Most people don't. I meet with clients all the time who come in thinking that they need to protect assets from the nursing home and find out they really need new Wills, Trusts and Powers of Attorney. Or, the other way around!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!
Showing posts with label assets. Show all posts
Showing posts with label assets. Show all posts
Wednesday, June 2, 2010
Monday, September 14, 2009
It won't Happen to ME!!!
When dealing with leaving assets at death, I have clients all the time who say, my children are perfect, they won't fight or ever have any financial problems! Famous last words. Consider this:
When Sharon was planning for how her assets would pass to her four children, she envisioned an easy transition. She had read all the articles on avoiding probate, setting up trusts, and organizing her affairs. She had even spoken to her children about her wishes (a very difficult thing to do). All of her children had wonderful relationships with each other and the assets were to be divided equally. After Sharon died, the transition was easy; each of her children received an equal share of assets and everyone was happy. Unfortunately, shortly thereafter the real trouble began.
Her number 1 son was a doctor. He had a good practice and he thought his patients were happy. One was not, and sued him above his malpractice insurance levels, and WON! Suddenly all of this son's assets, including Sharon's legacy, were gone.
Daughter number 2 was married with 3 children of her own. She thought she would follow her mother's estate plan when she died, since things had progressed so smoothly. Suddenly her husband filed for divorce, and demanded half of all assets, including Sharon's. After a terrible legal battle (which cost thousands in legal fees), most of Sharon's money was gone.
Daughter number 3 was ill most of her life, but had a terrific husband who cared for her, along with a faithful nurse and two children. When she died, she left everything to her loving husband, who promptly married the nurse. He added her name to all the assets. When he later died, everything was left to the nurse. Daughter number 3's children got nothing.
Son number 4 was single, and had never had much money. After receiving Sharon's inheritance, he felt rich and proceeded to buy all the thing in life he had never been able to afford. Before too long, all the money was spent and he was no better off.
What happened? This was not what Sharon had planned so carefully for. She missed one critical step: protecting her money even after she was gone. But how? With a BLOODLINE TRUST! This starts out like a simple Living Trust while Sharon is alive. She has full access to and control of the funds. Upon her death, the assets avoid probate, but instead of distributing outright to her four children, the assets are divided into four separate trust shares to be held for each of her children for life. Each child can have access to his or her share for everyday living expenses, but does not receive the lump sum in one chunk. The share held in trust is protected from the lawsuits, divorce, death or crazy spending of the children. Yet the money is there if needed. Plus, when each child dies, his or her remaining share is left to his or her children, Sharon's grandchildren, whom she adored and wanted to benefit if she could.
This simple, but often overlooked, planning tool would have been the answer to Sharon's prayers, and could be perfect for you too. See an attorney who focuses on Estate Planning and Probate Avoidance to establish a Bloodline Trust.
When Sharon was planning for how her assets would pass to her four children, she envisioned an easy transition. She had read all the articles on avoiding probate, setting up trusts, and organizing her affairs. She had even spoken to her children about her wishes (a very difficult thing to do). All of her children had wonderful relationships with each other and the assets were to be divided equally. After Sharon died, the transition was easy; each of her children received an equal share of assets and everyone was happy. Unfortunately, shortly thereafter the real trouble began.
Her number 1 son was a doctor. He had a good practice and he thought his patients were happy. One was not, and sued him above his malpractice insurance levels, and WON! Suddenly all of this son's assets, including Sharon's legacy, were gone.
Daughter number 2 was married with 3 children of her own. She thought she would follow her mother's estate plan when she died, since things had progressed so smoothly. Suddenly her husband filed for divorce, and demanded half of all assets, including Sharon's. After a terrible legal battle (which cost thousands in legal fees), most of Sharon's money was gone.
Daughter number 3 was ill most of her life, but had a terrific husband who cared for her, along with a faithful nurse and two children. When she died, she left everything to her loving husband, who promptly married the nurse. He added her name to all the assets. When he later died, everything was left to the nurse. Daughter number 3's children got nothing.
Son number 4 was single, and had never had much money. After receiving Sharon's inheritance, he felt rich and proceeded to buy all the thing in life he had never been able to afford. Before too long, all the money was spent and he was no better off.
What happened? This was not what Sharon had planned so carefully for. She missed one critical step: protecting her money even after she was gone. But how? With a BLOODLINE TRUST! This starts out like a simple Living Trust while Sharon is alive. She has full access to and control of the funds. Upon her death, the assets avoid probate, but instead of distributing outright to her four children, the assets are divided into four separate trust shares to be held for each of her children for life. Each child can have access to his or her share for everyday living expenses, but does not receive the lump sum in one chunk. The share held in trust is protected from the lawsuits, divorce, death or crazy spending of the children. Yet the money is there if needed. Plus, when each child dies, his or her remaining share is left to his or her children, Sharon's grandchildren, whom she adored and wanted to benefit if she could.
This simple, but often overlooked, planning tool would have been the answer to Sharon's prayers, and could be perfect for you too. See an attorney who focuses on Estate Planning and Probate Avoidance to establish a Bloodline Trust.
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