LAST WILL AND TESTAMENT
Any individual 18 years of age or older who is of sound mind may make a Will. Your Last Will and Testament (Will) is a legal document that directs how you wish to dispose of your property, real [ie: condo, house, land] and personal [ie: your personal effects, clothing, jewelry, furniture, furnishings, household goods, automobiles, etc.] property, and digital, after your death. The primary reason for making a Will is to leave your property to those you care about, and in the proportions you choose. If you do not have a Will, those assets which would otherwise pass under your Will instead will be distributed according to New York State’s Laws of Intestacy.
If you die without a Will, the property in your name without a beneficiary or other designation in most instances will be distributed among your family members, and often not in the way you would prefer if given the choice. If you are survived by a spouse and descendants, your spouse would take the first $50,000 plus one-half of the balance of the property, and your descendants would share the rest. If you are survived by a spouse but no descendants, your spouse would take all. If you are survived by descendants but no spouse, your descendants would take all. There are specific laws which dictate how property passes when a person dies without a Will. A Will is essential if you want to leave assets in any manner not consistent with the laws of intestacy. If you have a partner you’re not married to, he/she may get nothing without a properly drafted Will, and may be forced from your shared home if not properly protected by a carefully drawn Will or by testamentary substitutes as discussed above.
A Will is tailored to your own particular needs and plan. You name as executor(s) the person(s) you want to direct and close out your affairs after your death. An executor can be a relative, a friend, your lawyer, a bank or a trust company that specializes in the handling of estates. If the property management includes a trust, a trustee(s) will also be designated in the Will. As the person directing the creation of the Will, the choice of executor and testamentary trustee is yours to make, and not left to the courts or others to decide. Successive executors and trustees can be named as well.
If you die without a Will and leave minor children, a court-appointed guardian may be appointed to manage any property your child inherits from you. The court often appoints the spouse as property guardian if the spouse is the child's parent. Depending on the amount of the child's inheritance, a bond may have to be posted, and if your spouse has credit issues, he/she may not be appointed. If any money would best be used to pay for your child’s education, clothing or living costs, prior approval of the court may be required. The court requires annual accountings and examinations of income and expenses. Investments of the guardianship funds may be limited or directed by the court. These problems and limitations can be avoided by executing a properly drafted Will. If you and your spouse die at or about the same time it is important that you make provision not only for a guardian of the property of any child under age 18 but also for your child’s personal needs. The person(s) designated in your will as guardian(s) for your children does not automatically have legal authority to act as guardian upon your death; they will have to go to court for approval. While a Will is not enough to put in place your future plans for your children, it is strong evidence of your wishes regarding this important decision and is generally given great weight by the courts.
You should have a clear picture of the assets you own, how they are titled and if there are beneficiaries designated when reviewing or considering making a Will.
Property held jointly (with right of survivorship) with another, held in trust for another, for the benefit of another, or payable on death to another will not be distributed by Will but according to the designation on the account or joint ownership. Life insurance will be distributed to the policy holder’s beneficiary(s) which may or may not be the estate. If the beneficiary is the policy holder’s estate, the policy will be distributed through the Will. The same can be said of individual retirement accounts, pension plans, and other assets. It is important to remember that the Will is only part of the total plan for the distribution of your property.
When you make a Will, you should also consider how estate taxes will affect you. The Federal estate tax exemption for persons dying in 2016 is $5,450,000. For a married couple, when one spouse dies during this time period,this exemption is portable, which means that the surviving spouse inherits this exemption, and a married couple therefore can qualify for up to $10,900,000 in 2016 in federal estate tax exemptions. The federal estate tax is "unified" with the federal gift taxes so that the lifetime gift tax exemption and the tax rate for taxes on estates and gifts above this amount is 40%. This figure assumes U.S. citizenship and does not account for previous taxable gifts.
The New York State estate tax exemption is, by contrast, $4,187,500 from 4/1/2016 through 3/31/2017, with an increase to $5,250,000 on April 1, 2017 and increasing thereafter until it is unified with the Federal level in 2019, and is not portable. New York State's estate tax rate will decrease to 11.5% on April 1, 2016, and will thereafter decrease to 10% on April 1, 2017, with estates potentially being taxed on the entire amount of the estate, depending on the date of death value and non-exempt gifts made in the three prior years. Whereas once the ability to make unlimited gifts in New York prior to death might have saved significant New York State estate taxes, the recent changes to the New York State estate taxes have changed this drastically. The interplay between estate taxes and capital gains taxes must also be evaluated.
Making the right plan for your estate takes knowledge and expert advice. To have the best plan for yourself and for your beneficiaries, discuss your particular needs and planning objectives with an elder law attorney so that the proper documents for your living and after death planning can be in place. You should always feel free to discuss the attorney's fees in advance of your meeting.
If you have questions or wish to prepare or change your Last Will and Testament contact Fern J. Finkel or Julie Stoil Fernandez at Finkel & Fernandez, LLP
16 Court Street, Suite 1007, Brooklyn, New York 11241, 347-296-8200 (telephone), 718-965-3185 (fax), ffinkel@ffelderlaw.com, jstoilfernandez@ffelderlaw.com.
