There are websites on the Internet that contend that anyone can create an estate plan using generic, boilerplate documents that they will sell you. In reality, there is a lot of information that you need to digest if you want to construct an estate plan that ideally suits your needs.
Your financial status is going to be an important part of the equation. The federal estate tax is a factor for high net worth families, so you have to inventory your assets so that you know exactly where you stand. During the current calendar year, the estate tax is applicable on asset transfers that exceed $5.43 million.
We should point out the fact that you can transfer unlimited assets to your spouse tax-free, but transfers to anyone else are potentially taxable.
If you are exposed to the federal estate tax, there are legal steps that can be implemented to ease the burden.
You should also consider the life situation of each person on your inheritance list. There are different ways to transfer assets, and you should understand the facts.
For example, if you leave lump sum inheritances through the execution of a last will, what happens if a loved one spends his or her inheritance too quickly? If you have concerns, you can institute spendthrift protections in a number of different ways.
Special needs planning would be another consideration. People with disabilities can lose government benefit eligibility if they come into money. You can account for this through the creation of a special needs trust.
To be comprehensively prepared, you should also obtain some information about the state of long-term care costs and the solutions that exist. Medicare does not pay for long-term care, and it is very expensive. If you have to pay out-of-pocket as an elder, everything that you wanted to pass along to your loved ones could wind up going to a nursing home.
Medicaid does pay for long-term care, so you could aim toward eligibility so that you can preserve assets for the benefit of your loved ones. This takes careful and informed planning, because the rules are complex, and you are penalized if you give away assets within five years of submitting your application.
We have looked at some of the information that you need to digest when you are planning your estate, but there is much more to the process. The ideal way to proceed will depend upon the circumstances, and this is why personalized planning is extremely important.
If you would like to discuss your objectives with a licensed professional, our firm can help. We offer free consultations, and you can contact us through this page to schedule an appointment: Indianapolis IN Elder Law Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.