Family dynamics is often the biggest challenge to estate planning in New York. When there is a high degree of tension between family members, it can be difficult to make decisions about how you want them to share your assets in the event of death or disability. However, it’s important to remember that it is easier and better to deal with all the issues that might arise later now than to force your loved ones to deal with the consequences of a hurried or poorly planned estate.
Estate planning basics
In New York, estates are subject to the rules of intestacy, which dictate how estate distributors will divide assets in the event of death. This includes any property owned jointly, such as real estate, cash accounts with designated beneficiaries and life insurance policies.
It is also important to understand the types of assets you may have, such as retirement accounts (IRA or 401k), annuities, and trusts. Each of these has its own laws governing their distribution upon death. For example, many retirement accounts allow for the account holder to designate beneficiaries, specifying who will receive the funds upon their death.
Additionally, most estates are subject to federal and state taxes, and many transfers may also be subject to gift tax rules. Fortunately, New York doesn’t have an inheritance tax, but reducing the amount of your estate that is subject to taxes is still an important part of developing a comprehensive estate plan.
Estate planning with family conflict
When estate planning, the first thing you may want to do is ensure everyone understands and is on board with your wishes. If there are family members who do not agree with your plans or if you anticipate a dispute over specific assets, it is important to discuss it and resolve it immediately.
There are also some provisions you can add to your documents, like the “in terrorem clause” to discourage beneficiaries from challenging your will. Or gear your plans toward avoiding probate like creating trusts, payable-on-death accounts, joint ownership or transfer-on-death registrations.
Remember, communication is key in any estate planning process, particularly amidst family conflict. Consider mediation or family meetings to facilitate open dialogue and mutual understanding. A good plan might even help repair your familial relationships.