Estate planning isn’t just for the rich. Irrespective of your current financial status, you should have an estate plan ready to help secure a financially stable future for your family after your demise.
If you’re under the impression that you can accomplish this all on your own, though, think again. Not only is that highly inadvisable, but it can also prove to be quite detrimental for you and your family.
For Legal Advice on Asset Naming
Here’s the thing: your will doesn’t automatically covers all your assets. You need to clearly state the different types of property ownership, retirement accounts, beneficiary designations, and life insurance terms. Otherwise, they’ll be considered to be independent of your will.
An estate planning attorney can review your assets and recommend asset titling options. They can also help you in changing beneficiary designations. This helps in time-consuming and costly procedures in the future.
For Professionally Drafted Documents
Another advantage of having an estate planning service handle your case is that you can be assured of professionally drafted documents and impeccable paperwork. You won’t have to worry about errors and inaccuracies in the documents, which can prove to be quite costly. They’ll take care of each and every aspect of the forms and applications, doing an immaculate job.
Moreover, an estate planning expert can customize your documents as per your specific situation and goals. They’ll arrange for the witnesses and required notary signatures, include all necessary details, and take care of the whole process without you having to worry about the piles of paperwork ahead of you.
For Timely Updates
You can’t create an estate plan and then never revisit it. With changing circumstances, wills, trusts, and other types of estate plans need to be updated. This is necessary so as to keep the contents aligned with the current situation.
For example, you may want to change details in your estate plan five years down the road. Maybe a close family member got married; maybe you relocated; maybe your family experienced a financial setback or blessing. Your life events affect your financial situation, which in turn affects your estate plan. Therefore, it’s important to keep it updated.
An estate attorney will remind you timely to review your documents. Moreover, they’ll also help you update your estate plan in case of changing state laws such as the 2017 Tax Cut and Jobs Act and changing governments.
A living will is a legal document that allows the creator to provide written instructions on how his or her health care should be managed in the event of incapacitation. Having a basic understanding of how these legal tools function is helpful both for those putting together an estate plan as well as those looking to administer a loved one’s estate plan .
What exactly is a living will?
This document is just one of many available in a well balanced estate plan and is particularly useful for end-of-life care. A health care proxy is similar. Instead of providing instructions for how health care decisions should be managed, the health care proxy allows the creator to name another individual to make health care decisions on the creator’s behalf.
Another important distinction between these two types of legal documents is the fact that the health care proxy is established under state law. Although the living will is not officially established under state law, the State of New York’s Office of the Attorney General notes that this document is generally accepted by New York Courts.
There are many benefits to putting together this type of document. Three of the more common include:
Control. This type of document allows the creator to remain in control, even if incapacitated. Whether unconscious due to an auto accident or hospitalized and fighting a serious illness, this document can outline exactly what type of care the creator wishes to receive – better ensuring the creator’s wishes are met.
Clarity. These documents also provide clarity. Loved ones will not wonder what the creator would want in these situation, these wants would be clearly listed within the living will.
Cost. Ultimately, use of a living will could reduce the costs to the creator’s estate. Without this document, loved ones could disagree over the creator’s wishes. This could lead to costly litigation and potentially deplete the assets of the creator’s estate.
These are just three of the many benefits of one document that composes a well balanced estate plan. Anyone that is considering adding this legal tool to an already existing estate plan (or starting an estate plan to begin with) is wise to contact an experienced estate planning attorney. This legal professional can guide you through the process of putting together or administrating an estate plan.
It is not uncommon for there to be differences of opinion in the administration of a will under New York law. Broad powers have been invested in the executor that is appointed under a will. However, with these powers come serious legal responsibilities. Failure to properly perform the duties may lead to legal action and in some cases personal financial responsibility. The probate court also has the power to remove an executor.
The executor of a will is required by law to maintain thorough records. Executors must carry out the provisions of the will and comply in all other ways with both the law and the last wishes of the deceased. They may not simply seize property for themselves or dispose of it without making a fair valuation and proper record of the sale. Executors must remember that they have fiduciary duties that extend to all of the will’s beneficiaries.
There is a natural unwillingness to invoke legal authority against the executor of a will, as in many cases that role is filled by a close member of the family. However, it is best to speak out against improper administration before it is too late and the entire estate has been inappropriately distributed.
It should be noted that even under the best of conditions and with the best intentions, executors sometimes make mistakes. They are not expected to be financial or legal professionals, and in fact they are entitled to seek the advice and counsel of a probate attorney when they need guidance on a particular matter.
Music fans and pop culture enthusiasts in New York were likely shocked and saddened by the news of Prince’s death, and some have begun speculating about what will happen to the late singer’s estate while others still mourn the legendary star’s passing. If Prince has a will, it has not yet been made public knowledge. This means his sister looks like the mostly likely candidate to inherit his fortune.
Prince died at age 57 in Chanhassen, Minnesota, and he was found collapsed in an elevator by first-responders when they were called to his home since staffers were not successful at reaching him by phone. His home and Paisley Park Studios are located in Minnesota, and state intestacy law dictates that parents, grandparents and siblings inherit the estate of an unmarried person with no children who dies without a valid will . This would mean his 55-year-old sister inherits everything though theoretically someone could try to appeal the probate court decision.
Both of Prince’s parents are deceased and were divorced but had other children, so Prince has two remaining half-sisters and a half-brother from his father’s other marriage and two surviving half-brothers from his mother’s other marriage. Prince’s net worth was estimated to be around $300 million, but his music catalog as well as unreleased recordings could drive the value of his estate far higher.
In the past several years, there have been many reports of celebrities dying without a comprehensive estate plan in place. It would be somewhat surprising if Prince had no will at all, but if so, the administration of his estate could be quite protracted.
New York residents may want to consider who they will appoint under a power of attorney as part of their estate plan. This is the person who among other duties will deal with their finances if they are unable to do so as a result of becoming incapacitated. In some families, choosing such a person may lead to conflict. One woman was concerned after her 66-year-old father had a stroke and appointed his girlfriend as attorney-in-fact. The girlfriend told the daughter that she was also being left everything in his will.
The daughter and her brother were concerned because they wanted to keep the house their father owned in the family. However, family members do not necessarily have this right over a person named in a will. They can have a medical evaluation for their family member if they are concerned that the relative lacks the capacity to appoint someone under a power of attorney, and they may want to speak to an attorney who has experience with conservatorship matters.
One problem in a situation like this one is that the children might be suspicious of the girlfriend, and the girlfriend may be suspicious of the children. However, it is important for family members to keep in mind that loved ones have the right to make their own choices even if they disapprove.
It is similarly important for a person to create a will and name an executor. However, many people die without making plans for the distribution of their estate. This is called dying intestate , and in such an event the decedent’s assets will be distributed in accordance with state law.
New York residents who are preparing their estate plans should not neglect to value their artworks correctly. By and large, art does not produce any revenue until it is sold, and it can be difficult to place an accurate value on paintings and other works because the among will usually change in keeping with prevailing market conditions. However, failing to do so can result in a dispute with the Internal Revenue Service.
One example occurred when an art collector owned three particularly valuable pieces by Pablo Picasso, Robert Motherwell and Jean Dubuffet. The owner died in 2009, and the Picasso sold at an auction for $12.9 million a year later, a price that was more than twice what had been set by the auction house. However, the estate valued the painting at $5 million on its 2009 estate tax return . The IRS thought that the Picasso and the other two paintings were all worth more than the value the estate had assigned them. It sent experts to assess the paintings’ value, and they valued all three of them at a higher price, with the Picasso being valued at $10 million. A formal Notice of Deficiency was issued to the estate by the IRS, and the case reached the U.S. Tax Court.
The court agreed that the state of the art market was worse in 2009 than in 2010, but it still sided with the higher assessment by the IRS for the Picasso, although it was lower than the painting sold for in 2010. However, the court sided with the estate with respect to the value of the other two paintings.
The value of certain types of assets that are contained in an estate often change after the estate plan is made. This can occur with art, but it can also occur with other investments as well. It is important that both the owner and the executor or administrator have a good sense of the current value of the assets for tax and estate administration purposes.
New Yorkers who have spent their lives working hard to amass wealth are often concerned about how to preserve it so it will benefit multiple family generations. Due to factors such as dividing assets between beneficiaries, the effect of risk and taxes with each successive generational transfer, family wealth can be depleted in as little as two or three generations.
People are able to use family trusts to help preserve the wealth for which they have worked for generations to come. Instead of simply dividing the assets between children through a traditional estate plan, they can leave them to a trust to benefit them.
One key way to make amassed wealth benefit many generations is to treat the money as a way to give new generations a start in life. Money can be earmarked to pay for college educations or to provide seed money to start new businesses. Grantors can make distributions contingent on any number of different activities. Successive generations can also contribute to the trust to allow the funds contained within it to continue growing, thus benefiting the family in perpetuity.
It is often a good idea for wealthy people to use multiple types of estate planning tools in order to minimize the amount of assessed taxes and pass their assets on to their intended beneficiaries. In addition to preparing a will , people may want to consider setting up different types of trusts to help meet their estate goals. With careful estate planning, people can help to make certain they leave their families with a legacy that can last. They may want to discuss how best to go about planning to transfer their assets with their estate planning lawyer. A lawyer, upon reviewing their client’s assets, goals and needs, may advise their clients about the various types of documents that may best help them.
Many New Yorkers have individual retirement accounts. They can be problematic for estate planning purposes as the IRS considers them to be income that the decedent would have otherwise received and thus in some cases taxable to the estate.
In many cases, a decedent who had an IRA failed to update beneficiaries or to name them on the account, which can also be an issue after they die. Careful drafting of estate documents must be undertaken in order to avoid problems created by the existence of an IRA. When IRAs are treated as income to the estate by the IRS after death, the amounts that are distributed are subject to the highest income tax bracket of 39.6 percent. This may mean that, although the estate would otherwise fit under the estate tax exemption amount, the IRA itself may face significant taxation.
Some people try to avoid this issue by naming a trust as the beneficiary to their IRAs. They then designate charities as beneficiaries to the trust. Care must be taken even when doing this. If the income from the IRA goes to the trust, the IRS may treat it as taxable. If the portion from the IRA instead goes to the residual portion from the trust, and from there, to the designated charities, the income is considered to pass to the charity instead of to the trust. This can help since charities are tax-exempt.
Estate planning and estate administration may be highly complicated. People who need help may want to talk with an estate planning and administration lawyer. An attorney may be able to provide guidance regarding the best way to handle the person’s estate planning goals and needs. They may also be able to reform a pre-existing trust that was drafted incorrectly by filing motions to do so with the court. It is possible to minimize taxes if the documents are drafted correctly.
A New York resident who has a spouse and children might pay close attention to estate matters, especially in case of major changes to their financial or family situation. However, those who have never married may not worry as much about estate planning due to the fact that there aren’t dependents. The reality is that anyone who has assets should think about creating an estate plan to ensure that their wishes are documented legally. Failing to do so could result in the court system having to follow the state laws of intestacy while absorbing some of those assets to cover its costs.
In many cases, those with no marital or parental responsibilities will name a companion, parents, siblings, or nieces and nephews as beneficiaries. They may also designate close family or friends as those in charge of any necessary medical or long-term care decisions. They might identify certain assets to be donated to scholarship funds or for other charitable purposes, which can help in reducing the tax burden for an estate.
It may be helpful to provide an explanation of one’s decisions, especially if there is an unequal distribution of assets to persons with reasonably similar relationships to the testator of a will . It is also advisable to review one’s estate plan at regular intervals to identify areas in which changes are warranted. In some cases, friends might have been included at one time who are no longer close to the testator. In other cases, the financial circumstances of a beneficiary might change, warranting a larger or smaller portion of the estate being designated for that individual.
An estate planning lawyer can be helpful for coordinating a trust or will to ensure that a client’s intentions are clearly and legally documented. Additionally, a lawyer can provide appropriate guidelines for reviewing one’s plan if estate tax laws and other relevant issues change over time.
The administration of a wealthy person’s estate in New York is a big undertaking. Executors must be aware of the current estate tax laws, and they must determine which IRS forms they are obligated to complete with the deceased person’s final tax filing.
Right now, an estate is considered taxable by the federal government if its assets are worth $5.43 million or more. The $5.43 million exclusion amount is indexed for inflation and adjusts each year. In 2012, a new estate planning tool was introduced that allows married couples to pass their unused exclusion amounts to each other when they die. With the new law, a married person could essentially exclude $10.86 million from taxation if they use their deceased spouse’s entire exclusion amount.
If a deceased person had an estate that was worth more than the federal estate tax exclusion amount, the decedent’s executor will need to complete IRS Form 706 . On the form, the executor will report the estate and generation-skipping transfer taxes. The current federal estate tax rate is 40 percent while the generation-skipping transfer tax rate is an additional 40 percent. A generation-skipping transfer tax may kick in if the testator left a chunk of their estate to their grandchildren or unrelated people who are at least 37.5 years younger than them.
A person who has been named as a testator under a wealthy person’s will may want to work with an attorney. When a significant amount of assets are at stake, there is the potential for disputes to arise if beneficiaries believe there is a problem with the estate administration . An attorney may be able to help the executor in the performance of all required duties.