Estate Fights for Music Royalties in the Digital Age

April 14, 2014,

Estate planning can have ramifications decades (or even centuries!) after an individual passes away. On one hand, this is true because how one leaves assets and guidance to others can influence their long-term personal legacy. More specifically, however, planning can dictate legal matters far into the future. Whoever is in control of administering an estate has significant control over how some of those legal issues are handled.

Sudden Celebrity Death
Consider a dispute that recently arose between the estate of Rick Nelson and Capitol Records. Nelson was a popular musician an actor in the 50s, 60s, and 70s, best known for his role in the TV series "The Adventures of Ozzie and Harriet." Unfortunately, Nelson died unexpectedly in a 1985 plane crash at the age of 45.

Reports explain that complex feuding took place shortly after the death. Nelson was divorced, had a child outside of wedlock, and was dating a woman at the time of his death who was also killed in the plane crash. The estate was administered by David Nelson, Rick's brother. Fortunately, even though Nelson's death was sudden, he had some steps in place to protect his interests. A will left everything to his children from marriage (his out-of-wedlock child was ignored).

However, even though there was a will, problems arose. Nelson's ex-wife threatened a suit in order to claim life insurance money. She also attempted to take control of the estate away from David Nelson but failed. In addition, the parents of Nelson's then-girlfriend filed a wrongful death lawsuit against the singer's estate.

All of these issues were eventually resolved either via settlement between the parties or by the courts.

Drama Re-surfaces Decades Later
Interestingly, the estate of Rick Nelson made a recent reappearance in the news. That is because the heirs of the estate--his children--filed a lawsuit in 2011 against Nelson's former record label. At issue were royalties that the family claimed were owed to them under his original 1957 contract. Specifically, the family argued that the company was shorting them their share of income from digital downloads and streaming music agreements.

Fortunately, earlier this month, a settlement agreement was reached between the two sides. A spokesman for the record company announced the decision, noting that they are looking forward to working with the family to further promote the singer's most famous recordings.

Planning for an Uncertain Future
This example is an interesting reminder of how these decisions can have ramifications decades down the road. Obviously, at the time of Nelson's passing--and when his will was created--the idea of digital downloads and streaming music were unheard of. There was no way for administrators to understand how those issues would affect a contract, royalties, or inheritances in an estate.

All those crafting long-term plans now must appreciate that new technologies or issues may arise in coming decades that we simply cannot fathom now. As a result, it is critical to create plans that are flexible, providing a framework for any possible dispute to be resolved as efficiently as possible.

The Power of Legacy - Could a Will have Prevented WWII?

April 11, 2014,

Life is about far more than the accumulation of material wealth. Working hard and collecting valuables to enjoy and pass on to others at death is nothing to spurn. But there are many other things that are accumulated over a life and can be passed on at death: morals, lessons, memories, stories of hope, words of kindness, inspiration, and countless other values.

When thinking about life transitions and estate planning, it is important to consider those intangibles just as much as those items that have a monetary value. This is why, in addition to creating legal wills and trusts, we work with New York families on "ethical wills" to pass on all of those moral and spiritual items that solidify a legacy.

Advice for the Future -- Preventing a War
One common part of an ethical will is the sharing of advice to the next generation. The value of passing on advice should not be underestimated. An extreme example suggests that one of the greatest horrors in human history--World War II--may have been prevented if only a last will and testament was more widely disseminated.

A Daily Mail story last month discussed the will of the former President of Germany, Baron Paul von Hindenburg. Hindenburg led the nation until his death in 1934. He was widely respected in the country, particularly among the powerful political class.

Recently declassified information suggests that Hindenburg's last will and testament did far more than dispose of his property. The will also contained very specific advice to his country about the preservation of democracy and limiting the power of the up-and-coming populist leader at the time: Adolf Hitler. Recognizing Hitler's goal of taking complete control of the government, Hindenburg's will explained that the country need to maintain established principles, like an independent army and separation of powers. The document was intended specifically to prevent Hitler from fulfilling his ambition. One historian described the will as "a bomb timed to go off posthumously and blow Hitler off course."

Unfortunately, it did not work out as intended. That is because before the will was made public, Hitler found out about the contents. He immediately ordered the document seized, and the German people never learned of the lessons their statesman wanted to impart. Instead, a forged document was released to the public which wrongly asserted that Hindenburg had nothing but glowing praise for Hitler.

While this example is a bit different than the lessons that many New York seniors wish to impart, the underlying principle stands. Estate planning offers a chance to think wholistically about the meaning of life and how one would like to be remembered by the generations to follow.

Developments with the New York Estate Tax

April 9, 2014,

We often discuss the importance for local families to account for the New York estate tax. Far more media coverage is given to the federal tax, and some local residents are under the mistaken assumption that the state law mirrors the federal. It currently does not. Even families who do not have asset to trigger the federal tax may still need to plan appropriately for the New York tax on estates.

However, if current plans are carried out, in a few years .there may be much more congruence between the state and federal rules. That is because earlier this month New York changed exemption levels for the estate tax. Previously, assets over $1 million were exposed to the tax at a 16% top rate. Now, however, the exemption level is raised to slightly more than $2 million ($2,062,500). Not only that, but that level is set to steadily increase or five years until, in 2019, the exemption level matches the federal exemption amount at that time (projected to be $5.9 million).

Important Provisions in the Estate Tax Law
There are other aspects to the new state rules that must be understood by local residents seeking to minimize their obligations and legally save on taxes. Some items to keep in mind:

***There is no "portability" as there is with the federal tax. This means that surviving spouses cannot use unused portions of their partner's exemption amount to lower their burden.

***Under the law, all gifts made within a three year window will likely be included in the estate to calculate the tax burden (at least for gifts made starting this April and extending to 2019). Naturally, this means that one must act early to move assets in ways that take them out of the estate and lower its value.

***There is a risk of falling of the estate tax "cliff" during the phase-in which could mean those with assets just slightly over the exemption amount may face a tax on the full value of their estate. This issue is complex, but in a helpful comment letter the New York State Society of CPAs provides a more detailed analysis of how this may come about.

***The new law repeals the state's generation-skipping transfer tax while also providing more relief for some surviving non-citizen spouses.

Contact our NY estate planning lawyers today for tailored guidance on how these rule changes affect your financial future.

April is Financial Literacy Month - Plan for Your Future

April 8, 2014,

In the spirit of raising awareness of sound money management, April is officially deemed "National Financial Literacy Month." The U.S. Senate even passed a resolution on the matter a few years ago. The National Foundation for Credit Counseling usually leads the yearly effort, and many others in the financial world also use the occasion to discuss important money matters.

For example, Money Management International, a non-profit credit counseling agency, created a robust website sharing a variety of resources for consumers: www.FinancialLiteracyMonth.com. The website provides helpful tools on basic financial information, income worksheets, debt load calculators, financial goal tracking, and more.

While much of the information is focused on very general money management skills, if recent poll data is accurate, a majority of Americans remain far behind in prudent planning. Consider that a recent National Foundations for Credit Counseling (NFCC) survey found that over 60% of Americans do have any sort of budget. In addition, the survey found that nearly one in three Americans do not put anything from their annual income toward retirement savings. It is perhaps no wonder then that "retiring without having enough money set aside" is the most commonly cited financial issue that worries Americans according to the NFCC survey.

All of this suggests that far too many residents are living each month without a clear assessment of how their spending may affect their savings and long-term financial future.

Estate Planning - Thrive in your Golden Years
It is impossible to know exactly what the future will look like. That holds true for every aspect of life, from health and relationships to finances. Yet, that is not an excuse to avoid any long-term planning. In fact, the uncertainty counsels toward the opposite--taking steps to best position yourself to meet goals regardless of the future. Elder law estate planning is a key component of that preparation. Beyond designating one's wishes at death, this work also ensures steps are taken to secure a happy retirement with appropriate senior care.

Our team of legal professionals is proud to work with families throughout New York on a range of estate planning matters. We encourage all residents to take use National Financial Literacy Month as a time to re-evaluate current practices and take necessary steps to lead a safer financial life. From personal budgeting and saving to crafting long-term plans, getting a handle on these issues brings enormous peace of mind. Give us a call today to see how we can help.

U.S. Tax Court: New IRA Rollover Decision Strongly Criticized

April 3, 2014,

Intricate financial and estate planning details are understandably hard for many residents to wrap their head around. There are hundreds of thousands of page written in federal statutes, case opinions, and regulations dictating what can be done and what cannot. Making matters even more complex is that fact that even professionals can disagree on how certain rules should be applied.

For example, many financial planners are up in arms following a recent opinion by a U.S. Tax Court related to IRA rollovers.

The Case
The ruling examines a provision in the tax code that allows one to withdraw money from an IRA without tax or early withdrawal penalties so long as the funds are put into a different account within 60 days. Based on federal law, account owners are required to wait one year before making the move again. In other words, you cannot keep changing accounts every month.

According to many, based on guidance repeatedly published by the IRS for nearly three decades, this "one year wait" rule applied separately to individual IRA accounts.

However, earlier this year a federal Tax Court judge issued a ruling in a case that the once per year rule applies to all IRA account collectively. Essentially then, as an American College of tax Council brief in the case explained, the issue is whether the once per year rule applies per IRA or per taxpayer.

In the aftermath of the decision, many tax attorneys and other practitioners are calling for the decision to be vacated. They argue that it undermines public confidence for taxpayers to be punished even when following the IRS's own guidance. However, following the ruling, IRS officials released information suggesting that updated guidance will reflect this most recent decision, limiting IRA rollovers to once per year per individual.

Keeping an Eye Out for Legal Changes
The specifics of this case are somewhat nuanced and based on statutory interpretation. But rolling over IRA funds is a common practice that is used by residents of all income brackets, and so this issue has direct relevance for many.

In addition, one of the many lessons to take from this particular debate is the fact that you need to constantly have eyes on your long-term plans to determine if they need to be updated or changed. That is one value of having professional oversight of your affairs, peace of mind comes with knowing someone else watching out for changes on the legal landscape that must be reflected in your planning.

Do Not Act Too Quickly After a Passing

April 2, 2014,

Much of estate planning involves preparations that can streamline matters in the aftermath of a death. The probate process can be long and drawn-out, forcing families to wait months before working out the basic details of asset transfer. Alternatively, by using trusts, the process can be far more seamless, saving time and taxes. Trusts are important for all New York families, not just those with significant assets.

While it is prudent to handle legal and financial details in a timely fashion following a death, as a practical matter, it is important to not "overdo" it. A helpful article from Mondaq offers a few thoughts on ways that family members can "jump the gun" and cause more complications by rushing to deal with various matters.

Causing More Complications
Conduct that should be avoided in the immediate aftermath of a passing includes:

Acting as executor before officially be appointed by a court: A last will and testament names an "executor" to handle many of the administrative details. However, the appointment is not official until a court actually names the executor in the probate process. It is reasonable for a soon-to-be executor to take some basic steps to prepare for their role. However, in certain situations, this can go too far, such as when one signs contracts or enters into agreements beforehand. For example, one cannot sell the decedent's home before officially being given the power to do so by the court.

Canceling accounts and credit cards immediately: Closing down a decedent's financial life is often far more complex than family executors realize. There may be an urge to just cancel everything immediately. However, this can be a mistake, because there may be outstanding bills to be paid automatically from those accounts. Shutting them down can lead to bounced checks, late fees, and,ultimately, more hassle than if the financial details were handled more cautiously.

Quickly disposing of personal property: It is not uncommon for family members to be overwhelmed in the immediate aftermath of a death. A common response is to try to "get over it" as quickly as possible, often by getting rid of personal effects immediately. But this is often a mistake. Some items may need to be properly appraised, and it is important that the property (or the value of the items) go to the designated heir. Rushing this process can lead to tax problems and potential feuds.

For more tailored, specific help with any issues related to estate planning, probate, and administrative complexities following a death, please contact our New York estate planning attorneys today.

Planning for Immortality - A Legacy in the Online World

March 28, 2014,

http://legacylocker.com/

Passing on assets and saving on taxes are viewed as the hallmark of estate planning. But as we often share with clients, there are many intangible aspects to long-term planning that are often even more valuable that homes, cars, and savings accounts. A legacy.

An important part of many elder law estate plans is an "ethical will." This refers to non-legally binding document that shares values to friends and loved ones. An ethical will is about one's legacy, sharing information about one's life purpose and reminding family members of morals and cherished principles.

Leaving a Legacy in the 21st Century
Ethical wills made their way into Shakespearean plays and existed in various forms in ancient Rome and Greece. The world has changed dramatically over the centuries, and that includes the way a legacy is left to others. In fact, with the proliferation on various online account and social media services, more and more individuals are finding out how one can become "immortal" online.

An interesting story last week discusses how the permanence of one's online life can come as both a comfort or burden to surviving family members. For example one adult son explained the stress that comes on his mother's birthday every year--as old friends post Facebook messages, sending well wishes without knowing that she passed away three years ago. On the other hand, Facebook allows pages to become "memorialized" serving as a slightly more appropriate setting.

It is critical to think ahead about how these pages will be preserved. Considering their permanence, they will undeniably become a key component to your long-term legacy. There are no one-size-fits-all approaches to handling an online legacy. There are many different questions that you should consider, perhaps putting the details down in writing to ensure it all works as requested. Some things to consider include:

**Should someone have access to your email account after your passing?
**What should happen to your Facebook page? Should it be deleted, turned into a "memorial" or managed by another person?
**Are there any online photos, comments, or conversations that you would like shared or deleted?
**Would you feel comfortable using a special online legacy account, such as Legacy Locker?
**Should another have access to your online purchase record, at Amazon, ebay, or similar retailers?

Preserving an online legacy and creating an ethical will is a reminder of the comprehensive nature of estate planning. Doing this work is far more than just filling in the blanks on legal forms. It requires careful consideration about long-term goals, understanding of intricate legal details, and honest consideration about the most treasured values in one's life. For help crafting a comprehensive elder law estate plan throughout New York, please contact our experienced legal professionals today.

Federal Estate Tax "Portability" - Should It Always Be Used?

March 27, 2014,

The idea of "portability" is an important part of many estate plans. Portability is technically an informal word referring to a federal tax-saving option using the deceased spouse's unused exemption (DSUE). Essentially, portability is a tool for married couples that, when used prudently, can shave millions of dollars off an estate tax bill.

Under the current law, assets under $5.34 million are exempt from the federal estate tax (though the New York tax kicks in far lower at $1 million). Importantly, there are unlimited tax-free transfers allowed between spouses. That means that if one spouse dies and leaves everything to the other, then there will not be a federal estate tax burden, regardless of how many assets are passed on.

However, when the surviving spouse passes away and transfers those assets to others--perhaps adult children--then the tax would apply to assets over the individual exemption level of $5.34 million. But portability changes that. Instead of using only an individual exemption, a surviving couple may be able to use any unused exemption from their former spouse in addition to their own. This means that up to $10.68 million may be exempt from the tax. In short, portability can save an estate millions of dollars in taxes.

Importantly, portability must be "elected," meaning that failing to file the appropriate paperwork upon the first spouse's death may result in the extra exemption being lost.

Should You Always Take Advantage of Portability?
Considering the benefit of portability, it is critical to determine how it may fit into your plan. One potential downside, as discussed in a recent Wealth Strategies Journal article, is that there may be a mistaken reliance on portability. Because of the advantages couples may believe that it always makes sense to simply leave everything to a spouse and then taking more sophisticated planning steps for the second spouse.

Also, the majority of families will not have estate nearing the level where the tax may come into play, and so serious thought needs to be given regarding whether the election is even worth it in their case. In addition, there is a New York estate tax which may require use of other shelter trusts, even when portability would solve the problem at the federal level. Re-marriage may also add complexity, as the rules regarding portability with multiple spouses can be confusing, depending on how much of an exemption was used by a former spouse.

For help on these very complex legal issues, seek out an experienced estate planning attorney as soon as feasible.

Don't Leave Your Planning Up to a Coin Toss

March 25, 2014,

A headline-grabbing story last week in the New York Post offers a good reminder of the need to be crystal clear in certain estate planning situations to avoid drawn-out legal battles.

According to reports, two siblings are engaged in a dispute over how to divide up an inheritance that they are to split from their uncle. The two men are the nephews of David Barrett, a well-known Manhattan interior designer who passed away in 2008 at the age of 85. Per the terms of Barrett's estate planning, his $5.6 million estate is set to be split between the two men.

However, the division of those assets into two is apparently not going smoothly.To help determine how the various assets are to be split, an executor of the estate apparently recommended that a coin toss be used. For example, to determine ownership of a painting valued at around $45.000 a coin toss was performed, with the younger brother winning.

This did not sit well with the older sibling, who has reacted to the loss by making aggressive accusations against his sibling and executors in addition to filing a lawsuit challenging the distribution plan. The most recent suit has put a hold on the process, slowing the ultimate distribution and preventing any named heirs from receiving property from the estate.

In defending the lawsuit and his concern about the distribution plan, the older brother explained "This case is about more than my share of my uncle's estate. It is about my uncle, his legacy, his reputation, and his family."

Planning Lessons
All those who follow high-profile estate planning matters appreciate that feuds of this nature are not rare. When significant assets are at stake, all those involved are frequently willing to go to extreme lengths to ensure the matter is handled to their liking. Unfortunately, there are often no winners in these situations, as the drama often causes significant delay and enormous resources spent on the legal battle itself. There are various lessons that can be taken from this Barrett story:

Be As Specific As Possible - While it is impossible to specifically list every single item big or small, it is usually worthwhile to explicitly indicate where every valuable item will go. This is particularly true when an estate is divided between various parties who may disagree on who is to get what piece of personal property.

Understand the Personalities Involved - Certain friends and family members may be a more "hot headed" than others. Conflict is more likely to be prevented with those unique personalities are accounted for.

Prevent Surprises - Dispute often arises when one party is unprepared for some outcome. By having clear discussions with heirs ahead of time, all parties are able to come to terms with how the affairs will be handled This may prevent a knee-jerk, defensive reaction when unexpectedly confronted by an unfavorable part of the plan.

More Wealth Transfer Tax Changes on the Way?

March 18, 2014,

Politicians are engaged in a seemingly endless debate about tax rates, "loopholes," spending cuts and similar issues. That is because a new budget must be passed every year, and each proposal undoubtedly comes with suggested changes to various tax and spend rules and regulations. For example, President Obama recently released his proposed 2015 budget. Even a cursory glance at the document reveals that, if passed, it would have clear implications on wealth transfers and estate planning for New York residents.

Estate Tax Proposal
Most notably, the proposed budget calls for the estate tax provisions to revert back to where they were in 2009--an exemption level of only $3.5 million and a top tax rate of 45%. This is in contrast to the current $5.34 million exemption level and 40% top rate. The current tax is pegged to inflation, and so the exemption level will rise slightly each year. Per the terms of the proposed budget, this new tax level and rate would not go into effect until 2018.

Even with this presidential proposal, many do not expect federal officials to actually change the estate tax details, especially considering a high profile compromise was just reach a year and a half ago. The current estate tax rules were only codified at the beginning of 2013 as part of the compromise plan known as the American Taxpayer Relief Act.

Many Other Possibilities
As a helpful Forbes article discusses, beyond the estate tax issue, the President's budget also suggests changes to various estate planning tools. These include limits on annual tax-free gifts to trusts, changes to the use of grantor retained annuity trusts (GRATs), and eliminating "dynasty trusts."

As always, it is critical to re-iterate that these are mere proposals. With a divided Congress, it is likely that any final budget would look far different than the one proposed by the President. In most cases, the executive's first proposal is strategically written in order to position it for debate and negotiation. That said, however, the fact that some of these options were specifically included in the proposal means that they are on the radar screens of officials seeking to limit resident rights to transfer assets freely.

It is impossible to predict what policymakers in the future might do. However, an experienced estate planning attorney can ensure that you are best positioned to take advantage of all legal options to lower tax burdens when passing on assets. An attorney can also update and review your plan on a regular basis to determine if changes in the law necessitate altering any provisions of the plan.

Not Allowed to Disinherit - Spousal Right of Election in New York

March 17, 2014,

New York residents are urged to craft an estate plan so that their assets are passed on per their own wishes--and not based on arbitrary state laws. Unless you explicitly make your desires known, then all decisions will be left up to others. However, there are actually a few rare instances when the law explicitly prohibits you from making certain planning choices. These situations are not common, but it is important to be aware of them in case they conflict with your plans

The most notable rule of that nature relates to disinheriting a spouse. In most cases, the law automatically allows a spouse to inherit certain assets if he or she chooses--regardless of the specific estate planning provisions.

Marriage is deemed a special legal relationship that is voluntarily entered into under the law. As a result, state statutes include default rules that protect the relationship. This is somewhat different from other close relationships--like parent-child. A resident can always end a marriage to legally break the spousal relationship. That is why it is usually possible to disinherit a child but not a spouse.

NY Spousal Right of Election Law
There are countless different scenarios where one may want to remain married to an individual but not leave them assets as an inheritance. This can be a strategic choice and not necessarily motivated by animus. An estate planning attorney can explain if a strategy that does not leave assets to a spouse makes sense.

However, it is important to understand that there is a NY law that allows a spouse who is disinherited to voluntarily choose to collect various assets--even if they were designated for others. Specifically, the spouse can choose to take either ⅓ of the deceased "net estate" or, alternatively, $50,000. Under the law, the net estate may include many different assets. Beyond those indicated in a will, it can include joint accounts, living trust assets, and some assets where a beneficiary is designated. In addition, that net estate may also include certain gifts given within the last year. In other words, giving away asset to others as a means to deplete an estate is not a viable alternative.

This spousal right of election does not happen automatically. The disinherited spouse has to affirmatively exercise their right to take advantage of the provisions. There are various time limits to doing so. In addition, the right may be curtailed in some instances based on a pre- or postnuptial agreement.

For help creating a tailored elder law estate plan to fit your needs, please contact our NY attorneys today .

Understanding Estate Sales - What Can You Sell?

March 14, 2014,

Most legal matters have built-in complexities. Anyone who has purchased a home, for example, can appreciate the mountain of paperwork will dense legalese that must be filled out . Things are only made more challenging where there are significant emotions tied up in the dealings--like when the home was owned by a loved one who just passed away.

One common example of a process that many New York residents face with a mix of intense emotions and legal complexities is an estate sale.

No two families are the same. Some wish to go through with a sale as soon as possible to settle the matter and move on. Others take more time to process the situation before handling matters like an estate sale. In all cases, however, it is critical to proceed with an understanding of the legal requirements.

The Basics
Most importantly, one must understand what can be sold, when, and by whom. It is not as simple as adult children automatically being able to do whatever they want with their parents possessions. Answers to these questions will hinge on what estate planning was done beforehand. Use of tools like a living trust, for example, would likely streamline the process. On the other hand, those without any planning at all will have to wait for court resolution before anything can be done.

In general, all property can be labeled either as a probate asset or non-probate asset. Probate assets are those that must be collected and distributed through the court. When a will is used to pass on assets, then virtually all property in the decedent's name (individual who passed away) will be required to go through probate. Alternatively, non-probate assets pass to another automatically, or at least outside of the court's purview. This may include property held jointly with a right of survivorship, certain insurance benefits, or assets held in trust.

Those assets that do not need to pass through probate can be dealt with almost immediately. There will be a new owner or trustee who can do whatever they wish with the items, including sell them in an estate sale. Alternatively, probate assets cannot be immediately handled. Instead, the family must go to court and either present the will or have the court deal with the resolution per state intestacy laws. The court will appoint a "fiduciary" whose job it is to collect the assets and distribute them as necessary. This may include arranging a sale of a home. In more complex cases, like when the home is part of a cooperative, the same formal requirements must be met, including approval by a Cooperative Board.

Estate planning attorneys appreciate that on top of all of these legal details are very real emotional pressures. When it comes to an estate sale it is common for disputes to arise between grieving family members regarding what to sell and when. The stress and confusion is far more likely the less preparation and professional support is available. Feel free to contact our NY estate planning professionals for guidance on streamlining this process for your family.

What if a Beneficiary Dies First?

March 12, 2014,

Of the many estate planning lessons pulled for the tragic death of Philip Seymour Hoffman in New York last month is the need to properly update your documents. Hoffman's will was drafted nearly ten years earlier. It had not been changed to reflect his new life circumstances, particularly the birth of two more children. While his first son was left assets in trust, there was no mention of his two daughters.

This is a common problem when an estate plan is outdated. In addition, the opposite problem can also arise. Instead of failing to account for a new birth, a plan can also miss the fact that one has died. Many New York residents may have questions about what happens when someone set to inherit per the terms of a will or a trust beneficiary is not alive.

"Anti-Lapse" Statute in New York
Residents have been grappling with the issue of inheritances to deceased individuals for centuries. In the past, the general rule was always that the gift could not be given to one who was deceased. However, state law has addressed the issue by passing what is known as an "anti-lapse" statute. The rule seeks to balance the wishes of the testator or grantor with the need to pass on assets fairly.

Under the law, if the beneficiary dies while the testator is alive, then the inheritance instead goes to the deceased's "issue" (children or grandchildren). For example, consider a will that splits everything between the testator's two siblings (perhaps he had no children). At the time of the testator's death, one of his siblings may have predeceased him. Per the terms of the law, the bequest to the dead sibling would not lapse. Instead, the gift would go to the sibling's own children or grandchildren. If the sibling did not have children, then the bequest would in fact go back to the estate and likely all be given to the one surviving beneficiary.

However, there is a very important caveat to this anti-lapse rule. The law only applies to the testator's own issue or their siblings. In other words, if a bequest is made to the testator's friend, and the friend is not alive at the time, then the friend's own children would not be able to take advantage of the anti-lapse statute.

Update Frequently
The complexity of these and similar issues makes it critical to update your plan frequently. All marriages, births, and divorces should trigger review. Even without those events, a check-up every few years is important to account for other life changes or legal alterations that affect one's planning.

Art Collections and Estate Planning

March 10, 2014,

Art Collector Disappointed Her Kids Don't want her Collection: Makes Backup Plan

A recent Wall Street Journal article discussed how estate plans protect art collections. The feature focused on a widowed woman with an art collection worth $250,000. The woman and her late husband traveled extensively and amassed the collectibles over a 50-year time frame. Now in her 80s, she wants to make future plans for the valuable collection.

Upon her death, she would like her cherished art to pass to her two daughters. However, she discussed her desires with her children and discovered that they do not want the Asian art collection. She reluctantly came to grips with the reality of her art moving beyond the family. The Asian art aficionado requested that, if possible, the art assortment stays together and be sold to one collector.

This story, and countless others, highlight the importance and necessity of pre-planning for the inevitable with a clear estate plan.

Options for Art Collections
A New York Times piece focused on both the monetary and emotional worth attached to personal collections. Because of the later, many people avoid including their prized collections in any type of estate plan. This is a mistake.

A robust estate plan prevents confusion and often times costly estate taxes. An estate planning attorney can assist and plan for the proper disposition of your property, including art collections.

Here are some options for collectors and what to do with their treasured collections:

· Pass it on to family members - this seems to be a popular 'default' for most collectors. However, in some instances, it may be a good idea to discuss your desires with your family members, or those whom you wish to inherit your valuables. Not everyone has the same taste and may not want the collection.
· Sell it - as noted above, not all family members want to inherit collections. So, one option is to sell to a buyer with the same passion as the original collector.
· Donate it - some collectors opt to donate to a museum or their alma mater. This way, the collection can stay together, which is an important factor to many collectors.

An estate plan that clearly incorporates all your desires, including how and where you want your collection to be dispersed, is central to avert any future issues.

NY Estate Planning
It is important for everyone to make an estate plan. When valuables, such as special art collections, are involved, it is imperative to create a plan and entertain a 'fallback plan' as well. Discuss and make proper arrangements for the disposition of belongings with an experienced estate planning attorney.

Secret Marriage, New Will Leads to NY Estate Fight

March 6, 2014,

It is impossible to predict exactly how every family member will respond in the aftermath of a passing. However, as experienced will and trust lawyers know all too well, there are many situations that dramatically increase the likelihood of controversy that leads to a contested estate. Mixed families, a large age-gap between spouses, and secrecy are often signs of family tension that may erupt after a death.

A high-profile New York estate feud offers an example of that very situation.

NY Photographer Bern Stern's Estate Fight
Celebrity photographer Bruce Stern is well-known for his legendary photos of Marilyn Monroe--many taken just before her death. Stern died last year at the age of 83, leaving a roughly $10 million estate behind. As discussed in a recent Post story, family members are in bitter disagreement over how the estate should be divided.

Stern had three children, all from his first marriage that ended in 1975. As far as the children knew, their father's assets were to be distributed per the terms of a 2007 will that split half the estate between the children while giving the other half to his own photography foundation.

However, just before his passing, Shannah Laumeister came forward claiming that she and Stern were married in secret in 2009. She directed a documentary about Stern in 2010 and is nearly 40 years his junior. The adult children had no idea of the union.

Laumeister produced a second will from 2010 that created a private trust with all of the assets and gave control of the trust to Laumeister. According to Surrogate Court filings, Laumeister claims that the adult children would still receive cash bequests as part of the new will, but the details of those bequests are unclear.

Psychiatry Records & Questions About Mental State
Expectedly, the adult children challenged the 2010 will. The feud is making its way through the court system. Most recently, reports suggest that the Laumeister is fighting to block sharing of information about Stern's meetings with a psychiatrist.

For their part, the children argue that information about Stern's mental and medical state when the contested will was created is of obvious relevance. Alternatively, the younger wife argues that release of the information would permanently damage Stern's reputation. The value of his estate is closely tied with his artistic works and reputation-damage would significantly harm the estate, she claims.

An obvious take-away lesson from this story is a reminder that an experienced estate planning attorney can point out the many red flags that suggests a feud may be likely. A legal professional can offer counsel on steps to take that may eliminate secrecy or otherwise increase the chance of a smooth, conflict-free process that is resolved fairly and efficiently.