Quite simply, you need a Will to distribute your assets according to your wishes.
Additionally, there are several other reasons as well. First, if you have a minor child, you need a Will in order to appoint a Guardian for your child until he/she reaches age 18. Second, you should set up a trust under your Will to hold the assets for your child until the child is older and capable of handling his/her finances. Third, if you have a child with special needs, or other issues, such as drug or alcohol problems, creditor or marital problems, then you will need certain trust provisions in your Will to handle those issues. Lastly, if you have a very large estate, greater than $5 million, then you may need certain trust provisions to help minimize estate taxes after your death.
You do not get to choose how your assets will pass to your heirs. Your estate will pass according to New York State Intestacy law.
NY State Intestacy law provides that if you die leaving a spouse, your spouse inherits all. If you die leaving a spouse and children, the spouse inherits the first $50,000, with one-half of the remainder passing to the spouse and the other one-half passing equally to the children. If you die without a spouse or children, then all passes to parents; or if no parents, then all to your brothers and sisters, etc. Lastly, if the decedent dies without heirs, the assets pass to New York State.
Probate is the process of submitting the decedent’s Will to Surrogate’s Court for approval and for the formal appointment of the Executor. An Executor is needed in order to handle the administration of the estate.
New York State has an efficient probate system and typically, an Executor is appointed by the Court within 7 days. Probate fees are not as costly as one believes, and the fees range from approximately $100.00 to $1,250.00, depending on the size of the estate. There are only a few circumstances where avoiding probate is recommended; however, for the majority of New York residents, it is not necessary.
A Living Trust is a revocable trust in which an individual transfers all his/her assets into the name of trust. This means that the house, investment accounts, vacation property, etc. are owned by the trust although the individual controls the trust since he/she is the grantor, the trustee and the beneficiary during lifetime. After death, the trust becomes irrevocable and the trust assets pass as the Grantor has stated in the Trust Agreement.
The purpose of a Trust is basically to avoid probate. However, as stated above, since New York has an efficient probate system, it is not always necessary to avoid probate.
One situation where a Living Trust is preferred over a Will is if you are disinheriting a family member and the disgruntled family member may contest a Will. It is much more difficult to contest a Living Trust than a Will for many reasons; and a Will contest can hold up the administration of a decedent’s estate for a very long period of time. Avoiding a Will contest is a valid reason for using a Living Trust.
Additionally, if you are rich and famous and do not want your Will and asset information to be a matter of public record, then a Living Trust is a good vehicle to use since the Trust is not submitted to Court, and thus, not a public record.
However, keep in mind that legal fees are much more expensive for the establishment of a Living Trust than for the preparation of a Will. Also, it sometimes can be administratively difficult to transfer assets into a Living Trust. Lastly, you may still need a Will with a Living Trust to handle the distribution of personal property, or for assets that may have been forgotten and were not transferred into the Trust. Therefore, you may not be able to avoid probate after all.
You will find my fees to be very competitive and typically less than most firms. I will always give you a fee quote at our initial meeting and then you can decide if you want to proceed from there.
For Wills, I typically charge on a flat fee basis. The type of Will you need determines the amount of the flat fee. I find that clients prefer this method of billing because they feel more comfortable asking questions during the process without the fear of running up the bill.
For more sophisticated estate planning which involves the use of estate tax savings trusts, formulation of certain entities, estate tax analysis, and preparation of numerous documents, then I will bill on a flat fee basis for preparation of documents and hourly for the time involved in planning and analysis.
For the administration of an estate after the death of an individual, my fees are determined by the assets that the decedent owned at death and the length of time that will be involved in administrating the estate. Most importantly, the complexity of the decedent’s situation will determine my fees. For example, if the decedent owned a business at death that needs to be sold, or owned many real properties in other states or there is family disharmony, then my fees will be higher than a more straightforward administration. I prefer to bill on a flat fee basis, payable in one-third installments for simpler administrations, and hourly for more complex matters.