There is no one universal approach to estate planning that is ideal for everyone. There are many different tools in the estate planning toolkit. There is no reason why a layperson would know why you may want to use one instead of another.
This is why legal advice is invaluable, because you can make fully informed decisions when you understand all of your options. Though there is no one-size-fits-all approach, there are some basic components that apply to every estate plan, and we will look at them here.
Asset Transfer Vehicle
Obviously, you have to use a document to state your final wishes with regard to the transfer of your monetary assets. Many people automatically assume that a last will is the right choice unless you are very wealthy, but this is not necessarily true.
There are trusts that can be the right choice for many individuals that are not among the financial elite. One of them is the revocable living trust. A major advantage that you gain when you use this type of trust is the avoidance of the probate process.
When a will is used, it is admitted to probate, and the court supervises the estate administration process. Probate is time-consuming and is potentially expensive. Probate is also a public process and not private. Your personal affairs, who you left assets to, and who you excluded from inheriting your assets are public in a probate. If you use a living trust as an alternative, the trustee that you name in the document would be able to transfer assets outside of probate. Trust administration is private.
There are other trusts that can satisfy specific aims. For example, people with disabilities often rely on Medicaid and Supplemental Security Income. These are need-based programs, so there are low income and asset limits. An improvement in financial status could trigger a loss of eligibility.
For this reason, you would not want to leave a person that is in this situation a direct inheritance via the terms of a last will. As an alternative, you could use a supplemental needs trust. Assets in the trust could be used to make the beneficiary more comfortable, but benefit eligibility would not be negatively impacted.
These are just a couple of the different scenarios that can be addressed through the utilization of some type of trust. Once again, it is important to get sound legal advice so that you can make the optimal choices.
Incapacity Planning
Many people that think about estate planning are solely focused on events will unfold after they pass away. It is also important to make provisions for the eventualities you may face toward the end of your life.
Incapacity is very common among elders, and Alzheimer’s disease is a leading culprit. It strikes about one third of people that are 85 years of age and older. Though it is the major threat, there are other causes of incapacity among elders.
As a response, if you have a living trust, you can name a disability trustee to act as the trustee in the event of your incapacity. If you do not have a trust, you can name a representative through the execution of a durable power of attorney for property.
Even if you have a trust, you could use a power of attorney to account for property that you did not convey into it. A pour over will would enter the picture here as well, but that is something that I will explain in a different post.
In addition to the financial side of the equation, you should also execute a durable power of attorney for health care decision-making.
Nursing Home Asset Protection
Another basic piece to the puzzle is a nursing home asset protection strategy. Most seniors will need living assistance, and about 35 percent of them will reside in nursing homes eventually. Medicare does not pay for this type of assistance, but Medicaid does cover long-term care.
Nursing homes are extremely expensive, so this is something to take very seriously. You cannot qualify for Medicaid if you have significant assets in your own name. As a response, you could create a Medicaid trust or give gifts to your loved ones while you are living.
However, careful planning is key, because you want to make sure that you have adequate resources. Plus, all gift giving must be completed at least five years before you apply, so it is a rather complicated matter.
We Are Here to Help!
If you are ready to discuss your estate planning objectives with a licensed attorney, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.
Hunter is a member of the South Carolina Bar Association, the Beaufort County Bar Association, and has served on charitable and advisory boards in the Bluffton/Hilton Head area.
Hunter graduated from Hilton Head High School. He then earned his Bachelor of Science Degree in Economics from Clemson University, in Clemson, South Carolina.
Hunter graduated Cum Laude from Regent University School of Law in Virginia Beach, Virginia, having earned a Juris Doctor Degree. He also wrote his doctorial thesis on Estate Planning Dynasty Trusts.
Hunter has called Beaufort County home for since 1984, where he lives with his wife and two children.In his spare time he dabbles in automobiles, reading history, hunting and fishing.
- Aging, Alzheimer’s & Incapacity - September 18, 2020
- Leaving Assets Can Be Tricky – Part 3 - September 16, 2020
- Four Reasons to Use a Trust Instead of a Will - September 10, 2020
