Estate planning is more than just making a will. Comprehensive estate planning involves protecting your assets for the future, planning for the personal and financial challenges you may face as you age, and planning for the well-being of your loved ones after you pass away. While a last will and testament will be one of the most important components of your estate plan, it should not be the only component. For example, you may benefit from creating one or more trusts to transfer assets to loved ones and provide for the care of loved ones who have special needs. A trust is also an effective planning tool to protect your assets from future creditors. A health care proxy and a durable power of attorney allow you to appoint someone to make health care and financial decisions for you should you become incapacitated. In a living will you can let your family, friends and physicians your preferences regarding health care should you become so ill that you are unable to communicate your wishes. In order to understand all that is involved in estate planning contact an experienced Brooklyn estate planning lawyer who will help you develop a comprehensive plan that will help you meet your personal and financial goals.
The first step in designing an estate plan is to determine your goals. A good estate plan should make sure that your assets pass on to the family, friends and organization you select in the manner you choose, including providing for minor children and individuals with special needs. It should be designed in a way to avoid family conflict over assets and to minimize taxes, court costs, and other fees. A good estate plan should also address your financial, medical and living needs throughout your lifetime.Wills and trusts
A will is the most common form estate planning. A will is a document that states how your assets will be distributed upon your death. It also names an executor who will be responsible for the administrative aspects of winding up your affairs, as well as making sure your assets are distributed according to your wishes. You can also appoint guardians for minor children in a will and establish trusts to protect assets. If you do not have a will, then your assets will pass to your beneficiaries according to New York rules of intestate succession. NY EPTL § 4-1.1. The manner in which New York intestacy laws require distribution may be contrary to your wishes or the needs of your family. To ensure that your wishes are followed, it is important to have a properly executed will. To get started, contact an experienced Brooklyn estate planning lawyer.
A trust provides a way to protect your assets. It is a legal arrangement through which you transfer certain assets to the trust that is managed by a designated trustee for the benefit of a beneficiary. As with your will, a will trust can be revoked or changed at any time while you are still living. Upon your death, however, the will trust becomes irrevocable. Thus, it is important for you to periodically review your will and the will trust to make sure that it remains consistent with your current intentions. There are several different types of trusts. The type of trust that you choose to set up depends on your goals. For example, you can set up a trust to provide for minor children or for elderly relatives. Some establish trusts for relatives who may need guidance in handling finances. A trust can also be set up to protect your assets should you become incapacitated.
There are several different types of trusts, including:
- 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. This allows the surviving spouse to have access to the trust property without ever owning it. As a result, when the surviving spouse dies, that property is not included in his or her estate, reducing the amount of estate taxes.
- Generation-skipping trust. A generation-skipping trust provides a means to avoid estate taxes. 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.
- Special needs trust. A special needs trust (SNT) is typically established by parents to provide for a disabled child. The assets in a SNT can be used to cover necessities as well as quality-of-life items such as special therapies, medical insurance, education, and special equipment and vehicles including wheelchairs or accessible vehicles. SNTs can be designed to allow beneficiaries to remain eligible for government benefits such as Medicaid and Social Security Income despite the existence of a SNT.
- Spendthrift trust. A spendthrift trust is designed to provide for someone who is not able to responsibly manage their finances. It could be that you have an adult relative who has a track record of mismanaging money and racking up debt. A spendthrift trust would provide you a tool to give that relative financial help without giving them control over the money or property that you give him or her. Instead, the trustee of the spendthrift trust will be in charge of managing the assets of the trust.
To discuss your particular needs and to determine the type of trust is best for you, contact an experienced Brooklyn estate planning lawyer.Estate planning for incapacity
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.
Durable power of attorney. A power of attorney allows you to choose someone to manage your financial affairs 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. Under New York law a power of attorney is durable unless it specifically states that it becomes invalid upon the incapacity of the principal. N.Y. GOB. Law § 5-1501A
In the power of attorney you will specify what powers you are delegating to your agent. For example, you can give your agent the authority to sell your house. This means that your agent has to the power to bind you to a contract to sell your house as if you signed the sale contract yourself. The authority that you grant in the power of attorney can be specific or broad. Examples of specific powers that you can grant include authority related to: real estate transactions, chattel and good transactions, bond, share and commodity transactions, banking transactions, business operating transactions, insurance transactions, estate transactions, claims and litigation, benefits from military service, retirement benefits transactions, and tax matters. You can even grant your attorney-in-fact the authority to give your spouse, children, parents and other relatives gifts of up to $10,000 annually.
Living will. A living will is an advance directive in which you state your preferences regarding your medical care in the event you become incapacitated and are unable to speak for yourself. Typically, a living addresses end of life medical issues and treatment such as the type of life-sustaining measures you want or do not want. For example, your living will might specify whether or not you want cardiac resuscitation, mechanical respiration, artificial nutrition or hydration, or antibiotics.
You can also give details as to what types of medications or treatment you would want to relieve pain. A living will is also a good place to state your preferences regarding organ donation. You can specify that you do not want your organs, tissue, or other body parts donated for any reason, or that you do want them donated. Or you can be more specific and state that you want them donated for purposes of transplant, research, education or therapy.
In order to be properly executed and valid, you must sign and date your living will and have two witnesses sign it as well. Once you have executed your living will it is a good idea to give a copy of it to close family and friends, the person who you have named as your attorney-in-fact, your doctor, and anyone else who might be involved in your medical care. In addition, it is also a good idea to discuss with them your preferences. You can change your living will at any time by executing a new one.
Health care proxy. A health care proxy is legal document in which you nominate another person, referred to as your health care agent, to make health care related decisions for you or act for you in the event you cannot. In other words, a health care proxy is a power of attorney specifically for health care decisions.
Your agent will be required to follow the instructions that you left in your living will or in the health care proxy itself as to which treatments you would or would not prefer to receive. In the event that there is a medical decision that is not specifically addressed in your health care proxy or living will, your health care agent is the person who will have the legal authority to make the decision related to that medical issue.
Like a living will, a durable power of attorney is part of an AHCD. The difference is that a health care proxy allows you to name someone to make decisions about your health care if you can no longer speak for yourself. On the other hand a living will allows you to state your wishes about health care in the event that you can no longer speak for yourself. To learn more about advance directives and other strategies for incapacity planning, contact an experienced Brooklyn estate planning lawyer.Special circumstances
A good estate plan can also establish for the care and protection of family members for whom you have special concerns. For example, a trust can be established to hold the assets that minor children inherit in the event of your death. While the children are minors you can direct the trustee to use the trust assets for the care of the children. Once the children reach majority, you can allow the beneficiaries to have access to the trust assets. For more information about setting up a trust for a minor child, contact an experienced estate planning attorneys in Brooklyn.
If you have children or other relatives with special needs, you should consider establishing a Special Needs Trust (SNT) as part of your estate plan. A SNT is a trust established for the benefit of a person with a severe and chronic or persistent disability. NY EPTL § 7-1.12. People with such conditions as downs syndrome, blindness, chronic mental illness, cerebral palsy, autism, or quadriplegia may benefit from a SNT. People with such disabilities often qualify for government benefits based both on the severity of the disability and on financial status. Those with disabilities but who also have significant assets may not meet the financial requirements for certain benefits. A SNT is designed to preserve a beneficiary's assets and at the same time ensure that the beneficiary remains eligible for government benefits. The assets that can be used to fund a SNT can come from a variety of sources including from family assets, a bequest in a will, a lawsuit settlement, or some other source. If the assets of a person with special needs are transferred into a SNT, then the funds can be used for the benefit of the beneficiary without those funds counting as a financial asset for benefit eligibility purposes.Contact the Law Offices of Stephen Bilkis & Associates
Estate planning is an ongoing process and any plan that you establish should be regularly reviewed. A plan should be modified as needed according to changes in your life and the lives of your loved ones. You may also need to change details of your estate plan as laws change that effect tax liability or other aspects of your plan. The experienced estate planning attorneys serving Brooklyn at the Law Offices of Stephen Bilkis & Associates have 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 case. We represent clients in the following locations: Brooklyn, Queens, Suffolk County, Bronx, Staten Island, Manhattan, Long Island, Nassau County and Westchester County.