Estate planning for married couples can always yield a few surprising differences, but when a decade or more in age separates the couple, it can add a few more wrinkles into the mix, including:
Different time horizons – This affects not only a couple’s financial portfolio but retirement planning as well. When one spouse has a significantly greater life expectancy than the other spouse, the couple needs to plan for both time horizons. When one spouse has to begin taking required minimum distributions from IRAs and 401(k)s, their portfolio needs to have a balance of short-term assets. Couples may find it useful to do year-to-year cash flow projections that incorporate projected retirement dates and life expectancies.
Insurance planning – One of the biggest threats to a couples’ nest egg is the cost of long-term care. If the older spouse needs long-term care that requires eligibility for Medicaid, the couples’ financial resources will need to be nearly exhausted in order to qualify – leaving little for the healthy spouse. Long-term care insurance becomes an even more important consideration for the couples with wider age disparities, especially if the elder spouse is the primary wage earner.
IRAs – While seniors are required to begin taking distributions from traditional IRAs when they reach the age of 70 ½, those with spouses 10 years or more younger who are listed as the beneficiary of these IRAs can follow a different schedule that allows for lower distributions so as not to deplete the account.
Asset protection – If this is not a first marriage, then couples will need to make a plan for how to protect assets for both the younger spouse and/or children from a prior marriage.
Estate planning is essential for every married couple; for more information, contact our Irvine law firm.
Based in Irvine, the Flanigan Law Group is a California estate planning, administration and litigation legal services law firm. For more information on California wills and estate plans, contact the Flanigan Law Group at 949-450-0041.