A recent article in USA Today reported that more than half of Americans aged 55 and above don't have wills! Many people put off estate planning because they'd rather not think about it, but a solid estate plan exists to keep your family secure at the worst of times.
Most people also delay estate planning because it feels too complex. That's why we're giving you this comprehensive breakdown. To learn more about key considerations to address with your plan, read our brief guide on senior estate planning.
Estate planning is commonly understood as what a person wants to do with their assets in terms of their will. This is a crucial part of estate planning, but there's a lot more to it than that. Other instruments that form part of a comprehensive estate plan include:
Succession clauses in contracts or articles of incorporation in corporate contexts can even form part of re-distributing rights and duties you may currently hold. Comprehensive estate planning refers to using all these different legal tools to manage your estate when you no longer have direct control.
The different legal tools available to you have their own functions, strengths, and weaknesses. You can stick to one or create a web of overlapping legal protections for your estate. Ultimately, the personal details of your life (needs, finances, conditions, etc.) will determine the best estate planning structure for you.
Power of attorney is a core part of the elder law basics. If you don't have others, you'll at least want to issue powers of attorney.
Powers of attorney designate someone other than yourself as having authority to act on your behalf. This can be as simple as giving your son the authority to manage your finances or as comprehensive as a general power of attorney to make all your decisions.
You can restrict powers of attorney in any way you choose. You can have one run only when incapacitated or out of the country. You can also limit your agent's power to specific medical or financial affairs tasks.
These are particularly important if you want to designate decision-making power for times when you may be incapacitated (operations, for example).
Living wills specifically outline the medical decisions you would like to be made if you cannot communicate. Aspects of medical treatment they typically cover include:
Living wills often include a power of attorney specific to medical decisions and sometimes general powers of attorney.
Standard wills are testamentary documents that people enact to show who they want to inherit their assets once they pass away. The four basics one needs to consider are:
Setting up a valid in Iowa is relatively easy. However, the caveat is that many complicated laws govern whether terms in the will are valid and how the estate gets divided in terms of the will.
A significant hurdle is that an estate must pass through the probate process. The probate process ensures the estate settles any outstanding debts or taxes before transferring the person's assets to their heirs. You can avoid this by setting up a living trust instead of a will.
To establish a trust, you transfer assets to another person (a trustee), and they agree to manage those assets to benefit any beneficiaries you might name. This creates an entity shielded from the probate and tax problems typical to wills. However, it's also a complex process that requires professional assistance.
If you don't have any debt, you can avoid the senior legal assistance costs involved with setting up a trust and opt for a will instead. However, if you want the flexibility and security a trust provides, it's worth putting in the extra effort.
Most people research estate planning tips to maximize the legacy they leave to their families. So, before we discuss estate planning tricks, here are a few extra steps you can take to leave a more significant estate.
Firstly, explore affordable options and cut costs in retirement (if that's a worthy goal for you). Managing your finances well protects you from sudden financial collapses and your estate's integrity.
Secondly, try eliminating debt (which also supplements the first point). Servicing interest restricts your current budget, but the existence of debt can also mean your heirs get less than you want them to.
If you want to set up a will and trusts for your heirs, ensure the terms express your intentions in sufficient detail. Vagueness in overlapping instruments can cause legal uncertainty and could lead to lawyers and judges needing to step in to solve the problems.
However, you also want the language to be clear and understandable. Complicated "legalese" can be detrimental when it's unnecessary for the expression of your intentions.
Lastly, you'll want to appoint someone who's both capable and of good character as an executor or trustee. They need to be impartial, able to deal with emotions, and technically inclined to financial management.
When it comes to senior estate planning, the four basic tools you can use are:
Each one has particular strengths and functions. For the best assets protection, consult with an elder law attorney and set up a comprehensive network of all these tools. This way, you'll get the best of what each instrument offers.
Prairie Hill Independence is also here to help you with any other retirement needs. Contact us today for information on affordable assisted living, memory care, and any other help with navigating your retirement living.