Components of an Elder Law Estate Plan
Clients are often surprised at the amount of documents included in an elder law estate plan. The following are the various components.
Components of an Elder Law Estate PlanTrusts are far more common than they used to be. They are preferred over wills by many because trusts avoid probate, a court proceeding upon death. Wills, on the other hand, are documents used in probate court if you die with assets in your name alone. In addition to saving time and money, trusts avoid family disputes over the inheritance. Some people choose revocable trusts. Others choose the irrevocable Medicaid asset protection trust (MAPT) that protects assets from nursing home costs after five years.
Inheritance trusts protect the money you leave to your children. If a child dies, the inheritance passes to their children, your grandchildren, not their spouse, to keep it in the bloodline. In addition, the inheritance is protected from children's divorces, lawsuits and creditors.
A "pour-over will" directs that any assets passing through probate court will "pour over" into your trust. It is a backup plan just in case assets were left out of the trust, but the goal is to avoid the use of the will.
A power of attorney is an "advance directive" that states who will make your legal and financial decisions if you are incapacitated. You avoid a guardianship proceeding. In addition, the elder law power of attorney includes unlimited gifting powers that can save about half of assets exposed to nursing home costs, even on the nursing home doorstep.
A health-care proxy, another advance directive, states who will make your health-care decisions if you are incapacitated. A living will states your end-of-life desires, including if you do not want to be kept alive on machines if there is no reasonable expectation of recovery.
Funeral and burial instructions can be very helpful to the people you leave behind, including if you choose to make organ donations.
Components of an Elder Law Estate Plan (continued)Final instructions, also helpful to your loved ones, list practical information such as whom to contact, your vital statistics, service providers and obituary information.
A memorandum for personal effects lists antiques, coins, jewelry, artwork and other treasured items you want left to certain people. It is located with all your other important documents, easy to find, and you may change it at any time.
When you sign all your documents, you also usually sign the deeds for your house and other real-estate properties located in Georgia or other states into the name of your trust.
Written instructions describe how you transfer a variety of assets into the trust, including stocks, bonds, Certificates of Deposit, bank accounts and real estate.
And even though the plan looks complete, it's time to come back for a review every three years to ensure the plan will work when you need it, not just the first time when you signed it.