Estate Planning and Debt

By | Estate Planning, FAQs, Wills

When deciding how an estate will be distributed to heirs, people spend far more time considering the assets they’re leaving behind, rather than the debts. However, it is equally important to devise a plan that will account for the debts that will remain owing after you pass away, including whether a portion of the gifts you leave will be affected by those debts. Read on to learn more about how debts are handled after the debtor passes away, and speak with a skilled New York estate planning attorney with any additional questions.

With few exceptions, the debts of the debtor will survive that person’s death. One of the executor’s jobs is to pay the debts of the deceased person and to do so in order of priority. This means that taxes, unpaid family court debts, and secured loans will be paid before unsecured debts, such as medical bills or credit cards. In most cases, a debt will solely remain the obligation of the deceased person’s estate and not become the responsibility of the heirs, unless an heir’s name was on the debt (i.e., they cosigned on a loan or their name was on a credit card). In other words, if the estate runs out of money before all credit card bills are paid, then the credit card company will be out of luck.

One exception to this rule is residential mortgages. If a mortgage exists on the deceased person’s home, and the will does not instruct the executor to use estate funds to pay off the loan, the inheritor will be obligated to pay that mortgage to retain the home. If a family member of the deceased person inherits the home and plans to live in it, they have a right under federal law to assume the existing mortgage rather than having to apply for a new one or pay off the old mortgage entirely. That said, if the current mortgage isn’t affordable for the inheritor, they can try to refinance the property or, failing that, sell the home.

While most debts will survive the death of the debtor, some will be erased upon death. For example, federal student loan debt does not survive the death of the debtor. Be sure that, as you plan your estate, you have a plan in place for how your debts will be paid so that gifts remain for your heirs. One way to avoid depletion of your estate is by passing gifts to heirs that are not reachable by creditors. For example, certain retirement accounts and life insurance policy benefits may not be seized by creditors for payment of a deceased person’s debts. Speak with your New York trusts & wills attorney to learn about other ways to maximize your gifts to your heirs.

For assistance with creating an estate plan in New York, contact the dedicated and detail-oriented Poughkeepsie estate planning attorneys at Van DeWater & Van DeWater for a consultation, at 845-452-5900.

Review Your Estate Plan After a Divorce or Separation

By | Estate Planning, FAQs, Wills

You may be overwhelmed by the number of changes occurring at once when you get a divorce or separate from your spouse—establishing a new household, severing financial ties to your spouse, and handling a divorce trial are all very labor-intensive. However, there’s one more critical step you’ll need to take after a divorce, especially if you’re older: updating your estate planning documents. Read on to learn more about which changes may occur automatically and which changes need to be made explicitly when you get a divorce.

Spouses listed in a will are automatically disinherited after divorce

Under New York law, once your divorce is final, a spouse who is listed as a beneficiary will be treated as though he or she predeceased you. If you listed the spouse as an executor of your will, or as someone designated to make health care decisions on your behalf through a health care proxy, that person will also be eliminated from these documents as well.

Until your divorce is final, however, your spouse will remain a beneficiary of your will. There are countless stories of spouses dying suddenly while in the midst of a divorce trial, resulting in most or all of their estate passing to someone they probably weren’t eager to enrich. You can avoid this outcome by visiting your estate planning attorney to update your will and any living trusts or advance health care directives that include your spouse as soon as you file for divorce or separation.

Automatic changes may not be ideal

In addition to the possibility that you may pass before even automatic changes to your estate planning documents occur, those automatic changes may not represent how you wish your estate to be distributed when you pass. For example, you may still wish to pass some amount of money to your ex-spouse when you die as a way of supporting a child you share. Additionally, if your spouse was listed as a beneficiary on your IRA or another investment account, the account would pass to the secondary beneficiary when your former spouse’s name is removed. This beneficiary might be a young child who is unprepared to inherit a large sum of money. You might want to consider creating a trust that will hold funds from a large account when you pass, which could not only help with any tax implications, but could also allow you to better control how those funds are ultimately paid out. An estate planning attorney can help you plan ahead after a change in your marital status.

For thorough and trustworthy assistance with your New York estate plan, contact the Poughkeepsie wills and trusts attorneys at Van DeWater & Van DeWater for a consultation, at 845-452-5900.

Creating Your Own Will Comes With Pitfalls

By | Estate Planning, FAQs, Wills

You’ve seen form wills online or in stores, offering the promise of a legally-binding will in exchange for filling in a few blanks. You may have even heard of people handwriting their wills for the ultimate DIY last testament. You may have found yourself wondering, is that a worthwhile way to save some money on legal fees? Read on to learn about what can go wrong when you don’t use an estate planning lawyer to create a will.

Chances are, your handwritten will isn’t valid

In New York, handwritten wills that are not signed by witnesses—known in the legal world as “holographic wills”—are only valid if created by someone in active duty in an armed conflict as a member of the armed forces, someone who has accompanied a member of the armed forces to an armed conflict, or a mariner at sea. Even then, the holographic will is only valid for one to three years after the individual is discharged from the military, or returns from the conflict or their time at sea.

Meeting with an attorney to help you create a will allows you to learn of the possible consequences of passing a gift to a particular recipient. For example, should you leave all your assets to a parent, you may push them into a different tax bracket, making their own estate planning process more difficult.

An attorney can also help you pinpoint heirs who may not benefit from an outright gift, and who would be better served by a gift with certain strings attached. For example, leaving thousands of dollars in cash to someone who may still be very young when you pass could be overwhelming and result in poor financial decisions. A lawyer would notice this issue and help you create a trust that would regulate that person’s ability to spend their inheritance. If you intend to leave all your money to an important cause, an attorney can help you structure that gift in a way that is ultimately better for the organization, and which does a better job of effectuating your own wishes.

A lawyer can help you anticipate potential conflicts which might arise from how you leave certain gifts. For example, appointing one sibling as executor could result in another sibling feeling unfairly treated, making the better solution to choose another individual entirely. A lawyer could also point out situations where leaving gifts in unequal amounts to relatives who may fight over the distribution could result in a court battle over the will’s legitimacy.

If you are in need of legal assistance in creating an estate plan in New York, seek the experienced and knowledgeable counsel of the Poughkeepsie wills and trusts attorneys at Van DeWater & Van DeWater for a consultation, at 845-452-5900.

A Will Alone Does Not an Estate Plan Make

By | Estate Planning, FAQs, Health Care Proxy, Living Wills, Wills

Perhaps you’re one of the responsible and thoughtful individuals who have taken the time to create a will, providing for your heirs and the causes most important to you after you pass away. While a will is critically important, it is far from the only document you need to have in place as you enter your later years. Read on to learn about the other decisions you should make, and their accompanying documents, to ensure that you have created a complete estate plan, and speak with an attorney about ensuring that you are fully prepared should serious injury, disability, or death suddenly strike.

What will happen if you’re unable to communicate after an accident?

If you’re in an advanced age, you’ve likely already come to terms with the fact that sudden and serious illness such as a stroke or fall could leave you incapacitated, even if only briefly. However, even if you’re younger and in good health, don’t forget that incapacity can strike at any time. In order to ensure that your wishes regarding your physical care are carried out when you’re unable to express them yourself, be sure you have documents in place that explain how you would like your care to look, and the person you wish to make decisions about your care on your behalf.

In order to accomplish these things in New York, you must create two documents: a health care proxy and a living will. A health care proxy allows you to select someone you trust to make health care decisions on your behalf when you are unable to do so. A living will allows you to leave specific instructions on the sort of medical treatments you do or do not wish to receive while you are incapacitated.

Who will care for your children and look after your affairs if you and your spouse are incapacitated?

If you are a parent, it is important that you select a guardian who will care for your children if you or your spouse becomes unable to do so. If you did not designate someone you wished to act as a guardian (other than your spouse) in your will, then you should choose someone you trust to serve in this role. Likewise, in order to know that your financial affairs are looked after, consider creating a financial power of attorney document, allowing you to choose an advisor or trusted friend to make financial decisions on your behalf. In order to ensure that these responsibilities are carried out according to your desires, it is important to work closely with an experienced estate planning attorney to create the financial power of attorney tailored to your own needs and desires.

For assistance with your estate planning needs in New York, contact the knowledgeable and seasoned Poughkeepsie estate planning lawyers at Van DeWater & Van DeWater for a consultation at 845-452-5900.