Worldwide, every minute, 120 people pass away. Death is not something we like to think about, but it is a certainty in all our lives. We don’t get to choose when our time in this world ends. One minute you’re there, and the next, someone has to carry on without you.
How can you help your family, friends, and loved ones carry on after you pass? The answer: establish an estate plan today. Don’t wait until it’s too late to take action. Getting started on your estate plan is not as hard as you might think, but it helps to have a starting place. At New York Legacy Lawyers, our New York estate planning attorneys can assist in drafting essential documents such as wills, trusts, and powers of attorney, ensuring that your assets are protected and distributed according to your intentions. Take the first step today and contact us at (718) 713-8080 to begin the process of securing a stable future for your loved ones.
To help you get started with your estate plan, we put together this short Estate Plan for Dummies article that boils down the complexities of estate planning into bite-sized morsels.
Of course, we don’t think you’re a dummy at all. You wouldn’t be reading this article if you were!
Here’s what you need to remember about everything you’re about to read. You don’t have to be a legal genius to start the process of protecting your family. Our New York estate planning attorneys at New York Legacy Lawyers have put together estate planning tips to help you. You can start today, with the right help!
ESTATE PLANS FOR DUMMIES: WHAT YOU SHOULD KNOW ABOUT ESTATE PLANNING
Estate plans should be a top priority as they cover many areas of your life, including personal wishes, healthcare desires, financial matters, and even self-advocacy. Most people are familiar with at least one idea of estate planning. Often the document people tend to start with is a Last Will & Testament.
In your last will, your goal is to identify tangible and intangible assets and to describe what you want to happen with them, clearly. Beyond assets, your last will provide a platform for you to share thoughts and even embed other parts of your estate plan, such as a trust.
TIPS FOR WRITING YOUR WILL
When you sit down to write your will, you might want to identify to the best of your ability, the answers to these questions.
- What properties do you own?
- Will you need a guardianship plan for your children?
- Who will be your beneficiary?
- Who should get ownership of pets?
- Who is your executor?
- Have you considered a trust?
- Do you trust anyone else to make financial decisions for you?
- Do you trust anyone else to make healthcare decisions for you?
- How much will your estate pay in taxes after you die?
- Is there anyone you DON’T want inheriting any part of your estate?
These questions are only the starting point. Many situations could make your last will difficult to draft on your own.
Trusts for Dummies
A trust is a legally binding document that enables an individual or organization to oversee and hold your finances and assets for your own benefit or for the benefit of others. It serves multiple functions, including estate planning, tax planning, medical planning, and charitable giving.
In contrast to a will, which takes effect after death, a trust has the ability to manage and invest your assets both during your lifetime and after your passing. Furthermore, it bypasses the probate procedure, which can be lengthy, costly, and exposed to the public. The individual who creates the trust is referred to as the “grantor” or “trustor,” while the person entrusted with managing the assets is known as the “trustee.” The recipient of the assets is called the “beneficiary,” and the assets held within the trust are known as “trust assets.”
Various types of trusts exist, including living trusts and testamentary trusts. A living trust remains active during your lifetime and may continue to operate after your death, providing ongoing management and distribution of assets. On the other hand, a testamentary trust is established through your will and only takes effect following your death. There are also specific types of trusts designed for particular situations, such as supplemental needs trusts and spendthrift trusts. Supplemental needs trusts enable you to allocate funds for individuals with disabilities while ensuring their eligibility for government assistance is maintained. Spendthrift trusts, on the other hand, restrict access to funds for individuals who struggle with managing their finances or have multiple creditors. You have the option to create both of these trusts either as living trusts or testamentary trusts.
Maximize the protection and preservation of your assets for future generations with the assistance of a New York estate planning attorney. At New York Legacy Lawyers, our skilled attorneys have knowledge of trust law and can guide you through the complexities of establishing and managing trusts, allowing you to secure your legacy and provide for your loved ones. Contact us today to schedule a consultation and take the first step towards a secure future.
CLARIFYING FINAL WISHES
While answering the questions, think about who will be there to interpret the answers you’re pondering. Will it be your eldest child? A grandchild? Your spouse? Try to frame your answers in ways that would make sense to them. This person, or these people, will be the executor of your decisions.
Your executor will be responsible for ensuring the beneficiaries of your will receive what you want them to.
CHOOSING POWER OF ATTORNEY
A Power of attorney, or POA, gives someone the authority to act on your behalf regarding legal matters, financial situations, or in regard to your health. In this article, we’re mainly talking about two types of POA.
First, there is the financial POA. This POA is the person who will be able to speak on your behalf about your finances if you can’t be there, or are unable to manage them due to ongoing health concerns (dementia, incapacity, etc.).
Second, is the healthcare POA. In New York State, the proper title of a healthcare POA is a Healthcare Proxy. Your healthcare proxy is the individual that will make decisions on your behalf regarding crucial health matters. Some of the decisions your healthcare proxy might make for you include life support choices, and following through on a do not resuscitate order, or basic healthcare decisions if you’re not able to understand them at some point.
Wills and Trusts for Dummies
Wills and trusts are both legal tools for passing on your possessions when you’re no longer around, and both may be adjusted or withdrawn while you’re alive. The main difference between the two lies in how they transfer property to the people you’ve chosen to receive it.
A will, or Last Will and Testament, is a written statement where you name an executor who will manage the division of your possessions after you’re gone. A will can also be used to choose a guardian for your underage children and can contain details about your funeral or memorial service, such as whether you prefer burial or the spreading of ashes.
A trust, meanwhile, is a legal document that forms a fiduciary relationship between your assets and a selected person or organization. This selected party, called the trustee, has the power to manage your assets for the benefit of your chosen recipients. Trusts are classified into irrevocable trusts, which can’t be changed once they’re set up, and revocable (living) trusts, which you can alter anytime you want.
After you’ve written a will, you might want to think about adding a trust to your estate plan if:
- You Want to Avoid Probate: Wills require going through the probate court process to be legally enforced. Any property given through a will must go through probate, which involves assessment, inventory, and court-approved distribution before the people you’ve chosen can receive their inheritances. In contrast, any assets in a trust don’t have to go through probate, which can make the inheritance process quicker and less expensive.
- You Value Privacy: The probate process for wills is public, which means the details of your estate are made public record. Trusts, on the other hand, are private documents that can’t be accessed by anyone not involved.
- You Have a Large Estate: If you have a lot of assets, valuable possessions, or a successful business, you might need a trust to reduce your tax liabilities. Both living and irrevocable trusts take effect as soon as they’re set up, meaning they can be used right away for tax purposes.
- You Want to Reduce Legal Costs: A well-organized trust can significantly lower the chance of legal disputes after you’re gone. Trusts are legally binding and hard to challenge, which means your heirs are more likely to respect your wishes, reducing the need for court action.
- You Have Specific Beneficiary Needs: If you have underage children, are worried about the financial responsibility of your chosen recipients, or have a lot of people you want to leave things to, trusts offer more control over distribution. For example, you could arrange for inheritances to be given out gradually to prevent irresponsible spending, instead of releasing all the money at once.
DON’T FORGET YOUR DIGITAL ASSETS
More and more, digital assets are becoming a standard part of these estate planning discussions. Your digital assets include things like usernames and passwords for your online accounts, logins for your computer(s), phones, and other devices, perhaps even an online business.
Having information regarding your digital life and assets available for your chosen loved one ahead of time can save them a world of trouble, and heartache. Now, they’ll be able to easily log in to pay bills or access other types of financial information. On a more personal level, they can access your photos, your documents, even your social media – and start taking the necessary steps to store those aspects of your life elsewhere or in the case of social media, transition them appropriately.
AVOIDING ESTATE PLANNING BLUNDERS: TIPS FOR SUCCESS
Here’s a guide to assist you in writing your Estate Plan and avoiding common mistakes. Listed below are some frequently occurring Estate Planning mistakes that you might want to avoid.
- Neglecting Estate Planning. Unfortunately, many of us tend to postpone creating an Estate Plan. However, failing to prioritize or complete your Estate Plan puts the financial future of your estate, your legacy, and your loved ones at risk.
- Failing to Communicate with Family and Friends. While there may be circumstances where it’s not possible to discuss your Estate Plan with loved ones, it’s generally a good idea to have at least a brief conversation with them. Doing this can help in establishing clear expectations and avoiding disagreements or conflicts among your beneficiaries after you pass away. If discussing your plan is not an option, you can include language in your estate documents that specifies that anyone who contests the plan may be excluded.
- Naming One Beneficiary. It is important to name multiple beneficiaries for your assets in your Estate Plan. It is recommended to list multiple beneficiaries to guarantee the distribution of your assets.
- Failing To Designate a Power of Attorney or Health Care Proxy. Appointing a Power of Attorney and/or a Healthcare Proxy is crucial since they will act on your behalf if you are unable to make decisions due to incapacitation. These roles typically expire upon your passing, so it’s essential to ensure they are in place while you have the capacity to decide.
- Disregarding the Need for Preparing Final Arrangements. It’s important to plan ahead for your final arrangements to make things easier for your loved ones during a difficult time. This includes deciding on your funeral or burial arrangements and communicating your wishes for end-of-life care, such as hospice or assisted living.
- Forgetting to Include Digital Assets. Don’t forget about your digital assets. Create a Digital Estate Plan to specify how you’d like these digital assets to be handled after you pass away. This is a relatively new aspect of estate planning, but it’s important given the technological world we live in.
- Failing to Consider Your Children’s Futures. When creating an Estate Plan, it is essential to thoughtfully contemplate how you intend to allocate your assets among your heirs. This is especially important if your children are still young, as the wording of your directives can have a significant impact on their future. You may want to provide specific instructions on how your guardians should use the assets to benefit your children or to take care of them in other ways.
- Overlooking Tax Obligations. It is crucial to consider tax liability when creating an Estate Plan. Estate taxes can significantly reduce what your beneficiaries receive. You should also think about how gifts to individual heirs may impact their taxes.
- Failing to Safeguard Your Estate Plans. It’s important to secure your Estate Plan so that your heirs can access it when needed. Consider storing it in a secure but accessible location instead of a safety deposit box. Keep all of your Estate Planning documents together in a safe place to ensure your heirs can find them easily.
- Failing to Keep Your Estate Plan Current. Regularly reviewing and revising your Estate Plan is crucial. Life changes such as marriage, divorce, and the birth or death of a family member can impact your plan, and it’s important to make necessary updates to avoid complications later on.
MAKE A PLAN THAT WORKS
We hope that in reading our Estate Planning for Dummies, you’ve got a list of questions longer than the ten we gave you in the article. If so, that’s great! We are here to help you figure out those answers.
At New York Legacy Lawyers, our New York estate planning lawyers understand how personal, and unique each estate plan needs to be. We know how intimidating the planning process can be when you’re facing it alone. It’s our mission to relieve any stress you may have about the planning process.
|Estate Planning Checklist||Executor’s Responsibilities|
|Identify beneficiaries||Ensure beneficiaries receive designated assets|
|Determine distribution of assets||Follow instructions in the will for asset allocation|
|Appoint a guardian for minor children||Oversee the well-being and care of minor children|
|Designate an executor||Manage the administration of the estate|
|Create a trust (if applicable)||Administer the trust according to its terms|
|Prepare healthcare directives||Make healthcare decisions based on the individual’s wishes|
|Establish a power of attorney||Handle legal and financial matters on behalf of the individual|
|Secure digital asset information||Provide access to online accounts and digital assets|
|Review and update the estate plan regularly||Ensure the estate plan reflects current wishes and circumstances|