We are proud to help people who have non-taxable estates in planning for the future.
Trusts and estates planning is critical to create security and peace of mind. A comprehensive estate plan can help ensure that one’s wishes will be carried out both in life and after death and that loved ones will be provided for after death.
At Rower LLC, we support clients whose estates are non-taxable, meaning that their total estate falls below the current federal exemption of approximately fourteen million dollars and the New York State limit of approximately seven million dollars per person.
We help clients build comprehensive estate plans, which include advance directives, last will and testaments, and trusts. Together these documents outline an individual’s wishes for during life and after death.
ESTATE PLANNING
Advance Directives
Two questions come to mind for many people when they think of estate planning: who will inherit my property when I die, and who will be in charge of administering my estate? However, it is just as important to plan for potential incapacity.
Advance directives allow individuals to appoint the parties they would like to represent them in the event of incapacity.
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A power of attorney is a legal document that grants authority to another person, known as an agent, to act on one’s behalf regarding his or her financial affairs. Executing a power of attorney is an essential aspect of comprehensive estate planning and allows individual to plan for unforeseen circumstances where they may be unable to manage their financial and legal affairs.
There are two kinds of power of attorney: durable, effective immediately, and springing, effective at a later point. Some people may prefer a springing power of attorney because of the protection they may provide, because they typically require a determination of incapacity for the agent to have authority to act; however, they can create a gap of time in which the agent is not able to act on the party’s behalf as he or she waits for the determination by a physician. Creating a durable power of attorney and giving the authority thereunder to a trusted party can therefore be a wise decision for many people, allowing the agent to act swiftly when needed.
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A health care proxy is a legal document that allows individuals to appoint someone as their agent to make medical decisions on their behalf if they become incapable of making those decisions themselves. Executing a health care proxy is a crucial part of estate planning, ensuring that one’s healthcare wishes are respected and followed when that person is unable to communicate your preferences.
Additionally, with a health care proxy, one can indicate any wishes for organ donation and can stipulate additional parameters, such as which organs may be used and how they may be used (e.g. for transplant but not for research).
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A living will provides specific wishes for end-of-life care. The living will only applies in certain situations, namely when someone is in an end-of-life state, such as terminal or permanently unconscious. Typically, a living will provides whether or not one wants any life-sustaining treatment if he or she is in this state.
A living will gives agents valuable guidance around difficult decisions, reassuring them that they are acting in accordance with one’s wishes. It is a good idea to discuss these wishes with the appointed agents as well, as many different scenarios could arise.
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The disposition of remains appointment allows an individual to appoint someone to oversee his or her body after passing away.
In New York, the legal authority is granted by default to the surviving spouse, followed by a surviving domestic partner, adult children, parents, adult siblings, and other next of kin in a specific order outlined by state law. However, one can exert control over this process by appointing agents and expressing one’s wishes in the disposition of remains appointment. The appointment can provide a primary agent and successors.
The disposition of remains appointment also allows people to state any specific wishes they may have for their final arrangements, such as a funeral, burial, or cremation. Additionally, it can outline preferences for funeral arrangements, specify religious or cultural customs, and indicate additional preferences.
Trust and Will Planning
There are two primary documents that a person will choose between to distribute their assets at their passing: a last will and testament or a revocable trust.
At their core, both documents are designed for the same ultimate function: they distribute assets to the people one has named as beneficiaries, and they appoint the fiduciaries who will distribute those assets.
The most significant difference between these two documents is in process. A last will and testament only takes effect after death and requires probate. A revocable trust, on the other hand, allows assets to be managed and distributed during lifetime and avoid the probate process. They also possess different stipulations with regards to privacy, incapacity protection, and ongoing court oversight.
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A last will and testament must go through the probate process: the executor has to petition the surrogate court to be appointed as the executor. The executor will subsequently complete various forms and provide documentation to the court for about a year before assets can be given to the beneficiaries. If assets distributed under a last will and testament are held in further trust, there is the potential for the court’s continuous involvement in the estate.
Additionally, actions in surrogate court are public record; anybody could therefore see one’s last will and testament.
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A revocable trust is designed to negate the need for the probate process. The client establishes a revocable trust during their lifetime and transfers and funds their trust with their various assets. This does not affect use or access to these assets; the revocable trust is like the party’s alter ego. Revocable trusts require more work on the party’s part during his or her lifetime, but they allow for the appointed trustees to distribute assets after death without involving the court.
Revocable trusts are not public record and therefore provide more privacy. Additionally, they include provisions for incapacity.
TRUSTS
Trusts can be a valuable financial planning tool for families. We help families prepare for the future by establishing various kinds of revocable and irrevocable trusts.
+ What’s the difference between a revocable and irrevocable trust?
A revocable trust allows the grantor to unilaterally change the terms of the trust, such as who is designated as a beneficiary or trustee, or how assets from the trust will be distributed. By contrast, once an irrevocable trust has been established, its terms cannot be changed except under limited circumstances.
+ Is a revocable or irrevocable trust better for me and my family?
Revocable and irrevocable trusts serve different functions. Revocable trusts are a valuable and flexible tool that allow the creator to maintain control over assets during their lifetime, and they efficiently distribute the assets upon death. Irrevocable trusts typically require the creator to relinquish control over the assets transferred into the trust but can be used to protect assets from creditors, reduce estate taxes, ensure eligibility for government benefits, and provide clear, controlled distributions of assets to beneficiaries. There are different kinds of irrevocable trusts designed to serve more targeted functions both during life and after death.
In addition to helping clients with trusts for the purposes of will planning, Rower advises clients on other irrevocable trusts.
Irrevocable Life Insurance Trust
A life insurance trust can be a helpful tool for tax planning and child support purposes. An individual can establish a life insurance trust to transfer the death benefit of a life insurance policy to the trust, thus removing it from the estate; this can help bring an individual below the federal and New York State exemption limits.
Many individuals also use life insurance trusts in divorces; should a parent who is responsible for paying child support pass away prematurely, a life insurance trust can be used to both fund and safeguard the amount of support that would be affected by the parent’s death. By transferring the death benefit to the trust, the parent can ensure that the funds will be paid to the beneficiaries.
Medicaid Trust
A Medicaid trust can provide asset protection to individuals with long-term care needs. The annual bills for nursing homes or in-home care can total well over $100,000 annually. By establishing a Medicaid trust, individuals can maintain their assets for beneficiaries while lowering their asset level below the Medicaid threshold. This enables the individual to qualify for Medicaid, which can then cover these long-term care needs, as opposed to spending down one’s assets to foot the bill.
Supplemental Needs Trust
Supplemental needs trusts are designed to help individuals with supplemental needs to access government benefits without having to spend down all of their assets, or forego the support of another person, in order to qualify.
There are two kinds of supplemental needs trusts: first-party and third-party. One might establish a first-party supplemental needs trust after receiving money in a settlement, for example. This would allow the individual to take the settlement funds, put the money in his or her trust, and use that money for needs that government services do not pay for, such as certain medical treatments. First-party supplemental needs trusts must include a payback provision, and upon death of the individual, the remaining monies may need to be returned to the government.
A third-party supplemental needs trust is established by an individual, such as a parent, for the benefit of another individual with supplemental needs, such as the parent’s child. This allows the establishing parties to set aside a certain amount of money to benefit the individual with supplemental needs without jeopardizing the individual’s ability to receive government benefits. Third-party supplemental needs trusts do not include a payback provision.
LIFE STAGES
Planning for Every Stage in Life
The documents that comprise an estate plan may be the same, but how one thinks of them at every stage of life might look different.
Starting Out
When people become adults, their parents no longer have any authority to make decisions on their behalf should they be unable to do so themselves, so it is wise to set up advance directives. As they begin their careers and earn more money, they might seek out a financial advisor, purchase different insurance policies, and think about who they want to inherit their assets upon their death. When they buy a home, they might want to consider whether they should place the home in some type of trust.
Partnering
It is a very exciting time when people meet the person they want to spend the rest of their lives with; with it come new considerations for how they build a life alongside another person. They might weigh getting married or entering a domestic partnership, considering both their personal wishes and the tax and inheritance ramifications of the decision, as married people have different rights when it comes to transferring property between each other and inheriting property upon death. Advance directives may need to be updated to reflect their new life circumstances.
Having Children
When people have children, their estate planning evolves to reflect their children’s care and future, too. They’ll want to review advance directives and appoint the guardians for any minor children in the event of their death. To prepare for their children’s future, they might also establish different trusts for their benefit and appoint a trustee to manage their money.
Sandwich Years
As individuals’ parents grow older, they might need to assist them in their estate planning, confirming that they understand their final wishes and that their estate plan is fully in place. As their children age, they may modify how they will access any money in a trust or that they will inherit. When they plan for their own retirement, they might also consider purchasing long-term care insurance or begin to think about how they will manage any long-term care need.
Retirement and Beyond
By planning for retirement early, people can enjoy the benefits later. One may consider establishing a Medicaid trust. Additionally, individuals may wish to review their advance directives and discuss any end of life wishes with their families. If they have any large life insurance policies still in place, they may assess whether they are still necessary and if so, consider placing them in a trust.
meet our practice
TrustS & EstateS Practice
Nicole Hurley
Nicole has spent nearly a decade advising clients on both basic and complex estate planning, long-term care planning, and special needs planning. Her in-depth knowledge of trusts and estates allows her to assist clients in safeguarding their assets, minimizing tax liabilities, and ensuring the smooth transition of wealth to future generations. Bringing this expertise to matrimonial and family law, she is committed to helping individuals and families achieve peace of mind by creating customized estate plans that protect their legacies and ensure their wishes are carried out effectively.
Publications
2024 “Ensuring That Trusts Created During a Marriage Survive a Divorce” by Alyssa Rower & Karina VanHouten | New York Law Journal
2024 “Have Your Cake and Eat It Too: Creating the Benefits of Marriage Outside the Institution” by Alyssa Rower, Nicole Hurley and Jamie Caponera | New York Law Journal
MEDIA
Trusts and estate planning
Nicole discusses trusts and estate planning.
This material is provided for informational purposes and does not constitute legal advice or establish an attorney-client relationship, which may be established only by a writing signed by the lawyer and the client.