Do Not Act Too Quickly After a Passing

April 2, 2014,

Much of estate planning involves preparations that can streamline matters in the aftermath of a death. The probate process can be long and drawn-out, forcing families to wait months before working out the basic details of asset transfer. Alternatively, by using trusts, the process can be far more seamless, saving time and taxes. Trusts are important for all New York families, not just those with significant assets.

While it is prudent to handle legal and financial details in a timely fashion following a death, as a practical matter, it is important to not "overdo" it. A helpful article from Mondaq offers a few thoughts on ways that family members can "jump the gun" and cause more complications by rushing to deal with various matters.

Causing More Complications
Conduct that should be avoided in the immediate aftermath of a passing includes:

Acting as executor before officially be appointed by a court: A last will and testament names an "executor" to handle many of the administrative details. However, the appointment is not official until a court actually names the executor in the probate process. It is reasonable for a soon-to-be executor to take some basic steps to prepare for their role. However, in certain situations, this can go too far, such as when one signs contracts or enters into agreements beforehand. For example, one cannot sell the decedent's home before officially being given the power to do so by the court.

Canceling accounts and credit cards immediately: Closing down a decedent's financial life is often far more complex than family executors realize. There may be an urge to just cancel everything immediately. However, this can be a mistake, because there may be outstanding bills to be paid automatically from those accounts. Shutting them down can lead to bounced checks, late fees, and,ultimately, more hassle than if the financial details were handled more cautiously.

Quickly disposing of personal property: It is not uncommon for family members to be overwhelmed in the immediate aftermath of a death. A common response is to try to "get over it" as quickly as possible, often by getting rid of personal effects immediately. But this is often a mistake. Some items may need to be properly appraised, and it is important that the property (or the value of the items) go to the designated heir. Rushing this process can lead to tax problems and potential feuds.

For more tailored, specific help with any issues related to estate planning, probate, and administrative complexities following a death, please contact our New York estate planning attorneys today.

Planning for Immortality - A Legacy in the Online World

March 28, 2014,

http://legacylocker.com/

Passing on assets and saving on taxes are viewed as the hallmark of estate planning. But as we often share with clients, there are many intangible aspects to long-term planning that are often even more valuable that homes, cars, and savings accounts. A legacy.

An important part of many elder law estate plans is an "ethical will." This refers to non-legally binding document that shares values to friends and loved ones. An ethical will is about one's legacy, sharing information about one's life purpose and reminding family members of morals and cherished principles.

Leaving a Legacy in the 21st Century
Ethical wills made their way into Shakespearean plays and existed in various forms in ancient Rome and Greece. The world has changed dramatically over the centuries, and that includes the way a legacy is left to others. In fact, with the proliferation on various online account and social media services, more and more individuals are finding out how one can become "immortal" online.

An interesting story last week discusses how the permanence of one's online life can come as both a comfort or burden to surviving family members. For example one adult son explained the stress that comes on his mother's birthday every year--as old friends post Facebook messages, sending well wishes without knowing that she passed away three years ago. On the other hand, Facebook allows pages to become "memorialized" serving as a slightly more appropriate setting.

It is critical to think ahead about how these pages will be preserved. Considering their permanence, they will undeniably become a key component to your long-term legacy. There are no one-size-fits-all approaches to handling an online legacy. There are many different questions that you should consider, perhaps putting the details down in writing to ensure it all works as requested. Some things to consider include:

**Should someone have access to your email account after your passing?
**What should happen to your Facebook page? Should it be deleted, turned into a "memorial" or managed by another person?
**Are there any online photos, comments, or conversations that you would like shared or deleted?
**Would you feel comfortable using a special online legacy account, such as Legacy Locker?
**Should another have access to your online purchase record, at Amazon, ebay, or similar retailers?

Preserving an online legacy and creating an ethical will is a reminder of the comprehensive nature of estate planning. Doing this work is far more than just filling in the blanks on legal forms. It requires careful consideration about long-term goals, understanding of intricate legal details, and honest consideration about the most treasured values in one's life. For help crafting a comprehensive elder law estate plan throughout New York, please contact our experienced legal professionals today.

Federal Estate Tax "Portability" - Should It Always Be Used?

March 27, 2014,

The idea of "portability" is an important part of many estate plans. Portability is technically an informal word referring to a federal tax-saving option using the deceased spouse's unused exemption (DSUE). Essentially, portability is a tool for married couples that, when used prudently, can shave millions of dollars off an estate tax bill.

Under the current law, assets under $5.34 million are exempt from the federal estate tax (though the New York tax kicks in far lower at $1 million). Importantly, there are unlimited tax-free transfers allowed between spouses. That means that if one spouse dies and leaves everything to the other, then there will not be a federal estate tax burden, regardless of how many assets are passed on.

However, when the surviving spouse passes away and transfers those assets to others--perhaps adult children--then the tax would apply to assets over the individual exemption level of $5.34 million. But portability changes that. Instead of using only an individual exemption, a surviving couple may be able to use any unused exemption from their former spouse in addition to their own. This means that up to $10.68 million may be exempt from the tax. In short, portability can save an estate millions of dollars in taxes.

Importantly, portability must be "elected," meaning that failing to file the appropriate paperwork upon the first spouse's death may result in the extra exemption being lost.

Should You Always Take Advantage of Portability?
Considering the benefit of portability, it is critical to determine how it may fit into your plan. One potential downside, as discussed in a recent Wealth Strategies Journal article, is that there may be a mistaken reliance on portability. Because of the advantages couples may believe that it always makes sense to simply leave everything to a spouse and then taking more sophisticated planning steps for the second spouse.

Also, the majority of families will not have estate nearing the level where the tax may come into play, and so serious thought needs to be given regarding whether the election is even worth it in their case. In addition, there is a New York estate tax which may require use of other shelter trusts, even when portability would solve the problem at the federal level. Re-marriage may also add complexity, as the rules regarding portability with multiple spouses can be confusing, depending on how much of an exemption was used by a former spouse.

For help on these very complex legal issues, seek out an experienced estate planning attorney as soon as feasible.

Don't Leave Your Planning Up to a Coin Toss

March 25, 2014,

A headline-grabbing story last week in the New York Post offers a good reminder of the need to be crystal clear in certain estate planning situations to avoid drawn-out legal battles.

According to reports, two siblings are engaged in a dispute over how to divide up an inheritance that they are to split from their uncle. The two men are the nephews of David Barrett, a well-known Manhattan interior designer who passed away in 2008 at the age of 85. Per the terms of Barrett's estate planning, his $5.6 million estate is set to be split between the two men.

However, the division of those assets into two is apparently not going smoothly.To help determine how the various assets are to be split, an executor of the estate apparently recommended that a coin toss be used. For example, to determine ownership of a painting valued at around $45.000 a coin toss was performed, with the younger brother winning.

This did not sit well with the older sibling, who has reacted to the loss by making aggressive accusations against his sibling and executors in addition to filing a lawsuit challenging the distribution plan. The most recent suit has put a hold on the process, slowing the ultimate distribution and preventing any named heirs from receiving property from the estate.

In defending the lawsuit and his concern about the distribution plan, the older brother explained "This case is about more than my share of my uncle's estate. It is about my uncle, his legacy, his reputation, and his family."

Planning Lessons
All those who follow high-profile estate planning matters appreciate that feuds of this nature are not rare. When significant assets are at stake, all those involved are frequently willing to go to extreme lengths to ensure the matter is handled to their liking. Unfortunately, there are often no winners in these situations, as the drama often causes significant delay and enormous resources spent on the legal battle itself. There are various lessons that can be taken from this Barrett story:

Be As Specific As Possible - While it is impossible to specifically list every single item big or small, it is usually worthwhile to explicitly indicate where every valuable item will go. This is particularly true when an estate is divided between various parties who may disagree on who is to get what piece of personal property.

Understand the Personalities Involved - Certain friends and family members may be a more "hot headed" than others. Conflict is more likely to be prevented with those unique personalities are accounted for.

Prevent Surprises - Dispute often arises when one party is unprepared for some outcome. By having clear discussions with heirs ahead of time, all parties are able to come to terms with how the affairs will be handled This may prevent a knee-jerk, defensive reaction when unexpectedly confronted by an unfavorable part of the plan.

More Wealth Transfer Tax Changes on the Way?

March 18, 2014,

Politicians are engaged in a seemingly endless debate about tax rates, "loopholes," spending cuts and similar issues. That is because a new budget must be passed every year, and each proposal undoubtedly comes with suggested changes to various tax and spend rules and regulations. For example, President Obama recently released his proposed 2015 budget. Even a cursory glance at the document reveals that, if passed, it would have clear implications on wealth transfers and estate planning for New York residents.

Estate Tax Proposal
Most notably, the proposed budget calls for the estate tax provisions to revert back to where they were in 2009--an exemption level of only $3.5 million and a top tax rate of 45%. This is in contrast to the current $5.34 million exemption level and 40% top rate. The current tax is pegged to inflation, and so the exemption level will rise slightly each year. Per the terms of the proposed budget, this new tax level and rate would not go into effect until 2018.

Even with this presidential proposal, many do not expect federal officials to actually change the estate tax details, especially considering a high profile compromise was just reach a year and a half ago. The current estate tax rules were only codified at the beginning of 2013 as part of the compromise plan known as the American Taxpayer Relief Act.

Many Other Possibilities
As a helpful Forbes article discusses, beyond the estate tax issue, the President's budget also suggests changes to various estate planning tools. These include limits on annual tax-free gifts to trusts, changes to the use of grantor retained annuity trusts (GRATs), and eliminating "dynasty trusts."

As always, it is critical to re-iterate that these are mere proposals. With a divided Congress, it is likely that any final budget would look far different than the one proposed by the President. In most cases, the executive's first proposal is strategically written in order to position it for debate and negotiation. That said, however, the fact that some of these options were specifically included in the proposal means that they are on the radar screens of officials seeking to limit resident rights to transfer assets freely.

It is impossible to predict what policymakers in the future might do. However, an experienced estate planning attorney can ensure that you are best positioned to take advantage of all legal options to lower tax burdens when passing on assets. An attorney can also update and review your plan on a regular basis to determine if changes in the law necessitate altering any provisions of the plan.

Not Allowed to Disinherit - Spousal Right of Election in New York

March 17, 2014,

New York residents are urged to craft an estate plan so that their assets are passed on per their own wishes--and not based on arbitrary state laws. Unless you explicitly make your desires known, then all decisions will be left up to others. However, there are actually a few rare instances when the law explicitly prohibits you from making certain planning choices. These situations are not common, but it is important to be aware of them in case they conflict with your plans

The most notable rule of that nature relates to disinheriting a spouse. In most cases, the law automatically allows a spouse to inherit certain assets if he or she chooses--regardless of the specific estate planning provisions.

Marriage is deemed a special legal relationship that is voluntarily entered into under the law. As a result, state statutes include default rules that protect the relationship. This is somewhat different from other close relationships--like parent-child. A resident can always end a marriage to legally break the spousal relationship. That is why it is usually possible to disinherit a child but not a spouse.

NY Spousal Right of Election Law
There are countless different scenarios where one may want to remain married to an individual but not leave them assets as an inheritance. This can be a strategic choice and not necessarily motivated by animus. An estate planning attorney can explain if a strategy that does not leave assets to a spouse makes sense.

However, it is important to understand that there is a NY law that allows a spouse who is disinherited to voluntarily choose to collect various assets--even if they were designated for others. Specifically, the spouse can choose to take either ⅓ of the deceased "net estate" or, alternatively, $50,000. Under the law, the net estate may include many different assets. Beyond those indicated in a will, it can include joint accounts, living trust assets, and some assets where a beneficiary is designated. In addition, that net estate may also include certain gifts given within the last year. In other words, giving away asset to others as a means to deplete an estate is not a viable alternative.

This spousal right of election does not happen automatically. The disinherited spouse has to affirmatively exercise their right to take advantage of the provisions. There are various time limits to doing so. In addition, the right may be curtailed in some instances based on a pre- or postnuptial agreement.

For help creating a tailored elder law estate plan to fit your needs, please contact our NY attorneys today .

Understanding Estate Sales - What Can You Sell?

March 14, 2014,

Most legal matters have built-in complexities. Anyone who has purchased a home, for example, can appreciate the mountain of paperwork will dense legalese that must be filled out . Things are only made more challenging where there are significant emotions tied up in the dealings--like when the home was owned by a loved one who just passed away.

One common example of a process that many New York residents face with a mix of intense emotions and legal complexities is an estate sale.

No two families are the same. Some wish to go through with a sale as soon as possible to settle the matter and move on. Others take more time to process the situation before handling matters like an estate sale. In all cases, however, it is critical to proceed with an understanding of the legal requirements.

The Basics
Most importantly, one must understand what can be sold, when, and by whom. It is not as simple as adult children automatically being able to do whatever they want with their parents possessions. Answers to these questions will hinge on what estate planning was done beforehand. Use of tools like a living trust, for example, would likely streamline the process. On the other hand, those without any planning at all will have to wait for court resolution before anything can be done.

In general, all property can be labeled either as a probate asset or non-probate asset. Probate assets are those that must be collected and distributed through the court. When a will is used to pass on assets, then virtually all property in the decedent's name (individual who passed away) will be required to go through probate. Alternatively, non-probate assets pass to another automatically, or at least outside of the court's purview. This may include property held jointly with a right of survivorship, certain insurance benefits, or assets held in trust.

Those assets that do not need to pass through probate can be dealt with almost immediately. There will be a new owner or trustee who can do whatever they wish with the items, including sell them in an estate sale. Alternatively, probate assets cannot be immediately handled. Instead, the family must go to court and either present the will or have the court deal with the resolution per state intestacy laws. The court will appoint a "fiduciary" whose job it is to collect the assets and distribute them as necessary. This may include arranging a sale of a home. In more complex cases, like when the home is part of a cooperative, the same formal requirements must be met, including approval by a Cooperative Board.

Estate planning attorneys appreciate that on top of all of these legal details are very real emotional pressures. When it comes to an estate sale it is common for disputes to arise between grieving family members regarding what to sell and when. The stress and confusion is far more likely the less preparation and professional support is available. Feel free to contact our NY estate planning professionals for guidance on streamlining this process for your family.

What if a Beneficiary Dies First?

March 12, 2014,

Of the many estate planning lessons pulled for the tragic death of Philip Seymour Hoffman in New York last month is the need to properly update your documents. Hoffman's will was drafted nearly ten years earlier. It had not been changed to reflect his new life circumstances, particularly the birth of two more children. While his first son was left assets in trust, there was no mention of his two daughters.

This is a common problem when an estate plan is outdated. In addition, the opposite problem can also arise. Instead of failing to account for a new birth, a plan can also miss the fact that one has died. Many New York residents may have questions about what happens when someone set to inherit per the terms of a will or a trust beneficiary is not alive.

"Anti-Lapse" Statute in New York
Residents have been grappling with the issue of inheritances to deceased individuals for centuries. In the past, the general rule was always that the gift could not be given to one who was deceased. However, state law has addressed the issue by passing what is known as an "anti-lapse" statute. The rule seeks to balance the wishes of the testator or grantor with the need to pass on assets fairly.

Under the law, if the beneficiary dies while the testator is alive, then the inheritance instead goes to the deceased's "issue" (children or grandchildren). For example, consider a will that splits everything between the testator's two siblings (perhaps he had no children). At the time of the testator's death, one of his siblings may have predeceased him. Per the terms of the law, the bequest to the dead sibling would not lapse. Instead, the gift would go to the sibling's own children or grandchildren. If the sibling did not have children, then the bequest would in fact go back to the estate and likely all be given to the one surviving beneficiary.

However, there is a very important caveat to this anti-lapse rule. The law only applies to the testator's own issue or their siblings. In other words, if a bequest is made to the testator's friend, and the friend is not alive at the time, then the friend's own children would not be able to take advantage of the anti-lapse statute.

Update Frequently
The complexity of these and similar issues makes it critical to update your plan frequently. All marriages, births, and divorces should trigger review. Even without those events, a check-up every few years is important to account for other life changes or legal alterations that affect one's planning.

Art Collections and Estate Planning

March 10, 2014,

Art Collector Disappointed Her Kids Don't want her Collection: Makes Backup Plan

A recent Wall Street Journal article discussed how estate plans protect art collections. The feature focused on a widowed woman with an art collection worth $250,000. The woman and her late husband traveled extensively and amassed the collectibles over a 50-year time frame. Now in her 80s, she wants to make future plans for the valuable collection.

Upon her death, she would like her cherished art to pass to her two daughters. However, she discussed her desires with her children and discovered that they do not want the Asian art collection. She reluctantly came to grips with the reality of her art moving beyond the family. The Asian art aficionado requested that, if possible, the art assortment stays together and be sold to one collector.

This story, and countless others, highlight the importance and necessity of pre-planning for the inevitable with a clear estate plan.

Options for Art Collections
A New York Times piece focused on both the monetary and emotional worth attached to personal collections. Because of the later, many people avoid including their prized collections in any type of estate plan. This is a mistake.

A robust estate plan prevents confusion and often times costly estate taxes. An estate planning attorney can assist and plan for the proper disposition of your property, including art collections.

Here are some options for collectors and what to do with their treasured collections:

· Pass it on to family members - this seems to be a popular 'default' for most collectors. However, in some instances, it may be a good idea to discuss your desires with your family members, or those whom you wish to inherit your valuables. Not everyone has the same taste and may not want the collection.
· Sell it - as noted above, not all family members want to inherit collections. So, one option is to sell to a buyer with the same passion as the original collector.
· Donate it - some collectors opt to donate to a museum or their alma mater. This way, the collection can stay together, which is an important factor to many collectors.

An estate plan that clearly incorporates all your desires, including how and where you want your collection to be dispersed, is central to avert any future issues.

NY Estate Planning
It is important for everyone to make an estate plan. When valuables, such as special art collections, are involved, it is imperative to create a plan and entertain a 'fallback plan' as well. Discuss and make proper arrangements for the disposition of belongings with an experienced estate planning attorney.

Secret Marriage, New Will Leads to NY Estate Fight

March 6, 2014,

It is impossible to predict exactly how every family member will respond in the aftermath of a passing. However, as experienced will and trust lawyers know all too well, there are many situations that dramatically increase the likelihood of controversy that leads to a contested estate. Mixed families, a large age-gap between spouses, and secrecy are often signs of family tension that may erupt after a death.

A high-profile New York estate feud offers an example of that very situation.

NY Photographer Bern Stern's Estate Fight
Celebrity photographer Bruce Stern is well-known for his legendary photos of Marilyn Monroe--many taken just before her death. Stern died last year at the age of 83, leaving a roughly $10 million estate behind. As discussed in a recent Post story, family members are in bitter disagreement over how the estate should be divided.

Stern had three children, all from his first marriage that ended in 1975. As far as the children knew, their father's assets were to be distributed per the terms of a 2007 will that split half the estate between the children while giving the other half to his own photography foundation.

However, just before his passing, Shannah Laumeister came forward claiming that she and Stern were married in secret in 2009. She directed a documentary about Stern in 2010 and is nearly 40 years his junior. The adult children had no idea of the union.

Laumeister produced a second will from 2010 that created a private trust with all of the assets and gave control of the trust to Laumeister. According to Surrogate Court filings, Laumeister claims that the adult children would still receive cash bequests as part of the new will, but the details of those bequests are unclear.

Psychiatry Records & Questions About Mental State
Expectedly, the adult children challenged the 2010 will. The feud is making its way through the court system. Most recently, reports suggest that the Laumeister is fighting to block sharing of information about Stern's meetings with a psychiatrist.

For their part, the children argue that information about Stern's mental and medical state when the contested will was created is of obvious relevance. Alternatively, the younger wife argues that release of the information would permanently damage Stern's reputation. The value of his estate is closely tied with his artistic works and reputation-damage would significantly harm the estate, she claims.

An obvious take-away lesson from this story is a reminder that an experienced estate planning attorney can point out the many red flags that suggests a feud may be likely. A legal professional can offer counsel on steps to take that may eliminate secrecy or otherwise increase the chance of a smooth, conflict-free process that is resolved fairly and efficiently.

Are You Too Young to Have an Estate Plan?

March 4, 2014,

A quick Google search reveals about 10,000 articles providing 5, 10, 15, or more reasons why everyone needs an estate plan. While that makes a catchy headline, it may not be technically correct. After all, in most instances, it is impossible for minors under 18 years old to enter into legal agreements. It is not reasonable for your five year old (or even high school student) to have a will drafted or a trust created for assets.

But realistically, when at what point is it prudent for New York resident to draft at least a minimal estate plan, including a Last Will and Testament? Perhaps more importantly, at what point does it make sense for one to invest some money in having a professional create an estate plan?

Not Age But Life Circumstances
The answer to the question is the perennially legal refrain: It Depends. It is best to view estate planning needs not by age but by circumstances. For example, even young adults should consider crafting a quality estate plan if:

1) You have children - The naming of alternative caregivers and other preferences for child-rearing is a part of all plans for parents with young children.

2) You own a home - Most young adults do not yet have sizeable assets to their name. But there are exceptions. Some have inherited sizeable wealth from parents or grandparents. Other may have saved and purchased a large asset. Ultimately, anyone with significant resources of any kind should ensure they have legal documents in place for a seamless transfer of those assets (and potential tax savings)

3) You have particular funeral/service preferences - It is only through a Will that your specific ideas about burial and funeral services can be enshrined legally. Residents of all ages with unique spiritual or religious preferences about these matters may want to ensure their wishes are explicit.

4) You have unique health challenges - Estate plans are understandably on the minds of older residents for whom death seems closer. However, all those with various health challenges should have a plan in place to name alternative decision-makers in case a disability arises which makes it impossible for one to care for themselves. This is true no matter how old you are.

In short: It may not make sense for everyone to pay for an estate plan immediately upon graduating from high school. But in some cases it could make sense. Not all 18 year olds need a detailed plan. But an 18 year old who owns a house or has children might need one.

An experienced estate planning attorney can provide straight-forward advice on what type of planning, if any, makes sense in your case. For help on these issues in Albany, Saratoga spring, Rhinebeck, Fishkill, Middletown, and many other communities through New York, please contact our lawyers today.

Marriage Matters - A Reminder of the Tax Benefit

February 28, 2014,

Earlier this week we discussed the tragic death of New York actor Philip Seymour Hoffman. There are many estate planning lessons to take away for Hoffman's situation, including the need to update a will after every life event. Hoffman unintentionally left out two of his children by not updating his will to include them specifically--his oldest son is named directly as a beneficiary of a trust.

Yet another lesson that fellow New Yorkers can take from the case is the role that marriage can play in these matters.

Companions vs. Spouses
According to reports, the mother of Hoffman's three children was long-time girlfriend Marianne O'Donnell. The couple was together for years, though they apparently were split in the few months before the death (allegedly as a result of Hoffman's relapse). At no point was the couple married. This is not necessarily an unusual state of affairs for couples today. Due to many personal factors, even the most intimate partners with decades together may choose not to formalize that union by way of a marriage. In the eyes of the parties, their relationship is the same regardless of whether there is official government sanction or not.

However, it is important to remember that the law does not view all couples the same. In fact, the entire purpose of marriage is to classify couples into different camps with thousands of rights on the line. Those rights have clear estate planning implications.

Per the terms of Hoffman's will the bulk of his suspected $35 million estate will go to O'Donnell. However, both New York State and the federal government impose an estate tax. Above the exemption amount, the tax can hit as high as 40%. Of critical importance, the tax does not apply to transfers between spouses. But Hoffman and O'Donnell were not married, and so she will likely be hit with an estimated estate burden of $15 million or more. A marriage would have eliminated 100% of that burden.

The bottom line is that in cases like this, marriage saves on taxes. There are many different situations where a transfer of wealth to another would be taxed except for transfers between spouses. While no one should make life decisions regarding marriage based entirely on taxes, one should not overlook the reality that marriage matters under the law.

Basic New York estate planning principles apply in virtually all cases, no matter if you have a $35 million estate or if your main asset is a family home. To ensure you take steps to protect your loved ones for the future, be sure to contact a NY estate planning attorney today.

New York Estate Planning - No Child Left Behind?

February 26, 2014,

Some New Yorkers eschew an estate plan because they assume their wishes are very simple. "I just want the kids to split it" is a common refrain. For one thing, default rules in the state do not automatically mean that children will split a parents' assets. The only way to do that is by ensuring you have a properly updated will, or, even better, use trusts to protect assets and streamline the process.

Even when residents wish to split their assets between the children, mistakes are made all the time. Take, for example, the recent high-profile passing of actor Philip Seymour Hoffman. The 46-year old passed away tragically earlier this year inside his New York City apartment. Recently, his will was made public and problems were quickly pointed out.

Perhaps most notably, the will was written ten years prior. The provisions specifically created a trust for Hoffman's oldest son, who was then an infant. After the will was drafted, Hoffman had two additional children, but there is no mention of them in the older will. As a result, it is unclear what, if anything, they will inherit directly from their father's estate. New York law provides some protection for unintentionally disinherited children, but the law can be murky in some cases.

Forgotten Children
The "forgotten child" problem is a common estate planning blunder. There may be times when you intentionally wish to disinherit a child. But when done accidentally this usually occur in one of two situations: outdated planning or blunders with a mixed family.

1) Outdated Will - As in the case of Philip Seymour Hoffman, failing to update planning documents on a regular basis can lead to oversights. Every major life event--childbirth, marriages, divorces, and others--must be follow by updates to a will and other planning tools. It is very easy to fall into the trap of "getting to it later." But the entire point of preparing ahead is because the future is uncertain. If your life circumstances have changed in any meaningful way, then ensure your planning reflects that.

2) Mixed Family Mistakes - Step-children are often unintentionally forgotten with regard to inheritance as a result of sloppy planning. Some planning documents suggest that property should go to "all my children." But no matter how close one's relationship to a step-child, unless there is a legal adoption, step-children will not be treated as "children" in most of these situations. Instead, clearer instructions will need to be included in legal documents to ensure a child is not unintentionally left behind.

For help with any NY estate planning matters, please contact our attorneys today for guidance. We work throughout New York City, Albany, White Plains, Fishkill, and many other communities throughout the state.

Using a "Life Estate" in a New York Estate Plan

February 25, 2014,

Property rights and rules are some of the most complex (and arcane) areas of the law. Of particular importance for estate planning purposes, property rules allow different individuals to each have different "interests" in the same piece of property. It is not necessarily as simple as one person owning each piece property. This presents unique opportunities for estate planning, often providing different options to structure an inheritance, save on taxes, and otherwise best protect the varying interests of all those in a family.

For example, consider the possibility of a "life estate" to pass on real property (a home or land). This tool is easiest to understand in the context of property interests in a family home. The family home is often the largest asset within one's estate. Protecting the home from potential estate taxes or being spent down to qualify for Medicaid is an important part of many New York estate plans.

Beyond simply transferring ownership to a family members or putting provisions in a will to pass it on to another. One option is the life estate. The life estate is a deed that essentially breaks up the interests in the home--at least for a time. The senior passes on ownership of the home, but they retain the right to live in the property for the remainder of their life. In other words by using a life estate deed, seniors keep some interest for themselves.

In legal terms this means that the senior retains a "possessory interest" in the home. There are different types of possessory interests, like a lease to a rental property. But with a life estate the possessory interest is based on timing, specifically the life of the senior. These issues implicate quite complex and tricky legal matters, and so one should never pass on assets in this fashion without complete understanding of the underlying legal principles involved. Also, there is often no way to reverse this step once it is taken, eliminating much flexibility.

Be Careful
This option can come with some benefits, such as transferring the house outside of probate. However, it is critical not to take this step without professional help, because potential complications remain. Depending on your circumstances, this option may implicate different tax burdens. In addition, it may be more prudent to use living trusts for a more comprehensive planning tool that includes all of your assets, not just a single piece of real property.

For help with these and other estate planning matters throughout New York state, please contact our estate planning lawyers today.

Can Your Heirs Work Together?

February 21, 2014,

Creating a will and drafting trust documents are forms of "transactional law." That means that, unlike litigation, the purpose is not necessarily to "win" in a conflict over another. Instead, the purpose is to put plans into place that explicitly avoids conflict down the road.

When doing this work it is critical to understand the details of the law to ensure documents are crafted and structured in ways that meet legal requirements and have the intended legal effect. But, in many cases, particularly estate planning issues, knowledge of the law alone is often insufficient to help prevent conflict. That is because, these issues are wrought with emotions. The interplay of family values, personal relationships, resentments, financial stress, and other matters are all wrapped up in the process. Working to prevent conflict therefore requires consideration of all of these issues in addition to simple knowledge of the letter of the law.

Feuding Siblings
Failure to take all of those factors into account is a recipe for family feuding in the aftermath of a death. For example, this week the New York Post reported about an on-going fight between two brothers over their father's estate. The patriarch died nearly sixteen years ago (in 1998) and the mother died six years later (in 2004). The fighting is over a $13 million estate which was built from profits of a garment company which sold women's lingerie.

According to a suit filed in a Manhattan Surrogate Court, the younger brother claims that his sibling embezzled more than $2 million from the estate to fund his lavish lifestyle. The son claims that millions were funnelled out of the estate, subsequently lowering his own inheritance. For his part, the older brother argues that all of the funds allegedly embezzled were gifts signed by their own mother before her passing.

This back-and-forth is far from uncommon. The roots of the feuding may be based in resentment from childhood, unbalanced relationships between parents and children, and many other factors. It is impossible to say with certainty what could have been done on the estate planning front to prevent this fighting. But simply "splitting the assets between the two sons" (as happened here) may have been too simplistic an option. At the very least, when potential challenges of this nature arise, it is important to explicitly list assets that are to go to each child, leaving no questions about whether lifetime gifts were to be factored into the inheritances. The less ambiguity the better.