The Benefits of Estate Planning for Future Senior Care Needs
Estate planning is the process of legally structuring current and projected assets for future allocation and disposal. An estate plan eliminates the uncertainties over probate administration of assets and maximizes the value of a families' or individual's estate by reducing taxes and other expenses
It's important to have one to transfer assets (even if modest) according to a person's wishes.
The first thing to ask - do you own anything? An estate covers all the things a person owns - a car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions, even pets. If you have any of these, you have an estate.
Good estate planning gives families with modest assets the control on how things disperse to people or organizations. Having an estate plan helps families pay the least taxes, legal fees, and court costs upon death.
Estate planning includes a will, trusts, beneficiary names, powers of appointment, a person writing the will selects a person (agent) to distribute the property under the will. An estate plan also includes several components:
A will is a legal document, sometimes called a testament, which sets forth a person's wishes regarding distribution of property and the care of any minor children. The person names one or more individuals to manage his or her estate. If a person doesn't have a will at the time of death, loved ones may not receive the assets. To learn how and where to begin, read the basics.
Without a will, the state where you live decides how to distribute your assets to your beneficiaries according to its laws.
Learn more about Wills.
A Living Will
A living will give the instructions for treatment. It is a particular type of power of attorney or health care proxy that allows a person to authorize trusted individual (an agent) to make decisions on their behalf when incapacitated.
A living will combine a "health care proxy," which allows a person to designate someone to make health care decisions for you if you become incapacitated. The living will and the health care proxy together make up what's called an "advanced medical directive."
Lear more about Living Wills.
Medical Power of Attorney (Health Care Directive or Proxy)
This legal form is a health care directive or health care proxy that oversees your wishes for health care if you are ever too ill or injured to speak for yourself. It's called a durable power of attorney for health care or health directive. Again, you assign an agent to direct or manage your medical care and then make the needed medical decisions for you if you are unable. Another name for the assigned agent is attorney-in-fact, health care proxy, or health care surrogate.
Lear more about a Health Care Proxy.
Advanced Health Directives
End of life affairs are confusing, so let's look at what an Advance Health Care Directive is and what it does for a person doing the planning. First, the directive gives the best assurance that an individual's decision regarding the future medical care will reflect the true values and desires.
What person; relative, friend, or professional do you want to make decisions for you (if you are not able to make them on your own?) These decisions include financial matters and health care. Remember: The same person may or may not fit for both.
What medical treatments and care are acceptable to you? Are there some that you would absolutely not choose? Which treatments are acceptable to you?
Do you wish to be resuscitated (revived) if you stop breathing and your heart stops? You need a DNR (Do Not Resuscitate) to specify your choice to continue or not.
Learn more about Advanced Health Directives.
A Power of Attorney
The legal form executes a plan to follow when a person becomes incapacitated, either mentally or physically. It is part of estate planning and recognized in all states.
When a power of attorney executes, it allows a person to assign an agent to make health care decisions, manage financial affairs, or conduct various other business arrangements for that person during the incapacitation period.
Learn more about a Power of Attorney.
Financial Power of Attorney
This legal form gives the assigned agent the authority to handle financial transactions on your behalf. While some are simple, used for single transactions, there are those more complex and comprehensive. The latter intended to let the assigned agent manage all of your financial affairs and called a durable power of attorney for finances.
Learn more about a Financial Power of Attorney.
Proper Estate Planning
Estate Planning should include:
- Care instructions, if you become disabled before you die.
- Name of a guardian(s) and an inheritance manager for minor children.
- Care instructions on how to provide for family members with special needs.
- Instructions for loved ones and family members who are irresponsible with money or need future protection from creditors or divorce.
- Include life insurance to provide for your family at your death. A disability income insurance will replace your income if you cannot work due to illness or injury. And long-term care insurance to help pay for your care in case of an extended illness or injury.
- Provide for the transfer of your business at your retirement, disability, or death.
- Minimize taxes, court costs, and unnecessary legal fees.
- Keep it current. The estate plan needs review and updates as the family, and financial situations (and laws) change over your lifetime.
When is the Best Time to Set up an Estate Plan?
The best time is now.
Otherwise, you risk the inability to make decisions for you by getting caught off-guard and unprepared. Don't wait. Put it in place now and come back to it later...which is what estate planning is.
Estate planning gives you peace of mind knowing it's in place. It's one of the most caring things to do for you and those you love.
After seven years of helping her aging parents, Carol Marak has become a dedicated senior care writer. Since 2007, she has been doing the research to find answers to common concerns: housing, aging and health, staying safe and independent, and planning long-term.
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