Why do I need an estate plan?

Whether you are 72 years old, enjoying retirement, or 22 and looking for that first “real” job, proper estate planning is critical. It is the cornerstone of long-term financial management and the road-map for generational wealth transfer—but there are a host of other benefits that are incredibly important no matter your age or the amount of wealth you have:

Nominate guardians for your children

If you are a parent, deciding who will care for your children if both parents pass away or become incapacitated is one of the most important responsibilities you have in caring for your children. If you don’t plan ahead and don’t provide direction by testamentary device, your children will be caught up in the court system until the government decides who the best caregiver is, which may not be the person you would have chosen or may take weeks or months.

Appoint “fiduciaries” to manage your affairs while you are still living

Your estate plan will include both a Durable Power of Attorney and a Power of Attorney for Healthcare. Through these documents, you empower someone, who is called a “fiduciary”, to manage either your financial or medical affairs if you are unable to manage them yourself. Once the emergency has happened, it is too late. At that point the only way for someone else to be able make decisions for your or manage your affairs if you cannot would be to ask the court to grant them guardianship over you (and, the person asking for guardianship may not be the person you would chose for yourself). You can avoid this from happening, and avoid conflict among your family members, or a protracted court battle, by planning ahead.

Create a special needs trust

Those who receive benefits such as Medicaid or Supplemental Security Income (SSI) are vulnerable to losing these benefits when they become the recipient of an inheritance.  For example, you will lose eligibility for SSI payments if you have more than $2,000 to your name. That means if you leave money to someone you care about that receives these benefits they could lose their only income and medical insurance by simply receiving a mere $2,500.  Medicaid ineligibility can be avoided through the use of a Special Needs Trust. This type of trust will ensure financial security for the beneficiary, while maintaining crucial social benefits. Moreover, this sort of trust can be employed at any time to help support your loved one who receives these types of benefits, not just after you pass away.

 Avoid a probate court proceeding

If you die without an estate plan, you are legally described as having died “intestate,” and the disposition of your assets is directed by state law. In most cases a proceeding will be initiated in probate court, and could result in an expensive, lengthy, and completely public, legal proceeding. On the other hand, if you have a complete estate plan with a properly funded trust, no one need set foot in a courtroom and your information remains private.

This blog post was written by Benjamin W. Bryant, J.D., at Schmeltzer Law, and is not intended as legal advice nor does it create an attorney-client relationship.  If you have questions or concerns specific to you, you are encouraged to seek qualified legal counsel.

Benjamin W. Bryant, J.D.

Schmeltzer Law PLLC

www.schmeltzerlaw.com

ben@schmeltzerlaw.com

(231)642-5225

2018-10-12T12:55:11+00:00 October 11th, 2018|

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