IRS Releases Trusts and Estate Statistics

February 14, 2014,

Discussion about the estate and trust tax issues usually centers on political debate about the rates and exemption levels or case-studies of the tax burden for famous or wealthy individuals. Far less often discussed is general information about the tax, including how much was actually collected, the total number of individuals affected, and similar details.

Fortunately, to fill in that gap, every year the IRS releases statistics, including those affected trusts and estates. A rather detailed list of information can be found in various spreadsheet on the IRS website. Also provided is a handy sheet offering a "snapshot" of many interesting trust and estate tax details. The most recent year's tally was just released, providing a helpful primer for those interested in how these federal taxes actually affect residents.

The Data
All statistics are culled from submitted returns on Form 1041. This is the form used is the "U.S. Income Tax Return for Estates and Trusts." The snapshot explains that the form is "used to report the income, deductions, gains, and losses of estate and trusts, as well as distributions to beneficiaries and income tax liability."

All told, in the most recent data released (from 2010), a total of 3 million such forms were filed totaling $91 billion in income--the majority of that income was from capital gains ($32 billion). That accounts for about $72 billion in deductions. About 75% of those filing listed some deductions.

However, these forms were not filed just by high-income earners, as the vast majority were from those listed incomes of $100,000 or less--more than fifty percent lists less than $10,000 in income. In fact, of the 3 million filings in 2010, only 532,000 of those owed any tax burden at all. There was a clear trend year over year in regard to these income filings. In 2009, about 661,000 Form 1041 filings resulted in some tax liability. Keep in mind that these stats are from several years ago, when the country was in a far more dire economic straits.

There are many interesting takeaways from this data. At the most basic level, this is a reminder of the complex tax issues that may attach to an estate well after an individual passes. This is one of many reasons that estate planning attorneys and financial advisors can play a critical role with these matters both with preparing the plan as well as administering it. For example, it is not uncommon for attorneys to work as a trustee to help ensure all of the legal details are handled appropriately.

For help understanding these issues as they may relate to you and your family, contact an estate planning lawyer today.

Growth of Online Memorial Services

February 13, 2014,

Making preparations for funeral services, burial preferences, and other memorial issues is a natural part of New York estate plans. These details have been a staple of the mourning and remembrance process for centuries. However, if trends continue, a new form of memory may be added to many plans: professional, digital tributes.

Online Memorial Websites
The stratospheric rise in popularity of online social networks and blogs should make it no surprise that remembrances for lost loved ones are moving online. Placing an obituary in the local paper or buying a memorial ad on the yearly anniversary is no longer the only way to share information about a passing and gracefully remember those who are gone. The process has moved online.

The Wall Street Journal published a story this week that discusses many of the most common options local families are turning to when trying to craft an online memorial for their loved ones. These sites are often referred to as "virtual gravestones" that allow friends and family a shared place to mourn across the web. A few of the most common vendors:

Of the above list, Facebook and LifeStory are free. The Facebook option is simply conversion of an old account into a "Memorialized Account." This preserves many of the memories and message on the page for friends and family. Similarly, using a Facebook account, provides a more formal online memorial with specific pictures, messages, and memories added.

Alternatively, and are stand-alone memorial companies that offer various degrees of customization. These sites range from a $35 to $100 and vary as to whether there is an annual subscription renewal charge or if the site will remain up indefinitely.

All told, one reviewer who searched various sites in an effort to compare features and functionality argued that all of these formal online memorial sites have much room to grow. Many of the sites seem outdated and have not fully embraced the social connectivity that undergird so much online browsing today. For example, critiquing (currently the largest provider online memorials), the reviewer noted that the site "pages are limited to a collection of preset boxes and small photos that might have been cutting edge in 2002."

The safe bet is that more and more options will pop up in the coming years for New York residents to craft official online memorial spaces. These tools may eventually make their way into formal estate plans so that residents are able to specifically explain how they would like their online remembrance to look and feel.

Estate Battles the IRS - The Michael Jackson Example

February 11, 2014,

When most hear the phrase "estate battle" the mind immediately jumps to fighting between families. Sadly, in the tumult of a passing, it is not uncommon for even close relatives to disagree sharply over how an assets should be divided. However, estate fights can also refer to legal problems related to taxes and the IRS. Tax matters are intricately woven into estate matters, and when problems arise, you can be sure that the IRS will be ready to defend their position in court.

How Much Was Jackson's Estate Worth?
To understand how these IRS estate battles often play out, one need look no further than continued wrangling over perhaps one of the largest estates in recent memory. Famed entertainer Michael Jackson died in 2009. However, the estate is still fighting with the Internal Revenue Service regarding how many taxes need to be paid.

As discussed in an LA Times story this weekend, the IRS and Jackson's executors are miles apart on what is owed. The executors claimed that Jackson's net worth at the time of his death was $7 million. The IRS, on the other hand, valued the estate and exponentially higher--$1.25 billion.

As most know, one's estate tax burden is based on the total value of assets. Obviously then, the executors and the IRS have staggeringly different ideas about how much tax is owed. For their part the IRS claims that the total estate tax was $505 million. Not only that, but they claim that errors with the tax return trigger double penalties, adding an addition $197 million in penalties to a total tax obligation of $702 million. Keep in mind, this tax bill alone is 100x larger than the executors claimed the entire estate was worth.

How could the two sides be so far off? Apparently, the main dispute surrounds the value of Jackson's "image" and his rights to a valuable trust which holds rights to legendary songs (including almost the entire Beatles collection). The executors argued his likeness was worth $2,105 and that Jackson had no interest in the song collection because he had borrowed hundreds of millions of dollars against it.

Unique Assets & Appraisals
When it comes to intangible assets that do not necessarily have an obvious value, then disputes often arise between the IRS and an estate. While very few will leave an estate or assets as large (or unique) as Jackson, the issue of proper appraisals and subsequent tax burden is not uncommon among New York residents. As always, the best approach is to structure an estate so that these assets are not included at all and not factored into possible estate taxes.

New York Gift Tax Calculations May Change Soon

February 7, 2014,

This week we discussed the growing belief among policymakers that estate tax changes are on the way for New York. Governor Cuomo proposed changing the exclusion rate for the NY estate tax up to the federal level ($5.25 million now and pegged to rise with inflation). This would be accompanied by a lowering of the top tax rate from 16% to 10%. Altogether, this represents a positive step for those hoping for a simpler, smaller estate tax bite.

However, less discussed are other changes that the Governor propose be included with the tax overhaul. Specifically, as noted in a Wealth Management story from last week, taxation on gifts will be folded into these total estate calculations. The gift issue is important, because it may lead some New York resident to alter their long-term strategies immediately.

Gift Taxes in New York
Under current state law, there is not a gift tax. However, under proposed changes, estate tax will need to be paid on all taxable gifts starting in April of this year. The story summarizes the concern succinctly:

"The new provision will cause any taxable gift made by a New York resident after March 31, 2014 to incur an additional net estate tax of anywhere from 6.5% to 12%." This is only important, however, if the individual's gross estate exceeds the exclusion amount.

In short, depending on your family's specific situation, it may be prudent to make gifts now, before those gifts would be folded into the estate for tax purposes, to avoid an extra tax bite during this potential NY estate tax transition.

Tax and Planning Complexity
These gift and tax issues are quite complicated in even the best of cases, but they are made even more so when involving speculation about what might happen based on lawmaker preferences. Adding another layer of challenge is the fact that some legal issues related the the connection between state and federal estate taxes remain unclear.

For example, most assume that the tax connected to the potential New York taxable gift will be deductible from one's federal gross estate--lowering that federal tax amount. However, there is technically no clarity on this exact issue, and many suggest that past precedent suggests that this may not be the case.

As even a cursory glance at these issues makes clear, it is critical not to handle these matters alone. New York estate planning attorneys, accountants, and financial advisors are here specifically to evaluate your situation, understand the legal details, and ensure you are best positioned to lower your tax burden and pass on as many assets as possible to loved ones.

Federal Charitable Deduction Debate Continues

February 6, 2014,

In December we shared information on proposed changes at the federal level which might limit the tax-saving benefits of charitable deductions. President Obama previously suggested limiting certain charitable tax breaks for high earning individuals. This possible change was just one part of large ideas about re-writing significant portions of the U.S. tax code. Many are hoping to simplify the code in an effort to increase transparency.

The charitable deduction change proposal in particular drew the ire of many when first suggested. Now a large group of sitting U.S. Senators are adding their names to the effort to protect the charitable deduction status quo.

The Senate Letter
Late last month a total of thirty three Senators from both parties sent a letter to the chairman and ranking member of the United States Senate Committee on Finance. The letter reiterated that tax deductions for charitable giving has been a staple of the national tax code for a century. The underscored their support for "protecting the full value and scope of the charitable deduction."

The Senators explained that while the tax code re-write is driven in part by a desire to eliminate "loopholes," the charitable deduction is not a loophole. Instead, the letter refers to the deduction (and charitable donations themselves) as a "lifeline for millions of Americans in need." Research is referenced which argues that any limitation in tax benefit for charitable deductions will correlate into billions in fewer charitable donations annually, ultimately hurting the vulnerable individuals and non-profit organizations that rely on such support.

Referencing the overall reasons for the possible change, the open letter suggested that any federal revenue benefit from changing the deduction would be offset by the consequences. In other words, federal tax revenues may tick up slightly as a result of the change, but the decrease in charitable contributions that result would actually lead to an increase in public spending to make up the difference. At the end of the day, the Senators argue, the change would be a net negative for all involved (including the government).
The letter ended by arguing that "the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges."

Changes Ahead
These potential changes in tax savings for charitable giving are just one part of many possible tax code edits that could impact New York estate planning. Be sure to keep abreast of any alterations that could affect your or your family. Speak with a qualified NY estate planning lawyer for tailored guidance.

Clamor Continues Around State Estate Tax - Are Increased Exemptions Coming?

February 3, 2014,

The New York Times reported late last month on a growing trend across the country--discussions about lowering estate tax obligations on state residents. The estate tax is the bite the government takes out of an individual's assets before they go to heirs. There are two layers of tax, at the federal and state level. Under current law, the federal tax kicks in on all assets over $5.34 million for individuals at a top rate of 40%.

But the federal tax is not the only concern of residents, because many individual states have their own tax, including New York. The New York tax starts far lower--at $1 million. This means that even those residents who have no concerns about the federal estate tax still must account for their obligation under state law.

Lower NY Estate Taxes
As we discussed recently, New York Governor Andrew Cuomo proposed altering the New York tax burden to more closely mirror the federal rules. He recently suggested that the state should increase the exemption amount to $5.25 million and peg it to inflation. This change would happen gradually over the next five years, reaching the intended level by 2019.

New York is certainly not the only state to consider these changes. New Jersey (which has the most burdensome estate and inheritance tax) is considering alterations. And many other states across the country have similar provisions in the docket.

But there is a big difference between proposing a law and actually enacting one. The problem is that any changes to estate tax rules for the state will result in lower state revenues. Those lowered revenues will then need to be made up elsewhere, which is the constant challenge for policymakers. As a result, the status quo often remains, regardless of individual wishes, because no agreement can be reached on how to make up the difference in the state budget.

Minimize New York Estate Tax Burden
While discussions about legal changes are encouraging for residents, as it now stands these changes are nothing more than possibilities. The current law continues to place a high burden on many families, making it critical for individuals to prudently plan to take advantage of legal steps to lower their tax burden.

Besides moving to another state and establishing residency, the main strategies to account for the tax is to set up trusts and engage in a gifting plan to pass on assets to lower the overall size of the estate. Because New York state does not have "portability" it is important even for married spouses to consider setting up trusts (like a credit shelter trust) to lower their state obligation.

Contact a NY estate planning lawyer today to learn more.

NFL Players & Estate Planning Errors - It Can Happen to Anyone

January 31, 2014,

For sports fans, all eyes this weekend are planted squarely on New York City with the Super Bowl set to kick off early Sunday evening. Beyond the usual chatter about who will win and lose, many commentators are discussing how this single game will impact the long-term legacy of many players in it.

Of course, at the end of the day, this game represents just a single game in a career. And for many players, that career is relatively short-lived. Football is a demanding sport, and it is not uncommon for players to retire in their late twenties or early thirties. It is only a rare few who play successfully into their late thirties.

This presents an unique dilemma for players who must then find other careers and/or properly manage their affairs early in life ensure financial stability for what is hopefully a many-decades long retirement. As you might imagine, many players are clumsy in this regard, making a plethora of estate planning mistakes that cause harm to themselves and their families down the road.

Professional Athletes Estate Planning Mistakes
In honor of football's biggest night, this week Life Health Pro discusses a list they dubbed the "Six Biggest Estate Planning Mistakes NFL Players Make." Most of the list centers on the basic idea of failing to think long term.

First, estate planning professionals who work with athletes explain that athletes often do not get out of the present. No matter how big one's check in any given month, the entire purpose of planning is to stretch today's earnings to an uncertain tomorrow. That need is especially acute for those in unique positions, like professional football players, who earn the vast majority of their lifetime earnings within a specific window that is often no more than a decade.

Along the same lines, a common NFL player planning mistake is spending outside their means. It is easy to mistake a large paycheck now for a license to make luxury purchases. And perhaps those purchases are feasible. But without an actual idea of the funds needed to sustain a decades-long retirement, in too many cases that high living comes at the cost of financial struggles down the road.

Be sure to take a look at the full article for the entire list of common planning errors.

Get Legal Help
The specific estate planning needs of most New York residents will be quite distinct from professional football players. High net worth individuals who are likely to have uneven earnings over the years present very unique planning challenges. But the underlying principles of prudent foresight and seeking out tailored advice to ensure your own actions fit your actual needs is important for all of us, regardless of our age, career, or particular challenges.

For help with estate planning for you and your family be sure that you contact an attorney as soon as feasible and secure the peace of mind that it brings.

Understanding Social Security Benefits for Seniors

January 27, 2014,

The words "Social Security" remain synonymous with retirement benefits for seniors. Earlier generations grew up with the understanding that Social Security would provide an income net in their golden years, allowing a modest but safe retirement. However, the current generation does not have nearly the same picture of the system. Political debates are daily filled with arguments about the "impending" collapse of the system and the bare bones support given to those on the program.

For many New Yorkers, Social Security represents only a small part of their retirement plans. Still, considerations must be given in estate planning to when one should begin collecting Social Security. There are different options for taking early withdrawals, regular withdrawals, or delaying payments for potential benefit down the road.

In general, payouts range from 75% of "entitled benefit" for payments at age 62; 100% of benefits of age 66; and 132% of benefit at 70. Lawmakers are frequently discussing changes to this scheme, particularly in light of rising life expectancies, and so it is critical to be aware of the potential alterations down the road.

What is Best for You?
No two people are in the exact same financial situation. For various reasons, some may be required to take the payouts at age 62, even though that means a significantly lower payment. Waiting a few years results in significant payment increases, particularly considering that those annual payments will last for years (or even decades) into the future.

A Forbes story this month mentioned a few of the individual factors that affect the decision of when to take payments. Current health, ability to work, desire to work, and access to other retirement resources will all factor significantly into the prudent decision in your case. In addition, there are complex issues related to spousal benefits. Full spousal retirement benefits are usually 50%--meaning a spouse can take 50% of their spouse's benefit amount instead of their own. This is common if one spouse did not work or only worked minimally.

For most New Yorkers today, Social Security considerations are just one part of their overall retirement planning. However, it remains prudent for residents to discuss Social Security issues with financial experts and estate planning attorneys to ensure that they make logical choices regarding when to take withdrawals. Tens of thousands (or even hundreds of thousands) of dollars may still hang in the balance. The Social Security Administration itself is not around to provide tailored strategic advice in your case, so you must ensure you find advocates who can look out specifically for your interests.

Former New York State Medicaid Inspector General Sets His Sights on Charity Regulation

January 23, 2014,

There will soon be a new chief in town when it comes to monitoring the activities of New York charitable organizations. According to a report last week in the Wall Street Journal, James Sheehan was named the head of a state agency known as the Charities Bureau. This entity may not be a well-understood by most community members, but it plays a role in trust regulation and other activities which hit upon estate planning matters.

The New Chief
Mr. Sheehan is well known to many in the estate planning elder law community as the former New York Medicaid inspector general. The inspector general is charged with acting as a check on the system to watch out for misdeed and violations. It is that same commitment to enforcement and transparency in activities that Sheehan will take to the new office.

Speaking about his new role, Sheehan explained that he viewed himself as a "compliance officer." In other words, instead of acting aggressively to root out misdeeds, he hoped to help "organizations do the job that they are here to do."

Sheehan likely felt the need to point out the distinction in order to quell concerns about his reputation as an "aggressive enforcer." While working as the Medicaid inspector general, he acted vigilantly to ensure state funds were not misspent, leading to sharp disagreement with many in the healthcare industry who felt his actions were unfair and overly forceful.

Regulating Charities in NY
The Charities Bureau has a mixed charge, focusing on ensuring proper oversight of state non-profits, legal use of charitable trusts, and management of various public outreach programs. In fact, this years will mark the first where the Bureau makes use of expanded powers passed into law by the state legislature in December.

The New York Nonprofit Revitalization Act will take effect this summer. The Charities Bureau will be in charge of implementing this Act which, at its core, is intended to ease the somewhat complex regulatory stresses that many nonprofits face in the state. This will be in addition to the traditional duties of the government entity to guard against fraud and other violations.

Many New York residents include charitable donations and create charitable trusts as part of their estate planning. As changes take place at the Charities Bureau, it will be important to keep a close eye on the developments to determine if any of the alternations impact long-term planning options or strategies.

Thinking About the Un-thinkable - When Children Are Involved

January 21, 2014,

According to a survey by legal services website RocketLawyer, 70% of American parents with minor children do not have a Will. The survey revealed that 76% of respondents believe that a Will is not an "urgent" matter. Parents of young children certainly must have many urgent claims on their attention. Many of them, it seems, are not inclined to give any consideration at all to the horrible possibility that they may not be around to raise their children themselves.

What would happen to your children if the unthinkable did happen and you were no longer there to care for them? If your children have two parents in their lives, then you might think that the chances of both parents dying in a common accident are too remote to merit serious consideration. Still, remote as the chances may be, we know that it does happen. Every day, couples face deadly risks together. How many times have you and your spouse found yourselves in a place where some quite plausible accident might befall you both? A car accident? A plane crash? A house fire? Upon reflection, you might discover that you face the risk of common accident almost every day.

Protect Your Child's Future
In New York, if both parents die, the fate of a minor child will be influenced heavily by the parents' Will, or the absence of a Will. If the parents leave a Will that designates a guardian for their child, the prospective guardian may petition the Surrogate's Court for appointment as guardian of the child's person or property (or both). The court is obliged to act in the best interest of the child, but within this broad parameter, New York courts will show great deference to the parents' wishes. The court will confirm that the prospective guardian (and other adults in the guardian's household) are not named in the New York State Registry of Child Abuse and Maltreatment. If there is no evidence of past abuse, the court will likely grant the petition for guardianship.

If there is no Will, the court will have to devise its own plan for the child. If you have ever given the guardianship question much thought with respect to your own family, you know how complicated this decision can be. Suppose a child has two loving adult relatives, both of whom wish to act as guardian. One is the child's favorite uncle, but he has four kids and a wife who is overwhelmed by the idea of adding another to their brood. Would it be best to have this child live with a more distant relative, if it meant that the addition of the child to the new household would cause less strife?

Although there is no perfect solution, in most cases, parents will be in a better position to find the best alternative. Think now about the unthinkable, and going forward, you can be assured that you have provided the best possible future for your child. Contact our estate planning attorneys today to learn more.

Do-It Yourself Estate Planning Problems: Transferring Real Estate

January 16, 2014,

There are some tasks where the "do-it-yourself" approach makes sense. This includes tightening a leaky pipe under the sink or changing the headlight bulb on your old car.

With those tasks, it is clear right away if your skills were up to the challenge and you did it correctly. If the sink still leaks or the light is still out, then you know that your efforts failed and you may need to call in a professional.

But there are some challenges where this "safety net" does not exist, and where do-it-yourself attempts can cause serious, irreparable harm. That is certainly the case with estate planning. Crafting a plan to transfer assets and save on taxes is delicate in that the only time when it will be used is at the very moment when it cannot be changed--after a passing. In other words, there are no "do overs" with estate planning, and so it is essential to have the aid of an experienced estate planning lawyer when making decisions about these issues.

Do Not Just Transfer the Deed
One of the most common do-it-yourself estate planning mistakes involves real estate. In an attempt to streamline the transfer of assets, some New York seniors are tempted to transfer ownership in a home to an adult child. The idea is for the senior to remain living in the home indefinitely but with ownership transferred so as to simplify probate upon senior's death.

This idea may sound logical, but there are many potential adverse ramifications of this do-it-yourself strategy that may trip up residents. Most notably, the tax consequences of such a move can be significant. That is because the "basis" upon which the possible tax is assessed differs considerably depending on whether the home was given while the seniors is still alive or transferred after death.

When the real estate is given during the senior's lifetime, the gift takes a "carryover" basis upon eventual sale of the house. Conversely, receiving the home after death results in a "step up" basis.

For example, consider a house that is worth $350,000 today and the senior father first bought the home 30 years earlier for $50,000. If the adult child receives the house while the parent is still alive, when the home is eventually sold to a third party, then the son will be taxed, roughly, as if he made a capital gain of $300,000 (the sale price from the first purchase price). Conversely, if the home is received after the death, then the sale to a third party will start with a $350,000 basis, and if the home is sold for that price, then zero capital gains are recorded (and no tax is owed).

The bottom line: Do not go it alone with estate planning. These issues are too important to do haphazardly, and there are no second chances. Contact our estate planning lawyers today to see how we can help.

Disorganization & IRA Inheritances

January 15, 2014,

Many New Yorkers invest a sizeable portion of theirs assets into IRAs--retirement accounts to fund their golden years after their work life is over. Of course, no one knows exactly what their future holds, and so it is common for IRAs to contain significant funds upon one's passing. Deciding who will receive those assets is a critical part of estate planning.

Unfortunately, as discussed in a recent Forbes article, sloppy planning on that front, which leaves designated beneficiaries in the dark, may ultimately cost those beneficiaries their inheritances.

Make Your Wishes Known
The financial lives of many New Yorkers are complicated. People have different bank accounts, work with various brokerage firms, and otherwise create a complex web of records for their diverse, scattered assets. It is hard enough for individuals to keep track of their own financial lives let alone that of a loved one after a passing.

But dealing with this problem following a sudden death without estate planning is more than just a paperwork nightmare--it can have very real financial consequences. For example, what happens if the designated beneficiary of an IRA does not know that they inherited the account?

Even a delay in knowledge about beneficiaries may be problematic. That is because non-spousal IRA beneficiaries are usually required to withdraw a minimum amount from the account each year. Failure to do so may result in a penalty, often 50% of the very amount that should have been withdrawn each year! This is not a small slap on the wrist. It is not necessarily uncommon for delays to drag on for years, with IRA beneficiaries having no idea that they are due money--the banks where these accounts are held are under no obligation to find the beneficiary.

On top of this, if the account holder eventually turned the funds over to the state as part of their abandoned property protocol, then an additional problems may arise--like income taxes. That is if the beneficiary ever finds out about the IRA at all.

All told, various nightmare scenarios can be worked out involving IRA beneficiaries who have no idea they are set to inherit, with subsequent complications resulting in the account assets being completely devoured by fees and taxes.

It is a bit cliche, but this situation is yet another reason to never let this planning go undone. Beneficiaries need to know what they are set to receive and the steps that must be taken to ensure their inheritance gets to them in full. Too many New Yorkers spend a lifetime acquiring assets and have the goal of leaving some to loved ones only to have that wish derailed by poor or non-existent estate planning.

Favorable New York Estate Tax Laws on the Horizon?

January 13, 2014,

New York State, known as one of the heavier tax-imposers in the country particularly when it comes to estate tax, may soon be more appealing to retirees. New York may be following on the heels of the federal government's revamped estate tax codes, which raised exemption amounts to levels that effectively omitted the vast majority of individuals and families from an Uncle Sam estate tax hit. The New York State Tax Relief Commission issued a December 2013 report that proposes changes in 2014 to lower the highest estate tax rate and raise the exemption amount to the same levels as that imposed by the federal government.

The Potential for Major Estate Tax Relief

The federal government and seventeen states impose taxes on estates upon the death of the individual. Each exempts a certain amount of an estate's net worth from these taxes, although these amounts differ state to state. Thanks to the passage of the American Taxpayer Relief Act of 2012, starting in 2013 the federal government began operating under new rules for estate taxes that significantly increased the exemption amount and provided that this value would be indexed each year for inflation.

Currently, New York exempts $1 million for estate taxpayers, and assesses a top tax rate of 16% on amounts above that threshold. New York's current exemption level is one of the lowest of the states that employ some type of death tax (either estate tax, inheritance tax, or both). If the Commission's proposal were to become law, however, this exemption would rise to that of the federal level, which right now is $5.25 million, and would be indexed each year for inflation just like the federal exemption. Additionally, the top tax rate on any amount above the exemption threshold would decrease to 10%.

Any individual decedent's estate with a net worth at or less than the exemption level would therefore be exempt under both federal law as well as New York law if this proposal were to come to fruition. This would undoubtedly sway many more New Yorkers to remain in the state since nearly 90% of all estates would be exempt from any estate tax. As indicated in the Commission's report, middle-income New Yorkers would benefit greatly because until now, the exemption levels have failed to increase along with the growth in home values. While the state treasury itself would lose out on significant revenue, this money would be left with consumers to put back into the economy.

This is all of course contingent on the proposal becoming law. It is also unclear whether the new rates will commence in 2014, 2015, or later, and whether one set rate will be implemented immediately or phased in over time. New Yorkers should keep a keen eye on the progress of this proposal as it will no doubt influence their estate planning, including the decision of whether to remain in New York or head for greener pastures such as Florida or North Carolina, which now have no estate taxes.

The Changing Expectations of Baby Boomers

January 10, 2014,

It is now such a quaint notion: Find a job with a steady company. Spend decades working for this same business, perhaps moving up the ranks over the years. Cash in your chips around age 65, with a steady pension or stable account from which to draw funds for the rest of your days.

While that model may still be followed by a rare few, for most New Yorkers, their career and retirement path is far different. Most notably, retiring to a life of comfort at age sixty five is nothing more than a pipe dream for many nearing that mark today.

Changing Expectations
Consider the results of a recent survey commissioned by the Associated Press-NORC Center for Public Affairs Research. The polling sought to gauge American's perceptions about retirement. Perhaps unsurprisingly, a majority of respondents planned to work during their retirement. Of all surveys respondents over the age of fifty, 82 percent claimed that they would likely work during their "retirement."

This is likely due to multiple factors. On one hand, the recent recession undoubtedly affected the savings of many soon-to-be retirees, cutting into life savings and altering their plans. But a lack of money is not the only factor. Older Americans are now far healthier than they were in decades past. More medical options are available now than ever before to combat the physical and mental deterioration that often plagues residents as they age. This make continued work more realistic in all circumstances--that is, if one can still find a job.

Unfortunately, as discussed in a Market Watch story on the survey, few of those who continue to work claim to do so voluntarily. Only 6 percent of respondents said that they were working for pay in retirement simply because they wanted something to do. A far larger percentage did so for the obvious reason that they needed the money. This is a reminder of the well-worn adage that it is never too early to start planning for retirement.

Plan Ahead
Planning for retirement and beyond is a highly individualized effort. No two New Yorkers are in the exact same situation. Differences always exist between total assets, retirement expectations, family size, and other details. For this reason, it is prudent for all New York families to work with professionals, like an elder law estate planning attorney, to put a plan together that accounts for many of these details. For help in New York City, White Plains, White Plains, Fishkill, and many other communities, contact our team to see how we can help.

Last Minute Gift? Cashing A $100,000 Check

January 8, 2014,

Estate planning disputes can arise in any situation and based on any number of facts. However, one situation where disagreement is far more likely to arise is when planning steps are taken, gifts are made, or other actions pursued while an individual is on their death-bed or known to be very sick. Naturally, observers are skeptical of these actions, because they are more likely to involve fraud, mistake, coercion or other means.

That does not mean that all death-bed actions are unenforceable. On the contrary, many Wills are and signed and trusts created at just this time specifically because one wishes to get their affairs in order near the end. However, because of the potential for abuse and the natural skepticism, estate cases frequently involve last minute actions.

Was It a Legitimate Gift?
Consider, for example, a case discussed today in the Morning Sentinel. A former university professor died recently, leaving virtually all of his wealth to the university itself. The only exceptions were his car and a few valuable personal belongings that he left to his friend, a man named Daniel Toto.

However, a dispute is brewing regarding a check that the professor allegedly wrote to Toto for $100,000 a week before his death. When Toto went to the bank to cash the check--two days after the death--the bank refused to honor it. That is because the personal representative for the professor's estate (the executor) challenged the authenticity of the signature on the check.All of this has led to a lawsuit filed by Toto against the estate and the bank seeking to have the check honored.

It seems that the professor did a good amount of planning near the end of his life, as his Will itself was only signed about two months before his death. This may suggest that the $100,000 check was simply another action taken by the professor near the end to distribute his property according to his wishes.

On the other hand, the Will apparently lays out the professor's wishes in "meticulous detail." This may lead some to question why he would engage in such "off-the-cuff" actions (like writing a $100,000 check) if his other affairs were so neatly organized.

This particular case is an example of the scope of issues that may arise in these matters. Even when the Will is not challenged, as it does not appear to be in this case, ancillary issues (like a large check) may pop up and raise questions about one's actual wishes.