There are a lot of things to think about when you are planning your estate. Many people do not understand all the intricacies, and in some cases, their families pay the price. A little bit of knowledge can go a long way, so we will provide a handful of inheritance planning tips in this post.
Do not buy into do-it-yourself estate planning notions.
Rolling up your sleeves to take care of some things on your own without professional assistance can save you money, and it can be fun in some instances. This being stated, you have to know where to draw the line.
There are websites on the Internet that sell boilerplate, template legal documents, and they offer last wills. You may say that it is self-serving for an estate planning attorney to advise against do-it-yourself estate planning. In truth, we would not try to deceive anyone, but you don’t have to take our word for it.
A number of years ago, the highly respected publication Consumer Reports decided to put the subject of DIY estate planning under the microscope. They enlisted the assistance of three legal professors, and they had staff members create last wills using tools that were offered by three of the most widely utilized legal document websites.
When the legal scholars examine these documents, they came away unimpressed. The attorneys stated that unintended negative consequences can come about if you use these do-it-yourself documents.
Ultimately, Consumer Reports advised people to steer clear of DIY estate planning notions. You should certainly follow their advice and obtain the appropriate legal counsel when you are engaged in your inheritance planning efforts.
Don’t assume a last will is the best choice.
A lot of people harbor misconceptions about wills and trusts. They think that all trusts are only useful for people that are extremely wealthy. These individuals are under the impression that a last will is the estate planning document for “the rest of us.”
In fact, nothing could be further from the truth. There is a type of trust called a revocable living trust that can be very useful for people that are not extraordinarily wealthy. With this type of trust, you can consolidate the assets that will comprise your estate in one place. This facilitates a very streamlined, efficient estate administration process.
When you are establishing the trust, you name a trustee to administer the vehicle after your passing. This can be someone that you know, but you could choose to use a professional fiduciary like a bank or trust company.
After your passing, the trustee would distribute assets to the beneficiaries outside of probate. If you were to use a will instead of a trust, it would be probated, and this is a costly and time-consuming legal process. There are other benefits that you gain when you use a living trust, including the ability to protect spendthrifts heirs.
Consider the importance of nursing home asset protection.
A very significant percentage of senior citizens will need long-term care eventually, and many of them will reside in nursing homes. If you were to spend a single year in a nursing home on Long Island, you would be looking at $125,000 at minimum, and you can double the expenses if you are married. Medicare does not pay for long-term care, so nursing home costs could potentially consume a significant portion of your legacy if not all of it.
For many people, the solution is Medicaid eligibility. This jointly administered federal/state government program does pay for long-term care, but it is intended for people with significant financial need. You can divest yourself of assets by essentially giving your loved ones their inheritances in advance. However, careful planning is key, because you must complete the gift giving at least five years before you submit your application.
Prepare for possible incapacity.
It is not the most pleasant thing in the world to think about, but many people become unable to handle their own affairs at some point in time. There are a number different causes of incapacity, but Alzheimer’s disease is the leading culprit. If you do nothing to prepare for incapacity, the state could be petitioned to appoint a guardian to act on your behalf.
There is a solution in the form of durable powers of attorney. With a durable power of attorney for health care, a document that is sometimes called a health care proxy, you can name someone to make medical decisions for you if it ever becomes necessary. A durable financial power of attorney can be added to empower a financial representative.
Attend a Free Seminar!
Our last estate planning tip is the most important. Our Smithtown inheritance planning attorney is holding a number of seminars in the near future, and you should definitely attend one of these sessions. To get all the details, click this link and follow the instructions to register for the seminar that fits into your schedule.
- How to Maximize the Benefits of Charitable Gifting in Your Estate Plan - February 14, 2024
- 2024 Medicaid Guidelines for New York Seniors - February 7, 2024
- Young Adults and the Importance of Estate Planning - January 31, 2024