Studies show that a lot of people who know they should have estate plans in place do not act because of a lack of knowledge. They simply don’t know where to begin, and it is something that they continually place on the back burner.
This is understandable to some extent, and sound information from a reliable source is the key to the demystification of the process. With this in mind, let’s look at four inheritance planning tips for 2026 that will provide clarity and answer some common questions.
You Probably Don’t Have to Worry About Taxes
It is logical to assume that that taxes will take a major bite out of the legacy that you pass along. In reality, the news is very good for the vast majority of people when it comes to taxes on inheritances.
Generally speaking, an inheritance is not considered to be taxable income by the IRS or the New York Department of Taxation and Finance. Exceptions would be untaxed earnings that are held by a trust along with distributions from an inherited traditional individual retirement account.
There is a federal estate tax, and the exclusion is $15 million in 2026. This means that you face no federal estate tax exposure unless the value of your estate exceeds this figure.
New York is one of the 12 states in the union that have state-level estate taxes. The exclusion on the state level is right around half of the federal exclusion, so there is still a considerable cushion.
A “Simple” Will Isn’t So Simple
Far too many people think that estate planning equates to the creation of a will. You state your wishes in writing, and that’s the end of the story, everything takes care of itself from there.
This is actually a gross oversimplification. If you use a will to state your final wishes, you name an executor in the document. When you draw it up, you name an executor to act as the administrator after your passing.
The executor cannot just go about his business independently handing out checks and property ownership documents. Under state laws, the will must be admitted to probate. The Surrogate’s Court in the appropriate county will provide supervision during the process.
During probate, final debts must be paid, so creditors are given time to come forward. If anyone wants to contest the validity of the will, they can present a challenge while this process is underway.
Meanwhile, the executor will secure and inventory the assets and prepare them for eventual distribution once debts have been satisfied. This can involve appraisals and liquidation of property.
To put it in a nutshell, probate is time-consuming, expensive, and public, because the records are readily available. At the end of the day, this process will not be welcomed by the rightful inheritors.
Consider a Revocable Living Trust
You can take a simple step to avoid probate and the pitfalls that go along with it. A revocable living trust can actually provide the best of all worlds.
First, if you create this type of trust, you will be the trustee while you are living. As a result, you maintain complete control of the assets that you place into the trust.
Secondly, after your passing, a successor trustee that you name will distribute the assets to the beneficiaries. Your wishes as stated in the trust declaration will be honored, and the probate court will not be a factor.
Don’t Overlook Incapacity Planning
Over 30 percent of the oldest old contract Alzheimer’s disease, and this is not the only cause of incapacity among elders. If you don’t do anything to prepare for the possibility of incapacity, the state can step in. They would appoint a guardian to manage your affairs if necessary.
You can take the matter into your own hands in advance with the proper planning. If you have a living trust, you can empower the successor trustee to manage the trust if you become incapacitated.
To account for property not held by the trust, you can name a decision-maker in a durable power of attorney. You can add another power of attorney to name someone to make medical choices on your behalf. With a living will, you can assert your life-support preferences.
When you cover these bases proactively, you know that your wishes will be honored. Plus, you take difficult decisions out of the hands of your loved ones.
We Are Here to Help!
Our doors are open if you’re ready to work with a Staten Island, NY estate planning lawyer to put a plan in place. You can send us a message to set up a consultation appointment, and we can be reached by phone at 332-456-0500.
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