New York Estate Planning Lawyer Blog

Most local residents will nod in agreement when one explains the importance of conducting New York estate planning as soon as possible. It is easy for most to understand the value of planning an inheritance, saving on taxes, and preparing for alternative decision makers. Yet, all estate planning lawyers know that there is a difference between recognizing the importance of a task and actually taking the time to get it done. Psychologists have found that when it comes to making the leap from knowing that a task should be completed to actually doing it, personal examples are usually the most effective motivators. It is one thing to learn about the value of planning, it is another to hear about a specific case of proper planning that helped an actual person. In fact, experts have also found that even more effective than stories of positive benefits are stories of plans gone awry. The stick is often more persuasive than the carrot.

That is where the estate planning misadventures of the rich and famous can be useful. Unfortunately, recent history is replete with stories of many well-known figures who did not take care of their affairs properly (or at all) before their passing. This week the SM Mirror ran down a quick list of some of the more well-known cases of celebrity estate planning blunders. A few included examples:

Jimi Hendrix
The great young guitarist passed away tragically at the age of twenty seven. As is common for those around that age, Mr. Hendrix did not have a will. Possession of his estate was disputed for decades, with Mr. Hendrix's father officially taking ownership twenty years after the death. Upon the father's passing, everything went to the father's daughter from a second marriage. The father had adopted the daughter who was his second wife's child from her former marriage. That means that Mr. Hendrix's nearly $80 million fortune (which continues to grow) is owned by someone he never knew. This is the case even though there remain many family members who are still alive and were much closer companions to Mr. Hendrix during his life.

Marlon Brando
Marlon Brando supposedly explained to his long-time housekeeper that she would be able to keep the home in which they lived following his death. She had been living there for years beforehand. However, the promise was never committed to writing. Oral promises are easily contested and often invalid. Upon Mr. Brando's death the housekeeper lost her bid for the home and received only a small settlement.

Anna Nicole Smith
The model and TV reality star died without updating a will she had written six years earlier. The old will left everything to her son Daniel. However, Daniel had died several months before Ms. Smith. Therefore, the probate court will likely have to apply default rules to determine how her assets are distributed. However, the case remained unresolved five years after her death, because Ms. Smith herself was involved in a fifteen year battle for a share in the assets of her billionaire former husband after his own will was contested.

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Reality Star Feuds with In-Laws in Estate Fight

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New York estate planning mishaps and disputes often make headlines when they involve large sums of wealth and larger-than-life characters. Perhaps none has received more publicity recently than that surrounding the "grand dame of New York City society," Brooke Astor. Ms. Astor died four years ago at the ripe age of one hundred and five. However, inheritance and tax issues continue to rage around her estate and they show no sign of nearing a resolution. As discussed in Forbes, seven new lawsuits were recently filed by her estate refuting IRS demands that she owe an additional $62 million in taxes.

It seems that one of the key issues is the overall size of her estate. Every New York estate planning lawyer knows that the total value of an estate is a fundamental factor in evaluating the overall tax burden. A smaller taxable estate means a smaller tax. In some cases, if an estate is below a certain threshold, then certain taxes need not be paid at all. That is why most tax litigation involves dispute between the government and the individual (or their estate) about the total value of taxable assets. In this case, the government claims that the value of Ms. Astor's estate is $223 million, but representatives for Ms. Astor say the figure is around $93 million. Tens of millions of dollars in potential taxes hang in the balance depending on what sum the court ultimately decides is accurate. The tax bill could be anywhere from $35 million to $97 million. The disagreement between the parties centers mostly on charitable bequests (totaling $96 million) that the estate claims can be deducted but which the IRS disputes. In addition, the IRS claims that there was $20 million in lifetime gifts which should have been included. Part of the IRS request includes over $2 million in penalties for the failure to file and pay those gift taxes properly.

The estate admits that certain gift tax returns were not filed. However, many of those gifts were to her son, who was earlier convicted of 14 different crimes related to neglecting her care and stealing from her estate. Many estate planning attorneys have used the drama surrounding Ms. Astor's estate and her son's crimes as an example of what can go wrong when a Power of Attorney is in the wrong hands. As the Forbes article author noted, "the Astor case is a reminder to families that it's important to make sure you get these basic estate and disability planning document right."

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High-Profile Example Highlights Need for Clarity in the Estate Planning Process

New York Estate Planning is Much More than Wills & Trusts

Last month Forbes discussed an estate feud that brewed followed the suicide death of a reality show star. Late this summer, the 47-year old star of "Real Housewives of Beverly Hills," Russell Armstrong, took his own life. His wife, Taylor Armstrong, had filed for divorce shortly before the death. However, the divorce was not final at the time of Mr. Armstrong's passing, meaning that per the rules of the state she was the next of kin. As such she maintained a certain level of control over his affairs--including his funeral and burial plans. Without instructions to the contrary in estate planning documents, even estranged spouses may maintain this control.

Making matters worse in this situation, it appears that Mrs. Armstrong never maintained a good relationship with her former husband's family. As a result, she did not initially tell the family about the funeral, burial, or memorial plans. The man's parents and siblings wanted his remains buried in his home state of Texas, but Mrs. Armstrong claimed that she wanted to bury him in Los Angeles. It remains unclear exactly how the ugly situation will be resolved.

Unfortunately, the burial dispute may be just the beginning. Depending on Mr. Armstrong's estate planning documents, his estranged wife may still be entitled to inherit most of his assets. That is why it is important to seek out professional help in the middle of a divorce. Otherwise, there is no telling what might happen. As the article notes, "Fights over the estate of someone who passed away in the midst of a divorce are especially common." Other recent high-profile examples include the deaths' of Dennis Hopper and Gary Coleman.

Our New York estate planning attorneys know that these complex situations occur in our area with surprising frequency. A loved one's passing is always an incredibly emotional time, and matters are made significantly worse if a spouse (estranged or otherwise) does not maintain a good relationship with the deceased's family. Traditionally, this situation is more likely to exist in second marriages. That is why there is immense benefit to ensuring that professionals are consulted ahead of time to account for potential disagreement down the road. In many cases, a neutral third party can be involved to ensure that fairness reigns no matter what the future holds. When clients in our area visit our New York estate plan lawyers to discuss second marriage planning, for example, we often recommend that the attorney be named a co-trustee of trusts to provide the necessary outside perspective.

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New York Inheritance Issues in Second Marriages

Surviving Spouse's Use of the Home in Second Marriages

For decades our New York estate planning lawyers have helped local residents use living trusts instead of wills to plan their affairs. For many clients a will simply creates more problems than it solves. For example, yesterday the Wall Street Journal published a story exploring the myriad of issues faced by a will executor--the person named to manage the estate of a deceased individual in a will. It was explained how a wide variety of complex tasks are required of the executor, there are legal repercussions when mistakes are made, and many relationships are ruined in the process of settling the estate.

Executors are often siblings or other family members of the deceased. It is the executor's job to administer a will through the probate process by accounting for assets, paying debts, and distributing property. Red tape, complexity, tedium, and relationship conflicts are inherent in the process. Many professionals in the field report that there has been a steady increase in the number of "executorships gone bad." Some believe that recent economic troubles have led to more inheritance fights as of late, complicating the executor's job even further. When a will is challenged by an heir (a frequent occurrence), the executor is usually thrown into the middle of depositions, court appearances, and other legal situations that most would prefer to avoid.

Observers admit that the role of executor is generally not suited for amateurs. Often the individual is required to be aware of taxation rules, potential conflicts of interest, and even investment strategies like picking stocks and bonds. All of this comes with little pay, because state guidelines set the amount of money that an executor can receive.

To top it off, executors are often placed in the middle of contentious family discord. One college professor explained the nightmare scenario created when he was named the executor of his father's estate which was to be split between himself, his sister, and his stepmother. At the outset his stepmother challenged the will, feeling as if she were owed a larger share. After contentious disagreement in and out of the courtroom, a judge eventually upheld the original plan. However, the relationship damage was already complete. The man noted afterwards, "Let's just say that holiday gatherings became fewer and less cordial." For those in our area, the clear take-away lesson from the tribulations of executors is the benefit of avoiding the probate process altogether when crafting a New York estate plan.

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Proper New York Estate Planning Necessary to Combat Possible Legal Challenges

Careful Consideration Required Before Selecting a Trustee

Local residents visit our New York estate planning attorneys for professional assistance to protect and pass on their assets. Many also expect guidance identifying the items that should be considered an asset and included in the planning. Most area families need to consider things beyond homes, cars, investment portfolios, and similar items when creating their New York estate plan.

For example, what happens to frequent flier miles and rewards upon an individual's death? Many residents spend years and thousands of dollars in airfare racking up mileages and benefits in airline sponsored loyalty programs. A recent article in Payments News explained how many fliers spend time accumulating these "miles" and rewards only to leave them unused at their death. Some reports indicate that as many as 3.5 trillion miles currently remain unused in these programs. Interestingly, each airline has a different policy in place regarding transferability of loyalty benefits at death. American Airlines specifically allows accumulated mileage credit to be transferred to a person named in a court-approved will or estate plan. Other carriers, such as United Airlines, require that a beneficiary be named with the program, a fee be paid, and require an executor to contact the airline before miles can be transferred.

Another asset which one may wish to leave behind is the option to purchase valuable season tickets. Area residents often spend years waiting for the opportunity to become a season-ticket holder for their favorite teams. A post this weekend at The Faculty Lounge recently discussed this topic. Most teams have policies in place that allow an individual's decedents to gain the right to purchase. However, it is important to closely examine the team policy related to ticket transferability to understand what issues might arise. For example, there may be conflict over who gains the right if several children share in ones' assets. Many team policies indicate that there will be no transferability if several individuals share in the right and do not agree on a single transferee. Some teams also expressly prohibit a non-relative from receiving the right to purchase the tickets.

Loyalty reward points and season tickets are just two of an array of assets that an individual may need to consider in their estate plan. Credit card reward points often present the same issues as airline loyalty programs. Many online efforts--like blogs--are becoming important spaces that some may want to leave to others. Also, our New York estate planning attorneys understand the important of passing on values. That is why we often help clients create "ethical wills" which help residents pass on morals and principles gained over a lifetime.

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Planning For Your Digital Life After Death

Instructions Should Help Family Find the Information They Need

Our New York elder law estate planning lawyers know that proper estate planning can help clients save money on taxes and probate costs, ultimately allowing them to pass on more of their assets at death. Besides leaving a larger estate, preparation also ensures that the distribution is likely to occur exactly as desired. Unfortunately, family infighting can erupt after a death that leads to a lawsuit challenging an estate. These legal struggles tear families apart and can distort the intent of the one who has passed.

Estate battles should be avoided at all costs. Last week Forbes published a helpful "tip list" of common sense and practical ways to "lawsuit proof" an estate. For one thing, it is very helpful to divide up specific possessions among friends and family members before death. Distributing family heirlooms--like a wedding ring, antique furniture, and similar items--can be contentious if not done ahead of time. There is no "right" way to divide these possessions, but communication is crucial. Talking about the issue gives families a chance to understand what items actually matter to each of them and avoid lawsuit-provoking surprises at death.

If you give large loans, advances, or gifts to children while alive it is helpful to provide close records of the transfer. Sometimes a parent will give a child a large amount of money--perhaps for a down payment on a house. Afterwards there may be disagreement about whether that money was "in advance" of an inheritance. By unequivocally clarifying your intent beforehand, a donor may prevent others from litigation the issue in the future.

One of the most common allegations in estate litigation is that someone did not have sound mind when their plan was created. Understanding this risk and accounting for it can go a long way in preventing a lawsuit ever being brought. Some seniors who seem vulnerable may be particularly apt to having their wishes attacked on this ground. In those cases evaluation by a treating physician and geriatric psychiatrist immediately before signing documents can help dissuade potential litigants from attacking the estate plan.

Continue reading "Tips to "Lawsuit-Proof" An Estate" »

Few residents understand the often staggering cost of long-term care, such as a private nursing home, until they are faced with the dilemma first-hand. It is only when they or a loved one is already to the point of needing that care that many people first realize the expense of securing a spot in a quality nursing home. In fact, beyond dictating how assets will be dispersed later, gaining advice and planning preparation for future medical and caretaking needs is one of the most important parts of creating a New York estate plan.

The need for the preparation becomes clear once many realize the cost of long-term care facilities. The latest figures calculated in Genworth's Cost of Care Survey were recently released showing that the median cost of nursing home care nationwide rose 3.4% last year--to $77,745. Of course, this is only an average from across the country. In our area many quality facilities charge much higher rates, around $140,000-$150,000 per year.

Those costs are much higher than the average family income in many American homes, meaning without proper long-term care planning some families are forced to use up a lifetime of assets to pay for the necessary costs. But if thought is given to these matters ahead of time, then options exists to reasonably provide for these expenses in a coordinated manner that protects family wealth.

For example, all of a family's assets may be protected ahead of time with the use of a Medicaid Asset Protection Trust (MAPT). These trusts usually have to be created at least five years before the care is needed, so forethought goes a long way in ensuring a positive financial future for families in these situations. An even better option is the purchasing of long-term care insurance--which ultimately provides the most flexibility when seniors reach the point that they need extra care. With this insurance a loved one may have the assets for expensive home-care, without the need to move into a nursing home at all.

However, even if the MAPT and long-term care insurance options do not apply, other choices are available. The "Gift and Loan" Strategy allows one to save part of an inheritance from the costs that Medicaid would usually take while still ensuring that Medicaid pays for the care needed. It is not an ideal choice, but meeting with a professional to discuss its applicability is still much better than facing it alone without any assistance--a visit to a New York Medicaid attorney is invaluable.

Continue reading "Cost of Nursing Home Care Increases Nationwide" »

New York inheritance planning involves passing on values as well as assets. No matter how large the family estate, most parents think long and hard about how their inheritance will affect the lives of their children. For many there are no easy answers to questions like how new wealth will affect their children's independence or how much wealth is the appropriate balance between proper inheritance and philanthropy.

As a story last week in the Belleville News Democrat explained, many parents are taking steps to share important information about the meaning of money as part of their inheritance plan. Most families strive to pass on the right amount of money so that children are provided for but still maintain the incentive to work, strive, and succeed.

One hardworking family, including a 60-year old retired teacher and 62-year old real estate broker, explained how they have worked with their now 30-year old daughter on financial matters, noting "We really want to encourage her to develop a personal financial plan, a personal philosophy, and become really familiar with the types of investments." The family admits that frankness and early discussions about these issues is important. Children should know what to expect and parents should not be afraid to share their concerns with their loved one.

Some are worried that their loved ones may be unprepared to handle the estate that they receive. Those families often face issues with asset planning for spendthrift children. They are aware that their children are poor at handling money or inexperienced with such matters. Many options exist for parents in those situations. For example, trusts are perfect tools to ensure that a child has access to reasonable assets but is unable to abuse the overall value of the estate. In these situations a designated "trustee" manages the actual estate with rules about what the child receives and when they receive it.

Continue reading "Parents Grapple with Effect of Inheritances and the Meaning of Money" »

by Michael Ettinger, Esq.

A couple came in to see me today for the husband's 88 year old father who is a nursing home in Florida. They now wish to bring him up to New York to be nearer to the family. He has about $600,000 in assets, including his home.

They told me about the very nice lawyer he has down on the west coast of Florida, who set up a revocable living trust for Dad and for Mom who died last year, in February of 2006, and amended it in March of 2010.

They had a great deal of confidence in the lawyer, especially since he had won an award as one of the top lawyers in the locality.

Regrettably, while the attorney prepared a fine estate plan, he was not an elder law attorney and took no steps to protect the couples' assets back in 2006, when they were well into their eighties.

Had the lawyer been knowledgeable in elder law, which unfortunately so many estate planning attorneys are not, he would have set up a Medicaid Asset Protection Trust (MAPT) and started the five year "look back" period running. It is now February, 2011, five years later. Had the MAPT been set up when it should have, in February 2006, instead of the revocable living trust, all of Dad's assets would now be protected and he would be eligible for Medicaid benefits to pay for the cost of his nursing home care.

Instead, the couple will only save half the assets by using the "gift and loan" strategy developed by elder law attorneys to save half the assets on the nursing home doorstep when the client has failed to set up the MAPT. The technique is also call "half a loaf" planning after the old expression.

Nevertheless, the "nice" lawyer ended up costing the family $300,000.00 and it is not the first time we have seen it happen. Indeed, it is the reason your writer published "Ettinger on Elder Law Estate Planning", available on Amazon.com. We believe that clients need a new york "elder law estate planning" attorney and not just an "estate planning" attorney so mistakes like this no longer happen to good people.

Historically, charitable giving rises about one-third as fast as the stock market. While the stock market gains of 2010 remain slight (Dow is up 1.13% at the time of this writing), New York residents may still want to consider using the charitable remainder trust (CRT) in their estate planning.

This trust works well for those who:
• hold highly appreciated assets
• desire an income stream off of the assets
• want to donate to charity; and
• achieve tax benefits.

Because the CRT is irrevocable, this planning should be done with an experienced estate planning attorney.

How the CRT Works, in brief
Your assets and/or property are transferred to a CRT whereby your charity administers the trust. The charity serves as trustee, managing or investing your assets.
The charity pays you and/or your beneficiary a portion of the income generated by the trust for a certain number of years, or for the remainder of your life. At your death or the end of the set period, your charity receives the trust's remaining principal.

CRT Tax Benefits
By establishing a CRT, you avoid capital gains tax on the donated assets, because the charity is exempt from taxes. An income tax deduction may also be declared on the fair market value of the remainder interest in the trust. Additional savings are effected by removing these assets from your estate, reducing subsequent estate taxes.

Two Types of CRTs:
With the charitable remainder unitrust, the percentage rate on the value of the assets determines your and/or beneficiaries' annual payment. If the trust value changes, the payment to you and/or your beneficiaries changes.
A charitable remainder annuity trust is set up to pay a fixed rate of return based on the initial valuation at the time the property is placed in the trust. The trust's assets are never re-valued, so if the assets of the trust increase, the income portion does not change.

Conclusion
The remaining principal of the trust reverts to the charity of choice upon death and/or the end of the set term. (The trust life may be based on the life expectancy of the income beneficiary). Because some grantors may object to the loss of principal, they may purchase life insurance to replace the principal assets. An estate planning attorney then uses an Irrevocable Life Insurance Trust in conjunction with the CRT to assure the trust's value is also distributed to the income beneficiaries.

Online resources to charitable giving:
• The National Center for Family Philanthropy

This website promotes philanthropic values, vision and excellence across generations of donors.

• The American Institute of Philanthropy

This website rates and grades public charities to help donors make informed decisions.

• The Foundation Center

This website provides news on charitable activities and links to private and public foundation websites.

by Michael Ettinger, Esq.

"Elder Law Estate Planning" is a niche area of the law which combines the features of elder law and estate planning that pertain most to the needs of the middle class.

Estate planning was originally for the wealthy few. Middle class families did not consider themselves as having "estates" to plan. During the Reagan years (1980-1988), a great economic expansion occurred, raising the asset level of the middle class into the realm of estate planning. With middle class people suddenly exposed to "estate taxes", the need arose for estate planning, to reduce or eliminate those taxes. A few years later, in 1991, the American Association of Retired Persons (AARP) published "A Consumer Report on Probate" which concluded that probate was a process to be avoided, in all but the most exceptional cases. This marked the beginning of the end of traditional will planning and started the "living trust revolution". AARP recommended that families start using trusts rather than wills, to avoid probate and save their beneficiaries tens of thousands of dollars in the estate settlement process.

Since then, millions of people have set up trusts to:

• Save time and money in settling the estate

• Avoid legal guardianship if they become disabled

• Avoid having their personal and financial matters made public

• Reduce the chance of a "will contest"

• Keep control in their family and out of the court system

At about the same time as living trust planning became popular, the field of elder law emerged to help people navigate the increased complexity of state Medicaid rules and regulations, the soaring costs of nursing home stays, and the fact that people were living considerably longer.

Historically, estate planning was handled primarily by "white shoe" law firms in the deep canyons of downtown Manhattan, while elder law planning emerged out of the Department of Social Services. State employees began to take their expertise in Medicaid rules and regulations into the private sector.

To this day, these two fields continue to grow independently of each other, sometimes to the detriment of the clients lawyers are meant to serve. Estate planning lawyers mostly see estates averaging from the low hundreds of thousands to about two million dollars. Families with estates under one million dollars often cannot afford long-term care insurance. They may now or later need a Medicaid Asset Protection Trust (MAPT) to protect their estates from being depleted in the event a nursing home is required. Since the estate planning attorney is often unfamiliar with elder law, the client never gets the MAPT they need, and the estate plan to avoid probate proves useless when a nursing home stay ends up consuming all of the assets.

For the couple with over one million dollars in assets, estate planning is essential to reduce or eliminate estate taxes. In this case, they should split their assets into two trusts, thereby creating two estates, and doubling the exemption from one million to two million dollars. Still, this couple, while they may be able to afford long-term care insurance, may find one or both of them uninsurable due to health reasons. Perhaps what they really need are two MAPT's, not just to save estate taxes but to also protect the assets from nursing home costs, but they never get them because the estate planning lawyer is not experienced or trained in drafting these documents.

What happens when the estate planning client actually becomes disabled and needs long-term care? They, or the family, often consult with the estate planning lawyer who prepared their plan, but who may be unable to help them, due to his or her unfamiliarity with state Medicaid rules. Many families lose assets that might have been saved. Unknown to the estate planning attorney, elder law attorneys have developed numerous techniques to protect hard won assets, even when the nursing home is imminent, such as "spousal refusal" and the "gift and loan" strategy.

On the other side of the coin, what happens when the older single or couple meets with an elder law attorney instead of an estate planning attorney? These clients are usually sixty-five or over, and are looking for asset protection. The elder law attorney knows how to create a MAPT and often recommends them. However, on the estate planning side of matters, the elder law attorney may miss the need to set up two trusts for the couple to avoid the estate tax. He or she may have little knowledge about estate planning for second marriages, a growing segment of the population, or using Inheritance Trusts to keep the assets in the blood and protect the inheritance from children's divorces, lawsuits, and creditors.

While some of the family's needs may be met, such as asset protection, other needs are left unserved, often because the clients are unaware that these two fields of law complement and overlap one another. In other words, they may get what they want but
not necessarily what they need. These oversights are often visited on the heirs.

Your writer made the conscious decision twenty years ago to develop expertise in these two fields of law simultaneously. This has proven to be invaluable to thousands of families. Clients who originally came in for estate planning services later became elder law clients, converting their revocable living trust estate plans into MAPT's as they got older, or through the use of Medicaid planning services to protect assets when the need for nursing home care actually arose.

Looking back on our experiences in over ten thousand cases at Ettinger Law Firm, we conclude that we have assisted in the creation of a new niche, "Elder Law Estate Planning".

We define this area of law as:

• Getting your assets to your heirs, with the least amount of taxes and legal fees possible

• Keeping those assets in the blood for your grandchildren and, in the meantime, protecting those assets from your children's divorces, lawsuits, and creditors

• Protecting your assets from the costs of long-term care and qualifying for government benefits available to pay for care

While estate planning involves tools for well-to-do families, with acronyms like GRITS, GRATS, and GRUTS, and where elder law serves the diverse needs of our growing senior population, including the less fortunate, through Medicaid, Medicare and Social Security, "Elder Law Estate Planning" addresses the concerns of the vast majority in the middle.

By Michael Ettinger, Esq.

Reflecting on this comment made to us by a client recently, the following thoughts came to mind. What do we actually do at Ettinger Law Firm?

All we do is save our clients a lot of time, many thousands of dollars and the not so petty annoyances they might otherwise have in settling their family's affairs on the death of a loved one. We help them reduce or eliminate taxes on the estate so that more passes down to help their children and grandchildren. These days, we also protect the inheritances our clients leave so that it is not lost should the heirs get sued or divorced and, better yet, we assure them that their wishes will carry on for decades after they are gone, by passing the inheritance on to their grandchildren one day. Should disability occur, our clients have had their assets protected years earlier through asset protection planning. For many who come to us in their hour of need, without preparation, we take on the burden of helping them through the Medicaid maze and help them save and protect much more of their assets than they ever thought possible.

On the planning side, we talk to our clients about their hopes and dreams, despairs and disappointments. Then we craft a plan to reflect the client's life and lifestyle, taking into great consideration the needs and feelings of the heirs and how it will be received. We are thoughtful to avoid unintentionally hurting loved ones and creating rifts between them with well intentioned, but ultimately misguided, gifts and bequests.

Yet none of the above good works were what the client was referring to with her causal remark that "you give lawyers a good name". We also hold three to four seminars for the public each week where we invite hundreds of people to dinner at our expense and explain all they need to know about elder law and estate planning, providing professionally prepared materials for them to take home and study. We maintain a 150 page website for their further research and review, together with an online video seminar to watch if they wish.

Then we invite every person, regardless of their means, to come into our offices and spend up to an hour with us, free of charge, where we share the vast knowledge, experience and insights we have gleaned in over twenty years of exclusive practice in this area. We also analyze and critique their current planning, letting them know where they stand, what to do and why.

Finally, we advise countless people each day, week, month and year that they do not need our services, that they are fine for the time being with the plan they have and can afford to wait, when they would be better off doing their planning with another firm, and then refer them to one with more expertise in solving their particular issues. For clients who do need us, we search for ways to achieve their goals with the least expense possible.

Clients see that we derive as much satisfaction from telling them that they are fine, that they do not require our services, as we do when our services are needed. Clients see that we are just happy that they took the time to come in to see us. And when clients see that we are on their side, that our true purpose is to serve them without regard to ourselves, then they say "you give lawyers a good name".

By Michael Ettinger, Esq.

In our experience, a majority of New Yorkers are unaware (blissfully?) that New York State levies an estate tax.

New York's estate tax starts on estates over one million dollars. What is your estate for tax purposes? All of your real and personal property, your bank accounts, investments, IRA's, etc. as well as any life insurance that you own. Add it all up and, if you're under a million, then no problem.

But, if you're over a million, the tax rate starts at 41% (yikes!) and gradually goes down to about 10%. Below is a New York Estate Tax schedule prepared by our firm to help you see where you stand.

Fortunately, if you have a spouse, you can avoid paying up to about $100,000 of these estate taxes by creating two estates, one for the husband and one for the wife, and get two one million dollar exemptions.

For example, let's say a couple has two million in assets. Essentially, what happens here is that each spouse sets up a trust and we put one-half of the house and other assets into each trust. Both spouses are trustees, or managers, of both trusts. Now, say husband dies. Before, everything went to wife and while there is no tax on what you leave to your spouse, when she dies her estate has the whole two million and generates a $99,600.00 tax bill. Instead, with the two trusts, husband's assets stay in his trust, wife is in charge and can buy, sell, trade and spend. But when wife dies, husband's trust goes to the children, or preferably their inheritance trusts, and "bypasses" her estate. He passes one million tax-free. Her estate is also only one million and also passes tax-free. Savings = $99,600.00. Why don't more people do this? In fact they do. Ettinger Law Firm has used this technique for over twenty years in more than 10,000 estate plans to save thousands of New York families many millions in estate taxes.

Remember, you don't get the two exemptions just because you have a spouse. You only get the two exemptions if you set up the two trusts before the first spouse dies...in other words, if your estate is over one million dollars and you have a spouse, the time is now.

By Michael Ettinger, Attorney at Law

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Historically, estate planning consisted of setting up a will and leaving everything to one's children in equal shares, "per stirpes". The "per stirpes" is latin for "by the roots", meaning that if any of the children predecease their parents then their share goes to their children, if any.

Today, however, adolescence lasts much longer than it used to. Some say that "30 is the new 20" and, anecdotally, we see much evidence of this. Another recent phenomenon is children coming back home to live with their parents, for many reasons, but often having to do with their inability to deal with the vicissitudes of life.

In light of the foregoing, and the fact that trusts, which have become as common as wills today, may continue for many years after the death of the parent, new planning options are available to clients.

For example, one popular plan of distribution is 20% at age thirty, one-half of the remaining balance at thirty-five and the remainder at forty. The theory here is that the child can get the 20% and spend it all, but they have to wait five years before they get one-half of what's left and then, finally, ten years later, when they have hopefully made their mistakes and matured somewhat, they still have about one-half of the inheritance left. A twist on this plan is 20% on the death of the parent, one-half of the remaining balance five years after the parent's death and the remainder ten years after the parent's death. This latter formula is often accompanied by a "cap". For example, upon attaining the age of fifty, any undistributed amounts shall then be distributed outright to the adult child beneficiary.

Hopefully, this gives the reader some flavor of the versatility of using living trusts as an estate planning tool to continue the planning out for many years after the parents' death - perhaps enough time to give late blooming children time to fully develop.

by Michael Ettinger, Esq.

Same sex couples face unique estate planning issues since, in many jurisdictions, their unions are not legally protected. New York, for example, does not permit same sex marriages although the state does recognize same sex marriages performed elsewhere (i.e., Massachusetts, Connecticut, Vermont, Iowa and D.C.).

Living trusts are often the estate planning vehicle of choice for the GLBT community for a number of reasons.

1. They provide for your partner to be able to handle your assets should you become disabled. Powers of attorney and health care proxies/living wills are ancillary documents that also help insure that your partner will be in charge of all legal , financial and medical decision-making in the event of disability, free of interference from other family members.

2. Will planning has fallen into disfavor because (a) wills are significantly easier to challenge than trusts (b) a notice of the proceeding must be given to your closest legal heirs, providing them with an opportunity to object (c) the will is a public record, eliminating privacy, and (d) the legal process may be time consuming possibly delaying the surviving party's access to needed funds.

3. Simply putting your partner's name on your assets, or joint tenancy, seems to be a simple solution to many, until they learn of the pitfalls. First, for appreciated assets, such as stocks and real estate, there are tax disadvantages to receiving assets from a joint tenant. While inheriting from a will or trust at death eliminates taxable capital gains for the survivor, joint tenancy only eliminates one-half of those capital gains since you are only "inheriting" one-half of the property. Secondly, you may be exposed to the debts and liabilities of your partner. Thirdly, you lose control over where the assets go after your surviving partner dies. Perhaps you may want to provide for your partner for life, but state where the unused assets will go after he or she passes. Finally, once you make your assets joint with your partner, you may have more difficulty in getting those assets back in the event of a break up in the relationship.

4. Funeral and burial arrangements are often contentious matters. New York law allows you to designate the person you wish to have control of the arrangements as well as providing in writing the specific type of funeral and burial that you may wish.

5. On the other side of the coin, the inability of same sex couples to marry in New York does offer a couple of distinct Medicaid planning advantages in later years. Whereas for married couples the combined assets of the couple are available for the care of the ill spouse, such is obviously not the case for unmarried couples. So your assets are legally protected from your partner's cost of care. Further, while married couples who wish to plan ahead five years be setting up a Medicaid Asset Protection Trust (MAPT) may not name each other as trustee, such is not the case for unmarried couples. So if you wish to protect your home and life savings from nursing home costs, and cannot obtain long-term care insurance for any reason, you may each establish MAPT's for each other and need not go outside the relationship to put someone else in charge in order to protect your assets.

In our experience, crafting an estate plan for a same sex couple, that is thought through addressing all the potential social, legal, financial, health and tax issues, is a loving act that provides peace of mind knowing your choices will be legally protected and honored.