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Tax-Smart Wealth Transfer Tips For Clients In Late Old Age
Older clients have different needs , which often include the need to help family members . By Paul R . Samuelson
WE ’ RE CONDITIONED TO THINK OF 65 AS THE tipping point into old age . Or at least we used to . But actuarial tables tell us something different , as does the attitude that “ 70 is the new 50 .” Amid these changes we have come to look at aging differently , specifically at how we consider clients ’ needs for protection from taxes .
We make a mistake if we lump everyone 65 and older together . There are actually three distinct stages in this time of life : I call them “ late old age ,” “ early old age ” and “ later middle age .”
In this column , I will address late old age , offering tips for your clients and their family members about how to protect their assets and buttress their sense of security . ( I ’ ll write about the other stages in later installments .)
Defining ‘ Late Old Age ’
It ’ s difficult to say when late old age starts ( age 85 ? 90 ?) since much depends on the person ’ s health , mental status , family history and luck .
But picture this : An individual in late old age is often widowed and , if well-to-do , has more assets than they can spend in their remaining years ( after accounting for what they need for long-term care ). Their freespending days are memories .
It is best to keep financial advice simple at this stage . But you want to confirm that your clients have made plans for their beneficiaries in a will , designated beneficiaries in retirement plans and other accounts , and taken steps to minimize the taxes the clients ’ heirs will be liable for when the clients pass on .
In other words , tax and estate planning should have been done well before late old age . Nevertheless , I urge advisors not to neglect these cases .
Every plan needs a close look at least once a year , and not just because of the recent changes in the tax treatment of inherited retirement accounts . There will also likely have been deaths or marriages in the client ’ s family that require them to re-examine their estate plans .
Advisors must develop and sustain good relationships with their clients ’ beneficiaries , since it could garner them referrals and new assets to manage .
The Advance Work If you ’ ve been someone ’ s advisor for a while , then you ’ ve likely done the foundational work
NOVEMBER 2023 | FINANCIAL ADVISOR MAGAZINE | 45