Estate planning is one of those responsibilities that people generally don’t enjoy addressing. Most people have an endless array of excuses for why they continue to procrastinate about estate planning. They have big financial moves in the works or intend to expand their families soon. They may feel like they are still too young and healthy to need to think about incapacity and death.

The unfortunate reality is that quite a few people end up procrastinating for so long that they die without an estate plan. Their loved ones are then vulnerable because no prior arrangements have been made, and no notice as to what should happen with their property has been detailed.

When is the best time for someone to start the estate planning process?

As soon as an individual becomes an adult

Many people think of estate planning as a way to distribute property or protect dependents. Someone who hasn’t yet accumulated much property and who doesn’t have a spouse or children may dismiss the idea that they need an estate plan.

However, they have not considered their own vulnerability adequately. Medical privacy laws leave new adults in a particularly precarious position. Their parents no longer have any authority to make choices about their care or to access private information about their condition. That remains true even in an emergency that leaves someone unconscious or dependent on life support.

New adults may benefit from drafting advance medical directives explaining their medical preferences and powers of attorney that grant trusted individuals the necessary authority to manage their finances and make medical decisions. They can then update those documents as their lives progress.

After becoming a spouse or parent

People who don’t choose to take action for their own protection may instead find motivation due to concern about their loved ones. Parents and spouses often want to provide for their loved ones should an emergency occur. Creating an estate plan after getting married or becoming a parent allows someone to provide financial support for their dependents and to take the pressure off of their closest family members in the event of a medical emergency.

After achieving personal success

Even those who have not yet developed their families may have valuable assets in their names. Those who own real property, businesses or investment accounts might want to create estate planning documents to address their resources. Otherwise, intestate succession laws that prioritize close family relationships dictate what happens with their assets when they die.

People often need to continually revisit and update their estate plans as their circumstances change. Yet, getting started with initial documents is the first crucial step for the protection of a testator and the people they love in this regard.

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Estate planning is rarely a straightforward process. And for those who have considerable assets, planning for long-term care needs and eventually distribution to beneficiaries can be particularly challenging.

One option that can help individuals to achieve their estate planning goals is to set up trusts, although not all trusts are the same. Understanding the basics of how trusts function can help those with considerable assets to make more informed choices about their estate planning options.

Revocable versus irrevocable trusts

One of the primary differences between certain trusts is that they’re either revocable or irrevocable. A revocable trust is one that you maintain control over, so you can change the terms or dissolve it as desired. An irrevocable trust is one that a trustee controls, so you can’t change or cancel it once it’s set up and funded. Both types of trusts can get assets to your beneficiaries privately since they bypass the probate process.

Irrevocable trusts have some benefits that revocable trusts don’t. Because you don’t control those assets, they aren’t counted as part of your estate. This can reduce estate taxes. Additionally, the assets are protected from creditor claims against you.

Medicaid planning

Many Americans who are over 65 years old receive Medicare, which isn’t a needs-based program. Medicare doesn’t provide coverage for long-term care, so some of these individuals will need additional assistance.

Medicaid is a government-administered medical coverage program. It’s needs-based, so only people who meet specific requirements are eligible. Part of creating an estate plan can be using specific trusts, such as a Medicaid Asset Protection Trust, to house assets in a way that won’t impact eligibility.

Because the Medicaid program is needs-based, it uses a five-year lookback period to determine eligibility. Certain transactions, such as selling assets or giving them away during that time can result in a penalty that’s handled via a specific period of ineligibility.

Estate planning can be a complex undertaking, especially for those with considerable assets. Working with a legal representative who can assist with finding ways to facilitate an individual’s unique needs and goals can help to reduce the stress for anyone who’s creating an estate plan.

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One of the more common reasons that people delay formal estate planning is concern about the expense involved. Many people worry that they may have to spend thousands of dollars putting together documents and reviewing their financial records with an attorney.

Some lawyers capitalize on that economic concern by engaging in deceptive marketing practices. They may claim to offer robust estate planning services at a flat rate. Flat-fee attorney services may seem like a cost-effective solution, but many clients end up surprised by how much they actually have to pay for the legal services that they secure.

Others may end up disappointed with the quality of the advice and documents they receive. What are some issues prospective clients need to know about before hiring a lawyer on a flat fee basis?

Flat-rate representation isn’t necessarily the best

A layer advertising their services for a flat rate hopes to bring in as many clients as possible and do as little work as possible for each client. They depend on volume, and the quality of representation isn’t necessarily the same as it might be with an attorney charging by the hour. Attorneys cost, on average, more than $300 per hour for legal advice and representation. Someone who needs help creating or updating an estate plan may be better served by paying an attorney hourly and getting the best support possible rather than looking for discount options of questionable quality.

Flat-rate pricing isn’t transparent

Attorneys often have much fine print involved in their contracts for flat fee services. That flat fee may only cover a certain amount of time or specific types of documents. Anyone requiring additional review or facing unusual circumstances may not be eligible for flat-rate services. Additionally, lawyers may charge them a la carte or hourly for any extra work required. What seemed like a competitive flat rate may end up turning into thousands of dollars in additional costs when someone needs a trust or powers of attorney.

Particularly when the flat rate is for estate administration or probate services, a lawyer could take unethical steps to justify billing a client for more than the agreed-upon fee. Some lawyers even intentionally contribute to disputes as a way to increase what they can charge their clients because a dispute arises. Overall, it is often a much better option to hire a lawyer based on their experience and how well what they offer aligns with an individual’s needs. Those who sit down to talk about their needs with a lawyer they can trust may feel more comfortable about their final decision regarding who they hire.

Prioritizing thoroughness and experience is often better than focusing solely on advertised prices when hiring a lawyer for estate planning purposes. Those who understand the shortcomings of flat fee illegal representation can more effectively avoid scenarios in which they end up paying far more than they budgeted for while estate planning.

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Estate planning gives adults the chance to lay out a plan for what will happen to their assets after they pass away. Some people opt to accomplish this goal through trusts, but others count on their will alone.

The problem with using a will to pass down assets is that it leaves the chance for someone to challenge one’s wishes. While this isn’t common, it’s something to think about when you’re creating an estate plan.

Who can challenge a will is limited

There are only very specific people who can challenge a will. These include:

• Beneficiaries of the current or former will
• Heirs who would inherit assets if you didn’t have an estate plan
• Creditors who can file a claim against the estate

By limiting who can file a will contest, it takes away the possibility of people who have no legal interest in the will delaying the actual beneficiaries from being able to get their portion of the estate.

Circumstances for challenges are limited

In order to contest a will, there must be something specific that points to a legal need to alter or cancel the will. One of the more common reasons to contest a will is because of undue influence. This occurs when a person convinces you to change something in your will for their own benefit.

Another reason is if you were unable to legally create a will when you signed it. This is typically because of an altered mental state, such as intoxication or insanity. In order to be considered “of sound mind” for estate planning, you have to:

• Understand the value of the assets in your estate
• Know who the beneficiaries are
• Recognize who you’re legally responsible to provide for
• Realize what you’re passing down through your estate plan

If all of those are present, you can’t be presumed to have lacked the testamentary capacity to create the will.

Forgery, fraud and failure to meet the legal requirements for the will are also possible causes for someone to contest your will. These all have to do with how the will was created and signed. All wills must be created based on the terms you decide, including your signature unless there’s a valid reason for you not to sign and have suitable witnesses.

Creating a solid estate plan is critical undertaking for all adults. Making sure that it’s legally enforceable and not likely to be contested may give you peace of mind and help your loved ones to follow your wishes when you’re gone.

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Many people focus on passing down assets in their estate plan, but that’s not the only thing a comprehensive estate plan does. It should also outline your preferences for your end-of-life care and care in the event that you’re incapacitated due to illness or injury more broadly.

When you’re getting the plans sorted out, you should focus on two specific concerns— medical care and financial matters. Setting everything up for these two areas of life can give you peace of mind because you’ll know you’re taken care of, and your family won’t have the burden of making every decision for you.

Planning for medical care

A healthcare proxy, also known as a medical power of attorney, allows you to appoint someone you trust to make healthcare decisions on your behalf if you are incapacitated. This document ensures that the person making decisions about your medical care understands your wishes. It’s important to have candid discussions with your chosen proxy about your values and the extent of medical interventions you desire.

A living will is a type of advance directive that specifies your preferences regarding medical treatments and life-sustaining measures, such as artificial hydration and nutrition, if you are terminally ill or in a persistent vegetative state. While New York State doesn’t have a statute specifically for living wills, courts have upheld them as evidence of a person’s wishes regarding end-of-life care.

DNR orders are specific instructions not to use cardiopulmonary resuscitation if your heart stops or if you stop breathing. This directive is crucial for individuals who wish to avoid aggressive measures that might prolong life in situations of terminal illness or severe quality of life impairment.

Planning for financial matters

A power of attorney for finances allows you to designate an agent to manage your financial affairs. This can include paying bills, managing investments and making financial decisions. A durable POA means it remains in effect if you become incapacitated, ensuring continuity in managing your financial matters without court intervention.

These end-of-life and incapacity components of an estate plan are terminated when you pass away. The financial decisions will then fall on the person who has been granted authority over your estate. These are only parts of a comprehensive estate plan, so it’s critical to work with a legal representative to ensure your wishes are sufficiently relayed overall.

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Trusts are legal arrangements wherein assets are held and managed by a trustee on behalf of the trust’s beneficiaries. These allow for customization in the way assets are handled and may be included as part of a comprehensive estate plan.

Trusts can be tailored to meet specific family needs, tax planning goals and philanthropic desires. All trusts are classified as either revocable or irrevocable, depending on whether the creator can change the trust during the remainder of their lifetime or not. The following are just a few of the kinds of trusts that can be included in an estate plan in order to achieve specific goals.

Special needs

A special needs trust can help to support a person who relies on needs-based programs without affecting their eligibility for those programs. These trusts must be carefully structured. By setting up a special needs trust, a grantor can help ensure that a loved one with disabilities receives the financial support they need over their lifetime, covering expenses that government benefits don’t, such as personal care attendants, out-of-pocket medical costs and recreational activities.

Charitable trusts

Charitable trusts are another type of trust utilized in estate planning, offering a way to combine philanthropic goals with estate planning objectives. Charitable lead trusts (CLTs) and charitable remainder trusts (CRTs) are the two primary forms. Both types of charitable trusts offer significant tax benefits, including deductions on income taxes and the potential to reduce or eliminate estate taxes.

A CLT allows the grantor to provide a fixed annual gift to a charity for a specified term, with the remaining assets eventually passing to non-charitable beneficiaries. A CRT provides an income stream to non-charitable beneficiaries for a term or life, with the remainder going to charity.

Working with a legal representative who can provide assistance concerning various types of trusts is often beneficial, as this relationship can help people to make informed decisions about their options. Ultimately, the goal is to create a comprehensive estate plan that meets a creator’s visions for their beneficiaries during life and/or after death.

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Estate planning is a critical aspect of financial management that is often misunderstood and shrouded in myths. For example, a prevailing myth is that once an estate plan is in place, it’s a set-and-forget scenario.

However, life is dynamic, and your estate plan should be. Regularly reviewing and updating your plan can better ensure that it aligns with your financial situation, family structure and legal landscape changes. Debunking common misconceptions can also help ensure you establish a robust estate plan to serve you and future generations.

Myths concerning the basics of estate planning

One common misconception is equating estate planning solely with creating a will. While a will is crucial, estate planning encompasses a broader spectrum of financial and legal tools. Trusts, powers of attorney and healthcare directives are just a few of the essential components that, when strategically employed, help ensure a seamless transfer of assets and decision-making in times of need.

Furthermore, contrary to popular belief, estate planning is not just for older adults or the ultra-wealthy. It is a proactive measure that all adults should take seriously.

The myths around taxes and estate planning

Another prevalent myth is that estate planning is solely about minimizing tax liabilities. While tax considerations are crucial, an effective estate plan is multi-faceted. It encompasses, but isn’t limited to:

• Preserving wealth
• Safeguarding the well-being of heirs
• Addressing healthcare decisions

Speaking of taxes, some individuals believe that only the super-wealthy need to worry about estate taxes due to generous exemptions. However, the evolving tax landscape means that even those with moderate estates may be subject to tax implications.

Myths on choosing the right executor

Appointing an executor is a critical decision in estate planning. Contrary to the misconception that it’s merely a ceremonial role, an executor plays a pivotal part in executing the wishes outlined in your will. Choosing someone who understands the details of your financial affairs and is trustworthy is paramount for a smooth transition of assets.

Another misconception is that there should only be one executor. In reality, having multiple executors can be a strategic choice because it allows you to distribute responsibilities and reduces the burden on a single individual.

By dispelling common misconceptions and understanding the details involved in estate planning, you can confidently navigate this crucial aspect of financial management. Remember, the key to a successful estate plan lies in its ability to evolve with your life and financial circumstances.

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