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It's about protecting yourself during your lifetime. For example, if you become incapacitated, who will handle your finances or make medical decisions for you? A comprehensive estate plan answers these questions and evolves with you as your life circumstances change. Planning ahead spares your family unnecessary stress and costs. Starting sooner rather than later allows you to update and refine your plan over time.
as your family grows, your assets change, or your priorities shift. Just remember, estate planning is a process, not an event. Another question we often hear is, why shouldn't I just give my house to my kids while I'm alive? Well, it might seem like a simple way to avoid probate. Doing so can create significant tax consequences. If you transfer the house to your children during your lifetime,
they inherit your original purchase price or basis. This means they could face large capital gains taxes if they sell the home. However, if they inherit the house after your death, they receive a stepped up basis, which adjusts the value to the property's worth at the time of your passing, potentially eliminating substantial capital gains taxes.
Holding onto the property and letting it transfer through your estate is often the wiser choice. Additionally, gifting the house during your lifetime could leave you vulnerable if your children face lawsuits or divorces or financial instability. For instance, imagine you gift your home to your child and shortly after they face a lawsuit or bankruptcy. In such cases, the house could be seized as a part of their assets.
leaving you with no recourse. Similarly, if your child goes through a divorce, the property could become entangled in the settlement, which may not align with your intentions. These risks highlight why careful estate planning is essential to protect both your property and your peace of mind. For young parents, estate planning is particularly critical. It's about more than just finances. It's about ensuring your children are cared for.
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if something happens to you. Naming a guardian is one of the most important decisions you can make. Additionally, appointing a trustee to manage your children's inheritance ensures that funds are used responsibly for their health, education, and well-being. A comprehensive plan gives you peace of mind, knowing your children will be taken care of no matter what.
It's equally important to consider naming alternate guardians or trustees in case your primary choices are unable to serve. For example, the individuals you initially select might face unforeseen challenges like health issues, relocation, or personal circumstances that make them unable to fulfill their roles. By identifying backup options, you ensure there's always someone trustworthy and capable to step in. For instance,
Setting up a trust with specific guidelines can prevent misuse of funds while ensuring they are available for essential needs like tuition or medical care. Taking these steps early in your parenting journey can make all the difference in a crisis. But what happens if a sibling is stealing items from a deceased parent's estate? Unfortunately, this is an all too common issue. Legally, once a parent passes away,
Their assets should remain untouched until the executor or trustee has been granted authority to distribute them. If someone is taking items prematurely, it's important to document what's missing and involve the executor or successor trustee immediately. In some cases, you may need to involve the probate court to resolve disputes. A clearly written estate plan can help prevent these situations.
by providing explicit instructions. Creating a detailed inventory of assets and specifying how personal items should be distributed can avoid misunderstandings and prevent family conflicts. For life partners who aren't legally married, estate planning is even more crucial. Without proper documents, your partner may not inherit anything or have a say in your care if you become incapacitated.
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A will or trust ensures your partner receives the assets you want them to have and powers of attorney allow them to make financial and medical decisions on your behalf. Without these safeguards, your family, not your partner, will typically have legal authority, which may not reflect your wishes. For example, if you own property together, a lack of planning could result in your partner losing their home.
Taking the time to create an estate plan tailored to your unique relationship protects both partners and ensures your intentions are honored. Estate planning is about protecting what matters most, your loved ones, your wishes, and your legacy. If you found this video helpful, please like, subscribe, and share it with someone who could benefit. As we wrap up, it's also essential to think about how Medicaid planning fits into your broader estate strategy.
One critical aspect is understanding Medicaid's five-year look-back period and how it can impact eligibility for long-term care benefits. This often overlooked rule can help protect your family's assets while ensuring access to vital care. In our next video, we'll break down the five-year look-back, explain how it works, and share strategies to navigate it effectively. You don't want to miss it.