Kent Larsson writes about the proper use of wills, advance directives, trusts, and other estate planning tools, and how how they play a vital role in you receiving proper medical care and helping you to preserve and pass on your assets to your loved ones.
The mistakes may not be estate planning mistakes. However, they can have a big impact on your estate plan.
The idea of an estate plan is to have a plan to distribute your assets and handle taxes, court costs and attorney’s fees, without them having a major impact. While it is important to make these plans, it is also important to include the possibility of a high price tag for end-of-life care, according to Forbes in "The Biggest Estate Planning Mistake People Make."
Some end-of-life documents you should get from your estate planning attorney include:
• A Durable Power of Attorney -- With this document, you can appoint someone else to handle your financial responsibilities, if you are ever unable to do so due to incapacitation. This is important, if you want to make sure that your bills get paid on time, for example.
• A Health Care Power of Attorney -- This document lets you appoint someone else to make medical decisions for you, if you are unable to do so. When doctors need to know what decision to make about your care, this is the person they will ask.
• A Living Will -- This document allows you to give advanced directives to medical professionals about what procedures to give you or to withhold in the event you are incapacitated, terminally ill and unable to communicate your wishes.
Reference: Forbes (August 16, 2017) "The Biggest Estate Planning Mistake People Make."
The amount of assets you have do not make a difference: you still need an estate plan.
Very few people in the U.S. are wealthy, but they still need an estate plan, according to the Napa Valley Register in "New dad wonders about estate planning."
One thing people with limited assets should understand, is that they might not need a trust to avoid probate.
Most states have a law that provides for the simple transfer of assets, if the estate is below a certain total amount. In such instances, even a will does not have to be entered into probate.
The amount varies from state to state, so you will want to check with an estate planning attorney in your state.
Nevertheless, just because you might not need to worry about probate, does not mean you should not get an estate plan.
If you have minor children, for example, then you will definitely want a will so you can choose who would be your child's guardian, if anything happens to you.
An estate planning attorney can guide you in creating an estate plan that fits your unique situation, including taking the size of your assets into consideration.
Reference: Napa Valley Register (August 24, 2017) "New dad wonders about estate planning."
If reform does not occur by the 2030s, benefits will most likely not be stopped, but will be reduced.
Washington has known for a long time now that Social Security needs to be reformed, but it is not expected soon, according to Forbes in "When Can You Expect Social Security Reform?"
The problem is that the Republicans and Democrats are very far apart on how they would like to fix the program.
Republicans would like to raise the retirement age as part of any fix. Many of them would also like to privatize the program.
Both of those ideas are staunchly opposed by Democrats, who would instead like to find further funding, so Social Security benefits can be increased.
This stalemate is not going to end in the near future.
That means it is unlikely the parties will compromise to come up with a fix.
Do not expect them to do so, until the very last minute when a compromise must be reached or benefits will be cut automatically.
The bottom line is that if nothing is done, then sometime in the 2030s the Social Security Trust Fund will run out of money.
Reference: Forbes (August 29, 2017) "When Can You Expect Social Security Reform?"
If you do not fund a trust during your lifetime, then probate gets involved.
A living trust can get confusing and mistakes can be made, if you don’t pay close attention, according to the Times Herald-Record in "Importance of funding a trust."
A key to the living trust is that you need to transfer your assets to the trust. However, that can be difficult because you have to figure out what goes in the trust and what should stay out of it for various reasons.
Unfortunately, many people end up not funding their trusts and when they become aware of a pour-over will that says any assets in an estate should be transferred to the trust after the owner of the assets passes away, they see no reason to do it now.
The biggest problem is that one of the main reasons to get a living trust is to avoid having your estate go through probate court after you pass away.
However, if you rely on the pour-over will to fund your trust, then the place your trust gets funded is in probate court.
It is the probate court that will have to direct assets to a trust. By not funding the trust on your own, you defeat one of the primary reasons that you got the trust in the first place.
Your estate planning attorney can advise you on creating an estate plan that meets your unique circumstances and may include a trust. Your attorney can also advise you on when to fund the trust and what assets should go into it.
Reference: Times Herald-Record (August 17, 2017) "Importance of funding a trust."
If you like your home and want to stay there in retirement years, it might be wise to take a look at it now from the point of view of the elderly.
Stairs, small bathrooms and too-high cabinets and countertops are examples of homes built in the U.S. that you may own and could cause problems for the elderly, according to Tulsa World in "Transition your home for aging in place."
Therefore, if you are planning to stay in your own home during your elder years or if you are a younger person moving an elderly relative in with you, then you need to make sure your home is appropriate for the elderly.
You might need to make some changes to your home.
In many places, there are experts on elder living who can assist you by coming to your home and telling you what changes you should make.
Even if you do not live in an area where that service is available, a little common sense will go a long way in helping you figure out how to adapt your home for an elderly resident.
Reference: Tulsa World (August 22, 2017) "Transition your home for aging in place."
It might be a good idea to prepare for the disease that can come along before reaching retirement.
It is not understood why. However, some people begin to suffer from early-onset Alzheimer's long before reaching retirement age, according to the Massillon Independent in "Alzheimer's not limited to elderly."
Because it is possible for you to get the disease and it could happen much sooner than you think, you need to prepare for it. You need to do something now that you will have difficulty doing after you get the disease.
You need to plan for your estate.
That does not just mean you should plan for who gets your possessions, which you should do. It also means than you should plan for who will help you, when you can no longer handle things on your own.
You need a general durable power of attorney, so someone can handle your finances.
You also need a health care power of attorney, so someone can make medical decisions when you are unable to do so.
An estate planning attorney can advise you on the need and use of these documents.
Reference: Massillon Independent (August 22, 2017) "Alzheimer's not limited to elderly."
Anywhere, Even in Estate Planning
Clients might not know they are being defrauded.
Estate planning attorneys must act with integrity at all times but, unfortunately, that does not always happen, according to the Federal Bureau of Investigation in "Lengthy Prison Term for Estate Planner Who Betrayed Clients."
Estate planning attorneys are often employed to handle large sums of money on behalf of their clients. They need to have the honesty and integrity to handle that money properly and not take any of it for themselves.
This is more important for attorneys than for many other types of people who handle money.
An estate planning attorney in Florida was investigated by the FBI. She was found guilty of defrauding her clients out of $2.7 million. She was sentenced to 10 years in prison.
Some details of her case can be found in the article the FBI posted.
What this shows, is that you always need to be careful about who you hire to handle your estate matters.
Fraud can be difficult for the victims to recognize, until it is too late to prevent.
Reference: Federal Bureau of Investigation (August 15, 2017) "Lengthy Prison Term for Estate Planner Who Betrayed Clients."
Entertainment industry reinforces the myth that estate planning is only for the wealthy.
The entertainment industry feeds a myth that only wealthy people need to do estate planning, with a constant flow of scenes where the wealthy are the only ones planning. But that is not the truth, according to the Financial Advisor in "Estate Planning Is Not Just For the Ultra-Rich Anymore."
Estate planning is something that everyone can benefit from, no matter how much they have. You do not need to be a Rockefeller to plan your estate.
If you want to have any say in who gets your property after you pass away, no matter how little or how much that is, then estate planning is the way you can have that say.
In fact, it is the only way you can have it.
Estate planning today also includes planning for your end-of-life care. For example, when planning your estate, you can also plan for what medical procedures doctors can perform to save your life.
Do not buy the myth that you do not need to plan for your estate because you are not rich.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.
Reference: Financial Advisor (August 3, 2017) "Estate Planning Is Not Just For the Ultra-Rich Anymore."
A common strategy to reduce estate taxes is to give away some assets before you pass away.
Gifting to younger family members can be used as a strategy to reduce estate taxes. However, it also comes with the potential for the recipients to become wasteful or lose their incentive. However, there are ways around those problems, according to Private Wealth in "Purposeful Family Gifting."
The idea is a fairly simple one.
You can give gifts as a way to incentivize younger people to do good things. For example, a gift of cash could be conditioned on someone needing to graduate from college or hold a job for a certain period of time, before they will receive the cash.
The options are nearly limitless.
If you tell someone they can get a gift of cash if they do something, then, within reason, you can incentivize your family to do many good things.
An estate planning attorney can advise you on a gifting strategy that fits your unique circumstances in creating an estate plan.
Reference: Private Wealth (July 19, 2017) "Purposeful Family Gifting."
Life expectancy has been going up for decades. However, now it is going down.
Life expectancy has been rising for decades for Americans but it has now gone into reverse, according to the Financial Advisor in "Americans Are Dying Younger, Saving Corporations Billions."
It is not certain yet whether this is a statistical aberration or the start of a long-term trend.
The change is significant enough, however, that it can now be used in long-term macroeconomic forecasting.
Another thing that is not certain, is the reason for the change.
Many people believe it is a result of economic trends in middle America, which are believed to have contributed to an increase in alcoholism, suicide and opioid abuse.
On an individual level, of course, this does not mean that you should do anything different.
An estate planning attorney can guide you in planning for your retirement and in creating an estate plan.
Reference: Financial Advisor (August 8, 2017) "Americans Are Dying Younger, Saving Corporations Billions."