While a will is a crucial first step in estate planning, it’s just the beginning of protecting what you’ve built. Challenges like a sudden illness, the need for privacy in asset transfers or intricate tax situations may arise during your lifetime or after your passing. In these cases, a will alone may not be enough.
The limitations of a will
A will can provide instructions for the distribution of your assets after death and name guardians for minor children. However, there are certain aspects of estate planning that it cannot cover. This includes:
- Avoiding probate: Assets that pass through a will must go through probate, which can be time-consuming, costly and exposes the will’s contents to public scrutiny.
- Controlling certain types of assets: A will can’t control non-probate assets. These include jointly-owned property, life insurance policies, retirement accounts with named beneficiaries and assets in trusts.
- Managing affairs during incapacity: A will only takes effect after you pass away. It can’t help manage your money or healthcare if you’re alive but unable to make decisions for yourself.
- Providing comprehensive tax planning: A basic will cannot handle complex tax planning. If you have a large estate or complicated finances, you might need more advanced strategies to save on taxes.
When your life changes – through marriage, divorce, having children or significant financial shifts – your will stays the same unless you actively change it. Regular reviews and updates are necessary to ensure your will continues to reflect your current wishes and circumstances.
What other estate planning tools should you consider?
While a will is essential, other tools can provide more comprehensive protection for your assets and wishes in New York:
- Living trusts: These allow you to manage assets during your lifetime and avoid probate after death. They also offer more privacy and flexibility in estate management.
- Powers of attorney: These let you appoint an agent to make financial and legal decisions on your behalf if you’re unable to do so.
- Health care proxies: This appoints someone to make medical decisions for you if you can’t communicate.
These tools complement your will, creating a comprehensive plan that manages your affairs according to your wishes, both during life and after death.
Create a plan that truly fits your needs and goals
Every person’s legacy looks different, and yours may require more than a basic will. It’s wise to consult with an attorney when exploring your options.