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.
Common mistakes are often mentioned over and over again.
There are common mistakes in estate planning that are not often mentioned, despite the fact they are made over and over again, according to the Ithaca Times in "Key estate planning mistakes to avoid," including:
• Forgetting to update an estate plan when a spouse or child passes away. It might not be the best time for you to change your estate plan, especially given everything you are going through. Not doing so, can result in problems later.
• Not reviewing and updating retirement plan and insurance policy beneficiaries for years.
• Many people have the mistaken belief that if they have a will, then their estates will not go through probate. That is almost never the case. If your objective is for your estate not to go through probate, see an estate planning attorney to learn how to accomplish that.
• People too often assume that once their children reach the age of 18, they will be able to responsibly handle any inherited assets. That may not be the case. You should plan for any minor children to have assistance with assets for longer than that.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and helps you to avoid some of those mistakes as well.
Reference: Ithaca Times (Nov. 8, 2017) "Key estate planning mistakes to avoid."
Estate planning instruments, including trusts, can be used to avoid the probate process.
If some information you have seen or heard has led you to believe a will does not have to go through probate, you are just plain wrong, according to TC Palm in "Common misconceptions about wills and trusts."
Sometimes, misconceptions begin with TV shows or movies that are just that – TV shows and movies. They don’t have to present the law as it actually is.
Another way to come up with a misconception, is that in some states, if an estate is small enough, then it does not have to go through probate. Usually, these are very small estates with very few assets. It certainly isn’t the norm.
Someone with good intentions probably had a relative or friend who passed away with few assets and as a consequence, the will did not have to go through probate.
However, most wills do have to go through probate. They need to be submitted to the court and approved.
The probate court then oversees the administration of the estate as conducted by the executor or personal representative.
If you want your estate to avoid probate, what you need is not a will.
Instead you need to use other estate planning instruments, such as trusts.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and also conforms to the laws on wills and trusts in your state of residence.
Reference: TC Palm (Oct. 5, 2017) "Common misconceptions about wills and trusts."
Can you just show a will to the holder of the assets and take possession? No, you need to head to court.
There are numerous misperceptions about how a will works. Attorneys often deal with people upset that it requires approval from a court before it is official, according to The Times Herald in "Wills won't work without probate."
A will is only a bunch of words on paper that have no real legal authority, until the will is filed with a probate court.
The court must then agree to accept the will as representing the valid wishes of the deceased.
Once that is done, the probate court appoints a personal representative for the estate.
That personal representative is then charged with carrying out the directives in the will, under the supervision of the court.
This can result in a long and often expensive process.
It depends on the size of the estate, the ability of the personal representative and whether there are any challenges to the estate.
An estate planning attorney can advise you on an estate plan that fits your unique circumstances and a trust may be the route to go.
Reference: The Times Herald (Sep. 22, 2017) "Wills won't work without probate."
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."
“Many Americans confess that they are confused when faced with the myriad Medicare choices available to them. Others are simply not planning, nor saving enough to meet the challenge of health care costs in old age. In response, a whole new industry has sprung up nationwide.”
A recent iberkshires.com post, entitled “The Independent Investor: Elder Care in an Age of Confusion,” explains that it's called "life care planning." This is a corollary discipline for those attorneys who are practicing elder law. Elder law attorneys are, in effect, advocates for the elderly and their families. They handle a wide range of legal issues commonly experienced by seniors. Some of the issues deal with Medicare, Medicaid, Social Security, retirement, long-term care insurance and nursing home care costs. These lawyers can also draft wills and trusts, help families with special needs children, handle probate proceedings and issues, along with a host of other estate planning matters.
The concept of life care planning focuses on the level of care that’s required when someone becomes disabled or reaches a certain age. Life care planners identify the level of care the person needs, finds the appropriate care givers and then maps out the necessary private and public resources necessary to help pay for these expenses.
Realistically, when an individual reaches a certain age—or his or her health issues become more severe—someone has to monitor his or her well-being and anticipate the next level of care required. In many cases, those responsibilities are thrust upon a family member. But most of them are not equipped to make the proper, necessary medical and financial decisions. As a result, our loved ones don't get the care they need or, if they do, they pay an excessive amount from the family savings for it.
Life care planners are involved throughout the process. They help make those decisions for you and anticipate what will be needed in the future. These professionals will adjust your life care plan accordingly and find the best methods to pay for it.
Some elder law attorneys work with registered nurses and public benefits coordinators either “on staff” or on call. These attorneys also provide life care planning, such as sorting through benefits for those who are veterans and might qualify for aid.
Elder care can impact an entire family and future generations. If just one member of a family develops a debilitating illness, has a lengthy hospital stay, enters a nursing home or requires 24-hour nursing care, then life savings can evaporate in just a few years.
Speak with a qualified elder law attorney and address what could be one of the biggest risks to your retirement and well-being: a lack of planning in elder care and estate planning.
Reference: iberkshires.com (June 1, 2017) “The Independent Investor: Elder Care in an Age of Confusion”
Cash for expenses should be included in an estate plan.
Some advice on how to plan for your family to access cash while your estate is being settled comes from South Africa by way of Personal Finance in "Will your family avoid a cash-flow crisis on your death?" The advice is applicable in the U.S.
Getting an estate through probate can take a lot of time, depending on the size of the estate and the probate laws in the state.
Your family will not receive the cash from your will for a while, in most circumstances.
If you do anticipate that your family will need cash after you pass away, the most effective way to provide it is normally to take out a life insurance policy. These policies pay out almost immediately upon learning of death.
Another idea is to open a joint bank account with a trusted family member and to put some money in the account that will only be used in the event of your passing.
Reference: Personal Finance (April 22, 2017) "Will your family avoid a cash-flow crisis on your death?"
You can create your own will. However, mistakes can turn out to be costly.
There are hidden dangers in creating your own will, according to The New York Times in "Wills Can Avert Family Warfare, but Have Their Own Hidden Traps."
Most Americans do not have a will but a greater percentage of Americans have them than ever before. One of the reasons for the increase is it is easy and cheap to get wills today. You can purchase downloadable forms from several different services.
However, there are some hidden dangers.
The biggest issue is that the probate process is different in every state.
Submitting a will to probate for administration, in some states, is very expensive and can take a long time. That suggests that probate avoidance strategies should be used, which could lead some people to utilize a trust instead of a will as their primary estate planning vehicle.
Trusts, however, are more expensive to get than wills and in some states probate is relatively quick and inexpensive. Consequently, trusts may only be needed for people with larger estates.
There are other probate avoidance strategies that can be used, but they have their drawbacks. For example, retitling an asset as joint property with a child, which is a common tactic, can make the asset vulnerable to the child's creditors.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, achieve your strategic goals and conform to your state laws.
Reference: New York Times (April 21, 2017) "Wills Can Avert Family Warfare, but Have Their Own Hidden Traps
Probate does not have to be an ugly word that calls up nightmares.
One of the most frequent questions addressed to estate planning attorneys is how to avoid probate, according to Forbes in "Probate, Wills, Executors: Your Estate Planning Questions Answered."
Probate, which is actually just the type of court where a will or estate is handled, can be a relatively simple process, especially with the assistance of an estate planning attorney. However, there are times when it can be long and expensive. Therefore, desires to want to avoid it, are not unjustified.
The key is to have an estate plan that utilizes instruments that do not have to go through probate. The most typical of these are trusts, but there are other more complex legal instruments that can also be used.
However, even the most airtight probate avoidance estate plan might have to go through the probate process briefly.
All estate plans should have at least a simple pour-over will that directs any unaccounted for assets into a previously created trust.
If there are enough unaccounted for assets, they will need to go through probate. However, the process should be quick and easy.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and has a good chance of easily going through probate.
Reference: Forbes (April 7, 2017) "Probate, Wills, Executors: Your Estate Planning Questions Answered."