1. What is estate planning?
At its core, estate planning involves planning for the future.
Individual circumstances vary, but most people benefit from having
the following documents in place:
- Last Will and Testament
- Revocable Trust (to address probate
and confidentiality concerns)
- Durable Power of Attorney (to address
financial control issues)
- Advance Directive (to help with health
care decisions)
Depending on one's individual circumstances the planning may involve
much more than the documents listed above. But, at its core, for
most people an estate plan will involve the above four listed documents.
2. Sometimes you should not leave your spouse as the primary beneficiary.
If your spouse is in declining health, it is probably wise not
to leave him/her as the primary beneficiary of your estate. Why?
If the well spouse unexpectedly passes first, an inheritance could
inadvertently go to a spouse in a nursing home causing Medicaid
benefits to cease and loss of some or all of the inheritance to
nursing home expenses. In such a case, a supplemental needs trust
- for the benefit of the surviving spouse - should be named as
the primary beneficiary. This area of law is complex. Please call
this office for more details.
3. Have an elder law attorney review an existing Power of Attorney
and Advance Directive.
It is critical that an elder law attorney review the power of
attorney and advance directive. It is very common to have a power
of attorney that a family thinks is fine until they have to use
it. That is not the ideal time to discover that it is defective.
Similar issues exist with an Advance Directive. In the middle of
a family health crisis situation is not the ideal time to discover
that the Advance Directive is defective. This office routinely
examines powers of attorney and Advance Directives as a normal
part of our consultations.
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4. Does your Advance Directive contain the HIPAA release
authority?
The Health Insurance Portability and Accountability Act imposes
strict monetary and criminal penalties on companies and institutions
that release private information to unauthorized individuals. The
result is that family members are unintentionally being keep out
of the loop by hospitals, insurance companies, assisted living
and nursing homes. The answer is that your Advance Directive must
absolutely contain the HIPAA release language allowing individual
to access medical information in the event you are incapacitated.
5. Why would I need a Revocable Living Trust?
A revocable living trust is designed to do two things: 1) avoid
probate and 2) make sure your beneficiary designations are a private
matter and not a matter of public record. Probate is a time and
paper intensive process. The typical time for an estate to be probated
is roughly 9 months to 2 years. The revocable living trust eliminates
probate and insures your beneficiaries receive their distributions
in a timelier manner.
6. What is an Irrevocable Life Insurance Trust ("ILIT")?
A common misconception is that proceeds from a life insurance
policy are tax-free. It is true that the proceeds are free from
Federal and State income tax for the beneficiaries of the policy.
However, the proceeds of the life insurance policy may be subject
to Federal and State estate tax. Life insurance is like a stealth
asset that, without proper planning, you may not realize the extent
of your exposure until it is too late. So instead of expecting
to pass your life insurance inheritance "tax-free" to
your beneficiaries, you may be unexpectedly find Uncle Sam's hand
dipping in to grab just about fifty percent of your life insurance
legacy. An Irrevocable Life Insurance Trust ("ILIT")
is a specialized trust designed to shield your life insurance policy
from Federal estate tax. Please contact our office for more information
concerning ILITs.
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Attorney
Roa was able to lessen the pressure on our family during this nursing
home situation.