One of the benefits of hiring an attorney to draft your estate plan is that the law is highly nuanced, and only a licensed professional will be able to ensure that you have the most comprehensive plan possible. Oftentimes, however, people opt to draft the estate plan on their own, which introduces the risk of making mistakes that can potentially leave them in a situation where they may not receive the proper long-term care that they require. Below we’ve outlined the most common mistakes that you should avoid when drafting an estate/elder plan.
Not Having A Plan
A mistake many adults make is putting off creating an estate plan until the last minute, which results in your assets being poorly managed and potentially not in accordance with your wishes. Worst case scenario, you may be deemed a “ward of the state” in a proceeding where a judge decides that you are unfit to make decisions and will decide for you where your assets will be distributed. In any case, you do not want to leave your estate in the hands of the state. This can result in a family member receiving assets that you would not have passed down to them had it been your choice. Avoiding this is as simple as making sure you have some sort of estate plan , whether or not you hire a professional, that will prevent such a thing from happening.
Having Only A Will
While a will is certainly a useful document to have as a part of your estate plan, it should not be the only one. It is recommended that one also has a trust in place, as trusts do not have to go through probate. Probate court is costly and takes at least a few months to a year to finish, so it is definitely favorable to skip the process if you are able to. Alongside those negatives, wills are considered public record in probate court, unlike trusts which are private documents. Having a living trust allows for the beneficiaires to have a much easier time receiving assets than they would had the assets passed through a will.
Not Planning for Disability
Although we all wish to be healthy up until the very last minute of our lives, that does not always coincide with reality. In elder law, one should consider planning for the possibility that they one day may be incapable of making their own decisions. In that case, having a power of attorney and health care proxy is essential. The Power of attorney allows for an agent of your choice to make decisions on your behalf in the case that you are unable to do so. This ensures that if you face a short-term or long-term disability, your assets will be taken care of and the agent can make choices regarding where/how they should be distributed. Similarly, a health care proxy allows someone to make medical decisions on your behalf if you are incapable of making such decisions. In elder law, there is also something known as “elder law power of attorney”, which can help make sure that more than half of your assets do not go to nursing home costs should you need one.
Not Considering The Possibility of Long-Term Care
In accordance with planning power of attorney and health care proxies, one should understand that they very well may one day end up needing long-term care, such as an assisted living facility. Nursing homes can be very costly, ranging anywhere from $12,000 to $18,000 per month. To lessen the financial burden of having to pay such high rates, one can obtain long-term care insurance. Another option is creating a Medicaid Asset Protection Trust (MAPT) which will protect any assets that have been in the trust for over 5 years from nursing home fees.
Naming A Minor Or Estate As Beneficiary
As mentioned before, it may be in your best interest to avoid the probate process for many reasons. If a grantor names a minor as a beneficiary, the assets that are to be inherited will have to go through probate. The same will occur if you list “estate” as a beneficiary in an IRA or life insurance policy. If you’d like to ensure that a minor inherits certain assets, it is best to leave them those assets in a trust to avoid probate.
Not Updating Your Plan
The final, but the most important mistake that one can make in elder law planning is not updating your estate plan on a consistent basis. The law can change, as can your financial situation and life circumstances in general. A marker of a good plan is that it matches up to your wishes and executes what you want it to. We highly recommend that you seek out a licensed attorney to handle your estate/elder planning needs to ensure a smooth and seamless retirement and transfer of assets upon your death.