Estate Planning, Too, is Based on Longevity Assumptions

On Behalf of | Jan 5, 2022 | clients' legal issues, estate and tax planning, Estate Planning

 

 

In Chapter 2 of his newest book on retirement planning, Wade Pfau cautions readers that their biggest risk is not knowing how long they’ll live. Stating the obvious but frightening fact that a long life is wonderful, but also costlier, Pfau reminds us that half the population will outlive what the statistics say is the new average life expectancy. Will you have the resources to sustain spending over a longer than expected lifetime? he asks.

 

While the Retirement Planning Guidebook covers a variety of planning areas, including:

  • investment and insurance tools
  • Social Security benefits
  • Medicare options
  • housing location and housing wealth
  • long term care risk
  • non-financial aspects of retirement (“purpose and passion”),

it also reinforces the importance of getting estate and incapacity planning documents in order, specifically mentioning many of the areas in which we advise clients at Geyer Law:

  • wills
  • account titling
  • beneficiary designations
  • financial powers of attorney
  • advance health care directives
  • trusts

Years ago, when our life spans were much shorter, Florida attorney Howard Stross points out,
the overriding concern for most people was passing away before their children were old enough to care for themselves, or before the business they’d started was ready to pass to the next generation. Today, everything is different, and “not planning for a long life can have disastrous consequences that were rarely seen until recently.”

Realizing the truth of those observations, at Geyer Law, we stress to clients that estate planning, however thoroughly and thoughtfully executed, simply cannot serve as a “one-and-done” process. There’s simply too much time for circumstances to change, for “stuff” to happen….

  1. adult children, siblings, nieces, nephews or grandchildren marry/divorce/remarry/adopt
  2. beneficiaries experience life emergencies and need financial support now
  3. legal issues arise with a business
  4. medical expenses exceed insurance coverage
  5. ability to earn consulting fees or work part-time is impaired
  6. housing markets change, impacting property values
  7. tax law changes
  8. acquisition of new assets or sale of assets once part of the plan
  9. relocation to a different state
  10. a designated personal representative falls ill or dies

“It is not uncommon for people to let 10, 20, or even 30 years go by without having their estate plan reviewed for necessary updates,” Florida attorneys Lacey Lyons Rezanka observe..  Over this span of time, life changes.Sometimes heirs go down a life path where the testator may no longer want to bequeath assets to a particular heir.”

Like retirement planning, estate planning is based on longevity assumptions, which are simply educated guesses about the future. The biggest initial risk is in not knowing; the biggest overall risk is not checking in and reviewing those assumptions!

– by Cara Chittenden, Associate Attorney at Rebecca W Geyer & Associates