Wills, Trusts & Estate

Wills, Trusts & Estate Planning in Westchester County

Without a will, New Yorkers’ assets are distributed upon death according to state law. Intestates is the technical description of dying without a will. Lineage practices orders your asset distribution as follows:

spouse (first $50,000)
beyond $50K, 50% split between spouse and descendants – (children, grandchildren)
parents
siblings
other know relatives
parents’ relatives
escheats to New York State

This appears straightforward, but things get complicated in the case of divorce, remarriage, or adoption.

Prior to death, lack of preparation could result in lost time, more cost and other negative impacts to your family. For example, in the absence of a medical proxy, making healthcare decisions for a stricken patient becomes harder. Long-term, but unmarried partners might have little to no rights without any documentation on a lease, deed or medical proxy.

With some planning, you can:

assure that your affairs are handled according to your wishes
reduce the likelihood that you will create additional burdens for your loved ones

Avoid excess delays, unnecessary costs, familial disputes, or other complications by planning for a sudden health crisis or death. During a stressful period, you want your loved ones concentrating on healing. They should not have to hurdle legal barriers before they can assist you or other family members.

Four trends have contributed to the increasing need for estate planning in the United States:

Families are less likely to be “one type suits all”
Increased familial net worth
Longer life expectancy
Age-related disease such as Alzheimer that can suddenly impair decision making

We will highlight the differences between a will and a trust and the benefit of estate planning.

Families are less likely to be nuclear

Distribution can become confusing when there is divorce, re-marriages, or stepchildren from previous marriages. For example, failing to update your beneficiary on your 401K might result in distribution to your previous spouse – despite divorce.

There have been infamous cases when an elderly individual weds a younger spouse, dies, and the estate goes to the spouse. This could result in the children of the deceased being excluded or sharing estate distribution with stepchildren from the surviving spouse.

Things can become even more convoluted when:

Even when the heirs are apparent, estate transfer could benefit from tax planning or shielding certain assets. While it may be unpleasant to consider, you may want to disinherit an estranged relative. Finally, you may want to stipulate that an inheritance has a specific use, such as college tuition related to an undisciplined heir.

There are (more) assets to bequeath

Increased financial literacy, real estate appreciation and greater stock market participation has spurred increased familial net worth. Over the past several decades, the average net worth of American households has increased over seven folds – from $20,000 to almost $160,000.

While real estate and stock ownership comprise most people's assets, other valuable property might include:

Any encumbered asset would first require the discharge of related debt prior to any transference. For example, a home worth $600,000 with a mortgage of $400,000 would first need the lien paid – resulting in remaining equity of $200,000.

Take inventory of all assets. Account for all debts – including mortgages, credit cards or car notes. List family members or other loved ones who might be your beneficiaries – including organizations, causes or pets.

For instruments such as 401K or insurance plans, the administrator may require that you designate a recipient for that plan. For other assets such as a home, you will need to specifically state your intended recipient(s). You should choose backup beneficiaries for your assets in case your primary heir dies before your estate distribution.

You should also update your beneficiaries every few years or following a life-changing event. For example, if your family changes due to marriage, death, or birth, make sure that you have your preferred recipients prioritized.

The Long-Term Trend of Increased Life Expectancy

From 1900 until 2020, life expectancy climbed from 47 to almost 80 in the United States. Recent declines can be attributed to the drug scourges of opioids and fentanyl, as well as COVID19 – phenomena likely to be minor blips as were the impact of various wars.

Living longer has led to more Americans planning for life after retirement – which includes building assets during work years. Should those assets be exhausted, there is nothing left to distribute. Conversely if those assets accumulate then there would be an estate to distribute. Distribution could become complicated when previous designations are not updated with life events such as divorce, re-marriages, or adoptions.

Sudden Impairment Can Delay Crucial Decisions

What happens if you have a stroke, and your spouse suffers from memory loss? She may not be able to make competent medical decisions on your behalf. Meanwhile, another trusted confidante in the healthcare industry might be better suited to facilitating decision making. Without a medical proxy, such an individual may be prohibited from getting medical information due to the 1996 HIPAA (Health Insurance Portability and Accountability Act) law.

Unmarried couples might face additional hurdles despite a long-term relationship. Prior to updates in marriage laws, this was especially problematic for same-sex couples.

At the worst moment, crucial time may be lost trying to determine even simple things such as:

who is your primary doctor is
what are your standard prescriptions
what does your health coverage include or exclude

Upon death, your estate will go through probate. Without a will, probate court must perform fact-finding procedures related to determining your assets, liabilities, and relatives. The expense related to this effort is deducted from your estate before being distributed to your heirs.

When concluded, probate court might bequeath your estate to distant family members you did not know. Or it might pass to the state, rather than a charitable cause or a non-family, loved one you prefer. Avoid disputes or extended probate.

Two documents provide clarity about your preferences in sickness or death:

A will simplifies probate by stating how you want your assets to be distributed upon death
A health care proxy designates one or more individuals to make decisions on your behalf when you are medically unable to do so.

A will can stipulate directions for your funeral. It can also appoint an executor to follow your instructions related to your assets in a trust.

A trust allows another person (or entity) to hold your property per your instructions on behalf of your heirs. You may have beneficiaries with special needs or limited decision making – whether temporary or permanent. For example, minor children can benefit from this vehicle until they reach an age where they can make more informed or responsible decisions.

An estate plan is the combination of a will (or trust) and healthcare proxy coupled with bestowing power of attorney for your designated beneficiaries. You can grant such authority to different individuals for different tasks. For example, you might grant healthcare directives to your daughter, the doctor, while choosing your son, the CPA, as your financial proxy.

An estate plan might include insurance products or annuities to help reduce taxes, fees or parse out living expenses. There are other distinctions to evaluate such as:

a living trust versus a will
revocable versus irrevocable trust
temporary versus permanent power of attorney
whether your documents are kept private or publicly recorded

This article is not legal advice, and it is not comprehensive. Rather, it is meant to provide background information. By highlighting certain concepts our intention is that you ask better questions related to finding trusted advisors to help you plan your future medical care, dependent care, and asset distribution.

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