Who knew the death of "Diff'rent Strokes" child actor Gary Coleman would illustrate so perfectly some of the many things that can go wrong with estate planning?

The case had all the elements for a drama: A will that hadn't been updated, leaving everything to a mystery ex-girlfriend; a health care proxy that hadn't been updated, leaving his embattled ex-wife in charge of whether he lived or died; and enough loose ends to keep everyone fighting for ages.

Still, in drafting a will and naming a health care proxy at all, Coleman was ahead of more than half the U.S. population. Roughly 55 percent of Americans do not have a will, and 59 percent have no health care directives in place, according to a 2007 study by the Martindale-Hubbell legal review.
"They're issues that people don't want to think about," said Joseph Curatolo, president of Georgetown Capital, a financial services firm in Williamsville.

Even if people do have the foresight to think about the inevitable, things can get overwhelming.

"I'm not as prepared as I thought I was," said Tom Landsheft, 54, of Amherst. "The more information I find out, the more questions I have."

He and wife Karen, 52, are planning to retire within three to five years and are working to get everything ready ahead of time.

Diane, 64 and and Vernon Hopkins, 67, of West Falls, had planned well for their retirement 16 years ago. But they are staying vigilant, so their nest egg lasts as long as they do.

"I have to stay as informed as I possibly can. We have a will. We have children, grandchildren, assets, no bills. All that is the American dream. Now how am I able to continue to make that work for me and my offspring?" said Vernon Hopkins.

There are some questions that many people face. The answers may surprise you.

*"I've drafted a will with my attorney. I'm all set, right?"

That depends. Do the beneficiaries in your will match those named on accounts that are payable upon death? Think way back to when you filled out your life insurance paperwork. Who did you name as your beneficiary? How about your 401(k) account? That designation trumps anything written in your will.

So even if you don't remember naming your parents as the beneficiary of your IRA, they will get your money instead of your spouse and children once you're gone. You might want to check up on those accounts and update your beneficiary designations. Recent changes to the New York Estates Powers and Trust Law (EPTL) eliminate a former spouse as a named beneficiary in the event of subsequent divorce.

*"If I were to die without a will, would the state automatically take everything?"

No. Under the EPTL, your assets are split, giving 50 percent of everything to your spouse and dividing the other 50 percent among your children. The first $50,000, though, will go to the spouse outright. So if the estate has less than $50,000, the children won't get anything. If the children are minors, their portion will go into a guardianship account controlled by Surrogate's Court until they turn 18.

Without a will, "you've gone from controlling everything to controlling nothing," said David H. Alexander, an attorney with Gross, Shuman, Brizdle & Gilfillan, who has specialized in wills, estates and trusts for over 35 years.

You may be better off having your assets administered and then distributed by using a living will trust. With a living trust, you outline directions about how your assets should be dealt with while you are alive and then distributed after your death. Don't forget to include backup directions should something happen to the beneficiaries you name. Also keep in mind the ages of your children and whether they would be capable of handling money on their own. Trust accounts set up for children have a broader range of investment options than guardianship accounts under the supervision of Surrogate's Court.

*"If my dad dies without a will, can I access his savings account to pay for funeral expenses?"

Probably, but you will need to go through Surrogate's Court first, which will take some paperwork, some coordination and about three days. An easier solution would be for dad to make one or all of his children a "joint owner" on his bank account in an amount equal to unpaid funeral expenses. That way, they would have instant access to needed funds after his death.

In the case of a married couple, the widowed spouse would be granted immediate access to $15,000 in cash to pay for immediate expenses. He or she will probably need to bring both the death certificate and their marriage certificate to the bank for identification purposes.

*"I've got a health care proxy. Does that mean I don't have to worry about naming an agent to act on my behalf under a durable power of attorney?"

No. The two are completely separate and have nothing to do with one another. A health care proxy names someone to make health care decisions on your behalf. A durable power of attorney makes financial and business decisions on your behalf. A durable power of attorney names someone to act in accordance with your wishes and can be revoked at any time you choose. You can print up a free form at, which you'll want to sign before a notary and file with your county clerk.

*"Is a life insurance payout taxable?"

Typically, no. But if the policy was owned by the person who passed away, the policy gets lumped into their gross estate. So, while it may not be subject to income tax, it may end up being subject to federal and state estate taxes.

*"In terms of taxes, is there a difference when leaving 401(k) assets from a Roth IRA versus a traditional IRA?"

Yes, said Amy Jo Lauber, a local certified financial planner. Assets from a traditional IRA or 401(k) program are taxable to the person receiving them. Proper beneficiary planning with traditional IRAs is crucial, Lauber said, because there are so many rules governing how and when distributions are made and taxed.

A Roth IRA or Roth 401(k) is paid free of income tax.

*"How long does it take to execute the wishes outlined in a will in New York State?"

That depends on many things: the size of the estate, the nature of the assets, who the heirs are, where they're located and how cooperative they are, according to Phillip Brothman, senior counsel at Harris Beach PLLC Attorneys at Law in Buffalo.

The law requires that an estate remain open for seven months in order to give creditors a chance to recoup any money they are owed. So heirs will need to wait a minimum of seven months to receive anything they are willed. Typically, it takes about a year for a will to be wrapped up, but if heirs decide to contest, it can drag on for two years or longer.

*"Once I've got a will, who should I tell about it and where should I keep it?"

Tell your children and your heirs. Tell your executor, too, and possibly even give him or her a copy of it.

Surrogate's Court in Erie County offers the free safekeeping of wills, as do most attorneys. Harris Beach has a fireproof vault for just that purpose. As a last resort, you can keep it in a safe deposit box -- as long as you inform everyone exactly where it is. Brothman advises against keeping the will at home, where it could be destroyed or lost.

*"Is there something I can do to make my will harder to contest upon my death?"

Yes. You'll want to add an in terrorem clause, also known as a "no-contest clause." It's not a foolproof way to make sure everything goes where you want it to -- there are several exceptions that can keep it from being enforced -- but it's your best bet. The clause says that anyone who challenges the legality of any part of the will will be automatically disinherited.

"It has a chilling effect from a psychological perspective," said Katherine Cauley, a partner at Hodgson Russ LLP Attorneys. "It basically says, 'These are my wishes, I expect them to be carried out and if you try to prevent that from happening, you won't get anything.' "

*"Maybe I would be better off giving away my money while I'm alive. How much can I give without incurring taxes?"

You may give $13,000 per recipient per year, up to a lifetime maximum of $1 million. Anything above that is subject to gift tax.

So rather than giving $52,000 apiece to your son's and daughter's families, you would give $13,000 to each of your children, $13,000 to his or her spouse, and $13,000 to each of the grandchildren.

The downside of lifetime gifting, though, is that you may give away money you'll end up needing to live on.

"Proper financial planning can help determine how many assets are needed, but when you've been through a market like we've seen in the last couple of years, it's easy to see that financial planning is just that -- planning," said Lauber. "This is why most people, despite advice from many professionals, cannot bear to make lifetime gifts. It's a leap of faith that most people will not take."

*"When it comes to paying for nursing home care, should I spend down my resources in order to qualify for Medicaid?"

No, not if you would like to have some choice over where you will end up.

"It's hard to find open Medicaid beds [coming in] off the street," said Mimi Piciullo, residential sales manager at ElderWood Senior Care.

When taking applications for admission, Piciullo said she usually expects potential residents to have enough money to privately pay for three to four years of care. Though senior homes are required to offer a certain number of beds for residents supported by Medicaid, those usually go to private-pay residents whose funds have run out over time.