Estate Planning for Super-Longevity

A will is the basic estate planning document for people of all ages, and it is important that it be up to date and reflects clients’ current situations.

An effective will has a competent and capable executor. For many clients, this could be an adult child or other relative. Be sure that this selection remains the best choice for them, working with clients to make any changes as needed.

Family circumstances change over time, and reviews include adjustments due to divorce, death of a spouse or other heir, birth or adoption of a child.

Account and Asset Titling

Ensuring that bank and investment accounts are properly titled is particularly important for clients as they get older. If an account is jointly owned by married clients and one dies, be sure to discuss options for retitling the account to best serve the needs of the surviving spouse.

The same holds true for titling of a client’s home. Be sure the titling reflects the client’s wishes for who will own the property in the event of their death. In many cases, titling an account or other asset in the name of a trust can make sense.

Beneficiary Designations

It’s important that beneficiary designations on retirement accounts, life insurance policies and annuities are reviewed and updated as needed. Life events such as death, divorce and marriage can change who a client wants as a beneficiary on a particular account or policy.

If a client dies and the beneficiary designations are out of date, those named will still govern the distribution of assets or benefits from the account in question.

Powers of Attorney

In estate planning, there are two main forms of power of attorney.

A financial power of attorney authorizes someone to manage a client’s finances should the client become unable to do so. This designation can also be granted on a temporary basis to allow an individual to act on behalf of a client for a specific financial transaction such as the sale of assets.

A power of attorney for health care designates someone to make health-related decisions for clients if they are unable to do so for themselves. 

Powers of attorney are generally durable, ensuring that a designated family member of another trusted person will be able to make financial or health care decisions. As clients age and live longer, having appropriate powers of attorney in place can help ensure that their finances and health needs are being handled in a trusted manner.

Trusts

A trust can be a useful vehicle to hold and distribute assets for clients as they age. Trusts can be revocable or irrevocable, providing different levels of control.

They can allow for the distribution of assets to beneficiaries during a client’s lifetime and at death, depending upon the client’s wishes and the structure of the trust.

Lifetime Giving

For clients living into their 90s, it’s not uncommon that the life circumstances of their beneficiaries will change over time. They may get married, have children of their own, get divorced and experience any number of life changes.

While clients cannot forecast their heirs’ life paths, it can be a good idea to consider transferring a portion of their assets to beneficiaries at points in their lives when the money has an outsize impact — to pay a grandchild's college tuition, for example.

This can be a balancing act, as clients will also need to cover their own living expenses and potentially medical and long-term care needs.

One option for clients is to make a series of lifetime gifts to their adult children and other heirs. While these may not take the form of large one-time payouts, it is a way to transfer assets over time. The gifts can be paused if money is needed for a client’s well-being.

Transferring Business Ownership

For clients who are business owners, it's important to have a business exit strategy. Exiting the business — often one of a client’s largest assets — in a fashion that is most beneficial to heirs and the future of the business are both important estate planning goals.

If a family member is interested in taking over management of the business, clients should have a plan that includes when they will transfer ownership. This might be all at once or over a period of time.

Delaying a transfer of ownership too long might drive these heirs out of the business in favor of starting their own company or going to work with another firm. This could derail a client’s desire to keep the business in the family.