Tuesday, June 26, 2012

Planning for Couples with an Age Gap


Each estate plan is slightly different, but there are some challenges in estate planning that present themselves to different couples.  One common challenge is planning for married couples who have a significant age difference.

Perhaps the most obvious issue involves overall financial planning.  With age differences, one spouse is likely to outlive the other, perhaps by a considerable length of time.  The younger spouse may therefore feel more comfortable taking certain risks than the older spouse who is more likely to suffer from short-term financial dips.  It is important to balance the interests of both partners.  Couples of different ages require unique planning so that time horizons are meshed.  Retirement planning can be tricky if one spouse plans on working longer.  Similarly, long-term health care planning will be implicated by the age differential.  One spouse may need care earlier, though it is usually not prudent to automatically assume that the younger spouse will be able to provide the needed care.

A recent Morning Star article touched on many of these topics and mentioned a few other issues to consider for couples in this situation.  One point made in the story is that these couples often need to prioritize long-term care and life insurance.  Planning for disability is particularly crucial to couples, because family finances must account for both partners.  If one spouse is injured or faces a medical complication and is disabled, then family finances may be decimated if expensive, long-term care is needed.  In the worst-case scenario, assets are exhausted to care for one spouse while the second spouse remains healthy.  In order for the sick spouse to receive Medicaid support, assets for the entire couple must be below a certain level.  The healthier spouse can be left with little to no assets.  In these situations it is critical to get professional advice, as certain strategies can be employed in order to save as many assets for the second spouse as possible while still allowing the ill spouse to qualify for Medicaid.  This is particularly true for spouses with large age differences, because the younger spouse often needs assets to last for many years to come.

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