No more school buses. No more huge grocery lists. The last bird has left, and now the nest is empty!
You may feel sad or you may be overjoyed. You may not truly feel like an “empty nester” if you are still paying college tuition or loans for college tuition. You may just be trying to remember what life is like without your kids in the house. Either way, one thing you may overlook is the importance of taking a step back and taking a look at your estate as a whole.
When was the last time you revised your estate plan?
If you’re like many busy parents of toddlers then teenagers, the answer is “decades ago.” Perhaps you put a will in place when your children were born, to ensure they were taken care of in the event of your untimely passing, but it’s probably gone largely unchanged since then. You may have acquired more property or assets. You may have had more children. You may have divorced and remarried.
At any time of change in your life (and becoming an empty nester qualifies), it’s smart to assess the validity and accuracy of your estate plan, ensuring it lines up with your current wishes.
Here are five quick tips on why and how to update your estate plan:
Tip #1: Revisit Powers of Attorney
One of the primary functions of a will is to name the individuals you’d wish to care for your finances if you become incapacitated or die, as well as the individual you’d like to make healthcare decisions for you. Have these people remained the same?
You may have previously named spouses, siblings or parents, but over the course of 18+ years, family members may have aged or passed, and you may have divorced. If your children are older and trusted, it may be time to pass this responsibility to them, as they are more likely to outlive you.
Also, you can get your adult children started on their own planning by getting them each a health care proxy and a durable power of attorney. Now that they are legal adults, you will not automatically be able to step into this role for them. Not only can this help protect them if they get sick or injured, but you can help get them thinking about taking responsibility for their planning in the process.
Tip #2: Determine How You Will Pass on Your Inheritance to Grown Children
If you created an estate plan when your children were very young, you may have left all of your assets to your spouse to distribute amongst your children, or you and your spouse may have created a trust to hold your collective assets until your children reached a certain age.
If your children are now adults, you may wish to revisit trust provisions put in place to care for minor children that are now outdated, and revise your trust to reflect the adults they’ve become. Have your children added grandchildren to the family? You will likely desire to revise your will to reflect any gifts to your grandchildren. You may also be at the point where you no longer feel you need to have assets held in trust for your children, and want to revise your documents to provide for a more immediate inheritance.
Tip #3: Address Life Insurance Needs (or Lack Thereof)
Your previous estate plan likely included life insurance policies for you and/or your spouse. The amount of insurance you carried was probably based on an amount that would have provided for raising your children, paying for their education, and keeping your family in the home.
But now that you have probably acquired more assets over the course of the last decade or two and your children are now self-sufficient, you may not need to maintain the same level of life insurance coverage you did previously. It’s the right time to look at what’s needed for your family members above and beyond your estate, and only pay for coverage for the gap.
Tip #4: Start Considering Long-Term Care Insurance
One critical part of your estate plan is who will care for you if you are disabled. Now that your children are grown, it might be clearer to you which should be primarily responsible for your well-being and day-to-day living.
On the other hand, maybe you see clearly that you will need to supplement your retirement funds to provide for your own welfare. In this case, long-term care insurance is a great option. You can rest assured that you’ll be able to afford assisted living or a place at a long-term rehabilitation facility and avoid putting the burden on your children. You may be interested in purchasing a policy for a disabled child, to provide for them after you pass on.
Tip #5: Begin Planning for Retirement
If you own and run a family business, you will inevitably come to a point in your life when you are ready to pass the torch to the next generation. Even if that time feels far away, it’s critical to begin putting a plan in place to pass on your interests to a child who has shown interest in running the business. If you don’t have a clear line of succession, that’s even more of a reason to start exploring your options.
Our team at slnlaw specializes in making estate planning realistic and simple. It’s okay if you don’t know all the answers. Let’s work on finding them together.