Nearly 55% of American adults die without a will or estate planning documents. This lack of planning can cause years of stress and heartache for your surviving family members and heirs. If you die without an estate plan in place, your family may be subject to:
Art pieces and collectibles can often be difficult to price. After all, the best and easiest way to price an item is to see what other items like it have sold for. But in these cases, art and collections can be one of a kind and have no comparison. When this happens it can be a headache for a person planning their estate to account for the value of aesthetic beauty and rarity of their art. In this uncertainty though, there is room to maneuver to your advantage when it comes to planning out your estate.
Valuing Your Art
In the United States, if you are attempting to transfer a work of art valued over $50,000, the IRS goes through a process by which it independently evaluates the items. It is the IRS Art Advisory Panel who will have the final say when it comes to evaluating the value of your art, but this does not mean that they will not accept outside opinions. Traditionally art is valued by experts who work in the field, often those with very special niches, sometimes even down the individual artist. When an independent expert values your art, you can submit that assessment to the IRS for consideration.
Many people believe that estate planning is primarily a tool to minimize taxes by the state and ensure that your assets are passed on to the people you want them to go to. However, an important part of estate planning is ensuring that when you are incapacitated that your wishes will be respected and that you are taken care of when you cannot adequately express your wishes or provide for yourself. But how exactly is that decision made in New York? Who decides when you are incapacitated and when you will need someone else to make your decisions for you?
Your Living Will or Healthcare Directive Can Dictate The Terms of Your Incapacity
The best option for setting forth standards to decide when you are incapacitated is making sure that you are the one dictating the terms of your own incapacity. This can be accomplished through your living will, also known as a healthcare directive. Your living will traditionally acts to provide those making your healthcare decisions with your wishes as to how you would like to be treated in medical situations where you cannot give consent.
You have finally done it; you took the necessary and important step to sit down and put together an estate plan with a qualified New York estate planning attorney. You have all of the necessary documents you need to move forward confident into the future about how your assets will be managed and distributed. You have gotten over the biggest hurdle that a majority of Americans never address but now you are faced with a trivial but important matter: where do I keep my estate plan?
Location, Location, Location
Where you store your estate plan matters. As we have written about before, failure to locate the documents in your estate plan at the necessary time could end up with them being treated as if they did not exist at all. Having your wishes written down somewhere that no one knows about does no one any good. Estate planning documents like wills serve an important evidentiary purpose for the courts as they are written proof of your final wishes. No court will probate a will that you cannot find and no hospital or financial institution is going to respect a Power of Attorney if they cannot see and examine the documents themselves.
Most people plan their estate believing that everyone they have left money or bequests to will survive them, such as when a parent specifies that money or property will be left to a child. But sometimes unexpected deaths happen and when it does, many people are left wondering what will happen to the property that they specified to go to the predeceased. It is a tricky situation, but thankfully New York law and proper estate planning precautions can address the problem.
New York “Anti-Lapse” Statutes
Common law followed in the past dictated that gifts to someone who was deceased was null and void. This is due to the fact that a dead person cannot own property. Since they cannot have property, they cannot inherit it. When someone left property to a person who had predeceased them, the bequest would be said to have lapsed. This would have unintended consequences, such as cutting out people who would have inherited the property if the bequest had not failed and others receiving more than the testator intended.
It is not a common situation but it does happen. After you pass, your will is entered into probate and your beneficiaries are notified of your bequests but there is a problem: they do not want it. They refuse to take ownership of the property you have left them and in doing so have thrown a wrench in your well laid estate plan.
No Claim to the Bequest
When a beneficiary turns down a bequest this is known legally as a “disclaimer.” There is no requirement under a law that a person who is left assets or property under a will must take it. You cannot force property onto someone else. If a person disclaims a bequest, the person is treated as if they had predeceased the testator and the property will pass onto another beneficiary.
You are always told that you can leave whatever assets you want in your will to whomever you want. After all it is your last will and testament. Your will represents your final wishes and they are to be carried out to the letter. You may be shocked to learn that in some cases under New York law that your will can actually be disregarded almost in its entirety, and that special case comes into play if you do not leave anything to your spouse.
Sacred Institution, Sacred Inheritance Rights
Marriage holds a special place in society and the laws of New York not only reflect that distinctive position but also protects the institution of marriage. Under New York’s Estate Powers and Trusts law section 5-1.1, a surviving spouse has the right to collect assets from a deceased spouse’s estate if the deceased spouse’s will either does not provide for the surviving spouse or does not give enough to the surviving spouse. It does not matter if the will has bequeathed those assets to someone else; the surviving spouse’s rights to the property trumps all others.
There are many ways to pass on your assets without having to go through probate. Any account or policy with a beneficiary designation, payable on death clauses or joint ownership with rights of survivorship will not be considered to be a part of a probate estate. Those assets will pass to the person designated or the other joint owner at the time of your death. Despite being handy estate planning tools that help assure that the assets in question are never out of reach or frozen, many people fail to understand the nuances and rights associated with such designations and it is this failure that can frustrate and cause unintended consequences when dealing with a person’s estate.
Only After You Pass
Many people are familiar with a beneficiary designation on a life insurance policy. After you pass, the insurance company gives the money from the policy directly to your beneficiary avoiding probate. Similar to a beneficiary designation is what is called the payable on death clause (POD). At the time of your death, your designated beneficiary can claim the assets in the account by showing a death certificate, similar to claiming a life insurance policy. The designated beneficiary has no claim to the assets in the account while you are alive and cannot withdraw or otherwise dispose of them.
People are taught to hang onto important documents. Every person is instructed to hold onto deeds, mortgages, bank records and tax returns in a safe place where no one else can access them lest important information fall into the wrong hands. But wills, which might be the most important document a person can have, should not be held onto after a new one has been executed, and while it may be a good idea to keep it in a safe place, hiding it like the other documents may have unintended consequences.
Written Revocation
There are many ways to revoke an old will and it is always a good idea to do so if you have drafted a new one. The easiest and most common way to revoke a will is to draft a new one and have an explicit clause that revokes any previous wills and codicils that you have executed. Because your new will is dated later than the previous wills, the revocation will be effective.
Special needs trusts are helpful estate planning tools that allow family members to leave behind assets to loved ones with special needs without risking the beneficiary’s ability to receive Supplemental Security Income and Medicaid benefits. Without a special needs trust, any extra income that they receive such as an inheritance may inadvertently disqualify them from receiving public benefits or cause the inheritance to be seized to pay for those benefits. With a special needs trust, the beneficiary gets the best of both worlds, with the trust funds being used to pay for a wide range of necessities like clothing, education and medical bills.
However many special needs trusts may inadvertently, either due to poor wording or mismanagement, cause themselves to not be considered by the government to be special needs trusts. When this happens, the intent of the trust is frustrated and the assets of the trust may disqualify the beneficiary from public benefits under the United States government means test.
The primary issue that often arises with a special needs trust is that the trust is not recognized as a special needs trust and is instead labeled as a support trust. A support trust is similar to a special needs trust in that it gives support to the special needs beneficiary. However, when determining eligibility under the means tests, public agencies will consider the assets of a support trust to be attributable to the special needs beneficiary. This means that the support trust may disqualify the beneficiary from qualifying for the benefits they need.
New York Estate Planning & Elder Law Blog