September 05, 2009
/24-7PressRelease/ --
Planning for the Future Can Save Families Additional Grief Down the Road
Article provided by Singer Pistiner P.C.
Visit us at
www.singerpistiner.com
Estate planning is a topic many families want to avoid. It can be uncomfortable asking the types of questions that estate planning inevitability brings up: who do you want to have your property after you die? Under what circumstances do you want to prolong your life? How will you pay for long-term care? What type of funeral do you want?
These are the type of questions most people do not want to discuss with their parents, their spouses or their children. But not discussing them does not make the questions go away. If anything, it only delays asking them until you are forced to -- when there is a medical emergency or death in the family.
As divorce and remarriage rates continue to soar, estate planning is more important now than ever. Many families are finding themselves with the added financial stress of having to care for not just two elderly parents, but for elderly step-parents as well. This also can complicate the decision-making process as children, step-children and other family members are forced to come to an agreement.
By taking the proper steps now, families can work together to create a plan for answering these tough questions and, just as importantly, figuring out how to pay for extended medical care, nursing home or assisted living expenses, funeral costs and day-to-day living expenses.
Wills, Trusts and Other Basic Estate Planning Instruments
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will is the cornerstone of the estate plan. For some families, it may be the only estate planning document they have. For others, it may be one of many. It is not necessarily to be wealthy or have a lot of assets in order to have a will. Even if all you own is your family home, you still should have a will.
A will allows you to:
-Direct how you want your property to be distributed
-Provide directions for your final arrangements, including whether you would like a burial or cremation, where you would like to be interred, who you would like to perform the services, etc.
-Designate a guardian to care for any young children you may have
-Designate an executor to handle any remaining matters in your estate
If you do not have a will, then the laws of the state in which you died will determine how to divide up your assets. Generally, this means that your spouse and/or children will receive the lion's share of your estate. But what if you have step-children or children from another marriage? Without a Will, you lose the ability to make these decisions for yourself.
Other documents you may want to consider having in your estate plan include:
-Trusts
-Living wills
-Powers of attorney, both financial and health care
Trusts are another common estate planning document. In a trust, a trustee manages the property in a trust for the benefit of the named beneficiaries. There are many different kinds of trusts, including spendthrift trusts and charitable trusts. Unlike Wills, trusts do not have to go through the probate process and the contents of a trust are not available to the public.
Living wills are documents that allow you to determine the types of life-saving medical treatment you would like to receive, should you be unable to communicate your decision in the future. Usually, these documents are accompanied by a
health care power of attorney that gives an individual (a "proxy" or "agent") the power to make medical decisions on your behalf if you are not able to do so. By having both documents, you ensure that whatever decisions are not covered by your living will can be decided by your proxy.
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financial power of attorney is another type of document that allows you to select a person who will have the authority to make financial decisions on your behalf should you become incapacitated. This could be as simple as directing a person to pay your bills for you or as complex as authorizing the person to manage your stock portfolio.
Paying for Long-Term Care
Creating a plan for taking care of future needs is not complete unless there is also a plan for paying for it. Studies show that nearly 70 percent of people who live to be 65 will require some type of long-term care. With nursing homes costing more than $77,000 per year, on average, and assisted living homes costing nearly $36,000 per year, paying for these facilities can create a significant strain on families.
Many elderly Americans rely on Medicare and Medicaid to take care of their medical expenses. But Medicare and Medicaid come with restrictions on the type of care they will pay for, how much they will pay and when the benefits will start to kick in. Because of these limitations, families should not rely on either system to cover all of their long-term care expenses.
Some other options for paying for long-term care include:
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Personal savings: you can set up a separate savings account, brokerage account or other type of investment account with funds dedicated to paying for long-term care
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Long-term care insurance: there are special insurance policies you can purchase that will help cover long-term care expenses. The type of coverage and costs will vary by insurance provider.
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Life insurance: depending on the type of policy you have, you may be able to "borrow" against your policy to cover some of your medical expenses
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Reverse mortgage: a reverse mortgage is a type of loan in which the lender pays you a monthly amount based on the value of your home for as long as you remain in the house. The balance of the loan is due at the time you no longer live in the home. You (or your heirs) will not lose the home so long as the loan is paid off.
Conclusion
It is estimated that as much as 10 percent of the elderly population live on wages at or less than the national poverty line -- in 2009, $10,830 for a single person; $14,570 for two people for 2009. Even those who are living above the poverty line may not have the financial resources to pay for much needed care, especially if they need long-term care in an assisted living community or nursing home. This leaves the financial burden falling to their families, who also may not have the means to cover all of the costs.
One of the ways families can help ease any future financial stress is by sitting down with their loved ones and creating a comprehensive estate plan. This plan can include setting aside resources to pay for not only any possible long-term care needs, but also the day-to-day expenses loved ones may need in their golden years.
For more information on estate planning and long-term care plans, contact an experienced attorney.
Article provided by Singer Pistiner P.C.
Visit us at
www.singerpistiner.com---
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