There are websites you can go to that will sell you boilerplate documents so you may assume that you can whip up a quick last will and your wishes will be carried out after you are gone.
This “microwave” approach can sound appealing in this instant gratification society, but there are some reasons why you may want to work with an estate planning attorney when you are devising your estate plan.
Choosing the Right Documents
People who simply equate estate planning to the creation of a last will really do not understand the facts. Of course a will can be used to express your final wishes, but there are other options, and a will is not going to be the right choice for a significant percentage of people.
Various circumstances can exist that would call for the use of a trust of some kind. For example, let’s say that you have an adult granddaughter with special needs. She is enrolled in the Medicaid program for health insurance, and she receives ongoing income from the Supplemental Security Income program
These are need-based programs. A person cannot qualify if he for she has countable assets that exceed $2000 in value. If you were to leave a direct inheritance to your granddaughter through the terms of a will, her financial status would improve considerably. She could wind up losing these government benefits.
To address this, you could work with an estate planning attorney to create a supplemental needs trust. An independent trustee would manage the assets in the trust, and the trustee could use the resources to make your granddaughter more comfortable. As long as the rules were followed, benefit eligibility would not be impacted.
The money management capabilities of your heirs are another thing to take into consideration. If you create a last will, and you leave a direct lump sum inheritance to a family member who is not good with money, the inheritance could go up in smoke. Later on, there may be no one for this love to turn to for help.
If you were to discuss your options with an estate planning attorney, you would find that you could use a revocable living trust to protect a spendthrift loved one. You could instruct an independent trustee to manage the funds and distribute assets to the beneficiary on a limited basis after you are gone.
There is also the matter of nursing home asset protection. If you never seek any legal guidance, you may go through life with the impression that you will never need long-term care. You can also assume that Medicare would pick up the tab for nursing home bills if you do wind up in a nursing home at the end of your life.
This line of thinking can result in devastating consequences. In fact, 70 percent of elders will someday need living assistance, and Medicare does not pay for long-term care. A year in a nursing home can cost upwards of $100,000 in many areas.
People who engage legal counsel should find out about Medicaid planning. The Medicaid program does pay for long-term care. However, as we mentioned previously with regard to special needs planning, it is only available to people who can prove that they have a significant level of financial need.
You could create and fund an irrevocable Medicaid trust when you are a senior citizen. Assets that you conveyed into the trust would be out of your name, and they would not be counted if you were to apply for Medicaid to pay for living assistance.
Plus, you could continue to receive income from the earnings of the trust while you are still capable of independent living. However, the income would probably go toward the long-term care costs if you ever do qualify for Medicaid.
After you are gone, a trustee that you name would assume control of the assets in the Medicaid trust.
Don’t Go It Alone
We have touched upon a few of the reasons why you may want to steer clear of do-it-yourself estate planning ideas, but there are many other situations that can be addressed through informed planning.
There is no reason to go it alone. If you want to be certain that you are providing for your loved ones in the optimal manner, call us at (704) 944-3245 or (606) 324-5516 to set up a consultation.
- 10 Reasons You Might Need an Estate Planning Attorney - January 5, 2022
- How to Gift to Your Grandchildren in Your Estate Plan - January 3, 2022
- What Happens If I Leave Property Out of My Living Trust? - December 14, 2021