Estate planning is not a one-size-fits-all endeavor. This is one of the major reasons why you should probably steer clear of do-it-yourself estate planning notions that you see advertised on the Internet.
There are a lot of things to consider, and a lot of ways to go about planning your estate. You have to analyze all the details and understand how to proceed given your unique circumstances.
Let’s look at some of the details that some people may not consider.
You may think that your executor simply distributes the assets to your heirs according to the terms of the will immediately after you die. This is not the case.
Unless you have a very small estate your will must be admitted to the Surrogate’s Court after you pass away so that the estate can be probated.
Even smooth probate procedures are somewhat time-consuming, and no inheritances will be distributed until the probate process has been completed. There are also expenses that are incurred during this process, and they can be considerable.
Disgruntled parties could exploit the window of opportunity provided by probate to challenge your wishes, and this ratchets up the expenses while making the process even more lengthy.
There is a myth that circulates regarding trusts. The idea is that only the very wealthy benefit from trusts.
In fact, this is patently untrue. Revocable living trusts are very popular, and they are useful for those who are not extraordinarily wealthy.
These trusts provide for asset distributions outside of probate, so you avoid the pitfalls that we discussed in the previous paragraph.
And then there is another misconception. Some people think that living trusts are a cure-all, providing asset protection while shielding assets from consideration by the Medicaid program.
This is not the case. Revocable living trusts don’t protect assets from creditors and/or claimants, and funds that you conveyed into the trust would count if you apply for Medicaid to pay for long-term care.
There are however other types of trusts that do provide asset protection. And, there are also Medicaid planning strategies that can be implemented.
If you were to become incapacitated a guardianship proceeding could be initiated, and your affairs may ultimately be handled by someone that you did not personally choose.
You can nip this in the bud by adding an incapacity component to your broader estate plan.
Part of the equation would be the execution of a health care proxy to name an individual who would be able to make medical decisions in your behalf.
A durable power of attorney should be executed as well. Your attorney-in-fact will be empowered to handle your financial affairs.
You should also include a living will so that your preferences can be honored with regard to the utilization of life-support measures.
- What You Need to Know about Medicaid’s “Look-Back” Rule - February 1, 2023
- What You Need to Know about Elder Financial Exploitation - January 25, 2023
- What Is an Asset Protection Trust? - January 18, 2023