A survey that was conducted by Caring.com last year found that only 47.9 percent of people that are 55 years of age and older have estate plans in place. As you would expect, the preparedness percentage was lower among people that are in younger age groups.
Even though so many people are unprepared, the vast majority of participants stated that they thought estate planning was important. One of the reasons they cited for the inaction was a feeling of being overwhelmed by the seemingly arcane nature of the process.
While it is true that the minute details can be complicated under some circumstances, there are certain core components that are not especially hard to understand. In this post, we will strip it all down to its simplest form to demystify the matter.
Will or a Trust
When you plan your estate, you have to record your wishes with regard to the way you want your assets to be transferred after you are gone. A will is one option, and many people think that this is the only logical choice for people that are not multimillionaires.
On the surface, a will can seem like a very simple document that will facilitate efficient asset transfers after your passing. In fact, this is a commonly held misconception.
A will is admitted to probate, and the court provides supervision during the estate administration process. This procedure is time consuming, expensive, and there is a loss of privacy, because probate records are available to anyone that has an interest.
A living trust is an alternative that can be the right choice for a wide range of people. Asset transfers through the terms of a living trust are not subject probate, and there are other benefits.
This is just one of many different types of trusts. For example, many people with special needs rely on Medicaid and Supplemental Security Income. A direct inheritance that is received through the terms of a will can cause a loss of eligibility.
If you want to provide assistance to someone with a disability, you can use a supplemental needs trust to improve the beneficiary’s quality of life without disrupting the benefits.
Many people require long-term care at some point in time, and Medicare does not pay for living assistance. Medicaid will pick up the tab, but you can’t qualify if you have significant assets in your own name.
You could convey resources into a Medicaid trust to create a financial profile that will lead to eligibility. The rules for creating such a trust to acquire Medicaid eligibility are complex and change frequently. Accordingly, you should only create such a trust with the assistance of a qualified elder law attorney.
These are a handful of examples, but there are other trusts that can satisfy certain specific objectives. As a layperson, there is no reason why you would have an understanding of the possibilities, and this is why legal counsel is invaluable.
The other half of the puzzle is the incapacity planning component, and it starts with documents called advance directives for health care.
A living will is a device that is used to state your preferences with regard to the use of life-sustaining measures like resuscitation, artificial respiration, and artificial nutrition and hydration.
You should also have a durable power of attorney for health care, or health care proxy. With this document, you designate someone to make medical decisions on your behalf if you become unable to communicate them yourself.
When it comes to life support, the living will choices would be honored, and the health care representative would act on your behalf if other situations arise.
On the financial front, if you have a living trust, you can name a disability trustee to step into the administrator’s role in the event of your incapacity. For the management of property that is not in a trust, you can use a durable power of attorney for property.
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If you are going through life without an estate plan, action is required. We can gain an understanding of your situation and explain your options so you can make informed choices.
When you decide to move forward, we can apply our expertise to create a custom crafted plan that ideally suits your needs.
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