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Everyone should have four essential estate planning documents in place, regardless of age.

1. Last Will and Testament

Every individual should have a Will, even if they also create a trust or intend to avoid probate in other ways. A Will outlines the testator’s intentions and can clarify any ambiguity in other estate planning documents. It also serves as a safety net in case any assets are not transferred into a trust or otherwise addressed.

Every Will contains a residuary clause, which distributes any property not specifically bequeathed. This clause is especially important because assets and ownership often change throughout a person’s lifetime.

2. Power of Attorney

A Power of Attorney authorizes one or more individuals to act on your behalf in financial and legal matters. It can take effect immediately or become effective upon incapacity, depending on how it is drafted. Proper planning with a Power of Attorney can help avoid the lengthy and costly court process of appointing a guardian if you become incapacitated.

3. Healthcare Proxy

A Healthcare Proxy allows you to appoint someone to make medical decisions on your behalf if you become incapacitated or in emergency situations.

4. Living Will

A Living Will expresses your wishes regarding life-sustaining treatment if you are unable to communicate, such as in the event of a permanent unconscious or vegetative state.

Forming a trust can serve many purposes, including asset protection, avoiding probate, reducing estate taxes, and planning for long-term care.

A living trust (also known as an inter vivos trust) is created during the grantor’s lifetime. A testamentary trust is established through a Will and becomes effective upon the grantor’s death.

A living trust may be revocable or irrevocable.

A revocable trust is commonly used to avoid probate because trust assets pass according to the terms of the trust rather than through a will. However, revocable trusts generally do not provide asset protection, since the grantor typically retains control of the assets and may amend or revoke the trust at any time. It is common for the grantor to serve as trustee of a revocable trust.

An irrevocable trust can both avoid probate and provide asset protection. Because the trust cannot be revoked by the grantor and the grantor typically does not serve as trustee, the grantor does not retain control over the trust assets.

A common type of irrevocable trust is a Medicaid Asset Protection Trust (MAPT). This type of trust is usually structured as an income-only irrevocable trust, meaning the grantor may receive income generated by the trust but does not have access to the principal.

Another option, when the sole goal is to avoid probate, is a Transfer-on-Death Deed (TOD) under New York Real Property Law § 424, which took effect on July 19, 2024. This law allows a real property owner to transfer their interest to designated beneficiaries by recording a TOD deed.

The owner retains full ownership rights during their lifetime. They may sell, mortgage, or otherwise transfer the property at any time before death. The owner may also change beneficiaries or revoke the TOD by recording a new TOD deed or by recording a subsequent deed that does not designate a transfer on death.

A TOD deed is generally simpler and less expensive to implement than a revocable trust when probate avoidance is the only objective.