5 Reasons Why You Should Make an Estate Plan
About 60% of Americans lack a basic will. That’s no surprise: planning for sickness or death is a challenging subject to discuss, and it’s easy to put off for another time. But because you can’t see the future, you rarely know in advance when these documents will be needed. Visiting an attorney to make an estate plan means you’ll be prepared for far more than you might think.
- It lets you plan for disability
Most people think of estate planning as getting their affairs in order for death. But more than one third of seniors ages 65 and over develop a disability. This number is on the rise, as life expectancy has been increasing. Although a will itself does not address disability, a visit to an elder law attorney typically goes further in scope. When most people do estate planning, they execute Powers of Attorney, naming family members or others as agents to act for them in the event of their incapacity. These documents allow the agents to handle banking, taxes, and other financial transactions. Since 2010, New York State has greatly expanded the Power of Attorney to allow for a wide array of enhanced powers related to gifting and transferring assets that can be critical in allowing families to protect assets from long-term care and nursing home costs. If someone lacks a Power of Attorney and loses mental capacity, his or her family has to go through a guardianship proceeding in court, which can be emotionally and financially draining.
A Health Care Proxy is equally important. It is like a Power of Attorney, but for medical and end-of-life decisions. Although hospitals may present you with this document when you check in, it’s best to create it when you visit your attorney to make an estate plan. This document presents weighty choices that should be made well before you arrive at the hospital in need of serious care.
- It can save you money on taxes
If someone has not done estate planning, they have also not done estate tax planning. This is a special concern for New Yorkers, as most other states have abolished their estate taxes altogether. New York still remains one of the most costly places for an affluent individual to die. New Yorkers have gotten some relief in recent years, as the estate tax exemption has soared to more than $5 million, but being over that mark means that a person’s entire estate is subject to tax (instead of merely the overage). Estate planning can ensure that you have the most tax-advantaged structure possible in place.
- You’ll choose your own agents
Without an estate plan, you do not get to choose who’s making decisions in the event of death or disability. In guardianship proceedings, courts can appoint a petitioning family member or an attorney to handle your affairs. At death, the court appoints any member of the next-of-kin or the county Public Administrator to handle your affairs. No one knows your wishes better than you, and with the right documents, you can choose so the courts don’t have to do so.
- Settling your Estate will be easier.
Estates go to the county Surrogate’s Court to be settled regardless of whether there is a will in place or not. The proceedings that take place in each instance may seem similar, but when there is no will in place, the laws of New York State—not your personal wishes—govern the distribution of your assets. This can come with several problems. In some families, the estate’s administrator may struggle to determine who the next-of-kin is and where they are located. Often, the administrator must post a bond in order to act. Making a will alleviates many of these issues, and doing a trust-based estate plan lets your loved ones avoid a court proceeding altogether.
- You’ll decide how to distribute your wealth
Not everyone wants to simply distribute their assets evenly among their next-of-kin as New York State would do in the absence of a will. Some people may have paid for college or a down payment on a house for one of their children, with the intent of equalizing the gift at death. Others may have beneficiaries who are minors, like grandchildren, and may not want them to receive a big inheritance at age 18. With a will or other estate plan, you can structure or stagger the ages at which young people receive an inheritance to make it practical for your family. You can also create Supplemental Needs Trusts for any beneficiary who may be suffering from a disability and receiving government benefits.
Consulting an attorney about elder law and estate planning is the first step to putting a plan in place that can save time, money, and stress for your family. Planning for death and disability does not have to mean that the end of the road has arrived. Instead, it can bring about a positive, life-affirming peace of mind.
Michael Wagner is an associate practicing elder law and estate planning. He can be reached by phone at 866-303-9595 toll free or 845-764-9656 and by email.