What is Estate Planning?
Surprise! Estate Planning is not taxes, laws or assets although these are the subjects you hear about the most. Yes, it’s governed by state and federal laws and yes, we lawyers talk a lot about what to do to make sure your loved ones receive what you intended and yes, it’s about protecting your assets for future generations.
But Estate Planning is way more than taxes, laws and assets- these are always changing.
No, there are fundamental changes in our culture and society which are having a significant impact on estate planning, retirement planning and how we see our future.
True Estate Planning is about understanding these changes impacting YOU, understanding your priorities and knowing how they impact your Estate Plans.
Significant Social & Technological Trends and Changes Impacting Estate Planning
Let’s dig a little deeper into what these fundamental changes are and how they impact estate planning and your future.
Generational Differences and Priorities
Boomers and millennials are the two largest population groups, with millennials actually outpacing boomers. According to the Census there are 83.1 million millennials and 75.4 boomers (Source) which would make the oldest millennial in their mid-30s and the youngest boomer in their early 50s. As the youngest boomers peak and plan for retirement, millennials are on the rise in their careers and families bringing about a shift in priorities. Boomers are concerned with maintaining wealth to support their later retirement years while millennials are more concerned about health and life insurance and having what they need in the event of tragedy while building their homes, families and careers.
Impact to estate planning: Millennials will focus on basic estate plans with a focus on these other priorities while needing to adapt as significant life events occur. Boomers, on the other hand, will be focused on more complex estate plans with a heavy focus on financial planning.
Technology & Digital Assets:
More and more people are putting their information “in the cloud” meaning electronic communication (email, text, blogs), photos, documents, financial records and personal information is accessed via the Internet. This is having significant impact on estate planning.
Digital Heirs: No longer do we need to only address your personal and intangible property like real estate, vehicles, and cash, but we now need to address your digital assets and potentially include digital heirs who may be different from your other estate heirs.
Digital Assets: With the rise of real income being derived or accessed by digital means, estates need to consider the laws and rules regulating Internet companies and how they address ownership of a person’s digital assets, especially if that Internet company or website is based in another country.
Privacy & Access: Digital assets in the cloud bring up issues of privacy and access. What online accounts, email accounts and social media platforms need to be accessed? A fiduciary must follow the same rules on digital assets as other tangible property and can only access accounts if there is a need to administer the estate.
Increased Costs & Expenses: How many times have you created a password for an online account? Does anyone else have access to that information? Accessing online financial records and files is increasing the cost of estate administration because of lack of access to passwords or for failure to designate a person to have access if you die.
This is only a brief summary of how technology is changing estate planning. A new law is being proposed in each state to address these issues. I will be writing more in-depth on this new law in the next blog post.
Redefining Family…. Same Sex, Blended, 2nd or 3rd Spouse:
Because of the changing makeup of families – families are no longer traditional. It has only been a matter of months since same-sex marriage was legalized across the nation, yet certain states and cities have yet to update their procedures and in some cases, will still fight the change.
How does one change their Estate Plans to protect against this? Do now legally married same sex couples need to update their Estate Plan to seize tax savings formerly only available to traditional married couples?
Divorces: According to Pew Research, 4 in 10 new marriages include at least one previously married partner (Source). We are now in a generation of divorce with many families having entered into 2nd or 3rd marriages, but not updating their Estate Plans, life insurance, or retirement plan beneficiary forms or assets to account for these changes.
Age Gaps & Blended Families: Some may even need to consider Estate Plans dealing with age gaps. Creating estate plans for “blended families” has its own set of needs – balancing the needs of two sets of families is not just a personal struggle but one that Estate Plans must account for. An experienced listening Estate Attorney can help the client process and find that balance in their Estate Plan.
Living Longer: Later Retirement & The Sandwich Generation
Happy news! We’re living longer. The average age of retirement is 70 and the average life expectancy in the US for men is 78 and for women is 81.
Insurance: Assets and Estate Plans need to account for living longer, and even living healthier or not. For those in their early to mid-40s, health insurance is a primary concern but long term care insurance should also be a focus as part of your estate and retirement plan. Getting long term care insurance while you are healthy and young is a lot more affordable then purchasing it in your 60s.
“Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years.” (Source)
Double Duty: “Nearly half of adults in their mid-40s and 50s have a parent 65 or older and have a child 18 or older.” (Source). This is referred to as the “Sandwich Generation” because not only are they raising children or supporting young adults in college and beyond, but they are also responsible for taking care of aging parents. I have many clients who live well into their 90’s. My own Mother is 94.
In short, many Estate Planning articles focus on the taxes, financial planning and laws. These are all important because they are tools used to help shape your estate plan. However your unique situation, family dynamics and priorities must be heard and accounted for. This is why it is important to have an attorney that seeks first to listen and understand your unique situation, get to know your priorities and concerns. They will also consider the taxes and laws and financial assets when designing your Estate plan. All are needed for a unique Estate Plan for your unique situation.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.