Davidov Law Group

People sometimes take on do-it-yourself projects to save money. Unfortunately, in some cases these efforts wind up costing more money in the long run. This certainly comes into play when you’re talking about estate planning.

There are certain simple steps that you can take to arrange for the transfer of assets to others. Joint ownership is one of them.

Sometimes called the “poor man’s estate plan” with joint ownership you simply add another person as a co-owner of your property. This could be your home, your bank accounts, and your brokerage accounts.

When you die there is just one owner left, and this person would still own the property after you die. This is the long and short of it.

The truth is that this poor man’s estate plan can actually make you poorer.

What happens if the co-owner decides to utilize the funds for his or her own purposes? The answer is that you can do nothing about it because this person owns these resources just as much as you do.

What if someone sues the co-owner? While you are still alive you may watch much of it go down the drain if the co-owner is the target of a lawsuit or if he or she is involved in a messy divorce. Creditors of the co-owner could also target these funds.

What if you tell the co-owner to distribute the money among family members and he or she doesn’t do it? Once again, there is nothing to stop the remaining owner from doing anything he or she wants to do with the money.

When you consider how easy it is to plan your estate properly with the benefit of legal counsel buying into risky notions like joint ownership is probably not a good idea.

There are a lot of different legal devices that are used in estate planning. People sometimes harbor misconceptions about them based on assumptions. We would like to shed some light on three common estate planning instruments here.

The most common estate planning device is the simple last will. This document is typically used to arrange for future asset transfers and to name a guardian for minor children. The thing that is less than ideal about this arrangement is that probate enters the picture when you transfer assets using a last will.

Probate is the legal process of estate administration that takes place under the auspices of the Surrogate’s Court. There is nothing inherently wrong with this process. However, from a purely practical perspective the heirs to the estate don’t receive their inheritances until this process has run its course.

There are ways to arrange for asset transfers outside of probate, and some people prefer this efficiency.

Living Trusts

A living trust is a very commonly utilized probate avoidance tool. You convey assets into the trust and name a trustee who would manage the funds after your death along with a beneficiary or beneficiaries who would receive financial distributions.

These distributions would be made in accordance with your wishes as stated in the trust agreement. These transfers take place outside of the probate process.

Living Wills

This is where the confusion sometimes enters the picture. Some people hear about the things that a living trust accomplishes. They know that a simple will can be used to transfer assets, so they assume that living wills do the same.

In fact, a living will is an advance health care directive. With this document you state your preferences regarding whether or not you would want artificial life-support measures utilized to keep you alive in the event of your incapacitation.

Intelligent retirement planning is going to include anticipating the expenses that you may incur during your twilight years. It is not uncommon for people to require living assistance late in their lives, and this can be quite expensive.

So you think that you will be eligible for Medicare when the time comes and you’re not worried about it? The fact is that Medicare won’t pay for long-term care.

A very good source of information on long-term care costs is the annual survey that is put out by the MetLife Mature Market Institute. The 2012 survey found that in the state of New York the average daily charge for a private room in a nursing home was $368.

If you multiply this figure by the number of days in a year you’re looking at an annual expense of over $134,000. The reality is that most people spend multiple years in nursing homes.

Long-term care communities are quite expensive as well. In New York in 2012 the average monthly charge for an assisted living facility was $4011, which is over $48,000 per year.

When you are budgeting for the future it is important to take these potential expenses into account. According to the United States Department of Health and Human Services the majority of people who are fortunate enough to reach the age of 65 will need living assistance eventually.

If you are interested in exploring your options with regard to how you may be able to address these costs, you should discuss your personal situation with a licensed elder law attorney.