What is Estate Planning?
Planning for the Future
Most people think that estate planning is just planning for when you die. While that is an important part of estate planning, there is a lot more to it. Some of the most difficult situations arise when a person becomes incapacitated. This could happen as a result of a car accident, a sudden illness, or the onset of dementia. Planning on how to pay for a skilled nursing home, for example, is something that people usually don’t think about until someone in the family suddenly needs that level of care. We do what we call “crisis planning” when a family is facing that type of crisis and we can do a lot of good for that family. But we can do even more to help the family if we meet with them well before someone needs to go into a nursing home.
Most people don’t realize that many family assets can be protected, even if the person is going to be covered by Medicaid. The traditional way to qualify for Medicaid is to continue to pay the nursing home until all of your funds are gone. A better way is to plan ahead to protect most of your assets and qualify for Medicaid sooner. We have more information on this topic on our website under Long-Term Care & Medicaid Planning.
Are People Surprised When They Realize How Many Assets They Possess?
Yes, most people don’t take account of their entire estate until we work with them to understand what they need to protect. They are most surprised when we show them that many of the assets that they assumed were completely protected are actually subject to certain creditors, such as recovery for Medicaid benefits paid by the state.
Why Do People Need an Estate Plan?
Actually, everyone in Texas has an estate plan. It is provided by the State of Texas. If you do not provide your own estate plan, then the courts will impose an estate plan on you, and you will be paying the court system to do so. Providing your own estate plan is the only way to control the costs incurred with the court system, who inherits from you, and who takes care of your person and your money if you are incapacitated.
What Happens If Someone Dies Without an Estate Plan or a Will?
In Texas, if a person dies without a will, then the state decides who gets what. Generally, your estate is split between your spouse and your children, with your spouse inheriting all of your community property. If you have children from a prior marriage, your current spouse will only inherit half of your community property. We have more information on this in our FAQS on Basic Estate Planning.
Why Do People Generally Avoid Making an Estate Plan?
I think that people put off getting an estate plan until something happens in the family that causes them to really think about it. Many times, that event is someone very close to them and they now gain the first-hand experience to see how much easier it could have been if that person had an estate plan in place. Most of our clients who come to us with crisis planning, such as a parent entering a nursing home, usually end up preparing an estate plan for themselves, so their own children never have to go through what they went through with their own parents.
How Often Should People Give Their Estate Plan a “Check-Up?”
We talk about “stages of planning.” There are different times in your life when you may need to change your estate plan. Life-changing events, like becoming independent from your parents, getting married, having children, or getting divorced are good indicators that you should update your estate plan. Parents of adult children need to adjust their estate plans. Those between the ages of 60 and 70 1/2 should review their entire estate plan because 70 1/2 is a critical age for certain types of tax-deferred compensation plans. Seniors over 70 may want to adjust their estate plan to provide more protection against, for example, the costs of possible long term care that can seriously affect the value of their estate
What are Common Reasons or Life Events that Prompt People to Revise Their Estate Plans?
Any life-changing event should prompt people to reevaluate their estate plans. Getting married and having children are probably the top two reasons people get their first estate plan. Getting divorced is another important time to make sure your estate plan matches your current wishes. Another life event when clients want to revise their own estate plan is when a family member has become incapacitated or has passed away. If the family is having to deal with the problems associated with an estate plan that left several questions open for the family to resolve, those family members want to make sure their own estate plan is in good order.
For more information on Estate Planning In Texas, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (512) 288-3200 today.