Death is an unfortunate part of life, and the last thing you want is to leave your estate in a mess. Estate planning is a crucial process that you need to do to set everything up while you’re alive.
Estate attorneys in New York understand the importance of wills and estate planning. It’s best to utilize estate planning lawyers to make the best out of your properties. It can also help protect your family and ensure everything you own comes to those you believe deserve it.
With estate management, you need estate planning tools to help you plan out your estate. These key tools, together with your legal representative, should make everything simpler and more organized.
What is a Will?
The first and foremost tool that you need to utilize is your will. An updated will is very important due to the ever-changing nature of your financial viability. If you want to make sure that your family inherits your real estate investment without issue, you need to pen your will and keep it updated.
If you don’t have a will yet, you need to start creating one now. A valid will in New York will be in compliance with several requirements under NY EPT § 3-2.1 of the state’s law. Unless you have a variety of assets available to you, your will does not have to be anything complicated.
Among a few crucial details, your will needs to have:
- receiver(s) of your assets, together with additional details for bequests
- a legal guardian for your dependents, especially for your children
- an executor of your will, which can be anyone 18 and above, who will manage and administer your estate
- Specify which assets pass immediately as inheritance and which assets go into trusts for later distribution
- Other beneficiaries like charities and organizations
Your will can distribute any and all assets within your estate to any person, charity, or organization. As we noted, distribution can be either outright or delayed through the use of trusts. Upon your death, the trusts will immediately start operation.
What You Need to Know About Your Will
The setup costs of your will varies depending on several factors, including location and the experience of your estate lawyer. The specific circumstances that you need to address in the will can also change the setup costs, as well as the inclusion of potential testamentary trust provisions.
If you don’t have a complicated will, setup costs should be far less compared to setting up trusts. Probate will be required, as well as associated costs with it.
As for changes to estate plans, amendments are possible through the use of a codicil – a supplementary document that explains the amendments. You can also pen a new one and scrap the original. It’s preferred to write a new will over a codicil, as codicils have several complications like having the same witnesses and same formalities.
What Is a Revocable Trust?
Another useful estate planning tool that can be used is the revocable trust, which acts almost the same as a will. Much like a will, a trust allows for legal arrangement of a person’s estate, transferring property to a trustee for administration on behalf of a beneficiary.
The primary difference between a will and a trust is that the latter will have trustees hold onto the assets until conditions set by the grantor are fulfilled by the beneficiary. These can be anything from age to civil status and assets will be held until the fulfillment of such conditions.
A valid revocable trust must comply with several requirements under NY CLS EPTL § 7-1.17. Among these requirements include a written trust acknowledged as a recorded deed witnessed by two people. Distribution only happens according to the terms of the trust – nothing more, nothing less.
What You Need to Know About Revocable Trusts
The cost of revocable living trusts is usually more expensive than a will due to complications and trust administration. It is an advanced estate planning tool that you would want to use only when you need to be sure that your beneficiaries follow your terms.
Legal fees can increase if you allow your estate attorney to handle all funding and documentation, including the preparation of deeds and assignments. While some people might double-take on this price, a fully-funded revocable living trust will be probate-free.
Trusts are, by default, irrevocable in New York, which can be a problem unless it is clearly stated in writing that the trust is revocable. It can be amended in writing and must be executed and acknowledged/witnessed. The trust becomes irrevocable once the grantor dies, which lets the trust come into full effect.
What Is a Co-Ownership Agreement?
The last of the crucial estate planning tools that you can use in New York is the co-ownership agreement. As the name implies, the tool is an arrangement where two or more people share the ownership of an estate. These break down into three types of co-ownerships, the most notable of which is “joint tenancy with rights of survivorship.”
Joint tenancy with rights of survivorship means the assets within the estate are under the name of two or more tenants, usually between spouses. Once one tenant dies, the assets will pass down equally to all joint owners. If it is between spouses, the estate will automatically go to the surviving spouse.
Co-ownership can be for any asset, as long as both tenants have both their names listed as co-owners. On a bank account, co-ownership does not stop one tenant from taking all the contents of the account.
What You Need to Know About A Co-Ownership Agreement
When it comes to a co-ownership agreement, there is no express extra costs that can be incurred apart from the initial setup. These include preparing and recording a deed, which means fees will be as basic as possible. The complication is in the details of the agreement itself.
To be deemed joint tenants with rights to survivorship, the instrument should detail co-owners as joint tenants. The language should also contain the term “with rights of survivorship”. Without the language, the default comes as “tenants in common”, with exception of married couples, which give them the right to become “tenants in entirety.”
If there are rights of survivorship, the estate of the deceased passes automatically to the co-owner even if there is an existing will or trust. If the tenancy is in common, the portion of the estate of the deceased must pass to whoever their will or trust lists as beneficiary.
The Bottom Line
There is more to estate planning than deciding how to divide your property across your beneficiaries. A will, trust, or a co-ownership agreement can help you prepare your estate for the future. These can help make sure that your potential beneficiaries are provided for in case of your death or incapacity.
Talk to your estate management lawyer in New York about these estate planning tools. There are more details about these that give you better control of your estate for the future.