Estate Planning and Administration in New York City

Estate planning and administration are two related but distinct processes.

Estate planning involves the steps to protect assets while living and prepare for their transfer upon death. This includes creating legal documents like wills, trusts, powers of attorney, healthcare proxies, and beneficiary designations to distribute the estate.

Estate administration is the process after death to settle the estate based on the plan. It involves identifying assets, paying debts and taxes, and distributing property to beneficiaries according to the documents.

While estate planning protects assets while alive and directs the future transfer to beneficiaries efficiently, estate administration executes the plan after death. With proper planning and administration, you can ensure your assets are protected, your wishes are honored, loved ones receive assets, and costs are minimized.

Estate Planning

Good estate planning thoroughly evaluates your assets and objectives. A good plan accomplishes the following objectives:

• Protects assets if you need long-term care or Medicaid
• Avoids guardianship if you lose capacity
• Quickly and cheaply transfers property after death
• Adapts if situations change (e., breakdown of relationships between spouses or parent and child).

Common estate planning documents are revocable and irrevocable trusts, power of attorney, health care proxy, last will and testament, and beneficiary designations.

Revocable Trusts

Revocable trusts efficiently and flexibly plan estates by:

• Allowing amendments prior to death (e., modify terms, change successor trustees and beneficiaries);
• Preventing guardianship proceedings in case of incapacity;
• Avoiding probate for quick, inexpensive transfers.

Irrevocable Trusts

Irrevocable trusts offer benefits like:

• Asset protection

  Assets transferred to an irrevocable trust are permanently removed from the grantor’s taxable estate, safe from creditors and lawsuits. This can shield wealth meant for heirs. An example is the Medicaid Asset Protection Trust.

• Saving Money on Taxes

  Properly structured irrevocable trusts allow the assets to appreciate outside of the grantor’s estate and avoid estate taxes at death. Gift taxes can also be reduced with certain trusts.

• Avoiding Probate

  Assets owned by an irrevocable trust at death pass directly to beneficiaries per the trust terms, avoiding the delays and costs of probate.

• Providing for Management of Assets

  An irrevocable trust can provide management of assets for minors or beneficiaries with special needs who may not be capable of handling wealth themselves.

While irrevocable trusts offer benefits, they require giving up control over the assets transferred. Proper drafting, such as the use of decanting trusts and naming of trust protectors, allows flexibility for changing circumstances.

Wills

Wills dictate the distribution of probate assets when you die. They name an executor to oversee the probate process and specifies beneficiaries to inherit from your estate. Wills prevent the state from deciding who gets your property if you die intestate.

Pour Over Wills

A pour over will complements a revocable trust. They “pour” the remaining assets into the trust at death. This consolidates estate administration under the trust’s provisions.

You also have a pour-over will prepared that distributes any property not already held in trust to the trust upon death. The pour-over will names the trustee as executor to oversee transferring assets to the trust. After death, assets go directly to the trust beneficiaries as successor trustees execute the trust terms.

Pour-over wills prevent assets unintentionally left out of the trust from having to go through probate. The assets can “pour over” into the existing trust administration framework. This further ensures your estate is managed and distributed according to your trust’s provisions. It provides a backup plan capturing any stray assets to fully honor the intentions outlined in your trust.

Beneficiary Designations

Beneficiary designations are instructions made directly on certain accounts naming who will receive the assets after your death. They allow you to transfer assets like retirement accounts, life insurance policies, POD bank accounts, and stocks/brokerage accounts to designated beneficiaries without having to go through probate. Beneficiary designations override any instructions in your will regarding distributing those accounts. It is important to keep your beneficiaries updated on accounts with designation options to ensure your assets go to the right people.

Beneficiary designations offer a more cost-effective option than trusts for distributing certain types of assets. Here are some reasons why:

• No upfront drafting costs

  Accounts with beneficiary options already have the designation forms built-in at no upfront expense. Trusts require creating customized documents.

• No ongoing administration fees

  Beneficiary designations are straightforward to maintain during life with no ongoing administration costs. Trusts often have annual trustee and administrative fees.

• Saving money on taxes

  Assets like retirement accounts and life insurance can transfer directly to beneficiaries without income tax consequences. Trust assets may trigger ongoing income taxation depending on structure.

• Fewer funding hurdles

  Designation accounts are typically already funded. Funding trusts requires retitling assets, which can be complex for certain holdings like real estate.

For simple transfers, beneficiary designations provide value because it simplifies the process and reduces costs significantly. Still, trusts play an important role for other goals like lifetime management or complex distribution plans with multiple beneficiaries. For example, giving the lifetime income or use of real property to one person, and upon such person’s death, distributing the principal or real property to the successor beneficiaries. But for straightforward transfers, beneficiary designations provide immense value.

Power of Attorney

A power of attorney grants someone power to handle your financial and legal affairs if you become disabled or incompetent during your lifetime. This provides an alternative to a court-ordered guardianship:

• May take effect when the principal is determined to be incapacitated (e.g. springing power of attorney).
• Relies on agent acting ethically on your behalf per instructions.
• Authority of the agent ceases upon principal’s death.

While a power of attorney offers ability to delegate decisions if necessary, a revocable trust provides detailed ongoing management that persists beyond your lifetime. Using both can provide overlapping layers of protection against incapacity leading to court intervention.

Health Care Proxy

Under New York law, a health care proxy allows you to designate an agent to make medical decisions on your behalf if you become incapacitated. This provides an important alternative to a court-appointed guardian dictating your health care.

To create a legally binding health care proxy in New York, you must:

• Name an agent over age 18 who you trust to carry out your wishes
• Sign and date the proxy document in front of two adult witnesses
• Have your signature witnessed and proxy dated by the witnesses

The agent only has the authority to start making decisions after your doctor determines you lack the capacity to do so yourself. The proxy should include instructions about life-sustaining treatment options to guide decision-making.

Absent a health care proxy, medical decisions fall to the closest family members under New York law, who may disagree on the appropriate actions. Appointing an agent through a proxy prevents conflict and provides peace of mind that your wishes will be honored.

With each document serving a distinct purpose, it is important to work with an experienced attorney to employ the right strategies to protect your assets and fulfill your estate planning goals.

Estate Administration

Estate administration is the process that unfolds after someone dies to settle their estate and execute their estate plan. Administration carries out tasks like validating the will, collecting assets, paying debts, filing taxes, and distributing property to beneficiaries according to the deceased’s wishes. While planning looks ahead to strategically prepare for transferring wealth, administration handles wrapping up someone’s affairs and enacting their legacy plan after death.

Key stages typically include:

• Petitioning the court to open probate and validate the will, if there is one
• Identifying and marshaling estate assets
• Liquidating assets if needed to raise funds
• Inventorying and appraising assets and filing date of death values
• Paying valid creditor claims and final bills/expenses
• Filing necessary tax returns (estate, income, gift)
• Calculating distributions to beneficiaries per will or state laws
• Preparing and filing final accountings for beneficiaries’ or court approval
• Distributing remaining assets to heirs
• Closing the estate.

Read more about estate administration.

With estate planning and administration spanning such diverse yet crucial functions, it is essential to work with knowledgeable professionals. Our team has the experience to guide you in planning ahead and managing the settlement of your estate. We are dedicated to easing the burden on your loved ones while accomplishing your wishes.

If you need legal help with estate planning and administration in New York, we at the Law Offices of Albert Goodwin are here for you. We are located in Midtown Manhattan in New York City. You can call us at 212-233-1233 or send us an email at [email protected].