Question: What are the necessary documents which comprise an estate plan?
Answer: The Will, Health Care Proxy and Durable Power of Attorney.
Question: When should I update my Estate documents?
Answer: When one or more of the following circumstances occur:
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You marry; |
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You divorce; |
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Your spouse dies; |
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An executor, trustee, guardian, attorney in fact, health care proxy agent, beneficiary or a substitute to any of these dies or becomes incompetent; |
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A child becomes of age of majority; |
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You have a dependent or add a dependent to your household, whether it be child, incompetent person or elderly parent; |
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You become ill; |
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Your estate increases to a level higher than the tax credit allowed, presently $675,000; |
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You change residence; |
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Your financial situation changes drastically either for the better or worse; or |
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You simply just changed your mind about one of the components of the document. |
Question: If I die without a will, does everything I own automatically go to the government or my spouse?
Answer: No. Your property will be gifted according to the rules of intestacy. If your taxable estate is less than the Federal tax credit, and you are a resident of New York, your estate will not be taxed. If your taxable estate is in excess of said credit, the Federal tax bracket alone goes as high as 55% of the estate, which does not include the taxes which will be owed to New York State. One of the benefits of going to an attorney to draft a will, is getting advice on how best to reduce your tax bill.
Question: What is the difference between a Will and a Living Will?
Answer: Click on the highlighted words and you will be able to review the difference.
Question: What is the difference between a Living Will and a Health Care Proxy?
Answer: Click on the highlighted words and you will be able to review the difference.
Question: What is the difference between income tax and the estate tax, gift tax or transfer tax?
Answer: There are two components of money: principal and income. If you have $10,000 in the bank, that is principal. If over one year you get interest on that money of $1,000, that is income. You pay income tax only on the income, $1,000, NOT on the principal and income which are now $11,000.
When a person gives a substantial money gift to another, there is a gift tax. When a person dies and his/her assets get transferred to another person, there is an estate tax.
These collectively are called transfer taxes.
For more information on the estate tax, click on this Taxes button.
Question: Is it true that the government freezes your safe deposit box after you die.
Answer: In New York, a relative or legal representative of the estate has to file documents with the New York State Department of Taxation and Finance, ET-92. The government then sends the relative or representative a release form which allows the bank to open the vault for said relative or representative. Said relative or representative has to file with NY an inventory of assets which were located in the vault.