Dear Quentin,
I am 68 years old, do not own any real estate or a car, I am divorced and have two adult children. I’m on Social Security and have about $750,000 invested. I continue to reinvest the dividends and interest so that my investments continue to grow. I feel like I’m missing something. In addition to a will and health care directive, I’m wondering if I should add a revocable trust?
Retired
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Dear retiree,
Get ready. I’m going to answer a lot of questions you didn’t ask.
A revocable trust is necessary if you want to have control over how your assets are used after you die. If your estate is simple and you are happy with your two adult children being your beneficiaries, you can – if you wish – divide it down the middle 50/50.
Adding your children as beneficiaries on your bank accounts, investment accounts, and any life insurance policies you have means that these assets will not be dealt with by probate: the public accounting of your assets and liabilities.
Yes, you can also do a lot yourself. An advanced health care directive informs your doctors what action you want them to take if and when you cannot make those decisions yourself. You can name your children as your health care proxies to carry out these decisions.
Having a long-term care policy would also help alleviate the potential financial burden ahead. Nursing home care costs can vary significantly depending on the type of care, where you live, and the type of facility (up to $125,000 per year, believe it or not).
LTC policies cost more as you get older. A man who waits until age 65 to purchase such a policy will pay about $3,135 per year, according to the AARP. “The man who purchases a long-term care policy at age 65 will pay $3,135 in annual premiums or $47,025 at age 80.
“A 65-year-old couple who wait until age 75 to get coverage would nearly double their premium,” it says, citing the American Association for Long-Term Care Insurance. “Seeking coverage at age 70 or older also reduces the chance that you will be covered at all by almost 50%.”
An older lawyer can cost $100 to $600 per hour, depending on the type of services you need. An attorney and financial advisor will help you identify and plan for your assets, income, expenses, and expected long-term care costs.
Proxy
Other answers to questions you didn’t ask: Consider naming one or both of your sons as financial powers of attorney (assuming they get along) if you become incapacitated. Update your beneficiaries and write and/or review your will to make sure it is up to date.
You have invested €750,000 in the stock market. Do you have other, less risky investments? At age 68, according to the ‘100 minus your age’ rule, you should have no more than 32% of your wealth in the stock market; If there is a major recession, you will have less time to recover.
Tax diversification is another priority in your 60s. “If you don’t currently have money saved in a Roth IRA, you may want to consider Roth contributions, if you qualify, or a Roth conversion during lower-income years,” says T. Rowe Price.
“Roth IRAs and Roth 401(k) assets are not subject to required minimum distributions – the minimum withdrawals the IRS requires from retirement accounts once you turn 73. Therefore, if you don’t, you can let the money grow tax-free. don’t need it.”
It’s all to play for – with or without a revocable trust.
More columns from Quentin Fottrell:
“He never paid rent or utilities: “Do I have the legal and moral authority to charge my brother rent for living in our family home?”
‘I Don’t Want to Be Dishonest’: My Mom Gave Me $150,000 to Buy a House. One sibling wants 15% ownership. What now?
‘I have no regrets’: I’m 84 and estranged from my two adult sons. My 48-year-old wife gets my seven-figure estate. Is that selfish?
