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Long Island Elder Law Blog

Acting as an estate executor

Many New Yorkers feel honored when they are asked to serve as estate executor by a loved one. This is an important role that requires a high level of trust. In many cases, however, it's often wise for the person being asked to request some time to think over whether they wish to take on the responsibility.

The reason why somebody might hesitate before agreeing is that an executor takes on significant legal responsibilities that may last for several months. Depending on the complexity of the deceased's estate plan and assets, the executor could be bogged down in legal work for years. In addition, an executor could get immersed in family and social conflicts that can have long-standing repercussions on personal relationships.

How a pour-over will can protect a trust

Trusts have become an essential part of estate planning for many people in New York. These instruments can provide a range of benefits to people during their lifetime and beyond. Some kinds of trusts can provide tax advantages. Others provide a much higher level of privacy and control in directing the distribution of a person's assets after he or she passes away. Unlike a will, a trust does not go through the probate court. Therefore, it is not a public document and it is far more complicated or difficult to challenge a trust. In addition, trusts are an important way to pass on wealth to people who are not able to manage it themselves.

Parents of minor children opt for trusts frequently to ensure their wealth goes to their kids. They can ensure that their children receive benefits from the trust but do not control the principal until they are able to manage it effectively. Similarly, special needs trusts are important for the family members of people with physical or mental disabilities. Using these instruments, people can leave critically necessary funds for their loved ones without inhibiting their eligibility for government programs and assistance with housing and health care.

Caring for pets after passing away

New York residents may want to make sure that their pets are cared for after their owners pass on. This may be done by adding instructions to a living trust or to a specialized pet trust. It can also be a good idea for pet owners to carry cards that alert others to the presence of their animals. This may prevent a scenario in which an animal is left alone for hours or days after their owners die or become incapacitated.

Animals that are left alone for a significant amount of time can become stressed or anxious. They may also be at risk for going hungry or becoming dehydrated. If a pet owner dies, a trust can include instructions for who should care for the animal and how. The trust is funded by the individual who creates the document and overseen by a trustee.

The benefits of a dynasty trust in estate planning

Families in New York with significant assets frequently use trusts to pass down wealth. These trusts have many advantages related to tax planning and asset control. When a grantor wants to make sure money is passed down even further, perhaps to grandchildren and beyond, they may want to consider using a dynasty trust. This type of trust is designed to last more than one generation past the grantor. It has two unique benefits for multi-generational families.

A dynasty trust helps keep wealth out of the transfer tax system so that beneficiaries can keep as much of their inherited wealth as possible. If a dynasty trust were not in place, assets would be subject to gift and estate taxes each time they passed through one generation to the next. This way, beneficiaries can still benefit from their family's wealth without incurring the penalties of ownership.

How chronic illness can impact an estate plan

A chronic illness such as cancer or Alzheimer's disease could have a significant impact on a person's life. It can also influence how a person constructs his or her estate plan. Ideally, an individual who has a chronic illness will create a medical power of attorney as well as create a Health Insurance Portability and Accountability Act (HIPPA) release. This will allow another party to access an individual's health records and make medical decisions on the incapacitated person's behalf.

It is important that the HIPPA release clearly states that it was created voluntarily and by someone of sound mind. It should also clearly state what types of records can be accessed by a designated third party. Those who are living with a chronic illness may benefit from creating a living will. The will can further explain what the illness is and how it could impact the maker.

TOD accounts may simplify estate planning process

An estimated 57 percent of adults in New York and throughout the United States don't have a trust or will. When these individuals pass away, family members must go to a probate court in order to sort out the finances of the deceased. Even those with wills must often go through probate. This can cause contention and hostility between family members and friends. A transfer on death (TOD) account may be the solution to these issues.

A TOD account will automatically transfer the assets to the named beneficiaries upon the death of the account holder. Multiple beneficiaries can be named, and the account can be divided up evenly between these beneficiaries. For example, those with $300,000 in a savings account who name their three children as beneficiaries would be able to give each of the children $100,000 upon their death.

Mistakes in estate planning

It is not uncommon for people to make mistakes with estate planning. One way New York residents can avoid making estate planning mistakes is to consult with an attorney.

One mistake to avoid is not having an estate plan at all. People who die without a will leave what happens to their estate to the courts. The courts will determine who will act as executor and how the decedent's assets will be disbursed. It is also not unusual for married couples to not have a will in place because they believe that all assets will be automatically passed to the surviving spouse. However, this is incorrect.

Avoiding high-profile estate planning issues

The estate planning practices of many celebrities can serve as a guideline for what New York residents should not do. Unfortunately, lots of celebrities do not create wills, trusts or other key estate documents. This leads to their assets being tied up in years of litigation after they pass away. It was originally reported that Aretha Franklin, the famed singer who passed away in August 2018, did not have a will. Her estate has been in probate court since her death.

Now, three different handwritten wills have been found and filed with the court in an attempt to determine if any of them represent her legally expressed wishes. Because there was no clear will, a significant amount of her estate is being consumed by legal fees as well as exacerbating family conflicts over the future of the money. In the end, the probate court will distribute her estate, but the results may be dramatically different from what she would have wanted. All estate owners, even those with relatively few assets, can help to prevent similar outcomes by preparing for the future.

What to consider when choosing an IRA beneficiary

Anyone in New York or any other state who has an IRA will ideally name a beneficiary to that account. This is because failing to do so means that it goes into a person's estate when he or she dies. That may increase the potential tax bill that the estate has to pay. In addition to naming a primary beneficiary, it may be necessary to name alternate beneficiaries. Doing so can be helpful in the event that the primary beneficiary dies.

Deciding who should be the primary beneficiary depends on a variety of factors, and there isn't necessarily one best or right choice. Those who are married may want to strongly consider leaving an IRA to their spouses. Doing so can extend the period of time over which distributions can be made, which can reduce the tax burden on the beneficiary.

Estate planning mistakes related to benefit plan designations

Many people who start new jobs in New York don't think much about the assortment of paperwork they first get from HR. Some of these documents, such as life insurance forms, company stock purchase plans and retirement plans, require beneficiaries to be named. But when it comes to who gets what when it's time to pass along assets, there's a common assumption that details of this nature will be covered by a will.

This isn't always the case. Listed benefit plan designations for beneficiaries are not part of a deceased individual's probated estate. Most people name a spouse as a primary beneficiary and kids as contingency beneficiaries. Therefore, if a spouse predeceases an employee with benefit plans, the plan's proceeds could automatically be passed along to children when they reach the age of maturity, which is 18 or 21.