WHY YOU NEED ESTATE PLANNING

By: Ruth Wiseman, Esq.

We all know the old saying that there are only two certainties in life – Death and Taxes. While this is an unfortunate truth, the good news is that with the right planning you can avoid unnecessary headaches while dealing with or preparing for both. Specifically, when it comes to Estate Planning, taking the right steps early on can alleviate a lot of problems after you or a loved one has passed.

“Estate Planning” can be very complex but in most cases it is fairly straight forward and can be accomplished quickly. The starting point of any Estate Plan is to determine what documents you should include in your plan and what those documents should say.  For most people, a basic Estate Plan will include a Last Will and Testament (“Will”) and Health Care Proxy (“HCP”) and Durable Power of Attorney (“POA”).

It is important to set up an Estate Plan with all recommended documents while you are able to.  You cannot prepare these documents after you’ve been in a serious life-threatening accident, or when you are institutionalized in the last stages of Alzheimer’s disease.  You must have a minimal level of competency. What follows is a brief summary of the recommended documents that you should have in a basic Estate Plan, and the importance of each.

LAST WILL AND TESTAMENT

Everyone has an excuse as to why they don’t need a Will and we have heard them all.   I’m young; I’m single; I don’t have children; I’m healthy; I can’t afford it; I don’t have anything of value that anyone would want; or… I don’t want to think about dying! Unfortunately, none of these reasons are good ones for not drafting a Will.

Most people do need a Will and if you die without one, the state where you live and the way you have certain assets titled will determine who and how your property passes.  Frequently, assets are set up to distribute automatically on death, particularly between spouses, even without or in spite of a Will.  But what about assets that are not going to pass by operation of law; the assets that must be administered or probated? And what if you want a different scheme?

You need a Will to set forth the distribution scheme you want for your property upon your death, to provide contingent beneficiaries if your primary beneficiary or beneficiaries predecease you, and to establish testamentary trusts and or guardianships for minor children if needed. Your Will can be utilized to plan for the needs of minor children, disabled members of your family, and even for continued care for your pets after your death. Provisions can also be included to minimize or eliminate state and federal estate taxes, should your estate be large enough to be subject to estate tax.

Your Will provides for an orderly distribution of your estate.  In it, you designate who will handle the estate administration, who will administer any trusts you may set up, and of great importance to parents of minor children, who will be the guardian of your children.

Wills are of great importance to single people and people without children as well.  You may be single and childless, but in a committed relationship.  You may want your assets to go to your companion. Without a Will, New York State dictates that your assets will go to your parents or parent, if surviving, and if not, to your siblings.  You may be a married couple with no children.  After you both die, you may want your assets to go to your best friends, a charity or religious institution, particular relatives who you were close to, or a combination of beneficiaries.  Of course, there may also be people you want to make sure do not share in your estate.  Without a Will, once again, your state of residence will control where your assets are distributed. The best way to assure that your wishes are accomplished is to have a Will.

HEALTH CARE PROXY

A Health Care Proxy (“HCP”) is a document whereby you specify someone to make health care decisions for you, to be used only if you are unable to communicate your preferences for your health care.  Instances when a HCP is used would be if you were unconscious or left mentally incompetent by injury, disease or illness, such as Alzheimer’s disease, or a serious accident.

A HCP will specify your designated agent, preferably an alternate agent, and some direction as to the care you wish to receive.  Do you want to be kept alive if you are in a vegetative state with no hope of recovery?  Do you want the “plug” pulled? These are the questions a properly written HCP will answer.

A HCP can stand alone with some written directives or you can also have a more definitive living Will drafted to accompany your HCP with more extensive directives.

Just like a Will, this must be done while you still have the mental capacity to understand the document.

DURABLE POWER OF ATTORNEY

A Durable Power of Attorney (“POA”) is a document whereby you designate an agent, or agents to make binding financial and legal decisions on your behalf.  It does not take away your right to make and execute these decisions, but adds at least one other person to a position to assist you.

A POA can be used while you are still able to act in your own behalf and when you can no longer due to disability or incompetency.  Having a valid POA can avoid the necessity of a guardianship (a costly and lengthy proceeding) for someone who becomes disabled.

A POA is a very powerful document.  It gives the agent significant power and allows them to do such things as withdraw the contents of your bank account, sign a deed in your name transferring your home, or enter into a mortgage, encumbering your home. To avoid fraudulent activity by a designated agent, POAs in New York, and many other states, now require the designated agents to execute the document acknowledging the limits of their power in using the POA. Because of the potential for abuse, it is extremely important that you only designate someone you trust implicitly since they can access your valuable assets without your knowledge.

OTHER CONSIDERATIONS

A simple Will, HCP and POA may be all most people need in their estate plan; however, others may need more sophisticated planning, such as trusts for loved ones with special needs, pets, more extensive wealth management planning and/or intervivos trusts (trusts set up during your lifetime to accomplish certain goals).

Your estate plan may also involve changing the ownership of real estate, bank and investment accounts and modifying beneficiaries on life insurance policies.

It’s important to keep in mind that life cycle events may trigger a need to update existing documents.  Death, divorce, birth of a child, increase or decrease of wealth, chronic or terminal illness, and changes in state or federal laws are all reasons to regularly review your Will and associated documents.

Whether you have never executed a Will and associated documents, or need to update older documents, the attorneys at Andreozzi Bluestein LLP have many years of experience in estate planning, and can guide you through the complicated process of estate planning.  If you or a client should need assistance with any part of your estate plan, please call us for a no obligation consultation.

The information provided is a general overview and everyone’s circumstances are unique.

Disclaimer

This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decision of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult an independent licensed attorney before making any decision or taking any action concerning the matters in this communication. This communication does not create an attorney-client relationship between Andreozzi Bluestein LLP and the recipient.

Any links to other web sites are not intended to be referrals or endorsements of these sites. The links provided are maintained by the respective organizations, and they are solely responsible for the content of their own sites.

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