Misinformation about some aspects of the estate planning process tend to circulate, and people that buy into these notions sometimes make costly mistakes. With this in mind, we will shed light on some of these myths in this blog post.
You can plan your own estate effectively using a download that you can get online.
Indeed, there are websites that sell boilerplate legal documents. You fill in the blanks and you are supposedly good to go. This sounds almost too good to be true — because it is just that.
Estate planning is one of the most important financial endeavors that you will ever undertake. Everything that you have been able to accumulate during your life will be transferred through your estate plan, and this is a very serious matter.
There are state laws that must be followed when an estate is being administered, and there are different approaches that can be taken. DIY projects can be enjoyable, and doing things for yourself can save you money, but you have to know where to draw the line.
A will is the only document you need.
The simple will is a device that can facilitate postmortem asset transfers. However, there are trusts that are much more effective, and you don’t have to be very wealthy to take advantage of the benefits.
Many people do not realize that a will must be admitted to probate. This is a costly and time-consuming legal process that takes place under the supervision of a court. There is also a loss of privacy during probate because anyone that is interested can access the records.
The inheritors will receive lump sum inheritances with no asset protection or spending safeguards, and this is a limitation that can be a source of concern.
If you utilize a living trust as the centerpiece of your estate plan, you would act as the trustee while you are living, so you would maintain control of the assets. After your passing, the successor that you name in the trust declaration would distribute assets to the beneficiaries.
Probate would not be a factor, and the principal would be out of the reach of the beneficiaries’ creditors. When you draw up the trust, you could instruct the trustee to distribute limited assets on an incremental basis to prevent poor money management.
This is just one of a number of different trusts that can be utilized to satisfy certain objectives. Plus, in addition to the financial part of the equation, you should address end-of-life issues when you plan your estate.
You should express your life support preferences in a living will. A durable power of attorney should be added to name someone to make medical decisions on your behalf that are not related to life-support utilization.
If you have a living trust, you can name a disability trustee to administer the trust if you ever become incapacitated. A durable power of attorney for property can be added to empower an agent to manage property that is not held by a trust.
Your health care expenses are covered once you become eligible for Medicare.
Under the currently existing parameters, you will qualify for Medicare when you are 65 if you worked and pay taxes for at least 10 years. You can potentially qualify on your spouse’s work record if you have not met this requirement.
There are premiums, coinsurance, and deductibles that you should budget for in advance, and there is one enormous hole in the coverage. Medicare does not pay for a stay in a nursing home, and it does not cover in-home custodial care.
Most seniors will need paid living assistance eventually, and 35 percent of elders will in fact reside in nursing homes. These facilities are very costly, and in-home care is expensive as well.
Medicaid can provide a solution because it will pay for long-term care, but you can’t qualify if you have more than $2000 in countable assets. You can fund an irrevocable trust to develop a financial profile that will lead to eligibility, but you have to plan ahead effectively.
We can gain an understanding of your financial situation and your family dynamic and help you implement a nursing home asset protection strategy.
You always have time to plan your estate later on.
This is the biggest myth of all, because you never know what the future holds. In reality, action is required if you are going through life without a comprehensive estate plan. You can schedule a consultation at our estate planning office in Bluffton, SC if you call us at 843-815-8580.
There is also a contact form on this site you can fill out if you would rather send us a message.