Pets And Estate Planning
Pets have become an important part of our families today, many owners putting their love and care a top priority. Whether someone is single or has a family that includes children, pets contribute to our quality of life by providing companionship and unconditional love. They may go along on the family vacation, accompany us on a morning run, or just tuck in on the sofa while watching a favorite movie or television show. Many animal lovers who are passionate about their furry family members are curious about pets and estate planning. Is there such a thing, and what should you know? Those with questions may want to consider reaching out to the experienced estate planning attorneys at Jennifer V. Abelaj Law Firm at 212-328-9568 to learn about all of their legal options.
Pet Ownership in the United States
According to the Insurance Information Institute, Inc. (III) approximately 70% of households in the United States include pets. A survey conducted by the American Pet Products Association found that more than 90 million families owned pets during 2021. This increase is partially due to the COVID-19 pandemic when more people brought pets into their homes for companionship and comfort. Of pet owners, 69% of households had a dog, while 45% had a cat. Many pet owners assume that if something were to happen to them, a family member would take over the care of a pet. Unfortunately, many end up in shelters where they may or may not be adopted.
Why Include a Pet in Your Estate Plan?
Just as people create a Last Will and Testament or estate plan to plan for the future of their loved ones upon their passing, many want to make provisions for their dog, cat, or other pet in the event of their death. It is possible to designate who will be responsible for providing shelter, care, nourishment, and for the other needs of a pet. However, it is important to consider who would be trustworthy and responsible in carrying out your wishes. Surveys conducted in recent years indicate that millennials are significantly more interested than baby boomers in having provisions for pets in their estate plans. Ultimately, when there are no provisions outlined in a will concerning the future care of a pet, it may be considered property. This means the future of a pet may depend on a state’s intestacy laws. The simplest thing to do is designate who you want to care for a pet in a will, however there are other options such as pet trusts.
Pets and Estate Planning Options
There are a few options when it comes to providing for a pet’s future or seeking medical care for a pet in some circumstances. Some of the options include:
- Informal agreements
- Letters of instruction
- Pet trusts
- Durable power of attorney for pet care
Those with questions regarding the various estate planning options for pets may want to consider visiting with Jennifer V. Abelaj Law Firm to learn more.
Informal Agreements
Informal agreements are common and often involve a close friend or family member who is reliable and trustworthy. A person can request that if they become ill or pass, this person will care for the pet. Informal agreements are fine for their purpose, however it is important to consider that whoever is chosen to provide care can do whatever they please. For instance, someone who moves into a retirement home and places the care of their pet to a son or daughter will have no control in what happens once the pet is in their possession. Therefore, it is critical to choose someone who is highly trusted when using an informal agreement.
Letters of Instruction
A letter of instruction is not submitted to a probate court and is designed to work in unison with a will, trust, or other estate planning device. Letters of instruction are often left behind for family members, and are information, instructions, or express wishes concerning what you do and do not want. Letters of instruction are not legally enforceable and have little impact on assets or property. Many pet owners use letters of instruction to outline their wishes regarding their pets, how the pet should be cared for, who should take care of it, and more. Letters of instruction can be modified or updated at any time, which makes this option easy for many pet owners.
Pet Trusts
A pet trust makes it possible for a pet owner to name a caretaker that will provide for a pet in the event the owner becomes incapacitated or passes. The designated caretaker is under a fiduciary obligation to care for the pet as outlined in the trust. Pet trusts typically provide funds that will be used to take care of the pet which are disbursed to the appointed caretaker by the trustee. These funds are used for food, veterinary care, and other costs.
Pet trusts also make it possible to designate successive caretakers should the primary caretaker have a change in life circumstances or another event that makes it impossible for them to continue caring for the pet. A pet trust ensures that a pet does not become the legal property of someone who is not trustworthy or responsible, or someone of your choosing. With a pet trust it is possible to maintain control over caregivers. This gives the most peace of mind to many pet owners who want to ensure their pets are in good hands.
Durable Power of Attorney for Pet Care
Some pet owners want someone who can act on their behalf when their pet needs medical care and they are on vacation or away on business. A durable power of attorney for pet care authorizes another person to seek medical care for a pet and specifies the extent to which the agent may act on the pet owner’s behalf.
Consider Visiting with an Experienced Estate Planning Attorney Today
Pets and estate planning are more common than ever before today. Each year more than 500,000 pets are euthanized because their owners could no longer care for them according to the American Bar Association. While humans have many others they can rely on for their needs, pets have only their owners. They rely on their “humans” for food, shelter, love, and care. Those with dogs, cats, or other pets who are considering planning for their pets’ futures may want to consider visiting with Jennifer V. Abelaj Law Firm today at 212-328-9568.
Jennifer V. Abelaj, Guest on the Inside BS Show Podcast, hosted by Dave Lorenzo: The Right Way to Plan Your Estate and Gifts to Charitable Institutions (Show 97, originally aired 06-29-2022)
I enjoyed my recent discussion with Dave Lorenzo, who is the host of The Inside BS Show podcast about The Right Way to Plan Your Estate and Gifts to Charitable Institutions.
Dave’s daily podcast includes informative discussions with professionals in the spaces of marketing, sales, business strategy and all the big secrets THEY don’t want you to know. The show will entertain you with great interviews, help you make more money, and give you the inside scoop on all the best secrets most people never share.
I’m so pleased to be a guest on this show and provide information about estate and philanthropic planning. I had a great time chatting with Dave, who is an excellent podcast host and an expert in sales techniques.
Below is a bio for the show, as well as a link to the audio and YouTube. Hopefully you get to learn more about Wills, Trusts and my passion for philanthropic planning. Let me know what you think!
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The Right Way to Plan Your Estate and Gifts to Charitable Institutions
This show is important for anyone who cares about his/her family. Today Dave Lorenzo has a conversation with Jennifer Abelaj, a New York Estate Planning Attorney.
Join us!
Valuation Of Hard To Value Assets
It is difficult to determine the value of hard to value assets, hence their name. Hard to value assets, also referred to as HTVAs, can make appraisals in estate planning and business valuation more complicated and time-consuming. There are different methods for valuing hard to value assets, but the appropriate methodology depends on the type of asset and the circumstances surrounding the valuation. A consultation with a knowledgeable estate planning attorney may be beneficial for a proper and accurate valuation of hard to value assets. At the Jennifer V. Abelaj Law Firm, we assist clients in New York with a wide range of estate planning needs. You can request more information by calling 212-328-9568 and scheduling a consultation.
Methods for Valuing Hard to Value Assets
The methods for valuing HTVAs differ from one case to another. Choosing the appropriate methodology requires a thorough understanding of appraisal regulations and available valuation approaches. When selecting the method for a valuation of hard to value assets, it is vital to consider the purpose of the valuation, the asset’s competitive properties, and the nature of the local market. When valuing HTVAs, appraisals need to apply a comprehensive framework, follow the accepted guidelines, use professional judgment, and consider all factors to ensure an accurate valuation.
A Guide to Valuation of Hard to Value Assets
As mentioned, the appropriate method for valuing hard to value assets depends on the type of asset and reason for the valuation. For example, is the valuation necessary as part of a sale, gift or death. What follows are general guidelines for valuing these HTVAs:
- Real estate and automobiles
- Stocks
- Bonds
- Life insurance
- Annuities
- Business
- Personal property
- Debts
Real Estate and Automobiles
Often, people seek the help of an experienced real estate agent to estimate the value of their real property. An agent who knows the local market will be able to provide a rough estimate. However, this approach may not work with hard to value real estate. Similarly, certain automobiles, such a collectibles or rare versions, may have a value which depends on whether it is part of a collection. If the asset requires a more thorough analysis, the owner of the property will most likely have to hire an appraiser and collect all available information about real estate and any automobiles in order to obtain an accurate valuation.
Stocks
Valuing closely-held stocks often involves computing the company’s price-to-earnings ratio. However, an amateur may not be able to determine the value of stocks accurately. If the owner of stocks dies, the personal representative of the decedent’s estate may choose to get in touch with the company that managed the decedent’s stocks or consult with a financial expert well-versed in stock valuation. Title 26 of the Code of Federal Regulations (CFR) § 20.2031-2 provides guidelines for the valuation of stocks and bonds based on selling, bid, and asked prices.
Bonds
The approach to valuing bonds is similar to the method for valuing stocks. Determining the value of a bond usually involves calculating the bond’s cash flow and face value. The individual or firm performing a valuation of a bond may also need to add accrued interest that has not been paid after the decedent’s death.
Life Insurance
When determining the value, the appraiser may calculate the policy’s face value and cash value. The policy’s face value is the amount of money beneficiaries of the policy receive upon the owner’s death. The cash value, on the other hand, is the accrued amount that can be accessed outside of the death benefit. For life insurance that is part of a gifting transaction, sometimes the value is based on the interpolated terminate reserve (ITR). The ITR is similar to the cash value, but the calculation is based on various other factors.
Annuities
A valuation of hard to value assets may also include valuing annuities if the decedent owned any. In order to determine the value of annuities, the personal representative of the decedent’s estate may need to contact the company that sold the annuities to valuate them as of the date of the owner’s death.
Business
Often, determining the value of a business is the most challenging part of valuing hard to value assets because businesses may include both tangible and intangible assets and liabilities. A business is also difficult to value if the deceased person was not the only owner of the business. In this case, the personal representative of the estate may need to contact a certified public accountant to estimate the value of the deceased person’s interest. However, business and other valuations may be easier if planned in advance. At the Jennifer V. Abelaj Law Firm, we offer estate planning and business succession planning services tailored to each client’s needs.
Personal Property
Certain types of personal property may be considered hard to value assets. Common examples of HTVAs among personal property include cryptocurrency, digital assets, works of art, jewelry, and antiques. While many people choose to visit eBay and similar platforms for estimating how much personal property is worth, it may be necessary to reach out to an auction house, art museum, gemologist, or other expert who specializes in valuing antiques, artworks, and jewelry.
Debts
According to the Federal Trade Commission, the personal representative of the estate is responsible for settling the deceased person’s debts. Once the valuation of hard to value assets is complete, it is essential to identify all debts that the debtor owes and determine their value. Common types of debt include mortgages, credit cards, loans, and debts associated with the deceased person’s medical treatment prior to the death.
Is an Appraisal Necessary for a Valuation of Hard to Value Assets?
An appraisal may be necessary for some of the hard to value assets mentioned above. Usually, people choose to hire a professional appraiser for an accurate appraisal. It is recommended to request the appraisal as soon as possible after the decedent’s death. A valuation of hard to value assets can become even more difficult if a significant amount of time has passed after the owner’s death. The Date of Death Appraisal is necessary for several purposes, including taxes. The appraisal will be used to establish whether an estate tax should be paid to the Internal Revenue Service (IRS) and to determine the amount of estate tax if any.
Contacting an Estate Planning Attorney
For assistance with the valuation of hard to value assets, consider seeking legal guidance from an estate planning attorney at the Jennifer V. Abelaj Law Firm. We help executors and personal representatives of estates in the efficient settling of the decedent’s affairs, including valuation of the assets. We also assist people with creating a comprehensive estate plan that takes into account the hard to value assets in order to protect them and minimize taxes. To schedule a case review, call 212-328-9568.
Revocable Living Trusts
Revocable living trusts are powerful estate planning documents that can help avoid costly court battles and provide instructions on how certain assets should be managed. Revocable living trusts are created to meet your specific needs, which are discussed during consultation and recommendations by your attorney.
Understanding Common Revocable Living Trust Terms
Revocable living trusts are often complex documents that may contain terms many people do not use in everyday language. Here is a brief list of terms to be aware of when considering forming a revocable living trust:
- Trust—a written document that determines how the grantor’s assets will be handled
- Trustee—the person who manages the trust, which is often the grantor
- Successor trustee—a trustee who takes over when the first trustee can no longer serve in this capacity
- Grantor—the person who makes the trust and maintains ownership of the property while he or she is alive
- Beneficiary—the person who benefits from the assets in trust
- Trust property—any assets that are transferred to the trust, which might include real property, personal property, vehicles, financial accounts, and more
- Revocable—the grantor can alter or void the trust at any time as desired, but when the grantor of a revocable living trust dies, the trust becomes irrevocable
- Irrevocable—the grantor is not allowed to modify or terminate the trust without the approval of a third party named in the trust or court approval
- Living—“living” means that the trust is created during the grantor’s lifetime and becomes effective upon creation; in contrast to “testamentary,” which a trust that goes into effect upon the grantor’s death
- Fiduciary—a person who owes a duty to another person and must put that duty ahead of their own self-interest
What Is a Revocable Living Trust?
A revocable living trust is created during a grantor’s lifetime. It provides instructions for how the trust property should be managed, which may include separate instructions for the grantor’s lifetime, a time of disability, and the time of their death. These instructions can generally be changed at any time, allowing for great flexibility for the grantor to sell assets, change beneficiaries, and make other adjustments as their life changes.
Assets are transferred from the grantor to the trust. The trustee oversees them. When the grantor dies, the trust becomes irrevocable because the trust-maker has died and is no longer able to make changes. Therefore, the trustee must carefully follow the instructions regarding how the trust property should be transferred to the designated beneficiaries.
How Is a Revocable Living Trust Different Than a Will?
Many people hear the terms “revocable living trust” and “will” used together. While both are important estate-planning tools that transfer a person’s property to his or her beneficiaries, there are some key differences, including the following:
- Wills are only effective at the time of death while trusts can go into effect immediately
- Wills must go through probate and are made public while trusts are privately administered and bypass probate
- Trusts can provide instructions on how property is to be managed during the grantor’s lifetime while wills cannot
- Wills allow the naming of a guardian for minor children while trusts do not
Benefits of Revocable Living Trusts
Some of the most important benefits of revocable living trusts include their:
- Timeliness
- Detailed instructions
- Ability to avoid probate
- Privacy
- Flexibility
Timeliness
Revocable living trusts allow a healthy grantor to create an immediate plan for his or her wealth. The trust can also create a set of instructions in case the grantor becomes disabled. This flexibility allows the grantor to potentially avoid the expense and hassle of having a guardian appointed to manage the grantor’s property. Additionally, the grantor can create a plan for after his or her death.
Revocable living trusts allow a healthy grantor to create an immediate plan for his or her wealth. The trust can also create a set of instructions in case the grantor becomes disabled. This flexibility allows the grantor to potentially avoid the expense and hassle of having a guardian appointed to manage the grantor’s property. Additionally, the grantor can create a plan for after his or her death.
Detailed Instructions
Generally, Wills simply state to whom a person’s assets will go after his or her death. There are usually no conditions for how the property will be used. With a trust, the grantor can leave detailed instructions about how trust property is to be used. For example, the grantor can provide provisions about how money for any minor children will be used. A grantor can also allow beneficiaries to live on a property without ever transferring the deed out of the family.
Ability to Avoid Probate
One of the most important benefits of revocable living trusts is that they avoid probate. Probate is a judicial process that involves completing an inventory of the estate, admitting the will, paying off the debts the deceased has at the time of death, and finally transferring assets to beneficiaries. This process is often slow and expensive. Additionally, it can take years for beneficiaries to receive any property that was left for them. Alternatively, trusts avoid the probate process and judicial oversight, so beneficiaries often receive their property more quickly.
Privacy
Wills are entered into public record, so anyone can read the stipulations included in a Will, including who the beneficiaries are and what each beneficiary stands to inherit. This may not be a pressing concern for most individuals, but if an heir is being disinherited or the estate distribution is very personalized, a revocable trust can provide some privacy. Trusts are administered privately by the Trustee, so they avoid the prying eyes of the public.
Flexibility
The grantor can freely change, modify, or even terminate a revocable living trust as he or she sees fit. This gives greater flexibility in case circumstances change or if the grantor has a change of heart regarding how his or her property will be handled.
Disadvantages of Revocable Living Trusts
Some drawbacks to using revocable living trusts include their:
- Expense
- Lack of tax benefits
- Limited credit protection
Expense
Initially, wills and non-probate transfers may be less expensive than revocable living trusts. However, paying more to set up a trust now may provide greater benefits by allowing the grantor’s estate to avoid probate later.
Lack of Tax Benefit
Because these trusts can be revoked and the grantor maintains ownership interest over the property in trust, there is no tax benefit to using a revocable living trust according to the American Bar Association.
Limited Credit Protection
For the same reasons as the lack of tax benefit, revocable living trusts may not provide much protection from creditors.
How to Create a Revocable Living Trust
The simplest way to create a revocable living trust is to work with a lawyer who is experienced in this area of the law. The Jennifer V. Abelaj Law Firm can help create a customized trust that meets your specific needs.
Consider the following four steps when preparing to create a revocable living trust:
- Create an inventory of assets to include in the trust
- Think about who should inherit the assets
- Consider what should happen if you were to become incapacitated
- Transfer the property to the trust once it has been created
Contact an Estate Planning Lawyer
When you are ready to create your revocable living trust, consider calling 212-328-9568 to schedule a consultation with the Jennifer V. Abelaj Law Firm, which is experienced in helping individuals and families create revocable living trusts that meet their particular needs.
Estate Planning for a Single Person
Many people believe that estate planning for a single person is not a priority, but this approach fails to understand how comprehensive estate planning can actually be for an individual. In fact, if you are a single person, your estate plan may be even more important in terms of guaranteeing that your legacy is dealt with in accordance with your wishes and that your healthcare decisions are honored in the event you are not able to address them yourself. If you are single, your estate plan matters, and the experienced estate planning attorney at the Jennifer V. Abelaj Law Firm (212-328-9568; abelajlaw.com) in New York has the experience and legal insight to help.
Recognizing Decision-Making Authority
If you are single (unmarried and without children), you are unlikely to have anyone whom the State of New York will readily recognize – absent an advance directive – as having the authority to make healthcare decisions on your behalf (in the event you are incapacitated). The same is also true of any financial decisions that need to be made in the course of your incapacitation. While a spouse or child can fill this role for married individuals, you face unique challenges in terms of estate planning for a single person. This makes establishing both a financial power of attorney (as defined by the New York State Bar Association) and a healthcare proxy paramount for those who are single. If you cannot make primary decisions regarding your health and/or finances on your own (due to incapacitation), you want someone whom you trust to do so on your behalf – in accordance with your wishes and with your best interests in mind – and this can be addressed in your estate planning efforts.
Dying Intestate (Without a Will)
If you were to pass away without a will in place, your assets, which amount to your financial legacy, will be distributed by the court in accordance with state law. If you are married with children, this distribution is likely to align with your basic wishes, but if you are single, this is not necessarily the case. New York intestacy laws, which guide how assets are distributed when there is no will or estate planning document, dictate that the assets of single people who have no children are distributed as follows:
- Your assets (in their entirety) will pass to your parents.
- If you do not have a living parent, your assets (in their entirety) will pass to your siblings.
If neither of these applies in your situation, your estate will likely be divided between your mother and father’s relatives, including distant cousins. In other words, estate planning for a single person is exceptionally important, and the practiced estate planning attorney at Jennifer V. Abelaj Law Firm in New York is well positioned to help you address your unique estate planning needs.
Taking Important Steps Forward
It is easier for single people to ignore the matter of estate planning, however taking the time to solidify your wishes now can provide you with considerable peace of mind moving forward. Further, if you are inching toward retirement age, the time for estate planning for a single person is now. In addition to setting up a financial power of attorney (POA) and a healthcare proxy, there are a variety of important steps you should take.
Make Your Will
One of the most important aspects of your estate plan involves making your will, which names your estate’s executor – who will be imbued with the authority to engage in all the following:
- Attending to your affairs (in accordance with your wishes) after your death
- Probating your Will (if the need arises)
- Paying both your income and estate taxes
- Allowing for estate tax planning
In order to streamline the process of passing your assets on, the best course of action is generally making a revocable trust (created during your lifetime) the beneficiary of your will.
Create a Revocable Trust
Over the course of your lifetime, you may have built a financial legacy that continues to grow, and upon your death, you want your assets to flow to your loved ones – and/or to charities that are meaningful to you – in accordance with your wishes. A revocable trust provides you with the tools necessary to do so. For example, if you have a significant other to whom you are not married, including his or her name as a specific beneficiary of your trust will ensure that he or she receives those assets that you want him or her to have. Further, you may want him or her to remain in your home until his or her passing – when the property may move on to a relative (or someone else of your choosing) – as identified in your revocable trust. Setting up a revocable trust is an excellent way to specifically address the unique challenges that are often part of estate planning for a single person.
Fund a Trust Today
The importance of funding a trust throughout your lifetime cannot be overstated. If you are incapacitated at a later date, your trust’s successor trustee can use the funds therein to pay for your healthcare needs (in accordance with your specific wishes). If you have not successfully completed the steps of setting up a trust and funding it, those who are closest to you may be required to have a guardian or conservator appointed on your behalf, which can be a lengthy and complicated process. By funding your trust now, you accomplish both the following:
- You control who will be managing the assets you have included in the trust.
- You ensure that the assets you have included in the trust avoid the probate process.
Estate Tax Planning
For a single person who has assets that have a total value that is greater than the New York State or Federal Estate Tax Exemption, they must take deliberate steps to address minimizing estate taxes. A married person may take advantage of the unlimited marital deduction for assets that pass to a surviving spouse. However, a single person does not have this deduction available. This is most pressing for single persons who have a partner (or children), and who will bear the estate tax burden. Options might include charitable bequests, gifting during life, or creating irrevocable trusts that remove assets from your estate. This can only be done with advanced estate planning.
Reach Out to an Experienced New York Estate Planning Attorney Today
Estate planning for a single person is extremely important. In fact, you could be facing challenges that married individuals with children do not. Whatever your unique estate planning needs are, the experienced New York estate planning attorneys at the Jennifer V. Abelaj Law Firm can help. To learn more, please do not wait to contact or call us at 212-328-9568 today.
Estate Planning And The Holidays: A Checklist For Your Family
While enjoying time with your family this holiday season, you might want to consider broaching the subject of your estate plan. Since this may be one of the few times when you are around a larger group of loved ones and you have a chance to take stock of your current family situation, estate planning and the holidays can go together. You can give your family the most important gift of all this holiday season: the gift of peace of mind. Telling your loved ones about your wishes and the plans you have made can prevent misunderstandings and unburden your loved ones from having to make difficult decisions. Consider the following checklist for your family as you begin to broach the subject of estate planning during the holidays.
Property
A large part of many estate plans is what will happen to a person’s property after they pass away. Many people draft a Last Will and Testament (will) to provide clear instructions regarding the distribution of their property after their death. As the New York State Bar Association explains, the laws of intestacy will apply to how a person’s assets are distributed without a properly executed will. These are the default laws that favor a person’s nearest relatives to inherit their property after their death. In order to avoid having your property distributed to family members against your wishes according to intestate laws, you may want to consider visiting with an estate planning attorney to ensure your property is passed on to the loved ones you choose after your death.
Another option to distribute property following your death is with the creation of a trust. The New York City Bar Association defines a trust as a financial plan that protects and manages a person’s property while they are alive. After a person’s death, a trust can prevent the need for court proceedings (probate). A person can place various types of property in a trust, control the property during their lifetime, and leave clear instructions on how the property should be managed after their passing.
During this holiday time, consider carefully all of your property (real estate, stocks, bonds, cash, cryptocurrency, valuable possessions, collectibles and more) and who you would want to receive this property after your death.
Financial Accounts
Another important consideration for estate planning is what will happen to your financial accounts after you pass away. If another person is named as a joint tenant with rights of survivorship on the account, they will be able to access and control the funds in the account. However, if only one person is on the account, the account owner can often designate a beneficiary who will receive the funds upon their death by completing a beneficiary designation form that outlines this information.
A person can designate various types of accounts and benefits through beneficiary designations, including:
- IRAs
- 401(k)s
- Pensions
- Stocks
- Bonds
- Investment accounts
- Checking accounts
- Savings accounts
- Life insurance policies
Oftentimes, a trust can be named as the beneficiary of such accounts, which can be a useful way of providing for minor beneficiaries.
Power of Attorney – Medical Decisions
A thorough estate plan will not only address what happens after a person’s death but also what happens in case of a medical crisis. Individuals have the right to create a living will that outlines end-of-life treatment they want and do not want. This document states whether life-saving medical measures should be taken to prolong a person’s life. A person can also create a healthcare proxy that names a trusted person to make medical decisions on their behalf if they are unable to make these decisions themselves. Consider who you would want to make these important medical decisions if you suffer an illness or accident that leaves you unable to make these decisions for yourself.
Power of Attorney – Financial Decisions
A person’s estate plan can also create safeguards in the event they become incapacitated and can no longer effectively make decisions regarding their personal and financial affairs. A durable power of attorney can help manage the financial and legal details of a person’s life. Consider who you would want to make these important financial decisions if you suffer an illness or accident that leaves you unable to make these decisions for yourself.
Long-Term Care
Many people will ultimately need to turn to a long-term care facility for care at the end of their life, or if they suffer an illness or injury. As such, they may need to financially prepare for this possibility. An experienced estate planning attorney can discuss Medicaid eligibility, long-term care insurance, and other strategies that can effectively plan for long-term care.
When to Make Changes in Your Estate Plan
While estate planning and the holidays can sometimes go hand in hand, there are other times when an update to an estate plan may be necessary, such as in the case of:
- A new marriage
- Divorce
- Birth or adoption of a child
- Separation from a spouse
- Death of a beneficiary or fiduciary
- Change in relationship to beneficiaries or fiduciaries
- A significant change in the value or character of assets
- Acquisition of real property
- Purchase or sale of a business
- Relocation to another state
- A new need to care for a loved one with special needs
- A change in tax laws that might impact the estate plan
The Jennifer V. Abelaj Law Firm can review your existing estate plan and explain when it might be necessary to update your plan.
Practical Tips for Mixing Estate Planning and the Holidays
If you are planning to bring up your estate plan this holiday season, here are some practical tips for achieving the outcome you want:
Talk About It
The holidays should not be the only time your family hears about your plans and wishes. Make the conversation an ongoing one so that they are never left in the dark. Also, plan ahead of time and let your loved ones know that you want to set aside some time during your family visit for this important conversation. Consider whether or not it would be more appropriate to have the conversation before the festivities or after your holiday events as a family.
Approach the Subject with Sensitivity
It can be difficult for adult children to see their parents age or not be as active as they once were. It can also be difficult for people to confront their mortality and talk about death. Additionally, many people feel uncomfortable talking about money.
For these reasons, it is important to approach the subject with sensitivity and to be prepared for an emotional response. The person should focus on wanting to provide peace of mind and ensure their healthcare values are known.
Ask for Help from a Professional
Having a professional available for the conversation can be a helpful buffer. A professional can discuss the issues matter-of-factly and provide an objective perspective. He or she can also explain the purpose of an estate plan and the benefits of being proactive about creating one at any age. You may have the ability to consult with an estate planning attorney during the holidays by phone or even a video call to ensure that all of your loved ones have an opportunity to understand your wishes and even ask questions.
End on a Positive Note
Talking about your estate plan need not be a morbid or negative experience. Emphasize your desire to have your wishes known and respected so your loved ones have peace of mind.
Contact an Estate Planning Attorney to Learn More
The holidays are a time for families to get together and enjoy each other’s company. However, these types of events also present a perfect opportunity to discuss with family your wishes regarding your estate plan. Consider contacting your family ahead of the holidays and let them know your intentions to have this important conversation. If you need help devising a plan regarding your discussion with your family with respect to estate planning and the holidays, contact the experienced estate planning attorneys at the Jennifer V. Abelaj Law Firm at 212-328-9568 today.
In the News: Jennifer V. Abelaj, Interviewed by US News, published online August 26, 2021
Jennifer was interviewed by US News about the (cumbersome) process and status of remote notarization in New York State.
During the Covid-19 pandemics, many states (including New York and New Jersey) enacted temporary measures allowing remote notarization and signing of estate documents. Unlike other states, New York no longer allows remote notarization or signing of estate documents.
Check out the full article and Jennifer’s comments: What Is a Notarized Document – and Where Can I Get Something Notarized? | Family Finance | US News
When to Review or Revise your Estate Documents
There are certain times when you should consider reviewing your estate documents to determine if they still meet your needs. Sometimes it is based on specific relationship and life events, such as marriage, divorce, birth of a child, or death of a loved one. Other times it is based outside events, such as on the passage of time, growth of your estate value, changes in the law or desire for a different distribution of your estate.
Relationship and Life Events
A life event is generally an obvious time to review your estate plan and consider making changes. Because the life event affects you directly, you are able to know when a change to your documents might be necessary. If you have worked with me in the past, you might recall me saying that your Will is flexible for certain life changes. Even so, it is prudent to review the documents to consider if it would be best to update the estate plan to reflect your current life circumstances.
Marriage or Divorce
A change in your life circumstances may be causing you to reconsider the distribution of your estate, whether by your own choice or by law. In particular, New York State law (EPTL Sec. 5-1.1-A) requires that you provide a portion (approximately 1/3) of your estate to your spouse. In the absence of a pre-nuptial agreement, it may be necessary to revise your documents accordingly. If you become divorced, you may have to revise your estate plan to comply with a Separation Agreement or Judgment of Divorce.
Birth or Death
The birth of a child is always a cause for celebration! You may want to include the child as a beneficiary of your estate or create a trust for the child. You will want to consider who to appoint as guardian of your child if both parents are deceased. This may be a difficult decision to make, but this should not deter you from finalizing your Will because you can always update the appointments later. Without naming a guardian, it will be up to the Court to determine who is the best person to care for the child and it may not be your first choice.
If someone named in your Will dies, consider revising the Will to clear any confusion as to the person’s bequest. You may want to change the distribution of your estate as a result of the person’s death. It is just as important to consider revising your Will or Trust if a named fiduciary dies. You will be able to appoint a successor to ensure there is no gap in administration of your estate or trust.
Outside Circumstances
It is important to be aware of outside circumstances, such as those without a specific identifiable life event, which may affect your estate.
Passage of Time
Clients frequently ask me when they should review their estate documents. If there is no life event, your estate documents may work just as well many years after being finalized. But a good rule of thumb is to review your documents every two or three years. It’s as simple as reading through the documents you have and deciding if you want to make any changes. As you read the documents, consider if you have any questions on the impact of certain provisions or changes in the law.
Growth of Your Estate Value
If you notice that the value or your assets has appreciated since your estate documents were finalized, you should consider reviewing them to determine if tax planning is necessary or beneficial.
The growth of your estate may also provide additional options for distribution of your estate. This includes adding new beneficiaries, creating trusts or providing for charities.
Changes in the Tax Law
For most of us, it is easy to become aware that there has been a change in the tax laws. When such a law is passed, you should review your estate documents to consider if the tax law may impact your current estate plan.
Estate tax planning can only be done while you are alive through your Will, trusts or gifting. If you die intestate or with documents that do not include proper drafting specific to minimize estate taxes, your estate will be subject to estate tax that could have been avoided.
Desire for a Different Distribution of Your Estate
It is common for individuals to revise their documents to modify the distribution of their estates. This may include adding or removing a beneficiary, changing bequests, providing for a disabled beneficiary or modifying a named fiduciary.
Some changes, such as modifying a named fiduciary, may be done easily by use of a Codicil. Substantive changes generally require preparing a new Will or amending and restating an existing revocable Trust.
Be Proactive in Updating Your Estate Plan
Estate planning requires you to makes serious decisions about people and matters that you care about. You may want to “set it and forget it” once your documents are finalized, but don’t let your estate wishes become stale or ineffective because your circumstances changed since finalizing your estate.
If you are considering changing your estate documents, please do not hesitate to contact me. If I previously prepared your estate documents, I will be happy to review the documents and have a brief complimentary discussion on whether changes should be made.
Cryptocurrency, Digital Assets and Estate Planning
Did you hear about the cryptocurrency-exchange founder who was the only person with the password to a digital wallet worth $190m of client funds, and suddenly died without having shared the password with anyone? Well – if you didn’t, here is an article (one of many): Crypto exchange customers can’t access $190 million after CEO dies with sole password – MarketWatch He essentially has locked out all these customers from ever accessing their money – possibly until someone can identify and crack his password with future technology.
Cryptocurrency. Non-fungible tokens (NFTs). Blockchain. Digital Wallet.
Until the recent past, these terms did not exist in mainstream conversations. Although they have been around for quite a long time — and this is old news to many individuals who are trailblazers in the tech sphere or who are early adopters — most individuals did not have to think about digital assets when planning their estates.
Today, you may own digital assets or know someone who does. In fact, if you have a Facebook account, PayPal account or a website, you have a digital account and possibly digital assets.
If you own any of these assets, they are part of your estate and all the same rules of descent and distribution apply to them. This means that you must plan for their collection and distribution accordingly.
Definitions Guided by RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act)
The RUFADAA was enacted to provide a mechanism for fiduciaries to access your digital information, whether the assets are in a Will, a Trust instrument, or pass via intestacy. Prior to its passage, neither common law nor statutory law (in most states) clearly authorized a fiduciary to collect digital assets, close digital accounts or make an inventory of either.
Digital assets include cryptocurrency and non-fungible tokens (NFTs). They may be held in digital accounts, such as a digital wallet, or the password may be held on a digital device, such as a USB drive or a laptop’s hard drive.
It is essential to understand the three distinct categories (i.e, digital asset, digital account, and digital device) in order to properly plan for collection and distribution of your digital assets.
Estate Taxes
Estate and gift taxes are based on the value of the property transferred at the set point in time, whether at death or upon the date of the gift. Digital assets and accounts –- whether cryptocurrency, NFTs or otherwise –- would be valued in the same way to determine whether the estate is subject to State or Federal estate taxes.
Established cryptocurrency or other digital assets that are tied to a price index may be easier to value in real time. However, assets that are not tied to a price index – whether emerging cryptocurrency or NFTs – may be more difficult to accurately value for tax purposes. For such assets, any estate or gift tax valuation may require an appraiser who has expertise in digital assets to provide an accurate valuation.
Planning for Distribution of Digital Assets
You should clearly identify the type of digital assets that you own, how they are accessed and the approximate value. The RUFADAA does not direct distribution of your digital assets, digital accounts or digital devices; it is up to you to decide who receives your digital assets and provide for each as part of your estate planning.
It is important to discuss this information with your attorney to include the proper language in your estate documents, whether your Will or a Trust, to make proper distribution of such assets.