Five Estate Planning Documents Every New York Adult Should Consider

Estate planning is sometimes viewed as something to worry about later in life or after accumulating substantial wealth.  In reality, estate planning addresses questions that can affect virtually every adult:  Who can manage my finances if I cannot?  Who can make medical decisions for me?  What happens to my property when I die?  Who will be responsible for carrying out my wishes?

October is National Estate Planning Awareness Month, making it an appropriate time to consider whether you have the basic documents necessary to protect yourself and your family.

There is no single estate plan that is appropriate for everyone.  Your documents should reflect your assets, family circumstances, objectives, and concerns.  However, there are five estate planning documents that every New York adult should at least consider.

1.  Last Will and Testament

A Last Will and Testament directs how property passing through your estate should be distributed after your death.

Your Will can identify beneficiaries, make specific gifts, establish Trusts, nominate an Executor to administer your estate, and nominate guardians for minor children.

Without a valid Will, property passing through your estate is generally distributed according to New York’s intestacy laws.  Those laws determine who receives your property based upon family relationships, without regard to what you might actually have wanted.

A Will, however, does not necessarily control everything you own.  Assets with beneficiary designations, jointly owned property with rights of survivorship, and certain accounts that pass directly to named beneficiaries generally pass outside the Will.

That is why preparing a Will should be part of a coordinated estate plan rather than an isolated exercise.

2.  Revocable Trust

Not everyone needs a Revocable Trust, but it is an important planning tool that many people should consider.

During your lifetime, assets can be transferred into the Trust while you generally retain control over them.  You can ordinarily amend or revoke the Trust, serve as your own Trustee, and use the Trust property for your own benefit.

A properly funded Revocable Trust can provide continuity in the management of assets if you become incapacitated.  After your death, assets held in the Trust can generally be administered and distributed without those assets passing through probate.

Probate avoidance is only one potential advantage.  A Revocable Trust can also provide a framework for managing assets during incapacity, providing continuing Trusts for beneficiaries, and creating a more centralized structure for managing your estate.

A Revocable Trust can be particularly necessary when you own real property in more than one state.   Without appropriate planning, owning real estate outside New York may require a separate probate or ancillary proceeding in the state where that property is located, in addition to the proceeding in New York.   Transferring out-of-state real property to a Revocable Trust may allow that property to be administered through the Trust instead, simplifying administration for your family and potentially avoiding the need for multiple court proceedings.

The important word is funded.  Signing a Trust agreement without properly transferring appropriate assets to the Trust may prevent the plan from accomplishing its intended purpose.

3.  Power of Attorney

A Power of Attorney allows you to appoint someone to handle financial and legal matters on your behalf.

This may be one of the most important documents in an estate plan because it operates during your lifetime.

If you become incapacitated without an adequate Power of Attorney, your family may discover that nobody has legal authority to access accounts, pay bills, manage investments, address real estate, deal with financial institutions, or undertake necessary planning on your behalf.  In some circumstances, a court guardianship proceeding may become necessary.

4.  Health Care Proxy

Financial authority does not include authority to make health care decisions.

A Health Care Proxy allows you to designate someone you trust to make medical decisions for you if you become unable to make those decisions yourself.

Choosing the right person is important.  Your health care agent may someday have to communicate with physicians, evaluate treatment options, advocate for your wishes, and make difficult decisions during an emotionally challenging time.

You should also consider successor agents in case your first choice is unavailable or unable to act.

Just as importantly, speak with the person you appoint.  Your agent should know that he or she has been selected and should understand your wishes concerning medical care.

5.  Living Will

A Living Will expresses your wishes concerning medical treatment if you become unable to communicate those wishes yourself.

While the Health Care Proxy identifies who should make decisions, the Living Will provides guidance concerning what you want.

It may address your wishes regarding life-sustaining treatment and other end-of-life medical decisions.  This guidance can be invaluable to your health care agent and family members if they are ever required to make difficult decisions on your behalf.

A Living Will can also reduce uncertainty and disagreement among family members by providing a clear expression of your intentions.

The Documents Must Work Together

Estate planning is not simply collecting five signed documents and placing them in a folder.

Your Will, Trust, Power of Attorney, Health Care Proxy, Living Will, beneficiary designations, and ownership of your assets should work together as a coordinated plan.

At the Law Offices of Jeffrey A. Asher, PC, we view estate planning as more than deciding who receives property after death.  A properly designed plan should protect you during your lifetime, provide for the management of your affairs if you become incapacitated, and create an orderly plan for your family after your death.

During National Estate Planning Awareness Month, consider a simple question:

If something happened to me tomorrow, do I have the documents in place to protect myself and the people who depend upon me?

If you are uncertain, it may be time to create, complete, or review your estate plan.