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WHAT ARE THE NECESSARY INGREDIENTS OF A VALID WILL? PART 1 OF 3

Davidov Law Group

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To create a valid will in New York, you must comply with the New York Estates, Powers, and Trusts Law or “EPTL.” The New York EPTL governs all wills and trusts drafted by New York residents. Once your executor or custodian probates your will, the New York Surrogate’s Court Procedure Act or “SCPA” govern the procedural parts of your estate administration. Other various state, federal and common laws may apply to your will. Generally, the state statute governs most aspects of wills and estates in New York.

What do you need to do to create a valid will in New York? At a minimum, your will must be in writing, and you must comply with the statutory testamentary formalities established by the New York EPTL. In very limited situations, an oral will may be valid, but because of the limitations, we recommend drafting a written will. You must also sign your will in front of two independent witnesses who will also sign your written will. You and your witnesses will include addresses in your will and participate in a “will signing ceremony.” During the ceremony, you will state that you are signing your will. According to the NY EPTL, you must be at least 18 years old and legally competent to sign a contract or will. This means that you are of sound mind and legally capable of understanding that the document that you are signing is your will.

Check out our blog tomorrow to read Part 2 of What are the Necessary Ingredients of a Valid Will.

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When creating your estate plan, you will likely see many legal terms that may confuse you. It’s important to understand what these terms mean so that you can create a plan that fits your needs and so that you understand how your plan works. We’ve taken the time to define some of these terms so that you can better understand the estate planning process. Take a look at the information below to learn more. If you have any questions, or if you’re ready to start creating your estate plan, contact an estate planning attorney.

Estate – This includes the decedent’s property, including real estate, personal property, and other assets that are owned and controlled by the decedent at the time of his or her death.

Beneficiary – An individual who derives benefit from the creation of a trust, proceeds of insurance policy, or property designated by a will.

Will – A legal document that an individual uses to state his or her wishes on how property will be divided after death. It also discusses who will care for his or her minor children (i.e. guardian) and who will handle estate affairs after his or her death (i.e. executor.)

Trust – A legal arrangement (i.e. contract or agreement) in which an individual gives control over the assets held in the trust to a trustee in order to benefit the trust’s beneficiaries.

Intestate – A person who dies without leaving a will is said to have died intestate. In this situation, the individual’s state laws (i.e. New York) and the courts will determine how his or her affairs are handled.

Probate – The legal process that determines the validity of a will and administers an estate until all of the property is distributed.

These terms will help you better understand your own estate planning. If you have any additional questions, or if you’d like to begin discussing your estate plan needs, consult with a qualified estate planning attorney.

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If you’ve been putting off your estate plan, you’re leaving yourself unprepared and unprotected. Many people put off planning because of anxieties, other commitments, or because they feel there is no need for planning. However, estate planning is extremely important; just look and see…

  • Without an estate plan, your assets will be distributed to beneficiaries based on your state laws. This may mean that your assets are given to the wrong people. If you want to control who receives your assets after your death, an estate plan is necessary.
  • No plan means that you’re unable to appoint a guardian for the care of your children. Instead, the court will determine who raises your children if you can’t.
  • Without a plan in place, you won’t be prepared for medical emergencies. This means that you will not have a loved one assisting you and helping to make important medical decisions on your behalf. You’re loved ones will also not have the access they need to handle your financial affairs on your behalf. No access and no authority mean that court will intervene.
  • Without a plan, your family may be left to struggle to pay for everyday expenses and past debts. With a plan, you’re able to purchase life insurance coverage so that your family doesn’t struggle to find a way to replace your income.
  • If you choose not to plan, you will have no control over the future. This includes being unable to plan for long term care costs, not having the option to appoint loved ones to help you with your estate affairs, and having no say in how your funeral arrangements are handled.

Now is the time to create your estate plan. If you have any questions, or if you’d like to begin creating your estate plan, consult with a qualified estate planning attorney.

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Some clients ask whether avoiding probate also avoids the federal estate tax. Both probate and the federal estate tax deal with your estate, but avoiding one doesn’t avoid the other. To answer the question, if you avoid probate, you don’t necessarily avoid the federal estate tax.

What is Probate? What’s the Federal Estate Tax?

Probate is the process of validating a will, if there is one, and settling an estate. Probate assets are all those assets that the decedent owned in his or her individual name, but didn’t have a beneficiary designation.
Examples would be a bank account in an individual’s name or a house in an individual’s name.

Examples of NON-probate assets include assets owned as joint tenants with right of survivorship (with a spouse or another individual), life insurance, retirement accounts, and annuities.

The federal estate tax is a tax on everything an individual owns at death, regardless of whether the asset goes through probate, or not.
Examples of assets that are subject to the federal estate tax include all assets you own such as bank accounts, investment accounts, retirement accounts, a house, and annuities, no matter how you own them. If you have a right to them or control them in some way, those assets are subject to the federal estate tax.

Although avoiding one, doesn’t necessarily mean that you avoid the other, both probate and the federal estate tax can be avoided, when you work with a qualified estate planning attorney.

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When creating your will, it’s important to make sure that you follow all laws so that you have a will that is valid. In many cases, wills are contested, or challenged, because laws are not followed, or an individual was found to be forced into creating the will. Take a look at the following information, to better understand what makes a will valid. If your will isn’t legally valid, its terms are useless.

  • You must be 18 years of age or older

In order to create a legal and valid will, you must be old enough. Children are unable to make legal decisions. You must have attained the age of 18 to execute a legally valid will.

  • You must follow your state’s laws

Each state has specific laws related to creating a will. You may need to have multiple witnesses when signing your will, for example. Many states also require a non-handwritten will. It’s important to work with an estate planning attorney, so that you meet all of your state’s legal requirements.

  • You must be mentally competent when creating your will

If you don’t understand what you’re doing or the decisions that you’re making when creating your will, then your will is not valid. You must understand your intentions as well as the results of creating your will.

  • You must want to create your will

If you make a will under the undue influence from another individual, then your will is not valid. It’s illegal for individuals to pressure, force, or threaten a person into creating a will. A will can only be valid if you intended to create the will without the influence of others. Both the contents of the will and the actual signing (i.e. execution) of the will must be voluntary and without undue influence.

If you don’t create a valid will, it may be contested after your death. It’s important to hire an estate planning attorney so that you have a will that meets all of your needs, including your state’s legalities.

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When an individual dies, his or her financial life must be wound down. If that person died with a will or a living trust that was not fully funded, will administration is required. Another name for will administration is “probate.” You’ve probably heard that term.

During probate, the court must validate the will; then, will administration can begin.

Will administration (probate) is required for two main reasons.

  1. Change the name on the title of an asset from that of a decedent to a beneficiary.
  2. Pay creditors

In more detail, during will administration:

  1. The will is submitted to court for validation.
  2. Creditors, beneficiaries, and heirs are notified of the death.
  3. Assets are gathered, inventoried, appraised, and managed.
  4. Legitimate creditor claims are paid.
  5. All taxes are paid.
  6. Assets are distributed to beneficiaries.

The personal representative (i.e. executor) is in charge of getting all this done. It’s wise to choose an executor who will properly manage the duties. Characteristics of the ideal executor include fiscal responsibility, good time management, good record-keeping, ability to communicate well with beneficiaries and professional advisors such as the financial advisor, CPA, and estate planning attorney.

Be sure to name contingent executors as well; in case your primary executive is unable or unwilling to serve when the time comes. Otherwise, the court will intervene and appoint a personal administrator (i.e. administrator) of its choice, not yours.

If you have questions about will administration, be sure to consult a qualified estate planning attorney to get good advice about your individual situation.

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Living wills and last wills and testaments, most commonly referred to as simply a will, are two very important parts of any complete estate plan. These two vital parts of your estate plan serve two very different purposes. While you can create these documents at any time, you should only do so after consulting with a qualified attorney who can advise you about all your options and make recommendations about what you should do in your particular situation.

Creating The Documents: Both a living will and a last will and testament have very specific requirements, though the specific requirements you have to meet differ depending on the state in which you live. To create a will, you must usually make it in writing. You also have to sign the document and probably get it signed by two witnesses. A living will must be in writing and signed, but you typically must have it either witnessed or notarized.

Making Changes: Making changes to your will requires you to meet the same standards you must meet when you created it. So, if you need to sign and have your will witnessed, you have to do the same to any amendments or changes, known as codicils. The requirements with a living will are similar in that you have to meet the living will creation requirements whenever you want to make changes. In most situations, it’s best to create an entirely new living will rather than add changes to the previous document. Also, you can also simply tell your doctor what your medical preferences are even if they contradict what you placed in your living will and your doctor must follow your instructions.

Timing: Living wills apply only when you are alive, while wills apply only after you die. As long as you are mentally capable of making choices and meet the legal requirements, you can change either document at any time without telling anyone else.

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After the death of a loved one, there is much concern about paying taxes. One of the first questions beneficiaries ask is, “Do I have to pay taxes on my inheritance?”

The good news for beneficiaries is that all inheritance and estate taxes will be paid from the estate before you receive your inheritance. Therefore, you do not have to pay taxes on your inheritance; they’ve already been paid before you receive it.

However, if the assets appreciate in value from the date of death of a loved one to the date you sell them, you may owe capital gains taxes on the sale, depending on your income and current law. For example, if you inherit a stock portfolio worth $50,000 at your loved one’s date of death and you sell the stocks and receive $60,000, you will owe capital gains on $10,000 ($60,000 – $50,000 = $10,000.) The amount of tax due will be based upon the current rate of capital gains and how long you owned the asset (i.e. short term or long term.)

Another good thing about inheriting assets is that you do get a full step up in tax basis to the date of death value of the assets. Consider the example we used above.

If your loved one purchased the stock portfolio for $30,000 and gave the stocks to you during his or her lifetime, you would receive the transferred basis of $30,000. So, when you sold them for $60,000, you would owe taxes on the increase in value of $30,000 ($60,000 – $30,000 = $30,000.)

In contrast, when you receive the assets at your loved one’s death, you only owe taxes on the gain from the date of death until the date of sale. If the long term capital gains rate is 15%, inheriting the assets instead of receiving them as a gift, means paying $1,500 in taxes as opposed to paying $4,500 in capital gains taxes ($10,000 x 15% = $1,500 versus $30,000 x 15% = $4,500.)

For specific advice on your inheritance and taxes, consult with a qualified