Why Do I Need to Have an Estate Plan?
To Our Clients and Friends:
As 2015 comes to a close, we believe it is the perfect time to address why everyone needs an Estate Plan. The complexity of the estate planning documents we draft will vary, depending on age, wealth and family dynamics. What is important is that you have reflected upon your financial, family, health and other personal factors so that a plan is in place to protect your family.
Why do I need a Power of Attorney?
A Durable Power of Attorney is a legal document in which you appoint an agent to handle your financial affairs on your behalf, in the event you become unable to do so as a result of illness, an accident or old age. It is effective during your lifetime and terminates upon death or revocation.
Many people assume that, if they are married, their spouse will be able to step in and handle their financial affairs. This is not always true. A person’s spouse will not always have the authority to act on their behalf. Now, in addition to dealing with the emotional impact of the situation, your loved ones will have to deal with the added burden of a costly and time-consuming guardianship proceeding in order to get the legal authority to act on a spouse's behalf.
By signing a Power of Attorney, if a person becomes incapacitated in the future, those you love and trust will have the legal authority to act on your behalf and handle matters in the way that you would want.
Why do I need a Health Care Proxy?
A Health Care Proxy is a legal document that allows you to name someone you know and trust to make health care decisions on your behalf, at any time you become unable to make or communicate those decisions. Most commonly, this situation occurs either because you are unconscious or because your mental state is such that you do not have the legal capacity to make your own decisions.
Why do I need a Living Will?
A Living Will is a written set of instructions for how you want to be treated if you are no longer able to make decisions for yourself. It provides your philosophy on end-of-life care. If you require life support, do you want doctors to do everything they can to keep you alive or cease support if nothing more can be done?
Why do I need a Will?
A Will is a legal document that states your final wishes and how you want your estate (e.g. home, auto, cash and other assets) distributed after your death. You can name an Executor to ensure your wishes are carried out, and a Guardian for your minor children and their property. You can also decide how you want your debts and taxes paid and provide for the care of your pets.
If you die intestate — meaning without a proper Will in place — your assets will be divided and distributed according to New York law. Many people believe their spouse will inherit everything; however, in New York, your spouse would get one-third of your estate, with the children dividing the rest. Don’t leave it up to New York law to decide how your estate will be divided upon your death.
What is a Trust, and how can it benefit me?
A trust is an arrangement in which one or more people manage or take care of property for someone else’s benefit. A living trust is created during your lifetime. Creating a trust means you transfer title of your property from your name to the name of your trustee. The trustee then becomes the owner of the property, but you retain the property for the remainder of your life.
A variety of trusts exist, all with different benefits, but the primary benefit is that trusts can reduce or eliminate estate taxes. Trusts can be established in other states to secure favorable tax rates, personal residence trusts can be created to exempt homes from estate taxes, and gift trusts and charitable remainder trusts can transfer assets to children, grandchildren or charitable organizations, all of which either reduce or eliminate estate and capital gains taxes that would otherwise need to be paid on your assets.
Why should I update my plan?
1. Change in the family situation — A marriage, whether between same-sex or opposite-sex couples, requires the updating of wills and a review of all beneficiary designations. A divorce, separation or estrangement requires the same updating and review.
2. Change in the size of the estate — Your business, real estate or other investments have appreciated, requiring new planning to avoid estate tax.
3. You have acquired new property — You have acquired new property that was not in your prior will, or you have acquired property in another state that may result in other-state probate and other-state inheritance tax that will need to be planned.
4. Change in the law — Sweeping changes to the New York Power of Attorney Statute went into effect September 2009 and were amended in 2010, making it prudent for you to review and update your existing Power of Attorney if it was prepared prior to the change.
Please contact us today, if you would like to create a new plan or review an existing plan, at (516) 228-1300 or email at ldevito@swc-law.com, dcohan@swc-law.com or mgartland@swc-law.com.
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Louis DeVito, Esq., CPA,
Dan Cohan, Esq., and
Melissa Forgas-Gartland, Esq
Sahn Ward Coschignano, PLLC
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