Is Your Estate Plan Effective?
Unfortunately, many Americans spend more time choosing a car or even deciding where to eat than they devote to estate planning. Admittedly, it is not nearly as fun to plan what will happen after you die as it is to choose a shiny new car, yet when you have no estate plan in place, you have no control over who gets everything you have worked your entire life for. A common misconception is that estate planning is only for the super-rich. This is simply not true. Estate planning is crucial if you want to choose who will inherit your possessions. Estate planning can be complex and overwhelming, requiring Long Island estate planning attorneys from Davidov Law Group.
If you want to name a guardian for your children in the event of your premature death, you must have an estate plan to do so. Estate planning reduces taxes and minimizes the chances of family members arguing about what you leave behind, causing rifts that can take decades to heal. By having an estate plan, you are telling your family members just how much you care about them. Further, if you are the family breadwinner, you need to ensure your loved one will be financially taken care of following your death or incapacitation.
The Risks of Lack of Estate Planning
Many people rely on joint ownership to avoid probate, operating under the assumption that when they die, their share will transfer to the other owner without probate. If both owners die at the same time, or if the surviving owner does not add a new joint owner, then the property must be probated. In many cases, joint ownership does nothing more than postpone probate. There are a number of adverse effects caused by depending only on joint ownership as a means of estate planning, including:
- Your assets could be exposed to your co-owners’ debts.
- You could accidentally disinherit your loved ones.
- If a minor is added as a joint owner, the only way to sell or refinance later is through court guardianship. This remains in effect until the child becomes an adult.
- While it is easy enough to add a co-owner, it can be difficult to remove a name from a title. If the person does not agree, you could find yourself in court.
- Should your co-owner become incapacitated, you could find yourself with the court as your new co-owner. If a signature is required to sell or refinance, you will have to ask the court to appoint someone to act for your co-owner.
So, you can see why relying only on joint ownership as your estate plan is a serious mistake. If you have no estate plan in place,
- Your assets could go to those you would not have chosen
- The NY probate court will distribute your property according to intestate succession rules
- The heirs chosen by the probate court will receive their inheritance all at once—a problem if an heir is a minor
- The court will appoint a personal representative for your estate—most likely a close relative, but this is not always the case.
- A guardian will be appointed to care for your minor children—perhaps a guardian you would not have chosen and do not want to raise your children.
- A guardian will be appointed to make your financial and medical decisions should you become incapacitated.
All of these consequences of failing to have an estate plan will take time and cost money, likely resulting in family arguments. Having an estate plan in place ensures none of these things will occur.
What Do Estate Planning Attorneys Do?
Long Island estate planning attorneys at Davidov Law Group will make sure your legacy is properly secured. While there are many things an estate planning attorney can do for you, below are just a few of those.
- Your estate planning attorney can customize your will or trust. Yes, you can find a DIY will or trust online and fill in the blanks. Be aware that this is extremely risky. One tiny mistake can void the entire thing, making it even more complicated than if you had no estate plan at all. Your life—like the lives of most people—does not fit into a neat, generic template. It is much better to have an experienced, professional estate planning attorney from Davidov Law Group.
- An estate planning attorney can help you avoid probate and estate taxes, through the use of gifts, joint property ownership, the use of trusts, and many other strategies as well.
- Your estate planning attorney will know what legal instruments best suit your unique situation. Perhaps your estate is simple enough that a will might suffice. Or, perhaps your estate could benefit from several different trusts, a will, a health care proxy, and a power of attorney. No matter what level you are at, the Davidov Law Group knows how to fit an estate plan to you and your circumstances.
- An estate planning attorney understands that an estate plan should never be a “one-and-done” affair. We will let you know when it’s time to update your estate plan. Changes such as a divorce, a marriage, a death, a birth, a move, or a new job could all require changes to your estate plan.
- Your estate planning attorney keeps up with the latest New York and federal estate laws. These laws change regularly and only your estate planning lawyer will know about these changes.
What are the Parts of an Effective Estate Plan?
- Will—A will, known as a Last Will and Testament, is the most basic component of an effective estate plan. Even though a will must go through the probate process, it still has a very solid place in any estate plan. Particularly when you have minor children, a will is crucial as it allows you to name a guardian for your children or even a caretaker for your pets after you are gone. This is not something you can do with a trust. Many people will have both a will and a trust to fully cover every aspect of their estate plan.
- Living Will—A living will is very different from a Last Will and Testament. A living will is used to state your wishes for end-of-life care while outlining medical decisions you would want made on your behalf in the event of incapacitation. A trust can also do these things, by naming a Trustee who will act on your behalf in the event of incapacitation.
- Power of Attorney—A power of attorney grants legal authority to a designated person (the agent) to act on your behalf. You may give the agent broad or limited authority to make decisions regarding your property, finances, investments, or medical care.
- Health Care Proxy—A health care proxy is much like a power of attorney but is used only to allow another person to make healthcare decisions on your behalf. When a health care proxy is used in conjunction with a living will, it is known as an advanced directive.
What is Included in a Comprehensive Estate Plan?
- Trust(s)—There are many different types of trusts that can be included in your comprehensive estate plan. You may have a revocable living trust, which is the most common type of trust. A revocable trust can be changed or revoked at any time. You may name yourself as trustee of the revocable trust, ensuring you still have control over all the assets placed in the trust. You will also name a successor trustee who will take over in the event of your incapacitation or death. Irrevocable living trusts cannot be altered or revoked, but do offer more protection against creditor claims, and more tax benefits.
- Family LLPs—A family limited partnership or limited liability partnership is a holding company owned by two or more family members. This type of partnership is specifically created to achieve creditor protection, reduce gift and estate taxes, and maintain control over the management and distribution of the partnership’s assets.
- Charitable Planning—Charitable planning allows you to meet your charitable giving goals while ensuring the most tax-friendly outcomes for you and your beneficiaries.
- Insurance Planning—Life insurance is an important component of estate planning since life insurance is all about protection. Life insurance can ensure your loved ones have the resources necessary after you pass but can also help in the management and distribution of your assets. Life insurance can help with final expenses, estate taxes, estate equalization, business ownership, special purposes, and probate.
- LTC Planning—Long-term care planning is necessary since as many as two out of every three Americans will need some level of assistance with the tasks of daily living, whether due to illness or disability. Long-term care encompasses a variety of services and support to meet your health or personal care needs over an extended period of time. While we often think of nursing homes when we think of long-term care (and this is an important topic), much long-term care is provided in-home. Many of the programs and services that help the elderly remain in their homes are provided through the Older Americans Act, while nursing home care depends largely on Medicaid and Medicaid planning.
- Final Expenses—In the state of New York, the “average” cost of a funeral with services and burial is about $7,849, which is above the national average. Would your loved ones be able to pay your final expenses? Estate planning ensures this is one thing they will not have to worry about.
- Retirement Account Planning—Most working Americans will be required to supplement their Social Security pension with personal savings to live above the poverty level. Unfortunately, far too many have allowed themselves to rely on SS as their only retirement. About half of all working Americans participated in a workplace retirement plan as of 2020, and even that, coupled with Social Security may not be sufficient to retire. The SECURE (Setting Every Community Up for Retirement Enhancement) Act was passed in 2019. This bill makes it easier for small business owners to set up safe harbor retirement plans that are less expensive and easier to administer. The Act gives many part-time workers eligibility to participate in their employer’s retirement plan and pushes back the age at which retirement plan participants need to take required minimum distributions from 70.5 to 72. The SECURE Act also allows 401(k) plans to offer annuities and mandates that non-spouses inheriting IRAs take distributions to empty the account within 10 years.
- Buy-Sell—Succession Planning for Businesses—Succession planning for businesses involves creating a plan for someone to own or run your business following your retirement, death, or becoming disabled. In its simplest terms, succession planning is the process of passing control of your business to others. As a part of succession planning, a buy-sell agreement may be implemented. A buy-sell agreement is a document that re-allocates partial ownership of a business or the entirety of the business in the event certain things develop in the future.
How to Select the Best Estate Planning Attorneys for Your Unique Goals
When you choose the Long Island estate planning attorneys at Davidov Law Group, you are choosing a quality firm that has unparalleled experience in legal and financial matters. We have an in-house Certified Financial Planner, and we employ a holistic view of planning to ensure its effectiveness. At Davidov Law Group, we build strong client relationships, ensuring we fully understand your goals before we make recommendations. We invite you to take a look at our book, “Keeping it in Your Family—Protecting Your Family and Leaving a Lasting Legacy.”
How Davidov Law Group Will Protect Your Family and Preserve Your Legacy
The Long Island estate planning attorneys at Davidov Law group offer top-tier, personalized service to those in Long Island, Nassau County, NY, and Queens County, NY. Our firm never engages in “one-size-fits-all” estate planning. We understand that every family is unique, with unique goals and concerns. We have assisted and protected more than 2,500 families over the years, and we believe we can do the same for you and your family.
We are a family-owned firm that strives to help other families plan for their own futures. We are immigrants and children of immigrants whose parents sacrificed to provide a better future and the American Dream for us. We have even assisted a number of lottery winners in creating a comprehensive estate plan. One in particular, Aubrey Boyce, was the second-highest lottery winner in the state of New York. Contact Davidov Law Group today for the very best in Long Island estate planning.