Year after year, surveys show that most American adults do not have an estate plan. One survey asked unprepared respondents if they thought that estate planning was important, and over 60 percent of them said yes.
Why do they fail to act when they know that they should? The most common reason is a simple one: They do not know where to begin. This is understandable to some extent, and we will provide a roadmap that you can follow to jumpstart your efforts in this post.
Inventory Your Assets and Consider Liquidation
The first step is to evaluate the assets that will probably be part of your estate. If the value is in the seven figures or more, you should gain an understanding of the estate tax parameters. We are going to take a look at the current figures in an upcoming post, so stay tuned.
Liquidation is a key thing to think about, because to put it bluntly, your children may not want your belongings in their current form. For example, if you are a collector of some kind, your child or children may not have any interest in these valuable items.
There is also the matter of distributing the value of property among multiple different inheritors. Timing is key when it comes to downsizing and liquidation, but it is something that you should think about.
Estate Plan: Evaluate the Recipients
Every person on your inheritance list may not be ready to receive a large direct bequest all at once. Under these circumstances, you can use a trust with a spendthrift provision, and an incentive trust can be used to guide a beneficiary toward a certain desired behavior.
Estate planning for people with special needs is another circumstance that calls for the utilization of a particular type of trust. You should think about these things record your concerns in your estate plan outline.
Confront End of Life Realities
Your estate plan should go beyond the financial part of the equation. Your life expectancy is into the middle 80s after you become old enough to collect Social Security. Over 30 percent of individuals that are 85 years of age and older contract Alzheimer’s disease.
This is one cause of cognitive impairment, and there are other conditions that cause incapacity. The state can be petitioned to appoint a guardian to act on your behalf if you do not address the matter in advance, so you should take it into your own hands while you can.
When it comes to your financial affairs, if you have a living trust, you will act as the trustee while you are alive and fully capable. To account for possible incapacity, you should name a disability trustee in the trust declaration.
If you do not have a trust, you can name a representative in a durable power of attorney for property. Actually, you should do this even if you have a trust because some of your property may be in your direct personal possession for one reason or another.
You should also address potential medical scenarios that can arise when you are unable to communicate your own decisions. You can express your life-support utilization choices in a living will, and you can name a medical decision-maker in a durable power of attorney for health care.
This representative would not be able to access your medical records because of a provision contained in the Health Insurance Portability and Accountability Act (HIPAA). You can provide access to the information if you sign a HIPAA release form.
Work With S.J. Khalsa!
Far too many people pass away before they put estate plans in place, and their loved ones pay the price. Now that we are in a new year, you have a golden opportunity to put the procrastination behind you once and for all.
If you are ready to get started, you can schedule a consultation at our Manhattan estate planning office if you call us at 212-973-0100, and you can alternately fill out our contact form.