National Estate Planning Awareness Month: Protection, Security, and Peace of Mind™

October is National Estate Planning Awareness Month, an opportunity to consider an important question:  If something happened to you tomorrow, would your affairs be in order?

Estate planning is sometimes viewed as something primarily for older adults or people with substantial wealth.  In reality, a well-designed estate plan serves a much broader purpose.  It provides a structure for managing your affairs during your lifetime, protecting you and your family in the event of incapacity, and ensuring that your property passes according to your wishes after your death.

At the Law Offices of Jeffrey A. Asher, PC, we view estate planning as being about more than preparing documents.  At its core, estate planning is about Protection, Security, and Peace of Mind™.

Estate Planning Is More Than a Will

A Last Will and Testament is an important part of many estate plans, but it is only one component.

A comprehensive estate plan may include a Last Will and Testament, Revocable Living Trust, Irrevocable Trust, Medicaid Asset Protection Trust, Power of Attorney, Health Care Proxy, and Living Will, depending upon a person’s circumstances and objectives.

A Will provides instructions concerning the disposition of assets passing through your estate, designates an Executor to administer the estate, and can nominate guardians for minor children.

A Revocable Living Trust primarily serves two important purposes:  it provides for the management of your assets during your lifetime and avoids probate after your death.  During your lifetime, you ordinarily remain in control of the assets held in the Trust.  If you become unable or no longer wish to manage those assets yourself, a successor Trustee can step in and manage them for your benefit.  Upon your death, assets held in the Trust can be administered and distributed by your Trustee according to your instructions without the need for probate and court supervision.

For some families, Irrevocable Trusts may also be appropriate to address asset protection, estate tax planning, or other objectives.

Medicaid Planning and Asset Protection

Estate planning may also include preparing for the possibility of future long-term care.  The cost of nursing home and other long-term care can place significant pressure on a family’s savings and assets.

A Medicaid Asset Protection Trust can be an important planning tool for individuals who wish to protect assets while positioning themselves for potential Medicaid eligibility in the future.  When properly established and funded sufficiently in advance, the Trust can help preserve assets—including, in appropriate circumstances, the family home—rather than requiring those assets to be spent toward the cost of long-term care.

Because Medicaid planning is subject to specific eligibility requirements and look-back rules, advance planning is critical.  The earlier a plan is put into place, the greater the opportunity to protect assets while maintaining an appropriate financial structure for future needs.

Who Will Handle Your Affairs If You Cannot?

One of the most important – and frequently overlooked – parts of estate planning is planning for incapacity.

What happens if an accident, illness, or cognitive decline leaves you unable to make medical decisions or manage your finances?

A Health Care Proxy allows you to designate an agent to make health-care decisions if you are unable to make those decisions yourself.

A properly prepared Power of Attorney allows you to designate someone you trust to handle financial and legal matters on your behalf.  Depending upon the authority granted, your agent may be able to manage bank accounts, pay expenses, address tax matters, deal with real estate, and take other necessary actions.

A Living Will provides guidance concerning your wishes regarding medical treatment and end-of-life care.

Without appropriate advance planning, family members may be forced to seek court intervention to obtain authority to manage the affairs of an incapacitated loved one.  Good estate planning establishes that authority in advance, while you are able to decide whom you trust and how you want your affairs handled.

A Revocable Living Trust Must Be Properly Funded

Creating a Revocable Living Trust is only the first step.  To accomplish its probate-avoidance objective, assets generally must actually be transferred to the Trust or otherwise coordinated with the overall estate plan.

Certain assets with valid beneficiary designations or other non-probate arrangements may also pass outside of the probate estate.  Coordinating ownership, beneficiary designations, and Trust funding is therefore an essential part of the planning process.

Proper planning can reduce delays, provide greater privacy, and make the administration and transfer of assets easier for surviving family members.

Estate Plans Should Change as Your Life Changes

Estate planning should not be a one-time event.  A plan prepared ten or fifteen years ago may no longer reflect your family, finances, goals, or current law.

Marriage, divorce, the birth of children or grandchildren, retirement, the death or incapacity of a beneficiary or fiduciary, the purchase or sale of property, an inheritance, changes in wealth, and changes in tax laws can all create reasons to revisit an existing plan.

Even when nothing dramatic has changed, it is worthwhile to periodically review your documents.

Ask yourself:  Are the people named as Executors, Trustees, agents, and health care agents still the people you would choose today?  Are your beneficiary designations consistent with your estate plan?  Have assets intended for a Trust actually been transferred to it?  Does the plan still accomplish what you intended?

If the answer to any of these questions is uncertain, a review may be appropriate.

Estate Planning Can Help Prevent Family Conflict

A carefully considered estate plan can also reduce uncertainty and conflict among family members.

Disputes often arise because a decedent’s intentions were unclear, documents were outdated, beneficiary designations conflicted with the overall plan, or family members had different understandings about what was supposed to happen.

Although no estate plan can guarantee that a disagreement will never occur, clear documents and thoughtful planning can substantially reduce ambiguity.  This may be particularly important in blended families, second marriages, families with unequal distributions, beneficiaries with special needs, closely held businesses, significant real estate holdings, or complicated family relationships.

Estate Planning Is Ultimately About the People You Care About

People naturally focus on the financial aspects of estate planning:  taxes, trusts, probate, Medicaid planning, and asset protection.

Those issues are important.  But they are not the ultimate purpose of an estate plan.

The ultimate purpose is to make difficult circumstances easier.

It is making sure that someone you trust can step in when you need help.  It is providing clear instructions rather than leaving unanswered questions.  It is protecting a spouse, children, or other beneficiaries.  It is making sure that a beneficiary with special needs is properly provided for.  It is preserving what you have built and determining how it should be used for the people and causes important to you.

And it is addressing these questions now, rather than leaving your family to address them during a crisis.

National Estate Planning Awareness Month:  A Good Time to Review Your Plan

National Estate Planning Awareness Month is a useful reminder to take stock.

If you do not have an estate plan, now is an appropriate time to begin the process.

If you already have one, take it out and review it.  Consider whether it still reflects your wishes and whether your assets and beneficiary designations are properly coordinated with it.

Estate planning cannot eliminate every uncertainty in life.  What it can do is provide a thoughtful framework for dealing with those uncertainties.

Plan for the people you love.  Plan for the unexpected.  Plan for your future.

Protection, Security, and Peace of Mind™

The Law Offices of Jeffrey A. Asher, PC assists individuals and families with estate planning, trusts, Medicaid planning, asset protection, estate administration, and related matters.  Contact our office to discuss creating an estate plan or reviewing your existing plan.