Elder law estate planning sounds like a good thing for the elderly but also fits the needs of people at different stages and ages. Revisions to the plan happen as life events change.
Even young people, age 18 and older, should start a plan by signing a power of attorney, health care proxy and living will, documents referred to as advance directives. Unfortunately, young people become critically ill and have terrible accidents. Advance directives name people you choose who make legal, financial and medical decisions in case of incapacity. You avoid the expense, time and frustration of a guardianship proceeding where a court appoints a legal guardian.
As we mature into adulthood, we may fall in love and share a committed life with someone, whether we marry or not. In addition to advance directives, which all adults should sign, a will or a trust states who receives our assets on death. Without planning, assets may go to unintended family members and not to the life partner.
Then come children. The young family estate plan consists of wills and advance directives. Wills name people who act as legal guardians of minor children if the parents die. Otherwise, two sets of grandparents or other relatives may end up in a legal fight over custody of the grandchildren in a tragic situation. Without wills, the law says if one spouse dies, the surviving spouse receives a little over half. The other half goes to the minor children through a court proceeding called probate with lawyers appointed to oversee the children’s inheritance. That makes no sense. The will says the surviving spouse, who needs the money to take care of the children, receives the money.
If divorce happens, as with about half of marriages, the plan needs revision.
As life progresses, assets may grow, children grow up, leave the nest, get married and have their own children. Maybe it’s time to think about a comprehensive estate plan including trusts. Although there is no magic age when a trust is suitable, people in their 50s may create a trust for their own assets to avoid a probate proceeding. Wills are used in probate court if you die with assets in your name alone. Trusts avoid probate, are private, and save the time and money wasted on probate proceedings. Wills are public documents in probate for anyone to inspect. Parents may create inheritance trusts for children to keep assets in the bloodline for the grandchildren. Otherwise, your child may die and leave the inheritance to the spouse who remarries, and your money may go to a stranger. Inheritance trusts also protect assets from the children’s divorces and creditors.
In the mid-60s and older, the concern is the escalating cost of long-term care. The longer we live, the higher our chance of needing a nursing home that may cost between $12,000 and $20,000 a month in New York. If you do not have long-term care insurance, you may create the Medicaid Asset Protection Trust that protects assets from nursing home costs after the assets are in the trust for five years. You save your money for the family, not the nursing home.
It may be uncomfortable to commit to an elder law estate plan, but it is usually satisfying to know you did it, at any age or stage.