Estate Planning for Baby Boomers
A lot of attention is paid these days to Millennials and Gen-Zers, but it is Baby Boomers who possess the majority of US household wealth. Baby Boomers were born in the shadows of World War II, between the years of 1946 and 1964, and during the last six decades or so, they have been the driving force in bringing about major changes in our culture.
Today, Baby Boomers are helping to redefine retirement. Many of them are still working well past the age of 65, and they try to maintain an active and healthy lifestyle. But as they seek to enjoy their golden years, a lot of Boomers have not gotten around to planning their estates. Confronting their own mortality is one of the last things on their minds, so it is understandable that estate planning may not be their highest priority.
It is estimated that more than half of all Americans do not have an estate plan, and this comes with potentially dire future consequences. Estate planning not only addresses the administration of your final affairs after you die, it also deals with what you want to happen if you are no longer able to make decisions on your own.
Estate Planning Issues for Baby Boomers
Here are some common concerns that Baby Boomers may need to address when planning their estates:
Ensuring a Smooth Transfer of Property
One of the main reasons that Baby Boomers should at least have a will is to help ensure that their assets are distributed to their heirs smoothly and with minimal complications when they die. Without a will, your property will be divided in accordance with Virginia interstate succession laws, which may not be what you want. In addition, your loved ones will be in for a longer probate process because you do not have a Last Will and Testament that appoints an executor appointed and lays out specific instructions with regards to your final affairs.
If you want to take things a step further and help your heirs avoid probate altogether, then you should consider putting your assets into a revocable trust. This way, your property is distributed directly to the beneficiaries of the trust when you die – without the need for probate. Trusts are generally used when someone has a fairly substantial amount of assets, and they are definitely not necessary in every situation. Speak with your attorney to discuss whether or not a trust is right for you.
There are other estate planning steps that aging parents can take to help ensure a smoother transfer of property to the next generation when they pass on. For example, Virginia law allows a Transfer on Death Deed (TODD) for real estate property, which automatically transfers ownership of the property to designated beneficiaries upon death and without having to go through probate. The same can be done with financial accounts as well.
Minimizing Family Disharmony
When you have an estate plan in place, it significantly reduces the chances that your family members will fight over your property after you die. Many Baby Boomers have blended families with children from different marriages, stepchildren, etc. We all know that there is often an inherent distrust between some members of blended households, but it could turn into an all-out court battle if you leave them without an estate plan.
Long-Term Care Planning
The current Covid outbreak notwithstanding, people are living longer than ever. And as we talked about before, Baby Boomers have no intention of riding quietly into the sunset. It is very fortunate to be alive at a time when life expectancies are continually rising, but the downside of living longer is that you have a greater chance of becoming incapacitated. This is where a living will comes in.
A living will with an advanced health care directive allows you to state in advance your wishes with regards to end-of-life decisions such as which procedures you want to have, which ones you do not want to have, when to pull you off of life support, etc. Within your estate plan, you should also designate a trusted individual with power of attorney to pay your bills and make medical decisions on your behalf if you are no longer able to do so.
Business Succession Planning
More than 40% of the small businesses in the US are owned by Baby Boomers. And with roughly 10,000 Boomers turning 65 every day, many of them are realizing that they are late to the succession planning party. Although a lot of Boomer entrepreneurs are planning to run their businesses well past retirement age, they should still be thinking about who they want to succeed them when it comes time to step aside. You never know when a serious health condition can sneak up on you, and it is much better to plan out who you want to take over your business in advance of anything like that happening.
Minimizing Tax Liability
Wealthy Baby Boomers need to consider how the federal estate tax might impact the loved ones they leave behind. The estate tax ranges from 18% to 40%, but as of 2021, the first $11.7 million in assets is exempted. Virginia does not have any estate or inheritance tax, so if the value of your estate is under the exemption threshold, then you will not need to worry too much about taxes. If your estate value is over the threshold, however, then you will want to look at various strategies that will allow you to minimize estate taxes for your heirs.
Contact a Skilled and Knowledgeable Virginia Estate Planning Attorney
Baby boomers have some unique challenges when it comes to estate planning, and this is why it pays to work with an attorney who has extensive experience in this complex area of the law. For skilled guidance with your estate plan in Virginia, contact Buck, Toscano & Terezkerz by calling (434) 977-7977 or sending us an online message. We will provide a free consultation to go over your situation and help you come up with a plan that thoroughly addresses your needs.