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Long Island Elder Law Blog

How to protect the legitimacy of a DAPT

New York residents may be able to use a domestic asset protection trust as part of their estate plan. One of the most common reasons such a trust is used is to protect assets from creditors. However, state law may allow for the transfer of assets to such a trust to be voided. In many cases, this applies to existing creditors whether they are known or not.

Therefore, those who choose to use a DAPT may benefit more by using it as a means of protecting against claims from potential future creditors. Ideally, those who create a DAPT will take whatever steps are necessary to avoid the perception that a transfer was made with fraudulent intent. Steps may include putting only a limited amount of assets into the trust or having conversations to learn more about ownership limitations inherent with such an arrangement.

Mistakes in estate planning

Estate planning can be used by people in New York to protect their assets for future generations. However, there are some common estate planning mistakes they should take care to avoid.

Putting off creating an estate plan may be one of the most significant mistakes people can make. If the proper tools are not in place when the unexpected happens, what happens to an estate will be determined by the laws of the state in which the deceased person resided. The laws of intestacy will determine to whom assets will be distributed and the manner in which they will receive them.

Keeping legacies alive through trusts

When many New York residents think about bequeathing their estate to their family members, they may be mostly thinking about the assets that they spent a lifetime working towards. However, many residents also wish to leave behind their knowledge. While this can be difficult, some may have the ability to do through certain assets, such as a company or a work of art. In order for these types of assets to continue to live past death, people should consider legacy planning.

Establishing trusts as part of legacy planning is extremely beneficial as owners have the ability to put conditions on how the assets are used or distributed. The trusts can also protect the assets from lawsuits or creditors that may come after them after death. Further, establishing trusts can avoid probate, a process that is public and that is often lengthy and expensive.

Preparing for long-term care

The majority of seniors living in New York and around the country will eventually need long-term care, at least for a period of time. Unfortunately, many of these people are financially unprepared to receive such care.

One reason why so many seniors are unprepared to pay for care is that they mistakenly believe that their insurance or Medicare will provide coverage. This is generally untrue, and Medicare will not cover an extended stay in a nursing home or non-skilled home health care. In many cases, both types of care are needed by seniors.

What people get wrong about legacy planning

New York residents may have heard the term legacy planning used interchangeably with estate planning. While similar, a legacy plan is more about taking steps to craft a reputation as opposed to merely transferring assets. It is generally seen as being proactive about establishing an estate plan as opposed to being reactive. One misconception about legacy planning is that it is egotistical to create one.

Some may feel as if they haven't done anything of note that should be preserved or remembered by future generations. However, the truth is that legacy planning is about helping a person become the best versions of themselves and memorializing those accomplishments after death. Another misconception is that creating a legacy plan means controlling heirs from the grave. While it is possible to do this, it is not necessarily the intent of such plans. Instead, the intent is to empower heirs to use resources in a constructive manner.

Updating estate plans when life changes happen

Some New Yorkers write their estate plans and then forget about them. When people fail to review and change their estate plans when they experience major life changes, there may be some unintended consequences.

People who decide to end their marriages should review their estate plans while their divorces are pending and make changes to their beneficiaries if their estranged spouses are named. If they die before their divorces are final and have not made the changes, their estranged spouses may receive the proceeds of their estates rather than their family members.

Everyone should have a will

People in New York who don't have substantial assets may not think they need an estate plan. However, regardless of one's financial standing, having a will is important.

Individuals who own any type of property should have a will. This includes people who possess just a vehicle and checking account. Someone will still have to be responsible for settling the estate.

Millennials and their parents should talk about inheritance

According to a survey by Natixis, almost 70 percent of Millennials and other young people have an expectation that their parents will leave them an inheritance, but just 40 percent of parents plan to leave anything to their kids. Part of the disparity may stem from a simple lack of conversation and planning. Tennessee parents and their children may both approach the topic timorously, as it revolves around death. For all parties involved, though, it is important to have these discussions earlier rather than later.

For young people who want to initiate the talk, it's important not to have expectations. It may be that their parents intend to spend down to zero during retirement, and they should not be shocked at that. A good way to break the ice is to simply ask whether the parents have a plan in place to carry out their wishes after their passing.

Estate planning accounts for people's wishes after death

In New York, estate planning ensures that people's wishes are met concerning their health care and assets at the end of their life. Documented instructions let relatives and health professionals know individuals' wishes regarding medical treatment and end-of-life instructions. An estate plan also answers questions about property disbursement after a person's death. However, there are several issues that people often do not think about before preparing their estate plan.

Guardianship is a concern for people with small children. In case of their death or illness, individuals should list the names of guardians to care for their children. They should also get the permission of the designated guardians.

What to know before buying long-term care protection

New York residents and others are generally capable of calculating their monthly expenses. Having this skill may make it easier to plan for how much one will need in retirement. However, it is also important to plan for things like inflation, which may lead to higher costs over time. Paying more for goods and services may be increasingly difficult while living on a fixed income in retirement.

It is important to note that some expenses will increase faster than others. While the overall inflation rate in the United States was 1.9 percent between 2012 and 2016, health care costs are set to rise by 5.4 percent per year. Retirees will also need to account for long-term care costs in addition to current expenses. Some may choose to simply pay out-of-pocket or liquidate assets to cover those costs.