Estate planning is meant to provide peace of mind to you and your loved ones in the event of your passing. There are some easily avoidable mistakes which can cause unnecessary time and cost. This article will try to list just a few in an attempt to help people avoid them. All specific matters should be discussed with a competent Brooklyn estate planning attorney.
One mistake we sometimes see is a parent transferring appreciated assets like stocks or real estate to their children directly. This causes the children to lose an important tax benefit called the step up in basis, costing the children unnecessary taxes in the future. We have an in-depth article about this topic linked here. In addition, the parent loses certain tax benefits such as the primary residence capital gains tax exclusion, and STAR benefits. Instead, the parent should consider placing the property or assets into a living trust to avoid probate while keeping the step up in basis and other tax benefits.
Another lost opportunity is failing to list beneficiaries on accounts or failing to properly fund a trust. Probate can be avoided entirely simply by listing beneficiaries on bank accounts, investment accounts on life insurance policies. Forgetting to list your beneficiaries on even one account will cause an estate to have to be opened after you pass away for that account. Similarly, we have seen clients set up living trusts to avoid probate but then forget to properly fund the trust, thereby avoiding much of the benefit of a trust.
When planning an estate, it is important to have advance directives set up as well. These documents, which include a health care proxy, power of attorney are important tools to be used when someone can’t make their own medical or financial decisions. We often see clients who need help transferring their home or assets in order to qualify for Medicaid, but are unable to do so themselves because of a lack of mental capacity. For these clients, a power of attorney makes it possible to have their agent(s) make decisions for them, but the key is that the power of attorney and health care proxy has to be set up while you are of sound mind. Missing the opportunity to do it early on may mean the difference between getting the help you need quickly and going through a long and expensive Article 81 Guardianship proceeding.
Contributed by Roman Aminov, an award winning attorney in Brooklyn, NY located at 600 Avenue M, Brooklyn, NY 11230. Schedule A Consultation today by calling (347) 766-2682 or visiting https://www.aminovlaw.com/.
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