If you are relatively new to estate planning, it can seem a bit intimidating given the wide variety of tools, documents, and strategies that may be incorporated into a comprehensive estate plan. Once you get started, however, you will soon realize that estate planning is not as complicated as you thought. The key is to identify your estate planning goals and objectives and then work with an estate planning attorney to decide which estate planning techniques can best help you achieve those goals and objectives. Although every estate plan is unique, there are some common estate planning techniques. At the Law Offices of Kobrick & Moccia we feel that by familiarizing yourself with some of the most commonly used estate planning techniques you will become more comfortable with the overall concept of creating your estate plan. With that in mind, we have created the following list of the top estate planning techniques along with a brief explanation of when you might use them and how they fit into an estate plan.
- Incapacity planning – including an incapacity planning component is one of the most common techniques used in an estate plan because almost everyone should plan for the possibility of incapacity. Do not make the mistake of thinking that incapacity only occurs when you are in your retirement years. Incapacity can strike anyone at any time. In fact, almost one in five people suffer a period of incapacity that lasts five months or longer during their working years. Incapacity planning allows you to decide ahead of time who will make medical and personal decisions for you and who would take over control of your assets if you suddenly became incapacitated as a result of a tragic accident or debilitating illness.
- Parents with minor children – if you are the parent of a minor child, estate planning is particularly important for several reasons. Your child cannot inherit directly from your estate, making it important that you make plans for your child’s inheritance. For most parents, this means creating a trust for their child(ren). You will also want to be sure to name a Guardian in your Will in the event one is ever needed and make sure you leave behind sufficient assets to support your child(ren) in the event something happens to you.
- Advanced directives – if end of life medical treatment decisions are important to you, executing an advanced directive should be equally important. Along with allowing you to make medical treatment decisions ahead of time, you also have the ability to appoint an Agent to make decision for you if you are unable to make them for yourself someday.
- Medicaid planning – if you are young, long-term care is probably the farthest thing from your mind. You should, however, be thinking about the likelihood that you will one day need nursing home care because the cost of that care, and the need to qualify for Medicaid to cover those costs, could put your assets at risk if you failed to plan ahead. Medicaid planning techniques, however, can protect your hard-earned assets and ensure that you will qualify if the need arises.
- Asset protection – whether you realize it or not, your assets are likely at risk from a number of potential threats. A divorce, an economic downturn, or even a spendthrift beneficiary could all pose a threat to your heard-earned assets. Asset protection techniques, such as transferring assets into an irrevocable trust, can protect those assets from threats.
- Probate avoidance – probate is the legal process that is typically required following a death. Probate serves many functions, including:
- Authenticating the decedent’s Last Will and Testament and allowing interest parties to challenge the Will.
- Locating, valuing, and eventually passing down estate assets
- Notifying creditors and allowing them the opportunity to file claims against the estate.
- Making sure state and federal taxes are paid.
Probate can be a lengthy, and costly, process. Money spent on the probate of your estate diminishes the value of the estate left over to pass down to loved ones. In addition, assets that are required to go through probate are not available to the intended beneficiaries until the end of the probate process. For this reason, people often turn to probate avoidance techniques in their estate plan. One simple way to avoid probate is to use a trust agreement to distribute the majority of your estate assets because trust assets are distributed outside of the probate process.
- Special needs planning – if you are the parent of a child with special needs, estate planning takes on a heightened importance. You undoubtedly wish to ensure that you can continue to contribute to your child’s care and maintenance after the child becomes an adult and even after you are gone. Leaving a direct gift in your estate plan, however, could jeopardize your child’s eligibility for much needed assistance programs such as Medicaid and SSI. Special needs planning uses techniques such as the creation of a special needs trust to resolve this dilemma.
If you have additional questions or concerns regarding estate planning techniques that are frequently used during the creation of a comprehensive estate plan, or if you wish to get started on your plan, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.