Stages of Planning

Over 59½ with Adult Children

Time to Review

If empty nesters have reached and/or gone by age 59½, a thorough and proper review of their retirement planning is necessary.

Each type of deferred compensation plan (i.e. IRA, SEPP, 401(k) 403(b), PERS, STRS, etc.) has rules and regulations which govern the withdrawal and the receipt of the account at the participant’s death. These rules should be reviewed both financially and in the retirement and estate planning aspect so that no adverse tax rules apply.

The parents should prepare a Will in conjunction with a Living Trust, Durable Financial Power of Attorney, Durable Power of Attorney for Health Care, and Living Will. The Living Trust avoids a probate estate and also has tax provisions in the event your estate has tax consequences at death. The Trust would have provisions for the surviving spouse and would have provisions if no spouse survives for distribution to the adult children and/or grandchildren.

Empty nester estate planning becomes more complicated because the children’s lifestyles have been established, and special planning may be necessary in light of the adult child’s capabilities. In some instances, an adult child may be disabled and/or become disabled.  In this event, special trust provisions must be created to avoid the interruption of governmental benefits.

In some cases, the adult child is competent, but may not be one with a great deal of financial responsibility. This may lead the parent to consider an ongoing trust for protection of the corpus from bad decisions of the child. These matters are thoroughly discussed in estate planning and are tailored to specific client circumstances.

The foregoing stages of planning should give you an overall idea of when it is important to see your financial and/or estate planner for purposes of creating and/or updating your estate plan to achieve the maximum amount of income tax, estate tax, and unnecessary governmental interference.

Contact R.F. Meyer & Associates today to schedule an appointment to discuss your estate planning and elder law needs.

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