New York Estate Planning & Elder Law Blog
For most millennials, the thought of taking responsibility for end-of-life financial planning is a daunting if not unfathomable task. Estate planners acknowledge the hurdle between personal financial planning and estate or trust formation for purpose of end-of-life distribution of assets seems far off for younger clients until they are informed about rules of intestate succession related to default transfer of wealth without their input.
Estate Planning Reduces Risk During Probate
Without a last will or testamentary documents indicating to whom financial and non-financial assets should be distributed after your death, New Y0rk probate rules of intestacy require that a court names an estate executor to administer distribution to beneficiaries. In New York, laws of intestacy dictate when no will is present, the closest living relatives are designated as “distributees” by the court. In most cases, intestate succession gives rights to a spouse and children, followed by the parents of a deceased.
The Consolidated Laws, Estates, Powers, and Trusts Law of New York provides “the spouse inherits the first $50,000 plus half of [and estate’s] balance,” and “the children* inherit [the remainder]” (EPTL § 4-1.1). For many millennials without children, the rule may apply only to living parents if not married. Under New York probate rules of intestate succession, the legal parent-child relationship gives the parents of a deceased person full rights to their estate if the latter was unmarried, with no children of their own at the time of death.
Proper estate planning is the first step to avoiding the lengthy probate due process of court administration. Designating a durable power of attorney naming an executor or personal representative to manage your financial matters on your behalf is the first step to planning an estate. Once an executor is designated, valuation of estate assets and drafting of a will allows for quick distribution to named heirs or beneficiaries.
Tax-exemption benefits of early planning
The estate tax benefits for millennials generally outweigh the income tax disadvantages of early planning. With tax exemption of gift and estate tax upwards to 40%, there is still a margin of benefit in comparison with income tax rates. If an estate’s total value is less or equal to the top-tier of the exemption amount allowed by the federal Internal Revenue Service (“IRS”), there is a benefit to planning early. This is particularly true for wealthy taxpayers since 2017 when the IRS increased tax exemption to $11.8 million in reportable assets, under federal law. Those with employer-sponsored retirement plans will also benefit into the future by designating pension fund assets for estate transfer. While the basis of assets transferred at time of a decedent’s death is equated to the current fair market value, beneficiaries have the option of selling those assets without reporting of capital gains liability to the IRS.
Issues to Consider During the Planning Process
The estate planning process is a comprehensive financial planning, including retirement planning and estate or trust formation process. For some clients, end-of-life planning due to age or the uncertainty of existing health issues is a serious emphasis within their estate planning requirements. Who will oversee the payment of health care or hospice expenses should a client become too physically ill or mentally incapacitated is a consideration that even some millennials are forced to consider in preparation of their estate. An estate can administer a client’s financial needs while still alive, as well as after death. There is no limit to the administration of an estate’s finances within the legal limits of the law.
Contact a licensed New York estate law attorney practice to find out more about estate planning for your future. .
Estate Law Attorney Practice
Ettinger Law Firm is a licensed New York attorney practice specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate planning related matter.
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