New York has strict regulations regarding estate planning. It is highly recommended to have a detailed estate plan to protect your assets. Understanding these regulations will help you better navigate the best course of action to ensure your assets are handled in the manner you wish.
An overview of estate planning in New York
Basic estate plans are highly advisable for everyone. It ensures that your wishes are followed after your death, sparing unnecessary delays and expenses. It also appoints someone to manage your property even after you’re incapacitated.
In New York, the basic estate planning documents that you should have include:
- A will that details your assets, beneficiaries, and your executor’s name
- A power of attorney
- A health proxy
- A trust
What is a trust under New York property laws?
Under the 2013 New York Consolidated Laws, a trust is one of the documents you need in estate planning in New York. It allows an institution or individual to manage your assets upon your demise. Trusts are created the same way as wills, although they can be applied both during your lifetime and after your death.
One of the advantages of having a trust is keeping your assets away from a probate court after your death. It also protects your property from potential creditors and ex-spouses. A trust ensures that your future beneficiaries receive what you wish them to have.
There are five types of trusts in New York:
- Irrevocable trusts: This is a trust that protects spending assets with Medicaid benefits, home care, and other medical applications.
- Special needs trust: This is a trust that provides continuing care to a child with special needs without requiring government-entitled benefits.
- Irrevocable life insurance trust: This type of trust owns the settlor’s life insurance policy. You can control the trust by creating instructions that the trustee should follow. The settlor can create these instructions in a way that they avoid taxes on your estate and save a significant percentage of your insurance.
- Revocable trust: This type of trust allows the executor to transfer their assets and retain complete control over them. Settlors can modify, amend or revoke the trust during their lifetime. Upon death, the assets are transferred to the beneficiaries indicated in the trust.
- Charitable trust: This is a trust that transfers your assets to a charity after your death. You can either set the trust for a specific period and have the remaining asset passed to the beneficiaries or guarantee the beneficiaries during your lifetime and pass the assets to a charity upon your death.
New York power of attorney
New York Power of attorney is a document that gives certain power to a specific person, referred to as an “agent,” to handle matters related to your estate. A power of attorney can allow another person to manage your business, financial matters and work as a health proxy after your death.
To create a financial power of attorney, you must meet the following criteria:
- Have the mental capacity to create a document
- Use the correct statutory language
- Have a witness and a notary of the document