Hopefully, you are aware of the importance of having an estate plan in place. What is in your estate plan though? A well thought out and comprehensive estate plan can accomplish much more than just directing the distribution of your estate assets when you are gone. In fact, your estate plan can, and should, protect your assets and help them grow while you are alive, plan for the possibility of your own incapacity and the inevitability of your own death, and protect and provide for your loved ones when you are gone. Does your estate plan do all of that? If not, it may be time to review and revise your existing estate plan.
Estate Planning Should Be Comprehensive in Nature
When most people think of an “estate plan” they envision a Last Will and Testament or Trust. While your Will or Trust certainly can form the foundation for your estate plan, it should not be the entire estate plan. For your estate plan to achieve maximum effect it needs to be comprehensive in nature. This means that you will likely include a variety of different components, each of which is focused on a specific goal, and that all fit together to truly protect you, your assets, and your loved ones.
Components of a Comprehensive Estate Plan
Although every estate plan is as unique as the individual creating the plan, there are some common components found in the average estate plan, including:
- Incapacity planning – incapacity can strike anyone at any time. It does not only happen to the elderly. If you were to become incapacitated tomorrow as the result of a tragic accident or debilitating illness, who would control your assets? Who would make decisions for you? Who would take care of your minor children? An incapacity plan will answer all of these questions now so a court doesn’t need to decide the answers for you.
- Probate avoidance – probate is the legal process that follows a death and is used to ensure that the decedent’s assets are all accounted for, valued, and eventually transferred to the intended beneficiaries and/or heirs of the estate. Probate also ensures that creditors can file claims against the estate and taxes owed by the estate are paid. Probate, however, can be a very costly process, both in terms of time and money. Therefore, taking steps to avoid probate in your estate plan saves your loved ones both time and money.
- Asset protection – for your assets to help your loved ones, they must make it through to them safely. There are numerous threats to your assets of which you may not even be aware. To protect your assets from both known, and unknown, threats you should include asset protection strategies in your estate plan.
- Tax avoidance – federal gift and estate taxes can deplete your estate assets in no time if you have not planned ahead to minimize the impact of taxes on your estate.
- Retirement planning – retirement planning and estate planning should go hand in hand as one clearly impacts the other. Likewise, you should consult with both your financial planner and your estate planning attorney when creating your retirement plan.
- Medicaid planning – over half of all seniors eventually turn to Medicaid for help paying for the high cost of long-term care. Qualifying for Medicaid, however, can be tricky if you did not plan ahead because your assets could be at risk. In order to protect your assets and ensure that you will qualify for Medicaid if you need to down the road you should consider Medicaid planning in your overall estate plan.
You may not need all of these components in your comprehensive estate plan – or you may need additional components not mentioned above. The important thing to remember is to consult with your Illinois estate planning attorney to ensure that your estate plan is well thought out and covers all of your estate planning goals and needs.
For more information, please join us for one of our upcoming FREE seminars. If you have questions or concerns regarding estate planning, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.