LEARNING (ALMOST EVERYTHING) ABOUT ESTATE PLANNING€¦ · Non-probate estate Probate estate Most...
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LEARNING (ALMOST EVERYTHING) ABOUT ESTATE PLANNING PROTECTING YOUR SELF AND YOUR WEALTH FPANY’s Public Awareness Committee in Partnership with NYU School of Professional Studies 14 th Annual Financial Fitness Workshop October 1, 2016
Transcript of LEARNING (ALMOST EVERYTHING) ABOUT ESTATE PLANNING€¦ · Non-probate estate Probate estate Most...
LEARNING (ALMOST EVERYTHING) ABOUT
ESTATE PLANNING
PROTECTING YOUR SELF AND YOUR WEALTH
FPANY’s Public Awareness Committee in Partnership with NYU School of Professional Studies
14th Annual Financial Fitness Workshop
October 1, 2016
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All information contained in these pages is for informational purposes only. It
should not be considered legal advise. Please consult an attorney before
taking any steps based on this information.
All information contained in this presentation is for informational purposes.
The presenting attorney does not represent the information contained herein
is accurate or appropriate for your personal situation.
All financial advisors are committed to fiduciary standard. Professionals are
bound to adhere to the Certified Financial Planner Board of Standards and
Ethics and/or the Financial Planning Association Standards depending upon
their designation.
The information contained in this document was provided on a pro bono basis.
No compensation was obtained in exchange for services provided either
directly or via a third party.
Disclaimer
What is an “Estate Plan”? 3
LEGAL DOCUMENTS
“Living Documents”
Wills & Trusts
Deeds to Real Estate
GIFTING DURING LIFE
Giving Outright or in Trust
529 Plans & UTMAs
Health & Education Expenses
ACCOUNTS & BENEFICIARY DESIGNATION FORMS
Joint & Individual Accounts
Life Insurance Policies
Retirement Plans
Why Everyone Needs an Estate Plan
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Avoids Guardianship Proceedings during your life
Allows you to leave money to who you want to receive
it when you die
Can save you certain administration fees
Obviates the need for an attorney to be appointed for
minor beneficiaries
Avoids disabled beneficiaries from losing government
programs
Health Care Proxy
A document regarding health care decisions
• Names an “Agent”
• Authority to make health decisions
• Access to medical records
• Organ Donation desires
• Places limitations on treatment
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Living Will
States your desires when:
1. You are in a terminal condition; or
2. You are permanently unconscious; or
3. You are conscious but have irreversible brain damage and will never regain the ability to make decisions and express your wishes.
These conditions are sometimes referred to as "a vegetative state."
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Power of Attorney
Designate a person(s) to manage your financial
affairs.
States specific areas of your finances you are giving
control over (can be all areas).
Can allow “Gifting” to others
Beware. This is a blank check. The person you designate
could take all your money. They could go to jail for it,
but the money may have disappeared before they are
caught.
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“Gross Estate” 9
EVERYTHING you own
Non-probate estate
Probate estate Most people assume that everything you own passes through
your will upon your death. It does not!
Property passing by your Will (through “Probate”) only
transfers money that “We don’t know where it goes without
the Will.”
Non-Probate Transfers
We know where these assets go at death…so there is
NO Probate over them
Joint Property
Life Insurance
Retirement Plans
Transfer on Death [“TOD”] accounts
Trusts
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Collecting Non-Probate Assets
EASY!!
1. Need a Death Certificate
2. Need to be named as beneficiary on certain
types of accounts
Wills: What does a proper Will accomplish?
States who receives what property and how / when
Names an Executor: to administer Probate Estate
Collects assets
Pays creditors
Can bring lawsuits
Pays beneficiaries
Names a preferred Guardian for Minor Children
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Probate: When there is a valid Will
A PUBLIC process to validate and administer a Will
Executor brings Will to SURROGATE’S COURT
Places relevant parties on legal notice
Court may appoint an attorney to represent minor
children
Court appoints a Guardian
Executor delivers an “Inventory of Assets” with the court
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Intestacy: When there is NO Will
An Administrator is named and MUST deliver estate
property as follows:
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Who Gets What?
1. Spouse only - 100%
2. Spouse & Children - $50,000 to spouse +
50%/50% split between spouse and children
3. Children only - 100% divided equally
4. Parents only - 100% divided equally
5. Siblings only - 100% (Nieces and Nephews)
6. Grandparents only - 100% divided equally
7. Aunts + Uncles only - 100% divided equally
8. Cousins only - 100% divided equally
9. The State of New York
Who Gets Nothing?
1. Life Partners
2. Friends
3. Those relatives not “in line” (see left)
4. Pets
5. Organizations and Institutions
6. Business Partners
7. Specific Gifts to Specific People
8. Charities
The State’s Priority Controls Many
Aspects of Probate & Administration 16
Who gets what money if there is no Will
Who gets put on notice if there is a Will
Who has the best right to serve as Executor /
Administrator
Who can legally contest the Will
Minors: Guardians and Money 17
Legal/Custodial Guardian: A child’s acting parent
Does NOT have to be a biological parent
Makes daily decisions, has custody of child
Financial Guardian: control’s child’s finances
Can be same as custodial
Guardian Ad Litem (GAL): an attorney appointed
by the court to represent minors
Making Your Own Estate Plan 18
Execution of documents is equally as important as the
actual content of documents
Any mistake made has no attorney advocate to
substantiate the original intent (no skilled depositions)
Some mistakes cost 5X as much to fix as doing it right
in the first place…
…and some mistakes can’t be fixed at all
Document content is tricky: You don’t always know what
you don’t know
Trusts: Who is Involved?
Assets owned by Trust pass Outside of Probate
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Creator / Grantor / Settlor
> Creates the Trust
> Determines Terms of the Trust
> Funds the Trust
Beneficiaries
> Entitled to the property under the terms of the Trust
Trustee
> Manages the trust property
> Follows the Terms of the Trust
> Entitled to a Commission
Trusts vs. Wills
Wills Trusts
Positives • Typically cost less to draft
• You should have one anyway
• No Probate costs for assets
transferred by Trust(s)
• Private document
• Fast distribution of funds /
Continuity of control
• May provide tax savings /
government program access
Negatives • Eventual Probate Costs
• All information is public
• Longer time to access and
distribute funds
• You may need a “Testamentary
Trust” anyway
• More legal fees up front
• Time / effort required to
transfer assets into Trust
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Gift & Estate Tax Exclusions 21
Spouses
No taxes on unlimited amount of gifts during and after life
Any US Person’s Healthcare & Education
Payment MUST be made to the institution
Paying student loans are NOT exempt from taxes
“US Person” means a citizen or US tax payer
Annual Exclusion
$14,000 a year to any and every US person
You can use your spouse’s $14,000 without consent
Gift & Estate Tax Exemptions 22
Fed v. NY
Federal Government
New York State
Gift Tax Exemption
$5,450,000
Unlimited
Estate Tax Exemption
$5,450,000
Now: 4,187,500
2017: 5,250,000
2019: Fed Amount
Putting It All Together 23
A Certified Financial PlannerTM is a trained financial professional required to meet certain Experience, Examination, Education and Ethical standards.
They are trained in the financial planning process and bring together multiple components of your financial lives (Ex: estate planning, retirement planning, risk management, investment management, etc.)
Daniel Timins, Esq.
477 Madison Avenue, Suite 240
New York, NY 10022
(212) 683-3560
Questions & Answers 24
For more information about the Financial Planning Association of New York visit www.fpany.org.
