The majority of people do not have estate plans in place, but a survey that was conducted by Caring.com found that most of the same folks know that estate planning is important.
Why do they fail to take action?
There are various reasons including the simple fact that many of them don’t know where to begin. With this in mind, let’s look at the basic framework.
Legacy Preservation
The first aspect of the process may come as somewhat of a surprise. Before you start to think about how the assets will be divided, you should take steps to protect your legacy.
More than one third of senior citizens will ultimately reside in nursing homes. In our area, you can expect to pay at least $150,000 for a year in a nursing facility, and costs have been consistently rising.
A married couple may be forced to contend with two different sets of nursing home bills, so the overall expenses can be considerable. Medicare does not pay for long-term care, so this is a matter that you should take quite seriously.
Medicaid does cover custodial care, but you are probably aware of the fact that it is a need-based program. You can’t qualify if you have significant assets in your own name, but you could divest yourself of resources with future eligibility in mind.
The gift giving has to be completed at least five years before you apply for Medicaid, so informed advance planning is key. This is an area of specialization for elder law and estate planning attorneys.
Explore Asset Transfer Methods
You have to use a legal document to state your final wishes with regard to the way your assets will be distributed after you pass away. Many people assume that a simple will is the right choice, but a trust can actually be a better option in many cases.
There are trusts that satisfy specific targeted aims. For example, some trusts provide estate tax efficiency, and a trust could be used to assist someone with a disability without impacting need-based benefit eligibility.
The revocable living trust is another option that can be the perfect alternative to a last will for general estate planning purposes. If you create this type of trust, you would be the trustee while you are alive, so you would have total control over the resources that you convey into the trust.
You would name a trustee to succeed you and your heirs would be the beneficiaries.
If you want to prolong the viability of the trust, you could direct the trustee to distribute limited assets incrementally over a period of time. Through the inclusion of a spendthrift provision, you would protect the principal from creditors and certain litigants.
The estate administration process would be streamlined, and probate would be avoided. Probate is a costly and time-consuming legal process that would enter the picture if you use use a will as the centerpiece of your estate plan.
Incapacity Planning
The other piece to the puzzle is the incapacity planning component. A very significant percentage of elders become unable to make sound decisions at some point, with Alzheimer’s disease being a leading culprit.
If you have a living trust, you can name a disability trustee to assume the role if you become unable to administer the trust yourself. To account for property that is not in the trust, you can empower a representative in a durable power of attorney for property.
A durable power of attorney for healthcare can be added to name a medical decision maker, and you can state your life-support preferences in a living will. To give the healthcare agent access to your medical records, you should include a Health Insurance Portability and Accountability Act (HIPAA) release.
Attend a Free Seminar!
We are holding a number of seminars over the coming weeks, and you can learn a lot if you attend one of these sessions. There is no admission charge, but we ask that you register in advance so we can reserve your spot.
You can see the schedule and obtain registration information if you visit our seminar page.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
- Do You Maintain Control of Assets in a Trust? - March 30, 2023
- Four Reasons to Steer Clear of DIY Wills - March 14, 2023
- Estate Planning: Keep It Simple - February 23, 2023
