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Modifying Estate Plans in the Face of Catastrophic Illness

| Sep 17, 2014 | Blog Posts |

The “I Love You” plan. Husband executes a will leaving everything to wife. Wife executes a will leaving everything to husband. Everything is left to children in equal shares when both parents die. For good measure, we title the assets jointly with right of survivorship (house, bank accounts, stocks, bonds) or designate the spouse as beneficiary (IRA’s, life insurance, annuities) so that there isn’t even a probate estate when the first spouse dies. Why is this plan so popular? It’s because that is what most people want.The problem comes when one spouse becomes ill or debilitated to the point he cannot care for himself. The spouse may become so ill as to require nursing home care now or in the future, especially if the caregiver spouse passes away first. Then, the “I Love You” plan becomes the worst of all possible plans because leaving everything to the ill spouse, in essence, means leaving everything to the nursing home to pay for the spouse’s care. Planning ahead is essential to protect assets for the family.

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