Many people reduce the process of estate planning to the creation of a last will. In reality, a well constructed estate plan will involve the execution of additional documents.
When you create your last will, you facilitate future asset transfers. However, a comprehensive estate plan will also address the latter portion of your life.
Incapacity is common among elders. There are a number of different causes, but Alzheimer’s disease is the leading culprit. This disease strikes around 13 percent of all seniors, and the likelihood of contracting the disease increases as you get older. The Alzheimer’s Association tells us that 40 to 45 percent of people who are at least 85 have contracted the disease.
Who would handle your financial affairs in the event of your incapacitation? If you do nothing to prepare for this contingency, the state could be petitioned to appoint a conservator to act on your behalf.
While this is a necessary safeguard, most people would prefer to choose their own representative. You can do this if you create a durable financial power of attorney.
With this incapacity planning document, you empower an agent or attorney-in-fact to handle your financial affairs. Because the document is durable, it would still be in effect, even if you become incapacitated.
You should also have a durable power of attorney for health care to name a medical decision-maker.
People sometimes become unable to communicate when they are in a terminal condition with no hope of recovery. In many cases, these individuals can be kept alive indefinitely through the utilization of life-sustaining measures.
Would you want to be kept alive through the use of feeding tubes, artificial hydration, and/or mechanical respiration? This is a very personal question, and different people have different feelings about the subject.
A living will is the incapacity planning solution. When you create a living will, you state your wishes in writing. If you were to be in this position, your wishes would be honored.
More Food for Thought
If you had a last will, you would need incapacity documents as well. However, you don’t necessarily have to use a last will to facilitate asset transfers to your loved ones.
There are other options available to you. There are some drawbacks that go along with the utilization of a last will. For one, the assets transfers would be subject to the probate process. Probate can be time-consuming and expensive.
In addition to this, many people require long-term care during their senior years. Long-term care is very expensive, and Medicare will not pay for it.
Medi-Cal does pay for long-term care, but there are asset limits. If you keep your assets in your direct personal possession and arrange for distributions through your will, you would be ineligible for Medi-Cal. In the end, the assets may wind up in the hands of a nursing home.
Explore Your Options
You may want to discuss everything with a licensed estate planning attorney before you make any final decisions. Our firm offers free consultations, and you can request an appointment through this page: San Jose Estate Planning.
- The SECURE Act – the Gift That Keeps On Giving - September 28, 2023
- The Importance of Hiring a Probate Attorney (VIDEO) - September 27, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - September 14, 2023