Estate planning is a crucial process that can have a significant impact on the financial well-being of loved ones. It helps ensure that hard-earned assets are distributed in accordance with personal wishes, while also minimizing tax liabilities. Even for young adults, estate planning can provide peace of mind and ensure that their assets will be distributed as they desire in the event of unexpected illness, accidents, or death. By engaging in this process, individuals can take steps to secure their financial future and address potential risks. While every state has its own unique laws and regulations, navigating the estate planning process in New York can be particularly challenging. New York’s complex legal landscape, coupled with its constantly evolving tax laws, can create a minefield of potential mistakes for those seeking to plan their estates. In this guide, we will delve into the top mistakes in estate planning in New York, highlighting the common pitfalls and offering experienced advice on how to avoid them. It is critical to consider the assistance of a skilled New York estate planning lawyer to ensure that your plan is tailored to your unique circumstances, while effectively navigating the complexities of New York law. At New York Legacy Lawyers, attorney Yana Feldman and our team of skilled estate planning lawyers may be able to help you build a secure future for you and your loved ones. Contact us today at (718) 713-8080 to schedule a consultation. 1. Procrastinating on Estate PlanningMany individuals, including my own friends and family members, often procrastinate on estate planning. However, it’s important to remember that unexpected events, such as illness, accidents, or death, can occur at any time. This is why it’s crucial for everyone over the age of 18 to have basic documents in place, such as a Power of Attorney and Health Care Directives. For those with assets, it’s essential to consider what would happen in the event of incapacity or death. Who would have control over or inherit these assets? Are there any individuals that you would like to exclude? Estate planning can help answer these questions and ensure that your wishes are carried out. In some cases, basic documents such as advanced directives and beneficiary check-ins may be sufficient. In other cases, a will or trust may be necessary. It’s also important for older individuals, even those in good health, to consider how they would pay for the costs of long-term care. By engaging in estate planning, individuals can gain peace of mind and ensure that their assets and future care are protected. Therefore, procrastinating in estate planning can have severe consequences, and it’s crucial to address this important aspect of financial planning as soon as possible. 2. Not Exploring Your Estate Planning OptionsWhile a will is vital, there may be other estate planning tools that can be viable for your circumstances. Failing to explore other tools can lead to pitfalls like estate taxes that trusts can help minimize. A will doesn’t address incapacity, but living trusts and durable powers of attorney can. Probate is a pitfall, but trusts can help avoid it. A will doesn’t protect assets from creditors, but irrevocable trusts can. Special needs trusts can support family members with special needs without affecting their eligibility for government benefits. Consulting an estate planning attorney can help create a comprehensive estate plan that suits individual goals and needs. 3. Avoiding Disability And Long-term Care PlanningWhen it comes to long-term care planning, many individuals overlook the possibility of incapacity due to illness or injury. In such a scenario, a person’s loved ones may become involved in costly and time-consuming court proceedings, with a judge who has never met the person making decisions regarding their future. These decisions may not align with the person’s preferences or values, and a stranger could be appointed as their guardian instead of trusted family members and friends. To avoid the potential pitfalls of guardianship, it is advisable to appoint an Agent under a Power of Attorney, a Health Care Proxy, and possibly a Trustee to make decisions and manage assets in accordance with the individual’s values and lifestyle. Doing so can help prevent delay, confusion, and undue expense, as well as ensure that the individual’s wishes are carried out. Thus, in the context of long-term care planning, it is essential to consider the possibility of incapacity and take steps to avoid the need for guardianship. 4. Avoiding Discussions with Family and FriendsMany people don’t want to talk about estate planning, because it is talking about illness and death. Many people think it is somehow “jinxing” them or tempting fate by making plans for disability or death. However, it is important to let the people around you know what your wishes are. Even if you do make plans, if they aren’t what people would expect, it might make sense to let some people know about them so they aren’t disappointed or surprised. It also can help alleviate a lot of stress and worry from children and grandchildren about how they will help their aging parents and grandparents. It is also a great way to share your values and hopes for your loved ones in the future. 5. Not Planning for Your Children’s FuturesAs a parent myself, I understand the importance of planning for the future of our children. Some parents may feel that estate planning is not necessary if they have not amassed a significant amount of wealth, but as a parent, I know our children are our greatest wealth. I want to have a say in who would care for them if I weren’t able to do so due to death or disability. Appointing guardians and creating a trust for children can be quite straightforward. Many of my clients fund these trusts with the proceeds of term life insurance, which is very reasonably priced for most people, even if they don’t have a lot of accumulated wealth. The hardest part of estate planning to protect children is usually choosing who these guardians and trustees will be. One tip: there is usually no perfect choice. Make the best choice you have, know you can always change it in the future, and that it is still better than kids ending up in foster care or with someone you would rather avoid. 6. Forgetting to Coordinate and Review BeneficiariesRemember, a beneficiary designation trumps a will or a marriage. If you have named a sibling or a parent on a life insurance policy or any other asset, they will inherit it, even if you are now married or have a will that leaves your assets to another person. It is important to make sure that your estate plan aligns your wishes and your estate planning instruments with the beneficiary designations on your accounts. I have seen countless examples where a former girlfriend/boyfriend or sibling/parent inherits instead of a spouse or child, with little recourse. 7. Wrong Choice of Agent/TrusteeChoosing an agent under a Power of Attorney, an Executor or a Trustee is hard! But these decisions need to be made taking into account a number of factors. Of course, family dynamics are important, which is why a frank and open discussion with your estate planning attorney is so important. Financial sophistication may not need to be the most important factor as long as the person is honest, trustworthy, sensible, and can seek out and follow competent advice from trusted professionals. 8. Not Updating/Reviewing Your Plan RegularlyYou marry, have children, divorce, and people in your life pass away. You buy and sell real estate, open and close businesses, and change the direction of your career trajectory. Life changes. Laws change. Estate plans can easily become outdated, so it’s essential to review your plan regularly 9. Relying on a DIY Estate PlanMany estate planning and estate administration attorneys joke that LegalZoom and similar websites create more work for us than they take away. While it is certainly possible to create an estate plan on your own for no or low cost, it can cost your family a LOT more than you choosing to work with a competent estate planning attorney. Estate planning attorneys become intimately acquainted with your particular set of circumstances and while many plans are similar, most have some important tweaks to account for what matters to you! Maybe it is avoiding probate, providing for a loved one with special needs, or planning for long-term care. Is estate tax a consideration? Do you have all the right information? Many of the DIY plans don’t ask all the right questions. For example, I’ve seen NY wills name a foreign national who lives abroad as an executor, which simply isn’t allowed in NY. In short, it is almost always worthwhile to have a conversation with an estate planning attorney about what their suggestions might be and what issues they can identify in your specific situation. You want someone who you feel comfortable talking to, so you can be completely open and candid. You want someone who you feel you can come back to with questions and changes over the years. And of course, you want someone who can appropriately address your particular concerns. 10. Failing To Incorporate Your Digital Assets Into Your PlanThe use of digital assets has become an essential part of our lives, yet many people do not consider including them in their estate planning. Neglecting to include digital assets in estate plans can lead to the loss of valuable information, delays in accessing them, risk of identity theft, and inability to distribute them according to a person’s wishes. To avoid these pitfalls, individuals should create a comprehensive inventory of their digital assets, appoint a trusted executor, specify how the digital assets should be distributed, and ensure that all necessary legal documents are in place to authorize access to online accounts. Beneficiary BlundersOne of the most common mistakes individuals make in estate planning is not designating a contingent beneficiary for retirement accounts and insurance policies. They often overlook the necessity to regularly review and update their beneficiary designations. This oversight can lead to the unintended default beneficiary becoming their estate, which then becomes entangled in probate, exposed to creditors, and subject to unnecessary delays. The absence of a contingent beneficiary is particularly detrimental when it comes to IRAs, as it eliminates the possibility of a ‘stretch IRA’. A stretch IRA is a significant tax deferment strategy that allows beneficiaries to extend the distribution of inherited IRA assets over their own life expectancies, thereby minimizing taxes and potentially augmenting the income they receive over their lifetimes. Since an estate has no life expectancy, it cannot take advantage of this tax-efficient distribution method. Furthermore, individuals often forget to remove former spouses from their IRA beneficiary designations following a divorce. This oversight can have catastrophic consequences for their current spouse and family. It’s important to note that while retirement plans automatically assign the new spouse as a beneficiary upon marriage, IRAs do not follow the same rule. If one wishes to name someone other than their current spouse as the beneficiary of a retirement plan, they must obtain the spouse’s consent. A prenuptial agreement holds no power in this scenario, as only a spouse can waive beneficiary rights, and a fiancée has yet to attain that status. If you’re considering estate planning, it’s essential to avoid common mistakes that can have significant legal and financial consequences. At New York Legacy Lawyers, attorney Yana Feldman and our team of skilled estate planning lawyers can help you navigate the complex legal landscape of estate planning in New York and avoid common pitfalls. We can help you better understand the estate planning process and assess your unique circumstances. Our attorneys have dedicated their careers and work diligently to help individuals and families plan for their future, protect their assets, and minimize tax liabilities. Don’t wait until it’s too late. Schedule a consultation with us today by calling (718) 713-8080 or contact us at our website. Our experienced attorneys can help you create a secure future for yourself and your loved ones.
via New York Legacy Lawyers by Yana Feldman and Associates https://yanafeldmanlaw.com/top-mistakes-in-estate-planning/
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AuthorYour legacy extends beyond the material possessions you leave behind. It includes the impact you have made on your family and community, and the lasting benefit you have provided to future generations. At New York Legacy Lawyers, we understand the importance of carefully planning for the future and ensuring that your goals are carried out. With over 20 years of experience in estate planning and elder law, our attorney, Yana Feldman, is equipped to help you achieve your vision and guide you through every step of the process. FIND US ONLINE Bitly Box Diigo DropBox Evernote Postach.io Inoreader Instapaper Nimbus OneDrive OneNote Raindrop Todoist Toodledo Trello Tumblr Weebly Wordpress Blogger Google Drive Youtube Google Map Related Links About.me Behance.net Dribbble.com Taplink.cc Gravatar.com Carrd.co Minds Justpaste Issuu Linktr.ee Solo.to ArchivesNo Archives Categories |