According to the United States Census Bureau, just over 10% of the population in the Rochester area is 65 years of age or older. Clearly, estate planning is very important for people in this group. Actually, it should be viewed as a basic responsibility for adults of all ages, especially if you have children. This being stated, it is an absolute must for people that have attained senior citizen status.

There are some things to think about that may fly under the radar when it comes to estate planning, and families are sometimes negatively impacted when loved ones do not address them. In this post, we will provide a handful of tips that can help you steer clear of common miscues.

Review Your Estate Plan

Most people procrastinate before they put an estate plan in place. When they finally take action, they put the documents away for safe keeping, and they forget about the matter. This is a mistake, because estate planning should be viewed as an ongoing process.

The initial estate plan that you put in place at any given point in time will be based on a snapshot of your life at that moment. Over the years, there may be additions or subtractions to your family, and your financial situation can improve considerably.

Of course, major events like a change in marital status would necessitate estate plan updates, but this is something that is rather obvious. The point is, many people do not even remember all the details of estate plans that were created decades ago. If you are one of them, you should certainly come into the office for an estate plan review.

Stay Abreast of Estate Tax Parameters

The estate tax exclusion is the amount that can be transferred before the tax would be applied. In 2018, the federal estate tax exclusion was nearly doubled when it was raised to $11.18 million. During the current calendar year, it is $11.4 million, because an inflation adjustment was applied.

When you see these figures, you may think that you are in the clear, but that may not be the case. Here in New York, we have a state-level estate tax, and the exclusion is much lower than the federal exclusion. In 2019, it is $5.74 million, so you can be exposed on the state level even if you are exempt from the federal estate tax.

It is also important to understand the New York estate tax “cliff.” With the federal estate tax, even if you have $50 billion, you are entitled to use all of the exclusion. The first $11.4 million would pass to your heirs tax-free.

Things are entirely different with the tax that is specific to the Empire State. If the value of your estate is more than 5% over the amount of the exclusion, you cannot use any of it. The entirety of your estate would be subject to the tax, which has a graduated rate that maxes out at 16%.

You should certainly inventory your resources and determine whether or not you are exposed to estate taxes on the state level, the federal level, or both. Remember, your home and any other real property that you own is part of your estate. Assets in a revocable trust would also be counted.

Consider Incapacity Planning

There is more to estate planning than the financial part of the equation. It is definitely not a very pleasant thing to think about, but a significant percentage of people become unable to make sound decisions during the latter stages of their lives. If you do nothing to prepare for this eventuality in advance, a guardian could be appointed by the state to make decisions on your behalf.

You can take the matter into your own hands and prevent a guardianship if you execute the right incapacity planning documents. With a durable financial power of attorney, you can name someone to handle your financial decision-making. Because powers of attorney often are not honored by financial institutions, a better planning tool is a lifetime trust. A health care proxy could be added to empower individuals of your choosing to make medical decisions for you.

Another incapacity planning document that is recommended is a living will. With this type of will, you state your wishes with regard to the utilization of life-sustaining measures like feeding tubes, total parenteral nutrition, cardiopulmonary resuscitation, dialysis, and mechanical ventilation.

Attend a Free Workshop!

If you would like to obtain more detailed information about estate planning, join us for one of our free workshops. There are a number of dates coming up in the near future, and you can click this link to get all the details.