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Call us today if you need to plan your estate, write a will, or have other elder law questions.
Estate planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during the person’s life and at and after death, while minimizing gift, estate, generation-skipping transfer, and income tax. Estate planning includes planning for incapacity as well as a process of reducing or eliminating uncertainties over the administration of a probate and maximizing the value of the estate by reducing taxes and other expenses. The ultimate goal of estate planning can be determined by the specific goals of the client and may be as simple or complex as the client’s needs dictate.
The law of estate planning overlaps to some degree with elder law, which additionally includes other provisions such as long-term care.
The three major categories that makeup elder law are:
- Estate planning and administration, including tax questions;
- Medicaid, disability and other long-term care issues; and
- Guardianship, conservatorship, and commitment matters, including fiduciary administration.
- Other issues found under the umbrella of elder law include such areas as estate planning; wills; trusts; guardianships; protection against elder abuse, neglect, and fraud; end-of-life planning; all levels of disability and medical care; retirement planning; Social Security benefits; Medicare and Medicaid coverage; Medicaid planning (United States); consumer protection; nursing homes and in-home care; powers of attorney; physicians’ or medical care directives, declarations and powers of attorney; landlord/tenant needs; real estate and mortgage assistance; various levels of advice, counseling, and advocacy of rights; tax issues; and discrimination.
- Living trust.
- A durable power of attorney.
- Prenuptial agreement.
- Health care proxy.
- Living will.
- HIPAA release.
- Life insurance.
- Business succession plan.
Wills and Trusts
A will or trust should be one of the main aspects of every estate plan, even if you don’t have substantial assets. Will help to ensure that property is passed according to an individual’s wishes (if drafted according to state laws). In addition, some trusts help limit estate taxes or legal challenges. However, simply having a will and/or trust isn’t enough. The wording of the document is critically important.
A will or trust should be written in a manner that is consistent with the way you’ve bequeathed the assets that pass outside of the will. For example, if you’ve already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a will to a named beneficiary), you don’t want to bequeath the same asset to a second cousin in the will.
It could lead to a will contest. Not to mention that both individuals could be bitter toward each other (and you) for involving them in a legal battle. (For further insight, see Why You Should Draft A Will.)
Durable Power Of Attorney(s)
It’s important to draft a durable power of attorney (POA) so that an agent or a person you assign will act on your behalf in the event of your disability.
Absent a power of attorney, a court may be left to decide what happens to your assets (if you are found to be mentally incompetent). The court’s decision may not be what you wanted.
This document can give your agent the power to transact real estate, enter into financial transactions, and make other legal decisions literally as if he or she was you. This type of POA is revocable by the principal at a time of his or her choosing, typically a time when the principal is deemed to be physically able deemed mentally competent or upon death.
In many families, it makes sense for spouses to set up reciprocal powers of attorney. However, in some cases, it might make more sense to have another family member, friend, or a trusted advisor who is more financially savvy act as the agent. (For further reading, check out The Importance Of Estate And Contingency Planning.)
As was touched upon earlier, a number of your possessions can pass to your heirs without being dictated in the will (a 401(k) plan for example). This is why it is important to maintain a beneficiary (and a contingent beneficiary) on such an account. In fact, all retirement accounts and insurance plans should contain a beneficiary and a contingent beneficiary because they too typically pass outside of a will.
If you don’t name a beneficiary or if the beneficiary is deceased or unable to serve, a court could be left to decide the fate of your funds. And frankly, a judge that is unaware of your situation, beliefs, and intent is unlikely to make the same decision that you would have made.
Note: Make certain that all beneficiaries you name are over the age of 21, and are mentally competent. If you don’t, a court may end up getting involved in the matter. (For more, see Designating A Trust As Retirement Beneficiary and Mistakes In Designating A Retirement Beneficiary.)
Letter of Intent
A letter of intent is simply a document left by you to your executor or to a beneficiary. The purpose is to define what you want to be done with a particular asset after your death or incapacitation. In addition, some letters of intent also provide for the details of the funeral or other special requests. (To learn about executors, see Choose The Right Executor and 4 Things To Consider Before Becoming An Estate Executor.)
While such a document may not necessarily be valid in the eyes of the law, it helps inform a probate judge of your intentions and may help in the distribution of your assets if the will is deemed invalid for some reason.
Healthcare Power of Attorney
By drafting a healthcare power of attorney, you can designate another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity.
If you are considering executing such a document, you should pick someone who you trust, who shares your views, and who would likely recommend a course of action that you would agree with. After all, this person could literally have your life in his or her hands.
Finally, a backup agent should also be identified, in case your initial pick is unavailable or unable to act at the time needed.
While many wills or trusts incorporate this clause, some “form” wills don’t. If you have kids or are considering having children, picking a guardian is incredibly important and sometimes overlooked. Make sure the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. As with all designations, a backup or contingent individual/family should be named as well.
Absent these designations, a court could become involved and could rule that your children live with a family member that you wouldn’t have approved of. In extreme cases, the court could mandate that your children become wards of the state.
We can help intertwine estate planning and elder law in an estate plan. Call a Corpus Christi estate planning attorney today 361-454-1000