A will is the cornerstone of most estate plans. It is a document that outlines where assets go after an individual passes away. It may also name a legal guardian for a minor child. Trusts name a trustee and are used to hold assets on behalf of beneficiaries. There are several factors that may determine whether an individual needs a trust.
Part of the purpose of earning money and acquiring assets in your life is to leave it behind to loved ones and causes that are important to you. There are a number of ways to do this. You can simply draft a will that says one person gets your car, another gets x dollars, and someone else gets y dollars.
Increases in the federal estate tax exemption and in tax rates for wealthy individuals have changed the thinking of some estate planners. New York residents should consider a few suggestions when considering how to pass on their property to beneficiaries upon their death.
In some cases, New York residents might want to consider establishing a trust and making it the beneficiary of a life insurance policy. This might help those who have beneficiaries with special needs or that cannot manage money. A spouse or family member still receives money intended for him or her, and trusts in general keep one's wishes private and do not go through the probate process.
New York residents will likely remember Dean Smith for his incredible coaching career that spanned 36 years and included two national championships with the North Carolina Tar Heels. However, recent disclosures indicate that Smith's was also astute in the area of estate planning. Smith bequeathed $200 to approximately 180 of his former players, but it is not his generosity that has drawn praise.
Although some New York couples may equally share in the financial management of a household, in many cases, one partner tends to take primary responsibility for such matters. This can be a challenge with regard to estate planning due to the fact that a disconnected spouse might struggle in taking over such issues after a partner's death. However, a spouse who is aware of the challenges that a partner would face in knowing what to do after their death can enlist the help of an estate planning professional to minimize the difficulties of that transition.
Many couples create estate plans together as a way to ease the process should anything happen to either person. This estate plan can be the last thing on their minds as they go through this process. A divorce in New York automatically cuts the former spouse out of the will, but it does not affect other beneficiaries. This can lead to benefits and assets going to the former spouse's relatives instead of alternative beneficiaries.
Gifts can be more than just a generous offering to a friend or relative. They can also be an important part of a larger estate plan designed to make inheritance a tax-free situation for New York residents. It is important to understand how estate and gift taxes, and their exemptions, work so that you can avoid as much tax liability as possible.
It is not uncommon for some New York residents who are planning their estates to forget to think about their life insurance policies. For some people, however, these policies, if included in their overall estate valuation, could subject the estate to significant estate tax liability.
Many New York residents have already taken the essential step of creating an estate plan. It is an important process for protecting assets and distributing them to heirs. However, estate plans can be in place for years if not decades. To keep them relevant, plans may benefit from review at regular intervals.