Estate planning is a crucial process for ensuring your assets are distributed according to your wishes after you pass away. However, many New Yorkers make common mistakes that can lead to unintended consequences. Here are five frequent errors to avoid when planning your estate in New York:

1. Failing to Update Beneficiaries

One of the most critical mistakes is neglecting to review and update beneficiary designations regularly. In New York, certain assets like life insurance policies and retirement accounts pass directly to named beneficiaries, regardless of what your will states.

Key considerations:

• Review beneficiary designations after major life events (marriage, divorce, births, deaths)

• Ensure your beneficiaries align with your current wishes

• Remember that beneficiary designations typically override will provisions

2. Overlooking Digital Assets

In our increasingly digital world, failing to account for online accounts and digital assets is a growing concern. New York has adopted the Revised Uniform Fiduciary Access to Digital Assets Act, which provides a framework for managing digital assets after death.

Steps to take:

• Create an inventory of your digital assets

• Provide instructions for accessing these accounts

• Consider appointing a digital executor in your will

3. Not Planning for New York Estate Taxes

New York imposes its own estate tax in addition to federal estate taxes. As of 2024, estates worth more than $6.94 million are subject to New York estate tax, with rates ranging from 5.6% to 16%. Failing to plan for this can significantly reduce the amount passed on to your heirs.

Tax planning strategies:

• Consider gifting strategies to reduce estate size

• Explore the use of trusts to minimize tax exposure

• Regularly review your estate plan as tax laws change

4. Neglecting to Plan for Incapacity

Many New Yorkers focus solely on what happens after death, overlooking the possibility of becoming incapacitated. Without proper planning, your family may need to go through a costly and time-consuming guardianship process.

Essential documents:

• Durable Power of Attorney for financial decisions

• Health Care Proxy for medical decisions

• Living Will for end-of-life care preferences

5. DIY Estate Planning

While online resources and DIY kits are readily available, creating a comprehensive estate plan without professional guidance can lead to costly mistakes. New York's estate laws are complex and frequently change.

Risks of DIY planning:

• Improperly executed documents may be deemed invalid

• Failure to address New York-specific laws and tax implications

• Missed opportunities for asset protection and tax savings

To avoid these common pitfalls, it's advisable to work with an experienced New York estate planning attorney. They can help ensure your estate plan is comprehensive, up-to-date, and tailored to your specific circumstances and goals. Remember, estate planning is not a one-time event. Regularly reviewing and updating your plan is crucial to ensure it continues to reflect your wishes and complies with current laws. By avoiding these common mistakes, you can create a robust estate plan that protects your assets and provides for your loved ones according to your wishes.

Have any questions? Give us a call today!