Older parents or couples, where one member is significantly older than the other, need to address their estate planning and asset division differently than those who are in the same age group. One example of this is Billy Joel, who has just welcomed his third child with his much younger fourth wife.
The 68-year-old Joel is already the father to two other children: a 31-year-old daughter with ex-wife Christie Brinkley and a 2-year-old daughter with his current wife, Alexis Roderick. CNBC’s recent article, “Billy Joel, 68, will soon be a new dad. What older parents need to know,” says that older parents need to consider specific estate and financial planning issues.
Grammy-award winning singer or not, a new dad should start planning now, even if you don't know how your family relationships may change with the addition of a new child. You can always change things later.
For a superstar like Billy Joel with a high public profile and substantial wealth, he might think about a Quiet Trust in a state that permits it, such as Delaware, Nevada, or Alaska. This type of trust allows a person to set aside assets and plan for how they will be divided without telling the beneficiaries. It also keeps those plans private, and there's less reporting to the people involved. Anyone with multiple children and former spouses should directly address all family members in their plan. Make certain that you address each individual to the degree you want to or don't want to, and if you don't want to, make it readily apparent.
Beyond age and physical challenges, the biggest issue for families in this situation is being certain that there will be enough money to provide for the younger spouse and the child.
To cover a child's needs into his or her mid-20s, a parent could easily use an additional $400,000. That can be a big surprise to the senior, more established member of the couple. That person, if planning for a family of moderate means, is going to have to set aside considerably more money for the younger people in the home. It can mean working longer for the older spouse and working more for the younger spouse. The couple can also plan for the more senior individual to boost Social Security payouts by delaying benefits until age 70. However, that extra money is often not sufficient.
When the age difference between couples is 15 years or more, things can get complicated. Spouses need to have honest conversations about longevity, elder care issues and how they will handle being in very different stages of their work lives. Long-term care costs need to be addressed, as this cost alone could very easily decimate a lifetime of saving.
Reference: CNBC (October 18, 2017) “Billy Joel, 68, will soon be a new dad. What older parents need to know”