By Barry Zimmer on December 10th, 2020 in Estate Planning
A study that was conducted by Caring.com earlier this year found that just under one third of American adults had estate plans in place. Even though so many people are unprepared, most of the respondents said that they thought that estate planning is important.
When the researchers asked them why they did not take action if they thought that it was necessary, many of them said that they simply do not know where to begin. With this in mind, we will share the steps you can take to get started in this post.
Inventory Your Assets and Make Projections
The first order of business will be to take stock of the estate that you will be able to pass along to your loved ones. Granted, this can be an imperfect science when you cannot accurately predict your future needs, but you can get a general idea.
Plus, once you enter into this process, your legacy goals could impact your budget along the way. In addition to liquidity and real property, you should also determine the ideal future caretakers for family heirlooms and irreplaceable items that you have acquired during your life.
Consider the Individual Inheritors
People sometimes view estate planning as an exercise in slicing a pie into different lump-sum pieces. This is one way to look at it, but a well-constructed estate plan will take the respective life situations and the proclivities of the inheritors into account.
For example, you may not feel comfortable leaving a large inheritance with no strings attached to someone that is a very poor money manager. People with disabilities usually rely on government benefits, and a windfall of money can cause a loss of eligibility.
These are a couple of the scenarios that can arise, but there are others. You do not necessarily have to provide for each person on your list in the same manner. There are many tools in the estate planning toolkit, and there is an ideal approach that can be utilized to address all circumstances.
Anticipate Long-Term Care Costs
The majority of senior citizens will need help with their activities of daily living eventually, and just over one third of elders will reside in nursing homes. Medicare does not pay for the custodial care that nursing homes provide, and their rates will probably give you a case of sticker shock.
Medicaid does pay for long-term care, but it is a need-based program, so you can’t qualify if you have significant assets in your own name. It is possible to convey assets into an irrevocable trust before you apply for Medicaid so you can develop the desired financial profile.
You would be able to accept distributions of the earnings that are generated by income producing assets in the trust, but you would not be able to touch the principal.
Advance planning is key, because there is a five-year look back period. The funding of the trust, or any direct gift giving, must be completed at least 60 months before you submit your application for Medicaid coverage.
Implement Your Estate Plan
After you have a good idea of what you want to accomplish with your estate plan, it is time to take the final step.
If you reach out to schedule a consultation, we can gain an understanding of your unique situation and make recommendations. After you make your decisions, we can apply our expertise to create a custom crafted estate plan that is ideal for you and your family.
We know that it can be a bit disconcerting to discuss these personal matters with someone you have just met. This is actually one of the reasons why some people procrastinate, but you can rest assured that you will feel completely comfortable when you interact with anyone on our team.
In light of the dangers that are presented by the pandemic, we are offering remote consultations, so you can interact with us through a Zoom meeting or a telephone conference. You can send us a message to set the wheels in motion, and we can be reached by phone at 513-721-1513.