Estate planning and elder law are two terms that get used interchangeably often, however, there are significant differences between the two. While some overlap exists between the two, learning and implementing strategies from both law practice types is crucial to prepare for successful aging and preserving a family legacy.
Estate planning lets families:
- Name guardians for minor children
- Manage and protect valuable assets
- Distribute property according to specific instructions after you die
- Minimize potential estate taxes
- Simplify or avoid probate
- Distribute property to beneficiaries
- Create a business succession plan
Younger people tend to focus on asset protection in their earlier years. They are building their legacy.
Elder law primarily deals with later stages in life and an aging individual’s needs while they are still alive, like:
- Retirement goals
- Paying for long-term care
- Protecting the family if they become incapacitated due to an accident, severe illness, or reduced cognitive function
- Accessing proper health care without depleting a senior’s resources
- Protecting the legal rights of aging adults
- Address the needs of persons with disabilities and war veterans, including their spouses, children, and caretakers
Seniors worry about protecting their legacy from medical costs, fraud, or abuse. They want to keep the family home for a spouse or the next generation.
What is Estate Planning?
Estate planning is for adults of all ages. An estate plan determines what will happen to assets upon death. An estate planning attorney can use wills and trusts to ensure your wishes are followed. If there are minor children, a will identifies a guardian to guide and protect them through life until they become adults. Naming a guardian for minors is a crucial aspect of a will.
Estate planning lawyers can structure assets and property to help an estate avoid probate. Various revocable and irrevocable trusts can save money on estate taxes, leaving more to beneficiaries. The probate process is slow, can be very costly, and is a public process, so it makes sense to keep as much of your estate out of probate as possible.
Several assets can pass to heirs without being addressed in a will or a trust through beneficiary designations. Insurance plans, IRAs, and 401(k)s are all examples of beneficiary designation account types. Reviewing your designations is crucial upon major life changes, particularly death or divorce. Update your beneficiaries. If they have changed or are deceased, a court will decide the fate of your funds.
If you have a small business, estate planning is also relevant to the business’s future success. A succession plan helps a future business owner or family member to run the business upon your retirement, incapacitation, or death. An estate planning attorney can help structure inheritance using life insurance policies to balance inheritable assets if one adult child is particularly interested in running the business and others are not.
What is Elder Law?
Focused on later stages of life, elder law anticipates future medical needs, including long-term care, to ensure a senior can live a long, healthy, financially secure life. The goal is to develop a plan to pay for future care that meets their comfort level while preserving as many assets as possible. An elder law attorney knows how to help you qualify for Medicaid or other government benefits while keeping a portion of your assets. In addition, they may support you through Medicaid hearings and appeals.
Elder law attorneys can help protect individuals from elder exploitation or abuse as they become older and caring for themselves becomes difficult. Designating a durable power of attorney (DPOA) for property and financial affairs and another for health and well-being permits representatives to oversee and protect seniors when they are no longer able. DPOAs are documents used in estate planning. Without a power of attorney, elder law and estate planning can assist with guardianship and conservatorship.
What is Life Care Planning?
As an estate grows in value and minor children become adults, it is important to revisit and amend your estate planning documents. Review them regularly as your life evolves, particularly after marriages, births, divorces, deaths, and substantial changes in finances. You may find yourself straddling the needs of children and aging parents. Estate planning shifts as estate planning attorneys consult with you on elder law matters.
Life care planning protects your assets, health, and legacy at every stage of life and addresses common concerns to avoid potential problems. Proactive planning is the key to living your best life, from raising a family to fears of declining health.