Estate plans can help people address many of the uncertainties that are commonly associated with the later stages of life. They can provide support for their loved ones and find a way to leave a meaningful legacy when they die while also addressing their medical needs and financial stability.
Someone’s estate plan may also address personal and practical matters, including who should inherit property from their estate. There are numerous financial matters that can also play an important role in the estate planning process and which require careful consideration by those who are worried about their own financial stability later in life and/or the needs of their loved ones.
These financial concerns can even influence what instruments someone should include in their estate plan. What financial matters are often most important for people to address when developing their estate plans?
1. Estate Taxes
Residents in Washington may have to pay estate taxes with lower levels of personal wealth than those in most other states. While the 2023 threshold for estate taxes at the federal level is over $12,920,000, in Washington state, property worth just $2,193,000 passing through the probate courts can trigger estate taxes. Those with real property or businesses in their names often need to plan carefully if they want to minimize tax obligations.
2. Personal Debts
Any amount that someone owes when they die becomes the responsibility of their estate. They could also face lawsuits from creditors if they can’t make payments later in life when on a fixed income. Debts ranging from someone’s end-of-life care costs to their credit card balances will require repayment from someone’s estate before beneficiaries receive any property. Individuals can both allocate resources to pay their debts and take steps to protect certain assets from creditor claims as they age or after they die.
3. Elder Care Costs
Living in a nursing home or requiring skilled nursing support to stay in one’s own home are both incredibly expensive. Older adults may need to pay for such care themselves or apply for Medicaid. Advance planning is typically necessary for either solution. Those who fail to plan ahead to cover those costs may find themselves dependent on family members or struggling to get the support they need when they are more vulnerable later in life.
Addressing key financial concerns in an estate plan with the assistance of a legal professional can give someone the most security possible as they age.