It’s Not Just for the Rich
Contrary to what the name implies, estate planning is not just for millionaires with mansions. It’s a must for anyone who owns property – including bank and retirement accounts, real estate, stocks and bonds, art, and vehicles. Estate planning ensures that people have a say in what happens to their assets after they’ve died. It’s not only important for your parents and aging loved ones to make sure they get their wishes documented, it’s important for you to do the same. As a caregiver, you’ll want to include arrangements for another caregiver to take on your responsibilities if you should die before your parent or loved one dies.
Where There’s a Will...
A will only takes effect after that individual has died. Depending on the state of residence and the value of the estate, the will may have to go through probate, which is a public legal process that can take a long time and cost a lot of money.
A will may give instructions, according to a person’s wishes, on the following:
- What property goes to which family members, friends, and organizations.
- Who will serve as guardian, managing property for any dependent children.
- Who will be the executor of the estate, handling details right after the death.
- How payment of any outstanding debts or taxes should be handled, as well as whether any debts still owed to the deceased are to be cancelled.
A “living” trust can take effect during a person’s lifetime. A “testamentary” trust is applied after death. When an individual establishes a trust, that person (the trustee) decides who the beneficiaries are and when they will benefit. For example, a grandchild may receive money or a college fund upon turning 18. After the trustee dies, the remaining property is distributed as specified. Sometimes others may be appointed to manage the trust.
Some trusts are “revocable”, which means that the trustees can change the terms as long as they are still mentally competent. These are quite popular because they allow people to use and control the trust’s assets while they’re still alive, and then can transfer ownership to an appointed trustee at the time of their death. Other trusts are “irrevocable” and cannot be changed at a later date.
One of the big benefits of trusts are that they do not go through probate, so their contents aren’t made known to the public, and there’s no costly, drawn out legal process to go through.
But trusts can be expensive and are often complicated. They can also affect taxes and Medicaid. An attorney who specializes in elder law and/or estate planning can help you and your loved ones figure out the best documents for your situations. Other documents you may want to consider include: