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Whether you are looking forward to retirement or not, or already retired, estate planning should be on your mind. If you are a woman heading towards retirement, there are some essential legal documents you should seriously consider as part of your estate planning strategy.
More women are in the work force than ever before, but the stay-at-home female spouse is not an extinct species. If your husband was the one with the job outside the home, there are some differences in how you might approach your retirement.
Women should also keep in mind that they are likely to outlive their husbands. If you are used to dual incomes or dependent on your spouse’s income, then special care should be taken to ensure you have a steady income source other than Social Security. Regardless of your situation, there are some legal documents that may be key to how you live out your retirement.
1. IRA or 401K. If you are working, your employer might have set you up with a 401K. Your spouse may have one as well. Be sure that your husband’s retirement plan names you as the beneficiary, especially if he was previously married. If you do not have a 401K, then at least start an IRA and fund it regularly. Even if you do not cash it out, you can leave the assets to your children.
2. Draft a Last Will and Testament. A Last Will and Testament is a legal instrument wherein you leave your assets to a designated beneficiary. Spouses usually name each other and the General Laws of the Commonwealth of Massachusetts do not allow you to disinherit your spouse without the spouse agreeing to it in writing. If you have real property, then consider placing it in a trust so you can avoid the costs and delays of probate; you can leave your personal property as you direct.
3. Set up a trust. There are many different types of trusts that can be set up now. A living trust with you in control of its assets. By placing real property in trust, title can pass to whomever you designate when both of you pass away. A trust can also provide for special needs children without jeopardizing their receipt of public benefits. One can also provide assets for your children on an incremental basis when they attain a certain age or help pay for their higher education. Be aware that setting up a trust can be expensive so unless you plan to have considerable assets in it, such as equity from real property, then it may not be worth the cost. Transferring Real Estate into a “Life Estate Deed” may be a better and less costly alternative.
4. Pension documents. If you or your husband has a pension, obtain an Individual Benefit Statement that explains what will be provided upon retirement and how it affects you. You will also need to talk to your estate planning lawyer about the tax implications for income derived from a pension or an annuity.
5. Social Security. When you wish to collect benefits, you will have to provide your Social Security card, birth certificate if not born in the US, military discharge papers, marriage license or divorce documents and W-2 form for the past year.
6. Medicare. You may need the same documents as Social Security requires when applying for Medicare at age 65.
7. Durable Power of Attorney. Both of you should have these for financial matters. You name a trusted individual to make material decisions about your finances should you become incapacitated or otherwise unable to make these decisions.
8. Health Care Proxy with Advance Directives. A health care directive contains your wishes as to whether extraordinary measures should be implemented in certain cases or if other medical procedures should proceed depending on your situation.
9. Life insurance. If you or your spouse do not already have life insurance, seriously consider getting policies for both of you. It can be expensive as you age, especially for men, but if you can afford it the funds can help you pay off lingering debts, income tax assessed to your estate at your death and give you a welcome cushion towards living a comfortable life by utilizing the cash value if any.
9. Consider the children. If you have children or grandchildren you will want to leave something for them. Trusts can help in this regard, so discussing various trusts dealing with education, special needs or other interests with an estate planning lawyer is essential to meeting your goals
There may be other documents that may be essential to your retirement that your estate planning attorney can suggest. Patricia Bloom-McDonald is a Westport estate planning lawyer who has counseled, advised and set up estate plans for couples, individuals and those entering their retirement years. Call her office today to schedule a consultation on how she can help you plan for a better retirement.