Thinking about the future is something that we constantly do, but most people do it in a “What should we do for fun this weekend”, “Where should we go on vacation this summer”, or “What is my 5 year career plan” kind of sense. (On the other hand, some of us are too busy to even think ahead to “What’s for dinner”!) Thinking too far ahead can be stressful, particularly when it comes to thinking all the way to the end of our lives and to what will happen to our families and our possessions when we pass away. It’s not fun to think about that, and it can be highly emotional; however, the truth is that tomorrow is never guaranteed for any of us, no matter how young or healthy we are or how many dreams we have for what our lives should look like.
That’s why it is incredibly important to start planning for the future today, while you still have time. If you pass away unexpectedly or become incapacitated unexpectedly, and you don’t have certain measures in place, you could leave your loved ones in an incredibly difficult position both legally and financially. Your estate – everything you own – may have to go through a Utah court process known as probate before your assets can be officially transferred to your family, and probate is notorious for being time-consuming and expensive. Outside of just death and incapacitation, your estate could be severely depleted or lost entirely to unexpected events like illnesses, nursing home costs, divorce, or lawsuits.
As experienced trust, estate, and tax lawyers, we are unfortunately all too familiar with situations where people are trying to pick up the pieces from messy, complex circumstances that were caused by family members who didn’t plan ahead. We want to help you avoid that being your legacy.
Here are 5 things that every person who owns property or has family should do to plan for the future!
1 – Create a comprehensive estate plan
Making a will is a good first step, but a will alone isn’t enough to prevent probate from occurring, and it also isn’t enough to prepare for all of the negative possibilities that you may encounter in life. A will is a good way to make your wishes known for who should inherit your assets after you die. However, it only goes into effect upon your death.
You need a comprehensive estate plan in place that includes a will, a trust (a fiduciary entity that manages/shields assets and that goes into effect during your lifetime), a power of attorney (which gives someone you trust the power to make medical, financial, and legal decisions on your behalf if you can’t speak for yourself), an advance directive (that spells out your wishes for medical care in the event of incapacitation), and other documents.
An estate plan keeps all of these sensitive, personal documents in the same place so they are easy to find and use when needed.
2 – Protect your assets with a comprehensive asset protection strategy
As mentioned above, death and incapacitation aren’t the only things that can befall your assets. If you are at risk for liability – particularly if you work in a profession that is prone to litigation (such as being a doctor, a contractor, a real estate developer, etc.), or if you have good earning potential, or if you have a complex blended family, or if you have multiple investment properties, or if you have a large inheritance left behind by a deceased family member – you need to plan for the future by ensuring that your wealth is well-guarded from the possibility of potential lawsuits or other disasters.
Asset protection always starts with having the best possible insurance policies for every area; these serve as the first “line of defense”, but are not the end goal of asset protection! Depending on your unique circumstances and risk level, you may also need to set up some type of trust or multiple types of trusts (such as domestic asset protection trusts, irrevocable life insurance trusts, intentionally defective grantor trusts, and others), and/or form an entity (such as an LLC, C corp, S corp, or General Partnership) for the sole purpose of securing your money from other people or entities who would seek to take it from you.
3 – Designate beneficiaries on all of your accounts and policies
Did you know that beneficiary designations you make on your accounts and policies – such as your IRA or 401k retirement accounts, your life insurance policy, your bank accounts, your vehicle titles, and all other personal accounts and policies – will supersede/override any designations you set forth in your will? Having beneficiary designations on accounts can usually bypass probate, also. For both of those reasons, it is wise to make sure that your accounts all have beneficiary designations that are up-to-date and that match your will, so that there is no legal confusion or disruption later on.
4 – Preserve your assets from the costs of nursing home care
Long-term care costs can be much more expensive than most people realize – an average of $3,400 per month in the state of Utah. Medicare and most private health insurance plans do not cover these costs. For seniors who are on low or fixed incomes, having to come up with this amount out of pocket can be impossible, which is why Medicaid planning is so important. Medicaid is government financial aid that can cover these costs, but it is only available to those with low resource limits, and it considers any gifts made within a 5 year “look back” period to count.
This means that to plan for the future and find peace of mind, you will have to strategically place your assets in certain types of trusts, make caregiver arrangements, and make child or spousal transfers/gifts in order to guarantee that your life savings won’t be lost to an assisted living facility and that you won’t become a burden on your family.
5 – Work with a local law firm that can ensure you have the right paperwork
Making the right preparations can be complicated and confusing. You may not know what you need, and any mistakes can result in your preparations being invalidated or your wishes not being honored. It can take hours and hours of research in order to even begin to understand how the process works on a legal level, but the good news is that you don’t have to plan for the future on your own! There are many law firms that deal with one or more of the above areas and that can guide you every step of the way to total protection of everything and everyone that matters most to you.
At Proven Law, we do it all, and we aim to be the very best at all matters related to planning for the future. We have over 95 years of combined experience on our legal team, and we are peer rated with the highest level of professional excellence in Utah. We can explain your options, provide you with the education and support you need to make empowered decisions, and personalize everything we do for you to your unique life. Call us today to learn more and schedule a free 30 minute consultation!