October 2011 Archives

Economic Uncertainty Leads to Rise in Estate Planning Interest

October 27, 2011,

An article this week from West Fair Online explained how professionals working with residents on financial issues have seen a significant increase in demand for their services as of late. While there may be a tendency among some to become paralyzed when the economy is so volatile, many others view the instability as a time to act prudently and plan ahead as much as possible. The article reports what our New York estate planners have long known: the need to have an estate plan remains strong regardless of the circumstances.

Experts know that the need for prudent planning is perhaps even more important at times like these, when there tax and policy uncertainties at the local, state, and federal levels. One planner interviewed for the story explained how in turbulent financial times "the area's residents should have a vested interest in knowing what the stakes are for their assets." While those residents at the top income levels are often more aware of how the laws affect them, many middle class families have just as much to gain by using the legal tools available to plan their financial future and save taxes in the long-term.

Most observers have applauded the steady rise in estate planning awareness. However, there are still a few groups which continue to neglect their planning needs. For example, many local small business owners continue to miss out on opportunities to visit with a New York estate planning lawyer to take care of long-term financial goals. Of course, small business owners wear many hats. Rarely do they have time to accomplish everything on their "to do" list each day. Yet, many benefits have been reported by those who have carved out time to visit with financial professionals to protect assets, create a succession plan, and conduct similar tasks.

Also, a growing number of estate disputes faced by families have increased the popularity of estate planning. Many onlookers of these family fights have come to realize that the problem can be avoided if professionals are consulted ahead of time. Estate litigators have noticed a surge in family inheritance infighting caused in part because seniors are living longer but often not while maintaining their mental capacity. Without iron-clad plans in place ahead of time, vulnerable seniors often find themselves taken advantage of by less than scrupulous friends and family members trying to access funds. One litigator remarked, "A lot of wrongdoing takes place while mom is still alive but on her way down hill."

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October 25, 2011,

Any time is a good one for local residents to conduct New York estate planning, because no one can say with certainty what tomorrow will bring. Having a plan in place provides the peace of mind of knowing that affairs will be handled no matter what the future holds. However, as reported this weekend in the New York Times, proposed federal tax changes should act as even more motivation to take advantage of planning options now which may not be available in the coming years.

National policymakers continue to disagree about budget deficit reduction strategies, with countless variations of tax increases and spending cuts proposed. No one can say with any confidence what may happen. However, experts continue to explain that it is always advisable to plan for what is known and not for what one speculates might happen. A variety of tax changes may go into effect next year or the following year, and so it may be advisable to take steps now to plan for their long-term financial affairs. A key part of that process for local residents involves visiting a New York estate planning lawyer to have a plan created or updated.

For example, observers note that it may be advantageous for those thinking of transferring ownership of a company or other property to adult children to do so in 2011 or 2012 while there is a $5 million exemption from gift taxes. At the current schedule by 2013 that exemption will drop to only $1 million and the tax rate itself is set to increase from 35% to 55%. As an experienced New York estate planning lawyer can explain, personal gifts may be an important part of reducing eventual estate taxes. Individuals can give up to $13,000 annually without tax to anyone, and couples can double that amount. One expert explained that a popular way that parents and grandparents can utilize the $13,000 annual exclusion is to set up a Roth I.R.A. for a student who has a side job. As long as the relative has some earned income, than an I.R.A. account may be opened for them.

In addition, costs paid directly to third parties for some services--such as tuition or medical care--may not count toward that tax-free limit, allowing even more money to be saved through gifting. This is often a good way for older relatives to provide aid to family members while saving on eventual estate taxes at the same time. In any event, many options remain for those considering the best way to prepare their long-term financial affairs. One need only visit the right professionals to get the ball rolling and take advantage of these favorable tax situations while they are still available.

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New York Estate Planning Best Done Before Health Declines

October 21, 2011,

When it comes to New York estate planning, timing matters. While it is always better to conduct some long-term financial and well-being preparation than none, there is a large benefit to handling the planning while one is still capable. This means before a medical emergency strikes. Of course, it is also necessary to regularly update the plan so that it accounts for changes in life circumstances. On Wednesday, Forbes published an article that emphasizes the importance of planning before a serious medical or financial setback makes things more complicated. The article was part of a week-long series shared to promote National Estate Planning Awareness Week.

Our New York elder law estate planning attorneys help seniors every day who want to ensure that their long-term financial affairs are in order and to bring peace of mind by planning for end of life care. However, we are aware that a large segment of the population still has not taken the time to make necessary preparations. According to the National Association of Estate Planners & Councils, more than 120 million Americans have not created or properly updated their estate plans. While it remains tough for many residents to discuss these topics, there is far too much to gain to put off having conversations about long-term needs.

If you have an elder relative who has not yet crafted an estate plan or made preparations for long-term healthcare, it is often helpful to gently mention the benefit of the planning effort to them. Many residents wait too long to take action and fail to have any plan in place when they fall into poor health and need special care services. Having plans in place ahead of time, before a major illness, often means that the senior can preserve a much larger portion of their savings and can receive the best available long-term care that maximizes their quality of life.

Those who have not taken steps to prepare for long-term care often face significant challenges that could have been avoided. For one thing, many are forced to use their life savings to pay for the services they need to get by each day. Many other simply do not have the resources necessary. As a result, many of them are forced to go without. A new study from the American Society of Clinical Oncology revealed some stark statistics. Nearly 50% of senior survey respondents indicated that they had to borrow money to pay for needed services like prescriptions. Roughly 30% admitted to not filling prescriptions, and another 20% took less medication than advised so that the pills would last longer. While these statistics paint a grim picture of some aspects of our healthcare system, they also reflect a lack of proper awareness about the resources available to community members who are facing these needs.

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New York Estate Plan Lawyer Shares Value of Business Succession Plans

October 19, 2011,

Many local residents believe that crafting a New York estate plan only involves making of list of who will receive what at death and taking steps to ensure that taxes are saved in the process. While these issues are all important aspects of long-term planning, many others factors are also considered. Our New York estate planning lawyers tailor each plan uniquely to every new client, and no two community members are exactly the same. For example, many local families own and run businesses. It is incredibly important for these families to work on proper business succession planning when they consider their long-term preparations.

This weekend the Times Herald-Record published an article written by our New York estate planning attorney Bonnie Kraham, Esq, that explores the importance of business succession planning. Attorney Kraham explains how only a minority of family-owned business survive beyond the first generation. While 90% of all American businesses are family owned, 70% of them will end when the founding family member passes on. Only 15% of those current businesses will make it to a third generation. A large part of the declining rates and lack of longevity is the failure of many of these companies to have a business succession plan.

These plans take time, as the original entrepreneur should be around to help monitor the next generation for five to ten years while the process unfolds. A good rule of thumb is for the elder member to begin implementing the changes around the age of sixty. Of course the actual plan itself should be a collaborative process with input from the entrepreneur as well as the successors. There are many different variables to take into account, including the feelings, ambitions, and goals of all those involved. When done well the plan should also include input from a variety of professionals. Lawyers are necessary for the estate planning and agreement preparation, accountants should consider taxes, and financial advisors can determine the best investment strategies.

When it comes to actually transferring ownership, there are various methods that can be used. On one hand, gift tax rules allow couples to give a certain amount of stock in the company to children each year without paying a gift tax. In addition, there is a lifetime gift tax exclusion that each spouse can give up to $1 million. However, the most common method used to transfer ownership involves a "buy-sell agreement." These agreements require one party to buy and another to sell at a certain price and at a certain time--such as upon retirement, disability, or death.

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New York Estate Plans Tailored for Those with Multiple Sclerosis

October 17, 2011,

No two New York estate plans are exactly the same. Proper long-term planning demands that each unique life circumstance and family issue be considered and incorporated into the legal preparations. For example, our New York estate planning attorneys have helped many families over the years make special arrangements to provide assistance for family members who suffer from a wide range of disabilities. For nearly two decade residents in our state have been able to set up special trusts so that a disabled loved one could receive an inheritance without disqualifying them from government benefits. Unlike in the past, there is no need for parents to disinherit disabled children or other family members out of fear of losing access to Social Security and Medicaid.

This weekend Forbes published an article reiterating the value of estate planning for all area residents. It was noted that a professional estate planning lawyer should always be consulted so that these plans can be tailored to one's unique needs. As explained, this is particularly important for those living with disabilities or chronic illnesses. Families dealing with these issues are often forced to live day-to-day, because their medical problems come with a large amount of uncertainty. Ensuring that proper estate and financial plans are in place is one of the few ways that many of these families can provide some degree of certainty to their future.

For example, many New York families have loved ones living with multiple sclerosis (MS). It is a problem that flies under the radar, because as experts at the National Multiple Sclerosis Society explain, "some people do not understand that 96% of the symptoms of chronic illnesses are invisible." For those with MS one of the most common systems is referred to as "exacerbations." These are sudden attacks of fatigue. This fatigue is unlike normal tiredness, and instead it constitutes a complete exhaustion which makes it impossible for many suffers to function normally. It remains the number one reason why people with MS leave the workforce.

The National Multiple Sclerosis Society has a wealth of information for those interested in learning more about the illness. The Society also explains the many ways that aid can be given to help multiple sclerosis research projects that are working to fight the disease. In addition, the Society encourages all those suffering from MS to ensure that their family has planning in place that takes their unique situation into consideration. From accounting for the illness with life insurance policies to the creation of living trusts, there are many avenues available for families to properly plan for the future while taking the illness into account.

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Steve Jobs Likely Paid No Estate Taxes By Using Trusts in Estate Plans

October 12, 2011,

News spread quickly last week of the death of Steve Jobs, the popular technology guru who pioneered so many technological marvels with Apple and the animation company Pixar. While Mr. Jobs was a billionaire, those familiar with his estate planning affairs explain that even middle class families have much to gain by following his lead in planning for their long-term financial affairs. For one thing, no one knows exactly what Jobs decided to do with his affairs, because by using trusts he was able to keep his business out of the public eye. As reported in The Trust Advisor, one man familiar with the situation explains, "Privacy was such a big part of his life and his career. And if everything passed through one or more trusts, there would have been no probate fee...and no will to be read (publically)." You do not have to be a billionaire to achieve this privacy by utilizing alternatives to a will. Our New York estate planning lawyers have helped many local families in our area do just that over the years.

On top of the ability to make decisions privately, Mr. Jobs plan also highlights the way that preparation can help avoid taxes. Most believe that his roughly $6 billion estate will likely pay no estate taxes. Estate taxes continue to make news nationwide as lawmakers debate over changes in the rate and the levels at which the tax kicks in. However, steps can be taken to essentially eliminate the assets that are counted toward those taxes, making it possible to avoid these taxes altogether. The New York estate planning attorneys at our firm can explain what specific steps should be done in your individual case to ensure as much wealth as possible passes on to those who you'd like to receive it.

Mr. Jobs estate planning is also a good example of how each plan is entirely individualized to account for the unique goals, desires, and perspectives of the one from whom it is crafted. No one yet knows how his fortune will be divided down the road. All that is known is that before his death Mr. Jobs' attorneys moved 5.5 million shares of Apple, 138 million shares of Disney, and various real estate holdings into trusts. It is unknown who the trustee is now that Mr. Jobs has passed. Those familiar with the situation explain that Mr. Jobs had indicated distaste for dynastic plans that would have kept the fortune entirely locked up down the ages. Instead, most suspect that a philanthropic enterprise may be created with much of the assets, perhaps to assist other technology start-ups. No matter what, it is assured that Mr. Jobs plan was a reflection of his own values, something that he shares with every other community members who takes the time to craft their estate plan and consider their long-term legacy.

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National Estate Planning Awareness Week is Shares Importance of Long-Term Planning

October 10, 2011,

Any time is a good time to consider your family's financial future and to plan for inheritances. Our New York estate planning attorneys continue to help clients save money and gain the peace of mind that comes with knowing that a plan is in place to guarantee that one's wishes will be carried out down the road. However, there remain many local residents who are still unsure if they need to craft a New York estate plan. Discussions about death and asset transfers are naturally an uncomfortable topic, but it is hard to overestimate the benefit that a family can gain by handling these issues ahead of time.

Sharing information about the importance of the task is one of the main goals behind the National Estate Planning Awareness Week. As discussed this week in the Review Journal, the yearly program is sponsored by the National Association of Estate Planners & Councils (NAEPC) and is slated this year for October 17th to the 23rd. Besides sharing basic information about the value of estate planning, the NAEPC also hopes to use the week to educate the public on the best ways to develop productive relationships with their planning professionals. For one thing, it is always very helpful to gather personal and financial information together in one place before meeting with the professional. That information includes a list of assets and liabilities, retirement plan information, life insurance policies, property deeds, income tax returns, business agreements, and similar materials.

On top of these records, all community members should also do some thinking about their goals and concerns before beginning the process. On the most basic level, one should consider who they would like to receive an inheritance and what specific items they would like to pass along. A large part of that process includes consideration of the unique situations of certain family members that make it reasonable for them to receive more or less of an inheritance. In addition, thought should be given to who should be named guardians for minors and who would make a good executor for a will or trustee for a trust. However, a community member need not have every single detail figured out ahead of time. Experienced planners are often able to provide advice on these issues and share thoughts about how certain family dynamics may influenced by the process.

Every New York estate planning lawyer at our firm also reminds community members that crafting an estate plan can involve emotions as well as finances. To communicate the emotions connected to these issues, we encourage many residents to create letters of instruction as part of their planning package. These letters pass along important thoughts and values and complement the technical language of estate planning documents.

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New York Estate Planning Lawyer Explains Dangers of Joint Accounts

October 6, 2011,

Many local residents have found themselves facing unexpected problems after trying to create a New York estate plan on their own. Community members often mistakenly believe that joint ownership of property and accounts can be used to avoid probate and transfer assets. While joint ownership may be helpful in certain circumstances, in most cases it leads to a variety of problems. Many families have descended into ugly and expensive court fights after a "do it yourself" estate plan was created using these joint accounts.

Last month Forbes published a story listing several reasons that families should beware of joint ownership. The author was particularly concerned about the problems faced by families with joint ownership between generations--such as when an adult child shares control with an aging parent. Adult children are frequently names included on bank accounts, homes, cars, and other investments. Good intentions often lie at the heart of these decisions, but complications usually arise. For one thing, parents often face unwanted exposure to creditors when there is more than one name on an account. When an elderly parent has their child added to the account, the child's creditor may be able to access the funds. This is the case even though the child may have added none of his or her own money into the account and even though the parent had no involvement in the debt. Other circumstances could also present problems. For example, if the adult child gets divorced the ex-spouse may claim the joint assets as part of the marital estate to which they have rights.

Beyond that, many families have set themselves up for inheritance fights because of joint asset control. Upon the death of the parent, the child whose name was on the account or property usually retains sole ownership. Sometimes this may be exactly as intended. However, in other cases, there may have been an understanding that the assets should have been shared among siblings. Regardless of the intention, the child who control the assets is likely under no legal obligation to follow those wishes upon their parent's passing. Even in those cases where it was intended for the named child to take the property, the other siblings may still seek to challenge it. No matter what the court ultimately decides, costly, timely, and stressful legal wrangling would result.

Besides estate problems, joint accounts also affect long-term care planning. If a local resident is hoping to qualify for New York Medicaid assistance, the program will assume that the applicant owns all funds in a joint account. In addition, transfers out of the joint account may be deemed improper under Medicaid rules leading to a period of Medicaid ineligibility. Area families should take all of these concerns into account. In virtually all cases there are better ways to plan for the future, and a New York elder law estate planning attorney can explain the wide range of legal tools available for the effort.

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Planning Required to Make Smart Charitable Contributions

October 5, 2011,

Our New York estate planning attorneys have spent decades helping local families make long-term preparations for their estate. Legal and tax rules must be accounted for in all significant property transactions, even when one is giving money away. As a Wall Street Journal story this weekend explained, it can actually be quite challenging to properly plan for a charitable gift. If professionals are consulted, residents can often leave money in ways that provide significant tax breaks, particularly if they account for the ever-changing estate tax rules.

When conducting New York inheritance planning, many community members indicate an interest in leaving assets to support a favorite cause, like helping the less fortunate or nursing the arts. When the gift is made at death it is known as a "bequest." A bequest lowers the money subject to estate taxes; however, donors cannot enjoy an income tax deduction for the gift if it is made at the time of death. If a gift is given while the individual is alive then an income tax deduction can be taken. Yet, lifetime charitable gifts are irrevocable and an individual cannot change their mind about the donation as they might be able to if they were planning a bequest.

Of course, many residents leave funds to charity for reasons beyond taxes, but there is no reason why community members should not take stock of the tax consequences when planning to give money to these causes. In 2010, the year when there was no federal estate tax, charitable bequests increased by nearly 17%. That year donations totaled just shy of $23 billion nationwide according to information published by the Giving USA Foundation.

The New York estate planners at our firm know that there are many ways provide money to favorite non-profit causes. For example, part or all of an individual retirement account can be given to charity by designating it as a beneficiary. In addition, it is often helpful to use special legal tools like charitable remainder trusts to support a cause after death while generating an income stream while still alive. They are helpful for those who are eager to help the charity but have concerns about maintaining cash flow. The basic idea behind these trusts is that assets are set aside in trust with income paid to the donor (or family) for a set number of years or until the donor dies. At that point the remaining money goes to the designated charity. When using these trusts the donor may also be able to receive a tax deduction up front for the expected donation.

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New York Inheritance Issues in Second Marriages

October 3, 2011,

Proper Inheritance planning requires much more than simply filing in the blanks on standardized forms. That is why experienced New York estate planning attorneys are essential advisors when local community members are evaluating their long-term financial preparations. Proper planning of these affairs requires consideration of unique family dynamics and an ability to anticipate potential issues before they actually arise. Anticipating possible conflict and accounting for it ahead of time is one of the main benefits that local residents can derive from creating and updating their New York estate plan.

For example, local families often have concerns about the effect that a second marriage will have on their inheritance plans. Many emotions are at play when a parent remarries after a divorce or the death of a spouse. As a CNN story this weekend explained, adult children commonly express apprehension when a parent re-enters the dating pool or indicates a wish to get remarried. Financial concerns are occasionally the cause of that trepidation. One woman who lost her father several years ago explained, "I want my mom to be happy, but how do I know that her suitors don't have ulterior motives? I'm concerned that she'll jump into another marriage and her second husband will take advantage of her financially."

Conversations between loved ones about these issues are frequently thorny and often result in strained family relationships. On one hand, as the article author notes, a parent is free to use their finances as they see fit. After all, an inheritance is not an entitlement but a gift. However, adult children need not stand by if a parent is genuinely making damaging financial decisions or is legitimately being taken advantage of--elder financial exploitation is a common problem. Therefore, in these situations an experienced, trained professional can often provide a crucial perspective to balance the competing concerns.

Helping families in these situations is a role that our New York estate planning lawyers have filled for years. For example, many widows and widowers control significant assets held in trust. In those situations it is often advisable to have a lawyer act as co-trustee, providing a layer of protection for the family. Having the assistance a trusted attorney typically provides comfort to adult children who may be concerned about a second spouse's ability to take control of the assets. The lawyer acting as co-trustee can help the surviving spouse invest for his or her own benefit without forgetting the need to grow the principal for the benefit of heirs. It is not easy to fairly account for the needs of each party involved in these situations. However, the task is made manageable when a family has the aid of a professional who has worked in similar situations in the past and knows what to expect.

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