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.
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.
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.
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.
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.
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.
New York residents and others may not like the thought of estate planning. However, reviewing a plan on a regular basis can help to ensure that it does what an individual wants or needs it to do. For instance, a review session can help to identify whether there are critical components that need to be included. These components could include a will and powers of attorney, and those components should be updated at least once a decade.
When New York residents make plans for the future, they may run up against entrenched, emotional family conflicts. According to a survey conducted by one banking institution, family conflict outweighs market volatility and tax reform as the major challenge to estate planning. The survey included 105 participants in an annual conference on estate planning that involved professionals throughout the sector such as attorneys, insurance advisers, accountants and trust officers. Almost half of the respondents said that family issues posed the biggest problem to completing an estate plan.
There was a time when someone in New York with significant assets that they wanted to pass along to their children in a controlled manner would likely be advised to set up an irrevocable trust. The problem is that such trusts are close to impossible to amend. This can present further issues for trust holders with adult children who not quite ready to responsibly handle regular disbursements.
It's not necessary for anyone in New York weighing their estate-related options to have substantial assets to benefit from this type of proactive planning. Yet, according to the American Association of Retired Persons (AARP), more than half of all adults and millennials do not have basic documents like a will or living trust.