The crux of an effective estate planning strategy is a will. However, when it comes to preparing a will, many adults in New York and elsewhere fall short. According to a recent study, more than 50 percent of all adults don't have a will, and less than 10 percent of adults under age 35 have drawn up a will.
There are many reasons people should have a will on file, but certainly one of the main ones is that without a will, a person's estate can be tied up in probate for long stretches of time. The financial and emotional cost of going through the probate process can be exhausting, experts say.
A person's will is perhaps their most comprehensive estate-planning tool. A will can decree where a person's assets go, either to individuals or to a trust; name an executor, who manages the estate before the distribution of assets; and designate guardians for your children. These should be people who can be reasonably expected to care for the children until the youngest reaches age 18.
A durable power of attorney is another useful document. It spells out who can take over financial and legal decisions on your behalf if you are incapacitated. While often this is a spouse, it can be an attorney or another person as well.
A third important document to have is a healthcare proxy, which specifies your intentions about your health care if you are unable to make decisions for yourself. While family members may be able to make some decisions without a healthcare proxy, it will be legally easier if your intentions have been recorded in advance of your condition.
Source: U.S. News & World Report, "What Type of Estate and Tax Planning Do I Need to Do?" Susan Johnston, Feb. 27, 2012