subject: Reasons Why and When You Should Have an Estate Plan [print this page] Reasons Why and When You Should Have an Estate Plan
Estate planning is arranging your affairs so that you and your assets will be handled the way you'd want when you no longer can. Such planning generally anticipates our death as well as the mental and physical deterioration of old age that leaves us incapable of handling our affairs. This article overviews the concerns that estate planning addresses and the strategies used to solve them.*The whyFive concerns that you should address before you're no longer able are how you: 1. can be cared for as you would like when you become incapacitated 2. can prevent loss of much of your assets from the burden long term care costs 3. can assure your assets go to the beneficiaries you choose 4. can prevent public exposure, costs and delays that probating your assets will produce 5. can minimize estate tax losses to the legacy you leave to your beneficiariesThe first three concerns can affect almost anyone regardless of their wealth. Making sure your care is handled they way you want under both a medical emergency or general disability associated with old age is important to everyone.Long term care is costly. If you go into a nursing home you can pay $80,000 or more annually. Just some help at home can cost $20,000 annually. Medicaid will not pay for your long term care until you've first depleted most all your assets. It'll bill you for whatever costs you incur until then. Getting that special bequest when you die to the child or friend you intend it for requires planning. Otherwise, another child may rightfully claim it under the laws of probate.And if you're planning on leaving your house to someone, you'll have to protect it from being sold to pay long term costs billed by Medicaid or having someone else claim it for himself or herself.Anything in your name alone has to go through the probate process. This is time consuming and costly. It's also a public process that opens up your affairs to everyone. That can create hard feelings for those you leave behind. Lastly, estate taxes rates are high and the amount of your estate that's exempt from estate tax changes every few years. With the price of houses, these days, it doesn't take much to push average families paying estate tax if they own a nice house and a second home too.*The WhenWhen you should begin your estate planning is a commonly asked question. If you know when you'll die or become incapacitated, then determining when you should start becomes easy. Unfortunately, we don't know when we'll die nor when we'll become mentally incapacitated. In fact we don't know when we'll need long term care. We can slip into senility so that we no longer know what's even in our best interest. We can then squander money that undermines our true wishes.Lastly the tools that can remedy our concerns need to be put in place before it's too late. We can only write up wills when our minds are sound. The use of some trusts to protect our assets from Medicaid often have to be drawn up and funded as much as 5 years before our long term care problem arises. These circumstances mean you can't keep putting off your estate planning. The earlier you begin, the better. But if I had to pick a time, I'd choose when you start your retirement. At that time you've become acquainted with all your assets and how you plan on using them. You're in a good frame of mind then to consider how to handle what the possibilities will eventually arise.
