7 Key Steps to a Successful Estate Plan

Do Elder Law Attorneys do Estate Planning and Estate Administration

If you’re thinking about estate planning, good for you!  Your goal is to make sure your assets are distributed according to your wishes.  Here’s a list of the steps you need to take to ensure that happens.  Note that a successful estate plan will incorporate measures to protect your assets while you’re alive against the ruinous costs of long-term care.  Estate attorneys and Elder Law attorneys can help you achieve this vital objective.

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Step 1:  Execute Advance Directives

“Advance Directives” is a legal term for describing the Power of Attorney (“POA”), the Health Care Proxy (“HCP”), and other documents used to authorize and guide others who may need to take future action on your behalf.  Your estate attorney or Elder Law attorney can guide you regarding these documents.

Power of Attorney:

This document names an agent to act on your behalf, and defines his or her scope of authority, which can be narrow or broad.  For example, it can allow your agent to pay your bills, pick up your mail, or assist you with planning and obtaining long-term care.

Key aspects of the POA:

  • It takes effect as soon as you sign it
  • Your agent will usually be required to show third parties the original POA in order to act for you
  • Your agent is required at all times to act in your best interest
  • You can revoke it at any time
  • In most cases, a POA (and a HCP) will avoid the need for guardianship, which can be expensive, frustrating, and uncertain.
  • If you are getting older, but don’t need someone to act for you at present, you could execute a Power of Attorney and hold onto the original(s). You could inform the agent where you keep the POA, so that in case of an emergency, the agent could retrieve the original and begin to act on your behalf at that time.

Health Care Proxy:

This document assigns a person to act as your agent on matters of health and medical care.

Key aspects of the Health Care Proxy:

  • Your Health Care Agent has authority only if you are unable to express your wishes yourself.
  • In New York, only one agent is permitted. However, you can name an alternate agent should the primary agent be unable to continue in that role.
  • It is crucial for your Health Care Agent to know your wishes. Their responsibility is to express your wishes, even if your wishes differ from their own.

Living Will:

The purpose of the Living Will is to express your wishes in writing regarding your health care.  While the concept is appealing, we find that it is difficult to implement without relying on language that is often ambiguous and subject to differing interpretations and potential dispute.  For this reason, we advise clients to execute a Health Care Proxy, and make their wishes known to their Health Care Agent in a less formal way.

Step 2:  Review already-existing beneficiary designations

Many people are not aware of the variety of means by which their assets can pass to their beneficiaries upon their death.  In advising clients on their estate plans, we usually look for methods that do not require a court proceeding, such as probate or administration.  Here are a few examples:

  • If you own your house with your husband or child as Joint Tenants, and you pass away, the house immediately belongs to the surviving owner 100%.
  • The same thing goes for bank accounts. If you add your child as a signer on your bank account, and you pass away, the child becomes the 100% owner.
  • Retirement accounts: You are normally required to name a beneficiary on your retirement accounts.  When you pass away, the designated beneficiary automatically inherits the account.  From time to time, it is a good idea to review your beneficiary designations to be sure that they reflect your current intentions.

Step 3:  Focus on the need to protect yourself now, so that you will have an estate later

It’s worrisome to hear, but true:  paying for long-term care has wiped out the life’s savings of millions of people.  You’ll want to make sure that you have protected yourself and your estate against this significant risk.

About 70% of our population over the age of 65 ends up needing long-term care at some point in their lives.  The cost of long-term care is extremely high, especially in the New York City Metropolitan Area and surrounding counties.

This devastating expense does not have to ruin your estate plan, if you take action.  Estate planning can and does go hand in hand with long-term care planning.

Step 4:  Create a plan that integrates a Long-Term Care Plan with an Estate Plan

New York Elder Law attorneys are uniquely positioned to help you create a cost-effective, integrated plan to protect you and your estate against the depletion of your assets if you should need long-term care.

It only makes sense to consider creating such a plan, to protect yourself and your family.  Unless you are very wealthy, ignoring the risk, and hoping it won’t happen to you, is a formula for disaster.  Remember, 7 out of 10 people will need some kind of long-term care at some point, and 4 out of 10 will need nursing home care.

Once you have made a long-term care plan, you can move on to planning for the distribution of your assets after you have passed away.  In most cases, a Trust can serve both purposes and more.  However, a Will may still be advisable, since, for example, assets may inadvertently remain outside the Trust.

Step 5:  Execute Your Documents

None of us want to think about death or disability.   Perhaps because Wills, Trusts, Powers of Attorney, Health Care Proxies, and related documents are reminders of mortality, many people delay or find it difficult to take the final step of executing their documents.

If you have been delaying, push yourself to get it done and execute your documents.  You’ll gain tremendous peace of mind.

Step 6:  If you have a Trust – Fund it

A well-designed plan often involves the creation of a Trust.  Many clients come to us for advice after having created estate planning documents with another law firm.  If they have a Trust, we will ask:  “What’s in your Trust?”   Answer:  Silence.  There is nothing in the Trust.

An unfunded Trust is a useless document, and a complete waste of time and money.  A Trust governs only the assets that it owns.

If you are going to create a Trust, you’ll want to work with a law firm that will do more than write the Trust Agreement.  Make sure they will advise and assist you with transferring financial assets, deeds, co-op apartments, or other valuable property that belongs in your Trust.

Step 7:  Take Action Now

Estate planning firms and Elder Law firms like Lamson & Cutner do this kind of work every day.  Their experience can help you to navigate these decisions and steps smoothly and efficiently.   Be aware that estate planning firms do not necessarily focus on your long-term care and protecting your assets while you are alive.

Don’t wait for a crisis to occur before you take action – it’s far easier to make decisions when you are in a calm frame of mind.   Timing can be important, so don’t delay.

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