What is Estate Planning?

An Estate Plan ensures that your needs, your families’ needs, and financial goals are met during your lifetime and upon your death. A thorough and comprehensive plan would include a Last Will & Testament, Health Care Proxy, Living Will, and Power of Attorney and for some a Trust may also make sense. Everybody needs an Estate Plan because it states how your assets are to be distributed upon your death through a Will and/or Trust and whom you would want to handle your financial and health matters during your lifetime with a Health Care Proxy, Living Will and Power of Attorney. It is critical to have Estate Planning documents done by an attorney, even if you think you may not have a “taxable” estate. Leaving the administration of your affairs to chance without a will, or with documents not specifically tailored to your personal needs and circumstances, can lead to drastic and often costly consequences.

How do I start the process of making an Estate Plan?

First, evaluate and inventory your assets. Assets include but are not limited to your residence, real estate or business interests, stocks, bonds, annuities, retirement savings, and insurance policies. This list is not exclusive. It can include art work, jewelry, collections, antique furniture — whatever is of some monetary value. You then need to ask yourself the following questions:

  • Who would you want to make medical decisions on your behalf if you were unable to do so?
  • Who would you want to handle your financial affairs if you were to become incapacitated?
  • Who would you want to wrap up and distribute your estate upon your death?
  • Upon your death, how would you want your estate divided?

Once you have reviewed your assets and have considered these questions, you should meet with an Estate Planning Attorney to discuss a plan conformed to your needs. (Note: you do not need to definitively answer these questions; an Estate Planning attorney can help you work through these questions and help you make a decision). Your attorney may also want to include your financial planner and/or accountant in the planning.

Do I need a Will if my assets are all in Joint Accounts?

The unequivocal answer is Yes. Many people erroneously believe that they do not need an Estate Plan or Estate Planning documents if all of their assets are in joint accounts with their spouse or their children. Although joint accounts are intended to pass directly to the joint account holder after the other account holder’s death, it remains critical to have a Last Will and Testament in place to administer assets that may be outside of those joint accounts at death (i.e., outstanding checks that have not been cashed). If the decedent had applied for and received Medicaid benefits, it is particularly important to have these documents.

Keep in mind that a “joint account” can be challenged. The law allows a presumption of joint ownership but that presumption can be overcome. Sometimes a parent will title an account jointly with their child because the parent wants the child to handle his or her banking, pay bills and to have uninterrupted access to the account if the parent becomes incapacitated, all for the parent’s benefit. This is a “convenience account” that is deemed property of the probate estate and subject to collection by the Executor. Alternatively, the parent names the child as a joint owner to have the account pass to the child on the parent’s death without probate. In that instance, the child is a co-owner of the account and not merely a signatory for the convenience of the parent. However, in order to avoid any dispute as to account ownership, it is particularly important to sign a written statement indicating that all assets held in a joint account shall be considered the joint owner’s property on the parent’s death and NOT a convenience account. Additional precautions may help provide evidence as to what type of account was intended.

Why should I pay an attorney when there are forms available on the Internet?

A form is not able to give you specific legal advice tailored to your particular situation and needs. The laws impacting estate planning are constantly changing. Retaining counsel to help you navigate the process is critical and will help your descendants avoid unnecessary litigation and probate or administration costs. As baby boomers and their parents age, they are living longer and often, living with chronic medical conditions. The cost of long term care continues to spiral out of control and families struggle to meet the needs of their aging members.

If you already have an Estate Plan in place you should review it throughout your lifetime as each stage of life brings different reasons for an estate plan; different issues that need to be addressed, and often changes in the law which may need to implemented into your plan. Your Estate Plan should be reviewed with the birth of a child, upon a divorce, with the death of a spouse or child, each decade, upon a decline in health, retirement, and if there is a significant change in financial circumstances.

By implementing an Estate Plan now you can avoid bickering and confusion later. An Estate plan spells out to your family members and/or beneficiaries how you would want things handled were a crisis to arise or upon your death. Being clear about your intentions can not only prevent drawn out costly legal battles but can keep harmony amongst your loved ones.

Who Needs a Will?

Everyone. Whether you realize it or not, even if you never executed a Last Will and Testament, you already have a Will. The State has written one for you. This is called intestacy. Because of the intestacy laws, everyone essentially has an “estate plan” already; the only question is whether you write it or the government does. The default intestacy plan may not reflect your ideal distribution. New York’s intestacy laws allow a spouse to inherit $50,000 plus half of the balance, with the remainder to the children. Without a spouse or children, the law leaves your estate to your parents, then your siblings, in that order. Although clients delay estate planning because it forces them to make difficult decisions, a Will affords you control over who inherits and in what proportion, and to name an executor who is in charge of the administration of your estate. Advanced directives are further critical to ease financial and end-of-life decision-making. It is far better for you to decide these issues in advance than to leave it to chance.

Basic planning documents – a will and advanced directives (power of attorney, health care proxy, living will), and, for some, a trust– are particularly imperative for those who are themselves or have family members who are minors, disabled, or are in unmarried or same-sex relationships. If you have minor children, you must specify who will take care of them in the event of your death. While the Court has final say who will be their guardian, your nomination is given great weight.

Without a Will designating a trust for minors or disabled beneficiaries, the Court must appoint a guardian to collect their interest in your estate. This adds another layer of court oversight and can be expensive. The Court also requires full distribution to minors at age 18, while a well- drafted minor’s provision lets you direct an age when the child is mature enough to handle the money.

By implementing an Estate Plan now, you can avoid dissension, stress and confusion later. An Estate Plan declares to your family members and/or beneficiaries how you would want things handled were a crisis to arise or upon your death. Dictating your intentions prevents lengthy, costly legal battles and preserves family harmony.