Articles Posted in Estate Planning

A recent Forbes article put out yet another call for residents to take stock of their estate planning details by the end of the year to take advantage of a favorable tax situation that may be gone soon. The story notes that interest in the gift and estate tax rates have been eclipsed in recent weeks and months over calls for overall tax reform, including changes to income tax rates. But that doesn’t mean resident should forget the soon-to-be-gone rates.

Our New York elder law estate planning attorneys know that everyone’s situation is different, and it is impossible to predict what the rates might be in the future. Yet, even a quick look at the current political dynamic suggests that those who might include gifting as part of their plan are well advised to take advantage of current rates before year’s end. Right now, when inflation is factored in, individuals can transfer up to $5,120,000 tax free. That level will likely rise in just over five months.

Per tradition, Congress is yet to put together a permanent plan in place. When these original cuts were passed in 2001 with progressive cuts to 2009, most assumed that a permanent plan would be in place by the end of that decade. Not so. In fact, Congress’s delay meant that there was no estate tax in 2010. This is why very wealthy individuals who died in that year–like George Steinbrenner–were able to pass on their entire estate tax-free.

This weekend Lake County News published an interesting story noting how so many community members spend more time planning their summer vacation than their inheritance and long-term issues. Think about it: how many different contingencies are accounted for when heading away from home for a one to two week trip? Pet sitters are hired, mail is paused, email auto-responders are set-up, plants are moved inside and friends are asked to water them, doors are locked, and a spare key is left under the mat in case of emergency. We take these steps just in case, so that we can enjoy our time away with the peace of mind that everything back home can be dealt with in most situations.

In many ways New York estate planning involves the same forethought–understanding possible issues down the road and taking steps to account for those contingencies. Yet, vacation planning is done instinctively while estate plans are often delayed or ignored.

Considering the importance that this planning has for one’s future well-being and that of family members, it is sometime illogical for New York elder law estate planning to be ignored by prudent local residents. What gives?

One of the more unique estate planning feuds in recent memory remains under investigation, three years following the death of the family matriarch that started the debacle. While few families descend into physical violence, our New York estate planning lawyers appreciate that this case is a stark reminder of the mix of extreme emotions often present in these cases.

According to a Seacoast Online report, when Eugenia Boies died in 2009 at the age of 96 she left a family fortune valued at $12 million. The estate had mostly passed to her when her longtime husband passed away in 2007. The family wealth originated on the husband’s side of the family, dating as far back as a Civil-War era gunpowder company. The wealth included over a million dollars in the bank, real estate in North Hampton, and millions in stocks.

Before her death Eugenia named her nephew, Peter, as one of three executors of her estate. Shortly after Eugenia passing, while the probate process was underway, Peter and his wife were awoken in the middle of the middle to a drive by shooting, with dozens of high-caliber bullets shot into the family’s bedroom. The family home was riddled, but fortunately the couple survived the ordeal.

Our New York estate planning attorneys frequently remind residents that it is important to update an estate plan following major life changes, such as a divorce or marriage. However, that basic advice may be misleading, because in some cases it is crucial to consider updating the plan before the major life event takes place. That may be especially true in the case of second marriages.

A recent Elder Law Answers article summarized a few points to consider at this time:

-Make sure both spouses are on equal footing. Secrecy at this time is toxic. Both partners should take an inventory and understand what assets and debts are on the table. All planning extends from that base.

Taxes undoubtedly play a determinant role in New York estate planning. Understanding how assets can be transferred and passed on while incurring the lowest tax burden is crucial. Yet, it is a drastic oversimplification to assume that planning involves only looking at taxes. The “human” element is often even more important. Each New York estate planning lawyer at our firm understand that creating the best possible plan for each family requires an understanding of the unique family dynamics at play.

These family issues are not always easy to discuss. No one necessarily enjoys sharing information about potential family conflicts, personality issues, or other challenges which influence these decisions. However, as a new article in Financial Planning recently argued, failing to address these details often means that a plan will not work as needed.

What are these “human” factors beyond the legal, tax, and technical issues? The story summarizes them as “lifestyle choices, drug addictions, religious practices, health concerns, charitable goals, and preference regarding the disposition of collectibles and other personal property.”

No legal news item last week was bigger than the U.S. Supreme Court’s decision to uphold virtually the entirety of the Affordable Care Act (so-called “Obamacare”). In a move that surprised many observers, in a 5-4 decision the Court deemed the controversial “individual mandate” portion of the measure constitutional on grounds that it constituted a tax. While the court held that the Congress could not pass the law pursuant to its power to regulate interstate commerce, it did find it a permissible use of the legislature’s taxing power.

Now that the matter is reasonably settled, local residents may be wondering how the law affects their New York elder law estate planning, if at all. A recent Smart Money story talked about some of these issues, explaining how certain tax matters will indeed change in the upcoming year as a result of the decision.

A few select rates will change next year. For example, an extra .9% Medicare tax increase will start for various individuals making over $200,000 or $250,000. In addition, some investment income (long-term capital gains and dividends) may face a 3.8% “Medicare contribution tax.” This is in addition to the rising rates if the “Bush tax cuts” expire without renewal.

Most local residents understand that a New York estate plan needs to be updated to account for changing life circumstances. If one is divorced, has a child, has a falling out with a relative, acquires a significant asset, or experiences countless other life changes, then planning documents need to be altered to take that into account.

Unfortunately, some are under the mistaken assumption that this is a very simple, straightforward process involving some changes to a will. Our New York estate planning attorneys appreciate that this sort of thinking often leads to serious problems down the road. Failure to take a full range of issues–beyond a will–into account following life changes may mean one’s plans do not work as desired when the time comes.

For example, the Alternative Press shared an interesting story about a man who wanted to remove a daughter from an inheritance. However, the man only updated his will (and nothing else). The result was the that daughter still received almost half of the man’s estate

What is an “estate” anyway? Many local residents mistakenly assume that they have no use for New York estate planning, because they don’t really have a large cache of assets to pass on or save from being consumed by taxes. After all, when most people hear the word “estate” they think of a palatial home surrounding by lush gardens and filled with shimmering treasures and majestic antiques. Not many have that kind of estate.

But it is crucial to understand that no large “estate” is necessary to get value out of meeting with a legal professional to plan. That is because even if you do not own a big house, virtually everyone has some estate to protect: including personal property, bank accounts, retirement plans, life insurance, and more. Failure to conduct any estate planning means that when you die your estate will pass to others via intestacy laws. These are default rules in each state which essentially give priority to certain individuals regarding inheritance. A recent Forbes article shared a helpful new website (www.mystatewill.com) which outlines intestacy rules in each state. You can visit the site and see how the default laws in the state would divvy your property depending on your family situation.

For example, in New York if you have an estate worth $100,000 and had a living spouse and two living children, then the spouse will receive $75,000 and each child will receive $12,500. However, it is unlikely that the $100,000 is in the form of a big pile of cash that can be easily divided. Instead, it might take the form of a home, retirement plan, or other physical property. That means splitting it up as required will present serious problems. Not only does estate planning allow one to decide what percentage of an estate each person will get, but the exact form of the inheritance can be decided–such as the spouse getting the house, the child getting the second car, or whatever other combination fits in your case.

Family inheritance disputes are legion. In most cases that make headlines, a famous individual passes away without conducting thorough estate planning and various family members publicly feud to get their fair share of the individual’s wealth. Our New York City estate planning attorneys often advise clients that these sorts of disputes are not only for the famous or even the wealthy. Family disagreements regarding an inheritance are quite common, particularly when no planning is done and the matters must be left up to the court-centered probate process.

Not only that, but sometimes feuding occurs even before the family matriarch or patriarch passes away.

For example, a recent Sacramento Bee letter explored a situation where two siblings seemingly isolated an aging mother from other siblings. Claims of undue influence and abuse were made. The three ostracized siblings were left wondering what options were available to ensure they received their share of the inheritance.