Articles Posted in Estate Planning

It might be surprisingly to learn that a large number of people have estate plans that are not adequately updated. Fortunately, there is no better time to begin estate planning than the New Year. This article reviews some of the numerous estate planning that you should think twice about incorporating into your plans in the new year.

# 1 – Make Sure to Update Everyone about Estate Plan , Changes

You should make sure to inform anyone who will be affected by any changes to your estate plan. If you do not yet have an estate plan, now is the perfect time to create one and then inform your beneficiaries about the contents of your estate plan.

There are a number of common types of estate planning errors. One of the most widespread errors is the failure to update a person’s estate planning documents. As a result, even if you have written estate planning documents, there are numerous events that can arise that interrupt with your plans and require the revisions of these documents. This article reviews some of the most common signs about which people with estate plans should be aware.

# 1 – Executors Become Inappropriate

Executors refer to the individuals that are tasked with implementing an estate plan. Many people appoint executors without thinking carefully about whether the assigned person is able to perform successfully. Unfortunately, circumstances occur that make it no longer necessary to appoint a person as an executor. In these situations, it is critical to consider the individuals that are appointed in your estate plan and whether they are able to successfully carry your goals.

An estate planning attorney has the potential to help with a number of issues. Making sure to review all applicable issues with your attorney, however, can prove particularly difficult. Some people are not even sure what issues to bring up with their estate planning lawyer can prove particularly difficult. As a result, this article reviews some of the important questions that you should make sure to raise with your attorney.

# 1 – Who Will Receive What after Your Divorce?

If you do not have a will or trust, it is a wise idea to tell your attorney how you would like your benefits distributed to loved ones after your death. The only way to make certain that your assets are based in the way that you desire is to make sure that these wishes are reflected in writing. Even if you already have a will or trust, it is important to review this document and make sure that the people who you want to inherit from your estate are actually named in your estate planning documents. Many people go a number of years without reviewing their legal documents. This means that if you have not reviewed your will for some time, it might name individuals who are no longer alive. In addition to the death of a beneficiary, there are a number of other conditions that can change how a person would like their estate to be distributed. Some other things that can change a person’s condition include financial difficulties, marriage, or the birth of new family members.

A large number of people in New York are curious about 529 college plans as the result of campaigns run by the state. Not only do 529 college plans provide tax advantages, they are also particularly helpful when estate planning is involved. Despite the benefit of 529 college plans, there are still a number of questions that people have about these plans. This article focuses on addressing some of the most commonly raised of these issues.

What Is a 529 Plan?

These accounts are named after Section 529 of the Internal Revenue Code, which allows individuals to reduce their taxable estate while preserving funds for higher education. Funds that are placed in 529 accounts are usually invested in mutual funds and the earnings from these accounts are most often tax-free.

A last will and testament is an important legal document that tells our loved ones and the government how we wish for our estate to be apportioned to heirs and friends upon passing away. Although New York trust and estates law give testators wide latitude to decide what parts of their estates go to whom, there are still certain restrictions on what types of property can be given away if there is a surviving spouse and circumstances in which a testator may be coerced into created an invalid law.

In cases where some portions of the last will and testament are invalide, the surrogate court probating the will must admit the document if the court is satisfied the will is genuine, the testator was of sound mind or not under any undue restraint, and was executed in accordance with statutory requirements. However, the court will have to throw out parts of the will that are otherwise invalid so long as it can separate without defeating the testator’s intent or destroying the overall testamentary scheme.

Courts can also strike portions of a last will and testament they deem to be invalid due to improper execution, such as additions made to the document after a witness affixed his or her mark on the will. This same action may be applied when courts deem that addendums to a will were made when the testator was incapacitated or otherwise coerced into adding a section to the document. Courts are well within their power to isolate these particular sections of the will and preserve the original intentions of the testator that were properly executed.

A New York Surrogate’s Court judge recently handed down a ruling striking down a substantial state Tax Department penalty levied against the surviving spouse who became the beneficiary of a qualified terminable interest property trust (QTIP) established by the deceased husband. The judge’s order could have further reaching implications for other QTIP trusts established under similar circumstances.

The ruling effectively reverses a $462,546 levied by the state Tax Department against because the QTIP trust was established in 2010 during a one-year suspension of the federal estate tax. Under the wording of New York state tax laws, the state could not levy taxes on a trust that the federal government itself could not. The case represents a special set of circumstances that other individuals in similar positions may be able to take advantage of in order to avoid paying costly taxes on their QTIP trust.

Ordinarily, a QTIP trust allows a tax deferral on an trust, not a tax avoidance, by allowing the assets of a deceased spouse to pass on to the surviving spouse without taxation. However, upon the passing of the second spouse, the QTIP assets and the second spouse’s estate are subject to inheritance taxes. In this case, the lawyers for the trust holders were savvy enough to argue that the way New York estate laws were written would allow QTIP trusts established in 2010 to be passed on without any tax.

The Internal Revenue Service (IRS) recently announced the official estate and gift tax limits for 2019 will increase over the previous year from $11.18 million in 2018 to $11.4 million in 2019 which means married couples can now leave up to $22.8 million in assets to heirs without paying taxes. While the estate and gift tax has increased over last year, the annual gift exclusion amount (the amount in gifts that may be given each year without tax) remains at $15,000 for individuals and $30,000 for couples.

Recent tax reform legislation has not only decreased corporate and income taxes but also greatly expanded the estate and gift tax threshold from previously long-standing levels. For many years, the estate and gift tax limits held firm at a base of $5 million per individual with adjustments for inflation but the 2017 tax reforms passed effectively doubled that until 2024 when the provisions expire. As a result, the number of estates subject to such federal taxes has fallen to less than 2,000 in 2018 from almost 5,000 in 2013.

In order for married couples to take advantage of the full $22.8 million in estate and gift tax exemptions, they will need to utilize a concept called portability. Essentially, this allows one spouse to leave his or her unused estate tax exemption to the surviving spouse and to do you must elect it on the estate tax return of the first spouse to die, even when no tax is due. If the portability option is not exercised, the surviving spouse may be left with a hefty federal tax bill.

Every single person, regardless of how large or modest they may feel their assets are, needs to have a well thought out estate plan that covers three very basic planning instruments that will serve your best interests. Those three planning instruments include a durable power of attorney, a health care proxy, and a last will and testament. Each of these will cover an important aspect of our lives and our family’s lives after we pass away and should be taken very seriously, regardless of what you believe your financial or lifestyle limitations may be.

First, your estate plan will need a durable power of attorney allows you to designate another person to manage your property and/or finances during your life in the event your are unable to do so for yourself. This authority should be vested in a trusted individual you can trust and be sure will act solely in your best interest should the time come that you will need to rely on another for some type of guardianship.

Next you will need to create a health care proxy, which is essentially a form of a power of attorney that deals solely with health care decisions. This durable power of attorney allows you to appoint another person to direct your medical care and make important end of life decisions should you be incapacitated. In New York, this health care proxy should will need a medical directive (also known as an advance directive) providing guidance to your health care agent.