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Copyright 2019 ElderLawAnswers
The information in this guide should not be considered legal advice. While we strive to provide as detailed, reliable and understandable legal information as possible in our Elder Law Guides, they cannot substitute for an attorney applying the law and years of experience to a particular client situation. We urge readers to use the Guides as background material and to consult with one of our members before taking action.

The Key Elements of an Estate Plan

Execute a plan that spares loved ones confusion

Why plan your estate?
The knowledge that we will eventually die is one of the things that distinguishes humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own demise. But if you, your parents or other loved ones postpone planning until it is too late, you run the risk that your intended beneficiaries – those you love the most – may not receive all you would hope.

We should begin a discussion of estate planning with a consideration of what “estate” and “estate plan” mean. An “estate” is simply everything a person owns: bank accounts, stock, real estate, motor vehicles, jewelry, household furniture, retirement plans, life insurance. Read More

An “estate plan” is the means by which the estate is passed to the next generation. This can be accomplished through a variety of instruments. Most retirement plans and life insurance policies pass to named beneficiaries, chosen when you take out the policy or at a later date. Property that is jointly owned passes to the surviving joint owner. Trust assets are distributed according to the terms of the trust. Property held in an individual’s name alone comes under the instructions laid out in a will, or in the absence of a will, under the rules of “intestacy” set out in state law.

Problems often arise when people don’t coordinate all of these methods of passing on their estate. To take just one example, a father’s will may say that everything should be equally divided among his children, but if the father creates a joint account with only one of the children “for the sake of convenience,” there could be a fight about whether that account should be put back in the pool with the rest of the property.

A well-drafted estate plan also permits you to save as much as possible on taxes, court costs and attorneys’ fees. Most importantly, it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

Problems often arise when people don’t coordinate the various methods of passing on their estate.

All estate plans should include, at minimum, three important planning instruments: a durable power of attorney, a health care proxy and a will. A durable power of attorney allows you to designate someone to manage your property during your life, in case you are ever unable to do so yourself. Read More

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The health care proxy, called a durable power of attorney for health care in some states, appoints another individual to direct your medical care if you are ever unable to do so yourself. The health care proxy should include or be accompanied by a medical directive (also known as an advance directive) providing guidance to your health care agent. The will is for the management and distribution of your property after your death.

If you do not have an estate plan, your estate will be distributed under the rules of intestacy. These direct that what you leave goes to your nearest relatives, whether that’s your spouse, your children, or your nieces and nephews. That works for most people, but not for a lot of people – and fewer every day. Less and less do we live in the standard family model of a mother, a father and two or more children. More and more children are raised by single parents, lesbian and gay parents, and by grandparents. Over the last few decades, the number of children living in a household headed by a grandparent has skyrocketed, and in 2010 was estimated to be nearly 5.4 million, or 7 percent of all grandchildren. Anyone in an atypical situation needs a carefully considered estate plan.

The durable power of attorney

For many people, the durable power of attorney is the most important estate planning instrument – even more important than a will. A power of attorney allows you to appoint another person – your “attorney-in-fact” – to step in and manage your financial affairs if and when you ever become incapacitated.

What happens if there is no durable power of attorney? Without it, a family must wait for a court to appoint a conservator or guardian to manage the incapacitated person’s affairs. That court process takes time, costs money, and the judge may not choose the person that the individual would have preferred.

In addition, once a guardianship or conservatorship is in place, the representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney. Read More

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Medicaid Rules, etc

View All Elder Law Topics Questions & Answers State Medicaid Information