There are legal ramifications that most aging adults may face. Although it can feel daunting, it is important to get professional advisors and close family members involved to decide how you want your assets organized after death. But what does estate planning mean and how do you get started?
Estate planning is the process of organizing property, personal matters, and tax planning after death. This includes creating a will, and the process usually includes a professional advisor. This can be a lawyer, financial planner, banker, or accountant.
To get more details on estate planning, important vocabulary to know, and ways Senior Solutions can help you, continue reading below!
What Do You Need To Know About An Estate Plan?
Even if you don’t have a lot of wealth, investments, or assets, anything you own adds to your estate. An Estate is made up of the things you own that contribute to your wealth. This can be a bank account, a house, a car, or an investment.
What you owe also matters, even after death. An Estate is also connected to your Net Worth. Net Worth means anything you own that has value minus any debt. If you have any debt after death, whoever inherits your estate will be responsible to pay them off.
An Estate Plan addresses the elimination of debt after death and the distribution of a person’s wealth after their death or disability. The documents recommended for an effective Estate Plan are:
- Living Will
- Power of Attorney
What Is The Difference Between A Will & Living Will?
A Will is an extremely important part of the Estate Planning process! If you die without a Will, which is called dying Intestate, your state laws will determine how to distribute your property. These laws vary depending on your state, but typically, your spouse, children, or any remaining family members will inherit your Estate and debts if you have them. With a Will you can determine how you want your Net Worth given. It is important to get this done early in case of cognitive decline.
A Living Will gives your preferences for medical care if you are terminally ill, seriously injured, or cognitively impaired. This way, your wishes can be respected when you are in a clear state of mind. Because unexpected injuries can happen at any age, having a Living Will before turning 65 may be wise.
Some of the things a Living Will decides are:
- Cardiopulmonary resuscitation: Would you like the doctor to try to restart your heart if it stops beating?
- Medical ventilation: Would you like the medical ventilator to take over your breathing if you cannot breathe on your own? When and how long do you want this for?
- Tube feeding: If, when, and how long would you like to be tube fed if you cannot be fed otherwise?
- Dialysis: Would you like waste and fluid management if your kidneys no longer function? When and how long would you like this for?
- Body, Organ, and Tissue donation: Would you like any part of your body donated for medical or educational purposes?
- Comfort care: How much intervention would you like to be kept comfortable and manage possible pain?
Remember, creating a Living Will can ensure that all of your wishes are properly respected in the case of a medical emergency. Even though this conversation may feel uncomfortable, remember that you are in control of your Estate!
Trusts, Power Of Attorney & Guardianship
To make sure your wishes are properly respected, there are three more things to plan for.
First, a Trust is a legal agreement that allows a third party, or Trustee, to care for your assets for Beneficiaries. A Beneficiary is someone that receives the benefits of your estate. To explain it simply, a Trust allows a third-party professional to care for your wealth on behalf of those who will get your wealth.
Next, a Power Of Attorney gives one or more people the power to act as your agent in case you go through a mental or physical disability. This person can be anyone that you designate. Your Power Of Attorney can be revoked at any time, but most states need a written notice of revocation.
Finally, a Guardian is someone who is responsible for your estate or your children. They can be the same or different people. Choosing a Guardian gives you power over who takes care of your property or children in the case of death.
Can I Create an Estate Plan for My Senior Relative?
You can only help create an Estate Plan or assign Power Of Attorney with a living relative. Otherwise, your state laws may take control of your relative’s estate. It may be a challenging conversation, but it’s a necessary one.
Some tips to keep in mind while estate planning are:
- Incorporate other relatives in the conversation. You do not need to do this alone! Having support from your siblings or other relatives in an open conversation can help your aging relative feel less pressured.
- Keep a record of your conversation, whether it’s a video recording or it is written down. Estate planning is an ongoing process that can take some time to organize.
- Be empathetic. This is a transitional time of life and a tough topic for everyone involved. It’s okay to be kind to yourself and others in this conversation!
What If My Relative Has Unpaid Debts?
If your senior relative has passed away and you realize they have unpaid debts, know that you are not alone! If you don’t believe the debt is yours to care for, communicate with your debt collector in writing and keep a record of all conversations. This can help you make sure that you are not dealing with a scammer.
According to the law, if someone dies with unpaid debts, it should be paid for by their Estate before it needs to be paid by someone else. If you were connected to your relative’s bank account or were a co-signer, you may have to pay off their debt.
Contact Senior Solutions
If you have any questions please reach out to us. Senior Solutions is an East Idaho company that connects seniors and their families to resources on their aging journey.