If you prepared a will when your kids were small, your top priority might have been naming a guardian to raise them. Now that the kids are grown and out of the house, they don't need a guardian anymore. But you may not realize how out-of-date the rest of your estate plan is, and how it fails to address new issues you may face in mid-life and old age.
Whether you have a will from your children's toddler years or you never got around to making one, the years after your kids leave home are an excellent time to take care of your own estate plan. Here are four things to pay attention to.
1. Powers of attorney
When you create a will, it's common to also create powers of attorney and living wills. A durable general power of attorney names someone to take over your financial affairs if you become unable to manage them.
A health care power of attorney appoints someone to make your health care decisions if you cannot, and a living will makes your wishes known if you have an injury or illness that you will not recover from.
If you have older documents, the people you named may no longer be around — or they may not be who you'd choose today. If your documents are up-to-date, things will go more smoothly for you, your children, and other family members in a time of crisis. And no one will have to agonize over “what mom would have wanted."
2. Inheritances and trusts for your children
If you have small children, it's common to leave everything to your spouse or, if both of you pass away, to put money in a trust for the children, with the trust money going to them equally when they reach a certain age.
Now that the children are grown, you may not need the trust anymore.
Or you may want to delay the age they receive their inheritance outright because they aren't as mature at age 21 as you thought they'd be. You may need a different kind of trust to provide for a child with a disability.
Other life circumstances, family businesses, and family dynamics can affect the type of property you want to leave to your children and the way you divide it. The estate planning process helps you identify these issues and focus on finding a fair and practical solution that will provide for everyone while reducing the potential for family conflict after you're gone.
3. Life insurance and retirement accounts
The life insurance policy you took out when your kids were small may be larger than you now need. Or you may have bought a fixed premium policy whose cost is about to skyrocket. Now is a good time to assess your needs and the details of any policies you have now and shop around for different coverage if you need it.
Life insurance and retirement accounts like IRAs and 401(k)s pass to the beneficiaries you name, rather than as an inheritance through your will. Review all your beneficiary designations and make sure your retirement savings aren't headed for your ex-wife or a long-deceased parent.
4. Estate planning through trusts
If you made an estate plan as a young adult, it may not have included a trust (other than a trust for your children). But, depending on the state you live in and the number of assets you have, there may be very good reasons for setting up a living trust now.
These include avoiding the probate process, planning for long-term care, and providing for a spouse as well as for children from a previous marriage. Trusts can be complicated, and an estate planning lawyer can advise you on whether a trust might be helpful in your situation.
Your empty nest years can be a fulfilling time when you're free of day-to-day parenting responsibilities. Taking the time to make or re-evaluate your estate plan can give you peace of mind, knowing you've planned for whatever the future brings.
Find out more about Estate Planning Basics