Estate Administration

August 18, 2011

Estate Plan Still Needed to Divide Properly Equally Between Children

Some local residents believe that they do not need to worry about creating a New York estate plan if they only want to divide all of their assets between their children equally. These community members are under the incorrect assumption that the default legal rules will ensure that everything works out as they wish. Unfortunately, this is rarely the case.

This weekend My SA News discussed this all-too-common mistake of voicing intent to be even-handed with asset distribution but not taking the proper legal steps to carry out that intent. For example, the story used the real example of a family with two parents and five daughters. Both parents had been married to one another their entire lives with no divorces. They did not conduct any estate planning because they always explained that they wanted everything to be divided equally among their children at their death. They did not even have wills drafted.

However, their actions did not reflect that voiced intention, and there was no plan in place to protect the family. For example, after the father died, the mother deeded the family home to the first sister. Later, a second sister deeded another house to the mother, but upon the mother’s death that sister wanted the home back. A third sister visited an attorney and asked for help. She wanted the family home and the second home to be divided equally among the children as the parents always wished.

August 10, 2011

New Website Services Offers Online Method of Distributing Personal Property

by Ettinger Law Firm

Most New York estate plans have various components and include several legal documents. Most will have a Revocable Living Trust, Medicaid Asset Protection Trust, or both. A pour-over will is also frequently added as a failsafe to cancel an old will and ensure that any assets left outside the trust are brought into it after death. The plan will have various other facets, including a Power of Attorney, Health Care Proxy, burial instructions, and other final instructions for a family.

In addition, a common practice is to leave a list which indicates which valuables will go to each heir. This list is usually handwritten and specifically requests that a trustee honor its terms. In this way, if a client changes their mind about the distribution of their personal property they can simply handwrite a new list without needing to visit their attorney to cement the change. This step is important because many local families experience in-fighting when trying to distribute sentimental personal property without the guidance offered by a New York estate plan. When more than one family member wants the same item, the stage may be set for strong disagreements that often profoundly and permanently affect relationships. Most family members are under immense stress at the time of a passing which makes the situation even worse.

A few online web services have recently sprung up which claim to help families distribute this property in a fair manner. For example, one of the more popular services is eDivvyup. The website essentially sets up a family auction using non-monetary “credits.” A family first selects an “executor” to set up the auction by cataloging personal items, inviting family members to participate, and assigning credits. Each family member then visits the site and places bids on items of interest to them using the non-monetary credits they are provided. The auctions usually work like eBay, spanning anywhere from a day to several weeks. The goal is that by the end of the auction each family member will have gotten the fair chance to indicate which items mean the most to them.

May 23, 2011

New York Estate Planning is Much More than Wills & Trusts

by Ettinger Law Firm

When many area residents are told to consider visiting a New York estate planning lawyer their mind immediately envisions someone who will craft a will or a create a trust. However, estate planning is much more than document creation. Instead, it is best viewed as a process by which an individual works to eliminate future uncertainties and reduce potential financial complications for their loved ones. Wills and trusts may be a component of that process, but they are by no means its sum total.

This multifaceted approach to estate planning was nicely summarized this weekend in an article at Today Online. Most local community members spend a large part of their lives on asset accumulation–the process of building up their estate. Yet the important considerations of asset preservation and distribution are often given only minimal thought. That is where the New York estate planning attorney comes in.

Beyond mere drafting of wills and trusts, these professionals are capable of helping you determine what strategies will ensure that extended medical costs, taxes, and other factors swallow as little of your accumulated wealth as possible. This may involve the creation of a Medicaid Asset Protection Trust or perhaps advice on the acquisition of long-term care insurance. In any event, the most important part of the process is figuring out what needs to be done to best save your wealth–the creation of documents to actually carry out those wishes only occurs later.

In addition to preserving your estate, the planning process also involves a discussion of its ultimate distribution. This includes both ensuring that your estate is divided as you wish but also that the division occurs in as quick and straightforward a manner as possible. Many clients remain surprised by the type of advice and information that they receive about how their estate can be distributed. For example, many conditions can be placed on when an inheritance is dispersed or how it is spent for certain family members. The options are essentially unlimited. Understanding those choices and matching them with your wishes is a vital part of the process.
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April 4, 2011

New Estate Tax Rules for 2011: Portability

by Ettinger Law Firm

Over the last two years, four sets of estate tax rules have been in effect, with the individual exemption ranging from $2 million (2008) to $3.5 million (2009) to unlimited (2010) to $ 5 million (2011). Besides these varying exemption levels, another major change in the new estate rules includes the “portability” factor.

Portability allows each partner of a married couple to use the rest of the other’s estate-tax exemption. It facilitates planning when one spouse has a relatively large, indivisible asset.

The Tax Relief Act of 2010, Title III provision illustrates how portability works:

December 20, 2010

How Disclaimer Trusts Work

by Ettinger Law Firm

by Michael Ettinger, Esq.

Commonly used in estate planning today, disclaimer trusts allow the surviving spouse great flexibility in optimizing estate tax savings.

Here’s how they work. Each spouse sets up their revocable living trust. Husband and wife are co-trustees of his trust, using his social security number and, similarly, they are both co-trustees of her trust with her social security number. Let’s say husband dies first. His trust says “leave everything to my wife except that, whatever she disclaims, i.e. refuses to take, will remain in my trust. The disclaimer is a legal document that lists the assets disclaimed and their value. Wife remains as trustee on husband’s trust after he dies and may use the funds in his trust for her health, maintenance and support. She may also remove 5% of the trust every year for any reason or $5,000, whichever is greater.

October 25, 2010

The Race to the Courthouse

by Ettinger Law Firm

We received a call last Friday from a woman who said that her father had died but her stepmother was claiming that he did not have a will. The daughter was certain that he did, in fact, have a will.

What happens in such a case? Regardless what the daughter believes, unless a will can be produced there is no will. A check of the county probate court would be in order as some clients traditionally filed their wills in court for safekeeping, but this is rarely done today. There is also the possibility that the father destroyed the will he had, for whatever reason.

Another possibility is that all of the assets may have been made joint with the father’s second wife and that she was also named beneficiary of any other assets, such as IRA’s, annuities and insurance policies. In this case, all of the assets pass to the surviving spouse without any court proceeding and there is no need for a will or, if there is a will, there is no need to file it.

September 8, 2010

What is Elder Law Estate Planning?

by Ettinger Law Firm

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.

June 28, 2010

“You Give Lawyers a Good Name”

by Ettinger Law Firm

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.

May 13, 2010

Pitfalls of Will Planning

by Ettinger Law Firm

By Michael Ettinger, Esq.

So many clients are advised that they need a will. In fact, will planning is becoming obsolete for persons over sixty for many reasons.

Instead of actually solving problems, wills often create them. First, they must be proven to be valid in a court proceeding, the infamous probate, for estates in New York over $30,000.00. Court proceedings can be expensive, time-consuming and things often go wrong. Also, when the client dies, that will is usually out-of-date, having been created decades before. The executors may be the wrong persons, the beneficiaries or their percentages may be wrong or other changes in the family have not been taken into account.

May 3, 2010

The Stealth New York Estate Tax

by Ettinger Law Firm

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.