New York City Estate Lawyer

Estate planning is a process of creating a plan to accumulate, manage, and dispose of property both during your lifetime and after you pass away. A well structured and well utilized plan will both help you accumulate wealth and preserve wealth by minimizing income, estate, inheritance and gift taxes due. Furthermore, part of estate planning is making sure that when you pass away the wealth that you work hard to accumulate over a lifetime is transferred to the loved ones of your choosing with minimal tax consequences to them. The consequences of failing to create a comprehensive estate plan can be financially devastating to both you and those who you want to benefit from your estate. To help you create and execute an estate plan that is consistent with your goals, contact an experienced New York City Estate Lawyer who will be able to educate you on the types of estate planning tools that you should consider and who will help you implement a plan.Why is a will important?

While there are many reasons to make a will, they all boil down to the fact that a will allows you to maintain control over what happens to your estate once you pass away. With a will you can decide who gets a portion of your property, and who does not. In your will you can appoint an executor who is responsible for wrapping up your estate and making sure that your wishes are honored. If you have children, in your will you can decide who will care for them in the event they are still minors when you pass away. With a will you can also make decision that will help minimize estate taxes. On the other hand, if you do not have a will most of the choices and decisions will be made by the state of New York.

What are the legal requirements for a will to be valid in New York?

Under New York law for a will to be valid, the following conditions must be met:

  • You must be at least 18 years old
  • You must be of sound mind at the time the will is executed
  • You must understand what it means to prepare a will and the nature and extent of the property you own
  • You must sign the will at the end. Your signing of the will must be witnessed by at least 2 people

There are two types of wills that are valid in New York even though they are not created with the general requirements of New York law: holographic wills and oral wills. A holographic will is handwritten by the testator, but is not witnessed. An oral will is spoken and witnessed by at least 2 people. Holographic and oral wills are only valid if made by a member of the armed forces, someone accompanying the armed forces or a mariner at sea.

What is a trust?

A trust is a legal arrangement that you as the settlor create that describes how assets will be managed and held for the benefit of another person known as the beneficiary. The trust assets are made up property that you transfer to the trust. The trustee is responsible for managing the property according to the terms of the trust and must do so in the best interest of the beneficiary. There are several different types of trusts, designed for different purposes.

What are the different types of trusts?

There are several different types of trust. The type of trust that you should create depends on the purpose of your trust.

  • Living trust. A living trust is created by the trustor during his or her lifetime. Typically the trustor retains the power to change or terminate the trust. However, when the trustor passes away, a living trust becomes an irrevocable trust and cannot be changed.
  • Testamentary Trust. A testamentary trust, also referred to as a will trust, is a trust that is created by a will. It goes into effect upon the death of the trustor. A testamentary trust is often created to hold the property of a minor, to protect a surviving spouse's finances by providing lifetime income, ensuring that a loved one with special needs is taken care of, and gifting to charities.
  • Funded Trust. A funded trust is a trust that has property. Trust property can be cash, or it can be other types of property such as real estate. A trust can be funded by the trustor during his or her lifetime or after death.
  • Unfunded Trust. An unfunded trust is a trust without assets. Some trusts are created, but remain unfunded until after the trustor's death.
  • Revocable Trust. A revocable trust is a trust that can be amended or terminated at any time by the trustor. Upon the trustor's death, a revocable trust becomes irrevocable.
  • Irrevocable Trust. An irrevocable trust is trust that cannot be changed. In other words, the trustor has no control over the property in the trust.
What happens to my estate once I pass away?

Once you pass away your estate will have to managed, your affairs wound up, and your assets will be distributed to your beneficiaries. If you have a will, the person you name as your executor is responsible for ensuring that the portion of your estate subject to probate is properly managed and settled. The decisions your executor makes will be based on the contents of your will. Your executor will have three major responsibilities: take control of and manage the estate assets, pay estate debts and taxes, and distribute the estate assets to your heirs. In fulfilling these responsibilities, as a fiduciary the estate administrator must act in the best interest of the estate and your heirs and refrain from self-dealing. This means that your executor must not manage your estate in a manner that benefits him or third parties, but only in a manner that benefits the estate.

Take Control of Estate Assets. One of the first jobs of your executor will be to collect and to take control over your assets that are part of your probate property. Probate property includes all of your real property and personal property that you owned either as a sole owner or as a co-owner with one or more people. Probate property is subject to probate administration by your executor. You may think of estate assets as including only items such as bank accounts, investment accounts, your house, artwork, antiques, jewelry, and other personal property. However, there are other types of property that may be part of your probate estate, and there is property that may first appear to be part of your probate estate, but actually is not.

Probate property includes:

  • Real property owned by you individually as well as jointly with others in a tenancy in common. Tenancy in common is a form of concurrent ownership of real or personal property by two or more persons called tenants in common. Each person owns a separate undivided interest in the property.
  • Debts owed to you such as debts in the form of promissory notes, loans, rents, income tax refunds, mortgages, royalties and stock dividends
  • Gain from a sale of a business
  • Retirement benefits such as Social Security and Veterans Administration benefits
  • Damages from civil lawsuits such as a personal injury lawsuit you filed

Assets that would not be part of your probate estate include:

  • Your ownership interest in real or personal property that you hold in joint tenancy or tenancy by the entirety
  • Any property that you transferred into a living trust (inter vivos trust) prior to your death
  • Other types of inter vivos gifts, meaning any property that you gave away during your lifetime
  • Real estate subject to a transfer-on-death (TOD) deed
  • Money held in a pay-on-death (POD) bank account
  • Securities and brokerage accounts registered in TOD form
  • Proceeds of life insurance policies and money that is part of a plan that has a designated beneficiary that is an individual. Examples of such plans include annuity plans, 401(k) plans, employee stock ownership plans (ESOPS), self-employed retirement plans, IRAs, and even US Savings Bonds. If the designated beneficiary is your "estate," than the proceeds will be part of your probate estate.

Each of these types of assets is nonprobate property and goes directly to the named beneficiary or surviving owner by operation of law, outside of the probate process. In addition to being distributed outside of intestate laws or your will, such property will not be subject to the claims of your creditors.

Managing the Estate. While the ultimate goal is to distribute estate assets to the decedent's heirs, doing so will take some time. In the meantime your executor must manage your estate's assets. This may involve making sure that property is secure, paying estate bills such as your mortgage, utility bills or credit card bills. The administrator must also collect any money owed to you. If you owned a business, your executor may have to sell assets, take care of payroll and otherwise temporarily run the business until it is transferred to beneficiaries or sold.

If there is not enough cash in the estate assets to pay debts, then the executor may have to sell property in order to satisfy debts. Assets such as real estate, jewelry, and vehicles are typically sold at public auction.

Pay Estate Taxes and Creditor Claims. One of the responsibilities of the executor is to pay estate taxes. If necessary, your executor can hire an accountant to help calculate any estate taxes that are due. In addition, the executor is responsible for filing your final tax return. If you owe taxes, your executor will pay them out of your estate's assets. If a refund is due, it will be added to the estate and ultimately be passed to the beneficiaries.

One of the preliminary tasks of your executor will be to notify creditors of your passing as well as publish a notice so that anyone who has a claim against your estate will be put on notice that your estate is in the process of being settled. Creditors and claimants have 7 months after the date given in the published notice to file claims against the estate. There may be claims that are filed against the estate that your executor determines are not valid. If your executor refuses to pay a claim, the claimant may initiate probate litigation against the estate in an effort to get paid. Your executor will use estate assets to pay all claims deemed valid.

Closing the estate. After all estate debts are paid, claims are resolved and taxes are paid, the administrator must provide the Surrogate's Court with an accounting of the estate showing all any income earned or disbursements made by the estate after the death of the deceased.

Distributing Estate Assets. The last step in the administration process before the estate is closed is distributing the estate assets. Prior to the final distribution of assets, small allowances can be given to your surviving spouse, minor children and others who relied on the testator for support. In general, however, no assets are distributed until debts paid and all other estate issues are resolved.

What about assets that I left in a trust?

There are two general types of trusts: testamentary trusts and inter vivos trusts. Testamentary trusts are created by your will and funded after you pass away, while an inter vivos trust is one that is created and funded during your lifetime. Funds for a testamentary trust will be transferred to the trust after probate. Once the trust is funded, it will be managed by the trustee for the benefit of the beneficiaries you name. An inter vivos trust will also be managed by its trustee. If you were the trustee, then the person you names as successor trustee will take over. The trust assets will be transferred to the beneficiaries according to the terms of the trust agreement without having to wait for probate. In other words, assets in a trust that you created prior to your death are not subject to probate.

How can I plan for my incapacity?

Estate planning is not just about taking care of loved ones. It is also about planning for your personal and financial security in the event you ever become incapacitated.

  • Health Care Proxy. A health care proxy is a legal document that allows you to name a specific person, called your health care agent, to make healthcare decisions for you in the event that you are unable to make those decisions on your own because you are in some way incapacitated. If you do not appoint a health care agent typically decisions about your healthcare defaults to your spouse, your adult children or your parents. In some cases, a conservator may be appointed by the court to make these decisions for you.
  • Durable Power of Attorney for Finances. A financial power of attorney allows your attorney-in-fact to make financial decisions on your behalf should you become incapacitated. Oftentimes a spouse is given such a power of attorney. However, you can name whomever you want as your attorney-in-fact. It is wise to name someone who is trustworthy and who you know well.
  • Living Wills. A living will is a document that sets forth what you would like to have done if artificial means are required to keep you alive. This is an important document because not only will it ensure that your wishes are known, it also prevents your family from having to make these difficult personal choices for you.

Estate planning is a process that should be well-considered and not entered into lightly. Mistakes can be costly to you and to your loved ones. On the other hand, proper estate planning is the best way to protect your interests and those of your loved ones but while you are living and after your death. Everyone needs an estate plan, even of your assets are not substantial. However, the more substantial your assets, the more complicated your family situation, the more complex your estate plan will be. To learn more about writing a will, trust, and other estate planning tools, contact Stephen Bilkis & Associates, PLLC. The staff at Stephen Bilkis & Associates, PLLC will help create and execute a will and other estate planning documents that reflect your individual goals and that will ensure that your estate does not end up going to statutory heirs through intestate succession. Contact us at 1.800.NY.NY.LAW (1.800.696.9529) to schedule a free, no obligation consultation regarding your estate plan. We serve individuals throughout the following locations:

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