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Syracuse Elder Law Blog

Reviewing an estate plan

Even though the Tax Cuts and Jobs Act has increased the exemptions for GST and individual estate gift taxes, New York residents should still review their estate plans. There are many issues not related to federal estate taxes that should be closely examined.

The manner in which one's assets will be bequeathed to beneficiaries should be assessed. A will is usually the legal device that is used to express one's wishes regarding their assets, even if a revocable trust is part of the estate plan. A will's provisions can specify exactly how the ownership of assets should be transferred whether they are to be given to the beneficiaries outright, placed in an existing trust or placed in a trust that will be created per the directions of the will.

Does your estate plan include TOD- and POD-titled accounts?

Beneficiaries are a major focus in your estate-planning strategy, and you want to make sure that upon your death the transfer of assets to them will be handled smoothly.

One simple way to transfer certain assets and avoid probate is to have TOD- or POD-titled accounts. You probably own at least one such account, but is the beneficiary designation up to date?

Trusts for adult children

New York parents concerned about whether their adult children can handle the responsibilities associated with major inheritances may consider using trusts. One mistake that parents often make with estate plans is bequeathing their wealth outright to adult children who lack financial wisdom.

The benefit of using a trust for adult children with no financial sense is that parents can create rules to govern the distribution of the trust assets. For example, annual distributions can be limited to a fraction of the trust's value or consist of just investment income. Parents also have the option of granting the trustee the authority to determine how and when the distributions should take place.

Using a revocable living trust

New York residents who use revocable living trusts should make sure that they're using this estate planning tool to its full potential. Not using a living trust properly can result in a poor investment of the legal fees paid to establish the trust.

One of the most frequently occurring mistakes people make with revocable living trusts is not funding the trust or neglecting to move the legal titles of assets to the trust. Simply having a written living trust agreement in one's possession is not sufficient. If the intended assets are not placed in the trust, those assets will not be able to avoid the probate process. They will also not be able to be held to the trust's provisions.

Probate can be used strategically

For New Yorkers facing estate planning decisions, or dealing with wills made by others, probate can be an intimidating process. While probate court is often reviled as a venue for assets to be wasted through attorney fees and family infighting, it can actually have a place in well-considered estate planning. The key to a streamlined probate process is clarity and forethought.

When an asset passes to an heir through a will, it must go through probate. The process varies from state to state and sometimes from county to county. If assets are owned in more than one state, estate planning should include consideration of laws in each jurisdiction. Critics are correct to argue that probate can be a very expensive proposition when there is confusion about testamentary intent or legal cause to question mental clarity or undue influence. Many jurisdictions employ a multi-tiered approach to probate with smaller estates getting a more streamlined process to completion. Larger estates, which are the subject of more disputes, can involve protracted litigation and court-appointed administrators that substantially deplete estate assets.

Knowing about will contests can help you avoid them

If you are like many New York adult children who are helping their parents with estate planning issues as they age, you likely have talked to them about making their Last Wills and Testaments. If they have not yet done so, however, it will be helpful for you to know about New York will contests so you can help your parents avoid one.

To begin with, only certain people can challenge a will, including the following:

  • Anyone named in it
  • A close relative who the will does not name
  • Anyone named in a will that your parent executed prior to or subsequent to the will being challenged
  • Anyone who would inherit by intestacy if your parent had died without making a will 

Remember health care in estate planning

New York residents who are planning for retirement are generally focused on income streams, managing risk, minimizing tax implications and Social Security. A key aspect of planning for retirement is the inclusion of health care planning. Many financial planners fail to make it a focus in their conversations with prospective clients, but that could be doing them a disservice.

A major health crisis can render even the ideal investment and wealth protection plan insufficient. Recent estimates indicate that the average American couple will be required to pay $260,000 for out-of-pocket health care expenses during retirement. Long-term care, which is not included in that figure, is not covered by Medicare, and assisted living can run several thousand dollars a month in a modest facility. Either way, a hard look needs to be given at the prospect of health care creating a drain on assets during one's golden years.

How the higher estate tax exemption may affect planning

Although the tax bill signed into law by President Trump in 2017 increased the estate tax exemption to over $11 million for individuals and more than $22 million for married couples, New York residents might still want to keep other taxes in mind when creating an estate plan. There are strategies people can follow to reduce both transfer and income taxes.

Assets that produce high income can be placed in a trust that pays a beneficiary in a lower tax bracket. Contributing more to charity may help in some situations. There may be a number of other strategies available as well.

3 costly estate planning mistakes to avoid

Planning for the inevitable is not a very pleasant thing to think about. But if you fail to prepare for when your time will be up, your assets may not pass on to your heirs how you want them to. Not only can estate planning maximize the value of your estate, but it gives you the opportunity to make decisions about what will happen to your assets. 

If you fail to implement or update your estate plan, your beneficiaries may lose out on what you want them to get. If you want your estate to be as valuable as possible, here are some common estate planning errors to avoid.

Estate planning can save time, energy and assets

Estate planning can be an emotional task for people in New York as it involves dealing with emotional and complex issues about the end of life and relationships with one's heirs. However, it can also be critically important to ensuring a smooth transition and protecting the assets one has worked so hard to develop over the years.

A person's estate includes all of the property that a deceased person owned; it can include both their assets and their debts. The net assets of the estate are available for distribution after settling remaining liabilities. The standard process for dealing with an estate is called probate, and this legal procedure transfers the title of these assets from the estate to the heirs of the decedent. Probate, however, can be a costly, slow process and consume a great deal of the assets remaining in the estate. This means that avoiding and minimizing probate can be important for people who want their heirs to benefit from the estate, not for its value to be lost in lengthy court procedures.