The New York Times published a story last week that reminds residents of the complexity of many estate planning matters. The story reiterates two key principles when it comes to long-term financial and inheritance planning: (1) It is a critical task for families of all income levels; (2) It requires frequent pruning and updating.
Not a Problem for the Wealthy
There remains a misconception that estate planning is a concern only for the wealthy. If one does not have assets over the $5.25 million federal estate tax exemption level, then there is no need to worry about visiting an attorney or otherwise handling this inheritance details, right? As we often point out: this is a huge misconception. The truth is that estate planning deals with a wide-range of issues beyond the estate tax. From ensuring proper designation of life insurance policies and retirement accounts to using trusts to avoid probate and save on expenses, properly planning for transfer of assets is necessary for families of all income levels.
Consider one of the most common problems: a will that contradicts provisions in beneficiary designation forms. Many New York families find themselves in sticky situations when someone creates a will that leaves provisions to one family member, even though the name on a beneficiary designation form for a retirement account or life insurance leaves it to someone else. In those cases, the will is overridden, even if it represents the true desire of the benefactor.
Not a “One Time” Task
Similarly, because of changes in the law and life circumstances, estate planning cannot be viewed as a chore that is finalized once completed. Instead, it must be a frequently updated process, with alterations to those beneficiary designations, will provisions, trust assets, and more. Understanding when a part of the plan needs to be updated is where professionals like an estate planning attorney are vital. These details are complex and serious enough that they should not be left to those unfamiliar with how it all works.
Obviously the birth of new children or grandchildren, a divorce, marriage, acquisition of a new asset, or other change in condition must be folded into an existing plan. In addition, many different legal changes may influence what options are available and when. Those legal changes go well beyond the estate tax, which seems to generate all the media attention. Many different kinds of tax rules can shift at any time, including types of available trusts, extent of charitable deductions, and more.