We all know that passing away is one of the two certainties of life, but in spite of this, the majority of American adults are not properly prepared from an estate planning perspective.
A lot of people fail to act because they really don’t know why estate planning is important. Let’s look at three things that you should know about the process, and when you digest this information, you will understand why estate planning is essential.
Things Do Not Automatically Fall in Place
You may assume that there are laws on the books that will come into play if you pass away without an estate plan. The government will make sure that everyone you love is properly provided for, right?
In fact, if you die without a will or some other estate planning document like a trust, the condition of intestacy will result. Once your final debts are paid, the state will indeed determine who gets what. However, people who you love may be disinherited, because these laws are quite simplistic.
When you plan your estate properly, you can be certain that your own true wishes will be carried out.
Estate Planning Is Relevant to Young People
We all hear about people passing away at young ages each and every day. You never know what the future holds, and you cannot be certain that you will have time to plan your estate as a senior citizen.
As soon as you are a self-supporting, responsible adult, you should have an estate plan in place. This is true for single people, but if you are married, or if you are a single parent, estate planning is an absolute must.
A Will Is Not the Only Option
Many people equate the process of estate planning to the creation of a last will. In fact, a last will is not the best choice for many people.
If you use a last will to state your final wishes, the inheritors would receive lump sum inheritances. Everyone is not a good money manager, and this can be disconcerting if you have a spendthrift in the family.
To respond to this, you could create a revocable living trust and use the trust as the centerpiece of your estate plan instead of a last will. You do not lose control of the assets while you are living, so you do not have to be concerned on that level.
In the trust declaration, you name a trustee to administer the trust after you are gone, and you can leave behind instructions with regard to the way that you want the assets distributed to the beneficiaries. You could protect a spendthrift by instructing the trustee to distribute limited assets over an extended period of time.
Another type of trust that can be very useful under certain circumstances is the irrevocable, income only Medicaid trust. Why should you care about Medicaid in any context when you are going to qualify for Medicare as a source of health insurance when you are 65 years old? This is a good question, and the answer may come as a surprise to you.
The Medicare program will not pay for a stay in a nursing home. These facilities are exorbitantly expensive, so everything that you intended to leave to your loved ones could be surrendered to a long-term care facility. Medicaid will pay for living assistance, and this is why it should be on your radar.
Since it is intended for people with limited resources, you cannot qualify if you have a reasonable store of assets in your own name. As a response, you could convey resources into a Medicaid trust.
You could continue to receive income that is earned by assets in the trust until and unless you qualify for Medicaid. If you do seek Medicaid eligibility, the principal would not be looked upon as your own personal property. Unfortunately, you would have to use the income to defray the cost of the care that you are receiving.
These are two tools that are in the estate planning toolkit, but there are many others. The right choice will depend upon the circumstances, and that is why you should discuss your unique situation with a licensed legal professional.
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If you are convinced that action is required, send us a message or give us a call at 913-262-2000 to set up a consultation appointment.
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