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Long Island Elder Law Blog

Options to consider in estate planning

At one time, estate planning consisted of merely a last will and testament. For the very wealthy, it might have consisted of a trust. In modern times, estate planning can and should be much more than just preparing a will. New York residents should consider some of the options available.

Estate planning is a term to describe a prearranged series of documents or actions intended to carry out the wishes of a person who is either deceased or incapacitated. Modern estate planning seeks to make transfer of property and last wishes as least burdensome as possible.

Charitable giving and estate plans

New York residents can include provisions in their estate plan that allow part of their estate to be given to their favorite charities. Changes in federal laws regarding gift and estate taxes are likely to impact the manner in which charity is integrated into an individual's estate plan.

The Tax Cuts and Jobs Act that was passed in 2017 doubled the exemption levels for estate, gift and generation-skipping taxes. The exemption levels for individuals jumped to $11.18 million while couples are able to donate up to $22.36 million free of taxes.

Why trusts may be better for leaving assets to children

New York residents and others may have qualms about leaving assets outright to a minor child. However, it may also be a good idea to leave assets meant for adult children in a trust. The primary reason to leave assets in a trust is that advanced age doesn't necessarily translate into advanced financial skill. As the value of an inheritance increases, it is critical that whoever oversees it has the type of financial skills necessary to manage it properly.

Even if an adult does hire a financial adviser, he or she may make a bad choice when picking someone to provide advice. Putting assets into a trust provides flexibility in how distributions are made. For instance, the trust could limit distributions to income the trust generates or choose to allow the adult child to take distributions after a certain date.

Avoiding the probate process

One of the major mistakes New York residents can make when devising their estate plans is not using a strategy that allows assets to bypass the probate process. Probate, which can be costly and slow, is a legal process through which assets must pass if they are transferred to beneficiaries via a will.

In the last few decades, several states have introduced probate procedures that make the process more efficient and less costly for estates that do not have an extremely high value. However, in other states, the probate process remains full of delays and high costs.

Handling estate planning

People in New York should consider an estate plan with the appropriate legal documents in place so that any financial or healthcare decisions made on their behalf are done according to their preferences. Having an estate plan is not only about planning for assets but also accounting for if an individual is incapacitated and unable to make decisions on their own.

Estate planning should begin as soon as possible, particularly if it is for an elderly person. One of the ideal times to begin estate planning is when one turns 18 years old. Someone who becomes incapacitated without an estate plan makes it more complicated for their family to get the authority to make healthcare and financial decisions on their behalf.

The importance of early estate planning

New York residents may find that they are best served by creating an estate plan as soon as possible. One man almost had to pursue guardianship of his father after not understanding how a power of attorney worked. The man thought that he could create and sign the document on his own. However, for the POA to be valid, the father would have to sign it.

As the father was experiencing symptoms of dementia, it wouldn't have been possible for him to do so. Fortunately, the man discovered that his father's attorney had created power of attorney documents in the past. One of the main takeaways from this situation is that estate planning generally entails more than creating a will or a trust. Individuals may want to think about creating a power of attorney as soon as they turn 18.

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.