A bare-bones estate plan will typically include a will, and advance health care directives may be included as well. If you are not familiar with the latter documents, they are used to prepare for possible incapacity.
One of the directives is a a durable power of attorney for health care or health care proxy. This type of directive is used to name your representative to make health care decisions on your behalf should you not be able to do so. Under New York State law, this is the directive the legislature chose, and it gives your proxy full authority to make any and all medical and life-support decisions on your behalf. You may also consider having a living will to let your proxy know your feelings about life-support, but it holds no legal significance in New York.
Any estate plan is better than none at all, but you have the ability to go above and beyond the basics. On one level, this can preserve your resources, because a simple will is not always the best transfer method. Plus, you can take particular steps with your broader legacy in mind.
Targeted Asset Transfers
If you state your final wishes in a simple will, the inheritors receive direct, lump sum inheritances all at once. This can be less than ideal if you are going to be leaving money to someone that has a history of bad decision-making.
Under those circumstances, you can use a revocable living trust with a spendthrift provision to provide safeguards. You would be the trustee while you are living, and you would designate a successor to assume the role after your death. This can be someone you know personally, and you can alternately use a professional fiduciary.
After your passing, the trust will become irrevocable. The beneficiary would not be able to access the resources directly, and their creditors would be in the same position. As a result, the assets would be protected if legal actions are initiated.
You can dictate the terms of the distributions when you are drawing up the trust. In this manner, you can provide limited payouts on an incremental basis to prolong the viability of the trust.
This is one approach that can be taken, and the incentive trust is another option. With this type of trust, you include incentives that must be met before assets will be distributed to the beneficiary.
A supplemental needs trust can be used to provide an inheritance to a loved one with a disability that is relying on need-based benefits. There are estate tax efficiency trusts that are used by high net worth individuals that have estate tax concerns.
At the end of the day, there are many tools in the estate planning toolkit. There is no one-size-fits-all asset transfer approach that is right for everyone. When you work with our firm, we will help you make fully informed decisions.
Charitable Giving
If you are in a position to do so, charitable giving can definitely enhance your legacy. Direct acts of giving are one possibility, and donor advised funds are quite popular. You make a single contribution to the fund, and the assets can be used to support multiple different charitable beneficiaries.
A private family foundation is another option, and most foundations are funded with less than $1 million. There are also charitable trusts that can be utilized, and there are tax advantages to go along with the philanthropic intent.
Legacy Preservation
Your legacy can be severely damaged by long-term care costs if you do not address the matter in advance. More than one third of seniors will require nursing home care, and in the Manhattan area, you can expect to pay about $170,000 or more for a year in a nursing home.
Medicare does not cover long-term care, so this is not the solution. Medicaid will absorb the costs if you can gain eligibility. If you fund a Medicaid trust at least 5 years before you apply, the assets in the trust will not count and you can qualify.
Another program in New York, community Medicaid, will allow you to qualify for Medicaid and receive care in your own home paid for by New York State. Under current rules, you may fund a Medicaid trust with your assets and gain eligibility to Medicaid without being subject to the 5 year look back rule. Actions to qualify for must be taken as soon as possible because a new law will require you to wait for 2 1/2 years before becoming Medicaid eligible.
We counsel clients that would like to position their assets with future Medicaid eligibility in mind.
Take Action Today!
Today’s the day for action if you do not have a personalized legacy plan in place. You can schedule a consultation at our Manhattan estate planning office if you call us at 212-973-0100, and you can use our contact form to send us a message.
While he was in law school, he worked as an aide to the late John Sparkman, Senior Senator from Alabama. This gave him the opportunity to gain intimate knowledge of the workings of government, and this background has served him well.
He started his private practice in New York in 1974, the first Sikh to be admitted to the bar in the state of New York.And in 1995, when he narrowed his legal focus to the areas of estate planning and elder law, the prestigious American Academy of Estate Planning Attorneys accepted him into their membership.
Special needs planning is an important aspect of the field, and Mr. Khalsa has intertwined his empathy with his expertise to become a leading advocate in this area. Shortly after the Education for All Handicapped Children Act was enacted in 1975, he won the first case in New York that was adjudicated under this law.
S.J. Khalsa has a penchant for philanthropy, and he has raised well over $20 million for charities nationwide. He is a deeply spiritual man who represents the Sikh religion at religious and interfaith gatherings all over the globe.
He believes that successful professionals should contribute to the fabric of their communities, and to this end, he works with law enforcement in New York.
Mr. Khalsa is a graduate of the FBI Citizens Academy program, and he is active in their Alumni Association. He is a member of the FBI/New York Police Department Joint Task Forces on Civil Rights and Hate Crimes, and he sits on the Community Engagement Council that advises the FBI Assistant Director for New York.
He is the author of the highly acclaimed book, Estate Planning Essentials: A Guidebook for Modern Families. Lawyers of Distinction recognized him for his excellence in 2020, naming him a 2020 Power Lawyer, and he is a member of the prestigious American Academy of Estate Planning Attorneys.
Mr. Khalsa lives in Manhattan with his wife, and he has two grown children and four grandchildren. He likes to travel, and he is an avid golfer. As the co-owner of Kundalini Yoga East in New York along with his wife, he instructs practitioners and aspiring yoga teachers.
- The Twilight Years Can Derail Your Legacy Plan - January 26, 2023
- Understanding Undue Influence – Part II - November 7, 2022
- Understanding Undue Influence – Part I - October 31, 2022
