New York Estate Planning Lawyer Blog

One of the most common estate planning mistakes is failure to change names on the title of assets and beneficiary designations. This rarely a problem when one first visits with an estate planning lawyer to create a new plan, because, so long as the work is competent, the professional will ensure these issues are properly handled. However, when one tries to handle matters on their own or does not properly update their plan to account for life changes, then even a plan that was good at the time will not work when needed.

Wills and trusts are legal documents that name beneficiaries for assets that pass via the will or are placed in the trust. However, regardless of what is said in a will or a trust documents, many significant assets may have their own beneficiary designations. Those designations will control who gets the asset.

Beneficiary designations apply frequently with assets like IRAs, 401(k)s, company benefit plans, and insurance plans. These assets have their own “payable upon death” designations which decide who will receive benefits, regardless of what other estate planning documents indicate.

Most local families have traditional assets that need to be dealt with as part of their New York estate planning efforts: a house, car, stocks, bonds, retirement accounts, and the like. However, some families have very different (but valuable) assets that must be considered vital parts of their estate. For example, collections often present unique estate planning challenges. Should the collection be split up and sold? Is there another in the family who appreciates the collection as much as the original owner? How much is the collection worth? What ramifications might it have on taxes and long-term healthcare support? All of these issues must be considered when thinking about elder law estate planning.

Popular collections or antiques can be quite valuable with significant consequences on financial planning efforts. For example, according to Advisor One, a 3,000 bottle wine collection is set to be auctioned later this month in New York. The total haul is expected to be over $2 million. Some of the individual bottles will likely sell for thousands and thousands of dollars each.

Wine values may seem foreign to many, but there are a surprising number of local families that have significant wine portfolios. For many high-net-worth families, wine collections are viewed as a part of an actual investment diversification strategy. The investment performance of wine has actually been strong. The Live-ex Fine Wine Investables index has been tracking values of certain wines for the past few decades. In the last twenty years the overall index of the top 200 wines has increased in value by about 1200%.

“Lawsuit-proofing” an estate is a common goal in estate planning. Of course, this refers to use of strategies and tools to ensure the inheritance process does not lead to legal fights down the road. A benefit of having an experienced New York estate planning lawyer involved in the preparations is that the legal professional will be able to anticipate possible challenges and incorporate those risks into the work that is performed. In this way, proper planning requires strategizing and unique legal maneuvering, not simply filling out lines on legal documents.

For example, one of the most common ways that an inheritance plan in attacked is by questioning the capacity of the settlor. If one is unhappy with the way that a senior decided to manage their estate or dispose of their trust assets at death, challenging that senior’s mental capacity is a common. A Lake County News article last week discussed this possibility by highlighting real appellate cases where capacity was at issue.

In one case, an elderly settlor decided to leave most assets to his long-term romantic partner instead of his children. The senior, who was known to be forgetful, changed his trust documents to leave the majority of the assets to the partner. He also named her as beneficiary for his retirement accounts. The man’s children, with whom he had strained relationship, did not find out about these changes until the man’s death. They initiated a legal suit seeking to attack the changes to the trust and retirement plan. The argument that they made in the legal challenge was that their father did not have the requisite capacity to control his affairs at the time that he made changes to his trust documents. A key issue in that case is obvious: what level of understanding is required to make the senior’s actions legally sufficient?