Introduction
What is Estate Planning? It’s a plan about your Estate for when you die or become incapacitated. Your Estate is you/your person and what you own and owe.
An Estate Plan generally addresses 4 areas:
A plan that controls your property while you are alive and well.
A plan that provides for you and consequentially your loved ones if you become incapacitated/disabled/die.
A plan that gives what you have; To whom you want; The way you want; When you want.
A plan that minimizes the impact of fees, court costs and taxes.
1st step is to get a plan!
If I die, who gets what?
Who do I want in charge?
If I become mentally or physically disabled, who do I want handling my affairs?
Then address how to best effectuate that plan.
Tools to Help Achieve the Plan
Tools to help effectuate the plan make up the basic components of an Estate Plan:
Will
Trust
Power of Attorney
Health Care Proxy
Living Will
Disposition of Remains
Below is a simple summary of how these tools work, why people need them, and what happens if you don't have them.
I. Will a/k/a Last Will and Testament
Simple Summary
A Will is a written document that disposes of your probate assets (assets in the decedent’s name alone without a joint owner or beneficiary, including personal property, cash, real estate, bank accounts, securities) at the time of your death.
How it Works
Takes effect upon death only.
Must be submitted to Probate in Surrogate’s Court to prove it is valid and allow any objections by interested parties.
If court deems valid, then the court admits the will to probate and the court instructs an executor to carry out the terms of the will:
Funeral expenses, administration fees, and debts (including taxes) are paid before distribution to beneficiaries.
DIY vs. competent attorney.
Why You Need One
Allows YOU to pick an executor to direct the distribution of YOUR probate property as YOU see fit.
If your child(ren) are under 18, you can name a guardian for the child and/or their property.
You can disinherit your children, if you want, but not your spouse. Right of election.
What Happens if You Don’t Have One?
Default plan. Die intestate. The NY intestacy statute, not you, determines who and how your estate will be distributed.
Increased likelihood of disorder, conflicts, bitterness, and after-death-disputes between your children and family members.
Story Examples
Prince had $200 million in assets. To date, $46 million has gone to lawyers, accountants, and consultants. $31 million was paid in taxes. MJ had an Estate Plan with a Will and Trust.
Nipsey Hustle, rapper, was shot dead. No Will. Guardianship of his daughter at issue.
John Singleton, filmmaker, had a Will but it was outdated. He was 26 when it was drafted and it only included his eldest daughter. He died with 7 children.
Probate vs. Non-Probate
Drawback for a Will = Public + cost/length to probate the Will (6–18 months, exacerbated post-COVID-19).
Small Estates (Voluntary Administration): If a decedent’s estate is $50,000 or less, a short-form Small Estate application can be filed.
Alternative
Probate avoidance tools like joint property, pay-on-death accounts, insurance policies, pension/retirement plans with designated beneficiaries, and trusts (Revocable or Irrevocable).
II. Trust
Simple Summary
A trust is a written legal agreement between three parties to provide for the management and disposition of assets:
Trustmaker a/k/a Grantor/Settlor/Trustor
Trustee - the person/entity managing the property
Beneficiary(ies) - Person/entity who receives the benefits of the property titled in the trust
How it Works
The trustmaker funds the trust by transferring ownership of specific assets to the trust.
The trustee manages them for the beneficiaries.
A Living Trust goes into effect during the trustmaker’s lifetime (Intervivos Trust).
Testamentary trusts come into effect after death and are usually created by a Will.
Why You Need One
Two Common Forms:
Revocable Living Trust
The trustmaker, trustee, and beneficiary are often the same person.
Common purposes? To plan for mental disability and avoid probate.
Irrevocable Living Trust
The trustmaker often can’t serve as trustee. Assets typically transfer to the next generation, reducing estate value for tax purposes. Once transferred, property usually cannot be taken back.
The trustmaker can dissolve or alter a Revocable Trust but not an Irrevocable Trust, which is more permanent.
What Happens if You Don’t Have One?
Revocable Living Trusts offer only limited protection and no savings on estate taxes unless properly set up.
Irrevocable Living Trusts are ideal when minimizing estate taxes or protecting assets from creditors is essential.
Story Example
Oseola McCarty, a washerwoman with a 6th-grade education, formed an Irrevocable Trust, leaving 60% of her estate to help students in need, among other provisions.
III. Durable Power of Attorney
Simple Summary
A durable power of attorney appoints another person to make financial and legal decisions for you if you become incapacitated.
How it Works
The person receiving power (agent) acts on behalf of the grantor (principal).
Actions may include signing documents, handling finances, and selling assets.
Why You Need One
A durable power of attorney avoids costly and time-consuming guardianship or conservatorship processes.
What Happens if You Don’t Have One?
Without this document, your family may face legal obstacles before they can act on your behalf.
IV. Health Care Proxy
Simple Summary
A healthcare proxy lets you appoint someone you trust to make medical decisions when you cannot.
How it Works
Appointed proxy acts according to your express wishes concerning resuscitation, nutrition, hydration, and quality-of-life goals.
Why You Need One
It ensures someone acts as your advocate when you cannot, reflecting your medical wishes, not theirs.
What Happens if You Don’t Have One?
Lack of detailed guidance could lead to confusion among your caregivers or family.
V. Living Will
Simple Summary
A living will outlines what medical treatments you want or refuse in terminal conditions or situations where recovery isn’t expected.
How it Works
Specifies preferences for treatments like resuscitation, mechanical ventilation, and artificial nutrition.
Why You Need One
Avoids interventions against your wishes and clarifies your desires for end-of-life care.
What Happens if You Don’t Have One?
Healthcare practitioners may be forced to make decisions without guidance, potentially leading to undesired outcomes.
VI. Disposition of Remains
Simple Summary
A formal procedure allowing you to designate an agent to carry out your burial or cremation wishes.
How it Works
Includes the option to use New York’s Appointment of Agent to Control Disposition of Remains form.
Why You Need One
Ensures that your burial or cremation decisions are honored.
What Happens if You Don’t Have One?
State hierarchy laws determine the decision-maker, which may not align with your preferences.
Conclusion
Have vision. Plan for your family, community, and future. People Don’t Plan to Fail, They Fail to Plan!
Are your affairs in order?
Contact an Estate Planning Attorney Today
Kyle S. Edmonds, Attorney and Counselor-At-Law
📞 917-676-1176 | 📧 Kyle.Edmonds89@gmail.com
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