Articles Posted in Trusts

There is a tendency to view estate planning as a static skill and the process of having an estate plan created as a one-time task. Both are misconceptions. While certain basic estate planning principles have held true over the years, new strategies are developed, arguments are made, and legislation is passed which alter what the law is in this area and how it is applied. Similarly, proper estate planning is rarely just a one-time event. Besides accounting for legal changes, the plan must also be modified down the road to account for life changes.

On top of accounting for legal and life changes, when an estate plan for local residents is created poorly the first time, often by those without direct experience in this area of the law, it is often necessary for more seasoned New York estate planning attorneys to “fix” the “broken” plan. The process of correcting or changing parts of an estate plan was discussed last week by Forbes.

The story noted that changing items in revocable arrangements (wills and revocable trusts) is usually pretty straightforward–so long as the settler or testator is still alive and competent. Altering a will or trust is much more difficult after that time. Considering that many estate planning documents get placed into a safe place and only examined after death, many are often challenged to “fix” the plan at the very moment when it is supposed to be put into action. This process is very case specific, and so it is hard to make generalizations about legal ways to correct potential problems in irrevocable planning documents. However, some basic methods of doing so come up time and again.

One important part of the elder law estate planning process involves working out inheritance details. This comes with unique concerns for each family as various assets have different meanings for each individual, far beyond their market-value. Accounting for these emotional attachments is a delicate process that should not be done hastily. For example, one valuable that may present unique inheritance challenges are collections. Our New York estate planning lawyers appreciate that many residents have spent years building collections–from holiday villages and marbles to art–and have strong feelings about how they’d like to see the valuables handled after they are gone. A recent story in The Ledger argues that planning is paramount.

Collections, like other art and antique valuables, can present somewhat complex inheritance concerns. Large collections can be hard to physically manage, have difficult value estimates, and still may have tax implications. On top of all of that, collections are often laden with emotional value–some family members may love the collections, others may not. But it may not even be as simple as passing it on to one who cares for the objects. Some children may have no desire for the objects beforehand but may become emotionally attached after their parent’s passing because of the way that the collections helps them remember their loved one. In this way, family fights over what to do with collections–particularly large ones that are hard to manage–can be common.

For local residents, avoiding the potential inheritance mess comes down to one thing: have a specific New York inheritance plan in place. The planning process will involve asking tough questions about the best options for the future.

The Chicago Tribune published a story this weekend on new survey results which indicate, yet again, that many residents are taking big risks with a lack of even basic estate planning. A new Harris Interactive phone survey has found that more than half of adults still do not have a will, let along more sophisticated and helpful planning tools like trusts. The numbers are much starker for young residents. A staggering 92% of those under thirty five years old admit that they have not conducted any estate planning at all.

Interestingly, these figures actually represent slight increases in the number of residents taking the time to ensure estate and tax planning. However, there obviously remains much room for improvement. Each New York estate planning attorney at our firm continues to share information with local community members on the necessity of this planning, regardless of age or income. There is simply too much at risk to do otherwise. Those risks are maximized when one has children, substantial assets, or other special circumstances.

At the very least, all community members should have a will, durable power of attorney, and healthcare proxy. These basic documents ensure that assets are distributed as desired, financial decisions can be made in case of incapacitation, and a specific individual is named to make medical decisions on one’s behalf if necessary.

A small minority of misguided observers might suggest that using estate planning tools like revocable living trusts are becoming less necessary in recent years because of increases in the federal estate tax exclusionary amount. According to this line of thinking, use of the trust was limited solely to avoiding estate taxes–taxes on the assets given as part of an inheritance. Because community members can currently pass on up to $5 million individually without triggering the tax, there may be a mistaken assumption that those with fewer assets do not have much need for trusts. Of course, our New York trust lawyers work with thousands of clients who are living proof that this suggestion is a drastic oversimplification of the use of these legal tools.

An article last week in LifeHealth News made the same point, reminding readers of the various benefits that trusts provide beyond estate tax savings. Just two of the many benefits include: (1) avoiding probate; (2) allowing flexible inheritance arrangements

Perhaps most importantly, use of these trusts allows families to avoid the time-consuming, stressful probate process that is required when only a will is used. The probate process is court supervised, which means that judges ultimately decide how everything shakes out. Depending on the circumstances, the judge’s final decision might be far different than what the family thinks appropriate or even what the one who passed on might have wished. Using trusts and keeping the process out of the courts is a huge benefit for those who want to ensure that their wishes are actually carried out in the most straight-forward manner possible.