You have to be discerning about the sources of information that you trust when it comes to estate planning. People that do not mean any harm sometimes pass along ideas that are not entirely true, and this can lead to mistakes that can have a negative impact.
With this in mind, we are going to look at some of the misconceptions that people sometimes harbor about this important process.
Do-it-yourself estate planning is perfectly acceptable.
We all have the ability to obtain unlimited information online, and this is a very good thing in the big picture. At the same time, when it comes to doing things on your own without professional assistance, you have to know where to draw the line.
When you are planning your estate, you are taking a profound step. You are passing along your legacy to your family members, and there can be a lot of money involved.
There are websites that sell DIY estate planning documents, including wills and trusts. You fill in the blanks and you are supposedly good to go, but there is an expression about something that sounds too good to be true.
Legal counsel is invaluable when you are planning your estate because there are state-specific laws, and there are different approaches that can be taken.
There is no reason why a layperson would understand all of the asset transfer methods available and why you may want to choose one instead of another. Estate planning is an important legal matter with significant financial implications and is not a suitable do-it-yourself project.
A will is all you need if you are not very wealthy.
Another misconception is the idea that trusts are only useful for high-net-worth individuals. Yes, there are irrevocable trusts that are used by very wealthy people that have estate tax concerns.
However, there are some good reasons why people of relatively ordinary means should consider the utilization of trust. The revocable living trust is a versatile and highly effective estate planning device that is superior to a simple will in a number of different ways.
You should have a basic understanding of the estate administration process when you are making decisions. When a will is utilized to transfer assets, it is admitted to probate, and the court provides supervision while the estate is being administered.
This is a public proceeding, so the records are available to anyone that is interested. Probate expenses consume a portion of the estate, and no inheritances are distributed until the estate has been probated and closed by the court.
When a living trust is used, there is no need for probate, so the administration process is streamlined and simplified. Plus, the assets would be protected from the beneficiary’s creditors, and you can include spending safeguards.
This is just one of the trusts that can be used, but there are others. You should work with an attorney to explore your options so you can make fully informed decisions.
Medicare will cover all of your health care expenses when you become eligible.
The Medicare out-of-pocket expenses include deductibles, premiums, and coinsurance. You actually have to pay 20 percent of covered treatments that are administered by doctors and other health care professionals on your own.
These expenses can be manageable for people that prepare for retirement effectively, but there is one health care expense that is not covered at all. If you need long-term care as an elder, you have to look elsewhere for financial assistance because Medicare does not pay for custodial care.
Medicaid is the widely embraced solution, but you cannot qualify if you have more than $2000 in countable assets in your name. You can convey resources into an irrevocable trust to become eligible, and you could continue to receive distributions of the trust’s earnings.
Advance planning is necessary, because there is a five-year look back period. All divestitures must be completed at least 60 months before you apply for Medicaid.
We can gain an understanding of your position and help you implement a nursing home asset protection plan that will preserve your legacy.
Let’s Get Started!
Today is the day for action if you do not have an estate plan in place, and we can help you update your existing plan if it is out of date. You can schedule a consultation at our Bluffton, SC estate planning office if you call us at 843-815-8580.
If you would rather send us a message, fill out our contact form and we will get back in touch with you promptly.
- Changing “Irrevocable” Trusts Through Judicial and Nonjudicial Modification - September 14, 2021
- Estate Planning Misconceptions Lead to Costly Mistakes - September 9, 2021
- Is Your Estate Plan Outdated? - August 24, 2021