According to the American Bar Association (ABA) nearly 55% of Americans die without a Will or Estate Plan. In today’s world of tech and reliance on the internet, it is easy to be lured by advertisements claiming that you can save time and money by drafting your own will or trust using their do-it-yourself website, retail software, or fill-in-the blank will and/or trust kits. It is highly unlikely that these alternatives will create a suitable plan to accomplish your goals. In fact, simply signing a Will or Power of Attorney with a “do it yourself” plan may actually be worse than doing nothing, costing a “special needs” family member the loss of government benefits or resulting in an ex-spouse inheriting property meant for another. Only a qualified lawyer can interpret the myriad of laws bearing on property rights, taxes, Wills, Probate, and Trusts.
Moreover, internet programs and pre-packaged forms cannot provide legal advise to: (1) ensure forms are drafted correctly; (2) verify assets passed outside of your Will or Trust are properly handled; (3) address nuances of state and federal law; and (4) ensure relevant tax, legal and personal issues are properly addressed to meet your wishes and sustain your legacy. Wills and Trusts are generally inexpensive to create considering the costs of not having the proper instruments in place at the time of passing. Contact us today for a free consultation to see how we can develop an estate plan unique to your needs, goals, and wishes.
Last Will and Testament
Making a Will is on of the wisest and potentially most important investments in your life. If you pass without a Will the Surrogate’s Court takes over and appoints an administrator to collect and distribute assets. In New York, Trust and Estates Law essentially writes a Will for you and distributes your assets according to the “Distribution Rules of Intestacy.” This can be problematic as the law generally distributes to a surviving spouse and children. There is not specific gifting without a Will and assets are distributed in accordance with the statute.
In the case of surviving minor children, the Court will appoint a guardian to manage your children’s assets and all fees will be paid from your children’s distribution. This can be problematic as it is not guaranteed that the Court will appoint your spouse as the guardian of your minor children’s property. Moreover, if any portion of your assets are required to pay for your children’s education, clothing or living costs, prior Court approval is necessary. In addition, the range of investments available for the funds held by the guardian may be limited. If you and your spouse die at or around the same time, it is important that your Will have a provision not only addressing guardianship of the property, but also, and probably most importantly, naming a guardian of the person for each minor child. A guardian of the person is given custody of the child during minority. As you can see it is important to create the proper instruments to meet your goals and preserve your legacy.
Primary Reasons for a Will
- To leave your property to those whom you care in the manner and proportions you choose;
- To choose your Executor;
- So that the estate will not have to incur the cost of an administration bond to insure the faithful performance of the Executor chosen by the Court; and
- To have any estate taxes which may be due on your estate located among your beneficiaries according to your wishes, rather than by statutory rules.
Living Wills/ Healthcare Proxies/ Powers of Attorney
Living Wills, Healthcare Proxies and Powers of Attorney are generally things that a lot of families often overlook. The documents are generally inexpensive to create and worthwhile to give you peace of mind to know that your wishes are carried out if you become incapacitated.
A Living Will is a legal document in which you, as a competent adult, can state future healthcare wishes. It is used by people who want to express their feelings about withholding or withdrawing of life-sustaining treatments. Many persons want to make clear their objection to unwanted medical measures in advance. In contrast to their persons wish to state that they favor administration of life-sustaining measures. In essence, the Living Will is intended to anticipate the situation where you may be in an incurable or an irreversible mental or physical condition with no reasonable expectation of recovery.
A Healthcare Proxy is a legal document that allows a competent adult to appoint another person as an “agent” to make decisions for you regarding your health care in the event you lose your decision-making capacity or the ability to understand and appreciate the nature and consequences of health care decisions. The proxy can be general and apply to all medical decisions or it can impose limitations and spell out specific instructions. Several States may limit its applicability in certain situations. Therefore, it is essential to contact an attorney to write and execute this document on your behalf.
Powers of Attorney
Generally, there are two types of Powers of Attorney: (1) a springing; and (2) a durable power of attorney. The two are distinguishable as to when they go into effect. A durable power of attorney goes into effect at the moment it is executed, whereas, a springing power of attorney goes into effect at the movement of an event, such as incapacitation.
The power of attorney is a legal document that should be included in every estate plan. In essence, it provides your agent with the authority to pay your bills and handle your financial affairs if you become incapacitated.
A common misunderstaning is that the legal authority granted by a power of attorney ends at the moment of passing. Subsequent to passing legal authority transfers to the Executor of the Estate through appointment by Letters Testamentary.
It is seldom recommended to execute a general power of attorney because it provides unlimited ability for your agent to act on your behalf. It is revered today and most banks and financial institutions will not accept a general power of attorney. Contact us today for a free consultation to discuss how we may help you meet your needs.
In general, all trusts fall into one of two categorties: (1) a revocable trust; or (2) an irrevocable trusts. A revocable trust is also known as a living trust as the grantor can revoke the trust at any time during his or her lifetime. In other words, one can change their mind and go back to the drawing board if something changes. An irrevocable trust, on the other hand, specifically removes the property from the control of the grantor. Supplemental needs trusts and medicaid asset protection trusts are common irrevocable trusts.
There may be certain benefits and unintended consequences to creating an irrevocable trust that must be discussed with an attorney to ensure your goals and wishes are met. The revocable trust is one that may be changed up to and until the time of death. A revocable trust is commonly executed in lieu of a will to avoid probate.
However, the creation and funding of a revocable trust does not eliminate the need for a valid will. There will inevitably be some asset that was not transferred to the trust, making the requirement for a pour-over will necessary. In essence, the pour-over will captures all of your property outside of your trust and places it into the trust to entirely avoid probate.
The living trust is in existence during your lifetime. It has a trustee, usually yourself, and a successor trustee to take over at the time of your passing. While you are living, the trustee is generally responsible for managing the property as you direct for your benefit. When you pass, the successor trustee is generally directed to either distribute the trust property to your designated beneficiaries, or continue to hold the property and manage it for the benefit of your beneficiaries. Unlike a will, the trust can provide you with a vehicle to manage your property during your lifetime, and authorize the trustee to manage the property and use it for your benefit, or your family’s benefit, should you become incapacitated. Contact us today for a free consultation to learn if a trust is right for you and your family.
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