What Is Estate Planning & Why Do I Need to Plan?
Estate planning allows you to arrange for the transfer of your assets after death and to decide who will benefit from your estate and to what extent. It also allows for efficient tax planning to make sure that your beneficiaries are not stuck with an enormous tax liability during and after the transfer of assets.
Do I Need A Will?
There is currently no law that requires individuals to have a will. Since there is not yet a clinically proven way to avoid death, however, it’s usually a good idea to have one so you can have control over how your assets will be distributed after you pass and who will be in charge of distributing them; making sure the right person is chosen for this task is pivotal to ensure a smooth distribution process . If you have minor children, a will allows you to plan for their care in the tragic event that they survive you while they are still minors. A will is also not permanent and allows for modifications to be made while you’re alive.
What Is Probate?
Probate is the process of proving a will valid, collecting and identifying the deceased person’s assets, and distributing them to the heirs named in their will. Once a will’s validity is proven, the court will then oversee as the executor named in the will pays off any debts and/or taxes owed by the decedent, and distributes the remaining assets to the beneficiaries named in the will.
How Long Does Probate Usually Take in NY?
Depending on its complexity and whether or not the will is contested, the probate process can last anywhere from several months to several years. On average though, a typical estate can take 8-12 months to be probated.
How Can I Avoid Probate?
The most common way to bypass the expensive and time consuming probate process is by placing you assets into an irrevocable living trust. Since the assets are then no longer in your name but in that of the trust, they will not need to be probated. After you pass away, the assets automatically become the property of the beneficiaries. Read more about how a living trust works here.
Is Probate Necessary If I Have A Trust?
If trust-based estate planning is executed correctly, probate can be entirely avoided. However, it’s not uncommon for individuals with living trusts to die owning property that they did not place into the trust. Unless said property is of extremely low value, usually under $30,000 in NY, probate can still be avoided. Otherwise, a pour-over will allow for any assets outside of a trust to be placed into said trust upon the grantor’s (creator of the trust) death.
What Is A Living Will?
A living will is a set of medical directives created by an individual for use by medical professionals to determine the extent of treatment that the individual would like should they become incapacitated or be in an end-stage medical condition where they are not able to communicate their own decisions.
What Is A Power of Attorney?
A Power of Attorney is a written document signed by a competent individual that specifies and authorizes another individual to make decisions on a range of matters on their behalf should they become incapacitated.
What Is A Springing Power of Attorney?
A springing Power of Attorney becomes effective if and when the person who signes the document becomes mentally incompetent, and in some case, physically disabled.
What Is Intestacy?
Intestacy refers to having died without a will. If you die without a will, your property will be distributed by the probate court according to the intestate succession laws active in your state.
What Are Beneficiary Designations?
A designated beneficiary is named on a life insurance policy or other financial account as the recipient of the assets in the event of the original account holder’s death. Most financial institutions offer a “Payable On Death” form which allows you to list a beneficiary for each of your accounts. Financial accounts with designated beneficiaries typically do not have to be probated.
What Information Should I Have On-Hand Before I Contact An Attorney to Draft A Will?
Before you meet with an estate planning attorney, you should have the following information.
- How you’d like for the assets to be distributed
- Name of the executor and alternate executor
- Name of guardians for your minor children
- A list of your assets and their estimated value
- Your existing estate planning documents
What Is A Trust?
Simply put, a trust is a legal arrangement in which a person or a legal entity manages money or property for the benefit of a designated beneficiary.
What Is A Special Needs Trust?
A Special Needs Trust (SNT) is a trust created for a disabled person with the goal of preserving their eligibility for public benefits/assistance.
Are There Limitations As to What The Funds In An SNT Can Be Spent On?
Yes. Because the sole purpose of a Special Needs Trust is to preserve a disabled person’s eligibility for public assistance, the funds in the trust cannot be spent on any potentially disqualifying expenses, often including food or shelter.