What Is the Most Important Estate Planning Document?

The process of estate planning should be viewed in a comprehensive light. It is important to see the big picture, and you should make sure that your estate plan is custom crafted to suit your individual needs.

There is no universal one-size-fits-all estate plan, because different people have different objectives.

In this post we will look at estate planning documents in general and provide some explanations.

Transferring Assets

While there is no one estate planning document that is inherently the most important, a well constructed estate plan is going to have a particular foundational anatomy. The facilitation of asset transfers will certainly be part of the equation.

The best asset transfer document to use will depend upon the circumstances. For example, some people are exposed to the federal estate tax. If you want to transfer more than $5.34 million to people other than your spouse, you would be exposed to the estate tax and its 40 percent maximum rate.

We practice law in the state of New York. In New York, there is a state-level estate tax to contend with as well. Until April of next year the New York state estate tax exclusion is $2,062,500.

If you are exposed to either or both of these taxes, you must take steps to gain estate tax efficiency when you are facilitating future asset transfers. Irrevocable trusts are often used by people who want to reduce the tax burden.

These documents would be very important to certain high net worth individuals, but this type of trust may not be important to someone who has a different set of concerns.

You may feel as though a last will is the best choice for you if you are not exposed to the estate tax. You could use a will, but there is a type of trust called a revocable living trust that may be a better choice.

A will must pass through the probate process. This process can be time-consuming, and the heirs to the estate do not receive their inheritances while the estate is being probated.

If you have a revocable living trust rather than a last will, the trustee could distribute assets to the beneficiaries outside of probate.

Incapacity Planning

Incapacity planning documents are also important. With a durable power of attorney you name someone to handle your financial affairs in the event of your incapacitation.

You could use a health care proxy to name a medical decision-maker who could act for you if you become unable to communicate your own decisions.

Another important incapacity planning document is a living will. This document is used to express your preferences with regard to the use of life-sustaining measures.

Schedule a Free Consultation

In this post we have provided some very basic information. If you would like to discuss your estate planning needs with a licensed attorney, send us a message through this page to set up a free consultation: Smithtown NY Estate Planning Attorney.

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Mark S. Eghrari, Estate Planning Attorney

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.

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