Tragic New York Murder Case, Inheritance, & "Son of Sam" Laws

October 9, 2013,

What happens if someone who intentionally causes a death is due to inherit from the person who died? Is the wrongdoer still able to profit from his or her actions?

In general, the answer would be negative. New York passed a statute known as the "Son of Sam" Law which essentially prevents a criminal from profiting from their crimes. This state law overlaps with a long-ago established common law principle known as the "slayer rule" which more directly affects inheritance issues, preventing someone convicted of causing a death to then profit by inheriting from the deceased person.

These rules are not new. But sometimes unique cases pop up which are hard to fit perfectly into the older rules, usually sparking legal challenges.

For example, consider a 2011 case from Suffolk County. A man attacked and killed his mother-in-law. He was sent to prison. Later, the man was set to inherit a large sum from his wife's estate--the daughter of the woman he killed. Much of his wife's assets were received directly from the mother--who had left her entire estate to her daughter via a will.

There was not a straightforward answer to this question, because the killer would not be profiting directly from his crimes. Instead, he would receive the assets indirectly. Does the slayer rule cover this case? Eventually, a New York court in this case ruled that the slayer rule was expansive enough to bar a killer accessing any of the victim's property, even if inherited indirectly.

Recently, yet another New York case is making headlines on another potential "loophole." Several years ago a young mother in Long Island drowned all three of her children in a bathtub. She was arrested and put on trial, however, she was found not guilty because of mental disease or defect. She has since been living in a psychiatric facility.

Now the mother is seeking a part of the children's $350,000 estate. Those funds were received as a part of a legal settlement with a local social service agency after questions arose regarding their conduct which may have prevented the incident.

But doesn't the slayer rule and Son of Sam laws bar her inheriting? If she was convicted of the murders, then yes. However, the woman was deemed not responsible because of her mental state, leaving open the possibility that the rule barring inheritance does not apply to her. A hearing on the matter is set for next month.

Will The Government Shutdown Affect Your Estate Planning?

October 3, 2013,

News this week is dominated by one topic: the federal government shutdown. Like most others, you may be wondering how (or if) the developments out of D.C. will affect you.

The Background
The shutdown itself is caused by Congress's failure to pass an appropriations bill allowing for the spending of money to fund day-to-day government operations. More specifically, Republicans in the House of Representatives are refusing to pass a bill that includes funding for the Affordable Care Act. Usually disagreements about these issues are handled separately from daily government funding, but the House GOP has combined the issues and refused to budge, leading to the shutdown.

The Consequences
From the closing of the national parks and postponement of National Institute of Health trials to thousands of furloughed employees, the temporary shuddering of the federal government directly affects the daily life of millions. Now, three days into the shutdown, the average New Yorker may still have have not felt any direct impact. The mail still arrives, the garbage is still collected, kids go to school, and (unless you are a federal employee) you still go to your job.

While your estate planning is unlikely to be impacted by this situation, one area where everyone may be affected is taxes. Most notably, what is the Internal Revenue Service (IRS) doing in the middle of this shutdown?

Taxpayer Effects
A story this week from the Journal of Accountancy discusses the current status of the IRS in the midst of the controversy.

The articles discusses how the IRS's usual contingency plan calls for the processing of returns throughout, but at this time "tax refunds will not be issued until normal government operations resume." At the same time, the IRS plans to continue various cases--liens, bankruptcies, seizures--to prevent statute of limitation issues.

Relatedly, federal courts will stay open for at least ten days to handle business, but if the shutdown lingers longer, then no court proceedings will occur. Please note, however, that this does not affect state court proceedings.

Most other IRS activity will stop during the shutdown, including audits, examinations, and responses to taxpayer questions. All told, about 86,000 IRS employees will stop working, with administrative services put on hold.

As a practical matter, if this shutdown lasts for only a few days more, then there may not be any long-term effects. However, all of these assessments will need to be re-evaluated if the shutdown is prolonged and commonly-used services remain out of reach for residents.

Tough Legal Questions: Inheriting Digital Media

September 30, 2013,

It is a cliche to assert that the world of estate planning is ever-changing. Of course, laws are frequently altered by policymakers which affect the best practices for passing on an inheritance and saving on taxes. For example, just this year Congress agreed on new federal estate tax rates, which may influence how some decide to use wills and trusts to best plan for the future.

But it is not only legal changes that impact these issues--technological and cultural changes can uproot estate planning details as well. On the cultural side, consider the changing gender roles. Only a century ago, in many families it was expected that the oldest male would inherit almost the entire estate, with daughter and younger sons receiving only a minimal inheritance. While similar arrangements can be made today, the practice is incredibly uncommon. Cultural changes since then altered how these distributions are normally made.

Technology Changes Estate Planning
Changes on the technology front can impact estate planning even more rapidly. Consider "digital assets." While the term is used loosely, it usually applies to anything of value that one owns in in digital form--like a blog, website, or social media profile. In the past we have talked extensively about the various ways to pass on access and ownership of these unique pieces of property.

One of the more interesting legal questions related to digital property involves not how to pass them on, but whether they can be passed on at all. For example, last year several online news sites reportedly--falsely--that actor Bruce Willis was threatening to sue Apple for the right to pass on his iTunes music collection. The story was fictional, but it did raise a question that many found interesting: Can you pass on assets like an iTunes collection--even though you may not own the actual copyrights to the music itself. Is this the same as passing on a physical CD or record to another?

Believe it or not, the Bruce Willis hoax actually spurred creation of an academic article recently published in the Santa Clara Computer & High Technology Law Journal. In analyzing the legal questions, the author explained that the law is different between physical assets (like a CD) and digital assets (like a song downloaded from iTunes). Physical assets can be passed on via the "first sale" doctrine which provides flexibility on the re-sale and use of the content. Alternatively, digital assets are governed by something called EULA--"end user license agreement."

In other words, the companies that control these accounts--like Google, Amazon, Apple, etc.--each have unique EULAs which dictate transferability. The article points out that in most cases, the agreements are very limiting, making it difficult to completely pass on accounts or downloaded media to another.

If this is an issue that is important to you, it is critical to talk with your estate planning attorney to learn more about how you can best have your wishes accounted for in your plan.

The Huguette Clark Drama Continues--Possible Settlement?

September 27, 2013,

The New York estate feud that dominated headlines for months may finally be nearing an end. Mysterious New York heiress Huguette Clark died in 2011 at the ripe old age of 104. For several decades before her death, Clark lived inside a hospital room--even though she was healthy enough to live elsewhere. Her several mansions remained empty for years. In fact, a documentary film based on Clark's life and death is currently in creation--several books have already been published.

Because of her unique lifestyle and secretive existence, many were intensely interested in her estate plan--curious as to how her $300 million fortune would be passed on. So began a complex back-and-forth between dozens of different parties who apparently had a stake in the estate--including Clark's doctor, lawyer, nurse, the hospital where she stayed, her distant relative, named charities, and more.

Clark's estate planning was relatively bare considering the size of the assets. Essentially two wills were produced. The two wills were both created in 2005. The terms of those two wills could not be more different. The first will gave most of her assets to her distant relatives. The second will cut the family out entirely and instead sprinkled money to her doctor, nurse, lawyer, accountant, and arts-related charities.

It was not long before the different parties at stake were locked in a legal battles. As a substantive matter, the main issues was which of the two wills should be followed. Last week, we explained how negotiations had broken down and the matter was set for trial.

Apparent Settlement
But on the eve of jury selection in the case, the New York Post is reporting that a settlement may have been reached. Per the terms of the possible agreement, a group of 20 relatives will split $34.5 million from that estate. Another major beneficiary would be the new foundation created and set up at Clark's California estate. The Corcoran Gallery will receive $10 million, the hospital where she lived would get $1 million, and a loyal doctor-friend would receive $100,000.

Interestingly, not everyone involved with walk away with some piece of the estate. For example, her attorney and accountant will not receive anything. In addition, Clark's nurse will not receive the nearly $7 million she would have per the terms of the second will.

The next step is for the settlement to be put before the judge. So long as he approves it, the matter may finally be settled.

Mysterious Will Filed in New York Intestate Case

September 26, 2013,

Earlier this year we shared information about a $40 million New York inheritance that was destined to go entirely to the government. 97-year old former NY developer Roman Blum died in January, leaving behind the multi-million dollar estate. Yet, it seems that Blum conducted no estate planning--no trust was created and no will was found. Not only that, but it was unclear if he had any living relatives. As a result, per intestacy rules in the state, the assets would eventually "escheat" to the government. This represented the largest unclaimed estate in New York history.

The case is often pointed to as a vivid reminder of the need to lay out your inheritance wishes ahead of time or risk losing control of the decision entirely.

Will is Found?
There was a new twist in the story last week, as a will purportedly for Mr. Blum was officially submitted to the Surrogate Court of Richmond County. The man who filed the will, in which he is named as the sole heir, is Anthony J. Allegrino II--an attorney from upstate New York. Thus far, he has not provided an extensive statement to the press, and so his exact relationship with Mr. Blum is unclear.

Now that the will has been officially submitted for probate, an initial hearing will be held next month. The document will then be scrutinized to determine its authenticity. Because the estate would go to the government otherwise, the attorney general will participate in the hearings as an interested party.

Expectedly, many familiar with the situation were immediately skeptical. For example, one of the few men close to Blum later his life--his friend and lawyer--voiced surprise at the filing of the will. He explained to the Staten Island Advocate: ""I don't even know how to react. Things should get very interesting. I represented Roman Blum for almost 30 years. If he was going to do a will, I would have known about it."

The entire case is an example of another problem with inadequate planning--it opens the door to potential abuse. Of course it is far too early to make any accusations against the man who claims to be the heir in this case. But the potential for fraud or forgery is undeniable in situations where a large fortune is left open. History demonstrates that one need not even have a large estate to entice wrongdoers to exploit the situation. The best preventative step is to have professional guidance when drafting a will and creating trusts so that, when the time comes, there is no mistaking your intentions.

State Supreme Court Sends Most of James Brown Assets to Charity

September 23, 2013,

One common misconception regarding estate planning is that simply getting wishes down on paper automatically means that those wishes will be carried out. Some New Yorkers, for example, may be under the too-optimistic assumption that drafting a quick will designating inheritances is enough to ensure that assets will go where intended.

It may be that simple in theory, but the reality is far murkier.

That is because challenges to wills and trusts are incredibly common. Disputes frequently result in compromises that are far different than what was originally intended. That is sometimes true even in cases where extensive planning was done ahead of time.

James Brown Estate
Take, for example, the prolonged battle over the estate of James Brown. The legendary singer died several years ago, leaving behind an estate worth tens of millions of dollars. Brown was prudent in his planning, and so he had a will and trust in place. Those arrangements provided that the vast majority of his assets be transferred into a new charitable trust. In short, Brown wished to give most of his money away, instead of leaving it to his purported spouse, several children, and other relatives.

However, shortly after the death, all of the involved challenged the will. The family members asked that the state's intestate succession rules be applied, which would have divided all of the assets between the spouse and children. Eventually, the state attorney general intervened, brokering an agreement that sent half of the estate to charity and that split the other half between the family.

The matter did not end there. That is because the court-appointed representative of the estate challenged the apparent settlement. In their eyes, Brown very clearly wanted his estate to go nearly entirely to the charitable trust, and there were no grounds for those wishes to be overturned.

Recently, in a new decision the state's Supreme Court (read the opinion here) agreed with the representatives and threw out the settlement. Specifically, the high court did not find the compromise plan to be reasonable. The opinion states that "The result [of the settlement] is to take a large portion of Brown's estate that Brown had designated for charity and to turn over these amounts to the family members and purported family members who were, under the plain terms of Brown's will, given either limited devises or excluded."

Fortunately, in this case, it seems the Brown's wishes will be preserved. However, many other cases end up with a different result. And, in any event, the ultimate goal is not to have a bitter, drawn out dispute in the first place.

That is where experienced professionals come in. Beyond ensuring that the procedural rules are followed and the technical work is completed with regard to wills and trusts, experienced estate planning attorneys are also valuable because they provide practical insight to account for unforeseen variables. The best way to prevent an estate plan from being challenged is by being aware of the potential dispute ahead of time.

Financial Advisors Discuss Ways to Save on Increased Capital Gains Taxes

September 19, 2013,

Many New Yorkers know that, as part of the federal tax package compromise that was passed on January 1st of this year, the capital gains tax rate was increased. Last year the top rate was 15% but that is now up to 20%. In addition, some individuals will also face a 3.8% investment surcharge tacked on top.

Prudent estate planning always takes tax considerations into account, and transferring assets which have accumulated in value is one of the most important (but trickiest) aspects of the process. As such, it is prudent to closely consider ways to legally save on taxes, particularly considering the new rates.

Forbes on Capital Gains
A personal finance article from Forbes delves into some general strategies that may be used to legally save on those capital gains taxes. For one thing, there may be great benefit to saving assets until death so that heirs get a "stepped up" basis on assets which have appreciated considerably. In many cases, this results in those assets moving to heirs without the capital gains tax coming due at all. Though, don't forget that other taxes (like the estate tax) will still be in play at those times.

Yet, depending on your situation, there may come a time when assets must be sold before death. For one thing, seniors are often forced to sell assets in order to pay for retirement or long-term care. This may risk a huge capital gains tax bill. [Sidenote: this is one of many reasons why it is prudent to invest in long-term care insurance].

So what can one do to save on capital gains while alive? For one thing, passing on gifts to children or others under the annual tax exemption rate may be prudent. As the WSJ story reminds, "you can give $14,000 a year in cash or property each to as many individuals as you'd like without eating into your lifetime gift/estate tax exemption."

Other strategies can be used to keep one's income below the mark which imposes the 3.8% investment tax ($200,000 for singles/$250,000 for couples). One way to do so is to put more money into retirement savings accounts like 401(k)s as pre-tax contributions. This won't eliminate all capital gains, but it is always worth saving even smaller amounts like 3.8% from leaving your bank accounts.

The story delves into many other specific financial strategies, some which impact long-term estate planning. It is worth perusing the entire story, and hopefully acts as a spur to seek out professional guidance on all of these matters to protect assets for you and your family.

Planning Must Consider the Unforeseen Future, Not Just the Present

September 16, 2013,

It may seem obvious, but it is critical for all of your long-term planning, from an inheritance to a business succession strategy, to take into account potential events that have yet to happen. Far too many New Yorkers engage in estate planning and financial planning that gives short shrift to potential changes in circumstance in the future. It is worth reiterating that all families should make plans that take into account unknown future events, like divorce, disability, a lost job, and more.

Divorce, Disability, and More
A Financial Advisor magazine article from late last month touched on the principle of long-term forecasting. The story is focused specifically on business succession planning, but the basic principles are applicable to many forms of long-term preparations. The story summarizes the potential unknowns as the "Four Ds" -- divorce, disability, drugs, and death.

In the business succession context, this refers to dealing with changing marital status of an owner (and the resulting property rights dispute), death and disability of a partner, or potential drug/addiction problems of a key business employee. Steps must be in place to deal with these events so that the business is not decimated in the aftermath. The business graveyard is filled with many family enterprises that fall apart when uncertain events occur that paralyze decision makers and throw the business entity into chaos.

The principles of preparing for these (and other) unknown events applies well beyond business succession planning. Consider crafting an inheritance. Is it satisfactory merely to consider what the family is like now or is it prudent to factor in unique life events? Obviously the latter is necessary.

But it is natural wonder if anything actually can be done to prepare for a future that is unknown. How do you prepare for a divorce that may not happen, a drug addiction that has not occurred, or a disability that hopefully will never happen? The answer is to use flexible legal tools--like trusts--and to make contingency plans.

An estate planner can discuss the specific types of trusts and/or property ownership arrangements that might provide the most protection in case of some future change in circumstance. Similarly, the professional can also provide advice on what other events should be accounted for and considered when crafting these plans. Half of the battle is often thinking about contingencies early on, instead of lamenting later, "Oh, I should have thought of that."

Huguette Clark Estate Negotiations Fail, Set for Trial

September 12, 2013,

When most people envision legal trials, the first images that pop to mind involve bizarre crimes or large class action lawsuits. Thanks to movies and television shows, there is an assumption that trials are only for deciding whether someone is going to prison or if a large corporation acted inappropriately and hurt hundreds of innocent community members.

But believe it or not, trials actually stem from far less salacious situations--even disputes over wills and trusts.

$300 Million Estate Fight
For example, according to the most recent reports, it looks like a trial might be on the way for the on-going New York estate feud involving heiress Huguette Clark. We have been following the drama for several years. Ms. Clark's reclusive life and interesting family history caught the public interest, and disputes over her fortune have subsequently made headlines.

As summarized in a CNBC article this week, ongoing settlement negotiations between Clark's relatives and others involved in the case seems to have broken down. The disputes many different parties named as beneficiaries, including family members, former nurses, her attorney, accountant, a charitable foundation, and the hospital where she lived in her final decades.

One of the main disputes is whether her relatives--from her father's first marriage--should receive anything. The latest will signed by Clark purportedly states in explicit terms that those relatives should receive nothing. The family members have since challenged the will.

Unfortunately, a settlement with all of the divergent interests could not be reach. As a result, a trial is now scheduled to settle the matter. According to the report it is set to being on September 17th n a Manhattan Surrogate's Court.

Prevent a Fight
Estate feuds are not unique only to those with extreme wealth. When no advanced planning is done, even families with few assets can be torn apart in fighting. To ensure this does not happen in your case, it is important to visit with an estate planning attorney to make your wishes explicit.

At the end of the day there is nothing that can be done to 100% guarantee that there will not be a dispute down the road. However, a lawyer who works on these matters can explain the many options available to drastically reduce the chance of problems. For example, instead of primarily relying on a will, trusts can be used to transfer assets automatically. This help avoid the common claim, as made in Huguette Clark's case, that one was incompetent at the time of a will signing or unduly pressured into making certain provisions in the legal document.

Tax Evasion Case - Hiding Inheritance from IRS

September 10, 2013,

One important purpose of estate planning is to ensure that as many assets as possible pass on to friends, families, and charities--instead of Uncle Sam. Using trusts and other legal arrangements to structure an inheritance is a prudent move for all New York families, but particularly those with sizeable assets. Taxes at both the state and federal level can take a significant chunk out of any inheritance. There are many high-profile cases of individual who failed to take advantage of all the planning tools at their disposal, resulting in an inflated tax bill. The estate of actor James Gandolfini's, settled in New York, is just one recent example of how millions can be lost to taxes.

Illegally Cutting Corners
Unfortunately, some families may be tempted to cut corners and resort to illegal conduct in order to prevent the government from collecting on a large tax bill. The temptation to act in this manner is even higher when prudent estate planning is not conducted at the outset.

It is critical to reiterate the severe consequences of skirting the law in order to evade inheritance taxes.

Recently, Bloomberg News shared one cautionary tale involving the family of successful New York businessman, Harry G.A. Seggerman. Mr. Seggerman died in 2001 leaving behind an estate valued at nearly $24 million to his family. According to reports, a large portion of the assets were held in undeclared Swiss bank accounts. In addition, federal prosecutors allege that the family engage in illegal activities to defraud the federal government of its tax obligation.

The details of the case are quite complex, but at least four family members and an advisor were all charged with various federal crimes, including conspiracy and tax evasion. Apparently, they used different means, like sham mortgage services, to hide assets and ultimately not pay their full tax obligation.

The family members have pleaded guilty and are apparently cooperating with prosecutors in their efforts against the advisor (who pled not guilty). However, the family members still face stiff penalties (and possible jail time) for their conduct.

Smart & Legal
The bottom line: be sure to to receive the advice of experienced professionals when dealing with these matters to ensure that you are taking advantage of all legal tools to save on taxes. The law has built in various avenues to help families make prudent steps that allow more assets to go to desired beneficiaries. One need only take the steps ahead of time to make it happen.

Inadequate Retirement Worries? - Tips to Boost Your Savings

September 5, 2013,

Retirement saving. Those two works often strike immediate fear and worry in the heart of New Yorkers. It is hard enough for many families to meet their weekly needs, from mortgage payments to children's tuition payments and everything in between. In the end, there is often little left over to stock away for one's golden years. Add in the 2008 economic recession, which hurt many plans, and it is no wonder that New Yorkers are worried about the inadequacy of their retirement.

Fear not. Depending on your age, there is still time to put strategies in place to ensure access to resources for later in life. Even if you are knocking on retirement's door, there are still steps that can be taken to catch-up.

Strategies from Forbes
A Forbes article last week shared five basic tips to help boost your retirement savings. The strategies, while straightforward, are worth repeating. Take a moment to look at the entire list.

First, for those still young, it is tremendously helpful to set up automatic saving withdrawals. The story reminds that every dollar saved now is worth two dollars in a decade. The principle applies indefinitely, the earlier you start, the more time compound interest has to work to grow your nest egg. By having the savings taken out automatically--without requiring an overt act on your part--there is a much greater chance that you will save adequately.

For those closer to retirement, it may be prudent to downsize earlier than planned. Upon retiring, many get rid of unnecessary expenses--extra cars, large homes, etc. One way to boost savings near the end is to take these steps a bit before actually retiring. Moving into a smaller living space and getting rid of other unnecessary expenses can go a long way.

If you have very little time left, you still have options. One common recommendation is to work one extra year--live on retirement resources, and save 100% of the last year's salary. In this way, your retirement nest egg can receive one extra boost. If that step still is not enough, there is always the option of working part-time in retirement. After all, many retirees find themselves looking for new activities anyway. It may make sense to turn the free-time into a part-time retirement career to help with expenses.

It is prudent to visit with financial planning professionals to understand your options. At the same time, it is important to weave your retirement plan into an estate plan, so that you can take full advantage of various trusts to protect assets.

IRS Issues Guidance on Federal Taxes for Same Sex Couples

September 3, 2013,

Last week the Internal Revenue Service (IRS) released information on what has been dubbed a "hugely important" questions for same sex couples. Essentially, the new rules mean that same sex couples who are legally married in one state will still be treated as married for tax purposes by the federal government, even if they move to a state which does not allow same sex couples to marry.

More Protection for Couples
While the U.S. Supreme Court's landmark gay marriage decisions last summer were seen as a huge leap forward for equality, the decisions did not come close to permanently settling the matter. A majority of states still do not allow same sex couples to marry. This creates a complex patchwork of rules for taxes, inheritances, public benefits, and privileges. Same sex couples can be treated very differently simply by crossing a state line.

Obviously each state will treat couples differently based on state law. New York has marriage equality, and so same sex couples are treated the same as opposite sex couples here. But that still leaves open the question of treatment under federal law. What about couples who move out of New York? Do they lose all of their rights and privileges as a result?

The short answer: it depends. But, as a result of these new IRS rules, the couples will likely still be treated as married for federal tax purposes, even if they head to a non-marriage equality state. The U.S. Treasury Secretary explained that the IRS decision "assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change."

The decision means that the IRS adopted a "celebration" approach to determining marriage status. In other words, whether or not a couple is married for federal purposes is if the initial celebration (creation) of the marriage occurred in a state that allows it. The marriage laws of the couple's current residence does not decide the matter.

Most obviously, this will allows couples to file federal taxes jointly (though state taxes may need to be filed separately). On top of that, by treating same sex couples as married, the IRS decision will allow couples to claim additional exemptions attached to marriage, defer on IRA contributions, claim various tax credits available only for married couples, use the "portability" benefit for estate tax purposes, and more.

A Forbes story last week summarizes the specifics of the IRS decision. You can view the press release issued by the IRS here.

This is clearly good news for those hoping for fairness and uniformity for all legally married couples. If you have questions about how this may affect your estate planning or retirement, be sure to contact an attorney to learn more.

Delaying Social Security: Should You Do It?

August 30, 2013,

There is no such thing as universal financial advice. When reading any news story, blog post, or magazine article, one must remember that any advice or discussion about financial topics are general--they may not be best choice in your particular case. Many decisions about investments, use of trusts, and similar matters should only be undertaken after consultation with a professional upon explaining your exact situation.

But that is not to say that it isn't important to learn about some of the general issues beforehand to better understand common financial planning themes. For example, what are the pros and cons of delaying the receipt of Social Security benefits?

A Q&A story from the Herald provides a helpful summary of the issue. A questioner just turned 62 years old. He was wondering if he should start taking Social Security now ($1,800 a month), wait until he is 66 years old ($2,4000 month), or wait even longer.

The answering financial advisor provides an overview of how the system works. For those born before 1954, the retirement age is 66. Collecting Social Security early, at 62, results in payment of 75% of the monthly benefit. On top of that, if you are still working at that point, you will take a 50% cut of any amount over $15,120 annually.

Conversely, delaying until 70 actually results in a large bump--around 32% higher than the "regular" payment amount at 66 years old. In fact, this figure may be even higher, because annual cost of living increases may be applied to deferred payments. For the man in the above scenario, his monthly amount would be around $3,200--or even higher.

So which option is best?

There is no easy answer. One on hand, waiting until 70 obviously results in the highest monthly payments. Those payments are guaranteed for life, which is a huge perk. Considering the benefit of delay, it may be prudent to do everything possible to survive financially without taking Social Security early by using all other resources first (savings accounts, IRAs, etc.).

However, not everyone has those alternative sources of income to survive until 70. At that point the assessment is a balance between working longer (if that is an option) or deciding to bite the bullet and take the earlier Social Security payments.

Many other factors come into play in these decisions, as well. At the very least, it is critical to evaluate all of your options and closely consider your long-term needs and goals before making any permanent financial decisions.

New Rules: Reverse Mortgages Will Be Harder to Get

August 29, 2013,

One tool that seniors can use to receive funds for long-term care are known as "reverse mortgages." A reverse mortgage works by converting home equity into cash--either a line of credit, monthly payments, or lump sum. The individual can remain in the home at this time, with the loan (and interest) due either upon the borrower's death or moving out of the home. Reverse mortgages are only available to those who are at least 62 years old.

Shifting Rules
As reported recently in the Wall Street Journal, the rules about reverse mortgages are about to change. The U.S. Federal Housing Administration insures these mortgages and has power to regulate how they work. Not long ago the FHA decided to modify the program. The underlying goal of the changes are apparently to lower default rates and ensure borrowers are not unknowingly biting off more than they can chew.

More specifically, borrowing limits are changing. The FHA is enacting a lower cap on the amount a borrower can take in the first year--up to 60%of the appraised value of the home. This is down from a previous high of 75%. There are some exceptions to this rule, which will allow homeowners to borrow 75% of the appraised value immediately, but doing so will trigger a high loan fee.

Also changing are requirements on lenders before approving these loans. For example, lenders will now be required to evaluate the borrower's ability to pay property taxes, homeowner's association fees, and similar costs. Not only that, but the lenders may require those receiving the loans to set aside money to cover those costs.

In short: The new rules will make it a bit tougher to obtain a reverse mortgage and may limit the size of the loan. There is not much time before these rules go into effect. The FHA is pushing to have some (or all) of the changes take effect on October 1, 2013. To work under the older system, borrowers would need to finish the preliminary steps--a counseling session on receipt of case number--within the next month.

Get Professional Help
There is a lengthy list of New York seniors who have taken on these loans with rather harsh terms only to find that they are unable to live off the loan for long or pay it back entirely. When researching all options regarding long-term care, it is important to visit with an elder law estate planning attorney who can walk you through the details of each and help you make informed decisions to ensure goals are met in the most prudent fashion possible.

How Does New York Stack Up for Retiree Taxes?

August 26, 2013,

Do you have enough money to retire? It is a questions that tens of thousands of New Yorkers ask themselves every day. When talking with attorneys and financial advisers, many factors are weighed to determine whether enough resources are available for one to have the type and length of retirement that they want and need.

One of those factors, as always, is taxes. Retirement income is frequently taxed, with a portion of money going to state and local government. These are not necessarily trivial amounts, as the exact size of the tax burden may affect whether or not the nest egg is large enough to cash in one's chips and begin the next phase of life.

Federal taxes will obviously be the same everywhere, but the rules about retirement taxes vary considerably from state to state. When making long-term plans regarding finances, it is critical to understand how state tax rules will affect your retirement

New York Retirement & Taxes -- High Burden
One recent report from Kiplinger includes a helpful map that compares relative state retirement tax burdens nationwide. New York is rated as one of the "worst" for retirement purposes, because of its relative lack of senior-related retirement tax benefits. As you can see in this full map, New York is one of ten group into the "least tax friendly."

The designation was based on analysis of various factors, including: state sales tax, social security tax, income tax, estate/inheritance taxes, and other special treatment of income used for retirement.

For example, New York has a 4% sales tax, an income tax ranging from 4-8.82%, and a relatively aggressive state inheritance tax. Compare that to a relatively senior "tax friendly" state like Florida, which has a 6% sales tax but with no state income tax and no state inheritance tax.

None of this is to say it is all bad news for local retirees. New York does not tax Social Security benefits or public pensions, and provides some tax exemptions for private and out-of-state pensions. However, our state does have some of the highest property tax rates in the country, which can hit seniors hard.

More and more seniors are at least taking a look at this data when making future plans, including any thoughts about relocating. Even if the tax issue does not ultimately affect your retirement decision, it is still important to appreciate the differences if you are moving out of New York or into it. Those families entering the state should account for the effect that our relatively high rates may have. While those moving elsewhere should be sure to check on their eligibility for different senior-based retirement tax breaks.