June 2012 Archives

It May Not Be As Simple As Updating a Will

June 29, 2012,

Most local residents understand that a New York estate plan needs to be updated to account for changing life circumstances. If one is divorced, has a child, has a falling out with a relative, acquires a significant asset, or experiences countless other life changes, then planning documents need to be altered to take that into account.

Unfortunately, some are under the mistaken assumption that this is a very simple, straightforward process involving some changes to a will. Our New York estate planning attorneys appreciate that this sort of thinking often leads to serious problems down the road. Failure to take a full range of issues--beyond a will--into account following life changes may mean one's plans do not work as desired when the time comes.

For example, the Alternative Press shared an interesting story about a man who wanted to remove a daughter from an inheritance. However, the man only updated his will (and nothing else). The result was the that daughter still received almost half of the man's estate

The man in this case had a some sort of falling out with his daughter. He passed away and left a will that included express language indicating that the daughter was being left out intentionally. He was likely under the assumption that being so explicit in his will meant that the daughter would not receive anything, as was his wish.

Not so.

The reason was that, like many local residents, the man had many "non probate" assets that passed to another automatically, outside of the will. In this case, the father had previously named the daughter as beneficiary of a substantial IRA, several "pay on death" bank accounts, and a life insurance policy. None of those designations were changed after the falling out. Therefore, upon the father's death those assets went to the daughter directly, irrespective of the man's wishes indicated in his will.

Each New York estate planning attorney at our firm works with local residents to explain the fundamental difference between probate and non-probate property. In fact, much of our work involves helping avoid the probate process altogether, ensuring that families do not have to deal with complex, uncertain, and lengthy court proceedings to settle an estate. However, taking advantage of probate alternatives--usually in the form of trusts--means that it is particularly critical to update plans accordingly to account for life changes. Simply editing of a will is insufficient. Assets held in trust, beneficiary designations, and jointly owned property must all be considered when updated the plan to ensure everything is in place when the time comes.

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Not All Children Treated Alike

Clumsy Estate Planning: Transferring A House to a Child

No Estate? No Problem. You Still Need a Plan

June 27, 2012,

What is an "estate" anyway? Many local residents mistakenly assume that they have no use for New York estate planning, because they don't really have a large cache of assets to pass on or save from being consumed by taxes. After all, when most people hear the word "estate" they think of a palatial home surrounding by lush gardens and filled with shimmering treasures and majestic antiques. Not many have that kind of estate.

But it is crucial to understand that no large "estate" is necessary to get value out of meeting with a legal professional to plan. That is because even if you do not own a big house, virtually everyone has some estate to protect: including personal property, bank accounts, retirement plans, life insurance, and more. Failure to conduct any estate planning means that when you die your estate will pass to others via intestacy laws. These are default rules in each state which essentially give priority to certain individuals regarding inheritance. A recent Forbes article shared a helpful new website (www.mystatewill.com) which outlines intestacy rules in each state. You can visit the site and see how the default laws in the state would divvy your property depending on your family situation.

For example, in New York if you have an estate worth $100,000 and had a living spouse and two living children, then the spouse will receive $75,000 and each child will receive $12,500. However, it is unlikely that the $100,000 is in the form of a big pile of cash that can be easily divided. Instead, it might take the form of a home, retirement plan, or other physical property. That means splitting it up as required will present serious problems. Not only does estate planning allow one to decide what percentage of an estate each person will get, but the exact form of the inheritance can be decided--such as the spouse getting the house, the child getting the second car, or whatever other combination fits in your case.

Beyond inheritance designations via will or trust, our New York elder law estate planning lawyer also help many clients with issues that affect everyone--preparing for long-term care. Receiving advice on Medicaid applications, Medicaid Asset Protection Trusts, and long-term care insurance and similar issues can mean the difference between being forcefully moved into a substandard nursing home and aging in place. These are important issue for the rich and poor alike.

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Not All Children Treated Alike

Clumsy Estate Planning: Transferring A House to a Child

Should You Take Advantage of Tax Situation Now?

June 25, 2012,

The New York Times published a story this weekend on the continued uncertainty regarding the gift and estate tax and the questions it raises for many families. As each New York estate planning lawyer at our firm explains to local residents, the current tax situation is in flux, requiring many different considerations when engaging in estate planning. As it now stands, residents can each give up to $5.12 million tax free and then pay a 35% tax rate on any gift above that amount. The tax-free amount will drop and tax rate rise at the end of the year without Congressional action.

The uncertainty about the future of the tax details present very obvious challenges to many families. Giving away money to heirs now means reducing an eventual tax bill down the road. However, there are many questions about whether couples will have enough money to live on themselves after giving large sums to others. Obviously these considerations all depend on the value of the family estate. In general, only comparatively wealthy families are impacted by these issues. But for those families who are "on the cusp" and stand to pay more in taxes when the changes take effect, tough decisions will need to be made in the next six months.

One consideration beyond basic tax savings for estate planning purposes is the amount the any money passed on might grow over the years. For example, if a couple gave their child $5 million to take advantage of the favorable exemption, the gift could grow to nearly $30 million in about 30 years based on reasonable return rates.

Also, if one decides to give a gift, it is important to structure the gift in the most beneficial way. The best strategies usually protect the money from creditors while taking advantage of ways to multiply the gift. At times it might be appropriate to transfer a home or other real estate instead of liquid assets. However, these transactions must be done carefully to ensure they work exactly as desired without unintended consequences down the road.

Whether or not the potential change in the estate tax may affect you and your family, it is important to visit with a New York estate planning attorney to either create or update a plan when major tax changes tax place. A professional eye is crucial to explaining how legal changes affect your plan and whether or not alterations are needed to ensure the plan works as desired.

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Protecting Assets When Facing Uncertainty

Inheritance Disputes Among Children While Parents Still Alive

June 20, 2012,

Family inheritance disputes are legion. In most cases that make headlines, a famous individual passes away without conducting thorough estate planning and various family members publicly feud to get their fair share of the individual's wealth. Our New York City estate planning attorneys often advise clients that these sorts of disputes are not only for the famous or even the wealthy. Family disagreements regarding an inheritance are quite common, particularly when no planning is done and the matters must be left up to the court-centered probate process.

Not only that, but sometimes feuding occurs even before the family matriarch or patriarch passes away.

For example, a recent Sacramento Bee letter explored a situation where two siblings seemingly isolated an aging mother from other siblings. Claims of undue influence and abuse were made. The three ostracized siblings were left wondering what options were available to ensure they received their share of the inheritance.

The case: The 80-year-old mother in the case drafted a will specifying that she wanted all of her assets split evenly between her children. However, after the will was created, two siblings convinced the mother to take out loans totalling more than $100,000 for their children's college education and to purchase a house. One daughter obtained power of attorney over the mother and moved into the mother's home.

Three of the siblings became concerned about the situation, questioning whether their mother was being taken advantage of--they reported their suspicions to local authorities. The mother is now on Social Security and has no assets other than her home--though the children do not know if the house was used as collateral on the loans. The siblings are left wondering if they will have any inheritance at all.

This situation presents a wide range of legal issues, and the case is a reminder of the dangers of relying only on a will. Legally, the resolution of these issues will depend on a range of factors, including whether the siblings signed promissory notes on the loans and whether any changes to the will were made in the time that the daughter has lived with the mother.

No matter how it shakes out, it is likely to be a contentious, drawn-out process.

The lesson: Parents can ensure that their children never deal with this situation by locking down inheritance affairs early on with more expansive legal tools, like trusts. Children are well-served by encouraging their parents to deal with these issues as soon as possible. In our area, New York elder law estate planning attorneys can put the legal plans in place to not only settle inheritance issues but also to save on taxes and provide for potential disability.

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Gary Coleman Estate Feud Continues

New York Estate Planning Feud Ends for Astor Family

Is 80 the New 65?

June 18, 2012,

New York elder law estate planning is all about putting plans into place to designate inheritances, account for taxes, plan for disability, and otherwise provide peace of mind to account for long-term financial concerns. However, part of the challenge of the process is realizing that the future is unknown. It is impossible to determine with precision how long one will live, what finances are needed, and what care is required as one ages. Not only is speculation inherent in some of this planning, but changing government policy, medical advances, and societal cultural changes must be taken into account when conducting this estate planning.

No More Retirement Age?
For example, a recent Business Times article discussed statements made by representatives from Wells Fargo that the concept of a retirement age "is going the way of the typewriter, another 20th-century relic." Instead of retiring at 65, say the executives, most won't retire until age 80 or beyond. The claims were made following a Wells Fargo survey which found that at least ΒΌ of all respondents did not believe they'd be able to retired until they were 80 years old. On top of that, most thought that they'd never actually be able to stop working with some extra income needed after retirement.

What caused the retirement concerns? Financial insecurity.

Recent Gallup polls find that today's average age of expected retirement is far and away the highest it has ever been. In the mid-1990s, the average age that Americans expected to retire was 60 years old. Today only 38% of non-retirees believe that they will ever have enough money to comfortably retire--only ten years ago that number was at nearly 60%. Most believe the the "Great Recession" is to blame for the financial setbacks and subsequent retirement pessimism.

Of course, these surveys only measures perception, but observers are quick to note that perceptions have societal and economic impact. Estate planning, for example, is concerned with planning for potential life situations down the road. Goals and perceptions about working and living impact how the planning is conducted. Yet, it is important that local residents not make judgments about long-term financial stability, risks, and future costs on their own. Help is needed. While some uncertainty is inherent in the process, professionals can explain how inheritances, taxes, retirement, and long-term care planning can be planned for with flexible parameters to account for unexpected events.

All of this complexity should not be reason to avoid planning altogether. Instead, it should be reason not to take chances, but to seek out assistance from those who work on these issues every day.

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Changing Ideas About Leaving a Legacy

New Yorkers Worry About Outliving Their Retirement Funds

Changing Ideas About Leaving a Legacy?

June 13, 2012,

Our New York estate planning attorneys often help clients create "ethical wills." An ethical will refers to a document left by an heir to pass along intangible assets like morals, lessons, and memories. Creating one of these wills is an important way to clarify the meaning of one's life to family and friends, sharing gifts of the heart and mind.

Recently, a Time magazine article discussed how, following the recession, the importance of this ethical legacy planning was growing. While no one welcomes a difficult financial climate, some observers note that a positive side-effect is the growing importance of relationships, experiences, and memories for many families. The article author notes:

"Born out of national need, this national (if not global) rethinking of what is most important has had remarkable staying power, even as the economy has started to improve."

Notice of this "rethinking" comes amid survey results which indicate many Baby Boomers are changing what they consider to be the most important part of their legacy. A recent "Allianze Life" study found that 86% of respondents listed "family stories" as the most important part of what they are leaving behind. This was far ahead of things like material possessions or financial inheritances.

Of course, the estate planning lawyers at our firm appreciate that many local residents will still leave inheritances to children and other loved ones. However, there may be a shift in consciousness after many residents have watched their nest egg dwindle. More adult children recognize that they are less likely to receive a large inheritance. In fact, the same survey found that less than 5% of adult children thought it was their parents "duty" to leave an inheritance.

What does all of this mean for New York estate plans?

Just because material inheritances might be smaller does not mean that steps do not still need to be taken to ensure financial and physical assets are properly planned for. Yet, it is increasingly important to conduct planning that also accounts for intangible items, like life lessons, family stories, memories, and advice.

When conducting your elder law estate planning, it is important for your legal professional to share information on ways to preserve these intangible assets, often via creation of an ethical will. This might include writing down those lessons to be passed down and taking time to clearly talk about these issues with the most important people in your life. This process may also include creating special photo scrapbooks or video libraries. Family poems, stories, or mementos can also be collected and preserved to easily pass on to future generations.

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Passing on Religious Values at Death

Thinking Beyond the Paperwork--Creating an Ethical Will

Exception Proves the Rule: Joe Paterno's Will Sealed

June 12, 2012,

Most local residents cherish their privacy. That extends to privacy in sensitive matters like estate planning. When considering estate planning, the first thing that comes to mind for many is the traditional will. Our New York estate planning lawyers frequently explain how there are now many more tools beyond wills to properly tailor these affairs. Trusts are often far-superior ways to pass on assets and protect loved ones down the road. One of the many benefits that a trust can provide is privacy. Wills do not provide that privacy.

Public Records
Even though wills contain private, sometimes sensitive information, at a certain point they become public records, open to view to anyone interested. A will must be filed with the court during the probate process to settle affairs following a death. The court will eventually file the will in its records, where it becomes available to the public. This means that anyone can usually access the documents at a courthouse, often having the ability to make their own copy of the material.

Joe Paterno's Will Sealed
The public nature of wills is the general rule; however, there are a few exceptions. For example, a recent report this week explained how former Penn State football coach Joe Paterno's last will and testament was ordered permanently sealed from public view. The request for permanent seal was made by the family's attorney and approved by the judge. A spokesman for the family noted that the request was made to provide "a measure of privacy."

Paterno's will entered the probate process in early April--he died of lung cancer in January.

The family spokesman claimed that the measure was "not an unusual request for high-profile individuals." However, observers have noted that sealing wills is, in fact, very unusual. An examination of local records indicates it was the only will sealed in the county in the last year and a half. Many families have reasons to keep their affairs confidential, but almost no one else receives the same treatment. Simply a wish for privacy is usually never sufficient for these records to be sealed from public view.

Keeping Matters Private
The sealing of the Paterno will is certainly an exception that proves the rule. Almost all of these documents become public record, and the few exceptions are usually only in high-profile cases with very unique circumstances. However, local residents can keep their affairs private (and avoid the probate process altogether) by visiting with a New York estate planning attorney to take advantage of trusts. These alternative arrangements are often much better for tax purposes and are far more flexible, offering residents much more control over the process.

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Adult Children Often Remind Senior Parents of Estate Planning Importance

Tips for Giving Financial Aid to Family and Friends

Parents Talking to Adult Children About Estate Plans

June 8, 2012,

Smart Money published an interesting story this week that lists several things that parents should tell their children about their personal estate plan. This planning is conducted for individuals, but it obviously implicates entire families. It is often challenging to balance the need for parents to make their own choices about these affairs while respecting the fact that many others, especially children, are affected by those decisions. Our New York estate planning attorneys work with many residents who are grappling with these questions--trying to understand what they should or should not tell their children about their plans.

The Smart Money article argued that, generally, parents fail to provide enough information to their children about these affairs. Not every detail necessary need be explained. However, the author argues that it is imperative to share at least four details: (1) Who is the executor/trustee, (2) What is the long-term care pan, (3) Is there a living will, and (4) Where are important documents located.

Who Is the Trustee?
Depending on the type of planning conducted, it may include a will and trusts. Executors and trustees must be named to administer the estate via the guidelines in these documents. Children are often asked to handle these matters--frequently with the help of professionals like a New York estate planning lawyer. Those children should be made aware of their role ahead of time.

Long-Term Care Plan
Assisted living and nursing home care costs are quite high. When a parent reaches a point where this care is needed, it usually falls onto children to ensure the appropriate care is obtained. As such, children should be informed of any plans that are in place to provide the care. Sometimes this might involve long-term care insurance, while at other times it could include plans to enroll in Medicaid.

Living Will
A living will--sometimes referred to as an advance medical directive--shares information about how an individual would like certain end-of-life medical decisions handled. This includes the extent of life-support measures desired. It is helpful for children to be aware of the content of this will ahead of time so that there is not confusion in the event of severe injury or disability.

Important Documents
Many adult children face added stress after a loved one's passing or disability when they cannot locate important documents or other materials. Children should know where bank account information, online passwords, and similar items can be located in the case of emergency. Not sharing this information often leads to unnecessary complications for already stressed loved ones.

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Estate Planning May Be a Family Decision

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