The basic estate plan starts with a power of attorney, so you get the person or persons you choose to handle your legal and financial affairs if you become disabled.  We recommend that it be an “enhanced” power of attorney prepared by an elder law firm, so that it has the additional powers you may need in the event of disability, such as the right to change beneficiaries on IRA’s and insurance policies (in case the beneficiary is in a nursing home), the right to create a trust or make a change to a trust and the right to make gifts in unlimited amounts (so that, in the event of disability, all the assets don’t end up going to the nursing home).

    Next is the health care proxy and living will, so that you also get the person you choose to make medical decisions for you if you are unable to decide for yourself.  The living will allows your loved ones to terminate life support if there is no hope for recovery and no meaningful existence.

    As for the estate plan itself, the revocable living trust is a substitute for a will but, unlike a will, the trust does not need to be probated at death, avoiding a potentially costly and/or lengthy court proceeding.  Less well known is that, since the trust takes effect while you’re living, it allows you to state who your successor or back-up trustee will be in the event of incapacity.  Since about half of all people today are expected to have a period of disability during their lifetimes, it is of the utmost importance to have a lifetime plan.  Without a plan, clients risk having a court appointed guardian who may not be the person you would have chosen.  Additionally, in a long-term care situation, a legal guardian may be required by the court to use all of the assets for the incapacitated person’s care, instead of having the family take advantage of Medicaid rules allowing significant assets to be protected through transfers to other family members.  The well drafted revocable living trust provides that, in the event of incapacity, the back-up trustee is authorized to transfer out of the ill person’s name whatever assets the Medicaid law allows.  With the assistance of an elder law attorney, this will currently allow about one-half of the assets to be protected through advanced elder law techniques.

    Other advantages of the trust over the will are that your assets are kept private, since there is no public filing and that you are far more likely to avoid a “will contest” since trusts are considerably more difficult to challenge.

    Apart from avoiding the expense and delay of probate court proceedings on death, as well as court control of the assets in the event of disability, the revocable living trust also avoids the additional probate proceedings that occurs when a client owns property in another state.  Finally, the revocable living trust avoids the New York estate tax for couples with over one million in assets.  By using the “two trust technique”, both husband and wife, by each setting up a trust, may each claim a one million dollar exemption, generally saving between forty and one hundred thousand dollars in New York estate taxes.