2 May, 2017

Estate Planning Basics

Estate planning looks different for anyone concerned about long term care or the cost of a nursing home. The general idea, though, is the same: take legal action now to ensure your family is taken care of and your wishes are honored in the future.

The first step in estate planning is always to collect information and assess your current situation—not just your finances, but your health and family, too. This lets a lawyer anticipate problems unique to your situation.

Depending on your situation, you will probably have several of these goals for your estate plan:

  • Pass on your possessions to your spouse or children
  • Make sure your stuff doesn’t have to go through probate (a public and sometimes lengthy process)
  • Name someone to make health care decisions for you if you can’t
  • Name someone to manage your finances if you can’t
  • Make your wishes for specific health care known (for example, say if and when you want life support)
  • If you have a disabled child, make sure he or she is provided for
  • Ensure your children or grandchildren don’t squander their inheritance
  • Protect your savings and retirement from unforeseen threats (such as a lawsuit)
  • Plan ahead to be eligible for Medicaid or Veterans Benefits, in case you ever need them to pay for long-term care in a nursing home
  • Ensure your money stays in your family, even after you’ve given it to your children
  • Guarantee money for funeral expenses

You accomplish these goals by signing legal documents. Most people think of making a will when they think of estate planning, but that’s just one part of the picture. If you’re concerned about the cost of long-term care, your estate plan should probably include:

  • A will;
  • A health care power of attorney;
  • A power of attorney for finances;
  • A living will;
  • A personal care plan;
  • A revocable trust; and
  • An irrevocable trust.

When you combine the concepts of financial goals, health care, and legal documents, you get a good picture of estate planning. It’s a process:

  1. Assess your current finances, health, and family situation.
  2. Identify problems you’d like to avoid, financial and health care decisions you’d like to make in advance, and any other goals.
  3. Draft and sign legal documents to accomplish your goals.

One last thing: keeping your documents up to date is the fourth step in the process. You need to revisit your documents from time to time to keep them current as changes happen in your life and the law. Many people wait decades before revising their estate plans, resulting in unintended consequences.

A good estate planning lawyer will have a program or system in place to keep in touch and make revising your plan easy.

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