When Carol called us, she said she was feeling a need for a sense of security and knew that establishing an estate plan would be a good way to help do that. Carol is not alone. We’ve gotten a lot of calls like that lately. People crave certainty due to the uncertainty in this coronavirus environment, and many have extra time on their hands these days to consider their estate planning options.
Control comes from understanding how powerful estate planning can be, and that is best understood in terms of defining what an estate plan must do and what an estate plan can do. As estate plan must transfer your assets to your intended beneficiaries, but it also can avoid conservatorship, avoid probate, protect assets from long term care, and protect assets from your children’s creditors.
Durable Powers of Attorney and Living Wills Avoid Conservatorship
If you become unable to manage your affairs and haven’t appointed someone to manage them for you, you could end up having a conservator appointed over you. Such person would be chosen by the court rather than by you, but you would pay for his or her services. A Durable Power of Attorney names an agent to manage your affairs and defines what the agent can and cannot do. A Living Will establishes your wishes regarding life support treatment if you are terminal or permanently unconscious. An Appointment of Health Care Representative names a representative to make health care decisions if you cannot do so. Together, these documents keep you in control.
Wills Can Protect Assets from Your Children’s Creditors
A properly drafted will specifies how your estate will be divided among your loved ones, appoints an executor to manage the process, and appoints a guardian for minor children. A will gets probated, which means the process receives court oversight.
In addition, your will can also establish a “testamentary trust” for one or more family members, which can protect assets from your children’s creditors. If you have a disabled or irresponsible family member, this is a must. Just as importantly for loved ones who currently are doing well, such a trust can also protect assets in the event of a divorce, lawsuit, medical problem, or financial difficulty. The trust would appoint a loved one trustee, who could distribute funds for beneficial purposes but also withhold funds from creditors.
Revocable Living Trusts Avoid Probate
Assets which you own solely and which do not name beneficiaries must be probated upon your death. The same is true for a couple upon the second spouse’s death. Your home, vehicles and most bank accounts fall into this category. Probate, of course, takes close to a year, involves many steps and court filings, and is expensive. A Revocable Living Trust passes such assets to your loved ones outside probate, and therefore saves your loved ones a great deal of time and money, and distributes your estate much faster. You can also include a trust for one or more of your loved ones, to protect assets from their creditors over their lifetimes.
Irrevocable Trusts (Asset Protection Trusts) Protect Assets from Medicaid
An Irrevocable Trust, or Medicaid Asset Protection Trust, protects assets from Medicaid because it’s irrevocable. But, you still have control, because you direct what goes in and what comes out. It also is much safer for you than putting assets in your children’s names, lest they lose your assets through their own divorce, lawsuit, medical problem, financial problem, etc. It preserves the all-important step-up in cost bases upon death so your children don’t pay capital gains tax on your lifetime gain on trust assets. It also avoids probate upon your death, just like the Revocable Living Trust discussed above.
Estate Planning Attorneys in Danbury, CT
If you want a Will, Power of Attorney, Living Will, Revocable Living Trust or Irrevocable Medicaid Asset Protection Trust, the laws are complicated and change often with no notice to you. Documents available online may be “valid” in all 50 states, but they are not tailored based on detailed knowledge of Connecticut-specific law on wills, trusts, probate and Medicaid, and a detailed understanding of your circumstances, assets and preferences. If you want documents that accomplish your goals and protect you and your loved ones, consult with a Connecticut attorney who is widely recognized as both an Estate Planning attorney and an Elder Law attorney. Then you will feel secure and in control!
We are available for consultations and documents signings both remotely and in-person with COVID precautions.