As the year comes to a close, with all the holiday shopping, family parties, and resolutions, it’s also the perfect time to review and update your estate plan – especially if you live in New York State. Taking a close look at your plan now can help ensure your financial future is secure and that you’re taking full advantage of all the available estate planning tools at your disposal. At Tiveron Law, we’re all about helping our Western New York neighbors sort out these tricky details. Here are five key estate planning tips we suggest tackling before the calendar flips.
1. Check Your Beneficiary Forms
This is almost certainly the most common mistake people see regarding year-end Estate Planning. We all think our will is the final word on who gets what, but that’s not always true.
Personal accounts like your 401(k), IRA, life insurance, and even some bank accounts have their own beneficiary designations – which legally override your will, no matter what it says. If you’ve been through any big life changes – such as a marriage, divorce, or a new child – you need to update these beneficiary forms, otherwise your assets might not go to who you want them to. That’s why it’s critical to take a moment to track them down and make sure they’re current.
2. Make Your Annual Tax-Free Gifts
The year’s end is a prime time to move a little wealth. The IRS allows you to give a certain amount of money to anyone you want each year without it counting against your lifetime gift tax exemption.
This is a “use it or lose it” deal, as the amount doesn’t roll over. For 2025, that number is $19,000 per person or $38,000 for a couple. Giving these gifts to your kids or grandkids is a smart way to trim your taxable estate. We can also tell you about other options, like paying for medical or education expenses, which don’t count toward that limit.
3. Keep an Eye on New Tax Laws
Taxes are always changing – especially in New York. Recently, the big news has been the growing difference between federal and state exemptions.
The federal estate and gift tax exemption is a high number, but here in New York State, it’s much lower at $7.16 million. New York also has a “cliff” rule that can hit you hard: if your estate is a little too big, the whole thing gets taxed. Additionally, there is a three-year “claw-back” rule, that requires the value of certain larger, non-exempt gifts to be included when determining your estate’s liability for state estate tax. It can seem confusing, but getting ahead of it now with professional help can save your loved ones from a big tax bill later and also illustrates why it’s important to work with an estate planning specialist.
4. Dust Off & Update Your Legal Documents
Your will, trusts, and powers of attorney aren’t one-and-done deals. Estate planning documents are “living documents,” which mean they need a check-up…and potentially some changes, especially if your life has changed.
Are the people you named as your executor or power of attorney still the right choices? Maybe they’ve moved, or their health has changed, or your relationship isn’t what it used to be. A quick review of your documents ensures they’re still in line with your wishes and ready to be used if they’re ever needed. Regular reviews of your estate plan can keep you thinking about your future and save you and your family a huge headache in the long run.
5. Put Your “Financial House” in Order
Put yourself in the “shoes” of people who will have to handle your affairs someday. The best gift you can give to them is making sure it is simple and easily understandable.
Each year-end is a great time to write down a list of all your accounts – bank, investment, retirement – and where your important papers are stored. Having a clear roadmap for your executor can save them a ton of time and stress during what’s already a tough time for your family – and it can help you address any issues before your estate plan is in action.
Frequently Asked Questions
Q: What happens if I die in New York without a will?
A: If you pass away without a will, it’s called dying “intestate.” New York State law dictates how your assets are distributed, and it may not align with your wishes. For example, your assets might go to relatives you’re not close with, and a court will have to appoint a guardian for any minor children. That is why it’s critical to have an estate plan in place.
Q: What is the difference between a will and a trust?
A: A will is a legal document that provides instructions for how your property should be distributed after you die. A trust, on the other hand, is a legal arrangement where assets are held by a trustee for the benefit of another person. Assets held in a trust can often bypass the probate process, which can be time-consuming and expensive.
Q: What is a Power of Attorney?
A: A Power of Attorney is a legal document where you appoint a trusted person (your “agent”) to make financial decisions on your behalf if you become unable to do so yourself. This could include paying bills, managing your bank accounts, and handling real estate transactions.
Q: What is a Health Care Proxy?
A: A Health Care Proxy is similar to a Power of Attorney, but it’s specifically for medical decisions. You name a person to be your “health care agent” who can make medical decisions for you if you become incapacitated and can’t speak for yourself.
Q: Does having a will mean my family will avoid probate?
A: Not necessarily. A will does not automatically avoid probate. Probate is the legal process of validating a will and distributing assets. A will can, however, make the probate process smoother and ensure your wishes are carried out by the court. Trusts are a common tool used to help families avoid probate.
Q: How often should I review my estate plan?
A: It’s a good idea to review your estate plan every three to five years, or whenever a major life event occurs. This includes things like getting married or divorced, having a child or grandchild, buying or selling a home, or a change in your financial situation.
Q: What’s the New York State estate tax exemption for 2025?
A: For individuals who die in 2025, the New York State estate tax exemption is $7.16 million. This is significantly lower than the federal exemption, so it’s crucial to plan accordingly, especially if your estate is above this threshold.