Each October, Estate Planning Awareness Week reminds us of the importance of having a comprehensive and updated estate plan. A plan ensures there are proper decision makers in place if you became incapacitated, and that, upon your passing, your estate will be managed by a person of your choosing and distributed in the manner you decide.
There are many legal strategies involved in estate planning, including wills, trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning, their estate will be distributed after death according to New York’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of the State’s estate plan with your own. Start the process and create your estate plan under the guidance of an estate planning lawyer.
Last Will and Testament
Your last will and testament is just one part of a comprehensive estate plan for Estate Planning Awareness Week. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:
- A will has no legal effect until after death. It does not help manage a person’s affairs when they are alive but incapacitated, whether by illness or injury.
- A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
- A will is a good place to nominate the guardians (or “back-up parents”) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, you could be setting up a huge family battle and your children could end up with the wrong guardians.
Trusts
Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries immediately upon the death of the trust-maker(s) with no probate required. There are also many types of irrevocable trusts, including those aimed at protecting your assets from the costs of long-term care.
Powers of Attorney (Financial Advance Directive)
A power of attorney is a legal document giving another person (the agent) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. A failure to have a durable power of attorney will often lead to an expensive court proceeding called a “guardianship proceeding” in order to have a legal representative appointed to manage the incapacitated person’s affairs.
Health Care Proxy and Living Will (Medical Advance Directives)
A Health Care Proxy and Living Will are medical advance directives that specify the type of medical and personal care you want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery.
Everyone age 18 or older should have an estate plan. And as we get older, build assets, and have spouses, children and grandchildren, it is essential to have that plan updated to meet your current needs. This Estate Planning Awareness Week, contact the estate planning attorneys at Kurre Schneps to find out how we can help you put together a comprehensive estate plan to meet your needs.
