Having a will that is properly drafted and addresses end-of-life preferences is the first step in having a sufficient estate plan. However, there are other legal documents that can help ensure that an individual's wishes will be followed if they become incapacitated.
Probate is something many people try to avoid as they make their estate plans. While it might not be easy for someone with a large estate to bypass probate, New Yorkers without a lot of assets may be able to do this much more easily. There are simple ways to transfer most assets upon death without giving the beneficiary control over them sooner.
People in New York who are going through a divorce may also want to make sure that they change their estate plan if necessary. If they do not, ex-spouses may inherit assets they were not intended to have.
The Trump administration has proposed federal tax reform that would eliminate the federal estate tax. Also referred to as the death tax, the federal estate tax applies to residents of New York and the other states. The reasoning behind the proposed elimination is that it is a sort of double taxation, often requiring payment of taxes on funds that have previously been taxed. Even if the federal estate tax is eliminated, though, there are still reasons to develop a comprehensive personal estate plan.
Some New York residents may think of an estate plan as something that only wealthy people need. However, an estate plan is important for adults at every stage of their lives. An estate plan should also be reviewed and revised throughout a person's life as changes in assets and family make changes necessary as well.
Some New York parents may be concerned about leaving a large sum of money as an inheritance for their children. They might be worried because their children are financially irresponsible or simply because it can be difficult sometimes for anyone to suddenly come into possession of a large amount of money. While it is a good idea to discuss responsible financial management with children, a trust may be another way of protecting assets.
Trusts have a broad range of applications that may be relevant to New York residents who are planning their estate. There are many different types of trusts that provide different benefits, and here are two that might be of interest.
When individuals and couples living in New York begin the estate planning process, they are often concerned about what will happen to their real estate, investments, and savings after they die. While these are all important issues, it is also critical that estate planning address nonfinancial concerns, such as child guardianship, end-of-life planning, family pets and the distribution of personal effects.
New York residents can generally leave funds within an IRA to whoever they feel deserves it the most. If there is no person worthy of receiving the money, it may be possible to donate it to a charity. However, how an IRA is transferred generally depends on who is receiving it. For instance, if an IRA is left to a spouse, he or she could simply roll that money into his or her own account.
When New Yorkers are planning their living trusts, they will need to consider who to name to serve as their successor trustees. This decision is important because administering a trust is a complex and technical process, and the trustee must also be someone who can be trusted to work in the best interests of the beneficiaries.