Financial estate planning issues you should worry about

Estate planning: You need the three basic documents: Will, Power of Attorney and Health Care Proxy. The Power of Attorney is often more important than the Will. It gives power over your finances in the event you are disabled. It avoids cumbersome and expensive conservatorships.

Avoiding Probate of Wills (cost and delay): can be achieved by setting up revocable and Irrevocable trusts. Also, transferring your house by deed to a Trust to one or more of your children while reserving a life estate. Other probate avoidance options include adding a child’s name to your bank account, annuity beneficiary designations, life insurance, and transfer on death provisions of stock/ brokerage accounts. These are all methods by which your money gets to your heirs without probating your Will.

Asset Protection: If you and/or your spouse are frail and concerned that at some point your savings may depleted by a long term nursing home stay, then you need to do one or more of the following:

1) Transfer your assets now and begin the 5 year ineligibility for Medicaid. Transfer to whom? Directly to your child (ren) or to an Irrevocable Trust? Directly avoids legal costs and sophistication of Trusts but it exposes those transferred assets in the event one of the children divorces, goes bankrupt, etc. 2) Buy long term care insurance. Can be expensive but often worthwhile. It is the wave of the future as the Federal and State governments go broke and cut back on health care 3) move in with your children 4) pay your children under strict caregiver contract provisions for your care if gifting/five year is impractical. Note: if you are frail and/ or elderly you likely cannot get long-term care insurance.

2) Community Resources- The federal government does not pay for care in your home other than the Aid and Attendants program for veterans. Don’t hold your breath on getting this funding. There are huge backlogs and financial need criteria. Medicaid does pay for some care attendants but is asset and income based. Eligibility criteria vary dramatically from program to program. Reverse mortgages are great for those who are house rich but cash poor. They are expensive but can keep an elder from having to go to a nursing home. Inheritance Taxes: You only have to concern yourself with these if you have a million dollars or more in assets