By: NYLAG Financial Counselor Kamron Rustamov
April is Financial Literacy Month, and you have likely encountered various tips on budgeting, credit, savings, debt, etc. but here’s something equally crucial that often flies under the radar: Estate and Incapacity Planning. Estate and incapacity planning entails arranging that your loved ones know what to do when you die or are unable to make financial decisions due to a severe illness.
Though preparing for the end of life may seem like a daunting task, in this blog post, we’re breaking down five essential steps you can take to safeguard your loved ones and ensure peace of mind for years to come:
Step #1. Designate your beneficiaries in all your accounts.
There are different types of assets that require beneficiary designations, such as retirement accounts (such as IRAs and 401(k)s), life insurance policies, and bank accounts. Ensuring that all your accounts have designated beneficiaries empowers you to dictate who gains access to your assets upon your passing and can save you and your family money by avoiding additional legal expenses (through the probate process).
- You can learn more about the Probate Process in this article by SmartAsset.
Step #2. Fill out a health care proxy and create a living will.
Health is unpredictable so it’s important to plan so that your health interests are protected in the event of incapacitation. A healthcare proxy allows you to choose a trusted person to make medical decisions on your behalf if you become unable to do so due to illness, injury, or incapacitation. In New York, you do not need to have a lawyer to fill out a health care proxy form. However, you should have a conversation with your family about who you are choosing as your health care agent to make sure they agree to take on this responsibility. You may also consider a New York Living Will document during this conversation. A New York Living Will allows you to designate someone of your choosing to make healthcare decisions for you to the extent that you authorize them to on the document.
- The NY Department of Health has this free Health Care Proxy template that you can access online.
- New York State has this form to complete your New York Living Will
Step #3. Take inventory of your assets, including your digital assets.
You must track all your assets. One way of keeping track of this can be through a spreadsheet. Keep an accurate description, estimated asset value, and the percentage of the assets you own. Include: liquid assets like cash, savings, checking, and money market accounts; bonds; precious metals; real estate; valuable personal property like cars, boats RVs, expensive electronics, digital assets, heirlooms, and antiques; business interests; money you may be owed.
- New York State Courts uses this form for Inventory of Assets
- This resource maintained by Rutgers University is a comprehensive Digital Assets Inventory Worksheet
Step #4. Have a conversation with your family.
Your estate planning process can be used to prepare your loved ones and ensure your estate is executed according to your plan. Having these conversations may be uncomfortable but they are necessary to prevent costly situations when the estate is being distributed. Do not always assume that your survivors are comfortable managing a specific asset or making decisions on your behalf upon incapacitation. A conversation around the topic is an important place to start.
Step #5. Create a will.
A will outlines clear instructions for what happens to your property after your death. If you do not have a will, New York State will decide who gets your property according to applicable laws. A document is considered a Will if you claim it is on the document and it is: written, dated, and signed in front of two witnesses; this document does not need to be notarized.
- More information about a legal Will in New York State.
Still have questions?
NYLAG Financial Counselors help you create a plan to secure a financially stable future.
- If you are currently working with a NYLAG financial counselor, reach out to them now to discuss your tax planning options.
- Connect with a NYLAG financial counselor.
- Call our NY COVID-19 Legal Resource Hotline with a legal concern related to COVID-19.
