When you put your original estate plan in place, you are going to be reacting to a snapshot of your life at that time. There is no other way to go about it, but you should be aware of the fact that revisions are probably going to be necessary as circumstances change over the years.
Family Situation
An estate plan for a single person will be simple and straightforward. You want to carry enough life insurance to cover your final expenses, and you should execute a simple will or a living trust.
A basic estate plan will also include an incapacity component. You should use advance medical directives to state your life support utilization preferences as well as appoint an agent to be in charge to make sure your wishes are carried out.
For financial matters, if you have a living trust, you can name a disability trustee. A durable power of attorney for property can be used to account for the management of property that is not held by a trust.
If and when you get married, you have a new set of concerns. You and your spouse should discuss your estate planning objectives in an effort to find common ground.
A joint living trust can be the ideal solution if you intend to own most of your valuable property together and you want to leave your share to one another.
The addition of children to the family will add another layer of responsibility, and an estate plan revision will be necessary. You can name a guardian for the children in a will, and you have to account for the management of assets on behalf of the minor.
This would fall into place naturally if you have a living trust, because you would name a successor trustee that would be empowered to manage the assets. It is also possible to embed a testamentary trust within a will.
As your family grows, your estate plan should reflect the new dynamic, and this will also apply to individuals that are named in the plan that predecease you. This can include older people that you may have named as a trustee, a guardian, and/or executor.
Legacy Protection
Estate plan adjustments may be necessary to preserve your resources for the benefit of your loved ones. Long-term care costs are a looming threat because most seniors will need paid living assistance, and Medicare does not cover custodial care.
Medicaid will pay for long-term care, and it is the widely embraced solution. Of course, it is a need-based program, so you can’t qualify if you have more than $2000 in countable assets in your name.
An irrevocable, income only Medicaid trust can be the centerpiece of you nursing home asset protection plan. When you fund the trust, you would surrender access to the principal, but you could receive distributions of the trust’s earnings.
As long as you fund the trust at least five years before you apply for Medicaid, the principal would not count if you did in fact seek Medicaid eligibility.
Estate taxes are another threat to your legacy. There is a federal estate tax with a 40 percent maximum rate, and it is applicable on the portion of an estate that exceeds the exclusion.
In 2023, the exclusion is $12.92 million, but it is going to be reduced to $5.49 million in 2026. If you created your estate plan when you had no exposure and your success propels your estate into taxable territory, you can adjust the plan to include an estate tax efficiency strategy.
We Are Here to Help!
Our doors are open if you are ready to work with a Lafayette or Northwest, IN estate planning attorney to revise your plan, and we can help you develop an initial plan if you are currently unprepared.
You can send us a message to request a consultation appointment, and we can be reached by phone at 219-865-2285 in Schererville and 765-767-5225 in Lafayette.
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