Why You Need the Legal Assistance of an Estate Planning Lawyer
While it can be easy to draft a New York will, there are several other estate planning documents which you may require other than a new York will. These documents seek to offer you several benefits other than just distributing property to your loved ones after death. As great as the benefits are, these documents are often bound by certain laws and criteria which you may not be adequately accustomed to and as such, you may be stepping into unfamiliar territory when you attempt to create such documents yourself. These documents include:
- A living will — this will is only effective during your lifetime. In this document, you state what kind of medical attention you want during your end-of-life.
- A financial power of attorney — in this document, you name a person who you trust to be competent enough to handle your finances when you are unable to do it yourself due to incapacity or critical health conditions.
- A medical power of attorney — in which you appoint a person whom you trust to make important medical decisions on your behalf.
- A trust — a trust gives you several advantages, one of which is it allows you to pass your wealth outside probate. Probate avoidance is often required because of it’s cost, complexity, high profile and publicity. Probate entails a lot of troubles for the estate executor as well as the surviving heirs of the deceased, and as such, most people prefer creating a trust other than a will. However, there are two major types of trusts and utmost care should be taken in using either.
Types of trusts
The two basic types of trusts are the revocable trust and the irrevocable trust.
A revocable trust is also known as a living trust or revocable living trust. A revocable trust is a type of trust that can always be altered, changed or cancelled after being established, provided the Grantor (the creator of the trust) yet lives.
A revocable trust goes into effect as soon as it is created and funded with one or more assets. This is opposed to a will which only takes effect after death. Once the trust is created, you as the grantor can name someone else or yourself as your trustee, and put down terms and instructions on how those assets should be dealt with. Those assets thus transferred into the trust becomes a property of the trust, taking its name instead of yours, and will pass down to your named heirs without going through probate. A revocable trust can also be used to pass assets on to beneficiaries during the lifetime of the Grantor.
These trusts are permanent. Once created, the irrevocable trust can never be cancelled (unless for some rare exceptions) and as such, you have to be careful in creating this kind of trust. You lose permanent ownership of whatever asset you transfer into an irrevocable trust, and the asset becomes entitled to the trust. You can not be the trustee of your irrevocable trust, so those assets are completely out of your reach.
But this is very important when you desire to escape your creditors or federal estate taxes. Say, as a New Yorker, your estate is worth over the $5,850,000 threshold in New York, your estate would be subject to taxes reaching up to 16% of its value. To escape this, simply transfer a huge chunk of your estate into an irrevocable trust. This reduces the value of your estate below that threshold, allowing you to pass down your wealth tax exempt. Leaving just minimal funds for yourself can even help you qualify for Medicaid and other government benefits. However, the caveat here is that there is a 5-year look back period. If the transfer into the trust has not been up to 5 years, then you would not qualify for Medicaid.
Nevertheless, the irrevocable trust may or not be required by you, depending on your estate goals, and this is why contacting the estate planning attorney becomes highly advisable.
Knowing the right estate planning tool use
If you only seek to avoid probate, what you may require is simply a revocable trust and not the irrevocable one. However, if escaping estate taxes is your goal, then an irrevocable trust may become necessary although there are other tax planning methods for reducing estate taxes.
You do not transfer just any assets into your trusts. There are always things to look out for, such as how often do you use the asset? Is that asset in your name or a jointly owned property? Is it an account with a beneficiary designation? These and other things determine how your assets should be handled, and it is important you contact the estate planning attorney New York for professional and legal advice. Do not make mistakes that would cost you great regrets later in life. The estate attorney would help you create a proper estate plan that protects you, your estate and your loved ones. Consult the New York estate planning attorney 10038.