Some people in New York might put off creating an estate plan because they do not want to think about their mortality, but it is important to make a plan so that loved ones receive assets as intended. If a person dies without an estate plan, the court decides how his or her assets will be distributed, and this decision may not reflect the deceased’s intentions.
Another important reason to create an estate plan is so that preparations can be made in case a person becomes incapacitated. A durable financial power of attorney appoints someone to manage financial matters while a health care power of attorney designates a person to make health care decisions. An individual might also want to create a living will, which addresses end-of-life care.
A will is the basic document that establishes how assets should be distributed. A guardian for minor children can also be named in a will. Estate planning could even include putting together information about a person’s digital assets, including passwords, and assigning permission to people to delete or manage social media accounts. A person might also want to consider a living trust. The assets placed in a trust can go directly to beneficiaries without passing through probate.
Trusts have other advantages as well. They can also be used to delay distributions to beneficiaries. For example, trusts can keep assets safe for minor children. The creator of a trust might also specify that beneficiaries receive their distributions only they reach a certain age or milestones, such as graduating from college. It might be useful to give a trustee the discretion to make distributions for a beneficiary who might be financially responsible or is struggling with substance abuse. Other advantages of trusts are that they might protect assets from creditors or even from a spouse if a beneficiary gets a divorce.