Everyone agrees that our country is in turmoil. We all have high hopes for our new administration in Washington and will undoubtedly see significant change in estate taxes, long term Medi-Cal and Medicaid benefits, social security, and Medicare benefits. Our current laws and laws to be enacted in the years to come will have a direct impact on the need for proper estate planning. Everyone should plan for several possibilities, including: 1) long-term care and the possible need for Medi-Cal/Medicaid in the event of a serious illness or injury, which would require expensive skilled nursing care, and 2) the elimination or minimization of estate taxes.
A typical married couple residing in Santa Clarita could have the following assets: a house worth $650,000, various retirement accounts worth $250,000, bank accounts worth $100,000, and term life insurance. In just a few years (2011), estates valued over $1 million dollars will be required to pay estate taxes of approximately 50 percent. Proper estate planning documents can eliminate or minimize the portion Uncle Sam receives.
Unfortunately most people erroneously think that simply “avoiding probate” is the primary goal in estate planning. This is not true. A combination of estate planning and elder law planning is required in order to address estate tax issues, asset protection, and issues involving the possibility of catastrophic illnesses.
If a spouse requires long-term skilled nursing care due to a debilitating illness, comprehensive estate planning documents can offer asset protection and the ability to provide proper care for the ill spouse while eliminating the possibility of impoverishing the well spouse. Private pay monthly skilled nursing charges often exceed $6,000, and can be as high as $18,000 per month.
Without the proper estate planning documents in place, the court system is many times the only other option available to address estate and health issues for an ill spouse. This is an expensive and time-consuming alternative.
It is critical to know what is in your estate planning documents. If you don’t know, ask. If your documents have not been reviewed or updated for several years, it would be beneficial to do so. Don’t be caught unprepared.
For an appointment, please call the Law Office of Jane M. McNamara at 661-287-3260.