When you create an estate plan, your goal is not only to make sure your assets pass to loved ones after your death but also to safeguard those assets while you are alive. Protecting what you own begins with understanding the risks that could undermine your efforts. Some of these risks are widely recognized, while others are less obvious. Failing to account for them, however, can jeopardize the security of your wealth and the legacy you hope to leave behind. With that in mind, the Eghrari Wealth Training Firm highlight five common but often overlooked threats to your assets and discuss estate planning tools and strategies you can use to protect them.
- Problematic Beneficiaries. Your own family members (or other beneficiaries) may present an unexpected threat to your estate if you fail to plan carefully. Nearly every family includes at least one individual who does not manage money responsibly because they struggle with addiction, gambling, mental health issues, or chronic overspending. Leaving a significant inheritance directly to someone in that situation can be damaging both to the assets and to the beneficiary. The good news is that there are legal tools available to protect these individuals while still ensuring they receive financial support. One commonly used option is a trust that appoints a Trustee to manage distributions, provide financial oversight, and follow guidelines established by you.
- Incapacity. Another serious but often overlooked risk is the possibility of becoming incapacitated due to illness, injury, or age-related decline. If you do not have a plan in place, family members may find themselves in conflict over who should control your finances. These disputes can lead to costly and bitter court battles, leaving your assets vulnerable and your family divided. Incorporating an incapacity plan within your overall estate plan ensures that you retain control over who will manage your affairs if you cannot. Instruments such as a Durable Power of Attorney, a Health Care Proxy, and a Living Trust can provide clear direction. By naming the individuals you trust to step in, you preserve your wishes and prevent the courts from making those decisions on your behalf.
- Federal and State Gift and Estate Taxes. One of the most significant financial risks to your wealth is federal gift and estate taxation. This tax is essentially a levy on the transfer of assets, whether that transfer takes place during your lifetime or at the time of your death. The current tax rate reaches forty percent, which means nearly half of what you worked so hard to accumulate could be diverted to the government instead of your chosen beneficiaries. Although recent legislative action has raised the lifetime exemption to $15 million (starting in 2026), it is not wise to assume that the lifetime exemption will apply when the time comes. The size of your estate could increase substantially before your death, or the federal government could reduce the exemption amount in the future. Moreover, New York is one of a handful of states that imposes a state level estate tax. Incorporating tax avoidance tools and strategies into your estate plan can reduce, or even eliminate, your estate’s tax burden after you are gone.
- The Impact of Divorce. Divorce is another circumstance that can place your wealth in jeopardy. While New York is not a community property state, marital dissolution still requires equitable distribution of property. Assets that were once considered separate can become entangled in a divorce if they are not carefully preserved. For example, if you inherit funds from a parent but deposit them into a joint bank account with your spouse, those funds may no longer be considered your sole property. Similarly, income generated from separate property is often categorized as marital and therefore subject to division. The best approach is to take steps to protect assets long before a divorce is on the horizon. This may involve entering into a prenuptial or postnuptial agreement or placing property into a trust to establish its separate nature.
- Long-Term Care Costs. The staggering expense of long-term care is a threat that often goes unrecognized until it is too late. While many older adults assume that Medicare will cover these costs, the reality is that Medicare does not pay for custodial care in a nursing home or for extended stays in an assisted living facility. Private insurance policies typically exclude such coverage as well, unless a separate long-term care policy was purchased in advance. In New York, the annual cost of nursing home care averages more than $180,000, meaning that a single stay could deplete a lifetime of savings. Medicaid can help cover the cost of LTC but qualifying for Medicaid requires advance planning. By integrating Medicaid planning strategies into your estate plan, you can protect both your assets and your eligibility for needed care.
Can We Help You Protect Your Assets Against Common Threats?
For more information, please join us for an upcoming FREE seminar. If you would like assistance to ensure that your assets are protected against common threats, contact the Long Island estate planning attorneys at Eghrari Wealth Training Firm by calling us at 631-265-0599 to schedule your appointment.
Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill Read More!
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