New York Estate Planning Lawyer Blog

Chances are you have already heard that a bipartisan agreement was reached on New Years Day which averts the significant tax increases and spending cuts demanded by the so-called "fiscal cliff." The agreement certainly went down to the wire, with the Senate passing a bill on the last day of the year and the House passing the same bill the following day. Up until the end it was unclear if a compromise could be reached, as House leaders initially claimed that they would amend the Senate bill and send it back to that chamber. In the end, however, a vote was taken on the Senate bill without any changes, passing with support from members of both parties.

The compromise legislation does not resolve all of the issues in disagreement between the parties. More negotiation and legislation will be needed in the coming months to settle those other matters.

The Basics of the Deal
A few aspects of the compromise have direct bearing on long-term planning for New Yorkers. Perhaps most obviously, the estate tax levels have been set, presumably for the indefinite future. Per the agreement the highest tax level will be 40%, with a $5 million exemption level pegged to inflation. That is a far higher exemption level and lower rate than would have taken effect if the fiscal cliff proposals were enacted. It is also better for opponents of the tax than the main proposal offered by the Obama Administration of a 45% rate and $3.5 million exemption level.

Additionally, the agreement makes tax changes to retirement accounts that many community members use as part of their long-term financial planning. The new law will convert 401(k)s into Roth IRAs. Essentially, the change alters when the funds put into these special retirement accounts are taxed. While 401(k) contributions can be deducted right away (providing a tax savings on the front-end), Roth IRA contributions cannot be deducted. Conversely, while a Roth IRA withdrawal is not taxed, a 401(k) withdrawal is taxed. Lawmakers are pushing residents away from 401(k)s so that more tax revenue is collected in the short-term instead of the long-term.

In addition, many different changes were made on tax rates in general. The 2% payroll tax reduction was allowed to expire, which will affect virtually all residents. The income tax on high-income earners ($400,000 for individuals and $450,000 for couples) will rise, and the capital gains tax on those same high-income households will also rise.

If you have any questions about how these federal legal changes might affect your estate planning in New York, be sure to contact our office to see how we can help.

One of the many goals of proper estate planning is to prevent family feuding. This is obviously to ensure that the worry, stress, and cost of these legal battles is avoided. But on top of that, done right, avoiding costly disputes saves an immense amount of time. It is well known that the legal system often does not act swiftly. It is important not to underestimate the simple benefit of having property matter resolved right away after a passing, instead of making surviving loved ones wait months or even years--preventing them from obtaining necessary funds and moving on with their lives.

The prolonged nature of the resolution exists anytime there is no estate planning (probate takes time). But the delay is especially pronounced where there is feuding and legal battles are fought.

For example, the Patch recently reported on a delay in a hearing for one high-profile estate fight over the property of painter Thomas Kinkade. We have previously blogged about the legal fight between Kinkade's estranged wife, four children, and live-in girlfriend. The girlfriend has produced two handwritten wills which seem to leave Kinkade's house to her while establishing a museum. The wife and children contest the wills.

Yet, before even getting to the legal challenge on the authenticity of the wills, ancillary arguments have broken out on the need for the girlfriend to pay rent on the home--she is currently living in it. The sides have disputed the living situation and argued about the safety of the belonging within the home valued at millions. Thus far the wife and children have had no access to that property, even though Kinkade died nearly nine months ago. A hearing was schedule to resolve the personal property matter earlier this month. However, that was postponed until this week.

Even then, once the personal property issue is resolved, that won't end the matter as it still does not resolve the merit of the holographic wills. The fate of the home and the rest of the estate (valued at over $60 million) remains undecided.

The take-away lesson is a reminder of the fact that disputes often drag out for years. Beyond avoiding the stress and uncertainty of a legal battle, proper estate planning also ensures timeliness. No matter how complex one's situation, there is nothing to gain from leaving matters in such a mess that survivors are forced to wait years before having things resolved. Be sure to avoid this in your own situation by visiting a legal professional as soon as possible.

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Confusion, Disagreement Regarding Thomas Kinkade's Wishes

Only a few days remain in the year, and most financial activity for 2012 has come to a close. However, the end of year action has already brought one of the most active seasons ever. Financial advisors, estate planning attorneys, and others have all seen community members of all different income brackets seek out help understanding how possible legal changes in the new year might affect their own financial health and long-term prospects.

A Forbes story last week explored one of the main reasons for confusion and the seeking out of help: the "give now or pay later" problem. This is an issue that mostly affects those with significant assets who may be affected by gift and estate tax changes. As has been documented exhaustively, Congress is considered what to do with the gift and estate tax. Over the past ten years the tax rate has steadily fallen and the exemption level has risen. In 2010, the estate tax was eliminated altogether. However, what will happen in the new year remains to be seen.

Many different options are on the table--from a permanent elimination of tax (unlikely) to a return to pre-2001 rates. A table from the Tax Policy Center (viewed here) offers a helpful snapshot of the options and how many people would be affected by each. One comparison offers the range of possibilities. If the current rate continues, about 3,800 estates will be affected next year. Those estates would bring in about $12 billion in taxes. Conversely, if the 2001 rates returned then 47,000 estates would be affected and over 300% more tax revenue would be generated.

For those families affected, the possible significance of changes is clear. The Forbes article points to a helpful example. Right now if you give another person $5 million, then you pay no taxes on that gift. Without action, next year the same gift with also come with a $2 million gift tax bill. This is no minor change.

Of course, even though we are only days away, almost none of the uncertainty has been eliminated. As before the best option is to watch the debate and policy action closely while keeping in contact with your planning professionals to determine if any changes are needed in the future to account for any changes in the law.

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Unsellable Artwork Donation Saves Millions in Estate Taxes

The political wrangling to avoid the so-called "fiscal cliff" continued this week. Many different issues are all tied up in the negotiations, including income tax rates, defense spending, entitlement spending, and control of the debt limit. However, various reports suggest that the both sides in the political battle--primarily the Obama White House and U.S. House Republican leaders--are now trying to work out some agreement on estate taxes.

Still Wide Disagreement
Most discussion of tax issues and the fiscal cliff affecting upper income Americans revolved around the income tax. There is disagreement about whether current income tax rates for those in the highest bracket should increase slightly or stay the same. Both sides publicly believe that current rate should be extended for middle tax brackets. Because of the focus on income taxes, real negotiation of estate taxes has been pushed to the side. That appears to be changing.

According to a recent NBC story on the situation, the parties are now trying to reach some common ground on the estate tax. The current rate is 35% on all assets over $5 million. If no agreement is reached and we go over the fiscal cliff, then the exemption level drops to $1 million at a 55% rate. This represents a significant change with very real implications for many New Yorkers. In general, Republicans oppose any change to current rates while most Democrats (including the President) propose a compromise with higher rates and a lower exemption levels than at present but not as stark as the fiscal cliff amounts. The President has proposed a 45% rate with exemptions up to $3.5 million.

One complexity in the negotiations is that there may be disagreement within the Democratic party. Some leading figures have agreed with Republicans that current rates be extended. The concern is that lowering the exemption level and increasing the rate might hurt certain groups, like family businesses and farms.

Yet, figures from the Tax Policy Center suggest that of the 3,270 families that paid the estate tax last year, less than 50 involved small businesses and farms. Instead, the collections seem to be concentrated among a certain groups, with the top 1% of earners in the country paying 80% of the total estate tax.

In any event, all families who may pass on assets over $1 million must pay careful attention to these negotiations, as changing rules may impact their long-term planning.

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Unsellable Artwork Donation Saves Millions in Estate Taxes

The holiday season is a popular time for charitable giving. It is helpful for those considering gifts--particular sizeable donations--to properly think through all of the tax and legal implications. There are smart ways to make contributions and clumsy ways. As always, an estate planning lawyer or similar professional can explain how any such decision is best carried out.

For example, the Wall Street Journal reported recently on the rise of "donor-advised" funds. The use of these tools is likely spurred by two tax uncertainties in the upcoming year. Will charitable deductions on taxes be limited in the future, counseling toward a large gift this year? Will income tax rates increase next year, counseling toward using the deduction next year instead of this year? It is a somewhat tricky problem, as no one knows for sure what lawmakers might decide.

That is where these donor-advised funds come into play. They are accounts managed by national charities and foundations. The basic idea is that a donor can give the gift this year--locking in a tax deduction--while waiting to actual disperse the funds to the charities as they see fit over time. The funds grow tax-free throughout this period.

Interestingly, the National Philanthropic Trust and other sources provides data on the sharp rise in use of these funds. Many of the largest charitable entities increased anywhere from 60% to 80% in use of these funds this year as compared to last year. And that is on top of the fact that last year saw a 10-15% rise in use from 2010.

Most accounts can be opened with $5,000--large sums are not needed. The donations can then be given out in small increments of as little as $50. In other words, there is a lot of flexibility for those with assets of all sizes. When using these tools however, it is important to have tailored advice on the best manner in which to give. For example, it might make sense to donate stock that has appreciated, instead of donating the profit after sale of the stock. By selling the stock directly some capital gains can be saved and a larger charitable deduction can be taken.

Of course, these donor-advised funds are just one of many ways that might be appropriate to give to charities smartly. Various trusts and other legal arrangements are available to ensure your gift is maximized. No matter what the case, though, it is important to act quickly, as the future remains uncertain and it is helpful to lock in current rates as soon as possible.

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Unsellable Artwork Donation Saves Millions in Estate Taxes

Virtually everyone agrees that it is important to invest for retirement, take care of inheritance details, prepare for long-term care, and otherwise plan for the future. But there is a big difference between understanding the value of these tasks and actually taking the time to do it. Considering the financial and political stresses that come with caring for an aging population, figuring out how to motivate community members to do what is necessary to plan for the future is drawing more and more attention.

One new tactic stems from unique psychological research on financial motivation. In previous studies out of Stanford, experts found that one way to spur real action on long-term planning was getting individuals to visualize their future, elderly selves. Interestingly the researchers found the most benefit not when people just imagined themselves in old age but actually saw digitally enhanced images of themselves when they were older. The surprise of seeing their own face in old age was a real spur to stop putting off the necessary planning.

The lead researcher in the Stanford experiment summarized that, "People who see an age-progressed rendering of themselves are more likely to allocate resources to the future."

See For Yourself
In fact, interest in this technique has advanced to the point that Bank of America's "Merril Edge" program allows anyone to go online, take a picture of themselves, and see how they might look in the future. The tool is known as "Face Retirement." You can check it out for yourself here.

The program allows you to view images of yourself at various ages. On top of that, the tool provides estimated cost of living figures for each of those ages. Those cost of living calculators adjust for inflation so that consumers have a real idea of what they'll need to do to be financially secure well into their golden years. Perhaps expectedly, considering the tool was created by a financial services firm, the program also provides information about steps that can be taken now to prepare for the future.

Action Matters
No matter what you use to motivate yourself to plan for the future, the bottom line is that there is nothing to lose from taking action today. Thinking about money is always stressful. That is particularly true when worrying about retirement and other end-of-life issues. But it is important not to forget that the easiest way to ease the stress burden is to actually do something about it. No matter what your current financial situation--good or bad--there is value to beginning the process of long-term planning.

If you are in New York City, Albany, Fishkill, MIddletown, Nyack, Rhinebeck, Saratoga Springs, White Plains, or elsewhere throughout our state, please feel free to reach out to the attorneys at our firm to see how we can help.

The U.S. Supreme Court made headlines on Friday when it agreed to hear two cases which may have significant implications on the rights for same-sex couples in New York and throughout the country. The stage is now set for a few months of speculation and commentary on possible outcomes before the Court finally hears the cases. It is important for same-sex couples to understand the implications of each case, as the legal issues in each are different.

DOMA & State Bans on Marriage
One of the cases which the Court will hear is United States v. Windsor. As we have often discussed, at the center of the Windsor case is the Defense of Marriage Act (DOMA). Several appellate courts have now found that parts of DOMA violate the U.S. Constitution in that they deny federal benefits to legally married same-sex couples solely on the basis of their sexual orientation. In granting the petition of those appealing the lower court rulings, the U.S. Supreme Court will likely settle the matter once and for all.

Alternatively, the second case that the Court agreed to hear, Hollingsworth v. Perry, stems from the Proposition 8 ban on same-sex marriage in California. Unlike the DOMA case which deals with federal recognition of these unions, the Prop 8 case has implications for individual state decisions on marriage rights. There is a bit more legal complexity to the Prop 8 case, as the district court and the U.S. Circuit Court of Appeals both struck down the Proposition but for slightly different reasons. The bottom line is that, depending on the U.S. Supreme Court's decision in that case, same-sex marriage may not be allowed in California, be allowed in parts of California, all of California, or even in every state in the union. However, because same-sex marriage is already legal in New York, the rights of gay couples in our state will likely be most directly affected by the outcome in Windsor.

Interestingly, in both cases there are "standing" issues. That means that there is disagreement regarding whether the specific parties seeking the appeal even have the right to be in court on this issue at all. Therefore, on each case the Supreme Court has the option of rejecting the appeal without actually reaching the merits of the case.

What Is In Store
The actual hearings for these two cases will likely take place in late March--perhaps even on the same day. Following those hearings, the Court will deliberate and eventually reach a decision. Opinions will be written and then officially released to the public, likely sometime in late June.

Perhaps the only immediate change for local couples is that, becase the Windsor case was accepted, there is a "stay" on the lower court decisions in DOMA cases. In other words, had the Supreme Court refused to hear these cases, then there is a chance that DOMA may not have had effect in those jurisdictions where courts found it unconstitutional. However, as expected, the Supreme Court itself will have the final say. Until they declare otherwise, DOMA is in full effect, and same-sex couples in New York--even when married legally--need to conduct unique estate planning to account for their disparate treatment under federal law.

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Updates in Gay Marriage Cases That May Make it To Supreme Court

The Story Behind the New York DOMA Challenge

The heirs of art dealer Illena Sonnabend faced a very unique problem after the woman's death in 2007. One the most valuable pieces of her estate was a work by Robert Rauschenbeg known as "Canyon." The 1959 piece of art is a collage that include various three dimensional materials, including a stuffed bald eagle. Canyon would prove to be a sticking point in the heir's attempt to settle the estate--a process which ultimately dragged on for five years.

Taxes Always Due
For estate tax purposes, the value of artwork in an estate is appraised and the tax is owed based on the total appraisal value. Sonnabend's estate had a significant number of pieces and the artwork taken together was valued at over $1 billion. According to a Wall Street Journal story on the case, this led to an estate tax bill of about $471 million. The two heirs to the estate sold about $600 million of the artwork to pay for that bill.

However, the Canyon piece was a different story. Because the work featured a stuffed bald eagle, it could not be sold under U.S. law. That is because the 1940 Bald and Golden Eagle Protection Act as well as the 1918 Migratory Bird Treaty Act prohibited sale of the items. Since Canyon could not be sold, the three appraisers for the estate gave the artwork a value of zero for estate tax purposes.

But the IRS disagreed.

The IRS sent the family a report valuing the artwork at $15 million-even though it couldn't be sold for $5, let alone $15 million. The family rejected the IRS valuation. This drew the ire of the government tax collectors who responded by re-appraising the art as worth $65 million. On top of that, they claimed that the intial appraisal by the family of zero dollars triggered an "undervaluation penalty" of 40%. All told, the family was being asked to pay $40.4 million in taxes on an object that they could not make a dime from selling.

Few Options
Confused logic aside, the family had few options. Eventually, they chose to donate the piece to the New York Museum of Modern Art. This allowed them get around having to pay the hefty estate tax--charitable donations (like inheritances to spouses) generally fall outside the purview of the estate tax. Unfortuantely, however, the family was unable to use the gift for charitable deduction purposes as happens in most cases. That is because, even though the gift was made to get around estate taxes, at the end of the day it still had no value because it could not be sold.

This bizarre case is a testament to the lengths that the IRS may go to collect what it deems it is owed, even when logic suggests otherwise. It's a reminder that local residents should never try to plan for these details or handle long-term financial affairs without experienced professional assistance.

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Forbes Estate Tax Article Catches Fire on Social Media

You cannot turn on the TV, flip open a newspaper, or pull up a news website this month without seeing the words "fiscal cliff." As many are aware, this refers to sweeping, mandatory federal tax and budgetary changes that are set to take effect January 1st unless the Congress and White House pass legislation with an alternative plan. Essentially the "cliff" is about $7 trillion worth of tax increases combined with significant spending cuts across the board--including everything from Medicare and Medicaid to the military.

What is interesting about the cliff is that virtually no one on either side of the aisle actually wants it to take effect. Instead, it was only put into place as a compromise over a previous debt ceiling legislative fight. The idea was that that the cliff would be so abhorant to both sides that its impending appearance would force a compromise. However, as the end of the year gets closer, more and more observers are worrying that even with the serious consequences of the cliff, no compromise is in sight.

Currently, the Obama Administration and Congressional leaders (most notably, the Republican House leaders) are trying to reach agreement on an alterantive to prevent the mandataory changes. As part of that effort, President Obama recently released his "first offer." As summarized in a recent article, the offer is far from what the Republican leaders have proposed, so it is unlikely that it will be taken seriously. Essentially, it calls for around $1.6 trillion in tax increases over a ten year period--mostly related to expiration of the so-called "Bush tax cuts." In addition, it calls for modest stimulus spending. The proposal would also permanently eliminate Congressional control over the debt ceiling level (which caused the current crisis to begin with).

On the one issue that has the most direct impact on estate planning, the proposal calls for estate tax rates to return to 2009 levels. That is a $3.5 million exemption level and a top rate of 45%. That is compared to a current $5.12 million exemption at 35%.

What Does It Mean For You?

No matter what the final resolution, advocates, advisors, attorneys, and others on all sides of the issue agree that stability is key. For planning purposes, it is always advisable to know what the rules will be for the future, instead of having the risk of major changes every two years.

For those hoping to dig deeper, the Tax Policy Center has a "Fiscal Cliff Calculator" that allows you to plug in your own details and see how various proposals and the cliff itself will personally affect you. You may be surprised at the significant nature of the results. For example, the "cliff" affects everything from unemployment benefits to payroll taxes, and so everyone is likely to be affected, no matter what their current situation. Be sure to keep a close eye on the possible proposals as they are discussed in the coming weeks. It is also important to talk to your financial advisors and visit with estate planning attorneys to learn more.

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Forbes Estate Tax Article Catches Fire on Social Media

The Huffington Post recently reported on the aftermath of the tragic death of former boxing champion Hector "Macho" Camacho. The boxer had only recently retired from the sport after nearly three decades in the ring against some of the sports biggest stars. In his 50s, the boxer lived in Puerta Rico following his 2010 retirement. Tragically, earlier this month he was gunned down outside of a bar on the island. Emergecy responders were able to stablize the fighter, but not before he was declared brain dead by medical professionals at a nearby hosptial. What ensued was a bit of family feuding over the star's end-of-life wishes--a testament to all of us of the importance of making these wishes well-known before tragedy strikes.

Camacho's family disagreed on whether or not to remove life support to the boxer. Reports indicate that there was mass confusion and infighting. However, in the end, the extra life support measures were removed and the boxer passed away. The disagreement between the family members in the final few hours, however, may very well affect the family dynamic for years to come.

New York Health Care Proxy
It goes without saying that a family will always be in emotional turmoil when a loved one has a medical emergency, particuarly when the situation is grave. Obviously, deciding whether to take a family member off life support is one of the toughest decisions anyone might be faced with. That is why it is always best to make the decision for your loved ones well beforehand, by indicating explicitly what one's wishes are and ensuring someone will have the legal authority to make those end-of-life decisions in as straight-forward a manner as possible.

That is why our attorneys often work with local residents to create a living will and designate a health care proxy as part of their elder law estate plan. As the name implies, the health care proxy is an alternate decisionmaker who steps in to medical decisions on your behalf if you are unable to do so on your own. From car accidents to strokes, one never knows exactly what the future holds, and so it is wise for all of us to name another to act in our best interest if necessary. In addition, the living will is a legal document that explicitly lays out the scope of the proxy's power with regard to termination of life support services. Taken together, these tools ensure that your family will not be forced to agonize over these issues in the event that some tragedy strikes in the future.

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Estate Values Grow Beyond the Grave--The Marlon Brando Example

Irregularity of Estate of Monkee's Star Davy Jones

Medical and technological breakthroughs in recent decades have impacted virtually every facet of life--estate planning is no exception. For example, many rules in the field hinge on definitions of legal heirs. In the past, it was pretty clear who those heirs were, typically biological or legally adopted children. When an indiviual dies intestate (without a will), then each state has specific default rules regarding what to do with the individual's assets. Often the biological or legally adopted children receive part or all of those assets.

But it doesn't end with inheritance rules. Many state and federal programs also use these definitions to make decisions about who qualifies for certain benefits. This includes the federal Social Security program. In many cases, when a parent dies, a family eligible for Social Security assistance for the minor children that remain following their parent's passing. In the past there as little confusion over when a child did or did not qualify for those survivor benefits.

No longer. As recent of improvements in medical research have changed reproductive technology, the line between when a child is considered an heir and when they are not is blurred. That is perhaps best evidenced by a new case that is slated to go before one state court.

In Mattison v. Commissioner of Social Security, the plaintiff in the case is a mother who gave birth to twin boys several years ago. She is seeking Social Security benefits for the children because her late-husband (and the twins biological father) died in 2001. In the past there would have been little controversy surrounding the case, as the boys would typically qualify for support. However, the unique aspect in this case is that the children were conceived after the father's death. The man had battled health problems for some time, and before his death he had his sperm frozen. It wasn't until a few days after his passing that his wife used the frozen sperm to conceive the children. This is unique, because while parents often die before their children are born (when they are in the womb), it is rare to have the children actually conceived after the death.

In a previous U.S. Supreme Court hearing, the high court ruled that the children were not automatically guaranteed the Social Security benefit. Instead, the Court determined that the specific definition of heir in each individual state determines whether the benefits accrue or not. In other words, it is a matter for the states to decide. As such, the case was returned to the state court where, according to a recent MLive article on the matter, a hearing is soon scheduled. However, those familiar with the situation argue that the state court is unlikely to rule in the woman's favor because the law as currently written requires conception before death to be deemed an heir.

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Questions Remain Regarding Rights of Posthumously Conceived Children

Planning for Your Digital Life After Death

One of the biggest movies set to debut this holiday season is "The Hobbit," based on the well-known fantasy novel by J.R.R. Tolkien. This film follows in the footsteps of the very successful "Lord of the Rings" movies made over the last decade and a half. However, the release of the film is coinciding with a lawsuit filed by Tolkien's estate against certain companies using material from the series. The case is a testament to the fact that proper estate planning can have implications many years after a passing --even half a century later . That is because the assets passed on at death are not necessarily just physical property, bank accounts, and other material that is finite at the time of the passing. Instead, trademarks, copyrights, and patents can also be given which may have implications far into the future.

Estate Lawsuit
In this case, according to a story published recently by Guardian News, Tolkien's estate is claiming damage to his legacy as a result of certain gambling products and games using the Hobbit character and themes. The defendants in the case include the producers of the upcoming film version of The Hobbit. More specifically, the estate claims that the copyrights which were granted to the producers were infringed by use of the material in this way--for gambling and online games.

The sale of the copyright was alleged to be limited, occurring decades ago in 1969. The family's suit suggests that the limited sale of the copyright allowed use of the story for films as well as the sale of "tangible" products. The family claims that this did not include use of the likeness for online games or other digitial material. Of course, considering the copyright sale took place in 1969, well before the rise of the internet or personal computing, it is unlikely the sale included much reference to these online efforts.

According to the claims in the suit (the complaint can be read here), the family attempted to negotiate with the production companies but have not been able to reach agreement. As a result, they were forced to file suit in order to stop the infringing conduct and seek recourse for the losses sustained as a result of the infringing copyright.

New York Estate Planning
When reading stories like this one, it is easy for New York families to assume that these sort of details are unique only to high-profile celebrities or artists. However, issues over use of copyrights, patents, and similar material are common among many different local families. Many businesses, for example, have significant assets related to their protected material beyond cash, stocks, and bonds, real propert, and personal property. For that reason, it is critical that all families act prudently when conducting estate planning, so the use, value, and financial benefit from those more unique assets ultimately go to the intended beneficiary, instead of being exploited down the road by others.

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Estate Values Grow Beyond the Grave--The Marlon Brando Example

Irregularity of Estate of Monkee's Star Davy Jones

A perennial hot-button topic in estate planning and the creation of inheritance documents involves the passing on of personal values. Of course, the majority of work related to estate plans invovles physical assets: who gets the house, the bank accounts, the stocks, the insurance, the family china, and more. Making these allocations efficiently and saving on taxes are the hallmarks of these preparations. But our team often discusses the other aspects of estate planning, including setting in place material that ensures one leaves a legacy for those they are leaving behind.

This often includes spiritual issues but can just as well include secular notions like hard work, the importance of charity, and other values.

But how are these issues woven into an estate plan?

For one thing, as discussed in a recent article, "spiritual" estate planning is on the rise. This includes making inheritance allocations based on values, such as donating to religious charities or non-profits that support favored causes. In fact, according to one industry group--Charity Navigator--bequests to charities are up 19% this year as opposed to last year. Working with a professional beforehand can be crucial if one wants to leave sums to charity, because the gifts can be structured in various ways to ensure they are of maximum value for all parties.

On the other hand, some may want to incorporate their faith or values more directly into their plans, including trying to influence the actions of heirs with regard to respecting the faith. For example, a recent Wall Street Journal story on the tricky subject of using an estate plan to pass on religious values.

The article explained how there are a wide range of throny legal issues tied up in connecting inheritances with these faith-based requirements. Perhaps the most common heavy-handed approach invovles disinheriting those who are not spiritually devote or who marry outside of the faith. In most cases courts have upheld these requirements so long as they are not written to encourage divorce. Yet, even when legal, those familiar with these situations frequently explain that this often comes with very severe family controversy and confusion. As such, while the intentions are to honor one's religion, the ultimate consequences of this sort of feuding often do little to advance that cause.

In most cases, the best bet is still to share one's faith and values while alive, instead of trying to force the matter via inheritance details in an estate plan.

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Passing on Religious Values At Death

Thinking Beyond the Paperwork--Creating an Ethical Will

Many lessons can be taken from the beating that our state took in recent weeks as a result of Hurricane Sandy, not least of which is the resiliency of New Yorkers. However, as we piece things back together, some advocates are reminding community members of one overlooked victim of lack of preparation: pets. A story from Today discussed how many families were forced to make tough choices about their pet, partiularly when they had to evacuate or seek other shelter that did not allow animals.

Of course, there were no easy answers, but in all cases it was a reminder of the need to have some preparations in place ahead of time so that beloved animals are taken care of no matter what the circumstances. While few expect severe weather patterns to disrupt the care of an animal, there are some events which we all must plan for: death and disability.

The article points to statistics from the American Society for the Prevention of Cruelty to Animals (ASPCA) that nearly 100,000 pets are forced into shelters each and every year as a result of guardians who pass away or become disabled without planning for their care. The future for those animals is unclear. Resources are incredibly tight, and so, depending on where the animal is taken, their long-term prospects are varied. It is truly a tragic sitaution that affects far too many pets that were devoted companions to their owners throughout their lives.

Fortunately, there are steps that all pet owners can take to eliminate the uncertainty. Basic estate planning tools can be used to provide for the care of a pet for the rest of their lives. New York allows the creation of pet trusts, which are essentially pools of money set aside to be managed by a trustee and used for the animal's care. For legal purposes, an animal is the property of the owner. Thefore, the animal cannot receive money directly. You can write a will leaving money for your dog, for example, but it won't have the intended affect, because an inheritance cannot be left to property. However, by using a trust, the animal can receive the fruits of those funds in a way that is binding under the law.

A representatives from the ASPCA summarized by noting that "Oftentimes, it's natural disasters like Hurricane Sandy that push people into action. Storms like this could be what motivates people to update their will or draft one in the first place. We want people to consider making those same arrangements for their care of their pets, so they don't end up homeless with no one to care for them."

For help with these and related estate plan issues in New York, please take a moment to call or visit one of our many offices across the state.

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Entire Estate Left to a Dog?

Estate Plan Can Provide Lifetime Care for Pets

The popularity of social media sites has led to an outburst in use of the word "viral." "Viral" videos and articles are frequently pointed to as a product of the mega-popularity of sites like Facebook and Twitter. This just refers to stories and movies/clips that spread very quickly from person to person over these channels.

It isn't very often that any story related to estate planning in any way "goes viral." However, this week one story in Forbes on the estate tax was shared, re-tweeted, and "liked" far more than anything else on the topic. In the world of financial planning and long-term legal preparation it is fair to say that this artcle went viral. You can take a look at the story here.

The issue discussed in the article is one that we have frequently touched on--the likely changes to the estate tax starting January 1st. The summary is that while over $5 million can be used on gift and estate tax exemptions per individual this year (double that for married couples), the exemption will likely drop to $1 million on the first of the year. In other words, large chunks of assets can be given without any tax implications right now, but hundreds of thousands (or even millions) might be lost in taxes if that transfer does not occur until 2013.

Importantly, local residents should remember that taking advantage of this opportunity does not automatically mean that one gives up total control of the assets transferred. Various trusts can be used, along with business entities and insurance options to structure the transfer so that total control is not given up while still benefiting from the 2012 favorable tax rates.

Then again, it is impossible to know for sure what the future holds. The Obama administration and the Republican Congress have different ideas about what the gift and estate tax should look like, and they will be negotiating in the coming weeks to perhaps hammer out a deal. Right now though, as the article notes, "The only certainty is that the rest of 2012 is a bargain, and you don't have to die to take advantage of it."

No doubt the pent-up debates and feuding related to the election played a role in the popularity of this estate tax article. Many people are looking for "what now" stories in the aftermath of the election, trying to figure out how laws, rules, and regulations might be changed as a result of President Obama's re-election. That was likely amplified by the fact that this story is very time-sensitive: Act Now Before Its Too Late.

For New Yorkers, the story is simply yet another reminder that now is a perfect time to visit with a legal professional and handle some long-term financial matters. Immense tax savings might be in play by doing this work now instead of waiting. The attorneys at our firm are ready and able to help all local residents with these matters, no matter how big the estate.

See Our Related Blog Posts:
What the Election Might Mean for Long-Term Care Issues in New York

Selling Memorabilia Before Estate Tax Changes