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ESTATE PLANNING 101

| Feb 8, 2021 | Firm News |

Planning your estate is part of the process of  financial planning you engage in to build and protect your family’s wealth.

​Dying without a will means that state law will determine how your assets are divided among family members, which is not something you want to happen. Besides imposing time and expense setbacks, and there are more likely to be  disputes among your heirs and even a complete breakdown of order.

A good estate plan starts with your will, which dictates how your assets will be distributed. This requires careful consideration, particularly when there are children and especially children from a prior marriage. Even if you believe that the division of your assets will be relatively straightforward, you must consider factors regarding accounts with designated beneficiaries, such as 401K and insurance policies, which do not pass through the  Court controlled “probate” process, as well as the fair market value of real estate and who you wish to be the executor of your will.

In New York, estates are handled by the Surrogate’s Court of the county in which the deceased person had their primary residence. Someone, usually the executor, must ask the court to approve the will. Interested parties are given proper notice, and if the will is approved, the court will issue “letters testamentary” so that the executor can begin paying the estate’s debts and distributing the assets in accordance with the will. This probate process can be time consuming and expensive and sometimes contentious.

If you have been named the executor of an estate, you should consider consulting with an attorney to learn the details of legal obligation of managing a will and the estate in the interests of the beneficiaries. An executor who fails to properly manage the estate and causes financial harm to beneficiaries can face litigation. Estates involving trusts, significant real estate, or different types of investments can all involve complications,

Because of the probate this, next level estate planning usually involves one or more “trusts”. A simple trust is little more than a 12 page document that springs into life like a company when it is properly drafted, executed and witnessed.

When you create a trust you are both the “grantor” and the “trustee”. Ownership of property you currently possess can be transferred to the trust, but still  completely controlled by you during your life. A trust can also be named as a “pay on death beneficiary” of bank accounts, or the beneficiary of 401k and insurance policies.

During your life time you continue to control your property because you own and control the trust. If provide for your needs. On your death the property in the trust can be distributed in accordance with your wishes by your trustee.

There are a number of advantages to creating a trust. Foremost is your property and possessions, your “estate”, can  bypass most of the time consuming and expensive Court controlled probate process. If you will be leaving behind minor children or a child with special needs, a trust can also provide for their care and maintenance.