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Syracuse Elder Law Blog

Including your vacation home in your estate plan

The vacation home can be an important piece of property for you and your family. If you want to give it to your heirs for future generations to make memories in, you should start thinking about how to include it in your estate plan. But this requires more than just creating a document if you want to prevent future family feuds.

If you leave the vacation home without any explanations, your beneficiaries may deal with a lot of confusion, disagreements and misunderstanding. Here are some ideas for how to pass down your vacation home with minimal complications. 

Parents should strongly consider trusts

Wills can be effective estate planning tools for those who have few assets or don't have children. However, once a person becomes a parent, it can be a good idea to create a trust. The primary benefit is that it prevents a child from directly inheriting money when he or she turns 18. Instead, the assets inside of the trust will be managed by another person or entity.

While it is possible for a person in his or her 20s to manage money properly, this isn't always the case. There are plenty of stories of people who purchased houses, took vacations or spent lavishly on other items until the money was gone. A trustee can teach the child how to be fiscally literate and how to generate an income that lasts for many years or decades to come. At a minimum, a trust will provide boundaries that children and younger adults need.

Estate plans and chronic illness

People in New York who have a chronic illness or have a loved one who is chronically ill should have estate plans that include certain provisions that address health and aging complications. Over 130 million people in the United States are chronically ill, and by 2020, nearly 157 million will have some type of chronic disease.

The documents that should be included in estate plans for people with chronic illnesses are no different from those that belong in the estate plans that the typical person should have. However, certain modifications are necessary in order for those documents to properly serve the needs of someone who is chronically ill. It is also important that the correct documents are in place as soon as possible after a diagnosis is received.

Transfer on death accounts avoid probate

A comprehensive estate plan in New York might contain any number of specially-drafted instruments, including a will, trusts or powers of attorney. One planning tool that might help keep your heirs out of probate court is a transfer on death account. TOD accounts transfer assets automatically to a beneficiary who is named by the account holder. If a person had a TOD savings account with $50,000 in it and named his or her child as the beneficiary, the funds would transfer automatically to the child when the person dies.

TOD accounts might be established via a brokerage account with a provision that directs the assets to a named beneficiary on the death of the account holder. It is possible, and desirable, in many cases to name more than one beneficiary on a particular account. Parents could establish a TOD account with all three of their children named as beneficiaries, each to get a third of the account.

How to avoid the New York estate tax

If you have a significant estate in New York, you may have concerns about being subject to the estate tax. According to the New York State Department of Taxation and Finance, the current estate tax limit for 2019 is $5,740,000. If the value of your estate is below this amount, you do not need to worry about having an estate tax liability. 

But if you are close to or over this amount, you may need to use some special estate planning strategies to avoid the estate tax. Here are some general methods people use to ensure their wealth goes to who they want instead of the government. 

The uses of a financial durable power of attorney

People in New York who are preparing an estate plan might want to consider creating a financial durable power of attorney. This would appoint a family member to take action on a person's behalf if the person becomes incapacitated. Without this document, even a spouse could be prevented from taking care of the person's finances. This would include dealing with things that need a signature from both spouses.

If a person does not have a durable power of attorney, it may be necessary for a family member to go to court and petition for guardianship, a process that can be expensive and time-consuming. If the person simply has a power of attorney but not one that is durable, its authorization could end when the person becomes incapacitated. There is also a document known as a "springing power of attorney" that takes effect when a person becomes incapacitated. However, a springing power of attorney can require a physician's certification of incapacity, so there could be a delay before it comes into effect.

The costs of long-term care for seniors

The thought of paying for their long-term care can create a lot of financial anxiety for many families in New York. According to the U.S. Department of Health and Human Services' Administration on Aging, most individuals who are older than 65 will need some form of assistance with daily activities like bathing and dressing for at least a few years in their lives. While many people will be able to get care for free from family members, others will need to pay for caregivers, which can be very expensive.

More than a third of seniors will need to get care in a nursing home, where the median cost for a private room is more than $100,000 per year. About 40% will opt for receiving care within their own homes, and this can cost as much as $50,000 per year. Unfortunately, Medicare and most private insurance policies do not cover these expenses, so families are on their own to come up with the money.

Should you add a no-contest clause to your estate plans?

One purpose of New York estate plans is to minimize the likelihood and duration of estate disputes that may arise upon your death. Though you may leave behind detailed instructions that have considerations for all your loved ones’ potential concerns and needs, there is still the possibility of someone not agreeing with your final decisions. One solution that can help nip potential disputes in the bud is a no contest clause. 

It is important to understand that disputes can still arise between your beneficiaries. A no-contest clause does not automatically bar a disgruntled relative from filing a dispute. There are circumstances where a probate court may decide to allow a contest petition to proceed. Here are a few considerations about the no-contest provision for estate plans

What to do about digital assets in an estate plan

Even people in New York who have already created estate plans may not have taken their digital assets into account. When thinking about what they want to happen to their belongings after they die, people often forget things like online accounts, photographs, emails, subscriptions, and other items.

A number of states, including New York, have adopted the Uniform Fiduciary Access to Digital Assets Act or a version of it to deal with this issue. One problem that arises with social media and some other websites is that even if a password is given to another person, it could be against the website's terms of service for someone else to access it. People should investigate what a website's policies are and what the options are in accordance with state law.

The health care outlook for most seniors includes Medicaid

The federal government estimates that 70% of American seniors will eventually require long-term health care services, and others will need nursing home care.

If you become one of the millions of people in these circumstances, you will likely need Medicaid to cover your care due to the high costs involved.