During the holidays, families gather together and celebrate the season with their traditions. Many anticipate seeing the new baby, eating Aunt Penny’s red and green M&M cookies, going to candlelight church service, having a special family game night or just being still in front of a fireplace together. Families are not necessarily blood relatives but those chosen as our supporters and friends. Often the conversation turns to New Year’s resolutions. Resolutions heard often or seen on social media are exercising more, eating less, eating healthy, curbing bad habits, spending less money, or checking in with family more. I often hear “I have got to come see you at the beginning of the year and get my legal affairs in order.”
Does it matter whether your legal affairs are in order? Yes. The unexpected can occur at any time. If you have not planned ahead and signed a Power of Attorney designating someone (an agent) to act for you if you cannot, then you are creating unnecessary stress and expense for your family or loved ones during an already upsetting crisis. An unanticipated death can wreak emotional and financial havoc on a family. For example, if a person dies without a will or the proper beneficiary designations, assets may not go to the intended person or the tax consequences of ineffective planning may result in significant financial loss.
Estate planning should be done by anyone 18 years of age or older. An 18-year-old may have fewer assets than a 68-year-old, but both need to choose an agent to speak for them and handle their financial and health care affairs when they cannot. Although each person’s situation and estate planning documents are different, there are three documents that every adult should have: a Will, a Financial Power of Attorney and a Health Care Power of Attorney. Even if you prepared these documents in the past, there is a good chance they no longer represent your wishes. And, as aging occurs, additional considerations come into play such as payment for nursing home care in the future.
Seventy percent of seniors will require assistance with personal care, either at home or in a nursing home facility. On average, that care will be required for three years. Twenty percent of seniors will need care for longer than five years. The average cost of nursing home care in Pennsylvania exceeds $110,000.00 per year. Out-of-pocket payment of that bill can have a devastating effect on the family members that are at home. In addition to the basic estate planning documents, there are many forms of long-term care insurance products and irrevocable trusts that can protect assets from the cost of long-term care. Individual goals, timing and family dynamics are a few of the considerations.
Resolve to protect your family and get your estate planning in order in 2017.