Estate Planning Building Blocks

No matter how simple or sophisticated, every Estate Plan  should have these 3 Essential Building Blocks:

Last Will and Testament:

This Document’s job is to tell the Probate Court

• Who is to receive property from your estate (Probate Property)
• Who is in charge of your estate (Executor or Personal Representative)
• What powers or oversight the Court should Require (bond waiver or power to sell)

A Will can also create a testamentary Trust. If you do not have Will, then your property is subject to intestacy rules.  While you are generally free to dispose of your property as you desire, a spouse cannot be disinherited.

Power of Attorney:

Generally it is a good idea to have two; one for financial and the other for medical decisions.  A Power of Attorney designates a person who can make decisions on your behalf without a court order.  Some examples include:

Financial:  The ability to sell real estate; file taxes, write checks.

Medical: Make medical decisions for treatment, assisted or skilled nursing placement.

You do not lose your ability to make decisions for yourself by signing a Power of Attorney.  It can be revoked.  If you don’t have one and become incapacitated, your family may need an expensive guardianship in order to manage your property or make decisions about your care.

Advanced Healthcare Directives or Living Will:

This is a document that informs medical providers and your family about what type of care you want, or don’t want, at the end of your life.  For example, you may want life saving treatments withheld if certain conditions are met.  If you don’t have a directive, the law presumes that you would want certain care such as feeding tubes.

Click Here to Get Started.

Biggest Estate Planning Mistake:

Too many people become confused by all of the choices and therefore do nothing.  A better strategy is to start with the estate planning essentials and if necessary build from there.

Click Here to Get Started With 16 Simple Questions.

If creating an essentials plan, one should consider enhancing it with the following to possibly avoid probate.  These tools can be effective but have limitations.

Transfer On Death:

Transfer on Death documents do not transfer title while you’re alive and are inexpensive to create.  They do not allow for comprehensive planning.

Transfer on Death Deed:  Is one way to avoid probate if certain conditions are met.  This is a tool that can be used but it has drawbacks to a Trust.  Most notably, it does not provide for contingencies and it requires a beneficiary to file an acceptance within 9 months of the death.  A Transfer on Death Deed overrides provisions of a Will.

Transfer Title on Death:  Now motor vehicles can be transferred on death without a Will, Trust or Probate.

Beneficiary Designations:

Beneficiary designations are found as “Payable on Death” choices on bank accounts and beneficiary designations on life insurance polices, IRAs, Roths and brokerage accounts.  These pass to the chosen beneficiaries without probate.  In fact, a Will and a beneficiary designation disagree the Will loses.  These are forms that are created by the institutions, clients are counseled on how to use them to their advantage.  Often it is best to coordinate these with a Trust for maximum benefit.

Limitations of Transfer on Death and Beneficiary Designations:  While these tools can avoid probate, unless used with a Trust they do not provide for comprehensive planning.  If the person to inherit dies before the owner, then probate may still be needed for the next in line to inherit.  It also does not provide for planning such as youthful heirs, disabled heirs or those who need asset protection.

Living Trusts:

A Trust allows the Trustee is able to manage or distribute Trust property without the need for oversight or control of the a probate court.  Trusts can be very simple; such as distributing property outright.  Trusts can also provide asset protection to the person who sets it up and to those who will inherit.

What’s Right for You?

Prices indicate a basic package.  They include counseling, an estate planning binder, witnesses & Notary.

Essentials Package $750 Individual $900 Couple

Essentials Plus Package Individual $900, Couple $1050 (plus filing fee $13 per property)

Basic Trust Package Individual $1500 Couple $2500 (plus filing fee usually $45)

Can Somebody with Dementia or Alzheimer’s Make a Will?

Yes, but there may be a point where this becomes impossible.

Families often face a difficult situation when they receive a Alzheimer’s or dementia diagnosis.  Often, the signs preceded the diagnosis.  Whether an individual is dealing with a suspicion or “official” diagnosis, there may still be an opportunity to create an estate plan.   In fact, there is a great need to do so.

Good News, Estate Planning is Possible

Everybody over the age of 18, even those with a disease affecting their brain, is presumed to be competent to create a will.   This means that they have “testamentary capacity”.  Even if somebody has been determined by a court to be incompetent, there may be times when the person may have lucid intervals when he knows the extent of his estate and who should receive the inheritance.

Nature of Dementia, Windows of Opportunity

Most of us who have been around suffers of dementia realize that it is not an all or nothing condition.  For example, the term “sundowners” refers to the worsening of dementia in the late afternoon or evening.  At those time, individuals may hallucinate, become agitated or paranoid.  See http://sundownerfacts.com/symptoms/  Strangely, for some of these people the conditions disappear or lessen the next morning.

Generally, dementia such as Alzheimer’s is progressive.  However, the rate that it progresses varies.  According to Alz.org.[i]

The symptoms of Alzheimer’s disease worsen over time, although the rate at which the disease progresses varies. On average, a person with Alzheimer’s lives four to eight years after diagnosis, but can live as long as 20 years, depending on other factors.

From a planning perspective, it is best to draft and sign essential estate and asset planning documents early.  These may include:

• Powers of Attorney

• Wills

• Trust

• Advanced Healthcare Directives (Living Wills)

• HIPAA Releases

Concerns about Long Term Care

In addition, this is an ideal time to make plans for governmental programs that can help pay for care.  For example, Medicare does not pay for long-term care in a facility.  However, Medicaid can be an option to explore.  Also, veterans, their spouses and widows can be eligible for certain pensions such as the VA Wartime Pension also know as Aid and Attendance.  However, both Medicaid and certain VA benefits are needs based.  This means that those with too much income and or too much in net worth may not be eligible for these programs.  However, individuals can become eligible without losing their life savings.

In short, when a diagnosis occurs, it is a good idea to consult with an elder law attorney who has knowledge about the disease, the needs of the family and how to navigate through the Medicaid and VA eligibility requirements.  However, failure to take advantage of the opportunity to plan may result in the need of guardianship or other court administered processes.

[i] http://www.alz.org/alzheimers_disease_stages_of_alzheimers.asp