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.
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.
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.
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 In summary, these issues are a lack of information, beneficiary designations gone wrong and outdated plans.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.
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.
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.
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.
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.
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.
The rise of digital assets has drastically changed estate planning for many people. An individual can't simply add a digital wallet to their will as if it was a vacation home in New York or expensive jewelry. They'll need to include quite a bit of additional information so that those assets are quickly handed over to heirs.