ESTATE PLANNING

There are no set rules in regards to what components an estate plan should contain. Every person’s estate and goals for the future are different. As such, every estate plan is different as well, designed to meet the unique needs of every individual. But while each estate plan is tailored to a person’s specific financial situation and objectives, there are a few vital documents that a majority of estate plans should include: will, trusts, health care directives, and financial powers of attorney.

Through a reverse mortgage, homeowners who are 62 years of age or older may convert part of their home’s equity into a sum of money that can be used to increase their financial wellbeing and quality of life in retirement. The home would not have to be sold, and there would be no loan payments to make unless a homeowner changes residence or passes away. For older individuals with a limited income and few assets, a reverse mortgage can be very useful, especially since there is no required income or credit threshold to qualify. However, it is important to note that a reverse mortgage might not be beneficial for everyone. A qualified attorney can help assess a client’s situation and determine whether a reverse mortgage is in their best interests or if other alternatives should be considered.

A reverse mortgage can help older individuals utilize their home’s equity in order to finance their retirement expenses. However, doing so can affect an estate’s value later on. Because a reverse mortgage is essentially a loan, homeowners become “borrowers” of their own property. In the event of a homeowner’s death, the lender then takes possession of the property. If the homeowners have heirs who wish to keep the house, they would have to pay off the outstanding loan balance.

A power of attorney is a legal document within an estate plan which appoints a person of trust to act on behalf of another in matters such as finances or business decisions. The reason why power of attorney is such a crucial part of an estate plan is simply that life is unpredictable. An accident or a sudden illness that becomes prolonged can leave a formerly independent person incapacitated and unable to manage their financial affairs. This could have dire consequences if no one is aware of the person’s business or finances. Appointing a power of attorney is a matter of being prepared and safeguarding assets and businesses should an untimely accident or illness leave an individual unable to handle these matters themselves.

A power of attorney can take effect as soon as the document is signed if this the principal’s wish. This is usually the case if a person is going into retirement. However, power of attorney is usually designed to take effect in the event that a person becomes incapacitated. This can happen through physical incapacitation such as a coma or stroke, or through mental incapacitation wherein a cognitive disease makes it impossible for an individual to make decisions for themselves. Most people have a power of attorney drafted to take place once their doctor determines that they are unable to manage their own affairs.

There is no single long-term care insurance policy that fits everyone’s needs. What might work for one individual may not work for another. This is why it is important to get in touch with an estate planning attorney to evaluate a person’s unique situation. For example, a single person living with dementia who requires support services would need a long-term care insurance policy that is vastly different from a married person who is in good health. The benefits an individual would need to sign up for vary case by case.

In New York as anywhere else, appointing a health care proxy is an important part of estate planning. It’s one of the most important preparations to make as a health care proxy is appointed to make health care decisions for an individual who is no longer able to do so. New York law dictates that a health care proxy cannot change or overrule any decisions or instructions a person has made. In addition, all health care providers are legally obligated to keep the health care proxy informed and abide by the decisions they make in place of the patient. With that in mind, a person can also limit the decisions they want their health care proxy to make or give them as much authority as they see fit.