Law Offices of

Irina Yadgarova PLLC

347-699-5529

Estate Planning Basics

As estate planning attorneys, we are often asked: "what is estate planning?" Estate planning is a process that allows you to control the disposition of your property after your death and helps to eliminate uncertainty and chaos that invariably happen upon death or incapacity. Proper estate planning will help preserve the assets that you have worked hard to accumulate during your lifetime. It may also minimize or eliminate taxes on your assets (which your heirs or family may have to pay) after your passing. To understand estate planning, you need to have knowledge of the following basics explored in this article: Intestacy, Wills, Probate, & Trusts.

Intestacy

If a person dies without a valid Will, he or she is said to have died "intestate." In that event, New York laws (not you) dictates how your assets should be divided among your distributees. Often, these laws divide the decedent's assets very differently from the way the decedent would have wanted his assets to be divided. For example, if you leave behind a spouse and two small children, but no valid Will, New York law says that $50,000 and one-half of your assets pass to your spouse, and the rest to your children in equal shares. If your children are young, neither they nor your spouse will be able to freely use the children's share of the inheritance until the children turn 21. If you wanted to avoid this situation, or to provide for a grandchild, a sibling, or a friend, your wishes would be disregarded-unless you had a valid Will.

Wills

Executing a valid Will is an important step in taking control over what happens to your property after your death. A Will allows you to direct who gets your assets, to provide for the payment of debts and funeral expenses, and even to set up trusts for your family members (discussed below). Many people think that writing down their wishes on a piece of paper and having the paper notarized constitutes a valid Will. In New York State, that is not so. A valid Will must be drafted correctly and executed in compliance with a number of strict rules. A notarized paper that is not prepared by a qualified attorney will most likely not be recognized by New York courts as a valid Will. Some of your assets, however, such as life insurance, pension plans, or joint accounts, are not distributed through a Will. If you want to ensure that your assets get to the correct beneficiaries upon your demise, you may want to consult an estate planning attorney.

A final word about Wills: even when properly drafted and executed, they must be reviewed periodically! Our lives are full of significant events and changes, and instructions in a Will written 3 years ago may no longer apply to our new situations. For example, a divorce, a marriage, the birth of a child, the acquisition of property, or a death in the family may necessitate an update to your Will.

Probate

Probate is a necessary court process that establishes the validity of a Will once the person who made the will has passed away. This process typically lasts about 1 year, during which time the assets of the estate may not be distributed to the beneficiaries. The cost of probate is, on average, 6%-10% of the value of the estate. When a person passes away without a valid Will, the process of distributing his assets to family is called "administration." It is also a court process, but it typically costs more and lasts longer than probate. Sometimes, there is even a way to avoid probate. Avoidance of probate is just one of the several advantages to forming a trust.

Trusts

A trust is a legal entity, created by you through a trust agreement, that holds whatever assets to put into it for the benefit of a named beneficiary and at some specified time transfers those assets to that beneficiary. A trust is like a treasure chest where you place an asset and give the key to a trusted person (called a "trustee") to hold for some period of time. Although there are many different kinds of trusts, they will all fall into one of 2 categories: 1) revocable and 2) irrevocable. A revocable trust can be easily changed during your lifetime, whereas an irrevocable trust - with some exceptions - cannot be changed. This is because with the revocable trust you hold on to the key of your treasure chest, and with the irrevocable trust, you give the key to someone else to hold. Keep in mind, the revocable trust becomes irrevocable upon your death.

Each of these types of trusts can serve a unique purpose. For example, probate may be avoided with either type of trust, but for other purposes - such as protection from creditors, minimization or avoidance of estate taxes, or qualification for Medicaid, only irrevocable trusts may be used. If you have significant life insurance, a special type of an irrevocable trust will help your family avoid estate taxes on the proceeds of that life insurance policy. If you want to ensure that you qualify for Medicaid or that potential creditors do not take your assets, an irrevocable trust is in order. If you only want to make sure that your family gets to use the assets right away if something happens to you, then a revocable trust is what you might need. Each trust agreement is a complex legal document that should be drafted by a qualified attorney who focuses on estate planning to avoid any unintended results or unfavorable consequences.

We wish you the best of luck in forming your unique estate plan!

Knowing you have put an enforceable, long-range plan in place can offer you and your family reassurance that assets will be protected and processes will be clear when the time comes to carry out that plan. We work diligently and effectively to achieve the right results. Discuss probate, estate planning and related elder care matters with a knowledgeable New York lawyer in Queens, also serving Long Island and the entire New York City metro area. Contact us by email or at 347-699-5LAW (5529).
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