How Does Inheritance Tax Work?

Taxes are a part of life and if you live in New York and own a taxable estate, you’ll need to know New York’s estate tax rules. Taxes are also a part of death. And frustratingly, if we’re not careful in life, we can pass them on to our loved ones in death through inheritance taxes.

In New York, while there is no inheritance tax on gifts received as part of an inheritance or trust, estate taxes are still applicable. These taxes are calculated based on the total value of the deceased’s estate rather than on what each beneficiary receives individually. Many gifts are eligible for tax exemptions, which can significantly reduce or even eliminate the estate taxes that might have otherwise been due.

Effective estate tax planning is one of the most important plans you can make. Our Brooklyn estate tax planning lawyers at New York Legacy Lawyers can help you manage the intricacies of estate tax to protect yourself and your loved ones from paying more than what they should. Contact us today at (718) 713-8080 to schedule a consultation.

Estate Tax Vs. Inheritance Tax

Estate tax and inheritance tax are two different things. While they are both paid to the IRS, the most significant difference is who pays them. The estate pays estate taxes and covers any taxes that are levied against the assets included in the deceased’s estate. Inheritance tax is paid for by the people who are inheriting an asset. You may be able to set aside an exclusive account that can be used to help defray the cost of the inheritance tax so that your loved ones won’t be responsible for the entire amount.

You can also avoid inheritance tax by using certain types of trusts.

New York Inheritance Tax

In New York, there is no “inheritance tax” that is levied on the property and money received by an heir from an estate. The heir bears the responsibility of paying inheritance taxes. However, it’s important to note that if a New York resident owns property in another state, their heirs may be subject to that state’s inheritance tax unless proactive measures are taken to avoid it. 

While the majority of a New York resident’s property is typically situated within the state, it is not uncommon for them to possess vacation homes or investment properties in states where inheritance taxes are enforced.

New York Legacy Lawyers can be your reliable partner for out-of-state inheritance tax concerns. Our skilled New York estate planning lawyers can guide you in creating thorough estate plans that effectively reduce the impact of inheritance taxes. Trust our dedicated professionals to handle your estate tax concerns with the highest level of professionalism. Contact us today to find tailored solutions that cater to your specific needs.

How Much Can You Inherit Without Paying Taxes in New York?

Understanding the difference between inheritance tax and estate tax in New York is crucial when determining what you might owe after receiving an inheritance. Fortunately for beneficiaries, New York does not impose an inheritance tax, meaning you don’t pay taxes simply because you inherit assets.

However, New York does enforce an estate tax. This tax is not paid by the inheritor but by the estate of the deceased before the assets are distributed. For the year 2024, the estate tax exemption in New York is set at $6.94 million, an increase from the $6.58 million exemption in 2023. This means that if the total value of the estate at the time of death exceeds $6.94 million, the estate must file a New York estate tax return and potentially pay estate taxes on the amount over this threshold.

It’s important to note that this tax exemption applies to the estate as a whole rather than to individual beneficiaries. Therefore, as an inheritor, you wouldn’t need to pay any taxes unless the entire value of the estate surpasses the $6.94 million mark. Beneficiaries of estates valued below this threshold are exempt from New York estate taxes.

If you are managing or expecting to inherit an estate near or above this exemption threshold, consulting a Brooklyn estate tax planning lawyer can be beneficial to understand the specifics of New York’s estate tax laws effectively. To arrange a consultation, reach out to New York Legacy Lawyers today.

Trust Options Available in New York

When undertaking estate planning, one may encounter multiple legal documents to transfer their estate to beneficiaries. Alongside creating a last will and testament, establishing a trust can offer asset protection and secure asset distribution according to the individual’s preferences. As each type of trust carries its own set of benefits and drawbacks, consulting an estate planning attorney is recommended to assess the available options thoroughly. The following are trusts that can be established in New York:

• Irrevocable Life Insurance Trust. An option to prevent your life insurance policy from being included in your estate. An irrevocable trust means that you will have to give up any ownership rights, and you will not be able to borrow money against the trust or modify the beneficiaries. When you pass away, the benefits from the policy are paid to your beneficiaries as tax-free income. This can be useful for your loved ones who may need extra money or can help pay for any remaining estate-related expenses.
• Charitable Remainder Trust (CRT). A life income gift trust is the most frequently used charitable trust. You move your assets to the trust while you’re alive, and you or a beneficiary can receive tax-free income from it for the remainder of your life. The remaining funds in the CRT are given to a charity, and you receive a charitable and income tax deduction for a part of the transfer.
• Charitable Lead Trust (CLT). A charitable lead trust is a type of trust that enables you to select the charities that will receive the interest from the assets held in the trust for a predetermined length of time. After the specific period, the remaining amount in the trust transfers to your beneficiaries or family members.
• Special Needs Trust. A special needs trust is a trust designed to supply financial assistance to a loved one with a disability for the duration of their lifetime. The assets from the trust can be used to supplement any benefits the individual may receive from government programs like Social Security, Medicare, or others.
• Dynasty Trusts. This trust allows the tax-free transfer of a large sum of money to your beneficiaries who are at least two generations younger than you.
• Qualified Personal Residence Trusts. Using these trusts can exclude the value of your personal home from your estate. This kind of trust is frequently utilized in locations with thriving real estate markets or areas where properties are expected to increase in value over time.
• Qualified Terminable Interest Property Trust. Assigns assets to specific family members if your family includes stepchildren, remarriage(s), or children from a prior marriage. The trust will give your surviving spouse an income after you pass away. Once your spouse passes away, only the beneficiaries you designate (such as your children from a previous marriage) will receive the remaining trust assets.

Types of Trusts Available in New York	Key Features
Irrevocable Life Insurance Trust	Prevents inclusion of life insurance policy in the estate. Provides tax-free income to beneficiaries upon policyholder’s death.
Charitable Remainder Trust (CRT)	Transfers assets to trust while grantor is alive. Offers tax-free income for life to grantor or beneficiary. Donates remaining funds to charity, resulting in tax deductions.
Charitable Lead Trust (CLT)	Allows selection of charities to receive trust’s interest for a specified period. Transfers remaining amount to beneficiaries or family members.
Special Needs Trust	Provides financial assistance to individuals with disabilities. Supplements government benefits like Social Security or Medicare.
Dynasty Trusts	Enables tax-free transfer of a significant sum to beneficiaries two generations younger than the grantor.
Qualified Personal Residence Trusts	Excludes personal home value from the estate. Often used in thriving real estate markets or areas with expected property value appreciation.
Qualified Terminable Interest Property Trust	Allocates assets to specific family members in complex family situations. Provides income to surviving spouse and remaining assets to designated beneficiaries (e.g., children from a previous marriage).

How is Inheritance Tax Calculated?

Inheritance taxes vary significantly from state to state, with rates ranging from 1% to 20%. The tax obligation can also differ within a state depending on the size of the inheritance. For example, if a state exempts the first $2 million of an inheritance and you are bequeathed $10 million, taxes would only apply to the $8 million over the exempt amount.

It’s important to consult with the administrator of the will or an estate law attorney to fully understand the applicable tax rates and the process for filling out inheritance tax forms in your state. As mentioned, in New York, there is no inheritance tax imposed. This means that while you need to be aware of these regulations if you inherit property in other states, any assets received from an estate within New York are not subject to state inheritance taxes.

Inheritance Tax Exemptions

Not all inheritances are taxable. States that have an inheritance tax allow for a certain amount of money to be received without having to pay an additional tax. Several states offer tax-exempt status to the deceased person’s spouse. Children may also qualify for this exemption. There are instances, however, in which the amount received is large enough to put the inheritance into a taxable category. The main rule of thumb is that family members usually bear some degree of tax-exempt status. The beneficiaries who have no family connection to the deceased can expect to pay a much higher inheritance tax.

As a person who is planning their estate, if you want to prevent your beneficiaries from paying any inheritance tax, you may want to look into placing your assets into trusts. This action allows you to leave whatever item or amount of money you want to any person, family or not, and possibly reduce the amount of inheritance tax they are required to pay once they receive their gifts

It is important to note, however, that when inheriting assets located in New York, there is no state-level inheritance tax. This means that residents of New York do not need to worry about state inheritance taxes when planning their estates or receiving an inheritance, regardless of the relationship to the deceased. This exemption allows for simpler estate planning and potential cost savings for New Yorkers, although considerations for property held in other states where inheritance taxes exist should still be made.

Ask New York Legacy Lawyers!

Understanding inheritance tax and its implications can be complex, especially without a solid grasp of your state’s tax laws. When navigating estate laws, having a trusted attorney to provide reliable answers is crucial. At New York Legacy Lawyers, our Brooklyn estate tax planning lawyers are equipped with the knowledge necessary to clarify your questions and ensure you have a comprehensive understanding of how your will functions and the potential inheritance tax implications for your heirs.

It’s important to highlight that in New York, there is no state-level inheritance tax. However, if you have property in other states, it’s essential to consider the inheritance laws applicable there. Our team can assist you in drafting your will and creating trusts that help minimize the tax burden on your beneficiaries, ensuring they don’t have to pay excessive taxes on the gifts they receive.

Contact us at (718) 713-8080 to explore effective estate planning strategies tailored to your needs.

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Estate Planning For Young Adults

When it comes to estate planning, most people think it is about what happens to our stuff when we get older. Few people understand that it is also about what happens to ourselves while we are still young. 

As soon as we turn 18, we are considered legally responsible for our own decisions in terms of finances and health. This means that parents of young adults lose their legal authority over their child and are no longer able to access their health or education records or assist in managing their affairs. For this reason, it is critical to hire an estate planning attorney. They can help you handle the complex legal issues involved in estate planning and ensure that you have all the necessary documents in place, including advanced directives.

Having a plan in place with the help of a skilled New York estate planning lawyer can alleviate stress and confusion for both the young adult and their loved ones. Don’t wait to secure your future; contact New York Legacy Lawyers at (718) 713-8080 to schedule a consultation and start planning with confidence.

Why Do Young Adults Need Advanced Directives?

Advanced directives are essential legal documents that young adults should consider to ensure that someone they trust can make important decisions on their behalf in the event of sudden incapacitation or unforeseen circumstances. Having these directives allows them to:

• Designate a Trusted Person: Young adults can appoint a trusted individual, typically a parent or close relative, to legally access their medical and educational records. This person can manage the health and financial decisions if the young adult becomes unable to do so due to unexpected events or incapacity.
• Specify Treatment Preferences: Advanced directives provide clear instructions to healthcare providers and family members about the young adult’s treatment choices, including preferences for medical care, end-of-life decisions, and financial matters.
• Ensure Wishes are Respected: By having advanced directives in place, young adults can ensure that their preferences are respected, even if they are unable to communicate them. This helps avoid potential conflicts among family members and provides peace of mind, knowing that their wishes will be followed.
• Prevent Delays in Care: Without advanced directives, there may be delays in receiving necessary medical care, as healthcare providers might need to wait for legal permissions. Having these directives in place ensures prompt and appropriate medical interventions.

While young adults may not typically consider the necessity of such documents, the reality is that life is unpredictable. Advanced directives serve as a proactive measure for young adults to maintain control over their healthcare and financial decisions, providing clarity and security for themselves and their families in unforeseen circumstances.

What Documents Are Included in Advanced Directives?

There are four documents we include in our Advanced Directives packets:

• Power of Attorney: for financial and legal decisions 
• Health Care Directives: for health care decisions
• FERPA authorization: which allows access to education records
• HIPPA release form: which allows access to medical records

Let’s take a deeper dive into each one:

Power Of Attorney 

Young adults may need powers of attorney to authorize someone they trust to make important financial or legal decisions on their behalf. Parents may encounter situations where their young adult children are unable to manage their affairs due to unexpected events, such as an accident or illness, or when they are traveling or away from home and need someone to act on their behalf. 

Powers of attorney can be durable or non-durable and can cover a range of decision-making authority, such as managing bank accounts, paying bills, signing contracts, and making medical decisions.

A power of attorney can help ensure that their financial and legal matters are taken care of according to their wishes, without the need for a court-appointed conservatorship or guardianship. Having a power of attorney in place can also prevent potential disputes among family members or other loved ones and provide peace of mind to both the young adult and their family.

Mental Health Power Of Attorney 

In New York, a mental health power of attorney is a legal document that allows an individual (referred to as the “principal”) to appoint a trusted agent to make mental health treatment decisions on their behalf in the event that they become unable to make decisions for themselves. This type of power of attorney is authorized by the Mental Hygiene Law in New York State.

A mental health power of attorney can be particularly important for individuals who have a history of mental health issues and want to ensure that their wishes regarding their mental health treatment are followed. The agent appointed in the power of attorney document can make decisions about the principal’s mental health treatment, including consent to or refusal of treatment, and decisions about hospitalization, medication, and therapy.

It’s important to note that a mental health power of attorney only applies to mental health, for general Medical Care you need the document up next.

Type of Power of Attorney	Description
General Power of Attorney	Authorizes someone (agent) to make financial and legal decisions on behalf of the individual (principal). Can cover managing bank accounts, paying bills, signing contracts, and making medical decisions. Can be durable (remains valid even if the principal becomes incapacitated) or non-durable.
Mental Health Power of Attorney	Specific to mental health treatment decisions. Allows the appointment of an agent to make mental health treatment decisions on behalf of the principal if they become unable to decide for themselves. Covers consent or refusal of treatment, hospitalization, medication, and therapy. Authorized by Mental Hygiene Law in New York State.

Health Care Directives & HIPAA Release 

Health Care Directives (also known as a durable power of attorney for health care) provide a set of instructions for family and medical professionals to follow in the event of a medical emergency. A healthcare proxy should be familiar with their values and wishes, and will help plan for situations that cannot be foreseen, such as a serious car accident or stroke.

FERPA Release 

As a general rule, it is a good idea for college students to sign a FERPA release, as it allows their parents or legal guardians to access their academic records and other educational information. The Family Educational Rights and Privacy Act (FERPA) is a federal law that protects the privacy of student educational records, but it also allows for the release of those records to parents or legal guardians of dependent students under certain circumstances.

By signing a FERPA release, a college student can authorize their parents or legal guardians to access their academic records, including grades, transcripts, and financial aid information. This can be helpful for parents who want to stay informed about their child’s academic progress and provide support when necessary. 

Now that we have talked about what these documents do and why they are important, let’s discuss how to set them up! 

Because all 18-year-olds are considered legal adults, the decision to sign these Advance Directives should be made in collaboration with their parents or legal guardians and an estate planning attorney. While you may obtain some documents on your own such as the HIPPA release, the Financial Power of Attorney in particular is a powerful document that should be properly prepared by an attorney. This ensures that the documents will work as intended and your attorney can also provide counsel on how to use them correctly. Creating advance directives is an important part of planning for the future, if you are ready to get started make sure you contact us today.

Estate Planning For Young Professionals

Many young professionals neglect estate planning, since they have few assets, are single, and in good health. However, estate planning is just as necessary for a young professional as it is for older, rich, and married individuals. 

One of the critical aspects of estate planning is creating a power of attorney. This document authorizes someone to act on your behalf in financial and medical situations if you become incapacitated.  With the power of attorney, should the unexpected happen, you can avoid guardianship, which can be expensive and time-consuming. 

Another important estate planning tool is an advanced directive for healthcare.  If you have set up an advanced directive, you will appoint a healthcare proxy to make medical decisions for you should you be unable to make them yourself. This document also enables you to specify your preferences for end-of-life care and organ donation, which can alleviate the burden on your family. 

Creating a will or trust is also essential in estate planning. Without a plan, the law determines the distribution of your assets. Having a will allows you to decide on the allocation of your assets, which also involves designating a legal guardian for your underage children. In addition, a trust can help you avoid the probate procedure and make certain that your assets are distributed according to your preferences. 

If you’re a young professional looking to secure your future and protect your assets, consider working with a skilled New York estate planning lawyer. At New York Legacy Lawyers, our team of experienced estate planning attorneys may be able to help you create a comprehensive plan that addresses your unique needs and goals. Contact us at (718) 713-8080 to learn more about how we can help. 

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from New York Legacy Lawyers by Yana Feldman and Associates https://yanafeldmanlaw.com/estate-planning-for-young-adults/

10 Frequently Asked Questions About Setting Up A Will

For most of us, planning for what happens to our possessions after we leave this earth is not a top priority. This is evident from the fact that 6 in 10 American adults haven’t created a will or living trust. This oversight is frustrating because even a small amount of planning regarding our assets can save our heirs a great deal of stress, effort, and money.

Here’s what we’re saying: a will is critically important for the loved ones we will all leave behind. If we all knew a little bit more about what to expect and how to approach end-of-life planning, the number of Americans planning ahead would likely exceed the current 40%.

To help you, we’ve outlined 10 quick facts to help you better understand how wills work. At New York Legacy Lawyers, our New York estate planning lawyers are available to answer your questions and assist you in starting your will and estate plan. To learn more about how we can help, call us today at (718) 713-8080 to schedule a consultation.

1. How Do Wills Work?

A will, also known as a last will and testament, is a legal document that details how you wish your assets to be distributed upon your death. It ensures that your property goes to the individuals or organizations you designate. By clearly expressing your intentions, a will provides a guide for the executor—an individual or institution appointed to manage the estate—to follow, thereby minimizing confusion and conflict among beneficiaries. This document can cover a wide range of assets, including real estate, personal property, financial accounts, and even digital assets. Additionally, a will can name guardians for minor children, specify funeral arrangements, and set up trusts if necessary.

The primary benefit of having a will is that it significantly reduces the potential for disputes among heirs, as it eliminates uncertainty about your wishes. Without a will, state intestacy laws determine asset distribution, which might not reflect your wishes and could lead to lengthy legal proceedings. By proactively addressing these issues, a will helps streamline the probate process, where the court validates the will and oversees the distribution of the estate. This not only provides clarity and peace of mind for your loved ones but also can save time and reduce legal costs, ensuring a smoother transition during a difficult period.

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2. What Really Happens If I Don’t Leave a Will?

If you don’t have a will, that’s when a series of “if/then” property laws will govern how your family will receive your belongings. For example, your property will be divided based on whether or not you have a spouse, children, parents, siblings, and more. 

NYCcourts.gov does an excellent job of explaining this further.

3. What Are the Requirements for Creating a Will?

For a will to be legal in New York the following are basic requirements that should be met: 

• The testator (the person creating a will) must be at least 18 years old and of sound mind.
• The will must be signed by the testator (you) or someone with legal authority to sign on a testator’s behalf
• The will must be signed in the presence of two witnesses, and it must be written.

4. Do I Have to Leave My Estate to a Person?

If you’d like, you can leave your estate to a charity, school, or church instead of an actual person.

5. Do I Leave Instructions for My Burial in the Will?

You can technically leave instructions for your funeral in your will, but it’s best to express your funeral wishes to your loved ones verbally or in another document.

6. Does a Will Have to Be Notarized?

In New York, wills don’t have to be notarized to be legal.

7. Can I Void a Will Anytime?

You can revoke a will at any time by destroying it. Burning it or shredding it will suffice to demonstrate intent to destroy it. Alternatively, you may create a codicil. Regardless of your options above, it’s best to discuss your options for voiding a will with an experienced estate planning attorney.

8. What’s a Codicil?

A codicil is an amendment or change you make to an existing will.

9. Can I Create a Will If I’m Unable to Sign My Name?

If you’re unable to sign your name but have been legally signing with an “X” that will count as a signature. Or if you have given legal permission for someone else to sign your name, that person can sign your name on a will in the presence of your witnesses.

10. What Classifies as Being of Sound Mind? 

If you can understand what you own and who you’d like to leave it to, then you’re likely to have a sound mind.

Will or Trust: Which Is Right for You? 

Wills and trusts are both useful for estate planning, but they offer different advantages. The legal documents pertaining to estate planning are subject to state-specific laws and regulations. You may have both a will and a trust, and the information included in each should work together.

In New York, the key difference between a will and a trust lies in the probate court, which is also referred to as the Surrogate’s Court. Probate court is necessary for a will, but not for a trust.

What Is a Will?

A will is a legally binding document that allows you to name an executor to oversee your estate, appoint guardians for your children and caretakers for your pets, determine how your assets are distributed, and express your final wishes and arrangements. However, it is only effective after your death.

A will has some limitations when it comes to distributing assets and is also subject to a probate process, which means it becomes part of public records. Probate can be expensive and time-consuming, which can add to the carrying costs, expenses, and commissions of administering a New York estate. The distribution of assets generally requires a minimum of six months to be completed.

What Is a Trust?

Trusts are more complex than wills and offer various benefits to your estate and beneficiaries. You have various trust options available to you. A significant advantage of trusts is that they avoid probate. To fund your trust, you must transfer legal ownership of your assets to it, and the trust will then become the owner of those assets.

Typically, a trust enables you to administer and allocate your assets throughout your lifetime and beyond. You can place any of your assets inside the trust, which provides greater control over how they are distributed. There are many types of trusts available, more than those available for wills. At New York Legacy Lawyers, our New York estate planning attorneys can assist you and your family in navigating the estate planning process to achieve your asset protection objectives.

Questions About Wills	Answers
How do wills work?	A will directs where your property goes after your passing, reducing legal complexities and disputes.
What really happens if I don’t leave a will?	Without a will, property laws determine how family receives belongings based on relationships.
What are the requirements for creating a will?	The testator must be at least 18 years old and of sound mind. The will must be signed by the testator or someone with legal authority. It must be signed in the presence of two witnesses and be written.
Do I have to leave my estate to a person?	You can leave your estate to a charity, school, or church instead of an actual person.
Do I leave instructions for my burial in the will?	It’s best to express your funeral wishes to your loved ones verbally or in another document.
Does a will have to be notarized?	Wills in New York don’t have to be notarized to be legal.
Can I void a will anytime?	You can revoke a will at any time by destroying it or creating a codicil. Discuss voiding options with an estate planning attorney.
What’s a codicil?	A codicil is an amendment or change you make to an existing will.
Can I create a will if I’m unable to sign my name?	If you’re unable to sign your name, alternatives like an “X” signature or another person signing on your behalf may be used.
What classifies as being of sound mind?	If you can understand what you own and who you’d like to leave it to, you’re likely of sound mind.

Who Keeps the Original Copy of a Will

The disposition of the original will varies based on the preferences of the testator (the person making the will) and the advice of their attorney. Some common practices and considerations for keeping an original will include:

• Attorney’s Office: Many people choose to leave the original will with the attorney who drafted it. Attorneys often have secure, fireproof storage meant for important documents, ensuring the will’s safety. It is essential to inform the executor or trusted family members about its location in case of the testator’s passing.
• Safe Deposit Box: Some individuals opt to keep their wills in a safe deposit box. However, this choice may have potential complications. Upon death, the safe deposit box could be temporarily sealed, making it difficult for loved ones to access the will promptly. It might require a court order to access the box.
• At Home: Storing the will at home in a fireproof and waterproof safe is another option. However, it is crucial to inform trusted individuals of its location to ensure it can be found when needed.
• Filing with Surrogate’s Court: Individuals may file their wills with the local surrogate’s court for safekeeping. However, doing so may make the will a matter of public record. It’s essential to consult an attorney to understand the implications and the process involved.
• Copies: While the original will is crucial for probate proceedings, having copies is advisable. Ensure that your executor or trusted family members know where the original will is kept. Copies alone are generally insufficient for probate but can provide guidance if there are any questions about the will’s contents.
• Review and Update: Wills should be reviewed and updated after significant life events, such as marriage, divorce, birth of a child, death of a beneficiary, or substantial financial changes. Each time the will is updated, make sure the most recent version is securely stored, and older versions are destroyed to prevent confusion.

Regardless of where the will is stored, ensuring that chosen individuals can access it when needed is of utmost importance. For specific guidance related to wills or any other legal topics, it is best to consult with a New York estate planning attorney.

We’re Here When You’re Ready

Setting up a will is a critical step in ensuring that your assets are distributed according to your wishes and that your loved ones are taken care of after you’re gone. Understanding the intricacies of estate planning can be daunting, but you don’t have to do it alone. A knowledgeable New York estate planning lawyer can provide you with the guidance and skill you need to create a comprehensive and legally sound will.

At New York Legacy Lawyers, our experienced New York estate planning attorneys are dedicated to making the process of setting up your will as smooth and straightforward as possible. We can provide personalized advice tailored to your unique circumstances and help ensure that your estate is handled exactly as you wish.

Don’t leave your future to chance. Contact us today at (718) 713-8080 to schedule a consultation and take the first step towards peace of mind for you and your loved ones.

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What Is A Living Will And How Does It Work?

Wills are important tools that can help you ensure that your wishes are honored when you pass away. There are several types of wills that can be used for different purposes. Many people understand that wills are used to transfer assets to beneficiaries. However, in many cases, in addition to passing assets to loved ones, a will can have other, additional advantages. Speaking with an experienced Brooklyn wills attorney can help you understand these advantages. At New York Legacy Lawyers, our attorneys are well-versed in the intricacies of wills, including living wills, and can guide you through the process. If you want to learn more about how we can assist you with living wills and how they work, contact us today at (718) 713-8080.
A living will is one of the many different types of wills. A living will allows you to determine what steps will be taken to care for you if an illness or injury causes you to be in a vegetative or otherwise incapacitated state. While this is something most people don’t think about daily, it is essential to have a living will in place in case the unthinkable happens.  Here’s what a living will is, and why it should be important to you.

What Is a Living Will?

A living will states the measures and protocols you wish for doctors and other medical professionals to take if you are ever in a state where you can no longer make decisions for yourself, to include any instance in which you receive traumatic brain damage that prevents your body from functioning on its own accord. With today’s advancements in technology, the body can be kept alive for a virtually indefinite amount of time, even if the brain is no longer supporting its function — a living will states your wishes concerning what measures doctors should take in an attempt to keep you alive.

Life-Prolonging Treatments

Life-prolonging treatments refer to medication, blood products, CPR, dialysis, and surgery that can potentially save you and prolong your life when you are near death or are permanently comatose or incapacitated. A doctor has the power to declare whether you are in a life-threatening situation or if you are permanently incapacitated.

Treatments that are addressed in a living will also include chemotherapy, artificial respiration, antibiotics, and many others. It is possible to receive pain medication even though you refuse to receive life-prolonging treatments. Thus, if you would like to refuse pain management, you can include that in your living will. 

A living will also help your loved ones avoid having to make difficult decisions during a stressful and emotional time. Before drafting and signing your living will, it is important to do some research. Talking to your doctor, a spiritual advisor, or someone from your worship group about end-of-life care may help. You can also use many online resources available.

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Advanced Directives for Doctors

An advanced directive for doctors is simply a list of directions for doctors to follow if you are ever declared to be in a vegetative state. An advanced directive can also be used if your heart stops beating and it’s determined that extreme measures must be taken to restore your life with no guarantee that you will be able to live a full and active life. Resuscitation is often possible but with no guarantee of the quality of life, resulting in long-term palliative care and a lower quality of life than one is used to. The advanced directive provided to doctors will contain your explicit instructions as to the type of care you will receive during these situations.

Long-Term Palliative Care

Long-term palliative care is designed to make you as comfortable as possible. Think about the care provided to individuals who are in a coma or vegetative state. The ultimate goal of this type of care is to meet the physical needs of the patient and keep them as comfortable as possible until they can be released from the hospital or they eventually pass away. Long-term palliative care can be costly and is often a burden many people would rather not impose on their family.

The Option for a DNR

One of the central premises of a living will is a DNR, or “Do Not Resuscitate” order. A DNR means that no lifesaving measures such as CPR will be taken if you pass away during surgery or any other course of treatment. The DNR means that you will not be kept alive in a vegetative state or forced to endure a lower quality of life if long-term palliative care is required (assuming you are brought back to life).

A DNR ensures that you will not be forced to live a life that is dependent on the care of others. You will also protect your family from the high cost of long-term palliative care that is required to meet your day-to-day needs.

Key Aspects of a Living Will	Details
Purpose	A living will outlines your medical preferences in situations where you cannot make decisions for yourself, particularly in cases of severe medical conditions or brain damage.
Life-Prolonging Treatments	Addresses medical interventions like medication, CPR, surgery, and artificial respiration. Allows you to specify your willingness or refusal to receive these treatments.
Advanced Directives for Doctors	Provides explicit instructions for doctors to follow in cases of vegetative states or extreme life-saving measures.
Long-Term Palliative Care	Focuses on ensuring patient comfort and meeting physical needs during coma or vegetative states. Aimed at providing comfort until recovery or passing away.
Do Not Resuscitate (DNR)	Central premise of a living will. States that no resuscitation measures like CPR will be taken if the patient passes away during surgery or treatment.

Are Living Wills Legally Binding in NY?

In New York State, living wills are recognized, but there is no standard living will form provided by the state. This means individuals have the freedom to indicate their preferences when drafting a living will, but it must meet specific criteria to be considered legally binding.

For a living will to be valid in New York, it must provide “clear and convincing evidence” of the person’s wishes regarding their medical treatment. This standard is crucial because it ensures that the document accurately reflects the individual’s desires and can be relied upon in making healthcare decisions if the person becomes incapacitated.

To achieve “clear and convincing evidence,” the living will should be detailed and specific. It should outline the types of medical treatments and interventions the person does or does not want under various circumstances. Additionally, it is advisable for the living will to be signed, dated, and witnessed by two individuals who are not related to the person and who do not stand to inherit anything from them.

While New York does not require the notarization of living wills, having the document notarized can add an extra layer of authenticity and may help in cases where the validity of the living will is challenged. It is also beneficial to discuss the contents of the living will with family members and healthcare providers to ensure that everyone understands and respects the person’s wishes.

Living Will vs Will

A living will is a legally binding document that specifies your healthcare choices, but it only comes into effect if you become incapacitated, such as being unconscious due to an accident. This type of advance directive covers a range of medical procedures, including decisions about breathing tubes, ventilators, feeding tubes, blood transfusions, dialysis, pain medications, organ donation, and CPR preferences (distinct from a do-not-resuscitate order). Creating a living will can provide your loved ones with the confidence to make challenging medical decisions on your behalf, knowing that they are acting in accordance with your own choices.

On the other hand, a last will and testament, often referred as a will, is a legally binding document that outlines your desired distribution of assets, property, and belongings after your passing. The individual who creates the will is known as the “testator,” and those who inherit assets from the will are called “beneficiaries”. You can name an executor in your will who will assume the responsibility of executing the instructions detailed in the document. The executor’s role involves distributing assets to the beneficiaries, settling outstanding taxes and debts, closing accounts, and handling other administrative tasks as specified in your will.

Through your will, you can allocate your possessions,  including real estate, vehicles, bank accounts, and personal items, to specific individuals or entities of your choice. Additionally, a will allows you to appoint guardians for your children, dependents, or pets, ensuring their well-being and care if something were to happen to you.

Discover the difference between a living will and a will and how a Brooklyn wills attorney from New York Legacy Lawyers can provide invaluable assistance. Whether you need to clearly outline your healthcare preferences in a living will or secure your assets and legacy with a comprehensive will, our team can tailor a plan that suits your unique needs. Contact us to schedule a consultation and gain peace of mind knowing that your wishes and assets will be protected. 

Call Yana Feldman & Associates for Advice!!

There are many reasons why having a will is important for a person. A living will is unlike other types of wills and will allow you to have the final say in how you live out the rest of your life. It puts you in control of a dire situation before it happens. You will be able to live and pass away on your terms.

Yana Feldman & Associates offers sound legal advice that you can count on if you are looking to create a living will. Contact us to talk to one of our team members if you have any questions about how living wills work and what you need to have one created. We can help you!!

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Top Mistakes in Estate Planning

Estate planning is a crucial process that can have a significant impact on the financial well-being of loved ones. It helps ensure that hard-earned assets are distributed in accordance with personal wishes, while also minimizing tax liabilities. Even for young adults, estate planning can provide peace of mind and ensure that their assets will be distributed as they desire in the event of unexpected illness, accidents, or death. By engaging in this process, individuals can take steps to secure their financial future and address potential risks. While every state has its own unique laws and regulations, navigating the estate planning process in New York can be particularly challenging. 

New York’s complex legal landscape, coupled with its constantly evolving tax laws, can create a minefield of potential mistakes for those seeking to plan their estates. In this guide, we will delve into the top mistakes in estate planning in New York, highlighting the common pitfalls and offering experienced advice on how to avoid them. It is critical to consider the assistance of a skilled New York estate planning lawyer to ensure that your plan is tailored to your unique circumstances, while effectively navigating the complexities of New York law.

At New York Legacy Lawyers, attorney Yana Feldman and our team of skilled estate planning lawyers may be able to help you build a secure future for you and your loved ones. Contact us today at (718) 713-8080 to schedule a consultation.

1. Procrastinating on Estate Planning

Many individuals, including my own friends and family members, often procrastinate on estate planning. However, it’s important to remember that unexpected events, such as illness, accidents, or death, can occur at any time. This is why it’s crucial for everyone over the age of 18 to have basic documents in place, such as a Power of Attorney and Health Care Directives.

For those with assets, it’s essential to consider what would happen in the event of incapacity or death. Who would have control over or inherit these assets? Are there any individuals that you would like to exclude? Estate planning can help answer these questions and ensure that your wishes are carried out. In some cases, basic documents such as advanced directives and beneficiary check-ins may be sufficient. In other cases, a will or trust may be necessary.

It’s also important for older individuals, even those in good health, to consider how they would pay for the costs of long-term care. By engaging in estate planning, individuals can gain peace of mind and ensure that their assets and future care are protected. Therefore, procrastinating in estate planning can have severe consequences, and it’s crucial to address this important aspect of financial planning as soon as possible.

2. Not Exploring Your Estate Planning Options

While a will is vital, there may be other estate planning tools that can be viable for your circumstances. Failing to explore other tools can lead to pitfalls like estate taxes that trusts can help minimize. A will doesn’t address incapacity, but living trusts and durable powers of attorney can. Probate is a pitfall, but trusts can help avoid it. A will doesn’t protect assets from creditors, but irrevocable trusts can. Special needs trusts can support family members with special needs without affecting their eligibility for government benefits. Consulting an estate planning attorney can help create a comprehensive estate plan that suits individual goals and needs.

3. Avoiding Disability And Long-term Care Planning

When it comes to long-term care planning, many individuals overlook the possibility of incapacity due to illness or injury. In such a scenario, a person’s loved ones may become involved in costly and time-consuming court proceedings, with a judge who has never met the person making decisions regarding their future. These decisions may not align with the person’s preferences or values, and a stranger could be appointed as their guardian instead of trusted family members and friends.

To avoid the potential pitfalls of guardianship, it is advisable to appoint an Agent under a Power of Attorney, a Health Care Proxy, and possibly a Trustee to make decisions and manage assets in accordance with the individual’s values and lifestyle. Doing so can help prevent delay, confusion, and undue expense, as well as ensure that the individual’s wishes are carried out. Thus, in the context of long-term care planning, it is essential to consider the possibility of incapacity and take steps to avoid the need for guardianship.

4. Avoiding Discussions with Family and Friends

Many people don’t want to talk about estate planning, because it is talking about illness and death. Many people think it is somehow “jinxing” them or tempting fate by making plans for disability or death.

However, it is important to let the people around you know what your wishes are. Even if you do make plans, if they aren’t what people would expect, it might make sense to let some people know about them so they aren’t disappointed or surprised. It also can help alleviate a lot of stress and worry from children and grandchildren about how they will help their aging parents and grandparents. It is also a great way to share your values and hopes for your loved ones in the future.

5. Not Planning for Your Children’s Futures

As a parent myself, I understand the importance of planning for the future of our children. Some parents may feel that estate planning is not necessary if they have not amassed a significant amount of wealth, but as a parent, I know our children are our greatest wealth. I want to have a say in who would care for them if I weren’t able to do so due to death or disability. Appointing guardians and creating a trust for children can be quite straightforward. Many of my clients fund these trusts with the proceeds of term life insurance, which is very reasonably priced for most people, even if they don’t have a lot of accumulated wealth.

The hardest part of estate planning to protect children is usually choosing who these guardians and trustees will be. One tip: there is usually no perfect choice. Make the best choice you have, know you can always change it in the future, and that it is still better than kids ending up in foster care or with someone you would rather avoid.

6. Forgetting to Coordinate and Review Beneficiaries

Remember, a beneficiary designation trumps a will or a marriage. If you have named a sibling or a parent on a life insurance policy or any other asset, they will inherit it, even if you are now married or have a will that leaves your assets to another person. It is important to make sure that your estate plan aligns your wishes and your estate planning instruments with the beneficiary designations on your accounts. I have seen countless examples where a former girlfriend/boyfriend or sibling/parent inherits instead of a spouse or child, with little recourse.

7. Wrong Choice of Agent/Trustee

Choosing an agent under a Power of Attorney, an Executor or a Trustee is hard! But these decisions need to be made taking into account a number of factors. Of course, family dynamics are important, which is why a frank and open discussion with your estate planning attorney is so important. Financial sophistication may not need to be the most important factor as long as the person is honest, trustworthy, sensible, and can seek out and follow competent advice from trusted professionals.

8. Not Updating/Reviewing Your Plan Regularly

You marry, have children, divorce, and people in your life pass away. You buy and sell real estate, open and close businesses, and change the direction of your career trajectory. Life changes. Laws change. Estate plans can easily become outdated, so it’s essential to review your plan regularly

9. Relying on a DIY Estate Plan

Many estate planning and estate administration attorneys joke that LegalZoom and similar websites create more work for us than they take away. While it is certainly possible to create an estate plan on your own for no or low cost, it can cost your family a LOT more than you choosing to work with a competent estate planning attorney. 

Estate planning attorneys become intimately acquainted with your particular set of circumstances and while many plans are similar, most have some important tweaks to account for what matters to you! Maybe it is avoiding probate, providing for a loved one with special needs, or planning for long-term care. Is estate tax a consideration? Do you have all the right information? Many of the DIY plans don’t ask all the right questions. For example, I’ve seen NY wills name a foreign national who lives abroad as an executor, which simply isn’t allowed in NY.

In short, it is almost always worthwhile to have a conversation with an estate planning attorney about what their suggestions might be and what issues they can identify in your specific situation. You want someone who you feel comfortable talking to, so you can be completely open and candid. You want someone who you feel you can come back to with questions and changes over the years. And of course, you want someone who can appropriately address your particular concerns.

10. Failing To Incorporate Your Digital Assets Into Your Plan

The use of digital assets has become an essential part of our lives, yet many people do not consider including them in their estate planning. Neglecting to include digital assets in estate plans can lead to the loss of valuable information, delays in accessing them, risk of identity theft, and inability to distribute them according to a person’s wishes. To avoid these pitfalls, individuals should create a comprehensive inventory of their digital assets, appoint a trusted executor, specify how the digital assets should be distributed, and ensure that all necessary legal documents are in place to authorize access to online accounts.

Beneficiary Blunders

One of the most common mistakes individuals make in estate planning is not designating a contingent beneficiary for retirement accounts and insurance policies. They often overlook the necessity to regularly review and update their beneficiary designations. This oversight can lead to the unintended default beneficiary becoming their estate, which then becomes entangled in probate, exposed to creditors, and subject to unnecessary delays.

The absence of a contingent beneficiary is particularly detrimental when it comes to IRAs, as it eliminates the possibility of a ‘stretch IRA’. A stretch IRA is a significant tax deferment strategy that allows beneficiaries to extend the distribution of inherited IRA assets over their own life expectancies, thereby minimizing taxes and potentially augmenting the income they receive over their lifetimes. Since an estate has no life expectancy, it cannot take advantage of this tax-efficient distribution method.

Furthermore, individuals often forget to remove former spouses from their IRA beneficiary designations following a divorce. This oversight can have catastrophic consequences for their current spouse and family. It’s important to note that while retirement plans automatically assign the new spouse as a beneficiary upon marriage, IRAs do not follow the same rule. If one wishes to name someone other than their current spouse as the beneficiary of a retirement plan, they must obtain the spouse’s consent. A prenuptial agreement holds no power in this scenario, as only a spouse can waive beneficiary rights, and a fiancée has yet to attain that status.

If you’re considering estate planning, it’s essential to avoid common mistakes that can have significant legal and financial consequences. At New York Legacy Lawyers, attorney Yana Feldman and our team of skilled estate planning lawyers can help you navigate the complex legal landscape of estate planning in New York and avoid common pitfalls.

We can help you better understand the estate planning process and assess your unique circumstances. Our attorneys have dedicated their careers and work diligently to help individuals and families plan for their future, protect their assets, and minimize tax liabilities.

Don’t wait until it’s too late. Schedule a consultation with us today by calling (718) 713-8080 or contact us at our website. Our experienced attorneys can help you create a secure future for yourself and your loved ones.

Top Mistakes in Estate Planning	Description	Action
Waiting to plan	Delaying estate planning can result in unexpected events such as accidents, illness, or death.	Have basic estate planning documents in place and consider what would happen if you became incapacitated or passed away.
Avoiding living probate	Not considering who would make decisions for you if you became incapacitated due to illness or an accident.	Appoint an Agent under a Power of Attorney, a Health Care Proxy, and possibly a Trustee to avoid undesirable consequences.
Steering clear of discussions with loved ones	Not wanting to talk about estate planning due to it being related to illness and death.	Share your values and hopes with your loved ones to alleviate stress and worry.
Putting your kids in the hands of child care services	Not considering estate planning because of a lack of wealth.	Appoint guardians and create a trust for children.
Forgetting to change beneficiaries	Not aligning your estate plan with the beneficiary designations on your accounts.	Ensure your estate plan aligns with your wishes and beneficiary designations on your accounts.
Choosing the wrong people	Choosing the wrong person as an agent under a Power of Attorney, Executor, or Trustee.	Consider family dynamics and financial sophistication when choosing.
Failing to review your plan regularly	Not reviewing your estate plan as life and laws change.	Regularly review your plan to keep it updated.
Creating a “do-it-yourself” estate plan	Trying to create an estate plan on your own without considering specific circumstances.	Consult a competent estate planning attorney to address your particular concerns.

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Do I Need to Hire an Estate Planning Attorney?

Estate planning is a critical process that involves making important decisions about the management and distribution of your assets after your passing. While some individuals may attempt to handle estate planning on their own, navigating the complexities of legal documents, tax implications, and ensuring the fulfillment of your wishes can be overwhelming. This begs the question: Do you need to hire an estate planning attorney? In this article, we will explore the key considerations involved in estate planning and shed light on the valuable role a New York estate planning attorney can play in helping you navigate this intricate process.

A New York estate planning attorney can guide you throughout the estate planning process. At New York Legacy Lawyers, our team of New York estate planning attorneys may be able to help you explore various estate planning strategies, such as establishing trusts to minimize taxes and protect your assets, or setting up powers of attorney and healthcare directives to ensure your wishes are respected in the event of incapacity. With the help of our team, you can have peace of mind, knowing that your affairs are in order and your loved ones will be taken care of according to your wishes. Call us today at (718) 713-8080 to schedule a consultation.

What an Estate Planning Attorney Does

An estate planning attorney doesn’t only set up your last will and testament, they also set up power of attorney, name your beneficiaries for your assets, and ensure that your wishes are followed. 

They also set up documents that will protect you if you become incapacitated.  Moreover, an estate planning attorney will develop documents that will ensure your children go to someone you trust, if for some reason you’re not around due to unforeseen circumstances (injury, death, etc).

Estate Plans Must Follow State Laws

Some people think that printing off estate plan forms from the internet will suffice.  Unfortunately, there is no guarantee that the forms you print and fill out are legally binding.  This means that even though you think your best friend and favorite charity are going to receive some of your assets when you die they may not receive anything if your forms are not legally binding. 

The worst case scenario here, if your forms do not follow your state laws, a judge will determine how your estate is divided and split up.  This could cause a lot of pain, stress, and fighting amongst your family members.  Not to mention, your estate will be stuck paying for probate court to figure everything out.

Honestly, if you have children, you do not want a judge to determine to whom they go to if you and your spouse both die.  Or who should get your favorite grandfather clock. Or who gets the keys to Dad’s car.  Or, or, or…

Having the correct legal documents are super important! 

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What is the Purpose of Making an Estate Plan?

Estate planning serves a critical function in managing one’s affairs after death. Its primary purpose is to ensure your assets are distributed according to your wishes, thus avoiding the complications and delays of legal limbo that can burden your family. An estate plan gives you control over who inherits your property and assets, rather than leaving these decisions to state laws.

Moreover, a well-crafted estate plan can significantly reduce the financial strain on your heirs by minimizing potential income, gift, and estate taxes. By delineating your wishes through legal documents, such as a will or trust, you can provide clear instructions on asset distribution, which helps prevent disputes among family members and can expedite the inheritance process.

In the absence of an estate plan, state laws and courts take over. This means that without a will, you lose control over who receives your belongings, and the court system could determine the guardianship of your children. Estate planning is not solely about assets; it is also about ensuring that your family is cared for according to your preferences.

In essence, the purpose of making an estate plan is to protect your legacy, provide for your loved ones, and preempt unnecessary legal hurdles and taxes. It is a proactive step to maintain control over your personal and financial matters, ensuring peace of mind for both you and your beneficiaries.

Complex Family or Financial Situations

If you have a complicated family makeup or complex financial situations, doing a DIY (do it yourself) estate plan is a bad idea.  The more complex your situation, the more imperative it is to use a qualified estate planning attorney.

Complex family and financial situations include:

• second (or later) marriage
• own one or more businesses
• own real estate in more than one state
• have a disabled family member
• have minor children
• have problem children
• Do not have any children
• want to leave some or all of your estate to charity
• have substantial assets in 401(k)s and/or IRAs
• were recently divorced
• recently lost a spouse or other family member
• have a taxable estate for federal and/or state estate tax purposes

Estate Planning for Blended Families

When it comes to estate planning for blended families, it is crucial to consider the dynamics of each family relationship. In these situations, concerns often arise regarding inheritance size, executor appointment, and overall fairness. Creating an effective estate plan requires addressing these concerns. Here are some common estate planning options for blended families that can provide guidance:

• Family Trusts: This type of testamentary trust involves consolidating all assets into a combined trust after the first spouse’s death. The advantage of this structure is that the surviving parent can distribute assets based on the individual needs of each child.
• Marital Trusts: A marital trust allows assets to pass to the surviving spouse while also setting aside any remaining assets for the children after the surviving spouse’s passing. This approach enables both spouses to create a plan that includes all children in the family.
• Outright Ownership: With this estate planning structure, all assets transfer directly to the surviving spouse without involving a trust for the children. While relatively simple, this approach relies on the trust between spouses that the surviving spouse will appropriately account for the children’s inheritance.
• Immediate Bequests: Another option, not involving trusts, is to leave specific assets to each child within your will. Although discussing this choice with your spouse can be sensitive, it can be the best option when you want your child to directly inherit certain items.

Estate Planning Options for Blended Families	Description
Family Trusts	Consolidating assets into a combined trust after the first spouse’s death
Marital Trusts	Assets pass to surviving spouse, with remaining assets set aside for children after the surviving spouse’s passing
Outright Ownership	Assets transfer directly to surviving spouse without involving a trust for the children
Immediate Bequests	Leaving specific assets to each child within the will, without involving trusts

In a first marriage, estate planning is typically straightforward, with everything usually going to the surviving spouse and then to any children. However, in the case of blended families, more individuals may have a claim on property, and each spouse may have specific wishes regarding distribution. Failing to establish the right estate plan can lead to various problems, including:

• Disinheritance of Children: If a partner in a second marriage passes away without a will, their property automatically goes to the surviving spouse. When the surviving spouse also dies without a will, the property then passes to their own children, potentially disinheriting the children from the first marriage. Proper planning is necessary to ensure that your children from the first marriage inherit specific assets.
• Delayed Inheritance for Children: Even if you have specified that your children should inherit certain property, without the appropriate estate planning documents, they may have to wait until your spouse’s passing before they can receive their inheritance.
• Claims from Former Spouses: If you have not removed your first spouse as a named beneficiary on insurance policies or retirement accounts, they may still inherit these assets, regardless of remarriage or children. Smart estate planning can prevent your former spouse from making claims on your property.
• Disputes over Authority and Responsibility: In the event of your demise without making plans for this possibility, remarriage and the presence of children from a previous marriage can lead to contentious disputes over custody and legal decision-making for your minor children.

By implementing the right estate planning tools, all these potential problems can be avoided, ensuring a smoother transition of assets and minimizing conflicts within blended families.

Finding an Estate Planning Attorney in Brooklyn Or Anywhere Else…

Finding an estate planning attorney may seem overwhelming at first but there are websites such as FindLaw and AVVO that find attorneys for you.  You can also just type in “estate planning attorney near me” into your favorite search engine such as Google.

Of course, you’re already here as well and that’s what we specialize in, estate planning for people like you!  If you would like help setting up a new estate plan or revise an existing one, contact us today at (718) 713-8080  We would love to help!

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How You Can Use Estate Planning as A Gift

What happens to all your belongings when you die? Where will your finances go? Who will be in charge of carrying out your last wishes, and who will take care of you before you pass away? 

Estate planning is a gift. Consider this, you have already taken the effort and invested significant time to meet with an estate planning professional, so your family doesn’t have to. Why did you make this effort?

The reason you made the effort is that establishing an estate plan has the potential to resolve future conflicts and disorientation that your family may experience upon your departure. Estate Planning is a loving gift that you will give to reduce the emotional stress that is attached to your passing and it will provide direction for how your family will need to move on following your death.  

In this article, we provide an overview of the essential elements of an estate plan, emphasizing the importance of taking action now to protect your family’s future. At New York Legacy Lawyers, our experienced New York estate planning attorneys are available to offer guidance and support as you begin the process of creating or updating your will and estate plan. To learn more about how we can assist you, please call (718) 713-8080 to schedule a consultation.

A WILL IS A GLUE HOLDING IT ALL TOGETHER

The concept of a last will & testament, or transfer of property after death has been around as long as humans have. In many places, the method of transfer is primarily defined through existing cultural norms. In the US and Brooklyn, however, we use estate law to clear things up a bit more formally. 

Fundamentally, your will entails where you wish your possessions, assets, minor children, and more to go when you pass away. Additionally, it will state who will be in charge of distributing those assets and managing any other affairs in your passing or incapacity. 

Legal requirements in setting up a will can be intensely specific, but only because ambiguity leads to conflict, especially after a loved one has passed. It is critical that you seek the assistance of an attorney or an estate planning expert to make sure that your will gets drafted correctly.

JOINT OWNERSHIP AS AN ESTATE PLANNING OPTION

Joint ownership means owning your assets jointly with someone else like a spouse, child, or a close relative. The purpose of Joint ownership is to make sure that when you die, those assets go to your spouse or heirs smoothly because they are already owners of the assets.  To head off more complicated issues and to make sure joint-owners can access all assets, beneficiary designations are helpful.

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SETUP BENEFICIARY DESIGNATIONS ON INTANGIBLE ASSETS

A Beneficiary Designation on your bank accounts, your stocks, and brokerage accounts may be needed to facilitate the transfer of those assets to a joint owner, or another designee. Various kinds of Beneficiary Designations can be acquired through a bank or other financial institutions. Some of these designations are known as “transfer on death,” “pay on death,” or “in trust for account.”  

The person or beneficiary that you place on those accounts is not an owner of the accounts, presently. If they have any financial problems before you designate them as a beneficiary on your accounts, their financial issues will not become your problems, and that is a beautiful benefit.  When you pass away though, they will gain access to and ownership of the assets within the accounts, however.

A PRIMER ON PROBATE

Probate is the legal process in which a will is proved or tested in a court. Many people find the Probate Process frustrating. When a will is contested, there may be many parties involved in the process.  And if a lawyer is involved, there is a cost component…on top of the cost of probate itself. 

The purpose of the probate process is to have the will accepted as a valid public document that is the true and last living testament of the estate of a deceased person. Probate is the first step in the legal process that is needed to name the Executor of the estate. This step is essential because the Executor needs to be granted the authority to distribute assets according to the will of the deceased loved one. 

If you have questions about probate, please contact us.

WHEN YOU SHOULD CONSIDER A TRUST?

You should consider using a trust if the value of your estate is such that your family might lose a significant amount of your assets in probate or estate taxes. You might also want to consider a trust if you have special needs, like a family member who requires extra care, or a child you’re concerned will not be ready to manage the assets you intend to leave them. In truth, there are a lot of reasons to consider a trust, and many different forms of trust you might consider.

When you set up a trust you actively move assets from your possession to the trust. Usually, you are the beneficiary of that trust while you are still alive, and upon death or another circumstance of your definition – the beneficiary changes. 

A trust will sometimes feel scary because you may feel that you could be giving up your assets to a bank or other entity that you have no control over. However, you will make the decisions about how to place money in or withdraw assets out of the trust. Functionally, it shouldn’t interfere too drastically with how you manage your estate now – but when you pass away, it will make a huge difference in how your assets transfer to your loved ones.

Is Money Gifted From A Trust Taxable?

Understanding the tax implications of receiving money from a trust is essential for beneficiaries. The taxability of money gifted from a trust depends on the nature of the distribution. Trust distributions are typically classified into two categories: income distributions and principal distributions.

Income distributions are amounts paid out from the trust’s earnings, such as interest or dividends. These distributions are typically taxable to the beneficiary. The trust is required to provide the beneficiary with a Schedule K-1 form, which details the amount of the distribution that is considered taxable income.

Principal distributions, on the other hand, are distributions of assets that have been placed into the trust after tax payments and are not taxable to the beneficiary, since these assets were already taxed prior to their contribution to the trust. Therefore, beneficiaries receiving principal distributions are not obligated to pay taxes on these amounts.

However, it’s essential to be aware of the type of trust involved. The taxation rules can vary depending on whether the trust is revocable or irrevocable. Typically, money gifted from a trust’s principal is not taxable for the beneficiary, while money distributed from the trust’s income is taxable.

For a comprehensive understanding of your tax obligations, it is recommended to consult with a New York estate planning attorney from New York Legacy Lawyers. Contact us for personalized information tailored to your individual circumstances and the current tax laws.

When is a Gift Not a Gift

While we often say that the sentiment matters most in gift-giving, the IRS emphasizes that there’s more to it. In specific situations, a gift means more than just kindness; it holds tax implications, prompting the question: “When does a gift cease to be just a gift?”

In 2023, the annual gift tax exclusion is set at $17,000 per recipient or $34,000 for married couples sharing gifts. This means you can give up to these amounts without facing gift tax. However, if your total gifts surpass this threshold, the surplus is no longer seen as a ‘gift’ under tax law – it becomes taxable.

The lifetime limit for tax-free gifts, whether given during one’s life or left after passing, is $12.92 million for an individual, or $25.84 million for a married couple. These figures also apply to the Federal Generation-Skipping Transfer (GST) tax exemption in 2023.

New York residents are exempt from state gift tax. Yet, if you’re considering substantial lifetime gifts, knowing your state’s tax regulations is vital.

For US-citizen couples, there’s an unrestricted marital deduction for gift and estate tax purposes. This means limitless transfers can be made to a US citizen spouse during life or after passing, and the gift retains its nature. However, gifts to non-citizen spouses are subject to a $175,000 marital deduction in 2023.

Understanding these tax rules ensures your gift remains a genuine expression of goodwill and generosity, rather than inadvertently becoming a taxable matter.

DRAFT A LIVING WILL & DESIGNATE A HEALTHCARE PROXY

A living will typically accompany a healthcare proxy. However, these are two different documents. A Living will is simply a statement signed by you. It states how you wish to be cared for in case you become unconscious or you are in another situation in which you cannot make decisions for your care on your own.  

A healthcare proxy can be established when you appoint an individual to make healthcare decisions for you. In some places, this is called a healthcare power of attorney. Having this document in place will assist your family members and or loved ones if you become incapacitated. Moreover, this document will prevent courts or hospitals from becoming the primary decision-makers regarding your care.

YOUR ESTATE PLAN AND LIFE EVENTS

It’s crucial to keep your estate plan updated in the event of significant changes in your finances, health, family, or relationship status. In the event of your sudden passing, your will and estate planning documents may not reflect your current circumstances.

To ensure that your heirs are not held to the outdated provisions of your will, you should make immediate changes to your estate planning documents after any of the following life events:

Death: In the event that a family member who was designated to manage your estate passes away, it will be necessary to choose an alternate executor, trustee, or guardian to take their place.

New Addition: An addition to your family, such as the birth or adoption of a new child or grandchild, or the responsibility of caring for an ill adult can have an impact on your estate plan.

Health Crisis: If you or your spouse has been diagnosed with an illness, or disability, or requires nursing care, it’s recommended to update your will as soon as possible.

Milestone Birthday: Turning 18 or graduating from high school, may prompt you to consider providing financial assistance to a child or grandchild for their education.

Marriage: You may need to review and update your estate plan to include provisions for your new spouse’s inheritance and any future children. Additionally, you may need to revise any provisions you made for a former spouse.

Divorce: It may be necessary to revise your estate plan and remove your former spouse as an executor or beneficiary.

Significant Purchase: Buying a home, obtaining life insurance or investment, or borrowing a substantial amount of money, can cause disputes over your heirs’ inheritances.

Business Deal: Changes in your career path such as starting a business, selling company assets, or retiring can all affect your family’s future financial plans.

Change in Financial Laws: Any changes particularly federal or state tax laws, may necessitate asset restructuring or lead to the loss of substantial amounts to the government. It is important to stay informed of these changes and consult with an estate planning attorney.

It is important to update your estate plan regularly as your life circumstances change because it is a document that needs to be kept current. Failure to update your estate plan could result in unintended consequences that could negatively impact your heirs’ inheritance. To ensure that your estate plan reflects your current wishes, it’s recommended to consult with a qualified estate planning attorney.

Life Events for Estate Plan Updates	Impact on Estate Plan
Death	Choose alternate executor, trustee, or guardian.
New Addition	Adjust estate plan for new family members or responsibilities.
Health Crisis	Update will for illness, disability, or nursing care.
Milestone Birthday	Consider financial assistance for education.
Marriage	Include provisions for new spouse and future children.
Divorce	Revise plan to remove former spouse as executor/beneficiary.
Significant Purchase	Prevent disputes over inheritances after major acquisitions.
Business Deal	Adapt plan to changes in career, business, or retirement.
Change in Financial Laws	Restructure assets due to tax law changes.

ESTATE PLANNING IS ALL THIS AND MORE

We clearly believe estate planning is a gift. But it is not a gift you can grab at the store; it requires meaningful thought and responsible foresight.

In this brief article, we covered the basics you should be thinking about regarding estate planning, but for each section above we could write ten more articles. Help yourself give the gift of planning and connect with a great team of estate planning professionals.

We want to help you prepare for your future and the future of your family. Contact us today to get started on your estate plan.

https://yanafeldmanlaw.com/how-you-can-use-estate-planning-as-a-gift/
from New York Legacy Lawyers by Yana Feldman and Associates https://yanafeldmanlaw.com/how-you-can-use-estate-planning-as-a-gift/