Estate planning is a legal process that involves organizing and managing your assets and outlining how they will be distributed upon your death. Common estate planning tools include wills, trusts, powers of attorney, and healthcare directives.
Effective estate planning ensures your wishes are honored after your death or in the event of your incapacitation. It helps reduce confusion, prevent family disputes, and minimize certain taxes and legal costs.
A Texas estate planning lawyer can assist you with your elder law and estate planning needs. Our attorneys have over 120 years of combined experience. Contact us today to discuss ways to safeguard your assets.
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Powers of Attorney
Powers of attorney (POA) allow you to appoint one or several people to make decisions on your behalf if you are incapacitated or otherwise unable to act for yourself. Different types of power of attorney include:
- Financial power of attorney allows another person to handle your banking, bill paying, and other financial matters when you are unable to do so yourself.
- Medical power of attorney is where another person can make medical decisions and perform duties such as signing your admissions into skilled-nursing facilities when you are unable to do so.
You can cancel or alter your power of attorney documents at any time, as long as you are mentally competent. Powers of attorney usually end when you pass away.
For a free legal consultation, call (800) 562-9830
Advance Healthcare Directives
Estate planning often includes drafting an advance medical directive, also known as a living will. These are legal documents that outline your healthcare wishes if you become mentally incapacitated or unable to communicate.
They typically specify your preferences regarding life-sustaining treatments, such as resuscitation, ventilators, feeding tubes, or other medical interventions in emergencies or end-of-life situations.
An advance directive is often included as part of a medical power of attorney document, but your attorney can also draft it as a stand-alone document.
Wills
A will is a legal document that outlines how you want your assets and property distributed after your death. It can name beneficiaries to inherit money or property and designate a guardian for minor children.
When creating a will, you will choose an executor who is responsible for carrying out your instructions, paying debts, and managing your estate through probate. Your will does not cover assets with designated beneficiaries, such as life insurance.
Drafting a will can help prevent legal disputes among family members and ensure your wishes are respected. A will can be updated or revoked at any time as long as you are mentally competent.
Trusts
A trust is a legal arrangement where you, the grantor, place assets under the control of another person or entity to manage for the benefit of a third party called the beneficiary. Trusts can hold property, money, investments, and other assets. There are two main types of trusts:
- Revocable Trust: Can be changed or canceled during your lifetime. This type of trust helps avoid probate and ensures a smoother transfer of assets after your death.
- Irrevocable Trust: Cannot be changed after creation and offers stronger asset protection and possible tax advantages.
Unlike a will, a trust can take effect during your lifetime. Establishing a trust is an effective strategy for estate planning, as it helps you control how and when your assets are distributed.
Life Estate Deeds
Life estate deeds allow you to transfer ownership of your home to another person while retaining the right to live in the house for the rest of your life. This arrangement is often used in estate planning to avoid probate and preserve eligibility for Medicaid benefits.
The deed specifies your rights and responsibilities as the life tenant, such as maintaining the property and paying taxes or insurance. The new owner, called the remainderman, becomes the legal owner upon your death.
Life estate deeds can protect your home from Medicaid estate recovery, but the transfer must occur at least five years before applying for Medicaid to avoid penalty periods. Once created, a life estate deed is difficult to revoke without the remainderman’s consent.
Long Term Care Planning
Many estate planning tools can assist with long term care planning, particularly in protecting assets from Medicaid recovery. Medicaid is a joint federal and state program that provides healthcare coverage for low-income individuals, including seniors and those with disabilities.
If you require a long-term stay in a skilled nursing facility, you may need to apply for Medicaid to help cover your monthly care costs. However, qualifying often requires spending down personal assets. After your death, Medicaid may try to recover costs from your estate, including your home.
The strategic use of tools like life-estate deeds, wills, and trusts can help you transfer important assets such as a family home while remaining compliant with Medicaid regulations.
Get Help With Estate Planning
Estate planning is a way to organize your legal and financial affairs. Through powers of attorney, wills, estate deeds, and other tools, you can be sure your assets are handled properly, even when you are no longer able to make decisions.
It is smart to begin planning early, around retirement age. Unfortunately, many people put it off and end up in difficult situations. A skilled elder law attorney can help you understand your needs and plan for the future.
Our team at Marc Whitehead & Associates has helped people with their elder law and estate planning needs since 1992. Contact us today to discuss your options.