You might not realize how important having a will, powers of attorney, named guardians for your children or trusts are. You may have a lot of misconceptions about how things will play out when you die, or become incapacitated. You might think that just writing something down on paper is adequate, or that simply naming beneficiaries on your life insurance policy covers all the bases. Or, you may have created a will online so you aren't worried. Unfortunately, when it comes to actually being legal, none of these scenarios will hold up in court. Your family will end up with a big mess on their hands that could have been easily avoided.
If you can relate to anything in this list, you need to get in touch with an estate attorney, such as Cara Law, who will make sure everything is accounted for and protected, including yourself, your kids and your assets.
1. You do not have a legal up-to-date will or estate plan- Dying without a will or trust in place means you die intestate. Intestate laws in New York and most other states have created a distribution plan that is unlikely to match the plan you would want in place. Intestate means that the decedent has died without a will. Intestate laws are the rules that the court has to follow when distributing your assets and making decisions about your estate.
2. Your Children are under 18 - Children 18 and younger cannot inherit any of your money unless the court appoints someone to make financial decisions for them. When the court has to appoint that person, it can be quite costly and sometimes consume a large percentage of money meant for your children.
Your estate will end up in probate, which may take weeks or months before it is finalized, meaning that your children will not have access to any funds or property to cover their expenses, and even then, there will need to be a court appointed conservator until they turn 18.
Most importantly, by not planning you are putting the future of your children and your assets into the hands of the court and you can’t be sure of the outcome.
3. You have a large sum of money- While federal estate tax exclusions remain high, that could change in the next few years. In New York, there is also a State estate exclusion that is much lower than the federal exclusion. Planning for estate taxes can be a huge savings for your family.
4. You want to decide what happens to you. In the event that your health takes a turn for the worse, or you have an accident that leaves you incapacitated, the court or state legislature may decide who makes your medical and financial decisions if you have not appointed someone in advance. The person the court appoints may not be the person you would choose. By planning ahead, you can have peace of mind knowing that if something unexpected happens, you have appointed someone you trust to make decisions for you.
5. You have a blended family Establishing legal guardians for your children from a past marriage or relationship will ensure that your kids will be cared for by someone you decide, and not whom the court appoints.
6. You are self-employed or own rental property- If you have not appointed someone to take over your company or manage rental properties, there could be an extended period of time before the court appoints someone or orders the assets to be sold to cover any outstanding debt, including the mortgage on the rental properties , should it go into default. By taking action, you can make it significantly easier for your family and loves ones to take care of your business affairs.
7. Your adult child and/or their spouse are irresponsible- By planning ahead with an estate attorney, you can structure a trust in a specific way to space out the distribution of funds at specific milestones, so that your entire estate is not disbursed in one large amount. You can even dictate that properties cannot be sold without meeting very specific criteria, for example. An estate lawyer, such as Cara Law, will make sure that all the documents with your directions are legal and without loopholes.
8. You have an IRA or a 401(k) account. The majority of people don’t realize that retirement plans, such as IRA’s and 401k’s, are not included in basic estate planning, as they require that a beneficiary is named at the time of setup. This could actually result in tax issues, especially if it is a sizable amount. However, an estate attorney will assist you in making sure that they can continue to earn interest without tax penalties.
9. You own property with a domestic partner- It is a common misconception that jointly owned property, such a home purchased together with your domestic partner, would automatically pass to your partner in the event of your death. This is not necessarily the case, unless it is specifically documented.. The court may give your half of the property to your family, requiring your partner to purchase your half of the property from them in order to gain full ownership.
10. You have dependents who have a disability. If you have a child, or you are responsible for an adult with a disability, it is necessary to make sure that they don't lose any public assistance or benefits that they currently receive with special planning.
11. You have only a simple will in place now. Simple wills, such as will created online, rarely account for unique circumstances. Wills created online often lead to major problems for your beneficiaries, that they have to sort out with the court. Estate matters are best resolved with the assistance of a qualified attorney. Issues like children, children with special needs, property ownership, real estate and more require more than the click of a few buttons to handle in the way you want them handled.
12. Your estate plan is outdated- Your estate plan should be reviewed every 3-5 years. Reaching new milestones such as buying/selling real estate, having children, having grandchildren, moving to a new state, retiring, and acquiring additional assets, are all examples of times that require your estate plan be reviewed and adjusted. If it has been awhile since you reviewed your plan, now is a great time to do so with a trusted attorney, such as Cara Law.