Plan to be 100

These days, living to be 100 years-old is not unusual.  But most people (at least most of my clients) don’t necessarily want to think about what that means from a planning perspective.  As their advisor, I share these thoughts:

Hang On To Your Assets

As people age they often become more generous and more concerned about “protecting their assets.”  Both of these concerns can give rise to an impulse to transfer some of their resources to subsequent generations.  I discourage this impulse.

As people age, they also often need assistance with their care.  That care is expensive.  If you want to have choices about the quality of care you receive in your declining years, hold on to what you have.  Unless you have substantial wealth (multi-millions of dollars in reserve), anything you do now that reduces your resources is likely to have significant implications on your quality of care when you get older.

Further, the government safety net programs that currently provide older Americans with a base income (Social Security) and health care coverage (Medicare and Medicaid) are all unsustainable.  Whether we even have these programs in 20 years is purely speculative, let alone what they will pay for.  Today’s Medicaid funded nursing homes, as undesirable as they may be, will likely be castles compared to what the government will provide in the future.  Don’t rely on those benefits for your quality of life.

In the end, my advice on this point can be summarized as follows:  your resources are for your needs first.  The future is uncertain.  The kids can have what’s, if anything, left when you’re gone.

Plan for Incapacity

Although not everyone who lives to a ripe old age will become incompetent, many will.  The Alzheimer’s Association estimates that half of people aged 80 have some level of cognitive impairment.

When clients talk about estate planning, they focus first on what happens to their property when they die.  At least as important is the question of: who will make decisions for me if I am alive, but unable to make decisions for myself?

Having well-drafted power of attorneys (medical and financial) is a key to good planning.  That means that the documents not only express your wishes and sufficiently enable your agents to act, but that the people you select to make these decisions for you are the right people to handle these matters.  There is as much litigation these days over control of people and their assets while they are alive and demented, as is there is about their estates after they have passed.  Many of these cases arise because the planning that was done was inadequate or the people selected to make decisions were not well considered.

Watch Out for Greedy Kids

A related concern is that while many older people have saved and accumulated some assets, their children have not necessarily been so prudent.  The dynamic of children having an expectancy in their parents’ estates drives a lot of what we now call “financial exploitation of vulnerable adults.”  As harsh as it sounds, I encourage clients to recognize that children, especially children who, for whatever reason, have failed to establish a sound financial base, may become overly and/or inappropriately concerned that if their parents live a long life, their expectancy in the estate of those parents may be at risk.

Create estate plans where people who are financially stable and/or who have no expectation in a distribution from your estate are in control of decisions about how to spend your assets in the event you do live a long life, but lose the ability to manage those affairs on your own.

Imagine Your Children in Old Age

We all picture our children as youthful.  But one of the quirky realities of living to be 100 is that you have children who are in their 70’s when you die.  Leaving estates to 70 year-olds has implications that most people simply don’t contemplate.  Estate plans should consider this possibility.  It may mean that as one generation reaches a set age, that generation is skipped, and assets instead pass to grandchildren or great-grandchildren.  Or it may mean that the Trustee or executor of your estate has the ability to decide whether or not to make distributions to people of an advanced age based on their health and financial need.

Expect Another Relationship (or two)

Living to an advanced age may mean you outlive your spouse, perhaps by decades.  Loneliness is not required or even healthy.  This means that a subsequent important relationship may develop in your later years.

Pre-nuptial agreements are critical for second marriages, especially second marriages for people of advanced years who enter into marriages with established separate estates.  Not only because they protect against invasion in the event of divorce (which is more common in second marriages than first), but more importantly they limit the rights of a “surviving spouse” to the assets that pass at death by will or trust.  That doesn’t mean you can’t provide for a second spouse if you choose to, it just means that the decision about what and how much to provide can be defined by you in your documents and not by laws that were written without contemplating this situation.

Have A Death Wish

Finally, an edgy topic to consider:

Today, assisted suicide is illegal is most States.  However, the trend appears to be toward allowing people who get to the point where their quality of life is such that they would rather not be alive, to have the ability to opt out.

If that trend continues, assisted suicide may be broadly accepted within the next twenty years.  Accordingly, in anticipating a long life, it is probably worth thinking about (and perhaps even providing a written expression) what degrees of indignities you would choose to suffer before having your life artificially terminated.

Conclusion

The good news is that we are living longer, and that if you have reached the age of 70 or 80 in relatively good health, there is a reasonable possibility that you may see your 100th birthday.  The bad news is that living to 100 involves legal and financial considerations that are not always obvious or comfortable to think about.