In the past, when life spans were shorter, the overriding concern for many people was passing away prematurely, before all of their estate planning affairs were in order and before children were old enough to care for themselves. Today, life expectancy is much longer than ever anticipated. From both an asset protection and quality of life standpoint, failing to plan for longevity can have unpleasant results.
To avoid negative consequences, an integrated approach to longevity planning should be used that combines asset, health, housing and personal autonomy planning. Longevity planning has become as important in estate planning as planning for what happens after death. Longevity planning and estate planning are now two sides of the same coin. Given the challenges introduced by living longer, longevity and estate planning should be spearheaded by a retirement professional and an estate planning professional. Estate planning has always been a team activity and with extended longevity becoming commonplace, it is so important to have these professionals coordinating their retirement advice and counsel so you have an integrated plan for a long life.
Consider this: In their 20s, George and Sally marry and have two children, Jim and Jenna. In their 40s, they establish a comprehensive estate plan comprising a will, a living trust, financial and medical powers of attorney and a living will for each person. In their early 50s, George and Sally divorce. One year later, George remarries a woman ten years younger than him. George dies at age 70, leaving his property in trust for his second wife. Whatever remains after the death of his second wife goes to Jim and Jenna. George’s second wife lives a long life; she dies when Jim and Jenna are in their mid-70s. Sally exhausts all of her retirement savings at 85. Jim and Jenna feel morally bound to fund their mother’s long-term care and health expenses from their own retirement assets, which become depleted as a result. Sally dies at 95. Jim and Jenna anticipated inheriting a substantial sum from their parents that could have been part of their own retirement assets. That did not happen. Now their depleted retirement funds may not last them until their own deaths. This scenario is not uncommon.
The U.S. Census Bureau tells us the fastest-growing age group among senior citizens is 85 to 94, which has increased by 30% during the last ten years. According to the Social Security Administration, a 65-year-old man now has a life expectancy of 84; a 65-year-old woman has a life expectancy of nearly 87. A 65-year-old couple has almost a 50 % chance one of them will live to 95.
A retirement plan that assumes you will live 15 years after your retirement at age 62 to 66 may fall short of your actual long-term care requirements. Nearly every quality of life and asset planning concern is exacerbated when a person lives longer than expected. The longer you live, the greater the probability your expenses regarding health and long-term care will steadily increase.
Standard wills and trusts, signed years earlier with no updating for changed circumstances over the years, rarely work as intended, when children themselves reach retirement age or predecease their parents. Some children do not receive personal financial help when they most need it. Other children must supplement their long-lived parents’ retirement funds. Blended family issues become more common and more complicated for long-lived persons. Autonomous living also becomes more challenging and expensive for persons in their 80s and 90s. The realization comes to all of the family members when the need is the greatest. A long life places much pressure on the younger generations of the family to deal with the financial and emotional impact of their parents or other loved ones living a long life.
Because longevity is becoming the rule and not the exception, retirement and estate planning must assume you will live a long life. Today and for our futures, take a holistic approach to your longevity and estate planning. Combine legal and financial protections to maximize your assets to produce the retirement income you will need for your health, housing, and personal autonomy, and preserve the quality of your life to the greatest degree possible.
To do this effectively, it is highly recommended to receive advice from a retirement professional and an estate planning professional near in time. This will allow you and the professionals you select to collaborate to achieve and maintain an integrated life and estate plan to support your longevity and family goals when you are gone.
At Stross Law Firm, P. A., we have always viewed estate planning as a team activity. Your team is comprised of your retirement professional, your estate-planning attorney and possibly other professionals depending on the assets you have that will be used for retirement.
If you are interested to know more about how we approach long-term care planning and estate planning, please call us at 813-852-6500 to schedule an initial complimentary discussion with one of our attorneys.