Elder law and estate planning overlap in many ways. They both involve the preparation of your future as it relates to your wishes for your home, savings, investments, and other items (also called your assets).

The main difference is that elder law focuses more on planning for the use of your income and assets while you are alive, and estate planning focuses more on what will happen to your assets when you pass.

Watch my YouTube video “Who needs Estate Planning” to learn more.

A will is very important but it’s only one potential component of a good estate plan. At a minimum, you should have:

• Will
• Financial Power of Attorney
• Healthcare Power of Attorney
• Living Will

Be aware that will-based plans will go through Probate court upon your passing.

Probate is a lengthy, expensive, and stressful process for all involved. The average cost to probate an estate is around 5% of the estate’s value and takes 1 to 2 years to settle.

Depending on your situation and to avoid the probate process, a trust-centered plan may be better suited to your needs.

Watch my YouTube video “What is the difference between Estate Planning and just a Will?” to learn more.

1. Procrastination or failing to plan
2. Not planning for disability and long-term care
3. Failing to update planning with changes in life situations
4. Failing to consider trust planning
5. Failing to fund your trust once you’ve created it

Watch my YouTube video “Big Estate Planning Mistakes” to learn more.

Once you have created an Estate Plan, it is important to keep it up to date. You need to revisit your plan after certain key life events:

• Marriage (first or subsequent)
• Birth (children or grandchildren)
• Divorce or death of a Spouse
• Increase or decrease in assets
• Relocation

Always contact your Estate Planning attorney if you have had any of these life changes so they can determine how it affects your current plan.

When a person dies without a Will, it is called Intestacy. In this case there is a statute that determines how the deceased’s assets are distributed.

Generally, surviving spouses and direct heirs are first to inherit an intestate estate. In their absence, aunts, uncles and cousins may inherit. It is a common misconception that the State will take all of your assets if you die without a Will.

It is only in the absence of any surviving heirs that the State would stand to inherit. To open an Intestate Estate, an Administrator must be appointed. Your first step is to contact our office for further guidance.

Watch my YouTube video “What happens if I die without a Will?” to learn more.

A trust can be used to:

• Avoid the expensive and lengthy probate process upon your passing
• Keeps your affairs private
• Control how your assets are handled after your passing

Watch my YouTube video “Why use a trust for Estate Planning?” to learn more.

Revocable Living Trust: Allows you to avoid probate, maintain the privacy of your estate and save your heirs administrative time and expense upon your death. Similar to a Will, this type of trust directs how your assets will be distributed upon your death.

As with all Trusts, it must be funded to properly function. You transfer your “probate” assets into the Trust while you are alive. This includes real estate, stocks, bank accounts and personal property. While you are alive, you are the Trustee with full access to all of the assets. As this Trust is “revocable” you may decide at any time to revoke it and remove your assets from it.

In the event of your incapacity, a back-up Trustee is named to manage the Trust. Upon your death, your Trustee will see that your wishes are followed, and your assets are distributed accordingly.

Asset Protection Trust / Irrevocable Trust: Protects your assets from creditors as well as from long term costs such as nursing home expense. This trust is typically funded with assets that you specifically wish to preserve for your heirs. That may include real estate, gas and oil leases, brokerage accounts and cash.

While this Trust cannot be revoked and may only be amended under certain circumstances, you may still access any income that the trust assets produce. Also, while you may not access the principal of the Trust directly, you may access it with the assistance of a trusted heir.

This trust is normally used to become eligible for certain benefits such as Medicaid or Veteran’s benefit assistance to pay for long term care. Another reason may be to protect assets from creditors, especially if you or a loved one is in a profession with a high risk of liability.

Retirement Plan Trust or IRA Beneficiary Trust: Allows you to transfer your retirement savings to your heirs while protecting the funds from threats in their lives such as bankruptcy and divorce. It also enables your heirs to “stretch” the income taxes due on the funds over a period of time rather than all at once.

Rather than the funds flowing directly to your heirs, they flow to a Trust for their benefit. They are managed by a Trustee according to restrictions built to emphasize protection of the funds and maximization of tax savings.

This Trust is generally used when you are an excellent saver and have amassed a large sum in your 401K/IRA that you will not extinguish in your retirement. You have a loving spouse and/or child that you wish to provide for, but there is a risk that your hard-earned funds may be squandered. This Trust gives you peace of mind that your assets will survive and provide security for the next generation.

Similar to how you wouldn’t extract your own tooth, you shouldn’t try to set up your own trust! A trust is an extremely complex legal document. If it isn’t set up and funded properly there can be negative, unintended consequences. If you want to talk more about trust planning, schedule a free call with us.