Probate is the process by which your assets are distributed to your heirs after your death. Only assets in your own name, with no joint owners or named beneficiaries, pass through probate. Joint and pay on death bank and brokerage accounts pass directly to the joint owner or the named beneficiary by operation of law at your death. The same is true for life insurance policies with named beneficiaries and real estate owned jointly with another with rights of survivorship. A recent change in the law now allows you to name a beneficiary on real estate owned in your name alone through a revocable, transfer on death deed.
Using living trusts to avoid probate
For several years now people have been utilizing revocable living trusts to avoid probate. Basically, all of the assets currently in your name, including bank, brokerage, and retirement accounts, real estate, vehicles, jewelry, and household furnishings are placed in a trust. At your death, the successor trustee distributes the assets to the beneficiaries named in the trust without Court intervention or the probate process, just as if all of your assets were in a single pay on death account. While a revocable living trust is more costly than a Will, cost of administration of your assets after death is substantially less because of the avoidance of the Court probate process.
Revocable living trusts are not the best solution for everyone. In many instances, a simple Will, along with traditional pay on death instruments described above, will achieve the same result at a reduced cost.
Healthcare directives and powers of attorney
Of course, don’t forget the need for advance care directives during life, such as General Durable Financial Power of Attorney, General Durable Heath Care Power of Attorney, and a Living Will.
A General Durable Power of Attorney allows another to handle all of your financial affairs. It can take effect immediately or at the time that you are declared incompetent or unable to handle your financial affairs by your doctor. This can avoid the need for costly and embarrassing Court proceedings to establish a guardianship.
A General Durable Health Care Power of Attorney appoints and empowers another to make health care decisions on your behalf should you be unconscious or incompetent to do so. Again, this can avoid the need for costly and embarrassing Court proceedings to establish a guardianship.
Finally, a Living Will advises your health care professionals that should your condition become terminal and incurable, you do not want extraordinary life sustaining machines and measures. This prevents prolonged suffering and rapid exhaustion of assets intended for your loved ones.
Nursing home care and Medicaid planning
Assets can also be quickly depleted in an extended nursing home stay. Should you or a loved one face a permanent nursing home stay, it is important to contact us immediately. Jon Haggerty’s practice focuses on Medicaid planning. He can instruct you about how to exempt assets to the well spouse when the ill spouse goes to the nursing home. Without legal assistance, the well spouse can be left penniless paying for the ill spouse’s nursing home care. Once the ill spouse passes and the well spouse later needs nursing home care, it is again important to seek legal assistance to legally transfer a portion of the assets to the children so a lifetime of earnings are not spent on nursing home care.
In some instances, long term care insurance is a better option and we work with professional certified financial planners that can assist with such a purchase as part of an estate plan.
Estate planning is not only for the elderly. Young couples should have Wills naming guardians and trustees for their children in the event of catastrophe.
How we help clients protect their future
At HAGGERTY & HAGGERTY, we know the ins and outs of estate and Medicaid planning, probate and trust administration, and how to navigate through these legal issues quickly and cost efficiently. Please call us for a free initial telephone consultation to discuss how we can help. Please also see our related posts on the probate process and Will and trust administration.