When we post on this blog, we usually share information about what you should do when you are planning your estate. On this day, we are going to go in a different direction that is just as useful if not more. We are going to look at five common estate planning mistakes that should definitely be avoided.
Intestacy
Let’s face it, passing away is at the very bottom of everyone’s to-do list. For many, it is a subject to be avoided, and this can yield negative consequences. If you keep procrastinating when it comes to estate planning, or if you make a conscious decision to let the chips falls as they may, people that you love may pay the price.
The condition of intestacy would exist if you die without any estate planning documents in place. Under these circumstances, the court would step in to appoint a personal representative to act as your estate administrator. Final debts would be paid during the process, and ultimately, the remainder would be distributed according to the intestate succession laws of the state of Vermont.
There are those that are not too concerned about intestacy, because they assume that the assets would naturally be distributed in accordance with their wishes. In reality, this may not be the case.
Whether you would be okay with these distributions or not, the point is that you should take control of your own legacy through the execution of legally binding estate planning documents of some kind.
Immediately Settling for a Last Will
Many people assume that a last will is the right estate planning document for anyone that is not extremely wealthy, but this is not always true. There are other options that can be more beneficial for a wide range of individuals. You should discuss them with a licensed estate planning attorney before you make any assumptions.
Overlooking Incapacity
It is not a pleasant thing to think about, but a very significant percentage of elders become unable to make sound decisions at some point in time. While it is not the only cause of incapacity, Alzheimer’s disease strikes about 40 percent of individuals that are 85 years of age and older.
If you do nothing to prepare for this eventuality, the court could appoint a guardian to act for you, and you would become a ward of the state. You can be proactive about this possibility and select your own representatives through the execution of legally binding documents called durable powers of attorney.
Failure to Address Long-Term Care Expenses
Most elders will need long-term care eventually, and many will reside in nursing homes. In our area, you can expect to pay $125,000 or more for a yearlong residence in a nursing home. Medicare does not cover this type of assistance, and your family may absorb two rounds of nursing home costs if you are married.
If you are not overly concerned because you feel as though it is unlikely that you will ever need help with her activities of daily living, you should understand the facts. About 35 percent of senior citizens ultimately reside in nursing homes, and seven out of every 10 seniors will need some form of living assistance.
For many, the solution is Medicaid eligibility. This jointly administered federal/state government program will pay for long-term care, but it is need-based. There is a $2000 limit on countable assets in Vermont, but some items that you own are not counted.
With the proper planning, you can position your assets wisely with future Medicaid eligibility in mind.
Never Seeking Legal Counsel
The worst estate planning mistake that can be made is a failure to have a discussion with a legal professional. If you have not done so, now is the time for action. Take the first step by attending one of our free webinars, and receive a free initial consultation with one of our attorneys. To register or learn more about our upcoming webinars click here.
- Tony Hsieh of Zappos Fame Died Without a Will - January 13, 2021
- New Year’s Resolution: End the Estate Planning Procrastination - January 6, 2021
- IRS Releases 2021 Estate Tax Exclusion Adjustment - January 4, 2021
