An estimated 43.5 million Americans provided formal or informal care to an adult over the past year. About 16.6 million American adults with disabilities required the care of another adult for essential activities of daily living. If you have a caregiver, working with an estate planning lawyer to include them in your estate plan is a respectful way to honor them and the service they provided to you during your later years of life.
Inform Your Family of Your Plan
If you bequeath a large gift to one caregiver without anyone’s prior knowledge of your plan, your family or other heirs may view this with suspicion. Your family members might think that the caregiver coerced you into providing the gift. As soon as you decide to provide your caregiver with money or other assets from your estate, tell your family.
Some family members might try to convince you not to do this. If you believe that your family members will not agree with your decision, you may wish to have your estate planning lawyer update your estate plan and then inform your family of the changes. You may wish to tell your family members that your gift to your caregiver will not impact what you leave to them.
Put the Plan Into Writing
Have your estate planning attorney put your plan into writing. Once you sign it, the attorney will formalize it. Formalizing your estate plan and working with an attorney to create it could help you avoid a contest of your will or another type of dispute filed by your family members or other heirs. Disputes against your estate are time-consuming and costly, and avoiding them ensures that as much of your assets as possible are bequeathed according to your preferences.
Avoid Procrastination
Waiting until the last minute to include your caregiver in your estate plan sets it up for a dispute. Your family members could argue that your health was too poor for you to make a sound decision. The unexpected may happen, and your wish to leave a gift for your caregiver might not come to fruition if your plan isn’t formalized in your will. Consider having your physician document that you are of sound mind and health to make the decision to leave a gift to your caregiver, and include the signed and notarized letter of competency with your estate plan.
Provide Gifts or Money While Alive
Another option to include your caregiver in your estate plan involves gifting money or other assets while you are still alive. This could impact your family relationships and the type and quality of care the caregiver provides, so tread with caution if you choose this path. Some states have clawback rules of varying duration, and any gifts you provide to a caregiver could be considered as part of your estate and subject to taxes. Transferring assets could also affect your eligibility for certain government programs, such as Medicare, so it’s best to consult with an attorney before providing gifts to a caregiver while you’re alive.
Consider Gift and Estate Tax Rules
New Jersey has an inheritance tax. If a sizable bequest would negatively impact the finances of your caregiver, working with a financial planner and attorney helps minimize these impacts. Gifts may also impact your eligibility for nursing home and in-home services.
For more information about including caregivers in your estate plan, call the Paramus office of The Knee Law Firm at (201) 996-1200 for an appointment with our New Jersey estate planning lawyer. You may also enter your information into our online contact form, and an associate from our office will call you to schedule a consultation.