Lifetime Planning vs. Deathtime Planning (and why you need both)
There is a misconception among the general public that “estate planning” is only for the wealthy. According to a March 2017 survey by Caring.com, six out of ten Americans have no will or any other kind of estate plan in place. Many said they’d get around to it, eventually. When they’re old. (The survey did find that the elderly are much more likely to have some plan in place.) It’s all too clear that most of us think “estate planning” is a euphemism for “deathtime” planning. Indeed, in the Caring.com survey, one-third of the participants said that they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died. However, comprehensive estate planning isn’t just deathtime planning. It’s lifetime planning, too…
Lifetime planning is about ensuring that your medical and financial decisions can be made by someone that you trust. Lifetime planning can help you address potential tax liabilities, find you benefit programs you may eligible for, and protect your family from costly guardianship or conservatorship court proceedings. It can make sure that a trusted party looks after and protects your affairs, if and when you’re not able to.
3 Lifetime Planning Tools You Should Know About
As an estate planner, I have an arsenal of lifetime planning tools to benefit clients, and I can custom-tailor such plans to an individual’s needs. Here are a couple of the most common (and necessary) lifetime planning tools you should discuss with us.
- Revocable living trustsWhen people hear the word “trust,” they may think of “trust fund babies” or think that trusts are something only for the super-rich.However, a trust is simply a legal tool that can help almost anyone with property – not just the wealthy. In a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: You can buy and sell these assets as if they were still in your name. In fact, revocable living trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have, making them very easy to administer while you’re alive. And as the creator, or settlor of the trust, you can continue to make changes to the trust as long you’re competent to do so.Once you die, the trust becomes irrevocable, meaning its terms can’t generally be changed. At this point, your chosen successor trustee distributes assets to beneficiaries (the people, such as your spouse, children, a church, or other charity, you named to inherit from you). In many respects, the role of the trustee is similar to that of the executor of a will. But, a trustee of a fully funded trust doesn’t have to go through the public and expensive probate process. Trusts are private – unlike wills – which can also provide valuable privacy to your family.
- Durable power of attorneyDurable powers of attorney come in two forms. With a standard durable power of attorney, a person is legally designated to act on your behalf, in the ways specified in the document. You can make the durable power of attorney broad in scope or quite limited, and it becomes active as soon as you sign it. Under this document, the person may sign checks for you, enter contracts on your behalf, even buy or sell your assets. What they can do depends on what you authorized in the document.In the case of a “springing” power of attorney (POA), also known as a conditional power of attorney, the person only has this authority if you become incapacitated. At that point, the POA “springs” into action. There is no “best” power of attorney. At McDonald Law Firm, we’ll work with you to determine which is the best fit for your needs and goals.
- Health Care Power of AttorneyIn an instant, an accident can change a healthy, vigorous person into someone who can’t make his or her own healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. In either case, you want to empower those you trust to make medical decisions for you. Though health care legal documents vary somewhat by state, in Maryland, the general principle is that, through this document, you authorize someone to make medical decisions for you, if and when you no longer have the capacity to do so. You can also communicate your desired treatment and end-of-life care. However, those instructions may not be valid in every state.
Lifetime Planning: A Holistic Approach
Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.
Contact an Experienced Estate Planning Attorney to Discuss Your Options
For insight into how to establish a trust and implement other lifetime planning options, call Andre O. McDonald, an experienced Howard County estate planning attorney today at (443) 741-1088 to schedule a no obligation consultation.
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL ADVICE.