LAST WILL AND TESTAMENT
The foundation of any proper estate plan is a Last Will and Testament. A Will is a legal document in which a person specifies where, or to whom, they want their assets (real estate, business, money, investments, etc.) to go upon their death. But most people do not realize how many other decisions can be made by having a Will professionally prepared. The following are just some of the benefits of having a Will:
Choose a Guardian for your Minor Children
If both parents of a child die, and the child is still under the age of 18 years, a legal guardian will have to be appointed by the Courts for the minor child or children. You can specify who will become the legal guardian of your children in your Will. But, without a valid Will, the Court will decide amongst your surviving family who will be appointed as guardian.
Protect Your Children from Divorce and Creditors
For those who are concerned that the assets they pass to their children or grandchildren will be lost through divorce or because of potential debts, lawsuits or other liabilities of their children, a Will can provide a simple solution. Through the use of testamentary trusts, we can assist you in leaving a legacy to your children that allows them to liberally access their bequest while protecting those same assets from divorce and creditors.
Minimize Estate Taxes
While there are many strategies and complex planning techniques that we use to help minimize estate tax for our clients, a Will is often the first step. By ensuring that your individual estate tax exemption is properly utilized, you can potentially save hundreds of thousands of dollars or more in tax.
Appoint An Executor
An Executor is the person named in a Will who is in charge of protecting the assets in your estate, and ensuring that your wishes are carried out. Without a Will, family members often fight over who will be in charge of the estate and the resulting litigation can be very costly, both in money and damaged relationships. With a Will you can choose the person or people you believe are best suited for the job, instead leaving the choice to your surviving family.
Make your Wishes Known
It may seem obvious, but our years of experience have taught us that nothing avoids family disputes like the act of simply and clearly laying out your wishes for your estate in writing. Do your family and loved ones a favor and let them know what your wishes are, so that they can avoid the time, expense and heartache of fighting over what they believe you would have wanted.
What is a living trust?
Living trusts come in many different forms, the most common of which is the Revocable Living Trust. A Revocable Living Trust allows you to transfer your assets (your home, vacation property, investment property, bank accounts, non-qualified investment accounts, etc.) into the name of the Trust, but still manage the assets as if they were still titled in your name. However, when you die the Revocable Living Trust acts like a Will by providing for the disposition of the Trust’s assets. There are a number of reasons why a Revocable Living Trust may be desirable as part of a comprehensive estate plan. Consider the following:
Ownership in Real Estate outside of New York State
If you own any interest in real estate outside of the State of New York, you should give very strong consideration to having a Revocable Living Trust created. If you have only a Will when you die, and you own real estate outside of New York, your Executor will have to probate your Will in New York AND in each State in which you own real estate. This will cause the time and cost of administering your estate to increase exponentially.
By transferring your interest in your out-of-State property into the name of a Revocable Living Trust, the Trust property can be immediately transferred to your beneficiaries without the need for hiring additional attorneys and expensive and time-consuming Court proceedings.
When a person dies, and has a Will, it is often necessary to Probate the Will in order to collect the assets of the recently deceased. After all, a bank is not simply going to believe you when you tell them that you are entitled to all of the money in someone’s account; even if that person your husband or wife. Instead, the Will of the decedent must go through a formal Court process called Probate. Depending on the complexity of a person’s estate, and whether or not there are disputes or other issues that arise, the Probate process can take anywhere from two months to years to have an Executor appointed who will be able to access the decedent’s finances.
For those with small children or disabled beneficiaries who may need immediate access to funds, or those who simply do not wish for their family to deal with the time and expense of the Probate process, a Revocable Living Trust is a great alternative to a Will. A properly funded Revocable Living Trust does not require the involvement of a Court or the permission of any other authority to pass your assets to your intended beneficiaries. In most cases, this will save your family the time and expense of the Probate process and make the transition of your estate smooth and seamless for your family.
Most people do not realize that the Probate process is a public Court proceeding. What does this mean? It means that, when a person dies, and their Will is filed with the Court as part of the Probate process, anyone can go to the Court and see a copy of the Will. For many, this will not matter. But, for those who do not wish for certain members of their family, colleagues, creditors or the general public to see the contents of their Will which may include highly sensitive personal and financial information, a Revocable Living Trust can offer a level of privacy that a Will does not.
A Revocable Living Trust does not become public record when its creator dies. The added privacy of a Revocable Living Trust can, therefore, prevent a number of unwanted problems from arising. For instance, if you wish to leave your children or beneficiaries unequal amounts of your Estate you may wish to keep this fact private to avoid hurt feelings and fighting. Similarly, creditors have access to Probate records and may be able to file claims against some or all of a person’s estate. Those who wish to prevent creditors from obtaining more information than is necessary about their estate and finances are well advised to consider a Revocable Living Trust for its privacy.
Power of Attorney
A Power of Attorney is one of the most important documents a person can have. Most people think about Estate Planning in terms of being alive and well or dead and gone. The reality is that at some point in the average person’s lifetime, they will become disabled and need assistance with paying bills, transferring money and even protecting their assets. A properly drafted Power of Attorney can allow an agent or agents that you select perform these types of financial transactions, and many more, on your behalf. While this may be a scary proposition to some, the alternative is far worse.
If you become disabled, are unable to manage your own finances and do not have a Power of Attorney how will your bills get paid, groceries and other necessities purchased or checks deposited? The short answer is that they won’t. Instead, your family will be forced to go into Court to obtain legal guardianship over your property; a costly and time-consuming prospect considering that your expenses are piling up, services are being discontinued and there is no way to access your finances. A Power of Attorney could help avoid all of these issues.
Health Care Proxy
A Health Care Proxy is a document in which you appoint an agent or agents to make health care/medical decisions for you when you are not able to make your own decisions. If you have ever been to the hospital, one of the documents that the hospital requires that you complete (if you do not already have one) is a Health Care Proxy. Similar to a financial Power of Attorney, having a Health Care Proxy will reduce the likelihood that your family or loved ones will have to obtain guardianship over you in the event of an accident or catastrophic illness such as Alzheimer’s disease, and will allow those individuals to quickly and appropriately direct your medical care.
Living Will (Advanced Directive)
A Living Will specifies the medical decisions you wish for your family and loved ones to make for you in various circumstances if you cannot make those decisions for yourself. For instance, if a doctor has determined that you are terminally ill and have no chance for recovery, do you wish for all medically appropriate measures to be taken to keep you alive as long as possible, or do you simply wish to be made comfortable and receive palliative care? If you do not have a Living Will, your family and/or health care agent(s) will be forced to guess what you would have wanted. And, if members of your family disagree as to what your wishes may have been, a long, drawn-out Court battle may be your final legacy. Remove any uncertainty by making your wishes know with a Living Will.
For more information on Estate Planning or to speak with someone, please contact us here.