Estate Planning Guide for Baby Boomers

Estate Planning Guide for Baby Boomers

8 Estate Planning Questions for Baby Boomers

As they enter retirement age, Baby Boomers have years of wisdom and stability to offer younger generations. However, roughly 1 in 3 Baby Boomers hasn’t completed their estate plan. Failing to plan puts  the families and businesses they’ve spent years developing at risk. In this article, we’ll explore eight essential questions that every Baby Boomer should consider when crafting an estate plan.

TABLE OF CONTENTS

1. Why Is Estate Planning Important for Baby Boomers?

Financial advisors are stating that the passage of property to Millennials and Generation X will be one of the largest wealth transfers the United States has ever seen. The Baby Boomer generation enjoyed many financial advantages during their working years, including:

  • Low-cost college tuition (avoiding student loan debt)
  • Entering the workforce immediately after high school
  • Earlier contributions to 401(k) plans, pensions, and other retirement plans 
  • Lower costs of living and real estate prices
  • Thriving markets for stock investments
  • Lower interest rates (saving years of interest on mortgages, cars, and debt-financed household expenses)
  • Tax breaks and government incentives during their prime earning years.

If you haven’t started estate planning because you’re not a multimillionaire, you should know that you could have more to pass on than you think. In fact, many Baby Boomers who start the estate planning process discover untapped resources, such as military pensions or unpaid retirement benefits from a deceased spouse. Moreover, most people plan based on what they have today, but don’t account for how some assets will continue to grow in value before they might (or must) be used. 

Others who bought property before real estate prices skyrocketed are shocked to hear the current values of their investments. Until you meet with an attorney, you won’t know how the full value of your estate may affect your plan.

2. When Are Baby Boomers Retiring?

Age 65—the year when workers become eligible for Medicare—has traditionally been associated with retirement. However, the Social Security Administration’s (SSA) retirement funds are estimated to run out before 2040. With over 4 million Americans turning 65 each year between 2024-2027, SSA is considering harsh measures to preserve the funds it has left.

One method is to change the full retirement age—the age at which an individual can collect 100% of their Social Security benefits—to 67 for anyone born in 1960 or later. The strain on public funds means people might have to stay in the workforce longer, delaying their retirement for two, five, or even ten years.

While some workers can continue their careers in their seventies and beyond, they’re unlikely to bring home the same income they did in their prime earning years. Others living off investments could see their fortunes change overnight in an unstable market. We can help you find creative ways to preserve your wealth and form a business exit strategy to benefit you and your family.

3. How Old Is Your Current Will?

If you’re 60 or older and have already created an estate plan, you’ve taken a big step toward protecting your loved ones. However, don’t rest on your laurels just yet. Your priorities may shift as your circumstances change, requiring adjustments to your estate plan. You may wish to add grandchildren or step-grandchildren as heirs or disinherit a relative who has proven to be unreliable.

Generally speaking, it’s a good idea to revisit your estate plan every 3 to 5 years to make sure your documents are up to date. It’s also important to periodically review and update beneficiary designations, especially if family dynamics or personal relationships change.

4. How Much Will the State Take from Your Heirs?

Your Last Will and Testament is a valuable road map for your heirs, but it might not be the best option for passing on your property. Probate proceedings are public, which can be problematic if your family members want the details of your estate kept private. Probate also takes months to complete, during which time any creditors could come forward to collect old debts. The main thing that most people forget about probate is that the purpose is for the estate to settle the debts owed by the decedent, NOT to pass wealth to heirs and loved ones.

Without the right structures in place, a significant portion of your wealth could be lost during (or after) the transfer process. While creating a Will is a good start, you might be able to save your heirs thousands by establishing a revocable trust to manage your assets and streamline the distribution process.

Proactive tax planning can help minimize the tax burden on heirs of Baby Boomers with substantial estates. Strategies such as gifting, establishing trusts, and leveraging exemptions can reduce estate taxes and preserve more wealth for future generations. Choosing an attorney who can create a plan that meets your unique needs is crucial.

***Important tip: Remember, the high estate tax exclusion ($13.54M in 2024) will be going away at the end of 2025. Plan now.

5. Who Will Take the Reins?

Your estate plan isn’t just about who gets what; it’s about who’s in charge. You will need legal documentation to appoint trusted family members in specific roles, including:

  • A personal representative (executor) to guide your assets through probate and distribute them to beneficiaries
  • A trustee to oversee trust funds and make distributions to your heirs
  • A financial power of attorney to handle your money and bills for you if you are incapacitated
  • A healthcare proxy with the power to make life-or-death medical decisions if you are incapacitated 

For business owners, this question is even more complicated. Who will you appoint as your successor? Have you left clear instructions on the company values and the day-to-day operations? Is there a comprehensive business plan and corporate structure in place to head off internal disputes? Are the business assets shielded in case one of the successors is named in a lawsuit? 

If you can’t answer one or more of these questions, you must speak to us immediately.

Instability can cause losses throughout your workforce, vendors, customers, and even your professional networks. The earlier you begin your succession strategy, the less disruption there will be to your business after your passing. An immediate transfer of power can preserve your corporate reputation and reassure your employees and stakeholders that nothing will change.

6. Do Your Kids Know The Terms of Your Estate Plan? (They Should!)

Talking about money is awkward, and talking about the end of life is morbid and uncomfortable. As a result, many people put off (or completely avoid) talking about the terms of their estate plans with their heirs. After all, beneficiaries will find out how much they’ve inherited after you’re gone, so why talk about it now?

Unfortunately, refusing to talk about estate planning can have unintended consequences. For one, your children could send their own kids to college or take on a second mortgage because they assume their inheritance will cover the debt. Conversely, they could put off large purchases (such as homebuying) for years, ultimately paying tens of thousands more as house prices rise. 

Finally, not knowing the value of their inheritances can have a negative impact on their own estate plans. After you’ve created your plan, I suggest you plan a time to sit down with your executor, trustee, principal beneficiaries, and anyone else with a stake in your estate. Have an open conversation with your loved ones to provide guidance on how the estate will be managed after your passing. Talking through your plan now helps avoid confrontation—and potential litigation—later.

7. Where Will You Live?

The choice of where you will live out the rest of your life is deeply personal. You may need long-term care, suffer a disability, or otherwise be unable to live alone in your home. Will your surviving spouse have to move out after your passing? What about a live-in family caregiver?

We put the power over these decisions firmly in your hands. You tell us where you want to live, and we can plan how you will pay for it and who will be in charge of your living situation. This can include finding long-term care insurance policies or creating a Lady Bird deed to ensure your home passes immediately to your chosen beneficiary upon your death.

8. Have You Left a Legacy?

Once your property has been spoken for and your final wishes have been heard, you might want to think about legacy planning. How do you want to be remembered? What provisions can you make for the greater good, or to give you a sense of peace and purpose?

Legacy planning is often twofold: family legacy and personal legacy. You might wish to provide a written statement along with your Will to share your principles and life lessons with your family. You could also make charitable donations, create a memorial site, or set up a scholarship fund for students who exemplify your values.

Bonus Question: Has Your Estate Plan Been Tested?

While DIY estate planning may seem cost-effective, it can lead to costly errors and legal complications. Any estate plan can work in theory, but you’ll never know its real-world implications for your family unless someone puts it through its paces. At Yolofsky Law, we can advise you on the best way to protect your assets and pass on the bulk of your estate to your loved ones. Then, we test-drive your estate plan to ensure that every provision works exactly as intended, giving you peace of mind to enjoy your golden years. Email us at [email protected] today or schedule a 15-minute call to get started.