Protecting Your Assets from the Cost of Long Term Care – Part 2: Are Wills the Solution?
Although a will does not protect your assets from the cost of long term care, many people think it does. Let’s look at what a will can do and what it cannot do for you.
There are pros and cons to consider when comprehending the practicality of wills. The benefits include being able to designate beneficiaries of personal belongings and cash assets, naming your executor and taking care of decisions that will affect the future of minor or disabled children. On the other hand, a will does not provide benefits during your lifetime, it will require probate, distributions could be prolonged upon death, and it DOES NOT protect assets from long term care expenses. When you want to make decisions for long term care and designate how your estate should be carried out during life, a will is not the solution. You will need an Estate Plan that works together in protecting assets.
An Estate Plan is simply your set of instructions that identifies what will happen to your personal property, your financial assets and any minor or disabled children. Below are reasons to establish an estate plan:
• Restrict access to large sums of money
• Plan ahead for your disability
• Avoid probate and protect your privacy
• Provide for a special needs beneficiary
• Name a guardian for a minor child
• Evaluate spousal issues such as divorce, non-citizen
• Address business issues
• Identify community property and plan accordingly
Set your goals to ensure that you control your assets during your lifetime. Thinking ahead will provide structure for the surviving spouse during his/her lifetime while protecting any inheritance for the children (whether they are minors or adults). A comprehensive plan, which might include the documents listed below, provides some asset protection from creditors for beneficiaries and seeks to maximize tax savings.
• Last Will and Testament
• Revocable Living Trust
• Power of Attorney for Health Care
• Power of Attorney for Property
• Irrevocable Trust
In Illinois, the only way to avoid probate is to have assets that are valued at no more than $100,000 at the time of death. Joint tenancy and beneficiary designation assets do not count toward the $100,000 threshold. If you should have more than $100,000, then those assets should be placed or “funded” into your Trust. The benefits to having a trust are to avoid probate, tax savings, creditor protection, privacy, and durability.
While you read this you may think you don’t have an “estate” but if you have any combination of bank accounts, investments, real estate, business interests, life insurance policies, personal property, jewelry and collections of any sort, you will want to protect these things that really do matter. The cost of long term care without a plan could cost you and your loved ones. Simply put, a will isn’t enough!