Planning for Life

5@55: The Essential Estate Planning Documents

Posted by Harry S. Margolis on September 29, 2015

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By Harry S. Margolis

What estate planning documents do you need and by when do you need them? Brooklyn elder law and estate planning attorney Judith D. Grimaldi along with her co-author, Joanne Seminara, answer this question in their new book, 5@55: The 5 Essential Documents You Need by Age 55. They make the case that for baby boomers, now's the time.

 They list the following five documents as essential:

  1. Health care proxyJudith Grimaldi
  2. Durable power of attorney
  3. Living will
  4. Will or trust
  5. Digital diary

Lawyers, of course, can and will quibble. I'd argue that a HIPAA release is also essential. While the health care proxy will permit your agent to communicate with and provide direction to medical personnel, you can only appoint one agent plus alternates in case the agent cannot serve for any reason. But there may be many people you would like to be able to talk freely with nurses, doctors and other medical providers. For instance, you might appoint your spouse as your agent, but give all of your children the ability to communicate on your behalf. This can be vitally important in emergency situations. But this is a quibble. I agree with the rest of Grimaldi and Seminara's list.

But why age 55? Other than the symmetry between five documents and the two fives in age 55? A few realities of life make this a good age to do estate planning, including the following:

  1. Almost everyone at age 55 is still competent, healthy and alive.
  2. After age 55, the chances that one will become incompetent or ill or pass away increase significantly with each passing year, even though the average life expectancy is still 25 years for men and 28 for women. While 90 out of 100 boys and 94 out of 100 girls born each year will make it to age 55, on average of those who are 55, 10 out of every 100 men and 7 out of every 100 women will pass away within the coming decade. In other words, the rate of death (and probably illness and disability) are about the same from age 55 to 65 as from birth to age 55. (Click here to see the Social Security Administration's actuarial life table.)
  3. By age 55, most parents are empty nesters with their children over age 18 and out of the house (assuming they haven't returned again). Of course, this isn't necessarily true for those of us (including myself) who had children later in life, but it's true for most parents. The average age of mothers having their first child is 26 (up from just over 21 in 1970). So on average, the first born is 29 by the time his mom is 55. The parents will no longer need to name guardians for their children in their estate plans and should have a pretty good idea about whether their children will be self-supporting and able to handle any funds they inherit. They may also be ready to name them as their agents on documents rather than siblings and friends. Those estate planning documents the parents signed after they first had children no longer make much sense.
  4. Also, the parents' lives are likely to have settled down. If they were divorced, had children with more than one partner, moved around the country, or suffered a disabling illness or injury, life has happened. About 42% of marriages between ages 15 and 46 end in divorce by age 46. While these numbers are from 1979 data and may have changed, the fact that most marriages and divorces occur before age 55 has not. Estate planning documents that may have been superseded by events in the past can now be taken into account in the new plan. In addition, clients' financial situations are likely to be more certain at age 55 than when the clients were younger, which will make planning more clear and more relevant to the assets they own, whether they are homes, retirement plans, or vacation homes.
  5. Finally, at age 55 you may well be concerned about issues that were irrelevant at younger ages, such as retirement and the potential need for long-term care.

So, if you are 55 or older and do not have estate planning documents or have ones that you signed decades ago when your children were born, now is the time to do your planning. Click here to order 5@55 and learn more about the essential documents and planning in general.

Topics: baby boomers, Estate Planning

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