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choosing fiduciaries to administer
The Basic Estate
Documents
Healthcare Proxy
A Healthcare Proxy is an important
legal instrument which sets forth the
person or persons who you would like
to make healthcare decisions on your
behalf in the event of your incapacity.
Absent such an instrument, your
healthcare provider may not have
the proper guidance as to who you
would trust to make these important
decisions, or information how to
contact the person who you would
designate. By preparing a healthcare
proxy, you will assist your physicians
and nurses in providing the care that
you would want to receive if you were
able to speak for yourself.
Power of Attorney
Equally important is the power of
attorney or “POA”. The POA allows
your choice of individual to acts
on your behalf in making financial
decisions and managing
financial affairs in the event that
you are unable to do so. A POA may
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government benefits of subsidies,
be effective immediately upon its
execution, or else “springing”, such
that it will not be effective until you
are certified to be incapacitated. The
POA may be limited in its scope (i.e.
giving authority to a certain family
member to run your small business),
or may give complete authority to
the agent. Without a POA, your loved
ones would have to bring a formal
guardianship proceeding to exercise
power over your financial affairs in
the event of incapacity. Guardianship
proceedings are expensive
uncertain, and there is no guarantee
that the outcome will be that which
you would have desired if you were
able to speak for yourself. As with all
aspects of estate planning, it is best
to think of these issues and make the
decisions for yourself, or you may find
the state making them for you.
Last Will and Testament
The most important and ubiquitous
document that is necessary part of
any estate plan is the last will and
your testament. This document will serve
many important purposes, including
providing for how many your assets
should be disposed of at your death,
your estate (and any trusts created
thereby), and selecting guardians for
any minor children. Absent a last will
and testament, the laws of intestacy
of the State of New York will apply.
This can lead to numerous problems.
Perhaps the most frequent issue that
arises in such a case is the conflict
of a parent and child. Many couples
expect or desire that their surviving
spouse inherit their entire estate.
Without a will, however, the property
of a decedent will be split 50% to
the surviving spouse, and 50% to
the children who have survived the
deceased spouse. In the event those
children are minors, the Surrogate’s
Court will appoint a guardian an item
for the children, and the property will
be held in trust for the children until
they reach the age of majority, and
the property will then be distributed
to the child.
The problems here are two fold -
first, the surviving parent will not
have access to the funds in a time
of uncertain financial circumstances
(unless the children give the funds up
upon reaching the age of majority);
and second, the children will receive
the entirety of such funds immediately
and upon reaching the age of majority.
Even if the children are adults, in the
event there are any issues between
the surviving parent and the children,
the children may refuse to waive their
rights to inherit, and thereby deprive
the surviving parent of financial
support in their hours of greatest
need.
Another important purpose of a will
is the ability to create trusts for the
benefit of your loved ones. These
trusts can protect your prospective
heirs from fraud, misappropriation
and waste. Additionally, in the
event any prospective heirs of your
estate are disabled, recipients of
trusts can provide additional support
and improve the lives of your loved
ones without jeopardizing your
beneficiary’s’ entitlement to those
benefits.
The Executor
In New York State, any person over
eighteen years of age and of sound
mind may serve as executor of a
decedent’s estate. The executor is
entitled to a statutory commission,
payable on a sliding scale. The scale
is as follows:
5% of the first $100,000.00
4% of the next $200,000.00
3% of the next $700,000.00
2.5% of the next $4,000,000.00
2% of all monies in excess of
$5,000,000.00
As you can see, even a modest estate
will yield a substantial commission
for the nominated executor. Your
executor will be in charge of collecting
your assets, discharging your debts,
and distributing your assets as per
the terms of your will. As such, the
job is very important, and should be
given to someone who is responsible,
trustworthy, and meticulous in their
record keeping.
If you have been nominated as
the executor of a friend or family
member’s estate, be mindful in your
duties, and keep excellent records
of all expenditures made on behalf
of the estate. By doing so, you will
honor the legacy of your loved one,
assist their heirs in their time of need,
and protect yourself from potential
liability.
Trusts
There are dozens of varieties of
trusts, each of which can be used
to accomplish different goals. For
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