As Rochester estate planning lawyers, we speak with a lot of clients that ask us many of the same questions. In this blog post, we will look at a hypothetical question and answer session that we have constructed based on these conversations. When you read the give-and-take, you will come away with some very useful information.

If you would like to experience the real thing, simply send us a message requesting a consultation appointment and we will get back in touch with you promptly.

Doesn’t the state take care of everything if I die without a will?

If you were to pass away without any estate planning documents at all, the Surrogate’s Court would step in to authorize transfers through intestate succession laws. However, the assets may not be transferred in accordance with your wishes.

For example, in New York, if you died intestate with a spouse and descendants, your spouse would not inherit everything. Your surviving spouse would inherit the first $50,000 of your intestate property and half of the balance, and your descendants would inherit the rest.

This is one drawback, and there is another one. The probate process would take many months, and no inheritances would be distributed during this interim.

Is this the only scenario that would require probate?

The answer to this is a resounding no. If you were to use a last will to state your final wishes, it would be admitted to probate, and the court would supervise the administration of the estate. In addition to the time consumption that we have already mentioned, there a couple of additional drawbacks.

One of them is the cost factor. There are a number of different expenses that accumulate during probate, including the executor’s payment, court costs, legal fees, liquidation expenses like commissions, and other incidentals. These debits reduce the amount of the inheritances that will be received by the heirs.

Another pitfall is the loss of privacy. Probate records are available to anyone that has an interest, so people can find out how you decided to distribute your resources. In some cases, this can cause hard feelings among family members and others.

How can you avoid probate?

Some asset transfers that would not be subject to the probate process. Insurance policy proceeds would be transferred outside of probate along with individual retirement accounts that have named beneficiaries. Property held in joint tenancy would not be subject to probate, and payable on death accounts are transferred in a probate-free manner.

You can proactively plan ahead to avoid probate through the creation of a revocable living trust. Assets in the trust would be distributed to the beneficiaries in accordance with your wishes after you are gone, and probate would not be a factor.

Should I be concerned about estate taxes?

Most people are not going to be exposed to the federal estate tax, because there is a credit or exclusion that is relatively high. This is the amount that can be transferred before the estate tax would be applied. At the time of this writing in 2018, this exclusion stands at $11.18 million. It should be noted that the maximum rate of the estate tax is 40 percent.

In the state of New York where we practice law, there is a state level estate tax to contend with as well. At this moment, the amount of the New York state estate tax exclusion is $5.25 million. However, it is scheduled to rise in 2019, and we will pass along the updated figure when it becomes available.

Aside from asset transfers, is there anything else that should be addressed in my estate plan?

A solid estate plan will include an incapacity planning component, because many elders become unable to communicate sound decisions at some point in time. Through the execution of durable powers of attorney, you can name representatives to make health care and financial decisions on your behalf. You can add a living will to state your preferences regarding the use of artificial life-sustaining measures.

Attend a Free Workshop!

We have shared good information in this blog post, and you can learn a lot more if you attend one of our upcoming workshops. There is no admission charge, but we do ask that you register in advance, because space is limited. To see the schedule and obtain registration information, visit our estate planning workshop page.