The 7 Biggest Estate Planning Mistakes in New York City (2025-2026 Guide)
As a New York estate planning attorney with many years of experience, I have seen the devastating financial and emotional fallout from well-intentioned “simple” plans. After successfully guiding over 1,000 families through the probate and administration process, my team at Morgan Legal Group has identified a clear pattern of critical, yet common, mistakes. These aren’t just small errors; they are multi-million dollar catastrophes.
My name is Russel Morgan, and our 900+ positive online reviews often come from clients who are relieved to finally have a *real* plan. An estate plan you made just a few years ago is likely obsolete. The 2025-2026 legal landscape in New York is a minefield. Two massive “time bombs” are ticking: the 2026 federal estate tax “sunset” and New York’s new 30-month Medicaid “look-back” for home care.
A “DIY” plan or a “simple will” will not protect you from these threats. This guide will expose the 7 biggest mistakes we see in our practice and show you how to build a fortress around your legacy instead.
Mistake #1: Relying on a “Simple Will” (The Probate Court Trap)
This is the single most dangerous misconception in New York.
The Myth: “I have a Will, so my family is protected and will avoid court.”
The NY Reality: A Will does not avoid probate. A Will is a one-way ticket *to* probate court. It is a formal set of instructions for the Surrogate’s Court judge. It has no legal power until a judge validates it.
The New York City Probate Nightmare
In our 1,000+ cases, we know that probate in New York City (whether in Brooklyn, Queens, or Manhattan) is a disaster.
- It’s 100% Public: Your will and a full inventory of your assets (your co-op value, your accounts) become a public record. This is a goldmine for scammers and nosy relatives.
- It’s Agonizingly Slow: A “simple” probate in NYC can take 1-2 *years*. Your assets are frozen. Your family cannot sell the home or access accounts.
- It’s Shockingly Expensive: Your estate must pay executor commissions (on a $1M estate, this is $34,000) plus thousands in court costs and legal fees.
- It Invites Conflict: The court process *requires* all next-of-kin to be notified, giving any disgruntled relative a formal invitation to contest the will and sue your estate.
The Solution: A Revocable Living Trust. A trust is a private contract. It owns your assets, so when you pass, there is no court, no delay, and no public record. Your “Successor Trustee” takes over immediately. It is the *only* way to guarantee you avoid probate.
Mistake #2: Adding a Child to Your Deed or Bank Account
The Myth: “I’ll just add my daughter to my deed as a ‘Joint Tenant’ to avoid probate. It’s easy.”
The NY Reality: This is the most catastrophic “simple” fix. It avoids probate but creates three new, larger disasters.
Disaster A: The Capital Gains Tax Bomb
When your daughter *inherits* your home, she gets a “step-up in basis” and pays $0 in capital gains tax. When you “gift” her the home by adding her to the deed, she gets your *old* “cost basis.”
Example:
- You bought your Long Island home in 1985 for $200,000. It’s now worth $2.2M.
- The Right Way (Inherit via Trust): Your daughter inherits at $2.2M, sells at $2.2M. Her Tax Bill: $0.
- The “Easy” Way (Deed): Her basis is your old $200,k. She sells at $2.2M. She has a $2M *profit* and now owes $500,000+ in taxes.
Your “easy” plan just cost your child half a million dollars.
Disaster B: You Lose Control & Expose Your Home
The moment you add your child to the deed, they are a legal owner. You cannot sell, refinance, or even get a HELOC without their signature. Worse, your home is now exposed to their creditors. If they get divorced, sued, or have a tax lien, *your home* is on the line.
Disaster C: The 2025 Medicaid Trap
This “easy” transfer is a “gift” that triggers the 5-year Medicaid look-back AND the new 30-month look-back for home care. You have just made yourself 100% ineligible for long-term care.
Mistake #3: Having No (or a “DIY”) Incapacity Plan
The Myth: “My Will handles everything.”
The NY Reality: A Will does nothing for you while you are alive. Estate planning is also about *incapacity*—what happens if you have a stroke, an accident, or dementia?
Without a plan, your family is powerless. They cannot access your accounts to pay your bills. They cannot make medical decisions. Their *only* option is to file a public, expensive, and humiliating Article 81 Guardianship proceeding to have you declared incompetent by a judge.
The Solution: The 3 “Must-Have” Incapacity Documents
- Durable Power of Attorney: Appoints a financial “agent.” This is your #1 defense against guardianship. But be warned: NY has one of the strictest POA forms in the country. A “DIY” form *will* be rejected by your bank.
- Health Care Proxy: Appoints a medical “agent” to make decisions for you.
- Living Will: States your end-of-life wishes (e.g., life support).
As our 900+ reviews show, the peace of mind from getting these three documents done *correctly* is immense.
Mistake #4: Failing to Fund Your Trust
The Myth: “I signed my trust, so I’m all done.”
The NY Reality: A trust is just an empty box. It does nothing until you “fund” it by re-titling your assets into its name. This means filing a new deed for your home, changing your bank accounts, and re-titling your co-op shares.
In our practice, we’ve seen countless families arrive with a “trust” from another lawyer, only to discover it was never funded. The result? The *entire* estate goes to probate, and the trust is a useless piece of paper. Our firm manages the entire funding process, especially the complex transfer of NYC co-ops, which many lawyers don’t know how to do.
Mistake #5: Ignoring the 2026 Estate Tax “Sunset” (The High-Net-Worth Trap)
The Myth: “The federal estate tax only affects billionaires.”
The NY Reality: This was true in 2025. It is not true in 2026. On Jan 1, 2026, the $13.61M federal exemption is being cut in half to ~$7M.
This is a “time bomb” for high-net-worth New Yorkers.
Case Study: The $15M NYC Estate
- In 2025: $15M estate is under the $27.22M (married) exemption. Tax = $0.
- In 2026: The exemption drops to ~$14M. The estate is $1M over. New Tax Bill = $400,000.
This is combined with the NY-specific “double whammy”: our own $6.94M “cliff” tax and no “portability” for spouses. 2025 is your *last chance* to “use it or lose it” by making strategic gifts to advanced trusts (like SLATs or ILITs) to lock in your high exemption before it vanishes.
Mistake #6: Ignoring the 2025 Medicaid “Look-Back” (The Middle-Class Trap)
The Myth: “Medicare will pay for my nursing home.”
The NY Reality: Medicare pays $0 for long-term custodial care, which costs $20,000/month. Medicaid *does* pay, but it’s a poverty program.
This is the most urgent 2025 crisis for homeowners. For years, NY had “no look-back” for home care. That era is over. A new 30-month look-back is being implemented. This means any “gift” you made (like adding a child to a deed) in the last 2.5 years will *disqualify* you from home care, forcing you to sell your house.
The Solution: The Medicaid Asset Protection Trust (MAPT). This is an irrevocable trust you create *now* to start the look-back clock. After the 5-year/30-month period, your home is 100% protected. With the new rules, “crisis” planning is dead. Proactive elder law planning is the only way to protect your home.
Mistake #7: Failing to Update Beneficiary Designations
The Myth: “My Will controls all my assets.”
The NY Reality: This is a fatal error. Your IRA, 401(k), and life insurance are controlled by *beneficiary designation forms*. These forms override your Will.
In our 1,000+ cases, we have seen this tragedy:
- A man’s will leaves everything to his new wife.
- His $2M IRA beneficiary form, signed 20 years ago, still lists his *ex-wife*.
- The Result: The ex-wife gets the entire $2M. The current wife gets nothing. The will is useless.
Furthermore, the SECURE Act’s 10-Year Rule has turned IRAs into a tax trap. Naming a trust as your IRA beneficiary is now incredibly complex. Your plan *must* be reviewed to coordinate these forms.
Conclusion: “Simple” is a Trap. “Comprehensive” is the Solution.
Your legacy is your life’s work. It is not a “DIY” project. In the complex 2025-2026 New York legal landscape, an “easy” plan is a guaranteed failure. The only way to make it “easy” for your loved ones is to do it the *right* way.
A comprehensive plan—a Revocable Trust, a “battle-tested” Power of Attorney, a Health Care Proxy, and a review of your assets against the 2025/2026 tax and Medicaid threats—is the only fortress that works.
Do not wait for a crisis. Schedule a consultation with the expert team at Morgan Legal Group today. Our 900+ positive reviews (as seen on Google) come from clients we’ve saved from these exact mistakes. Let us build your fortress.
For more information on New York’s probate laws, you can visit the NY Courts Surrogate’s Court official website.
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