With Age Comes Wisdom - Limiting Child's Access to Family Money

May 20, 2014,

The current generation of older Americans make up the wealthiest generation this country has ever seen. As the number Baby Boomers (people born between 1946 and 1964) retire or pass on, the United States is expected to see an "inheritance boom" unlike any other in history. At the same time, the generation that stands to inherit this money generally lacks the money management skills to handle these inheritances. But there are some things that the older generation can do to help the younger generation "grow into" its money.

Provide Children And Grandchildren With A Financial Education

Young adults often are launched into adulthood with little or no financial education. In the United States, only four states require students to take a personal finance class in high school. Worse yet, a 2009 study by the University of Arizona and the National Endowment for Financial Education gave students an "F" grade for money management skills. When the study was repeated two and a half years later, students' money management had declined by an additional 7 percent.

Five money management skills that members of the older generation can help to teach their children and grandchildren include--

1. You sometimes have to wait to buy something you want. Although this is a hard concept to learn, the ability to delay gratification can determine how successful one will be as an adult.
2. You need to make choices about how to spend the money you have. Financial decision-making is a key factor in successful money management as an adult. It is important that children and grandchildren be taught that money is finite and that when money is spent on one thing, it is not available for other another thing.
3. The sooner you start saving, the faster your money can grow. The concept of compounding interest is critical for children and grandchildren who will be inheriting or otherwise receiving family money because they need to learn that saving accrue on the initially received money plus on past interest received from the initial savings.
4. You should pay with credit card (or cards) only if you can pay off the balance in full each month. The average American household has over $15,000 in credit card debt. This, along with average student loan debt which is almost $34,000, threatens to choke most young people. To counter this debt trend, it is important that the older generation help children and grandchildren understand that it is important to budget and use credit cards wisely.
5. You need to know how to budget. Learning to create a budget is a main key to learning to live within one's means and budgeting techniques are critical for a successful adulthood.

Establish A Trust

One option to slowly ease children or grandchildren into the adult world of personal financial management is through a trust. One form of trust which is sometimes used in the case of inheritance is a "spendthrift trust." A spendthrift trust can be created for a child or grandchild to limit access to the trust funds. An independent trustee is given full authority to make decisions about how trust funds can be spent for the benefit of the child or grandchild and funds are not under the child's or grandchild's control. An additional benefit of the spendthrift trust is that the child or grandchild cannot assign any of his or her present or future income to creditors, or sell his or her rights to the trust principal.

A spendthrift trust can be tailored to the maker's specific wishes and particular family circumstances. For example, a spendthrift trust can be established for the child's or grandchild's lifetime or until he or she reaches an age designated by the maker of the trust. To ensure that family wealth is responsibility passed on to the next generation, it is important to discuss trust specifics with an experienced NY estate planning law firm.

Estate Planning is Not a Do-It-Yourself Project

May 16, 2014,

Recent economic times caused many people to take on a lot of home projects that they otherwise would have hired out to a handyman. While some do-it-yourself (DIY) projects turned out alright, people often found that seemingly easy projects were significantly more complicated than they had anticipated. Worse yet, sometimes these DIY projects even end with disastrous consequences, requiring calling in professionals to fix the job at greater hassle and cost than would have originally been incurred if the professional had been called in the first place.
The same can be said for estate planning.

DIY Estate Planning "Kits" And Pre-Packaged Computer Software Are Not The Answer

Regardless of how smart or talented someone is in other areas of his or her life, proper estate planning is not something that can be done out of a DIY "kit" or on some software package.

DIY Kits

Do-it-yourself kits are notoriously inadequate and incomplete. At best, they can be a waste of money. At worst, they can be an outright scam to bilk you out of your entire estate. According to AARP, older adults are frequent targets of fraudulent and deceptive business practices and a healthy dose of skepticism is warranted when considering estate planning services.

In particular, AARP warns against living trust kits and seminars, as well as "free lunch" financial seminars. The organization advises, "If you want to know if a trust is right for you, seek advice from a licensed and experienced estate-planning attorney."

Pre-Packaged Software

In similar fashion, Consumer Reports advises against using pre-packaged estate planning software in all but the most simple of estate planning circumstances. Consumer Reports tested several brands of software using profiles of individuals from three different New York families.

Using the various estate planning software (which operates like tax software), Consumer Reports found problems with all software packages that were tested. These problems included:

-Outdated information- some of the software products referred to federal estate-tax limits that were outdated;
-Insufficient customization- the products did not give sufficient detail on state laws and offered no guidance on certain situations;
-Too little flexibility in some cases- the products created arbitrary limits and would not allow certain distributions to be made as desired, despite the legality of such distributions;
-Too much flexibility in other cases- the editing and open ended narrative features of some programs allowed information to be added that could outright contradict other parts of the will document;
-Incompleteness- important matters related to estate dispositions were omitted from each of the software programs considered, including certain critical tax matters.

As the AARP and Consumer Reports reviews show, no DIY kit or prepackaged computer software can adequately substitute for the skills and individual attention of an estate planning expert.

Estate Planning Is Important Enough To Use A Professional

End of life planning involves considering an individual's very unique and personal circumstances. It involves important decisions on how your life and property will be handled if you become incapacitated, as well as how your property and assets will be distributed when you pass on. And there is no one-size-fits all answer for these questions.

Further, while drafting up a will, trust, or power of attorney may seem like a relatively simple task, any mistake in preparing these estate planning documents can create catastrophically bad results down the line.

An experienced estate planning attorney has knowledge of several areas of the law, including estate planning, tax law, real estate law, elder law, and business law, as well as succession planning. He or she can make sure your end of life intentions are properly expressed and honored.

Putting Conditions on a Trust in New York

May 13, 2014,

For many New Yorkers, the term 'trust' continues to invoke visions of the super wealthy. Similarly, terms like "trust fund baby" are used to refer to spoiled, rich individuals who do no work on their own and simply live off their parents savings. The connotation is always negative.

As our estate planning attorneys often explain, however, trusts are critical tools for families of all income levels. And there is no reason why children who benefit from the trust suddenly become slovenly or without their own motivations. For one thing, many trusts are not large enough to offer income that can last a lifetime. Even when the trust is large, conditions can be placed on child-beneficiaries which can help prevent them from relying solely on an unlimited stream of income.

Incentivizing a Trust in New York
A helpful Tribune article last week discussed some of the ways that trusts can be created to offer incentives to beneficiaries. The basic idea is simple--add "strings" so that the beneficiaries of the trust only receive money if they meet various conditions. A range of conditions can be added, but the most common relate to promoting responsible achievement in the next generations--requiring graduation from college or holding a steady job. By limiting the child from any proceeds unless they meet these requirements, one can flip the script, not only avoiding the trap of the trust acting as a de-motivator, but making the trust actually act as motivation to succeed.

These trust condition can be very helpful in tailoring an estate plan to one's exact specifications. However, they come with many pitfalls. When not crafted carefully, the conditions may unintentionally become far too restrictive or too expansive, failing to meet the intended goal. For example, requiring completion of college before receiving trust benefits may seem straightforward. But, what exactly counts as receiving a college degree? A bachelor's degree? What about an associate's degree? Does completion of a trade school count? The conditions need to be specific and clear.

In addition, there are some limits to trust conditions--both legal and practical. In general, conditions that violate the general public good can be invalidated. For example, requiring a child to divorce his wife before receiving anything may not hold up because the public supports the general goal of preserving marriages.

Get Legal Help
As always, do not attempt to craft these arrangements on your own. Contact an experienced New York estate planning lawyer who can explain the many options available to you and ensure the plan is drafted appropriately.

Prenuptial Agreements in NY - Part 2: Challenging The Validity Of A Prenuptial Agreement

May 9, 2014,

To challenge the validity of a prenuptial agreement, one looks to see if any of the above elements were abused or not satisfied. This can include--

1. Duress- A prenuptial agreement can be voided if one party was pressured or coerced into signing it. Duress also can be shown if the agreement was presented too closely to the wedding date and is not given enough time to think about the terms of the agreement before signing it. Some sources suggest that agreements signed within 60 days of the wedding may be challengeable based on duress. For example, duress has been shown where the wedding is only days away, the invitations have been sent, large sums have been expended, and cancelling the wedding would be costly and embarrassing. Another example is a case where the groom presented a prenuptial agreement just before the bride's visa was to expire and told her to sign or the wedding would not take place prior to the visa's expiration date.

2. Lack of mental capacity- Lack of mental capacity can be shown if the agreement was signed when one party was drunk or under the influence of drugs.

3. Lack of full disclosure- Failing to provide complete and truthful financial statements or the outright hiding of assets can constitute a lack of full disclosure.

4. Lack of independent counsel- An attorney or counsel can be shown to be partial if he or she was provided or paid for by the party demanding the prenuptial agreement.

5. Unconscionable Terms/ Lack of fairness- Disproportionate asset division alone does not make a prenuptial agreement unenforceable, but the agreement cannot be so disproportionately unfair that it is unconscionable or unscrupulous.

6. Child support and child custody provisions- Agreements that specify an amount of child support or dictate who will receive custody of any marital children are unenforceable as against public policy.

7. Unenforceable provisions- Provisions that make unreasonable demands of one party may be deemed unenforceable by the court. Examples of unenforceable provisions include requirements that one party must maintain a certain weight or keep a certain hair color, or must do certain chores (i.e., walk the dog or do the dishes).

8. Ambiguous terms or provisions- A prenuptial agreement is a contract. If a contract is not clear or has ambiguous terms or provisions, it is interpreted against the party who drafted it and in favor of the non-drafting party.

9. Fraudulent inducement/promises made but not kept- Fraudulent inducement is the use of deceit or trickery by one party to cause the other party to act to his or her disadvantage. For example, in a recent New York case, the wife claimed that her husband-to-be promised to tear up their prenuptial agreement as soon as their first child was born. After the couple had children, the husband refused to tear up the agreement and sought to enforce it when the couple divorced. The court ruled that the agreement was void because the wife had been fraudulently induced to sign it, believing the promise that the agreement would be destroyed upon the birth of their first child.
10. Verbal/unwritten agreement- Because of the serious nature of a prenuptial agreement, oral agreements generally are not valid.

The validity of a prenuptial agreement may be challenged in whole or in part. A court may decide to strike only certain provisions from the agreement, leaving the remainder enforceable. Alternatively, the agreement may be so weakened by certain provisions or circumstances that the entire document may be unenforceable.

If you have questions about how these agreements are crafted or how an agreement may fit into your long-term planning, be sure to contact a New York estate planning attorney today for tailored guidance.

Prenuptial Agreements in NY - Part 1: Enforceability

May 8, 2014,

Every year, over 2 million people get married in the United States. In the same year, almost 900,000 people get divorced. Broken down even further, approximately 50% of all first marriages, 67% of all second marriages, and 74% of all third marriages end in divorce. With these statistics, it should be of little surprise that the use of prenuptial agreements is on the rise. However, one surprise may be that more agreements are being requested by women.

In New York, the state statutes have little to say about prenuptial agreements. Section 3-303 merely says, "A contract made between persons in contemplation of marriage, remains in full force after the marriage takes place." This is because prenuptial agreements, by their nature, are highly customized and tailored to the couple who is entering into it.

In general, a valid prenuptial agreement requires the following--

Free Will

In order to be valid, each person entering into the prenuptial must do so of his or her own free will and must not be coerced into signing the agreement. The circumstances surrounding the negotiation and signing of the agreement need to be free from duress, overreaching, or coercion.

Disclosure

Valid prenuptial agreements require full disclosure of each person's financial assets and liabilities. This includes disclosure of financial statements for bank accounts, investment accounts, real estate holdings, business interests, vehicles, and other assets, as well as disclosure of liabilities, including outstanding loans, mortgages, and other debts.

Independent Counsel

Independent counsel means that each person to the agreement should have his or her own attorney, rather than sharing an attorney or being required to use one that is being supplied by the other person.

Fairness

The fairness provision is subjective. In general, a prenuptial agreement does not have to be equal, but it must not be so disproportionate, or call for one party to give up so much in the event of a divorce, that the agreement is considered unconscionable.

Proper Acknowledgement

In New York, a prenuptial agreement must be properly acknowledged or witnessed. Proper acknowledgement serves to prove the identity of the people signing the agreement and it adds formality to the situation to encourage careful reflection and prevent hasty decision-making regarding execution.

If you have questions about how these agreements are crafted or how an agreement may fit into your long-term planning, be sure to contact a New York estate planning attorney today for tailored guidance.

Not For Ourselves Alone - Estate Planning Beyond Immediate Family

May 6, 2014,

"Not for ourselves alone are we born; our country, our friends, have a share in us" is a famous phrase by the Roman philosopher Cicero. While the phrase is several thousand years old, it still has great applicability to estate planning today, because many people are still seeking to leave a legacy of good for their community and friends after they pass on.

Leaving A Legacy Of Good

Americans are generous people. In the United States, charitable contributions by individuals make up a vast majority (72%) of all charitable donations to nonprofit organizations. In fact, the State of New York ranks fifth in overall charitable contributions, with individual donors making an average charitable contribution of $5,150 annually. In addition, these same charitable donors also make will bequests that are, on average, almost triple the amount of their lifetime donations.

Legacy considerations and estate planning are relevant for everyone, regardless of their economic status, marital status, or age. Estate planning is not just for the wealthy, and it is not just for married people with children. In fact, many people come to realize they feel strongly about the idea of leaving a legacy after they experience a life changing event such as a divorce, spousal death, retirement, new job, change in economic circumstances, or health crisis.

Philosophical Questions

While many people are interested or intrigued by the idea of creating a legacy, they often do not know where to begin the process.

If you are considering using your wealth for good after you pass on, sometimes the best place to begin the estate planning process by considering your core values and asking yourself what general type or types of charities or causes you wish to support. Possible charitable classifications and causes include:

-Animals- including animal rights, animal welfare and services, wildlife conservation, zoos and aquariums
-Arts, Culture and Humanities- including libraries, historical societies, landmark preservation, museums, performing arts, public broadcasting and media
-Education- including universities, graduate schools, technology institutes, private elementary and secondary schools, other educational programs and services
-Environmental- including environmental protection and conservation, botanical gardens, parks, and nature centers
-Health- including diseases, treatment and prevention services, and medical research
-Human Services- including children's and family services, youth development, shelters, crisis prevention services, and food pantries
-International- including relief services, humanitarian relief, and international peace and security
-Public Benefit- including advocacy and civil rights, fundraising organizations, community foundations, and community and housing development
-Religion- including religious activities, religious media and broadcasting

Ways Of Leaving A Legacy

There are several gifting strategies and wealth transfer tools that can help an individual to leave a legacy for his or her family, friends and community, including the following:

1. Including specific bequests in a will- a will provides a simple plan for distributing personal and real property. A bequest can specify a particular piece of real or personal property, or it can be general in nature, such as cash.
2. Establishing a trust- there are several types of trusts which can be used depending on a donor's intentions and goals. Three of the most common are life insurance trusts, revocable living trusts, and irrevocable gift trusts. Trusts are often useful for avoiding probate, as well as reducing estate taxes.
3. Designating a beneficiary designations on life insurance policies, IRAs, retirement plans, and annuities- these assets are automatically distributed upon your death, which generally allows them to avoid probate.
4. Setting up a donor-advised fund with a community foundation- community foundations provide grants and scholarships to nonprofit organizations in a designated area. A donor-advised fund gives some control over distribution of funds while sharing administrative costs with other funds held by the foundation.

Creating a legacy plan is an important reason to embrace the idea of estate planning. Your donations can give lasting meaning to your life and make a significant difference in the lives of others. Please contact Ettinger Law Firm at (800) 500-2525 ext. 100 if we can help you with your estate planning needs.

Common Reasons for Contested Wills in New York

May 2, 2014,

Many people know that having a will is necessary in order to properly ensure the deceased's wishes are followed and desired transfers are carried out once they are gone. However, the importance of having the proper documentation in place does not end there. Careful estate planning is crucial to a will being upheld as valid in the event it is contested. If estate planning documents are not properly executed, the document is in danger of being challenged and may be ultimately revoked.

Common Challenges to a Will

An estate planning document such as a will may be contested for a number of different reasons. Perhaps heirs are not satisfied with their inheritance, or maybe family members fear their loved one made a bequest against their will. No matter the reason, the fact remains that wills do get challenged. Some of the more common challenges involve the following:

***A will that was previously revoked is presented as valid: If an executor is trying to pass an outdated will, a newer will that was created will likely invalidate it. Both destroying an old will and dating both documents accurately can help to avoid a situation such as this.

***The testator's mental capacity at the time they executed the will is in question: The testator generally must be at least 18 years old to have capacity to create a will. Beyond that, in order to prove an adult lacked mental capacity to form a will, the challenger must prove the testator did not understand the consequences of making a will at the time of its execution. Certain requirements must be met to prove capacity, including understanding the extent and value of one's property, who the person's expected beneficiaries are, the disposition they are making and what their will means, and how these elements relate to distribute their property.

***The document was not properly executed according to legal requirements: This can include lacking sufficient or appropriate witnesses, or failing to contain provisions that are required to be part of the will by law. Although certain things, like having a will notarized, may not be a formal legal requirement, there are steps a testator can take to further authenticate the will as valid and assure a challenge to it will not be successful.

***There is evidence of fraud, forgery, coercion, or deception in drafting and executing the estate planning document: This can involve a scenario in which a third person influenced a vulnerable testator into leaving all of their property to them. Undue influence is usually a factor to be considered, which involves the testator lacking the free will to bargain because of the person influencing them.

***There is evidence of unauthorized changes or additions to the document: Usually, this involves things like handwriting over a will provision or providing a handwritten addition to a will. The will itself may provide for ways in which it can be changed properly.

Estate Planning Attorney
Whether you are considering challenging a will or are seeking help in defending a challenge to a will, an experienced estate planning attorney can assist .

Back to the Basics: What is the Difference Between Revocable and Irrevocable Trusts?

May 1, 2014,

While many New York residents familiar with and have an existing will in place in the event of their death, most people do not realize that estate planning documents extend far beyond a last will and testament. The world of estate planning documents includes not only living wills and advanced medical directives, but also trusts. Trusts offer several benefits associated with them, and come in two forms: revocable and irrevocable.

Benefits of Having a Trust
Trusts can not only provide for loved ones upon death, but they can provide for the person who created the trust during their lifetime. This is important in cases where the creator has a health issue, a mental disability or incapacitation, and other scenarios. Trusts can be administered without the need to involve a probate court, and can therefore protect privacy as to the contents of the trust. Trusts also serve as protection of assets for trust beneficiaries, and offer a wide variety of options in creating them to suit different needs.

Revocable Trusts
Revocable trusts are a type of trust that can be changed at any time. The creator of the trust could simply modify the terms of the trust through an amendment. Or, if they want to revoke the trust in its entirety, they can do that as well. In revocable trusts, the assets contained within the trust are considered the creator's assets and will be treated as such for tax purposes and if creditors exist.

Irrevocable Trusts
As one may expect from its name, an irrevocable trust is not able to be changed once it is signed by the creator of the trust. These trusts are often complex and require a special degree of care in drafting them in order to meet the creator's needs and desires for his or her estate. It is imperative to consult with an experienced estate planning attorney when setting up an irrevocable trust in order to ensure your estate is properly protected, and any concerns you have about being unable to change the terms of such a trust are addressed and handled appropriately.

That being said, irrevocable trusts have a number of specific benefits associated with them. Often times, estate taxes are significantly lessened or even eliminated through the creation of an irrevocable trust. Irrevocable trusts also offer a high degree of asset protection for the creator of the trust and the trust's beneficiaries. Both of these advantages are possible with irrevocable trusts because once the assets are placed into an irrevocable trust, the creator gives up his or her control and ownership of the trust assets.

NY Estate Planning Attorney
If you are interested in securing estate planning documents or are interested in further discussing the benefits of trusts and how they apply to you, the experienced estate planning attorneys can help you.

Be Aware of Cemetery Rules & Guidelines

April 29, 2014,

Delineating funeral and burial wishes is a common part of estate planning. Everyone has unique desires about their final resting places, incorporating personal, spiritual and religious preferences. In addition, the perspectives of surviving family members are also taken into account. That is because spouses and children may wish to remember their loved one in various ways. For example, it may be important for family to have a specific place, such as a memorial or cemetery plot where they can go to honor one's memory.

Unfortunately, when few plans are in place ahead of time, families may be forced to rush these decisions. Mistakes can be made, which lead to disappointment, regret, and sometimes even more conflict.

Memorial Feud
Consider the legal struggle one man is facing after disagreement erupted about his practices at a cemetery. As discussed in a recent story, a father was devastated when his 23-year old son died in a tragic rafting accident in 2011. The young man died without a will, and so all funeral and burial plans were left to his family to be made in a hurry. The father purchased 15 different plots at a local cemetery and is currently using only five of them. However, on those five plots he has erected a growing shrine with a small fence,flags, flowers, and large posters of his deceased son on 8-foot high poles.

The shrine caught the eye of the cemetery superintendent who asked the man to alter the memorial due to complaints received. Specifically, the father was told to remove the posters on poles for violating cemetery rules. The father refused, arguing that when the posters were added there were no rules prohibiting them.

This has set off a legal battle. The father filed a lawsuit in a local court. The judge issued a temporary restraining order in the father's favor, allowing the memorial to remain while noting that the state Cemetery Dispute Resolution Committee was the proper venue for the matter. As it now stands the father is preparing his complaint to be filed with that body in a month.

Plan Ahead
This unfortunate situation is a reminder of the need to think about many different detail when making long-term plans of this nature. Cemeteries have many different rules that may affect your decision. It is common to have limits on decorating plots, use of flowers, requirements for vases/stands, and more. Cemeteries also may have vastly different rules regarding visiting hours, parking, plot size, and more.

For help crafting an estate plan in New York, contact the experienced legal professionals at our firm today.

Dispute Over Documents Settled Between Harry Belafonte & MLK Estate

April 25, 2014,

Even after a loved one is gone, disputes over his or her estate can continue to arise. For example, nearly forty-six years after the 1968 assassination of Martin Luther King, Jr., his estate is still involved in legal battles. Most recently, the King estate was in conflict with singer and activist Harry Belafonte over documents Belafonte claims were given to him by King and his widow, Coretta Scott King. Among the documents are an outline of an anti-Vietnam War speech written in 1967, a letter of condolence from President Lyndon Johnson to Coretta, and notes to a speech that King was never able to deliver.

The dispute first arose when Belafonte made plans to auction off the documents to the highest bidder at Sotheby's, Inc. In response, the King estate took legal action that resulted in Belafonte's being blocked from selling the documents. Belafonte in turn brought suit in federal court against the King estate. Ultimately, the parties reached a settlement, the terms of which are confidential. It is known, however, that Belafonte will be able to retain possession of three of the documents in question. In a joint statement, the parties' respective lawyers conveyed a message of mutual satisfaction: "The parties express their appreciation to one another for the good -faith efforts that led to this resolution."

Intra-Family Disputes
The dispute with Harry Belafonte is over, but it does not represent the end of the legal concerns of King's family and estate. The children of Dr. King are again fighting in court over possession of his Nobel Peace Prize medal, as well as one of his Bibles. The estate, which is controlled by King's sons Martin Luther King III and Dexter Scott King are embroiled in a dispute with Bernice King over ownership of the medal and Bible. Ironically, the brothers are claiming the right to sell the items, just as Belafonte had with regard to the documents in his possession. Bernice is opposed to any sale of the items, and until an outcome has been reached, the Bible and medal will be held in a court-controlled safe deposit box.

Protecting Your Estate
Careful planning in the present can prevent future confusion, disagreement, and disputes. If you or a loved one have questions or concerns regarding the contents or legal rights of an estate, be sure to contact a New York estate planning lawyer with experience in dealing with these issues.

See Our Related Blog Posts:

Broken Estate Plans May Need to be Fixed

Clumsy Estate Planning: Transferring A House to a Child

What is "Donor Intent" & How Does It Affect a NY Estate Plan

April 22, 2014,

Charity is an important part of an estate plan for New York families. Many residents have important causes that symbolize their own values and morals, including social, political, economic and religious non-profit groups. Donating funds via a will or trust is common for estates of all sizes--this is not just for the wealthy. Even relatively small donations can have a significant impact. In addition, giving funds to valued causes is a key way to pass on a final lesson to future generations.

There are many different ways to give assets to a charity at death. In the simplest form, funds can be given for the charity to use in any way it chooses. However, many donors have more specific wishes, often wanting to direct funds for very specific uses.

Understanding Donor Intent
"Donor intent" is the term used when delineating exactly what was intended by the giver of a gift to a charity. Unfortunately, disagreement often breaks out regarding whether the funds were actually used by the charity in the manner the donor intended. These disputes can arise for many different reasons:

***What if the charity is no longer doing the specific work delineated by the donor?

***What if the organization is in desperate need of operating funds to continue general business, even though the donor specifically wanted to funds to go to sub-set program?

***What if the donated funds are not large enough to actually accomplish the intended purpose? Or if there are extra funds remaining after the purpose is met?

Another layer of complexity is that the actual donor intent itself may not be clear. When written generally (and without proper legal help) there may be many interpretations. After a passing, the donor is not around to clarify his or her wishes and so the stage is often set for contentious disagreement between surviving family members, advisors, the charity, and other interested parties.

Casebooks are filled with drawn-out legal battles related to these issues. Ideally, planning itself should be done to limit ambiguity and prevent conflict before it arises. A legal professional can help by clarifying the specific goals of the donor and ensuring that only an appropriate level of flexibility is included in legal documents. In addition, there are various ways to actually structure a gift--it can be more than just cutting a check--and a lawyer can explain what option makes the most sense in your case.

Experienced Legal Guidance
The complexity of this issue is one reason why it is critical to have the help of an experienced estate planning attorney when crafting these arrangements. Even details that seem straightforward at first--like donating money to charity--can come with unique challenges. It is always prudent to take the time to draft inheritance documents carefully to avoid future disagreements and feuds.

For help on these and similar matters throughout New York, please contact the legal professionals at our firm today.

Undue Influence in NY & Pressuring Vulnerable Seniors

April 21, 2014,

Family feuding is all too common, and finances are often at the root. One argument often made in legal cases involves these matters is that an adult child or other close relative is abusing a position of trust and confidence with a parent to take advantage of them financially. Proving such an abuse is the challenge of an undue influence lawsuit.

Undue influence is usually defined the use of confidence for the purpose of taking unfair advantage of one with a weakness of mind (or other vulnerability). In other words, undue influence is about pressure. The question is when does pressure become excessive, and thereby amount to undue influence. In a legal case where undue influence is an issue, a court may consider a number of factors:

1. Unusual or inappropriate time of discussion of the transaction;
2. Unusual location of the completion of the transaction;
3. Insistence that the transaction be finished at once;
4. Repeated warning of the adverse consequences of delay;
5. Involving multiple individuals to apply persuasive pressure;
6. Absence of third-party advisors.

To illustrate, it is useful to consider a few real world examples:

In 2011, the children of actor Tony Curtis claimed that their father was the victim of undue influence. Curtis, redid his Will and changed other aspects of his estate plan a few months before he died from heart failure. As a result, Curtis's five children, including actress Jamie Lee Curtis, were left with nothing. The Will stated that Curtis intentionally disinherited his children, yet no reason was given. Shocked and deeply suspicious, daughter Kelly Lee Curtis sued, accusing Tony's widow Jill or others of convincing Tony to change his Trust through undue influence, fraud, or duress.

In 2009, comedian Pauly Shore filed a lawsuit against his brother, Peter, alleging the use of undue influence against their 79-year old mother, Mitzi. Mitzi suffers from neurological problems, including Parkinson's disease. Prior to her decline in health, Pauly, Peter, and their mother were joint directors of The Comedy Store, a famous Hollywood comedy club. When Peter subsequently took to managing the club's finances, Pauly requested that Peter turn over about three years worth of tax returns and financial documents. After Peter refused Pauly's request and instead fired Pauly from the club's Board of Directors. Pauly brought an undue influence lawsuit, claiming that Peter orchestrated firing Pauly from the Board by taking advantage of their mother's frail health.

Undue influence doesn't just disturb the families of the rich and famous. Too often it surfaces in the financial matters of everyday people, whether in wills and trusts, or the operation of a family-owned business. When it does, it's time to speak with an experienced attorney about your legal rights so you can protect the vulnerable from the unscrupulous.

Back to the Basics: First vs. Third Party Special Needs Trusts in NY

April 18, 2014,

Families throughout New York who have children with disabilities are frequently questioning how to best provide for their children's needs--both now and in the future. It can be a complex issue, because relatives must balance their ability to provide help via their own private resources with available support through Medicaid and Supplemental Security Income (SSI). SSI is designed to help those with certain disabilities with basic needs and is funded through general tax revenues, not Social Security taxes.

The government programs hinge on the specific income available to those with disabilities, and so relatives who provide support may unintentionally lead to disqualification of their loved one from Medicaid or lower SSI payments.

Special Needs Trusts in New York
Special Needs Trusts (SNTs) are critical in these situations, allowing parents, grandparents, or others to provide supplemental resources without affecting the individual's access to important government programs.

SNTs are relatively straightforward in concept, but the specifics of setting them up and using them properly can prove complex. For example, there are two general types of SNTs: First party and third party.

Third party SNTs are usually more common for New York families in situations where a parent, grandparent, or guardian wishes to provide funds for the child. The trust then operates to provide support for the individual with disabilities throughout their life. At death, the remaining assets in the trust are paid out to relatives--the disabled individual's own children (if there are any), siblings, or other close relatives.

Alternatively, first party SNTs use the disabled individual's own funds to create the trust--not money provided by others. These are slightly more complicated in that they have a "payback" requirement. The disabled child is able to benefit from the trust funds without losing eligibility in government programs. However, upon the individual's death, the funds remaining in the trust must be used to pay back the government for benefits received throughout their life.

Because first party SNFs require use of the disabled individual's own funds and have a payback provision,they are not used as often as third party trusts. However, they may be appropriate in certain situations. Some common examples include: when the child with special needs receives a large inheritance or is granted sizeable funds from a lawsuit verdict or settlement.

Evaluate the Whole Picture
In most cases, the creation of a special needs trust is only done in combination with other planning that may include life insurance, unique inheritance planning, and similar work. Elder law estate planning includes many interconnected parts, and so it is crucial not to view any specific legal tool in isolation. An attorney can explain what combination of steps are needed to best protect you and your family.

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.