Surveys tell us that despite understanding the importance of having an estate plan in place, nearly half of all Americans do not have one. People often explain the lack of an estate plan by explaining that they do not believe they need to worry about estate planning because they don’t have a large enough estate. The truth, however, is that all adults should have at least a basic estate plan in place.
Probate is the legal process that is typically required following the death of an individual. Probate is intended to serve a variety of functions, including:
- Providing for the identification, location, and valuation of the decedent’s estate assets.
- Allowing creditors of the decedent to file claims against the estate.
- Ensuring that state and federal estate taxes are paid.
- Facilitating the transfer of estate assets to beneficiaries and heirs of the estate.
If your estate is required to go through formal probate it will likely be costly, both in terms of time and money which is why many people choose to include probate avoidance tools and strategies in their estate plan.
One of the most common mistakes people make when creating a Last Will and Testament is not taking the time to consider the appointment of an Executor. All too often, a Testator simply fills in the name of a spouse, family member, or close friend without considering what the duties and responsibilities of an Executor actually are – and they can be extensive and varied. Find out more.
In the age of electronics, it is very tempting to turn to the internet for everything – even your estate planning documents. After all, it is easy enough to find a “fill-in-the blank” Last Will and Testament form on the internet; however, the risk you take of ending up with a Will riddled with errors and omissions is great. Moreover, those errors and omissions could cost your loved ones a considerable amount of time and money after you are gone. Read more about why you should not use a DIY Will.
“Incapacity” is not something that is limited to seniors suffering from Alzheimer’s of another form of age related dementia. On the contrary, you could become incapacitated at any age as a result of a tragic workplace accident, a debilitating illness, or a catastrophic motor vehicle collision. If that happens, who will make health care and personal decisions for you? Who will control your assets during your period of incapacity? Incapacity planning answer those questions now so that you know who will be in control of you and your assets should incapacity strike.
You may go through your entire working career without ever giving Medicaid a second thought because you are covered by employer sponsored health insurance. As a senior, however, you could find yourself needing to qualify for Medicaid benefits to help cover the high cost of long-term care expenses. Because most basic health insurance policies exclude LTC expenses, and Medicare only covers LTC costs for a short period of time under very narrow circumstances, over half of all seniors end up turning to Medicaid for help. If you find yourself in a position here you need to qualify for Medicaid benefits, and you failed to plan ahead by including Medicaid planning in your estate plan, your hard-earned assets could be at risk.
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. A beneficiary may be an individual, a charity, a corporation, or even the family pet. You may also include both current and future beneficiaries. Trusts are broadly divided into testamentary and living trusts with the former not activating until your death and the latter activating as soon as all the formalities of creation are in place. Living trusts can be further divided into revocable and irrevocable trusts. The type of trust you create will depend on the estate planning goals you hope to achieve with the trust.