Will my estate have to pay a federal or New York tax after I die?
Estates greater than $3,125,000 must pay an estate tax in New York. This amount will increase to $4,187,500 on April 1, 2016. The federal tax exemption is $5,450,000 ($10,900,000 for a married couple).
What is a living trust?
A living usually refers to a “revokable trust”. The primary purpose of a revokable trust is to avoid probate.
Do I need a Revokable Trust (Living Trust)?
A revokable true is generally for people who have no close family or who own real property outside of New York State.
If I make a living trust, do I still need a will?
Yes. When you create a trust you must then transfer assets to the trustee. You may forget or not get around to transferring all of your assets and if you pass away, a will would be used in probate. The will would stipulate that all assets should pass through the trust (This is called a Pour-Over Will). If you do not have a will, then the laws of New York will dictate who inherits your remaining assets.
What is probate?
Probate is the legal process of proving the validity of an individual’s Last Will & Testament in Surrogates Court. During this process, the Judge appoints the executor. The Executor is then responsible for the following:
- distributing the assets per terms of the Will
- settling any debts of the estate
- filing State and Federal estate tax returns, if necessary
Does all property have to go through probate when a person dies?
No. Property jointly owned with another passes to the survivor automatically upon the death of the first. Also, bank accounts with a named beneficiary or “In Trust for” another do not pass through probate. IRAs and life insurance can also pass to named beneficiaries. Finally, any asset owned by a Trust does not pass through probate.
Who is responsible for handling probate?
The executor is responsible for the probate process. If an individual did not have a Will and did not name an executor, or the named executor pre-deceased the individual, the Court will appoint an Administrator to administer the affairs of the estate.
What happens if I die without a will?
If you don’t make a will or use some other legal method to transfer your property when you die, state law will determine what happens to your property. Generally, it will go to your spouse and children or, if you have neither, to your other closest relatives. If no relatives can be found to inherit your property, it will go to the state.
In addition, in the absence of a will, a court will determine who will care for your young children and their property if the other parent is unavailable or unfit.
If you are part of an unmarried same-sex couple, your surviving partner will not inherit anything unless you live in one of the few states (New York is not one of them) that allows registered domestic partners to inherit like spouses.
What makes a will legal?
In New York, the Will must be witnessed by two disinterested individuals and the Testator (individual signing the Will) must sign and date the Will.
The Will should also include an affidavit of subscribing witness. This helps the court prove the validity of the will when you pass away without the need to locate the witnesses at that time. This document also needs to be notarized.
Do I use a will to name a guardian to care for my young children and manage their property?
Many people first do a will when they have children. In the Will you can appoint a “guardian” to be responsible for your children, baring special circumstances, the courts will almost always honor your wishes. You can also name an individual (can be same or different as guardian) to mange money for the children. This individual is called a Trustee. The Trust can be set up to provide that the Trustee can use the money for health, maintenance, education and support, without the principal of the money going to the children until they reach pre-determined age milestones.
Must I leave something to my spouse and children?
In New York, you cannot completely disinherit your spouse, unless agreed upon in a Pre-nuptial or post Nuptial agreement. Unless agreed upon, your spouse is entitled to 1/3 of your estate. You can, however, disinherit your children. You can either leave their names out of the document or make a statement in the Will that you specifically have made no provisions for that child.
Many people choose to disinherit children who receive benefits due to a disability. This is not always the best planning strategy. If you have a disabled child, you should speak with an attorney about special needs planning.
Can someone challenge my will after I die?
If your Will needs to be admitted to probate upon your passing, any interested party can object. Interested parties include closest family members. If you are married with children, your spouse and children are the interested parties. If you do not have a spouse, children or grandchildren, then your parents, siblings and their issue can become interested in your estate.
What is the cost of long term care?
The cost of care can be extremely expensive. Nursing homes in the Central New York area can cost between $9,000 -$10,000 per month. Home Health Aides can cost $20.00 or more per hour. Assisted living facilities can cost $3,000-$5,000 per month. With proper planning, government benefits can assist with these costs.
Will Medicare pay for long term care?
Medicare pays for a limited amount of the costs when in short term rehab or the cost of a home health aide for a limited period of time. When these benefits expire, you will need to pay privately or seek other alternatives, such as Medicaid.
Will Medicaid pay for my long term care?
Medicaid is a joint federal and state program that pays for a home health aide or nursing home for qualifying individuals. Many believe that they cannot qualify for Medicaid. However, this is a very common misconception.
When applying for Medicaid, the local Department of Social Services considers three factors:
- The need of the applicant to receive the care they are seeking.
- The income of the applicant and their spouse, including Social Security, pension, distributions from retirement accounts, rental and investment income.
- The resources or assets of the applicant and their spouse, including but not limited to the value of their house, investments, savings and cash value of insurance policies.
If I get sick and cannot make informed decisions, how can I be sure that my health care wishes are followed?
You can execute a Health Care Proxy, a document where you appoint another to make decisions for you, as would have made them yourself.
What is a Durable Power of Attorney?
A durable power of attorney is a legal document wherein you appoint a trusted family member or friend to act on your behalf if you are unable to act for yourself. The document should allow this individual the authority to handle all of your financial matters, including, but not limited to real estate, banking, insurance, litigation, government benefits and the power to gift assets.
What happens if I do not execute a Durable Power of Attorney or Health Care proxy and become incapacitated?
Without executing these important documents, your loved ones may be required to petition Supreme Court to become your guardian in an Article 81 Guardianship Proceeding. This is a difficult and time consuming process that no one wants to endure.
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