Estate Planning for Baby Boomers
Baby boomers own nearly 53% of the wealth in the country, which is ten times more than the wealth held by millennials. And studies show that the total value of wealth owned by baby boomer households in the country could be anywhere from $59 trillion to $68 trillion. But despite having such a staggering amount of wealth in their control, nearly 42% of baby boomers do not have an estate plan in place.
If you belong to the aforementioned 42%, there are four reasons why you should put together an estate plan as soon as you can:
The Cost of Long-Term Care is Rising Rapidly
This is one of the most important reasons why you need to have an estate plan in place. 7 out of 10 seniors (aged 65 or older) might require long-term care due to chronic diseases. So, even if you are healthy now, you might still need long-term care at some point in your life.
The average cost of long-term care at a private facility is estimated to be around $90,000 per year (for a semi-private room) and more than $100,000 per year (for a private room). The average cost of a home health aide and/or homemaker services can be as high as $50,000 per year.
What these numbers show is that you might have to spend a significant amount of money in the future on long-term care. With this in mind, you need to protect your assets and income-generating resources that can help you meet the expenses associated with your or that of your spouse’s care. One of the most popular strategies to accomplish this objective is to set up an irrevocable trust and put your assets into it, so that they are protected against lawsuits and liens.
An Estate Plan is the Best Way to Avoid Probate
The threshold for probate in Kentucky is much lower compared to most other states in the country. If your estate is valued at $30,000 or more, you need to have an estate plan which clearly instructs how your assets should be managed or distributed after your death. Otherwise, it will have to go through probate after your death.
The problem with the probate process is three-fold:
- It is expensive. The more assets you have, the higher the cost of probate will be. The executor’s fees alone can be up to 5% of the total value of the estate. In addition, Kentucky law also allows the executor to charge up to 5% of the income generated by the estate while it is under their management. Apart from this, the cost of probate also includes court fees, appraisal costs, accounting fees, and attorney’s fees.
- It is time-consuming. The process can take anywhere from 6 to 12 months under normal circumstances. If there are any tax-related issues or any disputes regarding the value of your assets, the process can take much longer.
- It is public. Once your estate goes through probate, any person can simply walk into the county court, file a request, and get the details they want about your estate. If you are a private person, the last thing you want is for just anyone to be able to find out about your final affairs.
Guardianship for Your Dependents
If you have children with special needs and minor grandchildren who are dependent on you, you can designate a guardian for them, set aside the assets you want to pass on to them, and put them all in a trust to make sure they are provided for even after you are gone. You can do the same for your pets as well.
Financial and Healthcare Powers of Attorney
A financial power of attorney allows you to authorize a trustworthy person to act on your behalf and make financial decisions in the event of your incapacitation. It can make sure your hard-earned wealth is managed by someone you trust, not someone chosen by the court.
Similarly, a healthcare power of attorney allows you to authorize someone to make medical and healthcare decisions on your behalf in the event of your incapacitation. It can make sure you are treated the way you want to in the event of your incapacitation and allow you to die with dignity – should it come to it.
Need to Create or Update an Estate Plan? Our Kentucky Estate Planning Lawyers Can Help!
At John H. Ruby & Associates, we have a team of highly skilled lawyers with decades of experience in estate planning. We can assess your needs, understand your goals, and create a comprehensive plan that can protect your assets after your death and make sure your loved ones are provided for.
If you already have an estate plan, we can review it, make sure it is in compliance with local and state laws and regulations, and update it as per your wishes. To talk to one of our Louisville, Kentucky estate planning lawyers, call us at 502-373-8044 or contact us online and schedule a free consultation.