreements are more feasible for a variety of reasons.  

6. Appointment of Agent for Disposition of Remains

An Appointment of Agent to Control Remains Disposition allows you to appoint someone to carry out your burial or cremation wishes. By putting particular instructions on the form, you can limit the rights assigned to your agent.  

In blended families, you may prefer that your children carry out this responsibility rather than your second wife. The document reflects your wishes and has the potential to avoid a legal battle over your remains’ disposition.  

7. Beneficiary Designations

Regardless of the will terms, beneficiary designations allow you to transfer assets directly to individuals. Beneficiary designations are frequently made while opening a bank account, a retirement account, or a life insurance policy. However, these designations should be checked on a regular basis.  

Your estate can also be named as a beneficiary. The asset will become a part of your estate plan and is dispersed according to your will in this situation.  

6 Steps to Creating an Estate Plan  

Creating an estate plan may seem confusing at first. First, you will need to know the state laws and prepare a list of your assets. And that’s not all; there are more decisions to make afterward. But we are here to make your life easier with these 6 simple steps in creating a complete estate plan before it’s too late.  

estate planning checklist for seniors


6 Steps to Creating an Estate Plan

Step 1: medical agent selection 

Our first advice in preparing the estate plan is to select a medical agent. This step involves filling up forms with your medical requests. As mentioned already, the living will, medical power of attorney, and caregiver agreement fall into this category. They are altogether called ‘Advanced Directive.’   

Step 2: financial agent selection

The next step is to focus on selecting a financial agent for your monetary assets. A durable power of attorney comes into the limelight now. This person will be responsible for handling all your financial properties. We recommend you strictly review the agent before selecting, as the person needs to be trusted with your assets. Also, you can select one person to be your medical and financial agent.   

Step 3: asset list preparation 

In this step, you begin accumulating all your assets. Your assets can involve real estate, business entities, cars, apartments, investments, and other financial properties. Your life insurance also falls into the list of assets.  

Step 4: beneficiary selection

Beneficiaries are people who will receive your assets after you pass away. So, this is probably the most important step in the process. Ideally, your beneficiary can be your spouse or children. However, you can choose whomever you want to hand over your assets to, including charities, companies, or other organizations.  

Step 5: trust or will selection  

Your trust and will are two things that will transfer the assets to the beneficiaries. Once you select a beneficiary, you will now need to create a living will and living trust. These documents are the strength of your estate planning as family members cannot question their validity once passed.  

Step 6: sign and safely secure

Finally, you can conclude by signing the documents as per the state requirements. Most states will require you to involve 2 witnesses and a notary public while signing the documents. The witnesses must be outside people and not mentioned in the estate documents. Once the signing and validation are done, you can secure the documents safely while providing copies to people you trust.  

Inheritance and Estate Taxes

Speaking of taxes, in planning for what should happen to an estate, there are a number of variables to consider. There are two kinds of taxes when it comes to estates: the estate tax and the inheritance tax.  

Inheritance taxes

The person who inherits assets from a will or trust is responsible for paying inheritance taxes. This tax rate varies by area, and certain inheritors (such as spouses or children) are excluded from paying it in some jurisdictions. Estates are taxed in a variety of ways in various states. In Maryland, for example, an estate is taxed three times: once by the federal government, then by the state, and then again when it is inherited by individuals named in the will.  

Estate taxes

The estate tax must be paid before money, and other assets are released according to the will. These are essentially taxes that the deceased paid (or specifically by the estate itself). A federal estate tax is implied on assets with a value greater than a particular threshold. In addition, some states impose an additional estate tax, albeit the rate and exemption criteria vary by location. It’s a good idea to double-check these details for the venue where you plan to carry out the will.  

Estate Planning Costs

The intricacy of your financial situation heavily influences the price of estate planning. You can obtain do-it-yourself senior will kits for around $150 online or in a store if you have a simple issue. These DIY paperwork are inexpensive, but you risk filling them out improperly, which could become a headache for your loved ones after you pass away. Alternatively, you might pay a few hundred dollars to have a lawyer create your will for you.  

Paying a professional estate planner to assist you in handling your affairs comes at a cost if your circumstances are complex. For example, it might cost up to $1,000. However, if you’ve worked hard to leave a legacy behind, it’s worth spending the time and money to employ a professional to write the necessary documentation to safeguard your assets.  

Estate Planning Checklist  

When you are considering estate planning, you will need to follow a checklist. This will help you plan the progress with proper steps and strategies. Here is 5-must have things on the estate planning checklist AARP.  

1. Review all your financial accounts 

One of the key steps in preparing the estate plan is listing all your assets. In doing so, a crucial approach should be to review all the financial accounts you have. You may find that some of your accounts already have beneficiary names mentioned in their policies. Those accounts will automatically be passed to that person after the account holder’s death. If you wish to bring a change to any policies of your financial accounts, contact the customer service department of that financial institution. This is specifically essential if you have gone through a divorce or got remarried.  

2. Review your insurance

Just like financial accounts, your insurance will also pass to the beneficiary mentioned in the insurance policies. Thus, it is beneficial for you to carefully contact your insurance providers and review all the documents. If you wish to make any changes, now is the time.   

3. Pick a skilled estate administrator

An estate administrator is responsible for ensuring that your will and trust follow your wishes after you die. As a result, it is important to choose an estate administrator who is professional and skillful. Most often, seniors will expect the best choice is his or her spouse. But our recommendation is to think about it before making the final call carefully.  

4. Review the estate documents regularly

Once you have created an estate document, it is ideal for reviewing them from time to time. The optimum option is to review the estate documents at least once in two years. As life goes on, your preferences may change. Thus, reviewing the estate plan gives you the opportunity to make alterations when you want.  

5. Make use of college funding accounts

The 529 college saving plans allow you to save money for your grandchildren. It is a great benefit you can make use of to leave your grandkids with assets. In addition, these college funding accounts are tax-free, and some states even deduct taxes when you contribute to the funds.   

5 Common Mistakes to Avoid While Planning for Estate  

Making mistakes on legal issues is not very uncommon. It can be two ways. If you already have an estate plan, it is a mistake not to review it for a long time. And if you are thinking about elder estate planning, mistakes can happen there as well. Below is a list of 5 common estate planning mistakes you should avoid.  

1. Opting for a Do-It-Yourself Method 

You may be giving up on opportunities if you don’t collaborate with a professional to prepare your will and estate plan. Perhaps you haven’t examined all of your options or put the incorrect estate plan in place. For instance, you may name your child as your executor, but what if they don’t live in the United States? With respect to your estate, you’ve now generated cross-border tax concerns. Working with a professional can assist you in navigating the difficulties with confidence and knowledge.  

2. Choosing the Wrong Executor

Your executor is in charge of carrying out your instructions, dispersing your assets, and ensuring that your taxes are correctly submitted on time. Choosing the wrong executor might cause confusion and costly errors. Always double-check that the executor you’ve selected is willing to serve. We’ve often discovered that someone unrelated has been chosen executor of an estate and is completely unaware of it.  

3. Not Considering Income Tax 

This is a really serious mistake. Your estate may be liable to more taxes than you would otherwise have to pay if income tax is not taken into account.   

4. Not Thinking About Your Beneficiaries

You can have someone in your will whom you don’t want to give an inheritance. For instance, you might consider a second marriage without amending your will. It’s possible that your assets will end up in the hands of your ex-spouse. (It’s unlikely that this is what you intended to accomplish). Perhaps you have a child to whom you’d like to leave assets, but they’re in financial trouble. Instead of making an outright payout, consider forming a trust. There are eligible disability trusts with certain tax benefits if you have a beneficiary who requires special care.  

5. Updating Your Plan Too Infrequently  

Unfortunately, many people create their estate plan and forget about it. You must keep it up to date and ensure that it accurately reflects all of your life’s developments. Any significant life event like a marriage, divorce, the birth of a child, or the death of a family member or beneficiary, could necessitate an update, as we indicated before.  

Talking About Estate Planning: How to Have the talk  

It’s tough to talk about estate planning and end-of-life transitions. Many individuals try to avoid having these crucial conversations. After all, discussing these things might lead to complex subjects like mortality, finances, and the future.  

However, it is critical for seniors and their adult offspring to face estate planning head-on and have open and honest discussions. The more you talk about estate planning and important life transitions, the more you’ll be able to get everyone on the same page and avoid any future confusion or disagreement.  

Here are a few ideas that may help you and yours make the most of any estate planning talks:   

1. Begin the discussion as soon as possible  

When elders are fit and in good spirits, it is easier and more beneficial to conduct these conversations since there is a fewer time constraints, and people can be more objective about their position. Don’t wait until something goes wrong to start planning for the future.  

2. Be patient and understanding

As previously stated, these topics might be tough to discuss, so go in with an open mind, empathy, and a willingness to listen. Try to be as open and transparent as possible, but prepare yourself to pick up the conversation multiple times. Avoid imposing undue stress on your elderly relatives or other family members who may have a say.  

3. Find a means to get in  

It can be intimidating to begin these difficult discussions. Instead, consider opening with a lighter topic, such as an anecdote or story, or noting a recent incident or news item that could promote a more open, casual debate.  

4. Bring in a seasoned pro

We understand that people fear including others in their asset division. However, a trusted family member or friend can moderate the dialogue. Experts in senior care and long-term care may also be able to help. Finally, Jenny and her team suggest speaking with an attorney. Attorneys for life transitions may guide discussions fairly and objectively, bringing a wealth of knowledge and expertise to the table.  

5 estate planning questions you should ask yourself  

The key questions to ask yourself when deciding whether you need to do any estate planning (for yourself or your aging parents) are whether you have any property you’d like to leave to a specific person or charity after you die and whether you have strong feelings about your medical care and final arrangements. If that’s the case, it’s always good to have some essential written paperwork to ensure that your loved ones follow your preferences after you pass away.  

But before considering specific legal documents, these are the key questions you or your parents should consider:  

estate planning checklist for seniors


Questions to Ask for Estate Planning

The Importance of Estate Planning for Long-Term Care  

According to recent statistics, around 70% of people aged 65 and up will require long-term care at some point in their lives. However, only about 30% of individuals have discussed their long-term care options. It’s critical to plan ahead and have a strategy in place for assisting your senior loved one in aging in place in a comfortable, safe, and independent manner. Home health care will be critical for many families. This form of flexible, cheap, and convenient care can help older persons enjoy life to the fullest while giving family caregivers a chance to rest, recharge, and refocus.  

Long-term care and estate planning are essential for seniors who want to age well and pass away with as little adverse influence on their families as possible. Long-term care that is well-planned relieves relatives of the stress of caregiving and ensures that seniors receive the best care possible in a professional setting. After a senior passes away, estate planning defines their wealth management wishes. Understanding how one might inevitably impact the success of the other is the key to successfully bridging long-term care and estate planning.  

Important Guide Resources for Seniors


Is estate planning the same as a will?  

A will is a means of determining what will happen to a person’s belongings after they die. It can be a crucial aspect of estate planning. However, it’s only one part of the bigger picture. A living trust can really be used instead of a will in estate planning. You can also use a trust and a will to protect assets that you fail to name in your will.  

When is estate planning needed?  

When a person has assets that they want to protect when they are no longer able to do so, estate planning comes into the limelight. In the case of an accident, people as young as 30 should also consider making a will, and it’s never too early for an adult to identify someone in a power of attorney.  

Why is estate planning important?  

Your possessions will be divided according to state law if you don’t plan. In addition, if you become physically or mentally disabled, you may not have an executor to manage your estate. You may also be leaving a burden on your loved ones, who might struggle to figure out how to best honor your intentions.  

How much does estate planning cost?  

A medical/financial power of attorney (PoA) typically costs $200-$400 to complete. The typical cost of estate preparation, including the creation of a will or trust, is around $1,000. However, these prices can skyrocket if you want more complex and extensive planning.  

What do estate planning attorneys do?  

It is extremely important to review the legal system before creating your estate plan. You may find yourself in a scenario where you fail to use the appropriate documentation for your location. A bank refuses to accept your Power of Attorney as legal. Seniors may relinquish too much control in their POA or face unanticipated tax repercussions. It is best to seek assistance of an estate lawyer to resolve the issues.  

What are estate planning documents needed?  

The foundation of estate planning is the creation of a will or trust. In addition, seniors might also require a letter of intent, power of attorney, guardianship designations, beneficiary designations, and documentation pertaining to life insurance products.  

Are estate planning fees tax deductible?  

The Tax Cuts and Jobs Act of 2017 eliminated the ability to deduct estate planning fees in some instances. Those clauses will expire in 2025. However, Congress could extend them, and they could also overturn the legislation in the future.  

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