Estate Planning For Terminal Illness: The Basics
If you, or a loved one receives a diagnoses of a terminal illness, it’s important that you consider your future financial options. In this overwhelming and unfortunate time, the emotional and financial impact terminal illness has on both an individual and caregivers simply cannot be ignored. After being slammed with medical and institutional expenses, it’s time to think about comprehensive estate planning for terminal illness.
Estate planning for a terminally ill individual can make things less stressful, and retain assets to be passed down to a spouse, children, or other loved ones with little time and conflict. Let’s find out more about estate planning for terminal illness.
What Are The Estate Planning Steps You Need To Take When You Have A Terminal Illness?
With the right steps, you can make this difficult time a lot easier for you, and your loved ones. One of the most essential steps to estate planning for terminal illness is having a will. If you don’t have a will, your estate will be distributed depending on your state law, and your assets can end up in the wrong hands! It’s vital to have an experienced attorney draw up a will that states where exactly you want your assets to go.
Let’s say someone separated from their spouse years before they were diagnosed with terminal illness, but there was never an official divorce or separation decree. If that person passes away without a will, guess who the money goes too? You guessed right. The answer is the spouse. Under the intestacy laws of many states, a spouse will receive 1/3 of assets. Or let’s say someone with terminal illness is living with a partner, but not legally married yet. When that individual dies, the lack of a will deprives the partner of all assets, even if they were intended to get it.
That’s not all you can do. Effective estate planning for terminal illness can also include a joint tenant with right of survivorship (JTWROS.) This means the surviving co-owner of the estate receives assets directly. This is regardless of what the decedent’s will says. When estate planning for terminal illness, review your property ownership and see if this title is right for you . You can ensure a smooth transfer to the surviving co-owner. This allows them to avoid going through probate, saving a whole lot of time and money.
You may also hold your assets in a trust. This will pass under the terms of the trust, which can also help you avoid going through probate. So no need to worry, because any fear of conflict can be significantly lowered!
Estate Planning For Terminal Illness and Common Misconceptions.
When it comes to estate planning, it is highly unlikely that a terminally ill individual will be able to transfer all their assets to a trust, or cover everything in their will.
Want to know something? This year, the federal estate tax exemption is quite generous. This means few people are going to want to leave an estate. How much is the federal estate tax exactly? Well, for a single taxpayer it’s $11.2 million, and for married couples, it’s $22.4 million. But what about terminally ill people who are below these asset levels? They tend to do the worst thing possible, which is not consider estate planning.
Simply put, ignoring estate planning can be a huge mistake. A mistake most people never would make if they truly knew the consequences. Almost half of the states are imposing inheritance or estate taxes. Due to this it is important to check with advisors and financial professionals to see if estate planning for terminal illness can save money for your loved ones.
A thorough review of beneficiary designation is also extremely important. Most people often overlook it. Many people don’t realize that when estate planning for terminal illness, IRA’s, life insurance policies, employer retirement plans, and other assets do not go to the heirs under a decedent’s will. The assets will pass under a beneficiary designation. This means in a situation like a divorce, an ex-spouse might inherit assets like death benefits, simply because they are still listed as a beneficiary.
Talk To Someone.
When estate planning for terminal illness, it doesn’t matter whether medical and institutional expenses require a cash flow. All that matters is that the quick and smooth transfer of your assets to family, a charity of your choice. No one wants obstacles in a time like this. With the right help, you can put your mind at ease.
If you, or someone you know, are facing the profoundly difficult and emotional impact of terminal illness, don’t hesitate to reach out to us today. We are here for you every step of the way. Talk to someone here.