Estate planning may sound distant but it is not. If you're thinking mansions, yacht, and private jets are only for billionaires—think again. If you are in your golden years, estate planning for seniors is something that should already be in mind. Having an estate plan will not just protect your loved ones but also help you make decisions for the future.
According to a survey done by Caring.com, the number of older and middle-aged adults with estate planning documents dropped by 20% and 25% since 2019. Know that estate planning is getting more and more important as we age.
After all, estate planning is also a way to take care of a family member by having a plan in place. Many people think that any life insurance policy will be enough to cover the basics of insurance planning, but there is more to it than just life insurance policies.
Losing loved ones is hard enough without adding legal battles to the mix. Having a will handy eases the burden and stress of your family and also ensures that your wishes are taken care of even after you are gone.
Estate planning involves the management of the assets of a senior one in the event of their incapacitation or death. The planning includes heir inheritance and the settlement of estate taxes. Don't worry you won't do this alone, estate plans are done and managed with the help of an attorney that specializes in estate law.
Estate planning also involves planning how assets are maintained, managed, and distributed after your death. This includes how your properties and financial obligations like your bank accounts are managed if you become incapacitated.
Remember, estate planning as soon as possible is important since we can’t really predict how long our lives will be, illness and accidents can happen especially in advanced years.
No one wants to leave their family in disarray in their passing, that is why many are considering planning an estate. This can be due to their wish to preserve the family wealth, provide for their surviving spouse and children, or leave a legacy behind to charity that is close to their heart.
Just thinking of estate planning makes most people uncomfortable, and that's understandable. After all, planning for your death, untimely or not, is a bit depressing. However, having an estate plan is important for elderly individuals, so the wishes for their estate, funeral arrangements, and other affairs are met accordingly.
Thinking about the end and leaving your family is a sad but crucial part of estate planning. Remember that estate planning will make things easier for the people who are left behind. Make sure that there won't be a family situation where your family members go to court over assets left by their parents. As a parent, everyone fighting over assets is not the state you want to leave your family in.
Having your wishes stated clearly will remove misunderstandings and will provide guidance for your beneficiary designations, living trust, and heirs. Keep in mind that if you have no estate plan in place, your state's local laws will take into effect. This scenario can be problematic for your family, so having a will is the best gift that you can leave behind.
Aside from preventing unsavory disputes among families, good estate planning can also minimize the taxes and fees of your estate and assets. To ensure that everything is in place, it is best to seek advice from an experienced elder law attorney to ensure that all documents are in place, and that you can make informed decisions.
Seniors can start their estate planning by seeking the help of a professional. After seeking advice from an estate lawyer, you can start giving instructions on how to go about your care if you become disabled in the latter part of your life. Loved ones will be at ease knowing that you had already planned for this event.
If you have a family member who's a minor or someone with special needs, make sure to appoint a guardian who can manage their inheritance until they are of age. You can do this by having a power of attorney prepared ahead of time. Make sure to create and update your beneficiaries regularly on plans such as 401(k)s, life insurance, and IRAs, this way your living trust won't encounter issues when the time comes.
You can also pre-plan for loved ones who might not be good with handling money. You can enact a safety net for them, so they won't use all the money in one go. It is also a good idea to include life insurance in your planning so your family is taken care of even after your death. You can also prepare long-term care insurance so you get the best care in your final days.
Though it may be hard for some, you must plan your funeral accordingly. This can be done by setting up funeral arrangements. State everything to ensure that your wills are followed.
Another important thing that you must do is to name an executor of your will. This way you'll have someone to oversee the terms of your will. This will ensure that you and your lawyer are on the same page of everything. Having a power of attorney is an important aspect of estate planning.
Once you are done with these, make sure to revisit your plan regularly. Estate planning is a continuous process and not a one-time affair. After all your financial, family situations, and existing laws may change over the course of your lifetime.
You must have tons of questions about power of attorney, and other important decisions that you need to make when you pass away. Read on, to know more about how your children and other relatives can be taken care of after your passing.
You can start as early as you want. Young people should consider starting now as it is never too early to start. Many financial advisors will tell you to start estate planning the moment you become a legal adult.
However, you also need to remember that you need to update it every three to five years. Updating your estate plans is especially important if you encounter a windfall that increases your wealth significantly.
The components of estate planning depend on the size and complexity of your estate. However, these are the four key components that you need to consider.
Will
A will details how assets are to be divided after they pass on. It covers all assets that are outside the trust and doesn’t have a recipient or beneficiary.
Living Will
Unlike a will that goes into effect upon death, living wills are documents that detail any medical care instructions that a living incapacitated person may have. Living wills function as a directive if the person can no longer communicate. It can be refusing to have feeding tubes or to be kept alive by a ventilator.
Power of Attorney
A power of attorney is a written authorization or document that gives another person the power to make decisions on the person's behalf. This includes control of banking accounts, healthcare decisions, property management, and giving to charity.
Trusts
Trusts may seem like the territory of billionaires, but building a trust can have its advantages. A trust is a legal document that is drawn up to hold assets like money, property, or other personal property for single or multiple heirs.
Estate planning can help avoid complicated tax dilemmas that usually follow the death of a loved one. Selecting heirs estate planning also presents an opportunity to clarify financial matters.
Tax laws can change, you must ensure that your estate plans are updated all the time. There are specific steps that can decrease the overall taxable estate. Those measures might involve establishing trust accounts for recipients or establishing annual donations to charities.
A will, or commonly known as the “last will and testament,” is a legal document that declares your final wishes. It is usually read by a county court after your passing, the court will ensure that your final wishes are carried out.
Internal Revenue Service (IRS) Publication 559 contains supplementary detail on how to determine the taxes owed on an estate. This publication also covers other issues with regard to estate planning.
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