Are you between ages 40 and 55? If yes, you are in midlife (or middle aged) and research has shown that you are in your peak earning years. That's good, because it may be that you have some expensive life events going on unlike when you were younger. Do you have children who are college-bound or already there? Do you have a wedding scheduled (or one or more in the future)? You may be helping your elderly parents with household chores, medical advocacy, and financial responsibilities.
The Sandwich Generation
The Sandwich Generation refers to middle-aged adults who are caring for both their elderly parents and their own children. If you are in that situation, you may be busy. Still, this would be a good time to create (or revisit) your estate plan and make sure your adult children and your parents have their affairs in order. Unfortunately, many married couples mistakenly believe they can make legal, personal, health care, and financial decisions for one another should either spouse become legally incapacitated due to a serious injury or illness. However, that is not correct!
Proper Estate Planning is Important in Midlife
Failure to engage in adequate estate planning ahead of time to designate your spouse as the decision-maker in case of incapacity means they won't have the power to make essential decisions for you (or for both of you). This includes being unable to access your medical records or consult with your doctor due to medical privacy laws, having restricted control over your finances because of financial laws, and being unable to file a "legal" joint income tax return according to IRS regulations, among other things.
If you don't designate the decision-maker of your preference through thorough estate planning beforehand, a probate judge will have to make the choice for you. Although the judge is likely to choose your spouse, the probate court procedure for this is costly (it may involve at least two attorneys), exposes your private personal and financial details to public record, and is a significant burden for your spouse.
An Estate Plan From the 1800's or 2020s?
In Michigan, in the absence of a Will or Living Trust, the state employs "intestacy" laws to dictate estate inheritance. These laws originate from the 1800s, a time when the United States was primarily a simple rural, agrarian society, and these generic state laws, drafted by legislators, may not align with your unique goals and circumstances concerning your spouse and assets and they fail to consider the actual wishes of the deceased. Depending on the titling of your assets and the arrangement of your beneficiary designations, you could inadvertently disinherit your spouse or children, potentially leading them to contest your estate.
Regarding your children, it's important to take significant precautions to safeguard any inheritance, both for their benefit and from potential risks. The wealth accumulated from a lifetime of hard work and thrift can be squandered rapidly, as earnings are often managed differently from inheritances. Young people can legally inherit outright at age 18 when they may lack the maturity and experience to take care of an inheritance. Youth can lead to an inheritance being squandered quickly at the bar, on cars, and ski trips. Even if your adult children are older, inheritances can also swiftly diminish due to divorces, lawsuits, and bankruptcies.
Fortunately, with meticulous estate planning conducted during your peak earning years, you can establish an inheritance that is safeguarded for and, if necessary, from your children. Remember, there are two things in life you cannot choose: your parents and your children's spouses.
Are your parents currently in or contemplating a transition to long-term care? If so, you've likely observed the substantial costs associated with various levels of care, from in-home assistance to assisted living to skilled nursing homes. These expenses can quickly deplete your parents' savings and investments accumulated through years of hard work and frugality.
Your prime earning years present an opportune moment to look ahead to the possibility of the need for your own long-term care when you are older by securing a long-term care insurance policy while you are still able to meet the necessary physical and mental qualifications. Some policies offer coverage exclusively for long-term care needs, while others offer the flexibility to convert into life insurance if long-term care assistance isn't required. This alternative to traditional long-term care insurance has gained popularity.
Is Long-Term Care Insurance Actually Necessary?
The statistics are there is a 70% likelihood of requiring long-term care after reaching 65. Despite this statistic, 70% of individuals believe they won't fall into that category and 70% assume Medicare will cover such expenses (it does not).
It wise to consider that if you require help with daily activities like eating, bathing, dressing, toileting, or transferring, if you prefer to receive help from care professionals or to put this responsibility on your children, who may not have the time or financial resources to give you the care you need. If you do not have children, who will provide this ongoing assistance to you?
When you're ready to address your long-term care planning with appropriate insurance, I can direct you to professionals to help you to find suitable options.
During Your Peak Earning Years, Revisiting Your Estate Plan Is Important
For all these issues, I can guide you away from the lawyer-heavy probate process and replace the impersonal, state-crafted, one-size-fits-all estate plan with a customized solution tailored to your specific goals and circumstances. I'll even help you synchronize beneficiary designations on your life insurance and retirement plans with your estate plan to prevent unintended consequences.
I am an estate and elder law attorney with 27 years of practical experience you can use to safeguard everything and everyone you hold dear. Contact me, Andrew Byers, now by using the online form or calling me directly at (248) 469-4261. On this initial call, I will answer your preliminary questions and get some background information to make sure it is a situation I can help with. After that, you can decide if it makes sense to schedule a more in-depth consultation. I advise clients in Troy, Michigan and surrounding areas including Royal Oak, Clawson, and the rest of Metro Detroit.
