Estate planning involves planning towards the management of your estate and it’s distribution when you pass away, while mitigating risks, cost, and complications. To make all of that possible, there are documents you should execute. Each estate planning document caters to at least one estate planning consideration, such as asset distribution, asset management, asset protection, tax and probate minimization/avoidance, incapacity planning, etc.
We shall now discuss the documents essential to a comprehensive estate plan in New York.
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4 Essential Estate Planning Documents
Regarded as the most fundamental estate planning document, the last will and testament is a highly powerful document by which you assert who receives what asset. You clearly write out the names of your beneficiaries and what portions of asset that should go to them when you die.
With a will, you can leave asset to just anybody, including a distant relative, charity, or even a stranger.
There are legal requirements for creating a New York will:
- You must be 18 years or more
- You must be of a sound mind at the time of signing the will
- The will must contain your signature and those of at least two witnesses who must each witness each other’s signature.
You can choose to notarize your will — that is, make it self-proving. In that case, the court wouldn’t need to call the witnesses to testify to the validity of the will when you die.
If you have minors, you could also name a guardian for them in your will. The Guardian will look after the children with the assets you leave for them until they attain 18.
2. Power of attorney (POA)
A New York power of attorney is Powerful document by which you appoint an agent – called an attorney-in-fact – to make financial decisions on your behalf. This is used very useful in incapacity planning so that you would have someone to manage your affairs if you become unable to do so.
- Durable power of attorney: this POA goes into effect as at when created, and lasts beyond incapacity. That is, your agent will continue making decisions for you even when you become incapacitated.
- Springing power of attorney: this POA only goes into effect the moment you are declared legally incapacitated.
- Medical power of attorney: The medical POA is also known as a healthcare proxy. In this POA, your agent is only authorized to make healthcare decisions for you rather than fiscal ones.
- General power of attorney: in the general POA, your attorney-in-fact has authority over your financial, healthcare, and personal affairs.
3. Living will
You may have certain preferences when it comes to your end-of-life matters. Possibly, in a case the chances of your survival are very slim, you may like a part of your body to be used to save someone else life instead, such as a kidney or heart transplant. You may prefer to be kept on life-support indefinitely until life or death comes, or choose not to so as to save cost for your family. You can’t make such decisions then because you probably would be in coma, so you have to make the choices now by writing them in a document known as a living will.
A trust is an instrument by which you can hold assets for a beneficiary (or beneficiaries). Typically, assets held in a trust take up the name of the trust, so may not be counted as part of your estate for tax purposes. Since such assets are no longer in your name, they would pass outside of probate.
We have two kinds of trust:
- Irrevocable trust: in this type of trust you have no access to the assets anymore. They are used for asset protection, wherein the full amount of the asset will pass to your beneficiary, without any tax or debt liabilities. Your creditors can’t even lay claim since these assets are no longer in your name. However, the irrevocable trust should hold only assets which you would not use until death.
- Revocable (living) trust: While still alive, you may name yourself as the trustee of your living trust, thus giving you the right to use the assets to your own benefit. You must, however, name a successor trustee who will see to it that the assets pass directly to the beneficiary. This Type of trust does not offer asset protection, but still avoids probate and offers little tax savings.
Estate planning lawyers near me 14207
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