In the recent economic downturn, many homes have lost considerable value and stock portfolios have plummeted. If this is the case for you, as it is for many of our clients, you may need to change your will or amend your living trust.
If your estate plan divides your estate into percentages for beneficiaries, then changes in value won’t affect how your estate is distributed. However, if you include specific bequests in your will, a fall or rise in the value of your estate could have significant consequences. For example, if your estate plan gives $50,000 to your favorite charity and the rest of your estate to your children, a reduction in the value of your estate could mean your children won’t get as much as you intended.
A change in value of assets could also affect your estate plan if you intended to treat your children equally by giving them assets of equal value. For example, suppose your will gives your house worth $500,000 to your daughter and your stock worth $500,000 to your son. If the value of either the house or the stock portfolio increases or decreases significantly in value, your children will no longer receive equal gifts. It is also important to update your estate plan if the overall nature of your assets has changed. For example, if you sold the stock and bought real estate instead, this will affect the distributions to your children.
In addition, given the current uncertainty surrounding estate taxes, it is important to assess whether your estate might be subject to estate taxes. Under current law, estates in 2009 worth more than $3.5 million will be subject to federal taxes on death; next year, in 2010, there will be no estate taxes; but in 2011, estates worth more than $1 million will be subject to federal estate taxes. Hopefully Congress will act before 2011 to prevent this drastic decrease in the estate tax exemption, but they may not, so it is important to be prepared for any eventuality.
Lastly, whether you’re rich, poor, or somewhere in between, you cannot afford to ignore the potentially devastating costs of nursing home care and other types of long-term care, because the best estate plan in the world quickly becomes useless if you lose need nursing home care and haven’t planned for how to pay for such care. Approximately 70% of Americans who live to age 65 will need long-term care at some time in their lives; and nursing homes are the most likely and one of the most expensive creditors that most Americans are likely to face in their lifetimes.
In response to this problem, Evan Farr has developed a unique solution – he’s created a special type of asset protection trust called the Living Trust PlusTM that functions very similarly to a revocable living trust and maintains much of the flexibility of a revocable living trust, but protects your assets from the expenses and difficulties of probate PLUS the expenses of long-term care while you’re alive, PLUS lawsuits and a multitude of other financial risks during your lifetime. The Living Trust PlusTM Asset Protection Trust protects your assets from lawsuits, auto accidents, creditor attacks, medical expenses, and — most importantly for the 99% of Americans who are not among the ultra-wealthy — from the catastrophic expenses often incurred in connection with nursing home care. For more information about the Living Trust PlusTM, click here.
The Farr Law Firm specializes in Estate Planning and Asset Protection for clients in all walks of life. With the expert guidance of Evan Farr, who is a Certified Estate Advisor and Certified Elder Law Attorney, we empower clients each day to plan their estates to weather future contingencies. To begin the process, or to have your current estate plan reviewed by Evan Farr, please call us at 703-691-1888 or visit our Web site.
About Evan H Farr, CELA, CAP
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