Estate planning in VA in preparation for retirement: Three top issues

Discussing these three issues can help begin the estate planning process.

Putting together an estate plan is an important step towards ensuring financial security. Not only do the documents used in the plan help determine the distribution of assets, but they can also help reduce tax obligations. Although there are a number of benefits to these plans, many Americans do not have an estate plan. A recent article in Forbes addressed the issue, noting Americans need to "stop taking an ostrich approach to estate planning." According to the piece, 51 percent of Americans ranging in age from 55 to 64 and 62 percent of 45 to 54 year olds do not have a plan.

For those who wish to develop a plan, it helps to know where to start. One helpful step is to face three common issues.

Top three issues to consider

A number of issues can arise when attempting to put together or refine an estate plan when nearing retirement. Three of the more common considerations include:

  • Government benefit programs. A recent piece in the Huffington Post touched on this issue, noting both "means-tested" and "non-means-tested" programs should be taken into consideration. Means-tested programs include Medicaid and Supplemental Security Income (SSI) while Social Security and Medicare are examples of non-means-tested benefits. The programs often play an important role when planning retirement income. In some instances, it can be advantageous to take steps to reduce assets to qualify for means-tested programs. Those who decide to reduce their assets to qualify must do so carefully as approval may include a "look-back" period. This involves a review of the timing of the transfer of assets. If assets were transferred too close to the application date, the application may be denied.
  • Capacity. Virginia state law allows for an individual to put together a legally binding document that details how the creator would like to be cared for in the event of incapacitation. This document is referred to as a living will. State law also allows for an individual to provide another with the ability to make health care decisions on his or her behalf through a durable power of attorney document.
  • Secrecy. Estate plans are generally more successful when the creator is open with his or her intentions. Discussing the plan with loved ones can reduce the risk of conflict when the plan is executed.

Being aware of these issues can help you determine what type of plan is best for your needs. Actually drafting these plans can be complex, as they often entail a number of different legal documents such as a will, durable power of attorney and living wills as well as the potential need for trusts. Contact an experienced estate planning lawyer to discuss your wishes and help better ensure a plan is tailored to fit your unique needs.