By: Martin M. Shenkman, CPA, MBA, JD
So you eat your Wheaties and take your multi-vite and plan to live to 100+. Just like you re-tooled your vitamin arsenal, you need to evaluate your financial and estate planning to be consistent with your aspirations for being a super-centenarian.
You have to take a long term, practically perpetual time horizon. It will be vital to maintain a broad allocation of resources and not shift to the allocation favoring fixed investments advocated in most articles and discussions.
If you will have to live on your resources that long, you really need to limit spending to probably not more than 4% per year of the investment base.
Disability insurance becomes irrelevant. Reliance on the simple powers of attorney most people sign will be insufficient. For the long term, consider the following modifications to a typical power of attorney: eliminate the gift provisions, or restrict them, you’ll need your money. Provide compensation for the agent. If someone has to manage your legal and financial affairs for years, perhaps decades, compensation becomes critical to obtain the help you’ll need.
If you’ll be living to 100, you’ll need the best structure to protect you, assure your resources will be used for your benefit, and to minimize the problems that could arise. A revocable trust is a much more sophisticated and broad based document that becomes increasingly important as you age. For someone living to 100 the advantages of a well thought out, detailed, and funded revocable trust increases. You can be a trustee of your trust along with a bank, professional trustee or other trusted person. They can help relieve many of the tasks you would have to perform and thereby protect you and keep you in control over your affairs longer.
You have to be cautious about giving away gifts and engaging in aggressive planning as you may need your assets to live on. Different techniques might make more sense to use. For example, instead of giving assets to intended heirs, transfer assets to a trust formed in one of the states that permits you to be a beneficiary of your own trust, yet remove the assets from your estate. Examples include Delaware, Alaska and Nevada. This way, you can engage in planning to reduce estate taxes but still retain the ability to benefit from your assets should you need them.
Issues of competency become more common when planning at an advanced age. Even if you’re competent you should take steps to corroborate that competency at the time of executing any trusts or other documents.
See the accompanying audio clip in the Finance section of this website of a 1-hour radio show with David Merker on this topic.
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