Trusts are often preferable to wills to avoid a court proceeding on death called probate, save time and money and reduce the chance of family conflict over the inheritance. Wills are used in probate court.
Basic principles guide the process of creating an elder-law estate plan.
First, understanding family dynamics is key. Standard questions reveal necessary information. How old are you? How is your health? How many children do you have? Are you married? If you are not married and have no children, are your parents alive, or do you have any siblings, nieces or nephews?
Who will receive the inheritance and how? Do you have disabled beneficiaries on government benefits? Are you disinheriting anyone? Do you want to leave outright distributions of assets to your beneficiaries, or do you want them to receive assets over time?
Second, a review of current estate-planning documents reveals whether your current goals are being met. Maybe your current plan is adequate, or maybe it needs to be tweaked, or maybe it would be better to start anew. Are you expecting to receive an inheritance that would change your goals or create estate tax issues? Do you have long-term care insurance, and if so, what are the details of your benefits? If you don’t have long-term care insurance, a Medicaid asset protection trust may be needed to protect assets from nursing home costs after five years.
Third comes a review of the assets. The asset list includes each asset you own, how each asset is titled and its value. Possible asset categories include real estate, vehicles, bank accounts, retirement funds, other investments, life insurance, annuities, business interests and anything else of value.
Fourth is the development of the elder-law estate plan. Who will make medical decisions for you in case of incapacity? Who will be your trustee, executor and power of attorney? Who will serve as backups in these different roles in case the first choices are unavailable? You choose people you trust who will make a smooth transition on disability or death.
Fifth, review the plan at least every three years to see if changes in the law or your life mean the plan needs adjusting. You want the plan to work not only when you create it but years later when you need it.
Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road in the Town of Wallkill. She can be reached at 845-692-8700, ext. 119 or bkraham@trustlaw.com. This column is intended to provide general information, not legal advice.
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Bonnie Kraham: Guiding principles of an elder-law estate plan
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