By Nancy J. Brady, RN, Esq., Partner, Brady & Bader LLP
When an individual passes away, the assets left behind can pass along to those left behind in several ways. The area of law that focuses on streamlining this process is known as Estate Planning. Often people consider estate planning to be for the elderly, or those expected to reach the end of their natural life expectancy. Another common misconception is that Estate Planning is for wealthy individuals. Estate planning should be considered for all adults, regardless of age, since untimely death or illness does not discriminate. The primary goals of estate planning are to have assets pass to the individuals intended, with as little delay as possible, and with as little cost as possible- such as legal fees for probate, or estate taxes.
When persons pass away with assets titled in his/her name alone- that is with no joint owner, beneficiary or payable on death designation, it must be decided to whom those assets will be transferred. If there was no Last Will and Testament, or if a Will is successfully challenged and therefore considered invalid, the assets will pass through a process called “administration”. If there is a Will, the Will must be “probated” through the legal process involving the surrogate’s court in the county in which the decedent resided at the time of death and proven to be valid before the assets can be transferred.
The process of administration (if you do no formal estate planning by completing a Last Will and Testament and/or trusts) is governed by the laws of the state of New York (intestacy statute). There is a particular order of persons to inherit delineated in the statute, based on their specific relationship to the decedent. These persons are known as “distributees”. There are many instances however when the intestacy statute’s order of distributees is not the same as what the decedent intended. If an individual wants to change this order of persons, or to decrease the portion of the estate to which distributees would have otherwise been inherited, there are several means by which this can be accomplished- naming beneficiaries when possible, having a Last Will and Testament in place, or creating a Trust.
To avoid court involvement and the delays associated with either process (administration or probate), beneficiary designations particularly on financial assets should be in place and kept current. If beneficiaries cannot be named on any particular asset, for example on a deed to real property or a cooperative stock certificate, estate planning with trusts can be used to minimize the costs and delays by avoiding probate for assets transferred to the title of a trust. Another asset that cannot be accounted for with beneficiary designations during one’s lifetime by naming beneficiaries would be proceeds from a lawsuit, in the event a person dies as the result of an accident, or malpractice. Having a Last Will and Testament in place can provide for a proposed Executor, who can act quickly in bringing any action required, as well as providing the decedent’s wishes as to how the estate should pass including any special provisions for disabled persons or minor children. This is specifically mentioned here, because it illustrates the importance of younger adults having an estate plan in place to provide guidelines to be followed in the event of untimely death. In New York, for example in 2001, when so many young adults perished in the World Trade Center, there were many cases of unintended results and delays in the transfer of assets due to the absence of estate planning.
We can see from these few examples that estate planning has a role for adults at all ages, and especially when important life events occur, such as marriage, births, divorce, or death of a loved one. Estate planning has a role in protecting assets for beneficiaries who may be minor children, disabled, or need special provisions for some other reason. Additionally, if someone is wealthy, Estate Planning can decrease or eliminate estate tax consequences, however even if one’s estate is not large assets should pass to intended beneficiaries without additional costs and delays due to a lack of planning in advance.
This article is for information only, for specific legal advice you should consult with an attorney.
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