NY Estate Planning Considerations

Learn about NY estate planning considerations when you are creating your will in this video. Contact our New York lawyers to start your estate plan.

Question:

What should I consider when planning my estate in New York?

Answer:

Every person’s case is different. In the process of preparing wills for people, we have to fill out a two-page will intake form. I have those here. We can see which assets are non-probate assets, who they want to leave their estate to, and so forth, so we can advise them properly. Probably one of the most common situations we come across is sibling rivalry, and brothers and sisters fighting furiously, brutally fighting amongst themselves, even before their parents are deceased and even after they are deceased. That’s something you have to deal with. We also, unfortunately, see many people who are estranged from their children. They haven’t seen their children for many years so they take care of that in their will. They can always change their will later on, but there are various considerations that you have to talk to your advisors about.

I had one client who had an estate of about $2 million. He didn’t have a will until I convinced him to do a will shortly before he passed away after he was diagnosed with cancer, but his closest relatives were cousins. His cousins would’ve inherited from him if he didn’t have a will. One of his cousins had looted his home when he was in the hospital and tried to be appointed his guardian to take the rest of his property. Fortunately, he did sign a will just before he passed away, leaving most of his money to the Salvation Army and the church. Very often people say, “I don’t know who I want to leave my money to. I don’t have anyone to leave it to,” but there’s very worthy causes that you can leave it to, but leave it to someone that’s deserving of it rather than some of your relatives that you’ve never seen or that you may dislike. The various considerations are what your relationships are with your children, whether you want to protect your assets. Like I said, an irrevocable living trust may be necessary to protect your assets in case you go into a nursing home and to qualify for nursing home care.

Most of our clients don’t have issues with estate taxes. When I first started practicing estate taxes, estate planning was all centered around estate taxes when the limits were like $250,000. Right now, the federal exemption is $12.06 million. I have those details in my newsletter, too. The New York estate tax exemption is $6.1. New York doesn’t have a gift tax. New York eliminated the gift tax a long time ago. The US government does have a gift tax. It’s all included with this lifetime exemption of $12 million.

Many of you may have heard that you can give away $16,000 per year to as many people as you want. It used to be $10 million, but now it’s $16,000. It has nothing to do with qualifying for Medicaid. You can give away $16,000 to as many people as you want without having to file a gift tax return. The idea of that was, in addition to people having the lifetime exemption of $12 million, they can give away $16,000 per year to as many people as they want.

Some people’s main objective is to qualify for Medicaid and leave as much as they can to their children. If you want to get into a good nursing home, even for rehab, you’re going to have to have probably about $100,000 in your name and not have made gifts in the past five years. Unfortunately, even some of the five-star nursing homes are not that great. If you don’t want to end up in a one-star nursing home, 50 miles away, you may want to think about yourself rather than your relatives.

Also, one of the most important and also one of the main points about Medicaid, and this ties in with your gifting, is that you need to have a power of attorney with gifting powers in it. It can be one of the most valuable tools you have if you’ve never done any planning for Medicaid, and you end up in a nursing home where you can reserve half your assets. The old powers of attorney from the ‘70s and ‘80s limited gifts to $10,000 per year. That was the old exemption for gift tax. What you need is a proper power of attorney with gifting powers so that your agents can preserve your assets in case you have never made any estate planning. That’s something to discuss with your advisors about having the proper power of attorney to qualify for Medicaid. It all ties in with a gift tax exemption.

If privacy is your goal, trusts achieve that goal because estate proceedings are all public proceedings. Those records are all public. They’re fully accessible online now, surrogate’s court records and most of the 60 courts throughout the surrogate’s court throughout New York State. Trusts, living trusts, provide privacy.

Another consideration is second marriages. We think about a husband who has children and his wife has passed away. He remarries and he and his second wife make identical wills. They leave everything to each other. Otherwise, it goes to his children when both of them are gone, but if the husband dies first, the second wife is free to change her will. We encounter this quite often with stepchildren saying, “Well, Dad’s always said I would have the house, but my stepmom has ghosted on us. We have no idea what’s going on.” He may have changed his will. They may have put the house in the second wife’s name or may have done a number of things. This is what happens very often.

When you appoint a power of attorney who’s not trustworthy, they may move things around on you. They could change beneficiaries on your accounts so that your children don’t get anything. If you have your second wife or an untrustworthy child as your power of attorney, they can change accounts around so that there’s no probate assets. Regardless of what your will says about leaving things to your children, your children may not get anything. With second marriages, most of the time, there are bad feelings between stepchildren and their stepmother for a number of reasons.

There are differences in legal fees, depending on what type of plans you want to make in estate planning. Financial security for your family is a consideration in your estate planning. With an irrevocable trust, you’re going to have limited access to your assets, so you’ll need to know how much income and cashflow you’ll need. You’ll need to talk with your advisors about the control you want. If you want to preserve your assets if you go in a nursing home, you have to give up control, either by putting it into a trust or by outright giving it away. That’s something you have to think about.

There are some vicious fights among family members about passing a business on to the second generation. There are also very often many business owners who haven’t made any provisions as to what happens if they do pass away and haven’t made arrangements for someone else to carry on their business. If you’re not a limited liability company or a corporation, if you’re just an assumed name, a DBA, and you pass away, your business passes away with you. If you’re concerned about your employees or your family taking over the business, you need to think about that.

Minimize the costs and delays of probate, if that’s a concern of yours. Also, medical decision-making in the event of a disability have advanced directives, people who make decisions for you. There are healthcare proxies available. A power of attorney and a trust can provide financial management in the event you’re disabled. You can designate your power of attorney to take control of all your financial matters if you become incapacitated. Trustees of your trust can manage your assets and prevent you from being exploited financially.

Many people would rather provide for their pets than their family members. That’s an important thing you could provide for, charities or for pets. You can set up a trust for your pets to provide for their care. Prevent financial abuse. When should you update your will? If there’s been a major change in your financial status, if you adopt a child or a pet that you want to provide for, if the executors or trustees or guardians in your will have moved, become incapacitated, or have been convicted of a felony, it’s time to update your will. Executors cannot be felons. They cannot have felony convictions for the most part. If your spouse died, you may or may not need to revise your will. If you get married, you have to get divorced.

If you move to another state, wills are generally valid. Most other states will generally accept a New York will, but the laws are considerably different in some states, for instance, in Florida, so you should consult with an attorney in that particular state. If you have a beneficiary that becomes disabled and goes on Medicaid or SSI and you want to leave something to them without them losing their benefits, you can leave money to them in a supplementary needs trust so that they can still purchase luxury items and still be a beneficiary without losing their Medicaid or their SSI, which is based on their resources.

If you’re creating a living trust, you may want to revise your will. If you want to have equal distribution of your assets and you’ve set up some of these non-probate assets, transfer on death accounts or life insurance, if you want to have equality amongst all your beneficiaries, you may have to adjust your will and keep that in mind. If you want to disinherit a child, you may want to change your will. If you’ve made gifts during your lifetime, such as transferring your house into a life estate deed, or if you want to leave a specific item to someone, like antiques or cars, you might need to revise your will for that.

Are you going through the estate planning process and have questions about NY estate planning considerations? Contact our experienced New York probate Lawyers at Friedman & Ranzenhofer today to schedule your consultation.

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