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Long Island Elder Law Blog

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.

Durable power of attorney

Individuals living in New York are often concerned about protecting themselves in case they become incapacitated and are unable to make decisions regarding finances, medical care and living arrangements. One way of ensuring that one's rights and needs will be respected is to give a trusted friend or family member durable power of attorney.

Power of attorney is a legal concept that allows one person to act on behalf of another. There are differences in the scope of power of attorney, however, as well as its duration. In a non-durable power of attorney, it only exists as long as the grantor is able to make decisions for him or herself. If the grantor becomes incapacitated either via an accident, severe illness that causes brain damage or dementia, the power of attorney lapses.

Adding final arrangements into an estate plan

In some cases, New York residents fail to include their desires when it comes to final arrangements in their estate plans. In some of these cases, they trust their family members and loved ones to do the right thing. However, if a person is concerned that his or her family will not know what to do or the person has what may be considered an unusual request, those wishes need to be outlined in the estate plan.

Traditionally, the final arrangements were listed in the will. However, in many cases the testator is buried or cremated before the will is reviewed or even found. As such, the final arrangements are usually listed in another document. A planning declaration is in some ways similar to a power of attorney, in that a loved one is given the authority to carry out the arrangements.

Why entrepreneurs need an estate plan

New York business owners should consider an estate plan to protect their family and business in case they become incapacitated or pass away. One survey of over 500 entrepreneurs nationwide found that almost two-thirds of entrepreneurs had no estate planning documentation. More than three-fourths did not have a financial power of attorney, and only one-fourth had a will. Even fewer entrepreneurs reported having a living trust.

A financial power of attorney is important because it appoints someone to handle financial matters if a person becomes incapacitated. This agent can handle stock transactions, litigation, tax issues, business operations and other matters.

Creating an irrevocable trust

An irrevocable trust may be a good option for some people in New York who are creating an estate plan. Unlike the revocable variety, an irrevocable trust cannot be changed. However, it offers advantages in protecting assets that a revocable trust does not.

An irrevocable trust has a number of uses. For example, placing property such as a life insurance policy in the trust's name removes it from the estate and thus can save on estate taxes. With a charitable trust, the creator can be paid an income while the rest of the assets will go to the charity after the creator's death. A dynasty trust is set up to preserve family wealth for decades or even hundreds of years. With a spendthrift trust, a person can arrange for more oversight for a loved one who may be irresponsible with money. A special needs trust will provide funds for a person who receives government benefits without affecting eligibility for those benefits.

Estate planning protections for cohabiting couples

Beyond the romantic sentiment and vows before family and friends, marriage is also a legal contract that give rights and protections in medical emergencies, financial situations, the death of a spouse and other situations. New York couples who choose to forgo marriage in favor of cohabitation can also enjoy these benefits by understanding what those are and creating an estate plan.

An accident, stroke or other hospitalizing illness can quickly upset a family's normal routine. It is at this time that a cohabiting couple can realize the danger of life without an estate plan. Couples can give each other the rights to make health care decisions for each other with a health care proxy.

How to protect heirs with an IRA trust

New York residents are generally allowed to pass money inside of an IRA to designated beneficiaries. However, for those who are worried about how that money may be used, an IRA trust may be an effective estate planning tool. They have become more popular since a 2014 Supreme Court ruling that no longer treats inherited IRAs as protected in bankruptcy. Instead of naming a person as the beneficiary of the IRA, the trust is named the beneficiary.

A trust may be used whether a person has a traditional or Roth IRA. They may be most effective for those who have a large amount of money in the account as well as for those who name a minor as a beneficiary. While minors cannot directly inherit property, they may be able to do whatever they want with the money after turning 18 or 21. This is in spite of the fact that a young person may have no idea how to manage that money.

Estate planning and second marriages

New York couples planning a second marriage, especially one later in life, have many significant estate planning concerns to think through on their road to wedded bliss. For people who have spent their lives gathering assets and investments, remarriage can be far more complex. Considering a few estate planning guidelines along the way can help avoid misunderstandings or costly financial errors.

Couples who have joint income and assets may have real concerns if one partner has a divorce settlement that keeps them connected to a former spouse. It also could be important to keep finances separate in the case of a party having an old debt, as creditors are not bound by the provisions of a divorce settlement or decree.