Some estate planning essentials necessary for all New Yorkers

Establishing an estate plan is important for New York individuals and couples at all stages of their lives as well as all levels of financial standing.

Over the past year, a few famous New York actors have received wide criticism for their estate planning shortfalls. When James Gandolfini and Philip Seymour Hoffman's estate plans became public after their premature deaths, the media had a heyday speculating about provisions in their wills and trusts, wondering why they failed to attend to some of the essentials.

While most New Yorkers do not have millions of dollars of assets and accumulated wealth to pass on to their families, the estate planning issues that everyone should address are often the same. Following are just a couple considerations for people of all asset levels.

Children

Hoffman created a will almost 10 years prior to his death, when his son was about one year old. However, by the time he passed away, he and his companion had two additional children. Although state laws allow for provisions for "after born" children, his failure to update his will after the birth of his two girls created an estate planning mess for his family after his death.

An estate plan can establish guardianships for minor children, a necessity for any family or single parent, especially for those who have children with special needs. Estate planning documents can designate:

  • With whom your children will live
  • Who will oversee any financial assets on their behalf
  • Who will provide for their daily needs

Tax planning

Gandolfini's estate plan was highly criticized for, what many saw as, poor tax planning. It was estimated that about $30 million of his estate went directly to the Internal Revenue Service (IRS) unnecessarily. With a little tax planning, he may have been able to leave a substantially higher amount to his children and extended family members.

Hoffman was not married to the mother of his children so she was unable to take advantage of the marital deduction, which allows significant tax breaks to spouses. A federal tax of up to 40 percent applied to a vast majority most of his estate. New York also applies an estate tax - for estates over $1 million - of up to 16 percent on assets left to non-spouses, further reducing the amount she was able to inherit.

Consult a lawyer

If you do not have an estate plan or have not recently updated your plan, it is important to contact an experienced New York attorney. A lawyer knowledgeable about estate planning documents, issues of taxation and trust administration can help you set up a plan that ensures that your wishes are carried out after you are gone.

Keywords: estate planning, guardianships, tax planning