Estate Planning for Seniors

Estate planning is an essential but often overlooked part of financial planning for seniors. This legal process lets you spell out how you want to share your assets with your loved ones if you pass away. It also enables you to make important decisions about your future healthcare, funeral arrangements, and more. 

Despite these benefits, many people don’t make estate planning a priority. According to Caring.com’s 2024 Wills and Estate Planning Survey, only 32% of Americans have created an estate plan. You might assume that you don’t have enough assets to write a will or that your loved ones already know your preferences. Or maybe you believe you have plenty of time to make an estate plan. 

However, no one can predict the future, so planning ahead is crucial. This guide covers the advantages, major components, and typical expenses of estate planning for seniors.

What is Estate Planning?

Estate planning is creating legal documents detailing how your caregivers and loved ones should manage your affairs and assets if you cannot make those decisions yourself. These documents ensure that your loved ones and professionals understand and follow your wishes if you pass away or become incapacitated. 

The word “estate” makes some people assume this process is only for wealthy people. But you don’t need to own a mansion or have a vast fortune to create an estate plan. Your estate refers to all your belongings and debts, including your: 

• House and other real estate 
• Business
• Cars
• Bank accounts 
• Investments
• Personal possessions 
• Pets 
• Credit card debt and personal loans

Estate planning lets you plan how these assets and liabilities will get distributed if you’re not around to handle them. For example, you might give your beloved cats to your sibling and set up a trust to pay for a lifetime food and catnip supply. You could also donate your furniture to a local charity and use your financial assets to cover your remaining debts. 

Additionally, estate planning empowers you to plan for future healthcare and end-of-life decisions. You can specify what types of medical interventions you want to receive, your headstone inscription, and more. 

Why Estate Planning Matters

Elder estate planning has many benefits. This process gives you complete control over the distribution of your money, possessions, and other assets among your beneficiaries. This step can reduce confusion among your heirs and ensure your legacy lives on as you envision. 

An estate plan also lets you map out your expectations for medical care. You can provide specific instructions about healthcare treatments, end-of-life care, and other decisions. Outlining your medical desires beforehand allows you to receive faster care that aligns with your wishes. 

Main Components of Estate Planning

Estate planning may sound intimidating and time-consuming, but the process is simpler than you might expect. Most seniors need four essential components to create a comprehensive estate plan. 

Will

A will is a legal document that describes how you want to distribute your assets after you pass away. Depending on your circumstances, this document can be simple or elaborate. 

Some people give all their assets to a single heir, while others have complex wills with many beneficiaries. For instance, you might give your three children equal ownership of your house, pass your car on to your best friend, and return an heirloom instrument to your cousin. 

Additionally, a will should provide care plans for dependents in your custody. Use this document to nominate a guardian for minor children and relatives who rely on you for care. It’s best to discuss your plans with potential guardians ahead of time so they can decide if they’re willing and able to take on this huge responsibility. 

You’ll also need to assign a living person as the executor of your estate. This individual will distribute your property under the supervision of a probate court. You can choose a family member, friend, attorney, or another trustworthy person. 

Some states accept holographic wills, which have no witnesses. However, it’s best to have your will witnessed by two disinterested people who won’t inherit anything from you. You should also have your will validated by a notary and make copies to store in secure locations. These steps reduce the likelihood that someone — like a disgruntled relative or opportunistic stranger — will successfully challenge your will in court. 

Trust

A trust is a legal arrangement that lets you transfer ownership of your money and possessions to another person. An appointed trustee oversees the trust account and distributes your assets after you pass away or when you see fit.

There are two main types of trusts with different purposes and rules. Many people choose a revocable living trust. This arrangement lets you keep control over your trust and appoint yourself or a third party as the trustee. You can make as many changes as you want to a revocable trust while you’re alive. For instance, you can add new beneficiaries, remove assets, or dissolve the trust.

Some people create an irrevocable living trust. This arrangement requires you to give up control over your assets and appoint a third-party trustee. An irrevocable trust can’t be altered after you finalize it.

Revocable and irrevocable trusts have different tax implications, so weighing these options carefully is essential. A revocable trust lets you retain ownership of your assets, so your beneficiaries must pay estate taxes when they receive their inheritances. By contrast, the government doesn’t consider assets in an irrevocable trust part of your estate. As a result, your beneficiaries won’t need to pay taxes, and your creditors won’t be able to claim your estate as repayment. 

What’s the difference between a will and a trust? A will must go through the legal process of probate, so it will take longer for your beneficiaries to receive their share of your assets. A trust goes into effect immediately, speeding up this process. Additionally, a will is a public document, while a trust remains private between the grantor, trustee, and beneficiaries. 

Living Will 

A living will is a legal document that details your medical treatment preferences if you cannot communicate your wishes. Healthcare providers and caregivers use this document to inform their decisions about your medical care. 

There are many situations where caregivers would consult a living will. People who develop Alzheimer’s disease and other cognitive disorders may become unable to make healthcare decisions. Accidents, cardiac arrests, and other sudden medical events could affect an individual’s ability to communicate their wishes. 

Living wills typically include guidelines for these medical decisions: 

• Cardiopulmonary resuscitation 
• End-of-life care
• Life-sustaining interventions
• Palliative care
• Organ and tissue donation  

These choices are personal and weighty, so consider how you’d want to be cared for in different scenarios. Ask yourself questions like these: 

• What medical interventions would I want to receive if I was in an irreversible coma? For how long? 
• What types of palliative care do I want if I have a terminal illness?
• Should doctors attempt to resuscitate me if I have a cardiac arrest? 
• What are my preferences for pain management? 
• Do I want my family to donate my body to science? 

You may also find it helpful to consult your doctor, loved ones, and spiritual advisor for guidance. 

It’s essential to keep your living will in an accessible location where someone can quickly find it in a medical emergency. Share copies with your doctors, spouse, children, and others who may be asked about your desires. You can also put a note in your wallet that notifies emergency personnel about the existence and location of your living will. 

Power of Attorney 

A power of attorney (POA) gives another individual the authority to make legal decisions on your behalf. You can grant this authority immediately or identify specific conditions under which the POA would become effective. For instance, you might give your sibling POA if you become incapacitated or travel abroad for an extended period. 

A POA lets you define the specific powers you’re granting. You could give a family member the authority to sell your house, manage your finances, or make gifts. It’s also possible to revoke the POA if your circumstances change.  

How Much Does Estate Planning Cost?

The cost of estate planning varies based on several factors, including the complexity and size of your estate, the type of documents you need, and the method you choose to create them. 

Many people hire an estate lawyer to create their documents. The U.S. Will Registry estimates that estate lawyers charge an average of $100 to $400 per hour for their services. Others charge a flat rate per document. The average fee for a will ranges from $200 to $1,500. 

Several online services offer affordable estate planning services. They charge an average of $160 for a will. You may prefer this option if you have a small or uncomplicated estate and don’t need legal guidance. 

Take Control of Your Future 

Unexpected events happen to people of all ages and walks of life. Make sure you have a say in your future by making an estate plan. This process lets you give advanced medical directives, specify how you want to distribute your possessions, and more. 

Estate planning may seem morbid or unnecessary, but it’s an investment in your future. The time you spend creating these legal documents today ensures you and your loved ones won’t get caught off guard if you experience an emergency tomorrow. 

Of course, estate planning isn’t the only part of financial management for seniors. You should also budget for healthcare expenses, senior living, and other routine costs. Learn more about how to manage these expenses with our financial planning for seniors guide, and contact Senior Resource Group to discover how we can help you prepare for an exciting future.