Caring.com has been conducting research to get a feel for the estate planning preparedness of American adults each of the last few years. Their findings are surprising, and not in a good way.
You would expect younger adults to be unprepared, and the statistics confirm this assumption. Just over 16% of people between 18 and 34 have estate plans in place, and the figure is 27.2% for individuals in the 35-54 age group.
The next demographic is the one that is especially eye-catching. According to their 2020 survey, only 47.9% of people that are 55 years of age and older have estate plans in place.
These surveys ask the respondents if they think that estate planning is important, and most of them say yes, and this adds to the perplexing nature of the phenomenon.
Why do these people fail to act when they know that estate planning is a serious responsibility?
One of the reasons is the simple fact that they don’t know where to begin. With this in mind, we will share the basic steps that you should take when you enter into the estate planning process.
Assess Your Financial Position
Before you think about actually executing documents, you should determine what you expect to be able to pass along after you are gone. In addition to the assets that can be converted into cash, you may want to take stock of your heirlooms and possessions that you have acquired that are hard to duplicate.
Factor in Long-Term Care Costs
This is not a very pleasant subject to address, but there is a good chance that you will experience cognitive impairment if you live a normal life span.
Once you reach the age of 67, the life expectancy is 85-87 years depending on your gender. More than 30% of people that are at least 85 years old have Alzheimer’s disease, and many people with cognitive impairment ultimately reside in nursing homes.
Of course, there are other conditions that make nursing home care necessary. According to the United States Department of Health and Human Services, 35% of American senior citizens will reside in nursing homes. Many others will receive costly in-home care.
It would be logical to assume that Medicare will pay for long-term care since it exists to address the needs of seniors. In fact, this program does not pay for the custodial care that nursing homes and professional caregivers provide.
You can expect to pay somewhere in the vicinity of $100,000 a year for quality nursing home care in our area, and people typically pay about half that amount for in-home care.
When you are taking stock of the legacy that you will be able to pass along to your loved ones, you should definitely factor in these potential costs and the widely embraced solution.
Medicaid will pay for long-term care, but you are probably aware of the fact that it is a need-based program, so there is a $2000 asset limit. You can give your children their inheritances in advance to qualify, but you have to complete the gift giving at least five years before you submit your application.
Establish Specific Goals
The next step is to create a list of the people that will be receiving inheritances, and you should consider the life situation of each individual on the list. There are different ways to transfer assets, and a method that is right for one person may not be appropriate for the next.
For example, do you have concerns about a spendthrift heir? Are there any minors on your list? Would you like to include incentives? Are you a member of a blended family?
There are strategies that can be implemented to satisfy any estate planning goal, so you should not assume that you have any limitations.
Consult With an Estate Planning Attorney!
When you have conceptualized your plan, it is time to work with an estate planning attorney to actualize your vision. If you are ready to get started, we are here to help.
We do everything possible to keep our office environment safe in light of the coronavirus, and we also offer remote consultations if you would prefer to go that route.
You can set the wheels in motion right now if you give us a call at 843-815-8580, and there is a contact form on this site you can use to send us a message.