Understanding Your Estate Plan
In our hectic world, so many things can change over a short period of time, especially matters concerning family dynamics, assets, and financial accounts. That is why at Phelps LaClair in Gilbert, Chandler, and Mesa, we encourage our clients to review their estate plans every three years. To our surprise, we often hear clients admit that they don’t know what is in their estate plan. Let’s review some key components of a thorough estate plan:
A Revocable Living Trust is by far the most preferred estate planning tool. This offers tremendous advantages, especially when compared with a will.
- Flexibility and control—During your lifetime, you are the trustor, trustee, and beneficiary of your own trust. You control all of your assets at all times. When you die, your trust will be managed according to the instructions you have left to your successor trustee. You can count on your desires being carried out even if you are no longer here.
- Avoiding Probate—Because your assets are titled in the name of the trust, your estate will not enter the probate system. In addition to saving time and money by avoiding probate court, the estate will be administered by a trusted person you have chosen, rather than by a judge.
A living will is an essential piece of an estate plan. It spells out your end-of-life medical directives, so that your wishes for your medical care are clearly known should you become incapacitated. A living will relieves your family of the burden of having to make difficult, complex medical decisions for you.
Medical Power of Attorney
Along with a living will, you will need to appoint someone you trust to ensure your medical wishes are carried out in the event that you are unable to do so. This happens through a medical power of attorney. This person is able to legally discuss the details of your case with your doctors as well as make healthcare decisions for you in accordance with your desires.
Long-term Health Care
70% of Americans over the age of 65 will need some degree of long-term care and support during their lifetime. The costs of this care are currently staggering and they are continuously increasing. Many private nursing homes cost upwards of $75,000 to $100,000 per year. Medicaid will not cover the costs of long-term health care. Your estate plan needs to include provisions for this care, whether through insurance, irrevocable trusts that protect your assets, or other wealth replacement strategies.
Many inheritances have been lost through fraud, unwise financial decisions, beneficiaries with addictions, and divorce. A Protective Inheritance Trust keeps your assets within the family. It allows for distribution and control of assets solely by the beneficiary you have named. This means it is not vulnerable to outside influences such as lawsuits and ex-spouses. The beneficiary does not “own” the assets, rather they belong to the Protective Inheritance Trust upon your death. But he/she is free to use the assets in keeping with any restrictions that you stipulate.
These are only some key components of a thorough estate plan. As a second generation estate planning firm, Phelps LaClair encourages you to come in for a consultation to discuss, review or update your estate plan. Your first consultation with us is free, so don’t delay. As always, time is of the essence—you can’t afford not to make time for something as important as this!
Images used under creative commons license (Commerical Use) 08/17/2019 Photo by Nicole De Khors from Burst