New York Estate Planning & Elder Law Blog
Elder Law Estate Planning is an area of law that helps us maintain control of our lives and assets in four basic areas.
First, Elder Law is planning for disability which includes naming people who will make decisions for us if we become incapacitated. You choose the people who will act on your behalf and thereby avoid the government taking over your life in a “guardianship proceeding.” Wills do not provide for disability because they are plans for death. Living trusts, on the other hand, name trustees who manage trust affairs during incapacity. Other necessary disability planning documents include a Power of Attorney that names people who make financial and legal decisions, a Health Care Proxy that names people who will make medical decisions and a Living Will that expresses end of life decisions such as resuscitation.
Second, another protection of Elder Law is asset protection planning from the costs of long-term care. Plan A to protect assets from long-term care and nursing home costs is to buy long-term care insurance. If you do not have long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT) that protects trust assets from nursing home costs paid for by Medicaid after the assets are in the trust for five years. The MAPT protects assets from home care costs paid for by Medicaid after the assets are in the trust for two and a half years.
Third, Estate Planning is death planning which means the transfer of assets to our beneficiaries with the least amount of court costs, legal fees, taxes and saving time and money on the settlement of the estate. So often, signing a will results in a sense of satisfaction that the estate plan is solid, and affairs are in order. Unfortunately, it is not widely known that wills are used in probate court. Trusts avoid probate, save time and money on the settlement of the estate, and avoid costly, frustrating litigation if a disgruntled beneficiary “contests the will.” If you plan to disinherit a child, a trust gives much more assurance than a will that your wishes are followed.
Fourth, another protection of Estate Planning is inheritance planning to keep the inheritance in the family and protect the inheritance from children’s divorces and creditors. You may create an Inheritance Trust for each child. When the children receive the inheritance, they may spend it. If the child dies, the inheritance goes to that child’s children, your grandchildren, and not to the surviving spouse of your child who could remarry and use your money with the new spouse. The Inheritance Trust also protects the inheritance from the child’s divorces and creditors.
Trusts are no longer just for the super wealthy. In 1991, the American Association of Retired Persons (AARP) recommended that most families should use trusts, not wills, to save time, money and complications on the settlement of the estate. The trend for more middle class families to use living trusts instead of wills was born and has been referred to as the “living trust revolution.” The major benefit of trusts versus wills is increased control in the unfortunate circumstance of disability and on the inevitable event of our demise.