Planning for Peak Earning Years

Serving Families and Individuals throughout Houston, Texas and the Surrounding Areas

If you are between the ages of 40 and 55, you are likely in the most financially productive period of your life. Your career is established, your income is at or near its peak, and your assets have grown significantly. But this period also brings unique pressures. You may be part of the “sandwich generation” – simultaneously caring for aging parents while raising children of your own. The financial and emotional demands of this stage of life make estate planning more important than ever.

Spousal Decision-Making Misconceptions

Many people in their peak earning years assume that their spouse can automatically step in and manage their affairs if they become incapacitated. This is a dangerous misconception. Without a properly executed statutory durable power of attorney, your spouse may not have the authority to access your bank accounts, manage your investments, file your taxes, or handle your business affairs. Without a medical power of attorney and advance directive, your spouse’s ability to make health care decisions on your behalf may be limited or delayed. During your peak earning years, the financial stakes of incapacity are at their highest. A comprehensive estate plan ensures that your spouse – or another trusted person – has the legal authority to act on your behalf immediately, without the need for court intervention.

Intestacy and Your Family

If you pass away without a will during your peak earning years, the consequences for your family can be severe. Texas intestacy laws may not distribute your property in the way you would have chosen. If you and your spouse have children together and no children from prior relationships, the distribution is relatively straightforward. But if your family situation is more complex – if you have children from a prior marriage, significant separate property, or business interests – the intestacy laws may produce results that are far from what you would have wanted.

Protecting Your Children’s Inheritance

During your peak earning years, you have likely accumulated significant assets that you intend to pass to your children. But leaving assets to children outright – particularly young adult children – may not be wise. A child who inherits a large sum of money in their 20s or 30s may lack the financial maturity to manage it responsibly. The inheritance could be squandered, lost in a divorce, or seized by creditors. A properly drafted trust allows you to protect your children’s inheritance by setting conditions on distributions, appointing a trustee to manage the assets, and including provisions that shield the trust from creditors and divorcing spouses.

Aging Parents and Long-Term Care

If you are part of the sandwich generation, you are keenly aware of the challenges that aging brings. You may already be helping your parents manage their finances, coordinate their medical care, or navigate the complexities of Medicare and long-term care. This experience gives you a front-row seat to the importance of planning for your own future care needs.

The statistics are sobering: approximately 70% of people over the age of 65 will need some form of long-term care during their lifetime. Long-term care – whether provided at home, in an assisted living facility, or in a nursing home – is expensive, and it is generally not covered by Medicare or traditional health insurance. Without a plan to pay for long-term care, the cost can quickly deplete the assets you have spent a lifetime building.

Long-Term Care Insurance

Long-term care insurance is one of the primary tools for addressing this risk. A long-term care insurance policy pays for covered services when you are unable to perform a specified number of activities of daily living (ADLs) – such as bathing, dressing, eating, toileting, transferring, and continence – or when you are diagnosed with a cognitive impairment. The best time to purchase long-term care insurance is during your peak earning years, when you are still healthy enough to qualify and the premiums are more affordable.

There are several types of long-term care insurance products available, including traditional stand-alone policies, hybrid policies that combine long-term care coverage with life insurance or annuities, and employer-sponsored plans. Each type has its own advantages and trade-offs. The right choice depends on your health, your financial situation, and your family history.

Activities of Daily Living

Understanding activities of daily living (ADLs) is important because they are the standard measure used to determine eligibility for long-term care benefits. The six ADLs are bathing, dressing, eating, toileting, transferring (moving from a bed to a chair, for example), and continence. Most long-term care insurance policies require that you be unable to perform at least two of these activities without assistance before benefits are triggered. By understanding how these policies work, you can make an informed decision about the type and amount of coverage that is right for you.

At The Stegall Law Firm, we help individuals and families in their peak earning years create comprehensive estate plans that address not only the traditional concerns of wills, trusts, and powers of attorney, but also the unique challenges of this stage of life – including planning for aging parents, protecting children’s inheritances, and preparing for the possibility of long-term care.