Estate planning is done to make certain you and your loved ones are cared for in the event of your disability or death. It can also involve leaving a legacy for your posterity and community to enjoy and remember you by. Estate planning documents are not created the same for each person; they must be carefully customized through the work you and your estate planning attorney do together. Your thoughts and feelings on many issues must be discussed and considered so your documents fit your life and preferences. Working with or at least touching base with a professional each step of the way can pay huge dividends later, and this will let you rest assured all will be taken care of properly. The information below will get you started.
The First Question: Who Needs an Estate Plan?
1. You have children or disabled adults dependent on you for their support.
2. You care about the medical care and financial care you would receive if you became disabled.
3. You care what happens to your property after you die.
For most people, the answer is “yes” to at least one of the three reasons to have an estate plan. Next, start thinking about and outlining the potential goals of your estate plan, and learn about the possibilities regarding strategies and accompanying documents that will ultimately need to be produced.
Major Areas of Concern
Estate planning revolves around addressing each of the four major areas shown below. Since the issues involved in each area differ during various stages of life, and also based on each person’s individual circumstances and preferences, no two estate plans ever look exactly alike.
1. Disability planning– how to assure I get the care I need if an illness or accident occurs?
2. Asset protection & property maintenance– what should I do with my property now, and how do I plan for the future (including after death)?
3. Ultimate distribution of assets – how do I care for my family properly (both 1st & 2nd marriage families), provide creditor protection, and prevent the wasting of assets?
4. Estate taxes – will these affect me?
The Solutions
In a nutshell, you need to design smart strategies developed during consultations with a trained professional, and those strategies must be executed through carefully tailored documents. Documents that are typically used (but using all is not always required) include:
1. Last Will & Testament
• Directs how to settle the estate after death
2. Revocable Trust
• Holds property during life and directs its management after death
3. Powers of Attorney
• Allows others to make financial and medical decisions for you
• Financial Durable Power of Attorney
• Medical Durable Power Of Attorney
4. Health Care Directive (or Living Will)
• Expresses medical preferences during a terminal condition or vegetative state
5. Other Planning Strategies, often involving Trusts and Insurance Planning
Special Considerations More Common Among Seniors
Directing How You are Cared For if Disability Strikes
1. Keep Powers of Attorney, both financial and medical, up-to-date, tailored to your circumstances (standard forms aren’t enough!), and easy to locate.
2. Discuss your Living Will with your doctor, and revise it as your health needs change.
3. Consider a Care Management Trust to give more detailed instructions to medical and financial caregivers, and to enlist overseers of those primary caregivers.
Covering the Costs of Long Term Care
1. Evaluate financial resources carefully, and look at every option.
2. Consider a Special Needs Trust to provide for basic comforts while remaining qualified for government assistance programs.
3. Consider Long Term Care Insurance options to cover the costs of retirement communities, nursing homes, etc.
4. Understand Medicaid Planning and its pitfalls well in advance (generally at least 5 years).
Disclaimer: this article is written to provide general educational information regarding the issues discussed. It is not legal advice, and may or may not apply to a person’s individual circumstances.