Estate Planning

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No matter what an individual’s financial or family situation is, there are certain basic estate planning documents that should be considered, which are a last will and testament, power of attorney, and living will and health care proxy.  These documents are explained in more detail below.

Last Will and Testament

There are many benefits of having a Last Will and Testament.  The most obvious benefit is to ensure that your property is distributed in the manner that you choose.  If you do not have a will, your property and assets will be distributed pursuant to New York State statute.

Another benefit of having a will is being able to name an executor.  The executor is responsible for administering the estate and ensuring all debts are paid and ultimately the beneficiaries receive their distributions.  Please refer here for more information regarding the responsibilities of the executor.

If you have young children or young grandchildren, your will can be drafted so that it contains a “testamentary trust”.  The testamentary trust does not take effect until you die and only if the conditions are met that are stated in the will.  In the testamentary trust, you will appoint a trustee to manage the trust.  The trust can set forth distributions to your children or grandchildren upon them reaching certain ages, so that they do not receive a lump sum.  The trust can also contain provisions for the trustee to invade the principal of the trust if your children incur medical expenses or education expenses.

Another advantage of having a will is your ability to name a testamentary guardian over your children.  Courts will take this provision into consideration in the event that you and your spouse pass away leaving minor children.

The will can also take into account a number of other issues, such as equal distribution to children from a previous marriage, planning for a child with special needs and specifically bequeathing certain items to specific individuals.

There are certain lifetime events that trigger many individual’s thoughts to start looking at their estate planning.  The most common event is getting married or having children.  Once an individual’s children become older and responsible, it may be a good time to reexamine his or her documents. Retirement is another lifetime event that may trigger the need for additional estate planning.

Other than major lifetime events, it is a good idea to review your estate documents each year to make sure all of the information is up to date and that they still comply with your wishes and goals.

Power of Attorney

The Power of Attorney allows an individual to name an agent to handle his or her financial affairs.  The rights granted to the agent under the Power of Attorney document may include banking transactions, real estate, life insurance, tax matters, business matters, claims in litigation and a whole host of other powers.  An individual can also execute a Gift Rider to the Power of Attorney, which will allow the agent to make certain gifts on behalf of the principal (the person who executes the Power of Attorney).  The Gift Rider is often times executed for Medicaid and tax planning purposes.  The Power of Attorney is an important document to have in place, because if an individual is unable to handle is or her finances due to incapacity, then a Guardian may have to be appointed, which could be a costly process.

Living Will and Healthcare Proxy

In New York State, a living will, the portion of the document that contains a person’s advanced medical directives is not binding, which is why it is important to have a Healthcare Proxy.  The Healthcare Proxy is a person that an individual appoints to make medical decisions if he or she does not have the capacity to do so.   The healthcare proxy generally would take into account an individual’s wishes in his or her living will, along with advice from the doctors.  These forms are important for all individuals, because they are often times used when an accident occurs leaving an individual unconscious.  If an individual does not have a healthcare proxy, then New York State has a process to appoint a family member to make healthcare decisions, but the incapacitated individual would not have any control over who is appointed.

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