A lot of people that do not have estate plans in place know that it is important, but they put the matter on the back burner because they don’t know where to begin. With this in mind, if you answer these questions, you will be able to start an initial estate plan outline
How do you want your assets to be transferred after you are gone?
You may read this question and immediately think about the percentages that you want to give to each person on your inheritance list. This is part of the equation, but you should also consider the method that will be used to facilitate transfers.
If you use a simple will, your heirs would receive lump sum inheritances all at once. There would be no spending safeguards or asset protection going forward. This can be a source of concern if you will be leaving bequests to people that are not good with money.
Special circumstances can enter the picture as well. For example, many people with disabilities rely on Medicaid for health insurance, and they receive Supplemental Security Income (SSI) benefits. These are need-based programs, so a windfall can impact eligibility.
There are transfer methods that can be used to address any objective. When you work with our firm to develop your plan, we can gain an understanding of your situation and make recommendations based on the circumstances.
Who will act on your behalf if you become incapacitated?
Alzheimer’s disease strikes about 13 percent of seniors, and the figure is 32 percent for people that are 85 years of age and older. Individuals with Alzheimer’s induced dementia lose their ability to make sound decisions, and this is not the only cause of incapacity.
If you do nothing to prepare for this eventuality in advance, the state could be petitioned to appoint a guardian to act on your behalf, and you would become a ward. Most people would not want the government to make the choice for them, and you can prevent a guardianship if you act in advance.
You can create a durable power of attorney for property to designate someone to manage your financial affairs if it becomes necessary. A disability trustee can be named if you have a living trust.
Another durable power of attorney for health care decision-making should be part of the plan. To give your representative the ability to access your health records, you should include a HIPAA release form.
There is also the matter of life-support utilization. You can state your life support preferences in a living will along with your organ and tissue donation choices.
How will you pay for long-term care?
The United States Department of Health and Human Services tells us that 35 percent of senior citizens will eventually reside in nursing facilities. In 2020, the median annual charge for a private room in a Memphis area nursing home was over $92,000.
That’s a lot of money to come up with late in your life, and a married couple could be inundated with two different sets of nursing home bills. Medicare does not pay for long-term care, so this is a matter that everyone should take seriously.
Estate planning will not have much meaning if there is nothing left to pass along because your legacy was consumed by a nursing home. Fortunately, Medicaid will pay for long-term care, and Medicaid eligibility is the widely embraced solution.
You can fund an irrevocable trust to divest yourself of ownership of assets in an effort to gain eligibility. The principal would be out of your reach, but you would be able to accept distributions of the trust’s earnings until you apply for Medicaid.
Advance planning is necessary, because there is a five-year look back period. The trust must be funded at least 60 months before you submit your application for Medicaid coverage.
Schedule a Consultation Today!
Today is the day for action if you are going through life without a plan. You can schedule a consultation at our Memphis, TN estate planning office if you call us at 901-763-2500 or 866-997-6325, and you use our contact form to send us a message.