An estate plan protects your family. It is not just for rich people. Everyone should have an estate plan in place to protect themselves, their businesses, their spouses, as well as their minor children or disabled children. Your estate plan needs to be in place as soon as possible to ensure your estate assets can go to the people you want them to go to in the event of your death.
While none of us want to consider a time when we will no longer be here to provide for our loved ones, we need to think about this as soon as possible. Estate planning can take many actions that protect your loved ones, and you. For example, through trust based estate planning, you can prevent irresponsible children from spending everything they inherit as soon as they get it. Another example allows you to potentially prevent family infighting after your passing by creating an estate plan that has your assets managed by an experienced guardian or trustee. Further, you can create an estate plan that will provide for and protect your minor children until they reach an age of your choosing.
The ultimate is for you to be able to create legal planning that can allow you to protect and care for loved ones long after you are gone. It often helps our clients to understand what happens in estate planning when they pass away. Let us give you more information right here. In almost all situations, after you die, a trustee or personal representative collects your remaining assets, pays your final bills and taxes, and retains the remaining assets for distribution according to the instructions contained in your last will and testament or trust agreement.
While last will and testaments are effective at handling relatively simple situations, trusts are much more flexible. For instance, trusts can be used if there is a minor child or disabled person left behind. The trust can name a trustee who has the authority to manage your assets and spend money on things necessary for the beneficiary’s absolute needs. The terms of the trust can state that the trust assets cannot otherwise be spent. It can also determine the age and circumstances for distribution, and guidelines for management of assets held within it.
Unfortunately, many people mistakenly believe that assets held in revocable trust agreements, which are created for estate planning purposes, will not be available for long-term care. This is almost never true. If a beneficiary is allowed to access trust assets, then the trust assets can be used to pay for the beneficiary’s long-term care. If you are concerned about a future that includes a need for long-term care, which we should all contemplate, then we need consider other planning alternatives.
One of the only ways to protect the trust assets from being used for long-term care is through an irrevocable trust agreement. This type of trust does not allow the beneficiary to access the trust assets. He or she only receives the type of distributions outlined in the trust document. An example of a type of such a protected irrevocable trust would be a special needs trust. Such a trust can insure that the government benefits for the disabled will also be available. Be careful, however, because if assets are transferred to an irrevocable trust, there is a five-year waiting period before the trust assets will be considered protected from long-term care expenses.
We know this article may raise more questions than it answers. For example you may ask yourself, how do you effectively plan for yourself and your loved ones when it comes to both estate planning and elder law concerns? We encourage you not to wait to get your questions answered by attorney Bill Miller in a consultation in our practice.