People often like to prioritize, especially when they are putting certain things on the back burner. This can enter the realm of estate planning. There are those who want to execute only the most important estate planning document, and they reason that they will look into the details later on.
In reality, there is no one document that is inherently more important than any other. Plus, an estate planning document that could be very important for one person may be totally unnecessary for the next.
For example, there are those who are faced with estate tax exposure. Granted, this is a limited percentage of the population, because the exclusion is $5.43 million. You would not be exposed if your estate is valued at less than this amount.
At the same time, this tax can take a heavy toll on high net worth individuals, because it carries a 40 percent maximum rate.
If you are exposed to the estate tax, you would want to use estate planning documents that provide you with estate tax efficiency. Various different types of irrevocable trusts are used to accomplish this aim, and a family limited partnership could also be part of the plan.
These estate planning documents would not be useful for other people who are not exposed to the estate tax.
Special Needs Planning
Many people with disabilities are enrolled in need-based government benefit programs like Medicaid and Supplemental Security Income. If you left a family member with a disability a direct inheritance through the terms of a last will, benefit eligibility could be lost, because the inheritor would experience an improvement in his or her financial status.
A supplemental needs trust can be used to account for this type of situation. This type of trust would be very important for some families, but it would not be appropriate for others.
Advance Directives for Health Care
The ideal asset transfer vehicle is going to vary depending on the circumstances. However, regardless of your situation, you should have estate planning documents in place that are called advance directives for health care.
A living will is one of these directives. You utilize a living will to state your preferences regarding the use of life-sustaining measures like feeding tubes, artificial hydration, and mechanical respiration.
Another advance directive that is widely utilized is the durable power of attorney for health care or health care proxy. This document is used to name someone to make medical decisions on your behalf in the event of your incapacitation.
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One-on-one attention is the key to a properly constructed estate plan. Your plan should be custom-crafted to suit your needs, and the needs of your family.
If you would like to discuss things with a licensed professional, send us a message through our contact page to set up a free consultation: Southampton PA Estate Planning Attorneys.