No one likes to think about one’s own death. However, planning ahead can help your family avoid unnecessary complications, delays, and expenses. This may be done using wills, trusts, joint ownership, and life insurance. In addition, modern estate planning also includes “life” planning through powers of attorney and health care proxies, which enable someone to act on your behalf in the event of your incapacity. Understanding the following terms is the first step toward planning your estate; however, no estate planning steps should be taken without consulting with a qualified professional.
This is the name for the process in the Probate Court through which the ownership of your assets is transferred to your heirs. This process includes the collection of your assets, the payment of your bills, and the distribution of assets that you own outright. It does not include joint property, trust property or life insurance proceeds.
A Will is a legally binding statement that instructs who will receive your property at your death and appoints a legal representative to carry out these wishes. A will only covers probate property and not joint property, trust property or life insurance proceeds.
The Estate Tax applies to both the probate and non-probate property of the decedent. For the federal government, the amount of assets which pass free from taxation is currently $11,580,000.00 per person. Whereas, for New York State, the estate tax threshold is currently $5,850,000.00 per person.
On the federal level, anything passing to the surviving spouse of the decedent is not included in the taxable estate and consequently, is not subject to taxation. All of the couple’s assets are then taxed upon the death of the surviving spouse, unless an estate tax plan has been put into place.