You might think that only wealthy people need to create an estate plan, but that thought can end up harming you and your family in the long run. Every adult, regardless of age or social status, should have an estate plan in place.
An estate plan requires more than just jotting down whom you think should have which of your assets. These plans include a variety of points that can help to guide everything from personal care in your final days through what will happen to your assets after you pass on.
Will and trusts
Will and trusts can help to ensure that your stuff is going to go where you want it to go when you pass away. Ideally, you will use the will to distribute assets that aren’t of considerable value and trusts to handle assets that have a higher worth. Together, these two components can make it easy for your loved ones to distribute these in accordance with your wishes. If you use trusts, you can set conditions and terms on when the beneficiary can reap the benefits of the trust.
Taxes, assistance, look back and spend downs
Another thing to think about when you are creating your estate plan is the value of the estate. You need to review tax laws and the laws governing programs, such as Medicaid, that are based on a financial need. Ultimately, you might find that you need to come up with ways to reduce the value of the estate legally so that your loved ones aren’t laden with taxes and so that you don’t lose assistance that can help you.
Be sure that you consider the look back period, which has to do with a period that Medicaid can look at what you’ve given away during the period. Spend downs are how much you can legally give away without penalty if you do need to use the assistance of a program based on need.
Medical and financial plans
Your medical wishes and financial plans are part of your estate plan. These documents, which include advance directives and powers of attorney, make plans for when you can’t make decisions on your own. Your power of attorney for health care designee should know what information is in your advance directive. Your designee for power of attorney for finances should be responsible enough to handle your financial affairs if you can’t handle them yourself.