Estate planning is not merely about a set of dry, legal documents. The real focus is on people – you, your family, and other loved ones. It helps to understand why we put together comprehensive estate plans.
We plan to:
- make sure our needs are met if we need help,
- make our loved ones’ lives are a little easier,
- avoid expensive and intrusive guardianships,
- maximize financial resources and minimize taxes, and
- address the expense of long-term care.
Each plan is different because it’s based on your individual needs and goals. However, your estate plan might have one or more of the following components.
Analysis of Tax-Qualified Plans
Many people have contributed to retirement plans on a tax-deferred basis. But what do retirement plans have to do with an overall estate plan?
- First, retirement plans will not be controlled by your Will if beneficiaries have been named.
- Also, income tax is usually due when the money is withdrawn or distributed after death. This could affect your estate so planning for the tax costs of withdrawals is necessary.
Because of their unique nature and potential tax consequences, retirement plans must be considered when preparing an estate plan.
Analysis of Non-Probate Assets
When preparing a comprehensive estate plan, it’s crucial to take into account all your property. This includes both probate and non-probate assets.
Life insurance policies, retirement plans, and other financial accounts are often non-probate assets. If you designated beneficiaries to receive the accounts after you are gone, your Will does not control the funds. Non-probate assets may still be taxable even if they are not part of your probate estate, depending on the nature of the asset.
Without careful planning and coordinating your probate and non-probate transfers, you could unintentionally exclude an intended beneficiary from inheriting.
Last Will and Testament
This well-known estate planning document names an executor and controls the disposition of your property through probate. However, some of your property passes outside the control of your Will. Typically, life insurance policies, annuities, and financial accounts use beneficiary designations and do not become part of your probate estate.
Durable Power of Attorney
This legal document allows one person (the “principal”) to appoint another person (the “agent”) to make decisions for them.
- A valid power of attorney can help avoid the need for a court-appointed guardian.
- A durable power of attorney (DPOA) can be broad or restrictive (limited in scope).
- “Durable” means that the document remains valid if you become cognitively impaired.
You can have one DPOA for financial decisions and another for medical decisions.
Advance Health Care Directive
Often known as a living will, your advance health care directive names someone to make health care decisions for you. Typically, this document is used when you’re in an end-stage medical condition with no realistic hope of recovery.
The medical power of attorney described in the previous paragraph names an agent to make general medical decisions. An Advance Directive focuses on end-of-life decisions, including whether to withhold or withdraw life-sustaining treatment.
A trust is a legal entity that can be used for several purposes, including:
- Avoiding probate,
- Protecting assets from creditors, and
- Reducing your tax burden.
Trusts can be created and funded while you are alive or through your Will. Generally, revocable trusts can be changed, while irrevocable trusts cannot. We often use irrevocable trusts in the elder law/asset protection context to protect financial resources.
Special Needs Plan
Does one of your loved ones have a disability or special need? Your estate plan can plan the best future possible for them while addressing several common issues:
- Benefit recipients sometimes must demonstrate a financial need to qualify for benefits like Medicaid or SSI. Leaving a large inheritance could jeopardize their eligibility.
- Your loved one might need help efficiently managing their finances.
With thoughtful planning, you can help special needs loved ones maintain their benefits and enjoy the inheritance you left for them.
Someone to Put the Plan Together
Good estate planning involves more than just inserting your name into a software program.
When you plan with us, we first ask questions that will help you clarify your goals. Then, we’ll work with you to design a thorough estate plan that best fits your needs and objectives.
At Slutsky Elder Law, we often help clients protect their futures through powers of attorney, estate planning, and guardianship proceedings.