Retirement can be an exciting time in your life. You will have more time to pursue the activities you enjoy. Retirement may also come with challenges.
Estate planning can help you prepare for those challenges, protect your wealth, and plan your legacy.
Importance of a Power of Attorney and Living Will
Having a power of attorney and a living will is essential to make sure that you control what happens to your health in case you become incapacitated. Your spouse and children will have no ability to make decisions about your medical care unless you have signed the proper paperwork expressing your wishes to allow them to do so in advance.
- Power of Attorney – This estate planning tool allows you to assign an agent to make medical or financial decisions for you if you become incapacitated.
- Living Will – A living will is a document that expresses your future wishes regarding end-of-life medical treatment, such as whether or not you want to be resuscitated if your heart stops or if you want to remain on life support if you would be unable to survive without it.
- Personal Care Plan – A personal care plan describes your wishes and preferences with respect to the care you may receive from friends and family at home or from professional caregivers in an assisted living facility. In a personal care plan, you describe your likes and dislikes when it comes to food, beverages, radio and television programming, hobbies and other recreational activities, spiritual preferences, and more.
Planning for Long-Term Care
At the age of retirement, many people do not like to think about the possibility that they or their spouse may need long-term care. The possibility still exists, and planning for it can make the transition go much more smoothly than if you need to find the right facility and figure out how to pay for it simultaneously.
Government benefits such as Medicaid and Veteran's Aid and Attendance can help pay for some or all of the costs of long-term care. The application process can be complex and may take months to process. This is not something you want to do on your own. And you are much more likely to qualify if you plan many years in advance.
Don't Wait to Plan for Long-term Care
A denial of benefits could lead to having to start all over and not being covered for months while a new application is being processed. Make sure that you complete the paperwork correctly the first time by consulting with an experienced estate planning attorney.
If you need to apply for government benefits on behalf of a loved one, keep in mind that there are restrictions on income and assets. For Medicaid applicants, there is a 5-year look back period (2.5 years in California) for gifts and other uncompensated asset transfers. Asset transfers within that period can delay the time the date that benefits start covering the costs of long-term care.
Careful estate planning strategies can help you protect your assets. Planning ahead well before long-term care is needed can save you from having to spend down assets to qualify for benefits if you need to apply unexpectedly.
Protecting Wealth with Trusts
There are many types of trusts that you can use to protect your wealth that will automatically transfer your assets to beneficiaries upon your death. Many people decide to distribute assets using a trust instead of a will so that their heirs can avoid the time and expense of going to probate court.
Trusts may also come with tax benefits for the trust grantor and their heirs. The type of trust that you need to establish can be tailored to your unique situation.