“I did not want to be one of those 35-year-old first-time parents who are too old to play with their kids,” my little brother said to me when he announced his wife was pregnant with their first child. They were in their mid-20s and I was 32 with no prospect of being a father anytime soon. Fast forward a few years and at 37, I am now happily married with a rambunctious 18-month-old. It turns out you can still play with your kids even when you have them in your mid-to-late thirties, forties and beyond. However, there is significant planning that we need to do that our younger counterparts do not have to consider.
First, older parents will want to rely on a team of financial and legal professionals. Due to the convergence of a number of life events (raising children, paying for college, planning or taking retirement, and covering the increasing cost of health care) condensed into a shorter time period, older parents’ financial and estate planning needs will require more nuance than those of younger parents.
In addition to funding retirement and college, older parents will have to carefully consider the timing of their retirement and when it is best to take Social Security. Getting the timing right can have real benefits when it comes to funding college and securing certain benefits for minor or disabled children. Talking with a qualified financial advisor can be a huge help.
Statistically, older parents are more likely to have a child with special needs, too. Ensuring long-term care for a special needs child will require a more sophisticated level of financial and estate planning.
Second, one of the nice things about having kids later in life is that you tend to be more financially secure. This also means you have more assets that need to be safe-guarded in case something happens to you. Younger parents with less assets often opt for a traditional Will-centered estate plan. However, additional complications such as older children, blended families resulting from a second marriage, and adoption or special needs issues often make a Trust-centered estate plan worthwhile for late-in-life parents.
A well-crafted estate plan, whether it involves a Last Will and Testament or a Trust, will serve as a guide for your loved ones in the event of your incapacitation or death. For many parents, the most important function of the estate plan is to name a guardian for their minor children. This is especially important for parents having children late in life. If you fail to name a guardian, a judge that does not know you or your children will choose for you.
In addition to appointing a guardian, older parents may want to create a trust to ensure assets are available for taking care of a minor child and providing for their college education. If you are raising a minor child and have adult children from a previous marriage, a trust can be especially helpful. The trust could provide for your younger child’s upbringing and college education and then divide the remaining assets among all the other children. This ensures the most vulnerable child is taken care of first, but in the end, no one is left out.
Third, it is vital that older parents not only plan for the care of their children, but also for their own care. A good estate plan should include some essential health care planning. You will want to include a Durable Power of Attorney which names someone to handle your financial affairs if you are incapacitated. Your estate plan should also include a Health Care Power of Attorney which designates someone to make health care decision for you, a Living Will or Advanced Directive which explains your wishes regarding end-of-life medical care, and HIPAA Authorizations.
Parents often think the worst-case scenario is that they die and are unable to care for their child. Unfortunately, becoming incapacitated due to a disability or long-term illness and failing to plan for this scenario is much worse. In this situation, the assets which would be going to your child’s care will be rapidly depleted by your health care costs. Having a disability income insurance policy in place, along with some advanced trust planning, can help preserve your assets if this scenario ever occurs.
Finally, the most important thing when it comes to estate planning for any family, young or old, is to not put it off. Once your plan is in place, you will have peace of mind that your family will be protected if something should happen to you.
Jeffrey L. Bloomfield, Attorney at Law