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Mayfield Heights Estate Planning and Elder Law Blog

Major Changes in Ira and 401K Rules That May Impact Your Estate and Financial Planning

Congress passed the "Secure Act" which makes major changes in the rules as to distributions from 401k plans and IRAs, beginning January 1, 2020. If you have any questions, please contact us to see how these new rules may impact your estate planning. Set forth below is a Q/A to explain some of the changes. We will refer to IRAs only, but unless noted below these rules apply to 401k plans or profit-sharing plans. The new rules do not apply to pension plans.

What are the benefits of avoiding probate?

When you place assets into a will, your estate must pass through the probate process. Probate involves the sorting and administration of your estate under court supervision. While probate isn’t meant to be a horrible and complicated process, in some cases it can be a stressful and chaotic time for your family.

If you are among those wanting to avoid probate, here are four benefits to doing just that.

Do you need to have a will?

As you begin the estate planning process, one thing you might be asking yourself is if it's necessary to have a will. A will is a legal document that you may want to have, because it tells your loved ones and the courts exactly how you'd like your assets distributed after your death.

Most people choose to have a will as the first document in their estate plan. A will isn't enough on its own, but it does create a wonderful starting point.

Spendthrift trusts could be a good answer for risky beneficiaries

A spendthrift trust is a unique trust that gives an independent trustee complete control over trust funds that are to be distributed to a beneficiary or used for their benefit. This is an excellent trust to give to those who may spend money quickly or on things you don't want them to buy, for example.

Spendthrift trusts don't give your beneficiaries direct access to funds. Usually, one or more trustees works to decide on how to distribute the funds to help care for the beneficiary. For example, a mother leaving behind a spendthrift trust may say that the trust can't be used on buying cars above a certain value but can be used in full to pay for schooling.

Get help with an estate plan: A will is not enough

Wills are interesting documents. They can tell you a lot about what someone wants to see happen after they pass away. However, a will isn't the only thing people need to complete their estate plans. Not having more than a will can still lead to trouble.

With a will, there is the ability to tell others who you want to receive which assets upon your death. You can even make your wishes known for how you'd like your funeral to be held or how you want to be remembered.

How can you prepare for needing long-term care?

As you age, it's important to start looking into your long-term care options. You want to plan for your long-term care early because you may not get the opportunity to do so once you reach a time when you need it.

While most people don't want to think about a time when they need support from outside sources, the reality is that around 70% of people will need some kind of long-term care in the future. Whether that means needing assistance with getting dressed, taking medications or other daily activities, you need to plan for that possibility.

How do you become a conservator in Ohio?

A conservator is a person is entrusted with caring for a conservatee. That individual takes on the role voluntarily and is given legal power to perform certain tasks for the conservatee. Usually, the conservatee is the one who chooses who their conservator will be.

It is important that the person who is seeking a conservator or a person who is seeking to become a conservator for a loved one files for the role in a local court in the county where they reside. On top of that, there are a few documents that will be needed including:

  • A written statement that establishes that the conservatee is physically infirm. This document must come from a medical provider.
  • A Social Security form that is completed by the conservator
  • Probate forms
  • A copy of the driver's license or government ID of both the proposed conservator and conservatee
  • A record check authorization for the proposed conservator

Some probate problems can be prevented with a family meeting

Talking with your loved ones about your estate plan may feel intimidating. Estate planning choices can be very personal, and most people do not enjoy talking about finances or death. However, calling a family meeting can be a beneficial conclusion to the estate planning process.

A family meeting can help prevent misunderstandings or hard feelings among your loved ones. Hearing you talk about your wishes may even prevent fights among family members. This may be especially important in blended families or situations when your estate plan treats your loved ones differently.

Prepare now for the care you may need in the future

You are getting older, and part of getting older is planning for what happens next. As you age, you may find that you aren't as agile as you used to be. You may be less healthy and have more medical concerns.

While no one can be sure if they will need long-term care, it's a good idea to plan for it anyway. Any kind of unexpected illness, injury or accident could change your needs suddenly and that's something you need to be prepared for.

Why set up a trust? Here are some good reasons

Trusts aren't just for those who have wealthy estates. In fact, they can be extremely helpful for anyone who is growing older who wants to protect their assets.

Most of the time, people create estate plans without trusts. However, if you have several people who you'd like to leave assets to upon your death, then it is smart to look into having at least one trust.

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