It can be difficult to ponder our own mortality. That is just our human nature. Nevertheless, the clock is ticking for each of us. This blog post highlights some critical issues we all need to address while there is still time to make proper financial and legal plans.
The blog post following this one will encourage you to consider lasting letters as a means to enrich relationships with your loved ones (family and friends). Since letter writing has become a lost art, the mere fact that you make the effort will be remarkable. ..especially for all you bloggers!
Facing Facts. ..It has been said that there are only two certainties in life: death and taxes. Nevertheless, even these two certainties differ markedly in their respective degrees of certainty. Whereas taxes can be minimized, deferred or even legally avoided (but not evaded, as discovered by infamous gangster Al Capone), death awaits us all and is often preceded by a period of incapacity. Whether one is a prince or a proper, both incapacity and death can arrive without warning.
Therefore, it is essential that you make appropriate estate plans now to take care of your loved ones and your hard-earned assets before it is too late. In this post we will highlight some critical issues to address while there is still time to plan.
Incapacity Planning. ..Do you read the newspaper, listen to the radio or watch television? If so, then you know that accidents and dread diseases are part of our everyday human experience. We all believe such tragedies will befall someone else. But what if you made the headlines or the lead story? If you were incapacitated today, who would make your important personal, health care and financial decisions tomorrow? Would it be someone you appoint through proper legal instruments or someone appointed for you by a court? The choice is yours.
Long-Term Care. ..The number one fear of many Americans, particularly retirees, is running out of money before they die. This is understandable, given the volatile economy and the specter of nursing home costs. Although you cannot control the economy, you can protect your hard-earned assets from the cost of round-the-clock care in long-term care facility.
In fact, you may insure the option to have your long-term care provided in your own home, but only if you obtain such coverage through proper long-term care insurance contract while you are insurable. If you wait too long, your options may be very limited. In a worst case scenario, you could end up depleting your assets and be forced to resort to Medicaid, a program designed for the indigent. The choice is yours.
End-Of-Life Decisions. ..For many people, the line between preserving life and dying naturally is quite fine. In the end, according to the United States Supreme Court, every person has the right to define that fine line for him or herself. Where is that line for you?
Only by executing proper legal instruments can you determine the course of your health care treatment as you approach that fine line. Depending on your unique personal circumstances, you should consult your loved ones and your legal, medical and spiritual advisors regarding your wishes. Otherwise, your failure to address this ultimate end-of-life issue in your estate plan can potentially lead to family strife and poisoned relationships for generations. Again, the choice is yours.
Testamentary Transfers. ..You will never see a hearse pulling a U-Haul trailer. In short, you cannot take your worldly possessions with you beyond this life. What will be your legacy for a lifetime of work? Will the inheritance you leave be used wisely or dissipated by your heirs through squandering, divorces, lawsuits or bankruptcies? Have you considered protecting the inheritance through long-term discretionary trusts?
Will your lifetime of work be lost unnecessarily to the IRS? Each taxpayer may exempt up to $42 million from federal estate taxation under current law.* However, with proper planning, a married couple may protect up to $4 million. Single persons whose estates exceed $2 million may need to employ advanced legal strategies to preserve their assets from loss to estate taxes.
Conclusion. ..The process of preparing your estate plan is an extremely personal experience. To a large extent, it is not something you do yourself. Rather, you do it for the people you love.
* The future of this tax exemption is uncertain, at best.
Note: Nothing in this blog is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [see IRS Circular 230.]