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NEW YORK (MainStreet) — Multi-millionaire Roman Blum died in 2012 on Staten Island at the age of 97 and left behind no known heirs -- and no will. The $40 million fortune Blum had accumulated, primarily from real estate transactions on Staten Island, is ultimately fated for the coffers of New York State, according to news reports. His estate is still unsettled.

Katz's big flaw? He didn't provide a postmortem plan.

Estate planning experts stress the importance of keeping important documents in order and up to date, especially when there is a major life event such as a marriage, divorce, or birth. Laws rapidly change and often vary from state to state, they point out.

And as medical advances extend human life expectancy, putting your estate in order becomes even more crucial, especially as the likelihood of an individual becoming incapacitated before dying increases.

Estate planning at its core is making sure you have left instructions for the allocation of your assets when you can no longer implement those decisions. Lack of preparation or simple mistakes can lead to problems in your last years as well as for your survivors.

"Nothing in estate planning should be left to chance," warns Standford Wollman, president of Channel Financial Planning in Rye, N.Y., adding that it took him two years to execute his parents' estate because of improper planning.

Estate planning professionals agree that the main documents needed to implement a careful estate plan should include at least a basic will, power of attorney, health care proxy, medical directive, and in many (perhaps not all) circumstances , a revocable living trust, assignment of personal property to the trust, deeds of real estate to the trust and certification of trust.

"Careful preparation of an estate plan will consider each of these documents as it relates to different categories of your assets," says Jonathan J. Rikoon, an estate attorney at Loeb & Loeb LLP in New York. "Overall coordination is essential. Different forms of property ownership have different legal requirements for disposition after death as well as varying tax features and impacts, so naturally the details of the paperwork will vary. But it has to fit together with no contradictions or gaps."

When There's A Will

The fundamental estate planning document to dispose of assets is a will, which has strict formalities to be valid and which vary from state to state.

Revocable living trusts are important will substitutes in an increasing number of states. Even in states when probating a will is straightforward, says Rikoon, living trusts are used to simplify multi-state property administration, expedite the transition of ownership and control upon death, maintain greater privacy and provide a vehicle for management of assets during a period of incapacity. A will by itself cannot accomplish those goals.

Some categories of wealth are not covered by a will or revocable trust. Most pension and retirement will pass to designated beneficiaries and so will life insurance unless it's in an insurance trust or payable to the insured's estate, explains Rikoon. Joint property will pass to the surviving co-owner. Of course, for those individuals who choose to hold substantial assets in revocable trusts during their lives, he points out, it is the trust instrument rather than the will that governs what happens to the property upon death.

Some clients have various family wealth vehicles in place including irrevocable trusts, family partnerships and limited liability companies (LLCs). These are usually designed to save estate or inheritance taxes and in most cases will continue to operate at the death of the client.

Who Gets What?

Entirely apart from the legal formalities of how assets are transferred at death, the core issue of who gets what is more critical. Even the common scenario of an estate passing equally to the children does not necessarily guarantee family harmony.

Disputes can arise in the underlying control of the estate assets, such as what occurs when one child is involved in the family business while the other children merely hold an ownership interest without any control, notes Paul J. Sowell, an estate attorney with Smith, Gambrell and Russell LLC in New York. As a solution, consideration should be given to introducing a family business structure which involves an objective third party who may be able to resolve any disputes, he believes.

"Doing proper estate planning is all about creating peace, not only peace of mind for the parents knowing their wishes will be carried out, but for the heirs in not having to go through an avoidable, painful and costly process, as I did," says Wollman, referring to his experience settling his parents' estate problems.

Ongoing trusts or buy-sell procedures may reduce pressure from spouses or beneficiaries, whether the legacy is cash or a share of a family business or other property, says Rikoon.

Planning for Incapacity

Death is not the only event that deprives a person of the ability to manage his or her own financial and personal affairs. It is equally vital to have documents in place directing who makes decisions upon incapacity as to both economic matters and health care.

A durable general power of attorney is an authorization to act on one's behalf in financial and personal business and tax affairs. As long as it is "durable," the power of attorney can continue to be used during any subsequent disability or incapacity of the signor. Managing one's real estate, such as buying or selling a residence, is a common instance in which a durable general power of attorney may prove useful. Beware, though, warns Rikoon: upon the signor's death, the durable power of attorney will become ineffective and the authority of the agent expires.

Finally, it is especially important to have some means for making medical decisions in case of incapacity. This can be accomplished by specifying both who decides and what the decisions should be. You should designate someone to make health care decisions on your behalf through use of a health care proxy or health care power of attorney, according to Rikoon. Additionally, a medical directive or living will allows you to specifically express your wishes as to what course of treatment you would want in case your wishes cannot be communicated.

Virtually every state has specific forms of healthcare proxies, and in some cases there are restrictions as to who can be appointed. In New York, for example, you can only have one health care agent at a time, and doctors cannot act as an agent for more than a limited number of patients.

Keeping Documents Current

Many people tend to procrastinate when it comes time to update or change such documents, according to Wollman.

"Most people spend more time buying a refrigerator than doing the proper estate planning," he says.

Reevaluate Over Time

The passage of time, typically five or ten years, may bring a very different perspective about the likely financial maturity of your beneficiaries, which can change your thoughts about the terms of trusts for children, for example. Likewise, your financial circumstances may change radically, either for the better or worse. That means the resources that your will or other documents direct to particular beneficiaries may be much more, or much less, than you anticipated when the documents were first prepared.

In addition, estate attorneys point out, tax laws change and the transfer taxes that apply to the transmittance of wealth have been particularly volatile over the past decade or so. For example, recognition of same-sex marriage, increased use of scientifically-assisted conception and even post-mortem conception from preserved genetic material may challenge the expectations of those whose will or trust was prepared five or ten years ago.

"With the constantly changing tax laws, one should periodically review their documents to ensure they make sense," advises Sowell, "because the current tax laws, particularly the gift and estate tax, are moving targets."

Adds Rikoon: "A plan that is as flexible as possible, and anticipates a variety of potential tax and legal structures, makes the most sense."

--Written by Bruce W. Fraser for MainStreet