The first estate plan that you establish will reflect the circumstances of your life at that moment, but over the years, things will invariably change. With this in mind, you should view estate planning as an ongoing process from the start so you can keep your plan up-to-date at all times.
You should put your initial estate plan in place as soon as you become a self-supporting adult, and an estate plan for a single person with limited resources will be pretty simple and straightforward.
It will start with life insurance so you have sufficient coverage to take care of your final expenses, and you should have a simple will or a living trust to account for asset transfers.
Many people do not consider incapacity planning, but this is an important element because you should state your wishes in advance. A living will is an advance directive for health care that is used to record your life support preferences.
To prepare for medical scenarios that are not related to life-support utilization, you should name a representative to act on your behalf in a health care proxy.
There is also the matter financial decision making. If you have a living trust, you would act as the trustee while you are living, and you can name a disability trustee to assume the role if you ever become incapacitated.
For property that is not held by a trust, you can add a durable power of attorney for property.
At some point, you may get married and this will change the playing field. Your plan should be adjusted to reflect your new situation, you should discuss the matter with your spouse.
A joint living trust can be a good solution for couples when they intend to own their valuable property jointly and leave their respective interests to one another.
You and your spouse would be co-trustees, and you would name a successor to assume the role after the passing of the surviving spouse. If you go in this direction, your estate plan can be adjusted if and when children come along.
The successor trustee would be able to manage assets on behalf of a minor if it becomes necessary. You should also name a guardian for the children in a simple will.
If you have a will instead of a trust as your asset transfer vehicle, you can include a testamentary trust if you have minor children. This would facilitate the creation of a trust with an adult trustee that would manage assets on behalf of minor children.
Clearly, a subsequent change in marital status would also be a major life event that would make an estate plan update necessary.
If you become very successful from a financial standpoint, you have to be concerned about potential estate tax exposure.
Here in New York, we have a state-level estate tax with a $5.93 million exclusion. This is the amount that can be transferred before the estate tax would become applicable.
There is also the federal estate tax, and the exclusion is $11.7 million right now. However, the provision contained within the Tax Cuts and Jobs Act that established this record high figure is going to expire at the end of 2025. In 2026, the exclusion will be $5.49 million.
You can adjust your estate plan to include an estate tax efficiency strategy if you become exposed to either or both of these taxes.
There is also the matter of long-term care costs. They are considerable, most seniors will need living assistance, and Medicare does not cover custodial care.
Medicaid will pick up the tab if you can gain eligibility, and even though it is a need-based program, you can potentially position your assets in a manner that will lead to Medicaid eligibility.
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We are here to help if you are ready to work with a Staten Island, New York estate planning lawyer to update your existing plan or create an initial plan. You can send us a message to set up a consultation, and we can be reached by phone at 332-456-0500.