Many people think legal estate planning is about
dying. But these days it may be more about living. Those of us who
are over 50 should be putting a legal plan together for what may be our extended
life span.
In 1900 most people died
young rather than during old age. The average life expectancy in the US was
only 46 years. The leading cause of death was influenza and pneumonia. Early and
sudden deaths from accidents, infections, and childbirth meant that few people
would live long enough to develop Alzheimer’s.
Today the average life
expectancy at birth is 79 years. If you
have reached age 65, you can expect to live beyond age 84. Given the
astonishing developments in medical and scientific technology it is to be
expected that life expectancy will expand even more over the next decade.
The reality is that we are
all more likely than not to live into old age. Isn’t it sensible to plan to be
old? Doesn’t it make sense to do what we can to protect ourselves and our
families from the legal and financial burdens that may accompany our aging? That
is the goal of comprehensive estate planning.
Traditional estate planning
is focused on what happens to the things we own after you die. It helps ensure
that the right people get the right things at the right time with a minimum of
expense and dispute. It’s important. But given our prospects for long life, we
also need to plan for our extended life.
Lifetime planning focuses on protecting
and preserving the things we own and preserving our autonomy during our
lifetime. “Comprehensive estate planning” combines estate and lifetime
planning. It is the form of legal planning needed by people who are over age 50
to protect themselves and the people they love.
Comprehensive
estate planning allows you to:
∙ ensure
that your values will be respected and your intentions followed in the event of
your illness;
∙ permit
your trusted family members to manage finances and have access to needed health
information if you are incapacitated;
∙ protect
your family from the cost of your health care and long-term care expenses;
∙ provide
for family members with special needs such as a disability;
∙ avoid
family disputes;
∙ protect
and provide for your family after you are
gone.
Creating
a Comprehensive Estate Plan
Comprehensive planning
starts by planning for the remainder of your life. You need to create a life
plan that will protect your lifestyle and financial security and help you
attain your goals during the rest of your lifetime.
Especially important is
planning for the possibility of your incapacity. Who should be
authorized to step in and manage your finances if needed? Who should
have access to your personal medical information? What financial and
medical decisions should they be authorized to make?
What if you need long-term
care? What can you do to make sure you are able to stay at home
rather than in a nursing facility? What if you need care in an
assisted living facility or nursing home? Nursing home costs are
staggering - now over $97,000
a year in Pennsylvania for a semi-private room, with an average stay of 2 ½
years. This can quickly destroy your family's financial security. With advance
planning you can protect your family from this risk.
If you are married, a
comprehensive estate plan will help ensure that your spouse will be able to
live his or her remaining years with dignity and financial security. At your
death, it can preserve an inheritance to pass along to your family in a manner
that will not be squandered because of inexperience, illness, or a marriage
gone bad.
Created with the help of
your elder law lawyer, a comprehensive estate plan will allow your assets to be
best utilized for your benefit during your life and then ultimately protected
and preserved for the benefit of your intended beneficiaries.
Implementing
Your Plan
Once you have devised your
plan, it needs to be implemented. Implementation usually involves a
number of legal, financial, and health care documents, such as the following:
For most people there is no
legal document that has the potential to become as important in their lives as
a power of attorney. In the event of your incapacity, a power of
attorney can help ensure that the desired decisions will be made for you by the
people you choose.
A well-drafted power of attorney will increase the
likelihood that your values will always be respected and that you and your
family will be protected from your health care costs.
A power of attorney can be
the key that opens the door to effective asset protection planning and the
preservation of your family's financial security. The document, however, must
be carefully crafted in order to authorize this type of planning. The absence
of appropriate authorizations in a power of attorney can seriously jeopardize
your family's financial security. And a poorly drafted power of attorney can be
a license to steal.
The health care power of
attorney and the living will are documents that give you some measure of
control over the medical treatment you will receive if you ever become
incompetent. The health care power of attorney is more flexible
because it is not limited to just terminal illness situations. Federal
privacy laws can deny your family access to your health information and
participation in your care. You need to authorize the right family
members to have access to your information and provide them with the authority
to serve as advocates and decision makers for you.
In addition to an asset
protection power of attorney, specialized deeds, trusts, and other agreements
may help protect your assets in the event that you (or your spouse) should ever
require long term care either at home or in a nursing
facility.
In this document, you can
give important instructions regarding how your property should be distributed
after your death, authorize protection and care for your children and other
loved ones, and much more. Your will helps assure that your assets will be
distributed to the persons you want in the right amounts and at the right
times. Your will can help reduce or eliminate the taxes that will be levied
against your estate, avoid family conflicts, and provide for religious,
educational, or other charitable causes. If you have young children, your will
is the legal document you use to name a guardian for them.
At your death, the transfer
of some of your property will likely occur without regard to the provisions of
your will. Joint accounts, life insurance, annuities, IRAs and other retirement
plans, and other assets for which beneficiaries have been named are all
distributed without regard to what your will says. You need to create a plan
that covers all of your assets. Comprehensive estate planning
requires a coordinated review and update of all of your ownership and
beneficiary arrangements.
Trusts are particularly
useful if you have a family member with a disability. Specialized
trusts can be used to hold funds to enhance the beneficiary's life without
jeopardizing their eligibility for government benefits. Individuals
and married couples can set up trusts that will protect their assets from the
cost of care in the event of a future disability. In addition, trusts can
sometimes be used to minimize taxes.
Make sure your estate plan is comprehensive
The benefits of comprehensive estate planning are compelling. In addition to protecting you and your loved ones from whatever the future may hold, and preserving your personal and financial autonomy, a comprehensive plan will provide you with the peace of mind of knowing that you have done what you can to prepare.
Since the future is so unpredictable, its never too early to get started with your estate planning. Just make sure that the plan you and your lawyer create is comprehensive!