Estate plans are designed to take care of future issues and concerns, such as planning for retirement, long-term health issues, avoiding estate taxes, planning inheritance, and preparing for Medicare and Medicaid eligibility. However, creating an estate plan now can also help eliminate a present-day issue: stress and worry that comes with the unknown. Most planners admit that they feel a certain level of relief once an estate plan has been put into place because they know that their loved ones are protected and provided for should anything happen.
Elements of a Stress-Free Plan
Every person’s needs and wants are different when it comes to an effective, stress-free estate plan. However, there are some basic elements that should be covered in every plan besides deciding who should get what from the estate. This includes issues surrounding the creator of the estate as well as any family issues that can be protected or prevented by the estate.
Determine who will manage your affairs
This applies first to who will be the executor of the estate and will make sure that it is distributed according to your wishes. However, it also means that you should determine who should be appointed as your durable power of attorney in case you become disabled, incapacitated, or otherwise unable to handle your own affairs. In that scenario, the power of attorney makes all of the financial and legal decisions for the estate.
Plan for long-term medical care
This includes planning for Medicaid eligibility and protecting assets for your spouse if you need to spend down to apply. It also means appointing a healthcare proxy and creating a living will so that your medical wishes will be adhered to even if you become incapacitated and cannot make those wishes clear for yourself. An advance directive binds the healthcare proxy to the wishes that you have made clear beforehand.
Try to keep as much, or all, of your estate out of probate. There are a variety of planning tools, such as certain types of trusts, which keep your estate out of probate. Staying out of probate keeps your affairs private and out of the public record. It also saves time, money, and potential conflict for the rest of your family members.
Protect children from a prior marriage
In case you pass away before your present spouse, be sure that your children from a previous marriage are protected. This may include creating a trust or other estate planning vehicle to set aside money specifically for the children to ensure that they receive the full value of their inheritance.
Protect assets meant for your heirs
You should try and protect assets from any lawsuits, divorces, and other creditor claims against them after you have passed. This can include placing the assets in a specific trust or retirement planning vehicle. However, recent Supreme Court rulings have made some accounts, like an inherited Roth IRA, accessible to creditors.