What is estate planning? Estate planning concepts have changed over recent years because today, more Americans fear outliving their retirement than death itself. In fact, from 1980 to 2010 Americans are now living on average 8 years longer than before. This extended life expectancy requires on average an additional $422,000 to live ‘comfortably.’ People have traditionally associated estate planning with the transfer of assets after their death. For example, after the passing of a loved one you must consider the transfer of the home, bank accounts, retirement accounts, etc. Estate planning now centers around three things: you, your loved ones, and your community.
Most importantly, as the pyramid shows, estate planning is about you. Before planning for the transfer of assets to your loved ones, you must first have assets to transfer. It’s imperative to have a smart financial plan in place and be able to protect the wealth you’ve earned over your lifetime. As your wealth grows, you should consider the tax consequences, risks, and even healthcare needs associated with your estate.
Healthcare has especially become a big topic under the umbra of asset protection. Even larger estates can end up zeroing out with nursing home costs being upwards of $10,000.00 per-month. But when you put yourself at the base of your estate planning pyramid, you might consider methods to protect your assets from the spenddown of Medicaid. Asset protection methods like long-term care insurance plans and wholly discretionary trusts that can help save a portion of your assets from Medicaid.
Although charitable gifts are usually not the most important part of an estate plan, they may come in handy to save you thousands on income taxes. You can take upwards of 30% or more of a deduction from income taxes by creating a charitable remainder trust. Then you receive income over your lifetime from the trust and the money is passed on as your legacy to your favorite charity.
As you can see, estate planning involves more than just transferring your assets on to your loved ones. There are numerous ways to provide for you and your family with a carefully and well-thought out plan. Contact your Cleveland, Ohio estate planning attorney to start creating your plan today. For a free consultation, contact Cleveland attorney Dan A. Baron at 216-573-3723.