Domestic Trust & Estate
Basic New York Estate Planning Documents
Currently, the federal estate tax exemption amount is $11.7 million (2021) and for New York residents, the exemption amount is currently $5.93 million (2020).
Even if an individual's estate is well below the exemption amount (therefore, no estate tax is due), the basic 4 documents listed below are vital - both during one's lifetime and at death.
1. Last Will and Testament - A person's will is the official document to instruct the Surrogate Court how you wish to dispose of your assets that are subject to probate (the process by which the government oversees the disposition of your assets unless the assets are not subject to probate). Without a will, a decedent's assets are disposed of according to the state law. Having a will allows an individual to have control over one's assets and allows one's wishes to be respected (special rules apply, however, to a spouse's rights). One's will becomes a public document when it is filed with the court as part of the probate.
2. Revocable Trust Agreement - Because even a simple probate is both a time consuming and a costly process, part of the estate planning is to minimize the assets that need to be probated. Assets previously transferred to a revocable trust are not subject to probate - instead, the disposition of the trust assets are determined pursuant to the terms of the trust agreement. You will both be the settlor (the person creating and funding the revocable trust) and the initial trustee of the trust. Because the trust is fully revocable, you may change the terms of the trust at any time prior to your death. Unlike a will submitted to probate, because a trust document is not filed with any governmental entity, it has the benefit of providing privacy for the settlor and the beneficiaries. A revocable trust does not save any estate tax - it is designed to eliminate the probate process and to preserve privacy for the parties involved.
3. Healthcare Proxy & Living Will - This allows you to designate one or more agents to make medical decisions for you when you are either temporarily or permanently unable to make them for yourself.
4. Financial Power of Attorney - This allows you to designate one or more agents to make your financial decisions for you when you are either temporarily or permanent unable to make them for yourself.
We can help you prepare the above documents to ensure that your wishes for the disposition of your assets are respected. This is especially important upon a change of marital status or the addition of children.
Trust Planning and Implementation
For individuals with an estate greater than the federal and state exemption amounts, creating irrevocable trusts during one's life and making lifetime gifts to the irrevocable trust allows the trust's assets to avoid the estate tax (in addition to avoiding the probate process) at one's death.
There are generally no restrictions on what the irrevocable trust may own, though the following are commonly used:
- Irrevocable Life Insurance Trust (ILIT)
- Qualified Personal Residence Trust (QPRT)
- Grantor Retained Annuity Trust (GRAT)
- Grantor Retained Unitrust (GRUT)
We can help you select the appropriate trust planning options to facilitate the transfer of wealth to the next generation. We work closely with trust companies and attorneys from different states to allow our clients the flexibility in their choice of the desired jurisdiction for the trust. Family harmony is often times a side benefit of good succession planning!