Did you know that everyone in DC, Maryland, and Virginia already have estate plans? In fact, everyone in the US has an estate plan. Some people choose to actively decide where their assets will go by creating a Trust, Will, or both.
Everyone else has a plan created by the government.
Unintended Consequences of an Early Death
That’s right. If you die and have no Will or Trust, the state or district where you live decides who is entitled to your belongings.
Recently, I had parents come to me for help in probating their single daughter’s estate, we'll call her Julie. Sadly, Julie died in her 30s after a prolonged bout with cancer. She had no children, so her parents were entitled to her things. However, their inheriting Julie’s assets had a negative effect on their Medicaid eligibility.
They were both receiving long-term care, covered by Medicaid. However, when they inherited their daughter’s home and financial accounts, they were no longer eligible.
Instead, they had to “pay down” their newly acquired assets before they could re-qualify. So, basically they are spending their Julie’s hard earned money on their long-term care.
Estate Planning is Important at All Ages
Estate planning in your 30s is not a priority for most, but had Julie created a Will and Trust, her parents could have stayed on Medicaid and received money to supplement their needs.
I would have recommended a revocable trust as part of her estate plan. she could have established a special purpose trust within it for her parents. The document would have restricted their direct ownership of her assets, which would have avoided the pay down requirement and allowed her parents to supplement needs not covered by Medicaid.
This is just one example of how creating your own estate plan can help avoid unintended consequences caused by probate law in different states.