Couples without children may think it is unnecessary to do any estate planning. After all, their spouse will get the money and assets, and the court can decide what happens to them after the last spouse dies.
Although it may sound like a good reason at first, there are many things it does not consider. Other situations may require some sound estate planning.
When No Estate Plans Can Be Found
After your death, if no estate plan can be discovered, a court will decide what happens to your assets. States have a predetermined list to go through as to how your assets are distributed. It will not matter if you promised to give some assets to a relative while still alive if you do not have a will or trust. Any provisions you hoped would go toward a certain person’s needs will be ignored.Choose Someone for Power of Attorney
If one spouse is a survivor, but can no longer make responsible financial decisions, someone that you trust needs to be appointed to handle your finances. Once you have designated someone with durable financial power of attorney, that person can pay the bills, provide for your basic needs, buy medications, order medical treatment, and more.There may come a time when you will need long-term care. Medicare does not pay for it but will pay for short-term stays in a nursing home after a hospital stay. Medicaid requires you to spend almost all your assets before it starts paying for it.
Medicaid also has a five-year look-back period to determine if you used your assets in a way it does not approve of while reducing them. If unapproved, MedicaidPlanningAssistance says you will be given a penalty period of ineligibility in which you will likely pay an amount equal to your unqualified distributions toward your long-term care before they pay anything.
Health Care Power of Attorney
When you choose someone to handle your finances for you if you become incapacitated, you also want to choose someone you trust to direct your health care. This person needs to understand your wishes for medical care, which you put into your Advanced Directives document.Without this document, your family members or medical staff will have to make medical decisions for you—ones that you may not have desired. AWBFLaw mentions that their choices may contradict your intentions or values.
Asset Distribution
There is likely someone you know who could benefit and enjoy your assets if you and your spouse die. Although you would probably want your assets to go to your spouse if they are still alive when you die, you also want to name a secondary beneficiary if they are not.Charitable Organizations
You must have a will if you want any of your assets to go to a charitable organization. If you die intestate (without a will) and all your assets must go through probate, the court will not designate any money to go to a charity.Remember Long-Term Care
Medical expenses can be extremely costly during your senior years. Fidelity says that a couple will spend on average about $315,000 on medical costs after they turn 65.If you intend to give some of your money away before you die to reduce estate taxes, save some for this possible expense. You could also buy long-term care insurance to meet the need.
An alternative would be to buy a whole-life insurance policy with a long-term care rider attached. If you need to use the coverage, some of the face value of the policy will go to pay for it. ElderLifeFinancial says that qualifying requires that you meet certain conditions and be approved.
An elimination period also requires that you pay for the out-of-pocket expenses for a specific period. Only some insurance companies, however, offer this rider. An advantage of this kind of policy is that it will save some of the face value for your heirs.
Reduce Taxes With a Trust
You can reduce some of your estate taxes if you create a trust. A living trust will not offer protection from taxes, but an irrevocable trust will. It also will protect your assets from creditors. Assets in a trust ensure that they will go to the person or organization you want to have them.A trust can designate money for a spouse, parents, a relative, or anyone you name as a beneficiary. Assets in a trust get distributed much faster than those that go through probate court. Another benefit is that assets in a trust get distributed privately, whereas assets distributed through a will are made public.
Update Your Plans Regularly
Whenever there is a major change in your life or in those you care for, it is necessary to review your estate plans every two or three years. Events such as a marriage, divorce, death, birth of children among your relatives, and so on, may require you to update your plans.Also, check to ensure that any beneficiaries named on accounts such as savings, checking, investment, and retirement match the names given in your will. If there is a conflict, the assets will always go to the individual named on the account rather than in the will.
End-of-Life Plans
You can also put into a will your desires for what to do after you die. Do you want to be buried or cremated? Do you wish to have memorial services, and if so, what do you want to emphasize during the service? Do you want an honor guard there if you served in the military? Do you want a public funeral service or a private one?The need for a childless couple or single person to create a trust and will is just as important as for someone with children. When you make your estate plans, it is better to contact an estate planning lawyer to ensure that all your plans are legal and will successfully transfer your assets to where you want them to go.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
