Estate planning is more than just writing a Will. It is about avoiding family disputes, maximizing access to government benefits, minimizing taxes to be paid, and making sure your long term care wishes are known. This guide will help you answer your basic NYC estate planning questions.
Who needs estate planning?
It is commonly believed that only individuals whose estates would be taxed upon their death require an estate plan. This, however, is not the case. Regardless of the size of your estate, you should have an estate plan in place. While minimizing of estate taxes is an important part of estate planning, wills and trusts serve many other functions for individuals with a wide variety of financial circumstances.
Preparing a Last Will and Testament
One reason that a person may want to execute a Last Will and Testament is to express how he wants his assets distributed upon his death. For an individual who dies without any estate plan in place, the law of the jurisdiction in which the decedent was living at the time of his death will govern how the deceased individual’s assets are distributed. For example, in New York, where a person dies intestate (meaning without a will) and is survived by his spouse and two children, his spouse is entitled to the first $50,000 of his estate plus half of the remaining balance of the estate and his children are entitled to receive the remaining half of the estate, which would be split equally between them. This means that if an individual wanted to give all of his assets to his spouse upon his death, his wishes would not be honored if he died without any kind of estate plan.
Do I need an attorney to do my estate planning?
Yes, you do need an attorney to do estate planning. There are many websites and services that provide Last Will & Testament forms that can be printed for free or purchased for a small fee. These forms, however, are often the subject of estate litigation, which can be costly, time-consuming, and stressful for the decedent’s loved ones. Everyone’s circumstances are different, and a standard form is not able to accommodate everyone’s various needs. A trusts and estates attorney will, however, generally have the expertise and knowledge of the nuances and issues that arise in estate planning, and can tailor and modify a client’s documents to best fit her needs and circumstances.
Furthermore, when an attorney prepares a will for a client, the attorney generally also supervises the execution (the signing by the testator and the witnesses) of the will. New York law provides that a will must be properly executed in order for it to be probated (approved) by the Surrogate’s Court and sets forth the requirements for proper execution. In New York, when a will execution is supervised by an attorney, there is a presumption that the will was duly executed in accordance with New York law. When an an attorney does not supervise a will execution, this presumption does not exist, and it is more likely that the will will raise questions as to whether it was properly executed, whether it was signed voluntarily by the testator or was a product of coercion or undue influence, or whether the testator lacked the capacity required to execute a will when he signed the will.
What is an estate planning attorney?
An estate planning attorney, also known as a trusts and estates attorney, is an attorney who concentrates his or her practice in creating estate planning documents, such as wills and trusts, advising their clients on various estate and gift tax issues, and working with their clients to minimize estate tax liability. They also help their clients protect their assets and provide for their loved ones during life and after death.
Estate planning attorneys also prepare powers of attorney and advance directives. A power of attorney is a document by which an individual names an agent to make decisions and perform certain actions on behalf of the creator of the power of attorney (the person creating the power of attorney is known as the “principal”). An individual can choose to execute a power of attorney that either only becomes effective upon the incapacity of the principal or becomes effective immediately upon the execution of the power of attorney and stays effective even if the principal is deemed incapacitated. Advance directives include health care proxies, which allow an individual to name someone who will make medical decisions for the creator of the health care proxy in case that person becomes incapacitated.
Estate planning attorneys often also assist estate fiduciaries in the administration of estates and litigate estate cases in the Surrogate’s Court.
What are estate planning Attorney’s fees?
Estate planning attorney’s fees vary depending on several factors, including location and size of the attorney’s firm, the attorney’s experience in estate planning matters, and complexity of the client’s estate. It is common practice for attorneys to charge a flat fee for an estate planning “package,” which usually includes a will, power of attorney, healthcare proxy, living will, disposition of remains form, HIPAA authorization form, and designation of guardian form. Boutique firms and many mid-sized firms located in New York tend to charge between $1,200 and $3,500 for a will package.
Other firms, including many mid-sized and larger firms, charge an hourly rate and may charge anywhere from $375 per hour to $1,000 per hour for each hour that the firm spends working on the client’s estate plan. The firm may ask their clients for a retainer upfront before they begin working on a client’s matter. The retainer amount covers the amount that would be charged for a certain number of hours of work performed. Attorneys often count work performed against the initial amount charged, and either refund any unused funds or ask for an additional amount when the initial funds are spent down in order to continue working on the estate plan.
What are important questions to ask your estate planning attorney?
There are many important questions that a client should ask his estate planning attorney, including:
- Is it likely that I will owe estate taxes upon my death?
- Do I need a will?
- Do I need a trust?
- What are the attorney’s fees?
- Is the attorney’s main practice in estate planning?
- Whom should I nominate as the executor of my estate?
- Whom should I nominate as the trustee of my trust?
- Will I need to update my documents at a later time?
- Do I need a power of attorney?
- Do I need advance directives?
Will an estate planning attorney prepare wills and trusts?
Yes. An estate planning attorney will prepare wills and will usually prepare trusts. (As trusts tend to be more complicated than wills, some less experienced attorneys will not prepare trusts.)
What is a Will?
A will is a legal document that an individual prepares that sets forth how the individual’s assets will be distributed upon his death. It is also used to name a guardian of any minor children that the individual has at the time of his death and to name an executor, who handles and takes care of the individual’s estate upon his death.
What is a Trust?
A trust is a legal document that is used to create a relationship between the creator of the trust and a third person, who will manage and invest the creator’s assets and distribute them to individuals at different periods of time.
Revocable and Irrevocable Trusts
Revocable trusts are created during the testator’s lifetime and are generally used to provide the creator with funds at specific times and for certain purposes. These trusts are used for a number of purposes, including avoiding probate and protecting the privacy of the creator of the trust. The creator maintains the ability to modify the trust or revoke it during his lifetime. Once the creator dies, the revocable trust becomes irrevocable.
Irrevocable trusts can be created either during life or after death. A testamentary trust is an irrevocable trust provided for in the creator’s will and can, therefore, only be created upon the creator’s death. An inter vivos trust is created during the creator’s lifetime and can come in many forms. These trusts are generally created for the purposes of minimizing and deferring taxes, protecting property from creditors, and preserving eligibility for government benefits.
What is the difference between a Will and a Trust?
Unlike a will, which allows for the distribution of the testator’s property outright to beneficiaries upon the death of the testator, a trust is created for the purpose of allowing a third party to hold assets for a period of time and then distribute them upon the termination of that period of time or upon a certain event
Trusts do, however, often provide for outright distribution of the remaining trust assets upon the termination of the trust.
Do I need a Will if I have a trust?
While an individual who has a trust does not need a will for the assets transferred into the trust, he will generally need a pour-over will for any assets that were not transferred into his trust. A pour-over will is a will that pours over into the trust any probate assets of the decedent that were not transferred into the decedent’s trust during the decedent’s lifetime. It is common for the creator of a trust to not transfer all of his assets into his trust, usually because he forgot or did not have the time to do so. Where the creator of the trust dies without transferring all of his assets into the trust, those assets that are not in the name of the trust or that do not pass by operation of law (examples of assets that pass by operation of law are transfer on death accounts, joint bank accounts, and life insurance policies with named beneficiaries) will be distributed in accordance with Section 4-1.1 of the Estate, Powers and Trusts Law, if the creator of the trust did not also execute a pour-over will.
While trusts avoid the probate process, a pour-over will needs to be probated before any of those assets not transferred to the trust can be transferred to the trust. It is, therefore, crucial that the creator of a trust transfer all of his assets into his trust if he wishes to avoid the probate process. Should the trust creator create a trust and a pour-over will and transfer all of his assets into the trust, the will will not need to be probated.
How should I prepare to meet with my estate planning attorney?
You should first conduct research to find the right estate planning attorney for you. Ask friends and family members for a recommendation or search online for a good attorney.
Once you have found an attorney that seems right for you, contact the attorney and provide her with details about your finances (salary and assets), the makeup of your family, whether you have minor children, and what documents you wish to prepare. Set up a consultation visit with your attorney. The attorney will likely send you an estate planning questionnaire to complete before your first meeting. The questionnaire will include questions about your family, finances, and wishes. Make sure to ask your attorney if she charges a fee for an initial consultation.
When meeting with your estate planning attorney at her office, make sure you have as many helpful documents as you can find. Provide your attorney with such documents as the completed questionnaire; a detailed list of your assets; any identifying documents and details concerning your assets (for example, deeds to real property you own, identifying characteristics of any property you would like to give to a specific beneficiary); a legible family tree with the names of all of your next of kin; a list of names, addresses, and telephone numbers of all of your next of kin and any friends or charities to whom you wish to leave your assets; dates of birth of any minor children and grandchildren; any wills or other estate planning documents or advance directives that you previously executed; and beneficiary designation forms for any life insurance policies or bank accounts that you own.
For more information, please contact probate and estate planning attorney Regina Kiperman:
Or visit her at her new location:
80 Maiden Lane
New York, NY 10038
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