An estate plan is important for people of all ages, but as we age, the need for planning becomes even more critical. Many people avoid estate planning because they do not want to think about the end of life, failing health, or disability. Others believe that an estate plan is only for rich people. However, an estate plan is helpful for the senior adult and their families regardless of overall wealth.
An estate is all the property owned both individually and jointly, including bank accounts, real estate, jewelry, etc., and what is owed on that property. Without an estate plan, it is very difficult to carry out a person’s wishes and can bring on long, drawn-out probate that can be very expensive for the family. If an estate plan is in place, it can provide peace of mind for the senior adult and their family, as well as protection for the wishes of the senior.
Below are some basic guidelines for what should be included in an estate plan.
- Will.
A will provides for an executor of the estate – someone who will take care of managing the estate, paying debts, and distributing property as specified. The distribution of assets can be outlined in the will. This can be as broad or as detailed as a person wishes. In a will, beneficiaries and guardians for minor children should be assigned. It may not seem necessary to discuss minor children when discussing seniors and estate planning, but with the rise of grandparents raising grandchildren, this may indeed be an important part of the will. A senior adult can spell out, in the will, how they want their funeral and burial to be carried out as well. Lastly, a will is still an important planning tool even if trust planning is involved. A will known as a “pour-over will” is necessary to act together with any revocable living trust that may be established.
- Living Will.
A living will outlines a senior’s wishes for end of life medical care. It can include, in as much detail as the senior wishes, what medical treatments the senior would or would not like to have in specific situations. A living will takes the stress of making those decisions off of family members and helps to keep peace in families during times that can be difficult and emotional.
- Advance Healthcare Directive
An advance healthcare directive is also a key part of an estate plan. This legal document provides for someone to legally make healthcare decisions for a senior adult. in effect for the senior if the senior becomes unable to make decisions. It often goes hand-in-hand with the living will described above.
- Financial Power of Attorney.
A financial power of attorney often called a durable power of attorney, names an agent who has the power to act in the place of the senior or adult for matters relating to finances or legal obligations. This power can be designated to be immediate or conditional upon a later determination of incapacity. If it is designated as an immediate power it is durable in the event of a subsequent incapacity such that the financial power of attorney stays in effect.. By having a financial power of attorney in place, the stress and expense of a conservatorship can be avoided, and the senior has the final say in who will make decisions relating to finances.
- Trust.
Setting up a trust can be beneficial for the distribution of specific assets or pieces of property. One major benefit of a trust is that any assets held by the trust do not go through probate, as compared to a will. Property is still distributed at the death of the trust maker, but it is done without the need of a court. This also allows for the privacy of the trust maker. With just a will and probate, all of the deceased person’s assets and the terms of their will is made public.
There are also a number of other benefits that a trust can provide including asset protection for beneficiaries to protect inheritances from their personal liabilities. In addition, trusts can provide for important tax planning to minimize the impact of a variety of types of taxes on beneficiaries such as estate and gift tax, inheritance tax, capital gain tax, and property tax.
Having an estate plan is necessary if you or your senior loved one wishes to have a say in what happens at the end of life and with assets after death. Consulting and planning with an elder law attorney who is also an estate planning attorney will help to ensure that all options are explored and the best possible solution is utilized. The elder law attorney can walk you through all of the necessary parts of the estate plan, provide an explanation, and prepare the paperwork. This will help take the guesswork out of estate planning.
If you have any questions about something you have read or would like additional information, please contact us or schedule an appointment with us to discuss your estate planning needs.
