Speaking directly with an estate planning attorney near you is the best step to finding the best personalized answers as regards your personal situation. Our law firm is based in New York and you can always contact us to consult with an estate planning attorney in Port Washington, NY, 11051. However, this article aims to give answers to frequently asked questions regarding estate planning in the state of New York.
When I die, how will be assets be disposed?
Each asset will be disposed according to the provisions you put in place for them. If you create no provisions, then the state has default distribution protocol and heirs.
But first, it has to be known if you own that asset in your name alone or jointly.
- Assets held in your name alone: Assets held in your name alone will be distributed according to the specifications in your will. In the absence of a will, the intestate succession law of New York has a default mode of distribution. This provides that your spouse receives the first $50,000 while the balance is shared between the spouse and kids. In the absence of either a spouse or children, all your wealth will go to the one that survives.
- Joint ownership: Assets held jointly will definitely pass to the surviving partner. Also, assets in which you have included a payable-on-death beneficiary will go to this designated beneficiary directly without influence from a will or intestacy laws.
Must I create a will?
If you do not create a will as have been said, assets held in your name will be distributed by the intestacy laws. This means that those who you ideally would want as beneficiaries may end up receiving nothing because they are unrelated to you. But you can decide not to create a will and still be in a better position by creating a trust instead. While wills and intestacy both necessitates probate, a trust avoids it. This is because the trust assets take up the name of the trust and so will go directly to the beneficiary. This saves time and costs associated with probate.
When I am incapacitated or finally die, who will manage my estate in my absence?
Depending on the situation, your estate planning attorney can help in creating the right documents to handle each consideration.
- During incapacitation: A trustee named in your living trust will step into your roles to make decisions for you and handle your affairs. If you do not have a trust, a guardian may be appointed. Guardianship process takes time and to avoid this, you can simply appoint an attorney-in-fact by creating powers of attorney. The attorney-in-fact will handle your affairs on your behalf.
- When you die: The executor named in your will takes the will to the court and administers your estate, ensuring that all your debts, bills, and taxes are duly paid. In your will, you can also name a guardian to care for your minors when you die until they turn 18, using the assets you left for them.
Should I be concerned about estate taxes?
Payment of estate taxes depends on the value of the estate at death. For states valuing over $5,850,000 for deaths in 2020 in New York, an estate tax of 5-16% must be paid to the state. If the estate values over $11.58 million, a federal estate tax would also be paid to the federal government. These threshold values are known as estate tax exemption amounts; meaning that if your estate is worth less than this, you do not have to worry about estate tax. However, there may be significant appreciation in your estate before you pass away and such increase may cause your estate to surpass the threshold amount. If you are worried about this, kindly speak with an estate planning attorney near you.
How can estate taxes be avoided?
There are different ways your attorney may help you avoid or minimize estate taxes. One way is by use of irrevocable trusts. If your estate values above the exemption amount, you can place the excess funds into an irrevocable trust, thus reducing your estate below the threshold. But be sure those assets are such that you would not need to use until you die.
Another method is by gifting. You can give assets to your loved one while you are alive in form of gifts yearly without incurring gift tax. Doing this before you die can significantly reduce your federal estate tax.
What happens when your estate is insufficient to settle creditors, tax and beneficiaries?
If you die leaving $200,000 but owe up to $300,000, your debtors will have to be settled with the whole 200,000. Obviously, they would only be able to get a share of their credits. Beneficiaries would get nothing at the end. This is known as the New York priority of claims.
It is important you get professional assistance from a well-versed estate planning attorney near you. Call us today.