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Home » Estate Planning » Why Is an Estate Plan Necessary?

Why Is an Estate Plan Necessary?

January 20, 2022 by Jeffrey A. Nirenstein, Estate Planning Attorney

estate planThe vast majority of American adults do not have estate plans in place, and some folks simply do not feel as though it is necessary. This is a mistake, and we will provide some food for thought in this post.

Avoid Intestacy

Some people that do not have plans intend to draw up a simple will at some point when they are senior citizens. Unfortunately, people pass away at all ages every day, and the condition of intestacy would exist if you die without a will or trust.

Under these circumstances, the probate court would step in to appoint a personal representative to handle the estate administration tasks. After a number of months, the assets will be distributed under the intestate succession laws of Connecticut.

The time consumption is one problem with intestacy, and the assets may not be distributed in the way that you would have passed them along. There is no reason to take chances with intestacy when qualified legal assistance is just a phone call away.

Estate Tax Efficiency

If you have enjoyed a great deal financial success, you should address potential estate taxes. The federal estate tax is applicable on the portion of an estate that exceeds $11.7 million, and there is a Connecticut estate tax with a $7.1 million exemption.

There are steps you can take to gain estate tax efficiency if your estate will be subject to taxation. With regard to the federal tax, the exclusion is going down to $5.49 million adjusted for inflation in 2026.

Even if you are a Connecticut resident, property that you own out-of-state would be subject to the estate tax in that state when your estate is being administered. There is an estate tax in Massachusetts, and the exclusion is just $1 million.

Optimal Asset Distributions

You may not want to leave direct lump sum inheritances to your loved ones all at once in a perfect world, and this is what would happen if you use a will. A living trust is actually a far better choice for a wide range of people.

When you have a living trust, you would be the trustee while you are alive, so you would maintain control of the assets. After your passing, the successor trustee that you name in the document would distribute assets to the beneficiaries outside of probate.

The trust would become irrevocable after your death, and this will protect the principal from creditors of the beneficiaries. You can set any type of distribution schedule that you want to when you have a living trust, so there is no lump sum requirement.

This is one of a number of different types of trusts that can be used to satisfy a particular objective. You should discuss the possibilities with an estate planning lawyer before you decide to use a simple will.

Nursing Home Asset Protection

A significant portion of your legacy can potentially be consumed by nursing home costs because Medicare does not pay for custodial care. The median annual cost for a semi-private room in a Hartford area nursing home last year was $156,950.

The United States Department of Health and Human Services tells us that over one third of seniors will move into nursing homes eventually, and more than half of elders will need some type of paid care

Medicaid will pay for long-term care, and you can convey assets into an irrevocable trust to develop a financial profile that leads to eligibility. You would be able to receive distributions of the trust’s earnings, so you don’t surrender needed income.

The principal would no longer be within reach, but it would not count if you apply for Medicaid as long as you fund the trust at least 60 months before you try to obtain eligibility.

Take Action Today!

Our doors are open if you are ready to work with a Glastonbury, CT estate planning lawyer to develop a custom crafted plan that ideally suits your needs. You can use our contact form to request a consultation, and we can be reached by phone at 860-548-1000.

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Jeffrey A. Nirenstein, Estate Planning Attorney
Jeffrey A. Nirenstein, Estate Planning Attorney
Founding Partner and Vice President at Nirenstein, Horowitz & Associates PC
Jeffrey A. Nirenstein is a founding partner and vice president of the law firm of Nirenstein, Horowitz & Associates, P.C. He received his bachelor of arts degree in government from Clark University and his law degree from New York Law School.

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.
Jeffrey A. Nirenstein, Estate Planning Attorney
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Filed Under: Estate Planning Tagged With: estate taxes, nursing home asset protection, Wills and Trusts

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