Proper estate planning: wills and trusts
Creating a will ensures that all your wishes are carried out after your death. A will is the most common way for you to distribute your assets, like your home, to an heir. However, there are a number of other vehicles through which you can leave a home to an heir. Such methods can be used to help reduce costs and delays associated with the transfer of your assets upon your demise. If the potential heirs of a home get along, and the individual who is selected to be the executor of the estate resides in the state in which the home is located, then a will would be appropriate.
However, if several heirs in various financial brackets, are involved, then disputes may arise over whether to keep or sell an inherited home. In such instances, it is highly recommended that you establish a trust. The creation of a trust can help lower the costs of probate as well as legal fees, both of which are expenses of leaving assets through a will. The named beneficiaries of a trust are not required to go through probate. According to a survey conducted by Wealth Counsel, an education and software firm for trust and estate attorneys, approximately 53 percent of people who establish a trust did so in an attempt to avoid family disagreements.
In order to set up a trust, you will need an attorney, and you will be required to choose a trustee who possesses strong organizational and financial abilities. That individual should be willing and able to serve in the capacity of trustee. There are two types of trusts: irrevocable and revocable trusts. An irrevocable trust is one in which you, the grantor, relinquish the right to cancel the trust. A revocable trust permits you to appoint yourself as trustee, with the responsibility going to someone else upon your death.
If you decide to transfer your property to your children during your lifetime, you may realize tax and healthcare savings. Gifting a property can enable you to qualify for Medicaid, which can offer long-term health care and nursing care. Usually, in order to be eligible for Medicaid, you are required to comply with specific income limitations for at least five years prior to your death, and transfer property via an irrevocable Medicaid Asset Protection Trust.
Medicaid planning may require you to make gifts to family members more than five years before applying for Medicaid. Eligibility may also call for the purchase of an annuity, the creation of trusts and a specific kind of long-term care insurance that can safeguard some assets from the Medicaid calculation after you have filed a claim.
If you are considering leaving your home to your heirs during your lifetime, call the McDevitt Law Firm.