Statistics show that most people do not have estate plans in place, and this even applies to older Americans. Just 43 percent of individuals that are 55 five years of age and up have estate plans in place according to a study that was conducted by Caring.com.
In a strange twist, they also found that most of the people that they surveyed felt as though inheritance planning was important. Many of the respondents stated that they are frozen with inaction because they simply do not know where to begin.
With this in mind, we will look provide a basic overview in an effort to demystify the inheritance planning process.
Asset Transfer Vehicle
When it comes the financial part of the equation, you have to state your wishes in writing. A will is one possibility, but there are drawbacks and limitations when you utilize a simple will.
Generally speaking, you would be allowing for the distribution of lump-sum inheritances, so there would be no spendthrift protections. There is also a waiting game for the inheritors, because the estate would go through the time-consuming process of probate.
In addition to the delay that can drag on for close to a year or more, there are expenses that shave down the value of the estate before it is distributed to the heirs.
Living Trust
A living trust is the ideal alternative for a wide range of different people. There is no loss of control of the assets, because you can act as the trustee while you are alive. You can change the terms, and you can actually revoke the trust if you choose to do so.
In the trust declaration, you would name a trustee to succeed you, and your heirs would be the beneficiaries. A spendthrift clause can be included to protect the principal from the beneficiary’s creditors. Plus, you can instruct the trustee to provide limited distributions on an incremental basis.
Explore Your Options
The revocable living trust is not the only option. There are other types of trusts that can satisfy certain specific objectives. As a layperson, there is no reason why you would understand all of the options that are available and why would choose one over another.
This is why legal counsel is invaluable during the inheritance planning process. When you make a connection with our firm, we will simplify the complexities and provide recommendations so you can make informed choices.
End-of-Life Planning
Your estate plan should address eventualities that you may face toward the end of your life. Advance directives for health care will be a major part of the equation because incapacity is common among elders.
You should state your preferences regarding the use of life-support measures in a living will. A durable power of attorney for healthcare should be added to name someone to make medical decisions on your behalf if it becomes necessary. These would be decisions that are not related to life-support utilization.
A Health Insurance Portability and Accountability Act (HIPAA) release should be added to give the agent (and anyone else that you choose) the ability to discuss your medical condition with your doctors.
Your incapacity plan should be expanded to address financial matters. If you have a living trust, you can name a disability trustee to act as the administrator if it ever becomes necessary. For property that is not in a trust, you should include a durable power of attorney for property.
Nursing Home Asset Protection
The two components that we have looked at to this point are essential, and should also consider the matter of long-term care and the costs that go along with it. Medicare does not pay for living assistance, but Medicaid will cover these costs if you can qualify.
People often use Medicaid trusts to develop a financial profile that will lead to future eligibility.
We Are Here to Help!
As you can see, legal counsel is invaluable when you are addressing the details. If you are ready to get started, you can send us a message to request a consultation at our Westport or Glastonbury, CT estate planning offices, and we can be reached by phone at 860-548-1000.