Making the Golden Years Golden: Estate Planning to
Meet Your Needs
Author’s book provides estate planning help that will
make you aware if you are financially over or under your specific marker
of needs
By
Eva Mor, PhD
May
29, 2009 - Estate planning is highly misunderstood. It is perceived as
something that only the wealthy need to focus on. But in actuality,
everybody needs to plan for the future. Planning ahead is not only
financially prudent, but it also helps you to develop a “blue print” to
follow for future needs. Through such planning, you may be surprised to
realize what your actual needs may be for your senior years, and this
estate planning will make you aware if you are financially over or under
your specific marker of needs.
Most people find it difficult to deal with
financial issues that relate to their death. It is easy to
procrastinate or ignore it entirely. It is a misconception that if we
share legal ownership of all our possessions with our heirs, that
ownership will automatically be transferred to them.
Sen. Kohl sends letters to Secretary of Labor Hilda
Solis, Securities and Exchange Commission Chairwoman Mary Schapiro,
urging an immediate review of target date funds for Hearing on
Long-Term Care services
This may be an expensive misconception. Although
most people think of their distribution of assets after their death; one
should also look at the possibility of distribution before death. One
should consider that as a way of preserving the assets. It is wise to
take advice from an estate planner and/or a good accountant.
It is important to understand that if one does not
have a will, by law, the state has the right to step in and divide your
property, with no consideration, or minimal consideration to the
deceased’s family. The state can select the heirs your money goes to
allow large sums to the tax collectors, and than charge your estate for
this service. And those fees can be quite high.
Yet even today, seven out of ten people have not
had a will made up. The main reasons people do not have a will is their
discomfort in dealing with the concept of their own death, or an
indecisiveness as to how to divide their wealth.
Most people in need of a will also worry about the
cost of lawyers to prepare the will, yet the average cost of a will is
between $300 and $500. A will should be reviewed every three to five
years to make sure that it is updated to reflect your wishes and
financial status.
The lawyer should keep the original, while you
should keep a copy.
Many people are relying more and more on the
abundance of Internet sources that can provide them with a tool such as
a will or a trust builder. For as little as $70 you can develop a will
quite easily on a site called LegalZoom.com.
About Her Book...
"Watching my parents’ age has been quite
disheartening, their illnesses slowly eating away at their ability to do
simple things that are taken for granted by all of us.
I have worked
most of my adult life with the elderly and the disabled, and was quite
unprepared to deal with the emotional connotations of my parents’
situation. This brought me to the subject of how to improve my parents’
daily life, prolong it, and enrich it…
"In the last few years I headed an agency providing
home care. This allowed me to see the quality of daily life in different
situations: that of an elderly person residing in a nursing home or in
another institutional setting, and that of one residing in his or her
own home.
In this book I examine society’s relationship to and with
the elderly, as well as the organized cultural relationship with the
aging population today. Evaluating the impact of today’s family
structure on the aged and their lifestyle, and how different this is
from the familiar structure in the past, makes it clear how difficult it
is to get older in these times….
"This book was written with the premise to help you
navigate through the landscape of health systems and guide you through
the maze of options that are available to you. The idea is to make it
easier for you to evaluate the best choices for your situation. I hope
this book will guide you, and help you on this journey.
For your
convenience, the material has been arranged in chapters that concentrate
on specific topics relating to aging, needs, and services. Throughout
the book you will find cases of real clients of mine and their
experiences."
Eva Mor
Recently, the numbers of legal sites have
increased, and they are extremely sophisticated. They include not only
do-it-yourself wills, but help with estate planning, as well. Estate
planning can at times be costly, it basically depends on how complicated
the estate is. Living trusts can cost even higher. So if you are
reluctant to pay an estate planner, you may consider the Internet
option.
You have to follow the do-it-yourself, online
instructions very carefully when you write a will or a trust. The
signing of a will requires two signatures of witnesses, but it does not
require those signatures to be notarized. As opposed to the will, the
estate planning, trusts, and living trust almost always require
witnesses and notarizing the documents to make them legally valid. Some
of the regulations may vary from state to state, so make sure you check
the requirements in the state in which you file the documents.
None of the self-filled documents need to be filed
in court to make it legal, but it would be advisable to give a copy to
your executors and your lawyer, if you have one, and let your family
know where you are keeping the original.
As to the cost, Quicken Will Maker Plus has added
living trusts to their site, as well as power of attorney, starting at a
cost of $49.99 (www.nolo.com).
Other sites that may concentrate on specific types of trusts such as
Living Trusts on the Web, www.livingtrustontheweb.com,
which charges about $149 for an individual, and $199 for a couple. Those
prices were accurate at the time my book Making the Golden Years
Golden went to print.
Many experts advise that do-it-yourself estate
planning is most suitable for people whose estate is worth less than $2
million, according to an Oct. 14, 2007 article in The New York Times.
Above $2 million, the federal tax kicks in.
Estate planning not only provides for distribution
after death, but may also provide protection for your money before you
die. If you do not plan and leave written instruction as to what you
want to be done for you if you become incapacitated, the state can come
in and make the decisions for you.
At times people are hesitant and uncomfortable
planning ahead; they may do it in increments, which may be easier. .It
is very important that the legal documents in which you leave your dear
one’s wishes are kept up to date. The will, for instance, will not
negate other documents that may be in place, such as bank accounts that
are set up in trust for someone and are not included in the will.
Insurance policies that have a designated beneficiary will not be
included in the will.
If a named beneficiary has died, and that
beneficiary was not taken off the insurance policy, account, or trust,
the court will intervene, and make the decisions, as to who gets what.
This is the main reason why it is of utmost importance that you update
your will or trusts regularly. The court may appoint an attorney to
represent your interests; the attorney’s fee will be charged to your
estate.
It may be a good idea to set up a secondary
beneficiary, especially if the first one is elderly. It will be
beneficial to set up the will as clear as possible, to avoid any
misunderstanding or conflict. This has to be done if you want the will
to be carried out to your specifications. Review the will annually to
make sure that all beneficiaries are still the ones to whom you want to
leave your money.
You also need to verify that the executors you
picked to carry out your wishes are still willing and able to fill this
role. If the situation changes and that person is unable or unwilling
to fill this role, you need to choose someone else.
Note that the will becomes effective only after
one’s death. So if one is unconscious or mentally unable to make
decisions, it does not mean the will is going to be probated. So for
such scenarios you should establish other instruments to take care of
your needs and protect your estate.
When writing a will or planning trusts, do not
assume that all your heirs, family members, friends, and others whom you
may want to leave part or all of your estate will get along and agree
upon everything related to the probate of your estate.
If you go on the assumption that people are not
perfect and conflict is likely to take place, you should do all that it
is in your power to minimize tensions among the people that will benefit
from your estate. The best way to do that is to be as clear and
specific as you possibly can. Providing copies of your will to everyone
involved, is also helpful, thus they will know what to expect.
Estate Planning is easier to grasp when we
understand the function of this tool and its terminology. The following
are short descriptions of different legal tools that we use in estate
planning. You can find more extensive descriptions in my book.
The will is an instrument to leave instructions on
how an individual wants his or her estate to be distributed after their
death. It may be set up to include a trust, and usually includes an
executor.
Trusts
Trusts come in many shapes, sizes, and forms; they
can be structured to meet your special needs. But in general, all
trusts have three elements: a grantor, a beneficiary, and a trustee. The
following are short descriptions of the three:
Grantor
The person or institution who transfers assets into
the trust.
Beneficiary
The person or institution who will receive money or
other assets from the trust, according to the terms you are establishing
in the trust.
Trustee
A person or an institution that you designate to
carry out the duty to manage, invest, and distribute assets in the
trust.
The directive instruments below are some of the
ones you can use to serve your needs, and situation:
Testamentary Trust
This is a trust that does not take effect until
after the death of the creator of the will. This trust can be used if
you choose not to leave the moneys to your heirs outright. When forming
this trust, you may want to designate a trustee to manage the trust, and
oversee the payout from trust, in the way you desire.
Irrevocable Trust
This is a trust which, once it is created, may not
be revoked or amended by the person that establishes this trust. Most
such trusts are used for income, gifts, or estate tax planning, are
irrevocable in order to gain the tax advantages.
Revocable Trust
This type of trust can be subject to being revoked
or amended by the person who is establishing this trust. This type of
trust is often used in cases when the primary objective is to maintain
privacy during the grantor’s life or after his or her death.
Living Trust:
A living trust transfers property, stocks, and
other possessions from one person to another. That is, to a living
person. Using this instrument, one avoids probate and also is protected
in case they are incapacitated. A revocable living trust gives the
person creating the trust the right to change the terms of the trust, in
part or the whole, or to dissolve the trust altogether.
Charitable Remainder Trust
This type of trust is created as an irrevocable
trust to provide income or annuity payments for a beneficiary.
Insurance Trust
This type of irrevocable trust holds life insurance
policies on one or more individuals. It is often used to exclude life
insurance proceeds from estate taxes. When the person who is insured
dies, the trust receives, manages, and/or distributes the proceeds.
Trustee and an Executor
A trustee and an executor can be a family member,
friend, lawyer, or any trustworthy person who is charged with overseeing
the execution of your will. The executor will distribute the will as
per your written instructions, as well as pay any debts, taxes and
expenses.
Letter of Instruction
This document, prepared for the beneficiaries of
the will or trust, is meant to serve as a guide for closing out the
affairs of the individual upon their death. This document should be
consistent with the will or trust. It also should include direction and
instructions as to the funeral and the list of people that the
individual would like to be notified upon their death. It is also
prudent to have a list of all the individual’s possessions attached to
that document.
Durable Power of Attorney
This instrument gives another person the right to
sign his name to any business transaction in your name; it also gives
them the power over all your assets. This document can only be valid if
it is prepared while the person signing over this power of attorney is
fully competent mentally, and can be terminated at any time by written
request.
Probate
Probate is a state court procedure that oversees
the administration of your estate, or at least the property in your
estate.
Regardless if you are in your forties, a
baby-boomer, or in your seventies and eighties, we all need for our own
protection as well as for our loved ones, to put in place clear and
specific guidelines as to how and to whom we like to leave our estate.
About the Author
Eva Mor, PhD, an epidemiologist and specialist in
gerontology and health care management, has worked with the elderly for
more than 23 years. She holds an M.A. in Gerontology and Health
Administration.
May
29, 2009 - Estate planning is highly misunderstood. It is perceived as
something that only the wealthy need to focus on. But in actuality,
everybody needs to plan for the future. Planning ahead is not only
financially prudent, but it also helps you to develop a “blue print” to
follow for future needs. Through such planning, you may be surprised to
realize what your actual needs may be for your senior years, and this
estate planning will make you aware if you are financially over or under
your specific marker of needs.
