Estate Planning

October 2, 2012

Will Estate Tax Burdens Affect More Families in 2013?

The occupancy of the White House and party control in the U.S. House and Senate will undoubtedly influence the future tax situation at a federal level That includes the tax that most immediately think of when considering their inheritance–the estate tax.

Last week the Wall Street Journal picked up on a new report that argues that the estate tax burden may affect a large number of households next year. The report–crafted by the well-known consulting group, LIMRA–suggest that without changes from the current trajectory, 15 million U.S. families may have some estate tax liability next year. That would represent 1 in 8 households–a far cry from the assumption that this is a concern only for the super-rich.

The findings were reached by analyzing the Survey of Consumer Finance from the Federal Reserve Board. LIMRA noted that many households might be pulled into the bracket where the estate tax applies because of the wide range of assets included in estate tax calculations–things like real estate, business ownership, and life insurance values.

October 1, 2012

Estate Values Grow Beyond the Grave – The Marlon Brando Example

by Ettinger Law Firm

The importance of selecting a trustee to manage a trust or otherwise handle the affairs of an estate is hard to underestimate. There is a misconception that this task is always a “one-time” affair, with the individual (or individuals) taking care of various paperwork details after a death, and then being done. That is often not the case. Depending on the circumstances of one’s estate planning, the role of a trustee or others involved in these matters can last for years–or even decades.

One situation where that is vividly displayed is with celebrity estates–or those with extensive intellectual property rights. For example, the Hollywood Reporter discussed a legal fight this week involving Madonna and the estate of Marlon Brando. The disagreement stems from royalties that the estate claims it is owed after Madonna used images of Marlon Brando during her concerts. The images are a staple of Madonna’s performance of the song “Vogue” in which the lyrics include Brando’s name.

According to the story, Madonna planned to pay $3,750 to the estate every time that the image was used (once per concert). This fee was the same paid to the estate of a few other celebrities mentioned in the act–James Dean, Greta Garbo, and more.

September 28, 2012

Substitute Teacher Stands to Inherit $10 Million from Distant Relative

by Ettinger Law Firm

It is a common TV and fiction fantasy: your life changes in the blink of an eye when you discover that you’ve inherited a fortune from an unknown relative who passed away. While the dream is far-fetched and rarely based on true-life, it is not entirely without precedent. Every once in awhile a story breaks involving an individual who inherits a significant sum of money due to state intestacy rules from someone to which they were related but did not really know.

Latest Case

For example, the Las Vegas Sun reported this week on the latest developments in a case where a substitute teacher found, to her surprise, that she was slated to inherit upwards of $10 million from a distance relative.

September 27, 2012

Keeping an Eye on Upcoming Supreme Court Cases

by Ettinger Law Firm

Late September is well-known as the official start of autumn. In the legal world, it also marks the beginning of the new United States Supreme Court term. Many legal observers keep close watch of court actions at this time to figure out what major issues might be decided in the upcoming year. That is because the Court is currently deciding exactly what cases to take for the upcoming term (which begins in October). Thousands of appeals are filed, but only a small fraction will actually be accepted. In many ways it is much harder to get a legal case heard than it is to actually win the case in front of the Court.

Some cases that the high court might hear this year could have implications on elder law or estate planning issues. The most high-profile of these related to same-sex marriage. There are two separate cases that the Court might take, both which would have different effects on the rights of same-sex couples–and their planning.

1) Constitutionality of DOMA: The Defense of Marriage Act (DOMA) has long been a bane for same-sex couples seeking equality in their planning. The law defines marriage as only between a man and a woman for federal purposes. That means that even couples legally married in their state, like New York, receive no federal recognition of their union. Appeals Courts have consistently found DOMA unconstitutional. The law continues to force same-sex couples to work around their lack of recognition of their union in estate planning and long-term care strategizing.

September 24, 2012

Death & Student Loan Obligations

by Ettinger Law Firm

Not many years ago student loans and estate planning were rarely discussed in the same sentence. That is because in decades past far fewer individuals took out student loans and, even when they did, the size of the loans were smaller. Things are changing, however. Higher education is becoming more and more crucial to long-term employment and the cost of that education is increasing. These changes mean that more individuals have to take student loan obligations into account when conducting long-term financial planning. Those loans may the planner’s own loans or (even more likely) loans for children on which they co-signed.

In any event, more and more families have to take these issues into account in long-term planning. One issue on which there is much confusion is the discharge (or lack of discharge) of these obligations upon death.

Student Loan Obligations & Death

September 21, 2012

Confusion, Disagreement Surrounding Painter Thomas Kinkade’s Wishes

by Ettinger Law Firm

An estimated one in every twenty homes contains a copy of the work of Thomas Kinkade–the painter best known for traditional works of gardens, cottages, streams, and small town centers. Considering the mass marking and popularity of his work, Kinkade was able to acquire a considerable fortunate over the years. Unfortunately, Kinkade died this April at the age of 54. Like many others in his situation, disagreement has reigned in the resolution of his estate.

Kinkade was married, but his wife filed for divorce two years before his death. He has four children with his wife. For the last year and a half before his death he lived in his home with his girlfriend.

Estate Dispute

September 19, 2012

Political Bequests in a Will

by Ettinger Law Firm

When an individual uses only a will (instead of a trust) and does not have professional advice, there is a greater chance that the intended beneficiaries will not receive the property that the testator (the person who creates a will) wanted them to receive. For one thing, the will itself may not be executed properly. At other times, the beneficiary may pass away before the testator’s death without the will being updated. At still other times there may be unique complications with the ability to give in certain ways. Take, for example, political gifts.

Leaving Money to a Political Party in a NYC Will

Many community members have strong attachments to a political party and may want to leave part of their estate to that party. However, this presents some complications, because there are special rules–campaign finance laws–that often apply to what gifts can be given to these parties (or candidates). It is crucial to take those rules into account. Otherwise, the final decision is left up to the court, with extreme uncertainty as to where the money will actually go.

September 14, 2012

The Bernard Matthews Case: Putting a Mistress in a Will

by Ettinger Law Firm

Last week AOL Money shared the story of yet another estate planning feud–this time involving Turkish business magnate Bernard Matthews who died two years ago when he was 80 years old. Like many others, Matthews family life did not quite fit the traditional mold. He married his wife decades ago and soon adopted three children. Later on he had a relationship with another woman who bore him a son. Still later he started a long-term relationship with a third woman, Odile Marteyn. He remained in that relationship with Marteyn until his death. Through it all he never divorced his wife, and did not marry Marteyn after his wife’s death.

As it is easy to guess–the convoluted family arrangements spawned bitter feuding following Matthews’ death.

From the information that has been provided so far, it seems clear that Matthews’ wished to have part of his estate go to Marteyn. The estate is worth roughly $64.5 million. Part of that includes a villa in St. Tropez worth about $19 million. Matthews wrote a letter to his children outlining his wishes, noting that Marteyn “has supported me unfailingly for many years and particularly so during my recent illness. Without such support, I might not have been able to continue directing our family company for our mutual benefit.”

September 12, 2012

Fundamentals of Estate Planning: Naming a Trustee

by Ettinger Law Firm

A trust is the central legal tool used to provide the flexibility and protection most residents use when planning for their long term financial, inheritance, and health care needs. There are many different types of trusts which provide different benefits to residents; each type comes with its own rules. However, one common theme is that the when creating a trust a trustee must be named. Deciding upon the right trustee in your case is crucial to ensure that things proceed as you intend when you are gone.

The exact role of a trustee varies, depending on the long-term plans of the individual who creates the trust. Yet, in general the trustee will manage the assets and make distributions from it according to predetermined rules and wishes. Some trusts will last for decades, and so the choice can truly can set the course for one’s long-term legacy.

A Wall Street Journal post this week touched on the importance of the trustee selection topic, and provided a list of key factors that should influence the final decision, including:

September 10, 2012

DOMA Challenges Mount

by Ettinger Law Firm

The Defense of Marriage Act continues to make headlines, as several states have now challenged the constitutionality of the federal law which defines marriage as exclusively between a man and a woman. New York is among three states (including Vermont and Connecticut) which currently allow same-sex couples to wed and are challenging the law which denies federal recognition to those state marriages. The outcome of the legal challenges will have significant estate planning consequences for local same-sex couples.

The underlying legal issue is an old one–the intersection between federal and state law. The states are arguing that the federal government does not have the power to regulate marriage and family relationships–those issues should be left entirely up to the states. DOMA goes too far, they say, by enacting clear harm on married families in individual states.

Estate taxes are at the root of the issue. The most high-profile DOMA plaintiff, Edie Windsor, was forced to pay $350,000 in estate taxes after the death of her long-time partner (and wife). Because her wife was of the same gender, the IRS did not allow her partner to transfer assets under traditional marital deduction rules. This enacted a very real financial penalty which would not have applied to opposite-sex couples. In this way the state argues that the federal government unconstitutionally “unmarried” the plaintiff.