The Power Of Estate Planning
Proper estate planning provides you the chance to reflect on the people in your life who are nearest and dearest to you, the goals you have for them and yourself, and what matters most to you. You will also take into account what you have in terms of your finances, accounts, insurance and other property and how you want those things handled upon your incapacity or death. Moreover, you will decide who you trust to carry out your healthcare and financial wishes.
Estate planning should also help you and your loved ones find peace. Estate planning is not just about you, it is also about helping your loved ones in the event that you become incapacitated or pass away. Although it does not remove all difficulty, it can save you and your loved ones a lot of time, money and trouble in the long run. That is because the earlier you start planning, the more planning options are available for protecting what matters most to you and for avoiding expensive and lengthy court proceedings. Also, when you evaluate who and what is most important to you, it will inspire you to nurture the relationships that you most value and to live your life to the fullest.
Tailoring Your Estate Plan To Every Stage Of Life
Estate planning is not a one-size-fits-all process: Every phase in life requires something different. For example, young families with minor children may want to prioritize nominating guardians and trustees to care for their children and their finances in the event that the parents die or become incapacitated. Meanwhile, couples with older children have different needs since their children may be established in their own careers, living independently.
Families should also consider disability and incapacity planning for their loved ones as they get older. For example, as people live longer, long-term care costs have skyrocketed, placing many families’ financial futures at risk. That is why it is important to evaluate their loved one’s estate plan, to ensure that they have what they need and so that they are in the best position to protect their savings and qualify for government benefits that can help with the cost of care.
Below, you can find a short guide that outlines some common scenarios at different life stages and what how an estate plan can help.
Planning With Young Children In Mind
Parents whose children are minors often worry about who would take care of their kids and manage their finances if both parents die or become incapacitated.
Several questions weigh into this decision: Who do you trust with your children? Who shares your family’s values? Who do you trust with your finances? When do you think your chldren would be mature enough to handle an inheritance?
These questions may feel overwhelming at first. But a qualified, experienced attorney can help you sort through these questions and provide the guidance you need to find the answers. With the help of your attorney, you can legally nominate short-term and long-term guardians for your children, as well as nominate trustees for their inheritance.
Special Needs Planning
Families of individuals with disabilities want to ensure that the individual with disabilities receives adequate care and support, especially after the parents or guardians are no longer able to provide this care. But how can they leave an inheritance without making those individuals lose their government benefits?
Special needs trusts can provide a solution to this challenge. A special needs trust helps cover financial needs that are not covered by public assistance payments. The assets held in the trust do not count to qualify for public assistance.
Planning With Adult Children
In cases where children are already adults, whether away at college or living on their own, it is still important to have documents in place that accurately reflect your wishes for how you want your children to inherit and the roles (if any) that you want your children to play in your estate plan. For example, if you are worried about possible financial mismanagement or divorce, your estate planning documents should take those concerns into account.
Perhaps most uncomfortable to discuss is incapacity or long-term care facilities, such as assisted living or nursing homes. However, by talking about and planning for these concerns now, you and your family can find peace of mind.
Many seniors do not apply for Medicaid long-term care benefits because of misconceptions, such as:
- Medicaid will take your home.
- The nursing home will demand all of your family’s assets.
- You can give away $17,000 per year to protect assets from the nursing home.
When you consult with an attorney about Medicaid, you and your family can dispel these misconceptions, and more, avoid potential pitfalls, and learn about your options for qualifying for different federally funded programs.
Key Estate Planning Documents
Estate planning documents address healthcare decisions, physical or mental incapacity, and the distribution of property and assets upon death. They include:
- Designation of Healthcare Surrogate
- Living Will
- Durable Power of Attorney
- Last Will & Testament
- Guardian Nominations
Trusts And Asset Protection
One common misconception is that all trusts are the same and that they all provide the same type of asset protection. Asset protection is a legal strategy (or combination of legal strategies) designed to protect assets from creditors, lawsuits, and other risks. The meaning of “asset protection” varies depending on your goals and concerns. For example, some people are worried about creditor protection while others are worried about maintaining eligibility for certain government benefits. Even still, others are worried about divorce or remarriage. There are different types of trusts available. By working with a qualified, experienced attorney, you can better understand and choose the right trust for your needs.
The Major Phases Of Trust Administration
Administering a trust involves several phases, the most important of which can include, but are not limited to:
- Reviewing the trust to determine its terms and beneficiaries;
- Reviewing the trust assets;
- Obtaining the guidance of a tax professional;
- Identifying the manner in which the creator of the trust wants their assets distributed;
- Determining if there are any bills or creditors that need to be paid prior to distributing funds to beneficiaries;
- Setting up separate bank accounts for the beneficiaries’ trust shares.
Reviewing Your Estate Plan
You should review your estate planning documents when there has been a significant change in your life, such as a drastic change to your health, your family, or laws that might impact your plan for the future. However, it’s important to note that it’s even better to review your estate plan every three to five years – just to make sure that everything is aligned with your goals and that there are no necessary adjustments you need to make in response to changing circumstances.
For more information about The Basics: Everything In Life Is Different, an initial consultation is your next best step. Call (813) 686-7175 today.