Why Estate Planning is so Important as a Senior
Wednesday Apr 03rd, 2019
As you get older, you run the risk of being unable to make your wishes clear when it comes to your estate planning. Many people procrastinate because they don’t know where to start on the process. You may even be afraid that if you sign a power of attorney form over to a child, you may end up stuck in a nursing home. These are all valid concerns. This fear can be mitigated by meeting with an estate planner, and putting your wishes down on paper. Build in a contingency plan for how you want your affairs handled if you become incapacitated. This needs to cover instances in which you develop both a mental or a physical incapacitation. For example, if you develop Alzheimer’s, or if you have a protracted illness that leaves you unable to live without the aid of a machine. You can decide how you want to be cared for in the event of a debilitating condition. This will allow you to not worry about being taken advantage of by whomever you decide to leave in charge of your affairs. Estate planning involves more than just end of life care. It also allows you to decide how your assets will be divided after you’re gone.
What is Estate Planning
Estate planning is the process by which you decide how you want your affairs handled when you’re gone. It gives you the power to make these decisions while you’re still of sound body and mind. You can make the choices about who you want to inherit your estate and other items. This allows your inheritors to avoid a lengthy legal process. You can even decide to donate your assets or certain items to charity. You’re able to designate heirs who wouldn’t have inherited otherwise. It’s a legally binding contract stating your wishes for your estate and all that it entails. Another aspect of estate planning is to designate a guardian for younger children. Most seniors don’t have a need for this part of the plan. There are instances in which some seniors may have the care of grandchildren. This can be a useful clause for those instances. It can give you piece of mind knowing that you’ve planned for every eventuality. Many people typically refer to this process as having a will set up. The difference is that a will only goes into effect after your death. Estate planning encompasses other aspects, such as how you want to be cared for if you become incapacitated.
State Planning and Seniors
The first place to start planning when you’re a senior is to take an inventory of your assets. Once you have compiled a list, look at your debt load. You don’t want to pass this burden onto your family. Assign an estate administrator when creating your plan. This person will pay off the debts with your assets before dividing the remaining estate up. Make sure to assign death beneficiaries to your retirement accounts. This will make the transfer process easier for the person that stands to inherit. Decide if you just want a will or to establish a living trust. This will allow your power of attorney to act in your interests if you aren’t able to make decisions for yourself.
Why Estate Planning is so Important
The importance of estate planning is that it protects your loved ones in the event that something happens to you. It can reduce the tax burden that your family will experience. An estate planner can help you through this process. It provides you the ability to designate your heirs, so that someone else doesn’t inherit your estate. Planning for the future allows you to know that your young children will be taken care of even when you’re gone. Another reason is that your family won’t be left dealing with the mess of a protracted legal battle. Your will guarantees that your wishes will hold up in court.
Where to Find an Estate Planner
You have several options when it comes to finding an estate planner. This task is typically performed by someone who is a lawyer with some experience in the field. If you have a financial advisor or accountant, they may be able to give you a referral for a lawyer. Ask your lawyer who set up their estate plan. They may have a list of recommendations for who would work for you. You can also call your local bar association for a recommendation. No matter how you find a lawyer, check to make sure that they’re licensed to practice law in your state.
Cost of an Estate Planner
There are three methods in which an estate lawyer will charge you. They can charge by the hour, a flat fee, or a percentage of the value of your estate. Depending on the size of your estate, one method may work more to your benefit than another. If your lawyer is also going to be the executor of your estate, a one time flat rate may be the most cost effective means. Many attorneys charge around $250 an hour. The average cost of a will for an individual is between $1500 to $2500. A percentage fee method of payment is typically around three percent of the value of the estate.
Planning for the Future
A part of your estate to take into account is your retirement plans. Consult with a financial advisor in order to plan out how much you need to set aside in order to retire comfortably. You don’t want to run out of money before the end of your life. Designate beneficiaries when it comes to your retirement accounts. This will allow your heir to inherit the money, or use it for your care if needed. It can provide a safety net in case you need more care than your family is capable of providing. This can be used to pay nursing home expenses or for in home care.
Protecting Your Assets
The best way to protect your assets is to have a will or living trust in place. You won’t have to worry about what’s going to happen with your assets. Designating heirs and advanced directives will take the guess work out of what your wishes were away from your family. It can also help your heirs avoid future legal battles. A judge will rule in your favor if you’ve taken the appropriate estate planning steps. You can divide your assets however you choose. This can reduce the tax burden on your heirs. You can also set up probate avoidance steps.