Estate Planning FAQ

What is estate planning?

Estate planning is the process where a person prepares, often with the help of an attorney, for the ultimate distribution of their assets following their death. The purpose is to ensure that a person’s wishes are honored while maximizing the value received by the person’s beneficiaries. This is done by reducing or eliminating estate taxes and other costs to the greatest extent permitted by law.

Estate planning documents vary based on need, but your estate plan may include a Last Will and Testament, Power of Attorney, Trust Agreement, and Living Will.

What exactly is a Will and what purpose does it serve?

A Will, also known as a Last Will and Testament, is a legal document declaring what a person wants done with certain assets owned by a person after that person’s death. The Will does not dispose of all assets that a person owns, only assets that are titled in the person’s sole individual name at the time of death. Other assets, such as property owned jointly with right of survivorship with another person at the time of death, assets with a designated beneficiary (such as life insurance proceeds, retirement plans, pensions, profit sharing plans, 401(k) plans or IRAs) and assets in trusts pass outside of the Will to the person who is the joint owner, designated beneficiary or beneficiary of the trust. A Will also allows a person to name trusted individuals to serve as executor of the estate and guardian over the children.

The law requires certain formalities for a will to be valid. A person who dies leaving a valid will is said to die “testate,” while a person who dies without leaving a valid will is said to die “intestate.”

Do I really need a Will?

For various reasons, almost everyone should have a Last Will and Testament setting forth the person’s current wishes and desires with regard to the disposition of their estate. The Will should also appoint a fiduciary to manage and administer the estate as well as a guardian for any minor children. It should be prepared by and executed under the supervision of an experienced attorney, because failure to follow statutory requirements can invalidate the Will. If you die without a Will, your assets will be distributed under the terms of your state’s “intestate succession” laws. That means that your money and property could end up with family members you haven’t spoken to in years, or may even escheat to the State.

An attorney can assist you with preparing the Will and guiding you in estate planning issues in order to ensure that your assets can be passed on to your loved ones in the most efficient manner and at the lowest cost, including the minimization of estate taxes. An experienced attorney can also assist you with updating your Will as well to reflect major life events, such as marriage, divorce, birth of a child, or if you move to another state.

Having a Will prepared and/or updated by your attorney is not only the prudent and responsible thing to do, regardless of age or circumstance, but one that will leave you with peace of mind.

What is the difference between a Living Will and a Last Will?

A Living Will is a legal document that a person uses to make known his or her wishes regarding life prolonging medical treatments. It can also be referred to as an advance directive, health care directive, or a physician's directive. It consists of a Health Care Proxy and a Do Not Resuscitate Agreement.  A Last Will, on the other hand, is a document which declares a person’s wishes regarding the disposition of their real and personal property after that person’s death.

What is a Power of Attorney?

A Power of Attorney is a legal document that appoints another individual, called your agent, to handle your financial and other matters for you when you become unfit or incapable of handling them yourself. Your agent will have authority to make decisions on your behalf, guided by your best interests.

What is a trust?

A trust is an agreement between you as Settlor and another individual, called the Trustee. The Trustee holds legal title and manages the property and makes distributions for the benefit of the individuals named in the trust, called the Beneficiaries, the beneficial owners. You can be the Trustee or Beneficiary of your own trust or you can name other individuals to be the Trustee(s) and Beneficiary(ies).

What is a Revocable Living Trust and what are its benefits?

A Revocable Living Trust is a trust that you establish during your lifetime. You are generally the Trustee and lifetime Beneficiary of your own Revocable Living Trust. The principal purpose of creating your living trust is to avoid probate, but other benefits include avoiding a guardianship proceeding if you become disabled and the reduction or even elimination of estate taxes. It is not, however, a tool for reducing income taxes. In fact, if you’re the trustee of your living trust, you will file your income tax returns in exactly the same way you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

What is the difference between a Trustee and Executor?  

A Trustee manages or administers a Trust and an Executor manages the Probate of the Estate.  Some Wills incorporate Trusts within a Will (usually for the benefit of minor children), called Testamentary Trusts. Thus, you may need both a Trustee and an Executor named in a Will.  Each party’s job is complete when the property they manage is fully distributed to the proper parties.

What is a Health Care Proxy?

A Health Care Proxy is a legal document that appoints another individual to make health care decisions for you when you are unable to make them yourself. This document may be combined with a Do Not Resuscitate Agreement, which contains your wishes with regard to end of life medical care, to create a Living Will.

Can I prepare my estate planning documents on my own using forms I found on the Internet?

It is possible to create a valid estate plan without an attorney, but it is strongly recommended that you retain counsel for this purpose. The forms that are available on the Internet will need to be modified, sometimes severely, in order for them to carry out your desires in the most efficient and economical manner possible and to ensure that they conform to the requirements of New York State law. Documents prepared by an experienced estate planning attorney will provide you with the greatest chance of ensuring that your wishes will be carried out effectively.