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Planning for retirement’s three phases

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There are three phases of planning for your retirement, and each requires different tools.

Estate Planning and Long Term Care Planning are ongoing processes that should begin early in a person’s life. Your estate planning documents should adapt in the face of challenges that arise through aging, changes in your financial situation, or changes within your family. As estate planning attorneys, we see three major phases in the estate plan process: the maturing years, the senior years, and the post-death years. Each of these phases has a different focus, and, therefore, requires different documents. In this article, we will guide you through the phases and point out the available tools for each.

The Maturing Years: During this phase, you begin thinking about the future and creating a general framework for your estate plan. Think about who you would want to act as your power of attorney to oversee your healthcare and financial decisions in the event that you’re unable to do so, and execute power of attorney documents. Then look at any property you own, and how you would want it passed on to your children or other relatives. Then consult an attorney to create wills and trusts to best carry out that plan. These years are also a good time to think about the possibility of long-term care, especially if you have a family history of a chronic, age-related illness. Consider the possibility of future government assistance for care, and consult an elder law attorney to discuss how to increase your chances of eligibility. Also, consider purchasing long term care insurance at this phase.

The Senior Years: In this phase, you are more advanced in age, and may have already experienced health complications due to aging. There is a risk during this phase that you may become incapable of managing your finances or health care. Therefore, it is extremely important to at least have special powers of attorney in place before you reach your senior years. During that time, you can build off the foundation laid by the wills, trusts, and powers of attorney you executed during your maturing years. But depending on your personal situation, it may be easier to revise these documents to account for changes in your planning goals. We commonly encounter three types of senior clients. First, we find the proactive planners interested in their likelihood of qualifying for long term care assistance, reviewing their current estate plans, and making any necessary revisions. These clients are best positioned to protect their assets because the possibility of long-term care is not imminent. Second, we have the “wait and see” cases. These clients may already have a diagnosis of a chronic illness, but can still live at home for the time being. They have the opportunity to do some planning and asset protection. Third, we see crisis cases, where the client is already in a nursing home or must enter one, and needs to apply and qualify for Medicaid as soon as possible.

Post-Death Estate, Trust, and Probate Administration: In this phase, after you have passed away, the wills and trusts you executed during the first two phases take effect. Your property is distributed to your children or other heirs as you designated in your estate plan. Take care to pass assets on in the correct manner.

About Anthony B. Ferraro

Anthony B. Ferraro is the founder and managing member at the Law Offices of Anthony B. Ferraro. He received his Bachelor of Science degree in accountancy from DePaul University and his Master of Science in taxation. After receiving his CPA designation in 1978, he enrolled in law school, earning his Juris Doctor in 1983 from De Paul University. An elder law practitioner, his practice areas include Medicaid planning and applications, guardianship, probate & trust administration, long-term care planning, nursing home contracts and admission, senior estate planning, special needs planning, estate planning, and estate taxation.

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