Obstacles, often fear-based, prevent the creation of an elder law estate plan. Mistakes made later harm the integrity of the plan already signed. Avoiding common obstacles and mistakes are priceless.
The obstacles to doing an elder law estate plan are not surprising. The subject matter is scary -- planning for what happens if you’re incapacitated and when you die. It is understandable why so many delay this essential planning. However, having completed the plan can be liberating, knowing you did your best to save time and money on the settlement of your estate, make the process easier for those in charge, keep the government out of your affairs, leave your earthly goods to those you choose, and name people you choose, not a judge in a court proceeding, to handle your affairs if you are no longer able.
Another obstacle to planning may be a perceived loss of control over life and money. However, just the opposite is true with a properly drafted elder law estate plan. The purpose of the plan is to maintain control no matter what happens, keep your affairs private and only hand over control to the people you choose when the time comes, avoiding the government intruding into affairs either during life or on death.
Once the plan is in place, critical mistakes may follow.
One mistake is not understanding the plan. Many have a false sense of confidence that affairs are in order after signing a will. Although wills are documents that say where assets go when you die, they are also documents used in probate court if you die with assets in your name alone. Living trusts, as opposed to wills, avoid probate court and also state where assets go when you die. Trusts save the time and expense of probate and avoid will contests where heirs litigate over the inheritance.
In addition, everyone needs a power of attorney and health care proxy/living will to name people who will make legal, financial and medical decisions in case of incapacity.
Another mistake is not funding the trust, which means nothing is in the trust. A trust is a legal entity that owns assets. The elder law estate planning attorney usually transfers real estate to the name of the trust and gives advice regarding other assets you may transfer to the trust. Other mistakes include not reviewing and changing beneficiary designations as needed on retirement funds, life insurance policies and annuities. Reviewing the titling of all assets also needs review to avoid probate and make the plan work properly.
Another huge mistake is not reviewing the plan at least every three years and maybe more often when life events may change goals. Elder law estate planning protects us and our loved ones when bad things happen, very good reasons to avoid the obstacles and mistakes of planning.