New York Estate Planning Beyond Taxes

January 11, 2013

Some mistakenly assume that estate planning only deals with minimizing taxes. With all of the focus on the estate tax in recent weeks it is easy to see how this assumption might gain ground. And it is true that for some families, significant planning must be conducted to ensure that as large a portion of an estate as possible makes its way to the intended beneficiary instead of the pockets of Uncle Sam.

But it is a mistake to suggest that taxes are the only or even the most important factor for most long-term planning for New Yorkers. The reality is that many tangential issues are just as important and often even more important. A recent WRALTechwire article reminds readers of several "non-tax" issues that are critical and must be addressed in estate planning efforts.

Some of those issues include:

***Protecting assets in subsequent generations. Far from being taken by the government, many have concerns that an inheritance might be taken by a relative's creditors, angry spouse, or other. Fortunately, in certain situations steps can be made to provide protection so that any inheritance is secured from the uncertainties of the future. After all, if an asset is properly passed on only to be snatched away by a third-party, then it makes no difference if taxes were paid on the inheritance or not.

***Protecting confidentiality. One overlooked aspect of the planning is simply the speed at which it allows the process to unfold. When all assets must pass through the court's probate process, then the timelines to resolve everything are dragged out. In addition, probate records are public, and so anyone can learn of the details of the situation Keeping this private requires use of trusts and other tools that an estate planning attorney can explain.

***Plan for incapacity. Estate planning is not just about passing on assets. It also involves planning for possible disability or incapacitation. Who will make end-of-life medical decisions? Who will handle family finances if you cannot? It is a grievous error to assume any sort of "default" rules for this decision-making are sufficient. They usually are not. That is why a power of attorney and health care proxy need be used to leave no doubt about your wishes in these situation. Often family members remark on how grateful they were for these legal documents so that they were not required to make difficult choices in the midst of the stressful situation.