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People who have an estate with various assets often need to be prepared to contend with sudden changes in both market valuation and tax laws. During the COVID-19 pandemic and an era of both political uncertainty and quickly changing markets, it can be particularly difficult to decide what assets to transfer into a trust. This article reviews some tips and strategies that you can follow to add flexibility to your estate plan so you can make quick decisions to capture the most of estate opportunities in the changing market.

# 1 – Utilize “Intentionally Defective” Irrevocable Grantor Trusts

Intentionally defective grantor trusts are best thought of as grantor trusts with a purposeful flaw that makes sure the trust creator continues to pay income taxes. An intentionally defective grantor trust can be utilized to reduce estate taxes. A grantor creates the trust, transfers investment assets into the trust while retaining the ability to reacquire assets in the trust through the substitution of other equally valuable property, pays gift tax on the transfer, and pays income taxes on any increase in the trust’s value. 

Estate planning does not always appear on people’s things to do. Living through the coronavirus pandemic as well as approaching the second wave of the COVID-19 pandemic, however, should change the urgency with which people approach estate planning. New York currently has the fifth-highest number of COVID-19 cases among the states with more than 650,000 confirmed cases. Inevitably, some families during the pandemic will only discover that they lack sufficient legal documents when a loved one dies. To avoid expensive court cases, remember that estate planning is one of the best ways to prepare for the unexpected. To help you begin considering what legal documents to include in your estate plan, this article reviews some of the most common tools that people utilize.

# 1 – Wills

A last will and testament informs the court of who you would like to receive your assets after you pass away. This document also informs the court who you would like to make responsible for ensuring that your bills are paid and that assets transfer to the correct people. If you do not create a will and have not established other ways for your assets to be handled after your death, your belongings will likely not pass to the desired people. Instead, courts will often intervene and decide about who should receive these assets.

Trusts are a nuanced part of estate planning and can make sure that assets are passed on to your loved ones in a controlled manner. While there are many terms and concepts to grasp when it comes to understanding trusts, it also helps to appreciate that there are several types of trusts. This article examines just a few of the most common trusts which can be used advantageously to achieve various estate planning goals.

# 1 – Bypass Trust

Sometimes referred to as a credit shelter trust, these trusts are primarily used for tax reduction. The trust, however, also has several non-tax related benefits. For example, bypass trusts can protect assets from poor investment decisions as well as creditors and financial scams. Bypass trusts can also help to guarantee that children or beneficiaries are the ultimate recipients of the trust’s assets. As a result, these trusts are commonly used when one spouse has been previously married. The challenge presented by bypass trusts, however, is deciding how much to transfer into the trust. There’s no universal answer as to the extent of an estate to transfer to a bypass trust, but an experienced estate planning attorney can help you make this decision.

Wills are an excellent fundamental of many estate plans. If you pass away without a will, a New York court will be tasked with making the difficult decision of who should receive your assets as well as who should look after your children. If you’re like one of many adults in New York who has been forced to confront their mortality this year due to the COVID-19 pandemic, you’ve likely considered whether your will is up to date or if you’ve ever written one at all. While all estate planning should begin with a will, however, you should realize that wills are just one small piece of the estate planning puzzle. This article reviews just some of the most critical reasons why your estate plan needs more than a will.

# 1 – Wills Have Limitations Regarding Assets

Wills are estate planning documents that help you determine how matters should be handled when you pass away. You can be as specific as you’d like with wills or keep the terms of these documents open. While wills control the distribution of many assets, certain other assets pass outside the terms of wills including retirement accounts like 401(k) plans and individual retirement accounts. This means that beneficiaries listed on retirement accounts will often receive assets regardless of the terms of a will. Regular bank accounts can also have beneficiaries listed. If a beneficiary is not listed on the terms of retirement accounts, these assets will automatically pass into probate.

It’s not an uncommon story. In their final years or months, a loved one decides to leave a large amount of assets to someone they have just met. Often, these estate plans defy previous orders that would have passed on assets to family members. In these situations, family members and loved ones are often left whether they can pursue an undue influence claim. This article considers the nature of such arguments.

The Legal Basis of Undue Influence Claims

In New York, undue influence describes the influence to destroy the influence of a person engaged in estate planning and substitute another plan in its place. As a result, the estate planner is compelled to decide against their will due to complexities like fear, the need for peace, or an irresistible urge. 

For many people who pass away, their home is their most valuable asset. As a result, several estate planning strategies are utilized to hide such an asset. One of the most common estate planning tools used to transfer assets is a qualified personal residence trust. Such trusts allow the creator to avoid potentially substantial tax complications without facing significant challenges during their lifetime. After the terms of the trust end, the remainder then passes to designate beneficiaries. Because people interested in qualified personal residence trusts often have several questions about this estate planning strategy, this article considers some nuanced questions about how these trusts operate.

What Happens If You Outlive The Terms of the Trust

It’s easy to end up uncomfortable with the possibility that you might still be alive when the terms of the trust end. In such a situation, the remainder beneficiaries will inherit your assets. This might mean that you need to pay the beneficiaries rental to continue residing at your home. Although this might seem like a substantial challenge at first, realize that this type of action often helps to satisfy the estate planning goal of transferring assets on to loved ones.

Electronic wills are likely to play a large role in future estate plans. The ability to both create and store a document align has greatly facilitated the creation of estate plans. The Uniform Law Commission also recently passed the Uniform Electronic Wills Act, which has greatly influenced how many states approach electronic wills. If you’re interested in creating an electronic will or are deciding whether an electronic will is a good idea for you, this article reviews some important issues that you should consider. 

Whether Electronic Wills Are A Good Idea

While many people wondered what parts of the estate planning process could be done electronically, this question has only become more common during the COVID-19 pandemic. Additionally, Millennials as well as many younger individuals often find it an antiquated and outdated idea to physically sign a will. These individuals often question why if so many tasks can be performed electronically, why creating an estate plan can also not be done in such a manner. Consequently, electronic wills are playing a more common role in estate plans.

While the coronavirus pandemic has left many people uncertain about what the future holds, now might be an excellent time to take advantage of a historically low tax environment.  Although it is unclear how long rates created by the Tax Cuts and Jobs Act of 2017 will remain low, remember that many provisions of this Act will automatically expire in 2026 provided Congress does not act to prolong them. With the matter of how these regulations will be handled uncertain, whoever wins the US election in several weeks will likely play a role in influencing the outcome of these regulations.

Due to uncertainty about how long the Tax Cuts and Jobs Act will remain in place, many people are taking advantage of both the high lifetime gift as well as estate tax exemptions to pass on assets to loved ones. Although there are many ways that high exemptions can be utilized, one of the best ways to make the most of these exemptions is through the use of a Spousal Lifetime Access Trust.

The Role of Spousal Lifetime Access Trusts

Special needs trusts perform the valuable role of keeping a person eligible for government benefits like Medicaid and Supplemental Security Income (SSI) while also paying for services in addition to what the government can offer. If you make the decision to establish a special needs trust for a loved one, many assets will likely be placed in the trust only after you pass away. To transfer these assets, there are several commonly used methods including living trusts, will, and other types of beneficiary designations. This article reviews several of the estate planning tools most commonly used to transfer property to a special needs trust.

# 1 – Beneficiary 

Many different types of financial accounts including retirement plans like 401(ks) and IRAs, life insurance, and securities allow a person to assign a beneficiary of the assets. This beneficiary then receives the funds following the owner’s death. By assigning a special needs trust as a beneficiary, it is possible to pass on an asset without subjecting it to probate. Remember, you must list the special needs trust rather than your special needs loved one as the beneficiary. If you list your loved one as a beneficiary, this could end up jeopardizing their receipt of Medicaid or SSI.

The field of estate planning involves various types of documents. While some of these documents have long-recognized roles, people have less exposure to others and are more uncertain about the role they can play in estate plans. One commonly asked question is what the difference is between power of attorney and guardianship forms. While these documents can function similarly in some situations, they are vastly different in others. As a result, this article considers the relationship between guardianship and power of attorney documents.

The Role of Guardianship

Guardianship refers to a legal relationship established where a court assigns a person the legal right to make decisions for another individual who cannot make these choices on their own. Most times, the family member, friend, or other individual seeking guardianship files a petition in Probate Court in the county where the “ward” lives. A medical examination by a physician is often required to establish this person’s condition. If it is decided that the individual can meet essential requirements involving health or safety, the court will appoint a guardian to make decisions for this individual. Additional details about the guardianship system in New York can be found in Article 81 of the state’s Mental Hygiene Law. 

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