According to the American Health Care Association (AHCA), there are approximately 30,600 assisted living communities in the U.S. Many people, perhaps yourself included, want to move into one for various reasons.
Maybe your home is large and difficult to manage, or you're slowing down in your twilight years. Either way, you're coming upon an important change, one that needs careful consideration.
Something else to think about is estate planning. "What is an estate?" you ask. You've heard the term "estate" plenty but are unsure what it means or why it seems to matter so much.
Estate planning is vital to an assisted living transition because it protects your beneficiaries and wealth. If we've piqued your interest, read on to learn more.
When you hear the word estate, you may think of land or improvements made to it. However, in financial terms, an estate is everything that comprises a person's net worth.
Here's a breakdown of what constitutes an estate:
An asset, for those who don't know, is expected to provide future value. Assets are often items that may eventually generate cash or increase in value.
All the mentioned items, like land and possessions, are assets. Getting back to estates, their value is relevant in two cases: if someone declares bankruptcy or dies. Both of which fall under estate law.
Estate law is the legal field involving people's physical and personal property. First, we'll discuss bankruptcy, or how a person's assets and debts are viewed upon declaring bankruptcy.
When someone declares bankruptcy, their estate is accessed to see what they can reasonably pay. When a person dies, their assets undergo estate planning or managing how a personal estate is split and inherited.
Admittedly, our earliest explanation was overly simplistic. Estate planning is, in actuality, the task of drafting legal documents that detail what happens to your estate upon death and while you're still alive.
Yes, as surprising as it may sound, estate planning can be useful while someone is still alive. Firstly, these documents can help protect your economic well-being by assessing your cash flow and other financial needs.
Estate planning also helps keep your assets safe if you can't manage them due to incapacitation. The document outlines steps to take if you're ever unable to handle your finances alone.
Of course, you're probably aware that estate planning is also about planning for your loved ones. This is because it protects your beneficiaries.
Indiana hasn't taxed property inheritance since 2013, so you don't have to worry about protecting beneficiaries from taxation. However, other issues may still arise from inefficient estate administration.
Estate administration is when someone manages a deceased person's assets, debts, and taxes. The goal is to make the transfer of assets as smooth as possible. Doing it poorly can lead to chaos in the long run.
You could argue that estate planning and administration help head off family disputes. A court won't know which child should get the summer home or which is better with money.
They won't automatically decide that a surviving spouse gets everything either. Leaving everything to the courts can get messy, highly emotional, and ugly. The process can also take years to settle.
Estate planning isn't just for the extravagantly rich. People from all walks of life should establish what they want done with their assets because you can't control where it goes when you pass.
Middle-class people have less wealth to spread, which may lead to even more in-fighting. Here's a handy way to look at the matter: if you have anything of value to leave behind, plan who gets what accordingly.
You may have heard of wills and trusts, both bequeath estates to heirs, but there are fundamental differences in how they work. A will states how assets are distributed to beneficiaries after death.
It's a guide to how loved ones should handle an estate and should aid with removing disputes over who gets what. Wills often include instructions for:
Wills must be witnessed and signed as per state law. They're carried out in a local probate court by the executor. The document is publically available at the local probate court, which has jurisdiction over disputes.
A will is not a static, unchanging document. Individuals can modify it to accommodate personal and financial changes.
A trust facilitates the transfer of assets from a grantor (owner) to a trustee, and eventually beneficiaries. Think of the trustee as a third party (fiduciary) that assures everything goes where it should.
Trustees must handle trust assets according to the document's terms and in a way that best benefits beneficiaries. Much like a will, trusts outline:
There are two types of trusts; a living trust is established and facilitates the transfer of assets during a grantor's lifetime. Testamentary trusts start once a grantor is deceased and grants assets as per specified instructions.
Both types of trusts skip probate court and are, therefore, more private affairs. However, they can be more expensive to create if an estate isn't worth a huge amount.
Hopefully, we've answered the question, "What is an estate? It's a combination of all your assets into your net worth.
Estate planning is assembling the documentation to plan distribution. It's not a topic many like to dwell on, but it's necessary to ensure everything is to make life easier for you and your loved ones.
Whitlock Place Assisted Living can't help with estate planning, but we can make life simpler. Our dedicated expert staff offers quality 24-hour aid and can develop individual care plans to meet your needs.
Residents can thrive with our plethora of activities like our card club and daily exercise. Contact us to schedule a tour today!