2011-06-10 / Columnists

Spotlight on Elder Law

Estate Planning Should Be Considered ‘Intergenerational’
Commentary By Nancy J. Brady, RN, Esq. And Linda Faith Marshak, Esq.

The law firm of Brady & Marshak, LLP focuses their practice on Estate Planning and Elderlaw. The attorneys consider estate planning to reach across generations, since the relatives of the individual who is completing their estate planning will be affected by the estate plan, or by the lack of an estate plan.

It is not uncommon in our practice for clients to come to us in the “eleventh hour,” when mom, dad, aunt, uncle or wife needs care because they are incapacitated, and no planning or documents have been done in advance. When the incapacitated relative is unable to agree to make transfers or arrangements for eligibility for government programs to finance medical care, assets that could have been protected may have to be spent on legal and court fees for guardianship proceedings, or for medical care.

In many cases, this expenditure of assets could have been avoided altogether, and in all cases would have been much less if some planning had been done in advance.

Some clients come to see us because their relative has died without a Last Will and Testament. In New York State, if a person passes without a Will, (known as intestate) the law provides for the order of priority for persons who stand to inherit assets of the decedent’s that did not have any beneficiary designation.

In some cases, this priority is not particularly what the decedent would have wanted.

For example, in the case of spouses of decedents with minor children, the surviving spouse inherits the first $50,000 and half of the decedent’s estate, the minor children the remainder. We saw this occur frequently after 9/11. Most often spouses tell us during their estate planning consultations that they would like the surviving spouse to inherit the estate.

Another example of an undesired outcome due to lack of planning involves second marriages, when there are children from the prior marriage. Proper planning can ensure that the goals of both spouses are met.

Estate planning can serve to avoid probate. Probate is the court proceeding required when an individual passes away with assets in his/her name alone with no beneficiary designation; probate can occur whether there is a Will or not.

If probate is required, challenges to a Will can result, leading to legal ex-penses, and delays in loved ones receiving their inheritance.

Good estate planning will take the entire family’s circumstances into account. Sometimes clients have children with large estates who should not, for tax purposes, increase the value of their own estates by inheriting from their parents. Sometimes the adult unmarried children of elderly clients need to complete estate planning to avoid the parents inheriting from them if the situation of the child’s untimely demise would result in loss of benefits which are financing the parents’ medical care.

In completing estate planning, during the clients’ meetings with the attorneys, the value of the estate and the type of assets comprising the estate is taken into consideration, particularly for estate tax planning.

For New Yorkers who are single, a taxable estate is an estate in excess of one million dollars. With proper planning, married New Yorkers can leave up to two million dollars tax free.

If the estate is in excess of those amounts, additional planning will be required to minimize taxes for your loved ones.

This type of planning may include the input of an accountant or financial advisor. Without proper tax planning, if an estate is taxable, taxes must be paid within nine months of the date of death. If most of the estate is comprised of real estate, loved ones may be forced to sell real estate to pay the taxes due.

While no one likes to think about the unpleasantries of illness, or mortality, we cannot avoid these things happening.

Thousands and thousands of dollars, and unnecessary added stress in situations already chock full of angst can be avoided by planning ahead.

Without proper planning done ahead of time, we have encountered families that had to pay the nursing home bills out of pocket, and families forced to watch loved ones suffering while guardianship proceedings were dragging along, which could have been avoided with a simple power of attorney or health care proxy form.

Still other families were forced to sell real estate to pay estate taxes because no estate planning had been done. Others, whose deceased relative failed to properly plan, could have avoided probate and were forced to pay legal fees, and to wait months and sometimes years for their inheritance until the probate process was completed. These unfortunate situations are the reasons it is so important to think about executing some basic documents, review your beneficiary designations and titling of your assets, and keep your important documents readily available and organized to avoid your family being in similar circumstances.

See our display ad in this publication.

Please do not hesitate to contact our office for our upcoming seminar schedule.

Ms. Brady or Ms. Marshak can be reached at 718-738-8500 or 718-945- 7777.

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