Bronx Estate Planning
Estate planning involves not only making a will and deciding what you would like to happen with your assets after you pass away. It is also ensuring that your assets are passed to your beneficiaries in the most efficient way possible. Estate planning includes preparing for the possibility that one day you may become incapacitated so that you are unable to take care of your finances or make decisions about your healthcare. It also involves protecting your assets and minimizing your tax liability, as well as planning for the needs for a disabled relative. If you are contemplating developing an estate plan contact an experienced Bronx Estate Planning Lawyer who will not only be able to help you create a will that is consistent with your wishes, but who will also explain to you other estate planning documents that you may need to help you reach all of your estate planning goals.
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- New York Estates & Probate Law and Bronx Probate Lawyer
- New York Estates & Probate Law and Bronx Estate Litigation Lawyer
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Will. A will is the document that virtually every estate plan should include. It allows you to set forth how you want your assets distributed after you pass away. Without a will your property will be distributed to your heirs according to the laws of intestate succession. This means that your property may end up being given to people you would prefer not have it. Depending on your goals and the amount of your estate your will may be fairly simple or it could be very complex. However, most wills should accomplish the following:
- Bequeaths. Your will should set forth who gets your property. When preparing to make your will a good starting point is to make a list of your significant assets such as your real estate, vehicles, bank accounts, jewelry and collectibles. Then make a list of to whom you would like to leave each asset. You can be very specific about who gets what property. For example, you can leave your nephew your car since he has always admired it, while your niece will get your favorite diamond earrings. You can choose to leave gifts to organizations such as a cash gift to your favorite charity or to your church. You can also decide to choose contingent beneficiaries in case your first choices do not survive you.
- Executor. Your executor is the person you name in your last will and testament who will be charged with winding up your affairs and distributing your assets to your beneficiaries. This person typically is a family member such as a spouse, adult child or sibling. However, your executor can also be a family friend or even a corporation. It is important that the person you select is trustworthy, organized and responsible. If your estate is large or complex, it may be a good idea to consider nominating a professional executor who has the expertise to manage a complicated estate.
- Guardian. If you have minor children, you should state in your will who should raise them in the unlikely event that neither you or the other parent can. While you may be tempted to name your closest family member as the guardian of your children there are some other factors to consider: the age of the person, whether the person knows you well, whether the person has enough time to properly raise your children, whether the person is healthy enough to raise your children, whether the person is equipped to handle any special needs of any of your children, and whether you share the same moral and religious beliefs. Before naming a guardian in your will discuss it with the prospective guardian to confirm that he or she is willing and able to raise your children if necessary.
- Children's Property. In addition to naming a guardian for your minor children, you also need to address who will manage the assets that your minor children may inherit. The person you name to manage your children's property could be the same as your children's guardian, or it could be another person.
Depending on your circumstances and goals, there are different types of wills that you can make.
- Pour Over Will. A pour over will is a common type of last will and testament for those who also have a trust as part of their estate plan. With a pour over will, upon your death any property that is in your estate that must pass through your will automatically is transferred to your trust. The trustee can then distribute the property to the trust's beneficiaries according to the terms of the trust.
- Holographic Will. A holographic will is a last will and testament that is handwritten by the testator, but is not witnessed. Typically this type of will would be invalid in New York, as well as in most other jurisdictions, because it would not have been executed according to the requirements of New York law. However, under very specific circumstances a holographic last will and testament will be admitted to probate in New York. If a holographic will is made by a member of the armed forces during a timed of armed conflict, someone who is accompanying the armed forces, or someone who is a mariner at sea, it will be deemed valid. NY EPTL § 3-2.2
- Nuncupative Will. Like a holographic will a nuncupative will is one that is not executed with the formalities typically required by New York law. A nuncupative will is an oral will. It is not written, but is spoken in the presence of at least 2 witnesses. It is also similar to a holographic will in that if a nuncupative will is made by a member of the armed forces during a timed of armed conflict, someone who is accompanying the armed forces, or someone who is a mariner at sea, it will be deemed valid. NY EPTL § 3-2.2.
- Reciprocal Wills. Reciprocal wills are 2 wills made by 2 testators that have similar bequests. Each testator leaves the other testator all of or the bulk of his or her estate. Reciprocal wills are commonly made by spouses or significant others, but can be made by anyone who feels a need to coordinate their estate planning such as business partners or siblings.
- Joint Will. A joint will accomplishes the same goal as reciprocal wills. It is a single will that is created by two people and provides that that each person would get the survivor's estate.
- Codicil. If you need to change your will, you can do so using a codicil. A codicil is an amendment to a will. If you need to make relatively minor, uncomplicated changes, then executing a completely new will may be unnecessary. However, if the changes that you need made are significant, it may be a good idea to make a new will. A codicil, however, must be executed with the same formalities as a will.
Living Trust. Another estate planning tool to consider is a living trust. Similar to a will, with a living trust you can leave property to the people of your choosing. A will and a living trust differ in that living trusts are funded during your lifetime meaning that you transfer property to your living trust while you are still living. While there are a number of reasons to create a living trust, a common reason for having a living trust is because property transfer to a living trust is not subject to probate. In contrast, all wills are subject to probate. Probate is the process during which the New York Surrogate's Court reviews your will and oversees the wrapping up of your estate and the distribution of your assets. Probate can be expensive and quite time-consuming. It typically takes at least 9 months and often takes more than a year. During this time your estate remains undistributed.
However, even if you have a living trust, you still need a will. Assets that you own at the time of your death that are not in your trust would pass to your beneficiaries through your will. Without a will these assets will be given to your heirs based on the laws of intestate succession. This means that such property may not go to people of your choosing. Exceptions to this would be property that you own jointly with another person with a right of survivorship and property such as life insurance or a retirement plan where you have named a designated beneficiary. In both cases that property would not be subject to the rules of intestate succession.
Another reason to have a will even if you have a living trust is that with a will you can nominate guardians for your minor children. Otherwise, upon your death if the other parent is not available to care for the children, they may end up being raised by a person whom you would not have chosen to raise them.
It is important to understand that a living trust is different from a testamentary trust. A testamentary trust would be created based on instructions in your will. In other words they are not created and funded while you are still living. They are not established until you pass away and your will has gone through probate. Thus, if your goal is to ensure that your beneficiaries receive property that your leave them without the substantial delay caused by probate then you need to set up a living will, not a testamentary will.
There are several other types of trusts that you can set up depending on your goals.
- Bypass Trust. A bypass trust is a trust created by married couples to reduce estate taxes when the second spouse dies. Upon the death of the first spouse ownership of most of his or her property is transferred to the trust with the surviving spouse as the beneficiary. As a result, when the surviving spouse dies the property that is in the bypass trust is not included in his or her estate, reducing the amount of estate taxes.
- QTIP Trust. A QTIP trust is a Qualified Terminable Interest Property trust. This type of trust is used by married couples to delay paying estate taxes until the second spouse dies.
- Charitable Trust. A charitable trust is designed to donate property to a charitable cause and at the same time reduce income and estate taxes.
- Generation-Skipping Trust. Instead of leaving property to your children, the trust would be set up with your children's children as the beneficiaries. As a result, you would avoid the estate taxes that would apply if the assets were first transferred to your children.
- Life Insurance Trust. With a life insurance trust, instead of you owning the life insurance policy, the trust owns it. A life insurance trust is designed to reduce estate taxes by removing the proceeds of life insurance from your taxable estate.
- Grantor-Retained Interest Trust. A grantor-retained interest trust is another estate planning tool that helps to reduce your estate taxes by removing property from your taxable estate.
- Special Needs Trust. A special needs trust (SNT) is typically established by parents to provide for a disabled child.
- Spendthrift Trust. A spendthrift trust is designed to provide for someone who is not able to responsibly manage their finances.
- Pet Trust. Yes, you can even set up a trust to provide for the care of a pet that survives you.
When determining all of the necessary components of your estate plan you should consider planning for the possibility that one day you may become incapacitated and unable to speak for yourself or take care of yourself.
Power of Attorney for Finances. A power of attorney for finances allows you to choose someone to manage your finances for you if you are unable to do so for yourself. This person is referred to as your "attorney-in-fact." Typically, a power of attorney becomes invalid if the person who grants the power of attorney becomes incapacitated. If the power of attorney is a "durable" one, then this means that your attorney-in-fact will have the authority to take care of your finances in the event you are determined to be mentally incapacitated.
Power of Attorney for Healthcare. A power of attorney for healthcare allows your attorney-in-fact to make decisions related to your healthcare in the event you become mentally incapacitated and cannot speak for yourself. Your attorney-in-fact for health care will have authority to make decisions about treatments, palliative care, and organ donation.
Living Will. A living will is a legal document in which you memorialize your wishes with regard to what medical procedures you want or do not want to receive if you suffer an illness or injury that has left you in an incapacitated condition such as a coma or vegetative state from which you are not likely to recover. Although a living will is similar to a power of attorney for healthcare, a living will typically addresses deathbed concerns, while a power of attorney for healthcare generally covers a broader range of healthcare issues. Oftentimes the two legal documents are combined into one document known as an advanced health care directive.
Estate planning is a dynamic process that will evolve over time as your personal and financial situation evolves. It is a good idea to revisit each of your estate planning documents regularly to make sure that they are still consistent with your goals and that they are consistent with the ever-changing law. For example, you may decide to change your will if you get married or divorced. You may want to add beneficiaries to your trust after the birth of a child or a grandchild. If your finances change substantially, you may want to make changes in your estate plan to ensure that your assets are sufficiently protected from future creditors, or to minimize income or estate taxes. The staff at Stephen Bilkis and Associates has years of experience in estate planning and can help you make a will, set up a trust, plan for future incapacity, and develop a plan to protect your assets. Contact us at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your estate plan.