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Long Island Elder Law Blog

What to consider in estate planning

The end of the holiday season and transition into a new year is an ideal time to prepare an estate plan. New York residents should start by inventorying their assets both large and small. It is critical that a person doesn't forget to leave behind a list of online passwords or other instructions related to digital assets. It is also important to have a conversation with other family members to articulate that plan once it is made.

A family member or other trusted individual will ideally be granted a power of attorney. This allows that individual to pay bills, sell assets or otherwise manage a person's financial affairs while he or she is incapacitated. Generally speaking, a spouse can't access accounts or sell assets unless they are jointly owned. The use of a living trust can specify what happens to assets that don't have a beneficiary designation attached to them.

The estate planning benefits of life insurance

Those who are turning 55 in the near future may still be trying to find solutions to both current and long-term financial issues. However, New Yorkers who are attempting to create an estate plan may want to make a life insurance policy a part of that plan. Perhaps the most important benefit of a life insurance policy is that it can provide cash at the time of a person's death.

This can make it easier for surviving family members to pay final expenses such as for a funeral. The money a policy provides could also be helpful for paying medical or other outstanding debts at the time of a person's death. It is not uncommon for individuals to want to divide assets such as a business to multiple children upon their death. However, dividing the business may be tricky based on the needs and goals of the beneficiaries.

Methods for revoking a power of attorney

A power of attorney is one of the most useful and versatile estate planning tools available to New York residents. The document will appoint an agent, or attorney-in-fact, to act in the place of the principal with limited or broad powers. If it's a durable power of attorney, the powers will continue if the principal becomes disabled.

However, circumstances in life may change and the POA will need to be revoked. In some cases, the reason for the POA is no longer existent. In other times, the principal may want another agent or has lost trust of the previous agent. If the principal is not under a mental disability and has the faculties to understand the document, the POA can be revoked. There are several ways this can be accomplished.

Three mistakes to avoid when planning an estate

New York residents in the process of estate planning should remember three common pitfalls that may cause problems for their plans. In summary, these issues are a lack of information, beneficiary designations gone wrong and outdated plans. These snags can unravel estate plans and cause family feuds that may go all the way to court.

For example, lack of information can cause problems if the family does not have access to passwords used for digital assets by the deceased. Digital accounts such as homeowners insurance, brokerage accounts and bank accounts should be listed in a master roster that makes it easier for family members to gain access. This roster, which should be physical to prevent cyber-theft, could be kept in a safe deposit box or even at home.

Potential estate planning problems and tips for avoiding them

New York fans of comic book artist Stan Lee may know that he ran into some issues with his finances and his associates before his death. For example, earlier this year, he said that $1.4 million went missing from his account. In a dispute with his daughter, he signed a notarized document claiming she befriended men who wanted to take advantage of him among other accusations and then took it back. Furthermore, he has worked with several managers and attorneys throughout his career.

Although it has not yet been reported whether he had an estate plan, his daughter may have a lot of paperwork to get in order. This can be the case even when people do not have large, complex estates. There are also certain documents everyone needs as part of an estate plan including powers of attorney and a will or a trust.

About silent trusts

New York residents who are trustees of irrevocable trusts have certain duties regarding informing beneficiaries about the trust. Specifically, they have an affirmative duty to give some information about the trust to beneficiaries. In turn, beneficiaries are given the right to ask for certain information about the trust.

The rights of the beneficiaries and the responsibilities of the trustees are meant to make sure that the beneficiaries have the information they need to adequately protect their interests. The trust settler may be able to use the trust instrument to restrict or put aside the requirement in some states. In other jurisdictions, due to public policy, the requirement cannot be waived.

What to do after executing an estate plan

For New York residents and others, creating an estate plan is an ongoing event. After the paperwork has been drafted and executed, there are many tasks that still need to be completed. For instance, it may be necessary to make sure that a trust is properly funded and that the trust owns the items placed inside of it.

It is also important to know that beneficiary designations are handled outside of a will. Therefore, if they are not made properly, it can have a negative impact on an entire estate plan. At some point after an estate plan document has been crafted, it could become obsolete for a variety of different reasons. Generally, documents need to be altered because of a change to the tax code or because of a change in personal circumstances. For example, an individual may get divorced, have a child or otherwise be in a situation where estate plan needs have changed.

Reasons to use estate planning

New York residents may use estate planning as a way to help prevent their estates from being overly taxed. However, with the passage of certain federal estate tax legislation, which has increased the number of exemptions for estate, federal, gift and GST taxes, people may want to take the time to consider other reasons why estate planning can be a good idea.

One important reason for a person to create an estate plan is that it can provide a sense of order after he or she has died. In the immediate aftermath of a loved one's death, surviving family may find it difficult to have to manage a disorganized estate. This can be avoided with a well-developed estate plan that can help guide surviving loved ones through the management of the estate. Estate plans should include a will, revocable trust, itemized lists of assets and debts, a list of login information for digital assets and detailed instructions regarding the creator's last wishes.

Business owners can benefit from an estate plan

Small business owners in New York may have particularly strong reasons to think about their estate plans. Several celebrities have died without wills, leaving behind confused beneficiaries and valuable music catalogs. For exampleAretha Franklin's 2018 death without a will came despite the fact that she had an estate worth approximately $80 million. Prince died without a will in 2016, leaving behind a $300 million estate that has still not been finalized due to disputes among potential beneficiaries. The kinds of delays and problems caused when something like a business is not addressed can be devastating to the future of the enterprise as well as emotionally draining to loved ones.

When people don't have a will, their property is distributed according to state law on intestacy. In general, these laws favor spouses, children and parents. Even when people's relationships with their family members are positive and mutually supportive, making a will can help to avoid complicated issues that can arise. For example, in order to satisfy the percentage division under state law, a business could be sold and the proceeds divided. This could be averted by having a will that covers this issue.

Why everyone can benefit from an estate plan

Being too young or being single and childless are some of the common excuses people in New York often use to justify not making estate planning a priority. According to one survey, the majority of millennials don't have a will. While some people may not want to think about what will happen after their death, procrastinating can have potentially serious consequences. For instance, if an individual dies without a will, which is referred to in legal terms as intestate, the state will determine how assets and property are divided. Without a medical directive in place, the default decision is usually to prolong life artificially.

With wills, decisions about how assets are divided can be made proactively, and an executor can be named to ensure that everything is distributed as specified. Single, healthy millennials may be advised to also consider a durable power of attorney, a document that states who is authorized to make financial decisions in the event that an individual is unable to do so. With an advance medical directive, decisions concerning life support and comfort measures can be made ahead of time, or a specific individual can be named to make such decisions.