A new law that’s taking effect in 2018 doubles the federal estate tax exemption, enabling individuals to pass on more than $11 million and married couples more than $22 million without paying tax on it. Obviously, not everybody has that much money. (I mean, seriously, who does?) But even though the estate tax may not affect your estate, you still should have an estate plan in place. An estate plan is basically your instructions for what happens to your money and property after you die – regardless of how much or little wealth you have. If you don’t specify how your assets should be distributed, a judge will do it for you.
End-of-life planning also is vital to ensure your wishes are carried out in the event you become incapacitated before death and are unable to make decisions on your own. Surprisingly, fewer than half of American adults have a will or living trust, according to a recent Caring.com survey. Only 60 percent of Baby Boomers have an estate plan, and even among people age 72 and older nearly 20 percent don’t have one. Though a health care power of attorney, or durable power of attorney, is slightly more common, nearly half of American adults don’t have one of those, either.
Whether your estate is worth millions or just peanuts, you need an estate plan. And if you already have one that you haven’t updated in a while, then you ought to give it a thorough review.
Here are five things to consider now to make sure you and your family are prepared for your death, whenever that time comes:
1. a will or living trust
It may not be easy to think about, but it’s inevitable that we all are going to die. It’s much better to plan now what will happen to your assets, rather than forcing your surviving family members to sort it out when you’re gone. Preparing and updating a will can protect your family from spending any more time and money than necessary in probate court, where a judge will decide in public what to do with what you leave behind. To avoid the hassle of probate altogether, you can establish a living trust that carries on after you die with more precise instructions for distributing your assets.
2. advanced directives
An advanced directive expresses your preferences about medical care if you become incapacitated and can’t make decisions on your own. An example of an advanced directive is a living will, which takes effect if you become terminally ill and addresses what kind of treatments you want a doctor to provide or avoid. This relieves your family of the burden to make those difficult decisions on your behalf. In some cases, a situation arises that’s not covered in advanced directives, and that’s why it’s also important to give someone you trust a health care power of attorney to make medical decisions on your behalf.
3. Medicaid planning
Although it’s not technically part of an estate plan, it can be a good idea to talk with an elder law attorney about how to protect your assets and avoid going broke if you need nursing care later in life. Over 70 percent of people turning age 65 can expect to use some form of long-term care at some point, according to the Administration for Community Living, an agency of the U.S. Department of Health and Human Services. Medicaid planning can legally reduce your out-of-pocket nursing care expenses, getting you the care you deserve without losing the life savings you’ve worked to build.
long-term care insurance
If you have several million dollars, you can probably cover any long-term nursing expenses out of pocket. But for most people, long-term care insurance is a good idea because nursing care is so expensive. The average cost of a private room in a nursing home is $97,455 per year, while one bedroom in an assisted living facility costs $45,000. That adds up fast if you don’t have insurance to pay for it – shrinking your estate down to nothing in a hurry. When to buy a long-term care policy depends on your health, but for many people it’s best to do it in your mid-50s, according to the American Association for Long Term Care Insurance.
4. where to live
Every day in this country about 10,000 Baby Boomers retire. More than 40 percent of them plan to keep living in their homes for years, but at some point many people become unable to take care of their property. When you’re working through end-of-life planning issues like wills and advanced directives, it’s also wise to think about where you want to live in your later years. If you wait to look for a retirement home until you need one, you may find a lengthy waiting list. Even if you plan to “age in place” for now, you should look into future housing so there’s a place ready for you if and when you need it.
If you need help with an estate plan, our team at McGregor can help. At our extended care facility in Cleveland we provide a full-continuum of care including affordable senior housing, rehabilitation and respite care, assisted living, long-term care and hospice. In addition, our innovative, community-based approach called McGregor PACE (Program of All-Inclusive Care for the Elderly) enables older adults to remain in familiar surroundings while receiving the high-quality medical, rehabilitative, social and personal care they need.
We also work with many experts in estate planning and elder law who would be happy to connect with you about end-of-life planning. Together, we can help you and your family prepare for whatever the future may hold.