What Is an Estate Plan?
An estate plan is a collection of legal documents that sets forth how you want your assets distributed when you pass away, and how you want people to handle health and financial decisions if you are unable to do so for yourself during your lifetime.
A comprehensive estate plan can help you feel more confident about the future, knowing your loved ones will be taken care of and that the legacy you leave behind is the one you want. Thoughtful planning now can help minimize taxes and probate fees, and ensure your family will have less to worry about when you are gone; however, failing to make plans for your estate can lead to unintended complications for your descendants.
Essential Estate Planning Documents
1. Last will and testament
A will gives you the power to decide what is in the best interests of your children and pets after you’re gone. It also can help you determine what will happen to possessions with financial or sentimental value. It typically names an executor — someone who will be in charge of following your directions.
2. Revocable living trust
A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate court proceedings. You name a trustee — perhaps a spouse, family member or attorney — to manage your property. Unlike a will, a trust can be used to distribute property now or after your death. If you have substantial property or wealth, a trust can provide tax savings.
3. Beneficiary designations
When you purchase life insurance or open a retirement plan or bank account, you’re often asked to name a beneficiary, which is the person you want to inherit the proceeds when you die. These designations are powerful, and they take precedence over instructions in a will.
Tips for Plan when your child is disabled.
1. Create a letter of intent.
A letter of intent is defined as a letter of instruction that includes information your family and friends will need if you die or for any reason become unable to act. It should list everything from the passwords to your online financial accounts and personal information that someone would need to step into your life, your home and care for your loved one with a disability. This letter can include medications, daily routine, strategies you use for calming, therapists and other daily living items someone not living in your home may not know about your life.
2. Meet with a lawyer.
Reach out to your local ARC or friends for a lawyer to trust. Some lawyers will do a free consultation. Allow them to help you build a vision for what you want your loved one’s future to look like. While it can be expensive, it can worth the money now to ensure the future is well defined and resources are in place. While with the lawyer, please ensure these factors are discussed.
- Create a will.
A will ensures the court doesn’t take a cut of your savings. Without a will, the estate goes to probate, the judge decides where the assets go and there are costs involved. Having a will ensures the monies are distributed as you intend, and the care of your child goes to the person you designate like the best caregiver and who should be in charge of the money.
- Create a special needs trust.
A special needs trust allows you to distribute funds and property in a way that doesn’t interrupt government funding. Did you know your loved one cannot have more than $2000 in their bank account to receive Social Security and Medicaid?
- Create an estate plan.
You can use various methods and resources to create a vision for transferring a person’s assets and wealth after their death.
3. Set up power of attorney or guardianship.
This can be a complicated dilemma for many families. It should start with competency. As with all things, look to the least restrictive option. Do you need to take full guardianship? Can your child understand money and decisions? In part or by themselves? Will they ask for help? If yes, power of attorney financial and medical issues may be a viable solution. Supported decision-making is an alternative that empowers people with intellectual disabilities to make choices with support and while preserving their rights. If guardianship is your goal, consulting a lawyer should start at age 17.
4. Set up an ABLE account.
An able account helps ensure benefits aren’t jeopardized. This account can hold monies to ensure your child’s regular account never has more than $2000, keeping government benefits in place. This may seem like a lot, but take it one step at a time. Do one thing at a time. This process may take a year to get all your paperwork in place, or it may take longer, so start now. Start with the letter of intent and start to think about the vision you have for your loved one.
If you would like to learn more about estate planning, any one of our estate planning attorneys would be happy to assist you.