According to the Journal of the American Medical Academy, Arizona’s life expectancy was 79.3 years in 2016, the most recent year for which data is available. However, life expectancy is only the average number of years a person can expect to live, and many Phoenix residents will live many years past 80. With increasing life expectancy, come additional estate planning challenges.
Planning for Additional Costs
Living longer means that you need to make sure that you have sufficient funds for yourself. Not saving enough for yourself can lead to serious consequences. In addition to everyday expenses, it is essential to have a realistic understanding of health care costs. These costs tend to increase with age, especially if you end up having to fund long-term care facilities or in-home care. This means you need to be careful about giving too much away too early.
Planning for Incapacity
Increased life expectancy does not necessarily equate to more healthy years. You must plan for the scenario where you are spending your last years suffering from diminished capacity. The possibility of stroke, Alzheimer’s, dementia, or other illness must be part of your estate plan. There are multiple estate planning tools that you can use to prepare.
- Durable Financial Power of Attorney. This is a legal document that allows you to appoint an individual that you trust to handle your financial affairs in the event that you are incapacitated.
- Durable Healthcare Power of Attorney. This is a legal document that allows you to appoint an individual to make health care decisions if you are unable to make decisions yourself.
- Living Will. Also known as an advanced health care directive, this legal document states your end-of-life healthcare decisions, such as whether you want to be resuscitated or stay on life support.
Having these documents in place will ensure that when it is time to make difficult decisions, everyone understands what they must do and the role that they should play. You can make sure that your wishes will be honored even after you are no longer able to make decisions yourself.
Guarding Against Financial Scams and Elder Abuse
As individuals age, they can become targets of financial scams or elder abuse. Financial abuse of elders can come at the hands of strangers, caregivers, or even family members. It is critical to speak to an estate planning attorney about how you can protect yourself. One approach would be to set up an irrevocable trust that cannot be changed after it is created.
Updating and Reviewing Documents
Once you create an estate plan in Phoenix, it is not set in stone. Even after you have retired and your children are grown, there is a lot that could happen in your remaining years that might affect your estate plan. It is critical to regularly update your will and other estate planning documents to accommodate any major life changes, such as grandchildren, divorce, second marriages, and the loss of a family member. Even if you don’t experience any significant life changes, legislation is constantly being passed that could affect your estate plan. It is wise to update and review your documents with an attorney every few years.
Another challenge you may face is the ability to maintain flexibility in your estate plan as you live longer. The longer you live, the more life can change, and you must be able to adapt. Irrevocable trusts have benefits, but one downside is that, in general, a grantor cannot amend the trust without jeopardizing tax benefits.
However, Arizona law provides some methods of still maintaining flexibility with irrevocable trusts. The first method is to appoint a trust protector who is granted limited powers under the statute. A trust protector can do such things as modify the interests to beneficiaries, amend the trust to achieve favorable tax status, or remove a trustee. The second method through which you can modify an irrevocable trust in Phoenix is decanting. Decanting allows you to transfer the assets in the trust over to a new trust with different terms under certain limitations.
Meeting the Needs of Heirs
Individuals living longer means that their children are inheriting their estate later in life. It can be hard if you see your children, who may have planned to receive an inheritance, struggling. One option to overcome this challenge is to engage in gifting strategies during your life. A second option would be to create a trust with staggered payout dates. These dates could be when beneficiaries reach certain ages or other milestones.
Your Estate Planning, Business Planning, and Probate Attorney
Nicole Pavlik Law Firms helps residents of Phoenix, Arizona with their estate planning, business planning, and probate needs. To see what Nicole Pavlik can do for your estate or business, give our office a call at (602) 635-6176.