Estate Planning and Administration - Basic Concepts

Questions and Answers - Q&As

• What is a will?
• What is a trust?
• Will your will dispose of all your assets?
• Under NY State law, if I die without a will where do my assets go?
• Why should you have a Will?
• Who should you name as beneficiaries of any life insurance or IRA?
• If a beneficiary may be a minor what should be done?
• What is a revocable trust?
• What are the advantages of a revocable trust?
• What are the tax advantages of a revocable trust?
• What are the creditor protection advantages of a revocable trust?
• What are the disadvantages of a revocable trust?
• What is a Power of Attorney?
• What additional powers can you include in a Power of Attorney?
• What is a Health Care Proxy?
• What additional provisions can you include in a Health Care Proxy?
• What is a living will?
• What is an Organ Donation Card?
• What is an Ethical Will?

A will is a written instrument signed with certain formalities that disposes of your individually owned assets at the time of your death.
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A trust is an agreement under which one person holds the ownership of the property for the benefit of one or more persons in accordance with the terms of the trust. The trustee of the trust has the fiduciary obligation to act in the best interests of the beneficiary or beneficiaries of the trust and in accordance with the provisions of the trust.
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Your will only disposes of assets that you own in your individual name and for which there is no specific beneficiary designation form. Therefore, it is important that the following information and documents be reviewed: (i) joint or common ownership of bank accounts and securities, (ii) joint or common ownership of real estate, (iii) life insurance beneficiary designations, (iv) IRA beneficiary designations and (v) retirement plan beneficiary designations.
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If you are survived by only your spouse, your spouse will receive all of your assets. If you are survived by a spouse and issue, your spouse will be entitled to receive $50,000 and one half of your assets and the balance will pass to your issue.
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A will can provide alternate or additional dispositive provisions and powers than the default provisions provided under state law in the event of intestacy. For example, a will can (i) provide a trust for a minor child and (ii) designate a guardian for any minor children.
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Under normal circumstances, a spouse is named as the first beneficiary and then any children are named as the contingent beneficiaries.
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If a minor becomes entitled to receive the benefit under any insurance policy or retirement account or IRA, the amount will be required to be held in the plan or IRA until the minor becomes of age unless a guardian is appointed for the minor. A guardianship proceeding is expensive and cumbersome and should be avoided. Any benefit for a minor could be given to the trustee of a trust for the benefit of a minor.
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A revocable trust is a trust that can be unilaterally changed and/or terminated by the person creating the trust. This is in contrast to an irrevocable trust under which the person creating the trust has not retained the right to revoke or amend the trust.
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A revocable trust can have the following advantages: (i) providing a more structured approach to managing your assets, (ii) avoiding the future inconvenience and expense of probate and (iii) provide for privacy of the trust provisions.
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There are none. The estate and income tax reduction and deferral planning techniques that can be used with revocable trusts can also be included in a will. A revocable trust is disregarded as an entity for income tax purposes and for estate tax purposes.
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There are none. Since the revocable trust can be revoked at any time by the person creating the trust, the trust is a self-settled trust that can be pierced by creditors.
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The disadvantages of a revocable trust include: (i) personal feeling of adding complications to asset holdings, (ii) expense of preparing the revocable trust during lifetime and (iii) expense and inconvenience of transferring assets to the trust during lifetime.
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A Power of Attorney designates one or more persons as agent to act on your behalf for financial and business matters. You can appoint a spouse or any other person. When signing the Power of Attorney, you can specify that each person may act separately. The Power of Attorney can be revoked or changed at any time you desire.
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A Power of Attorney can contain extended powers which under certain circumstances could be beneficial for tax or asset protection planning. The additional powers which could be included in a Power of Attorney include the following: (i) extended gifting powers beyond the annual exclusion amount, (ii) authority to make disclaimers, (iii) authority to make transfers for Medicaid purposes and (iv) creation of a revocable trust.
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A Health Care Proxy designates one or more person as an agent to make health care decisions if you become incapacitated and are unable to act on your own behalf. The Proxy can appoint a spouse and or any other person as the primary agent. An alternate agent can also be appointed.
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A Health Care Proxy can express specific desires with respect to withholding artificial respiration, nutrition, hydration or cardiopulmonary resuscitation under appropriate circumstances.
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A Living Will specifies your desires as to life sustaining treatment in the event there is no reasonable prospect of recovery.
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An organ donation card is a written directive you can carry which is signed by you. The card provides that you make an anatomical gift, to take effect upon your death, of either any needed organs and tissues or only certain organs and tissues.
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An ethical will is a document containing a statement of your personal values and goals which were important to you during your lifetime and which you would like your family to continue to follow or at least consider.
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