Some people start their estate planning when they turn 65. And it’s easy to see why they might wait that long.
Age 65 is an age when many people retire, and it’s when Medicare starts. So that often serves as a reminder for people to begin the estate planning process.
But there are a number of key estate planning tasks you need to do before turning 65. Here are four to keep on your radar to avoid issues.
1. Decide which estate planning documents to use
It’s important to have a comprehensive plan for passing assets along to your loved ones. To that end, decide which estate planning documents are best to use.
You may decide to keep things simple and use a will, but there are many benefits to setting up a trust. These include avoiding the process of probate, saving your estate money, and potentially expediting your loved ones’ inheritance.
Of course, you may decide to use a will as well as a trust together. It’s important to talk things through with an experienced and qualified estate planning attorney so you understand the benefits of each tool.
2. Review your accounts and make sure they all have beneficiaries
You may have a number of different financial accounts in your name. These could include savings accounts, CDs, investment accounts, an IRA, a 401(k), and more.
It’s important to make sure that tax-deferred retirement or annuity and life insurance has designated primary and contingentbeneficiaries.
It is very common to incorporate beneficiary designated accounts with trust so that the trust can be named as the beneficiary. However, many trusts do not have the necessary provisions to be an effective beneficiary.
If you use a will to pass along assets, it can take a lot of time for it to go through probate, during which time your assets may be off limits to your loved ones. And while a trust may be quicker as far as the distribution of assets goes, there’s still a process to follow.
3. Create an advance health care directive
An advance health care directive is a legal document that outlines how you want your loved ones to handle end of life care should you end up in a position where you can’t make or communicate those choices yourself. It can come into play in situations where someone is in a coma or on life support.
An advance health care directive gives you an opportunity to make decisions about your care while you still can. It can also spare your loved ones from having to make difficult and devastating choices.
4. Create a plan for long-term care
One big misconception is that Medicare will pay for long-term care. Medicare will pay for you to recover from an injury or surgery, but it won’t pay for things like a home health aide who helps you bathe and cook. Medicare also will not pay for a nursing home or an assisted living facility should you end up needing to reside in one.
The cost of long-term care can be incredibly expensive if you are not prepared for it. Genworth says that the average home health aide is $77,792 per year. The average cost of a nursing home, meanwhile, is $111,325 a year, and that’s not even for a private room. If you end up needing to reside in an assisted living community, the yearly cost of doing so could amount to $70,800 based on national averages.
Of course, in some parts of the country, the cost of long-term care can be even more expensive than the numbers above, since they’re just averages. And so it’s very important to work with your loved ones to create a plan for long-term care. That could mean having discussions to see if anyone is willing or able to step up and provide the care you might need. Or, it could mean buying a long-term care insurance policy so that if you end up needing care, it can pick up a portion of the tab.
You may be inclined to wait until you’re older to begin the process of estate planning. It’s important to take care of estate planning items when you’re younger. It’s even more ideal to handle them prior to turning 65. We are happy to help you take care of your estate plan today.
At our firm, we understand that putting an estate plan can seem overwhelming. Our team is here to guide you every single step of the way. Contact our office today to discuss your options or give us a call at (916) 437-3500 to get started on your customized estate plan.
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