Becoming a parent is exciting and brings new changes to your life. When you have a new child, it is time to create an estate plan or review and update the plan you already have in place. New York estate planning lawyer Lesly R. Devereaux offers New York family estate planning services for new parents. With her help, you can ensure that your child will be protected if something unexpected happens to you. Here are some of the things you should consider after becoming a parent for the first time.
If you pass away without a will, New York’s intestacy laws will control how your assets will be distributed. If you have minor children at the time you die, this can complicate things. For example, if you have a surviving spouse, he or she will receive the first $50,000 from your estate plus 50% of the remainder. Your children will then divide everything else between them. However, minor children cannot directly inherit assets. Instead, the court will create a conservatorship and appoint a guardian to manage any assets for your child.
This can be expensive and reduce the size of your estate. When your child turns 18, he or she will receive what’s left in a lump sum. Children may not be mature enough to handle a large windfall at age 18. You can avoid these problems by creating a last will and testament in which you direct that your assets pass to your spouse instead of your minor children. If you have a child from an earlier marriage, you can create a trust for that child and direct a portion of your assets to be placed in that trust so your child will not be disinherited. You can do this by including a testamentary trust in your will.
Choosing a Guardian for Minor Children
Whether you are a single parent or are married, you should name a guardian in your will to care for your child if you or both you and your spouse die. This person should be someone who is willing and able to raise your child if something should happen to you. You do not want to leave the decision up to a judge who might not know your family.
Life Insurance and Retirement Accounts
Life insurance and retirement accounts do not pass under the terms of your will. Instead, their proceeds will pass to the beneficiary you have designated. You should avoid having a joint account with your minor children since they might receive the money in the account outright.
Likewise, if you name your minor children as the beneficiaries of your life insurance or retirement accounts, they will receive the money in a lump sum upon reaching age 18. It is better for you to designate the trust you have created for your children as the beneficiary of your life insurance and retirement accounts. That way, the funds will go to the trust and will be managed by the trustee. You can then specify a specific age your children must reach before receiving their distributions.
Planning for Estate Tax
If you have a very substantial estate, you will need to consider both the federal estate tax and New York’s estate tax. While most people will not need to worry about the federal estate tax since it is currently at $11.7 million, New York’s estate tax exclusion is much lower. In New York, you will be able to exempt $5.93 million. Anything above that will be taxed at the state’s estate tax rate. You should also consider your life insurance and other assets that you will pass to your children. Speaking with New York estate planning lawyer Lesly R. Devereaux can help you to minimize any taxes that might be assessed.
Get Help with New York Family Estate Planning
Whenever you have a new child or experience another major change in your life, you should meet with an experienced New York estate planning lawyer. Lesly R. Devereaux is an experienced estate planning attorney who helps new parents create estate plans that will protect their families and children. Contact us today to schedule a consultation by calling 212-804-5736.