Estate Planning is not just for millionaires and not just for the elderly. Everyone should have an estate plan, which can include asset protection planning, advance health care decisions planning and tax planning.
An estate plan typically consists of the so-called Advance Directives, namely a Health Care Proxy, a Living Will and a Power of Attorney. The Power of Attorney is a legal document wherein you appoint an agent to handle your financial affairs should you become unable to do so yourself. The Health Care Proxy is a document wherein you appoint someone to make medical decisions on your behalf and to communicate your health care wishes to doctors should you become incapacitated or unable to make decisions. The Living Will is a document wherein you express your wishes regarding end-of-life care, such as whether you want life-sustaining treatment including artificial nutrition and hydration. None of these documents take away any of your control or ability to make these decisions for yourself as long as you are able.
An estate plan will also include a Last Will and Testament. A Will is a legal document wherein you set forth how your assets are to be distributed upon your death, including how much, to whom and when (such as at a certain age). If you pass away without a Will, the New York State laws of intestacy will determine how your estate will be distributed, which is often not what you would have chosen. Younger couples will want to name a guardian of minor children in their Wills. Older individuals may want to take steps to ensure inheritances remain along blood lines (not to the children’s spouses) and establish trusts for minor grandchildren.
If you are retirement age or older, you should consider taking steps to protect assets, such as by setting up an irrevocable trust. Once five years pass, the assets in the trust are protected with respect to Medicaid so that you will not be obligated to spend those assets down on the cost of your care. Those assets can then pass to your heirs and beneficiaries.
Estate Planning is not one-size-fits-all. Planning will be different depending on your age, your assets and your family composition. Once you have a plan in place, you will want to re-visit it every couple of years or sooner if there are births, deaths, marriages, divorces, significant changes in assets or changes in health care needs.
By establishing an estate plan, you keep all current and future decision making power in your own hands, where it belongs.