Protecting a Lifetime of Work!
Many times we are asked whether there are standard, form or fill-in-the blank documents that fit every situation. The short answer is DIY Estate Planning is not a great idea. While you can certainly download a form and fill in the blanks, that strategy may prove to be dangerous! Each situation is unique and will vary from person to person and family to family.
Many years ago I came across a case where a lady had written her Last Will & Testament in her Bible. (A will written entirely in your own handwriting and signed at the bottom is referred to as a holographic will). This lady’s kids were prone to fighting and she knew it. Perhaps she thought that by writing her wishes in the family Bible, that they would honor her wishes and not fight. As you may imagine, her DIY Estate Planning didn’t work!
You have worked a lifetime to accumulate your assets. You know how you would want those assets used should you become incapacitated before you die. Which assets would you want to be liquidated to provide for your care (if necessary)? Likewise, which assets would you want to protect? You need to make those decisions in advance and commit them in writing in the form of legal documents. The n your wishes are more likely to come true!
Common Asset Protection Documents
With some advance planning, many families have the option to protect assets from Medicaid “spend down” should nursing home care ever be needed. Others have the opportunity to protect a substantial portion of their assets for the benefit of the spouse at home – even if one of the spouses is going into the nursing home immediately.
There are no “standard” estate planning documents. However, there are those documents that we tend to use in many situations. The provisions (or “guts”) of the documents will vary from one person to another. The goals espoused by many families, however, are the same.
Last Will & Testament OR Living Trust?
The initial decision at the start the estate planning process is often the same. “Should I use a Last Will & Testament OR Should I use a Living Trust?” Either of these documents can designate who will receive your money and other property at your death. Either a Last Will & Testament or a Living Trust will appoint a person to administer your estate at death.
One primary difference is that a Last Will & Testament normally goes to probate upon the death of the second spouse. Contrarily, a properly funded Living Trust typically avoids the probate process.
The trade-off for many families is the up-front cost. A Last Will & Testament is sometimes much cheaper on the front end, but often significantly more expensive on the back end as a result of the expense of probate. A properly prepared trust-based estate plan will eliminate probate at death if funded properly. Additionally, a Living Trust is much easier to administer at death. Typical tasks with a Living Trust are filing final tax returns, paying final taxes, paying final expenses and splitting remaining assets as directed in the Living Trust. No Court involvement is normally required.
A pour-over will “pours-over” any assets to your trust that you forgot to put in prior to your death. This, of course, is only for those with a trust-based estate plan. The problem is that any assets left out of your trust go through probate. That’s where proper funding of the trust is critical. If the trust is funded properly, probate is usually avoided entirely.
Property Power of Attorney.
Gone are the days where we can routinely get by with a one-page power of attorney. Most financial institutions, brokers and others want to see that you have specifically authorized your agent to take certain actions on your behalf or they may refuse to honor the power of attorney. Arkansas recently adopted the Uniform Power of Attorney Act which makes certain provisions standard that were previously left out of some of the older powers of attorney from days gone by. If your power of attorney is several years old, it would definitely pay to have it reviewed. The key is to make sure that it gives your trusted agent the powers that you would like them to have.
Health Care Power of Attorney.
Many of you have personal experience with a Loved One in the hospital during their final days. In a health-care power of attorney, you state your intentions regarding the type of care that you would like to receive if you become incapacitated before you die and can no longer direct your own care. You can also nominate health care agents (usually a spouse or one of your adult kids) who are empowered to step in your shoes and make healthcare decisions for you when you can’t make them for yourself.
Private Living Will.
This is a state-specific document authorizing the attending physician to withhold or withdraw treatment that only prolongs the process of dying. The Physician will normally consult with the person appointed in your health care power of attorney for direction as to what you would want in the event that a life or death decision needs to be made.
Because of the new privacy laws, it is imperative that you authorize medical personnel to release your confidential medical information to certain specified family members.
The Bottom Line
It is critical to meet with a qualified estate planning or elder law attorney to have your estate plan properly prepared and implemented. Avoid DIY Estate Planning kits or those off the internet. What you have worked for your entire lifetime is at stake.
We work with people to do various types of estate planning. There is no one size fits all plan and no plan is categorically better than others. The key is to meet with your attorney (hopefully us!) to discuss your unique situation and have a plan crafted that is best for you. If you or your declining parent does not yet have a Power of Attorney in place, please be proactive and schedule your FREE 10-minute phone consultation by clicking the button below.
FREE Phone Consultation
Without a properly flexible plan, how will you care for your Loved One, be there for your family, get work done, and pivot in the event of a crisis? What about cost? How will you pay for it all? If you make the Assisted Living Facility choice, how long will the money last? Together we can craft a proactive plan and get you started protecting your assets!
We are currently offering a FREE 10-Minute Phone Consultation with one of our Elder Law professionals. You can get a jump start on planning as we work together so you don’t need to attempt DIY Estate Planning.
If you, or someone you know, are from Arkansas and would benefit from more information like this, to our free Arkansas Newsletter by going to https://elp.legal/arknews.
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We have covered some legal topics in this edition and as always, I want to emphasize that (1) the law is different in every state, so if you live in a state other than Arkansas, just know that the law may be totally different in your state; (2) your situation is unique, so one size doesn’t fit all – meaning what we discuss herein may not be right for you; (3) we have purposely over-simplified many of the topics above (otherwise this would be many pages long and unreadable because of all of the legalize). It is imperative that you meet with your attorney (hopefully us!) and get a plan that will work for you. Please don’t attempt DIY Estate Planning based on what you read in this (or any) article AND don’t try to go it alone. Please consider this, get your questions answered and take action.