It can be difficult to know where to begin when you are thinking about the estate planning process. There are variations depending on the circumstances, but there is an underlying framework that applies to everyone, and we will break it down in this post.
Asset Transfer Vehicle
An asset transfer vehicle will be at the core of your estate plan. You could use a will, but this would not be the right choice unless the situation is extremely simple and straightforward.
The revocable living trust is a very commonly used tool that is ideal for a wide range of people. You maintain control of the assets while you are alive and well, and you retain the power of revocation. If you want to change the terms, you are free to do so at any time.
One major benefit is the ability to provide spending safeguards. The trustee that you empower to succeed you after your passing could be instructed to distribute limited assets on an incremental basis over an extended period of time.
This is one way to protect the resources, and the principal would be protected from the beneficiaries’ creditors. You could allow for larger lump sum distributions to begin when the beneficiaries reach certain age thresholds.
Another positive is the avoidance of probate. This is a legal process that would enter the picture if you use a will to direct the asset transfers. It is time consuming, there is a loss of privacy because it is a public proceeding, and probate costs reduce the value of the estate.
There are other types of trusts that can be used to satisfy specific objectives. For example, we have a state-level estate tax in New York that is applicable on transfers that exceed $5.93 million, and there is a federal estate tax. Irrevocable trusts are used to gain estate tax efficiency.
You can use a special type of trust to develop a financial profile that will lead to Medicaid eligibility. Many people take this step, because Medicare will not pay for long-term care.
These are a handful of the reasons why a trust can be utilized, but there are others. When you work with our firm, we can gain an understanding of your situation and make the appropriate recommendations.
Living Will
Your estate plan should address the eventuality you may face toward the end of your life. With a living will, you state your preferences regarding the use of life-sustaining measures like feeding tubes, artificial hydration, resuscitation, and mechanical respiration.
You can also record your organ and tissue donation designations in a living will, and if you have comfort care medication preferences, you can express them in the document.
Health Care Proxy and HIPAA Authorization
Medical situations can arise that have nothing to do with the use of life-support at a time when you cannot communicate your own choices. To account for this possibility, you can name an agent to act on your behalf in a health care proxy.
The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996 to protect patient privacy. Unless there is an authorization signed, doctors cannot disclose medical information to anyone other than the patient.
To account for this, you should sign an authorization to provide access to your health care representative and anyone else that you want to include.
Durable Power of Attorney for Property
In addition to physical conditions that can make communication impossible, many elders experience cognitive impairment. You should include a durable power of attorney for property to give an agent the ability to manage your financial affairs in the event of your incapacity.
It should be noted that you can name a disability trustee if you have a living trust, and it does not necessarily have to be the same person or entity that will act as the successor.
Schedule a Consultation Today!
If you are ready to work with a Rochester, New York estate planning attorney to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 585-374-5210.
- It’s Important to Have a Coordinated Estate Plan - July 28, 2021
- Your Estate Plan May Have Missing Parts - July 22, 2021
- Roth IRAs Can Be a Great Planning Strategy: Advanced - July 21, 2021
