Estate Planning

July 15, 2011

Careful Consideration Required Before Selecting A Trustee

A trust is a centerpiece of many New York elder law estate plans. Trusts are usually superior to wills for transferring assets at death. Trusts are preferred because they can be used to avoid probate, reduce estate taxes, protect children from earlier marriages, and more. Essentially these entities remove assets from a personal estate and place it in a trust so that more wealth can be given to beneficiaries.

Transferring assets to a trust means that a trustee must be designated to manage the entity and its assets. Therefore, selecting an appropriate trustee is an important aspect of the New York estate planning process. A Yahoo Finance article this week discussed the role of the trustee and the need to give careful thought to trustee selection. Those who create a trust usually chose between an individual trustee (often a friend or family member), a professional trustee (like a bank, lawyer, or trust company), or a combination of both.

Trustees have a fiduciary duty to the beneficiaries of a trust, and so it is vital to select a trustee who can fulfill that duty. Trusts require the trustee to appropriately balance the needs of a current beneficiary while preserving capital for future beneficiaries. In addition, trustees must be able to file annual fiduciary returns. While friends and family members will usually try to act in the best interests of beneficiaries, they are often inexperienced with trust management. Difficulties often arise when family issues conflict with the best interests of the beneficiaries. Also, a trust may be held in limbo if an individual trustee dies or becomes incapacitated in some way.

July 13, 2011

Estate Plan Can Provide For Lifetime Care of Pets

by Ettinger Law Firm

Pet estate planning is growing in popularity as more jurisdictions have begun allowing residents to create legal documents to provide for their animals after death. Pet trusts are becoming an important part of the New York estate planning process as New York is one of forty five states that permit owners to create these entities.

Yesterday, North Jersey News discussed the increasing use of pet trusts across the country. Many claim that the widely reported New York trust created by Leona Helmsley for her dog, Trouble, spurred the rise in popularity of the animal care giving option. Many area residents consider their beloved dogs, cats, birds and other animals to be members of their families, and so it is logical for those individuals to provide for their pets as part of their New York estate plan. Pet trusts are legal agreements which explain how an owner wants their animal to be provided for when they are no longer around. This includes the ability to leave money for the animal’s care and designate specific individuals as trustee and guardian of the pet.

As with all planning documents, a New York pet trust should be carefully worded to ensure that animal friends are quickly turned over to designated caregivers when the time comes. Disputes may arise regarding the amount of money left to the animal, and so proper drafting of these trusts is essential. The basic amount to be left is usually reached by multiplying the animal’s expected lifespan by the annual cost of care. Discovering that cost involves going through pet records to get an accurate accounting of how much money is spent on the pet each year. Food, grooming, veterinary bills, and other expenses add up quickly–sometimes the trust may even be funded with several hundred thousand dollars.

July 11, 2011

Instructions Should Help Family Find the Information They Need

by Ettinger Law Firm

This weekend the Wall Street Journal published a helpful article discussing some important aspects of New York estate planning that many residents overlook. Besides creating documents like wills and trusts, the best preparation also includes clear instructions that help family members understand where and how they can access the information they need when a loved one passes on.

As our New York estate planning lawyers frequently advise, “letters of instruction” are often forgotten components of the process. These letters can include information such as online user names, passwords, military discharge papers, PIN numbers, and similar material. They are often kept in a safe-deposit box or with an attorney so that family members have access to bank accounts, can keep up with online payments, and perform similar tasks if necessary.

In today’s high-tech world, residents may also want to leave information related to their wishes regarding their online presence. This may involve social networks like Facebook and Twitter, blogs, or other internet sites in their control.

July 6, 2011

Celeste Holm’s Family Feud Highlights Importance of New York Inheritance Planning

by Ettinger Law Firm

This weekend the New York Times reported on the sad legal battles of 94-year-old actress and Broadway star, Celeste Holm. Ms. Holm gained famed as a leading film actress in the 1940s, starring in All About Eve and winning an Oscar for her performance in Gentleman’s Agreement. Now, however, Ms. Holm is making headlines for her 5-year legal battle with her sons over her estate. The story notes the potential for drama surrounded a New York inheritance and, as the author writes, is “a cautionary tale for families trying to manage one of our age’s emblematic conflicts, between elderly parents who want to live autonomously and adult children who want to protect them.”

The trouble for the family began when Ms. Holm (then 87 years old) began dating a man who was 46 years younger. When the man moved into Ms. Holm’s large Central Park West apartment her two sons became worried that the relationship would have ramifications on their inheritance. Shortly after, Ms. Holm’s son transferred her investments and apartment into limited partnerships and then arranged for the partnerships to be held in an irrevocable trust, naming himself as the trustee. The trust was scheduled to pay Ms. Holm $300,000 a year to cover her expenses.

These living trusts are popular legal entities than help families transfer assets at death while avoiding the time and expense of probate proceedings. However, it is imperative that the decisions are made in good-faith with the consent of those involved. That is where Ms. Holm’s family situation went awry. Following a family meltdown over the relationship with the younger man, Ms. Holm sued her son to overturn the irrevocable trust. The legal battle eventually lasted five years and consumed millions of dollars–taken from the very estate that was at issue. The two parties eventually settled, but the expenses of the fight had placed Ms. Holm in a tough financial situation. Ms. Holm and her now-husband remain in debt and they are unsure if they will be forced to move out of their apartment.
Continue reading

June 29, 2011

Dispelling Common Retirement Myths

by Ettinger Law Firm

On Monday the Metro West Daily News discussed some myths about retirement. Popular culture, water-coolers chats, and other daily interactions often spread misconceptions about what it means to plan for retirement and what it takes to be financially secure in the future. Many area residents put in a lifetime of hard work, and it is important that theirs effort not be compromised through misunderstandings about the retirement process or failure to conduct proper New York retirement planning.

The article noted that one of the biggest misunderstandings relates to the overall cost of retirement. It is often a mistake to believe that reaching a certain net worth or portfolio value will mean that one can retire in luxury. The expanding length of retirement is one of the main reasons that this is no longer true. Sixty years ago, most individuals retired at sixty-five years old and usually lived until they were seventy. With life expectancy now at eighty years and beyond, the total money needed to retire at a certain lifestyle has increased.

There is a significant difference between funding a five year retirement and one that may be twenty years or more. Most will not have a “magic number” that will guarantee decades of luxurious retirement. Instead, residents need to take what they have accumulated and conduct proper planning to maximize their retirement value while preparing for contingencies.

Another of the myths shared was that individuals need not worry about planning for nursing home costs, because Medicaid will cover it. However, as anyone who has had to go through the process can attest, it is not that easy. Various requirements of need must be shown before the program will provide aid. In particular, if nursing home care is needed, there is a five year “look back” period. That means that Medicaid investigators will examine the asset transfers that have been made in the last five years to determine if property was given to others that could have been used to fund long-term care. Area residents can avoid this issue by having a proper New York Medicaid strategy in place to protect assets while ensuring access to the care they need.

The importance of preparation is why the article mentioned that perhaps the most harmful myth about retirement is that someone does not need any help in planning for it. Retirement planning encompasses a variety of components, each of which may require complex understandings of tax, financial, and legal issues. Without assistance strategic mistakes are often made.
Continue reading

June 27, 2011

Marriage Equality May Change New York Estate Planning Needs for Same-Sex Couples

by Ettinger Law Firm

Late Friday evening New York Governor Andrew Cuomo signed a bill that had just been passed by the state Senate giving same-sex couples the right to marry in New York. The signature was the culmination of an intense week of politicking at the statehouse which drew national attention. Passage of the measure will have important consequences for the lives of same-sex couples in our area, not least of which include effects on those individuals’ New York estate plans.

New York became the sixth state to allow these unions and in doing so provided same-sex partners with a variety of financial benefits and legal rights. Before having the option to marry, many gay couples conducted unique planning in order to protect their assets, provide for their loved ones, and plan for their futures. With passage of the gay marriage law, those couples may rightly wish to reevaluate to understand how marriage rights will affect their previous New York estate planning efforts.

This weekend the New York Times blog discussed the way that the measure will alter the financial lives of gay couples who decide to marry. For example, those with large estates may now benefit from the unlimited amount of assets that New York allows their spouse to transfer at death. Previously, those individuals were subject to an estate tax on all gifts over $1 million. The federal tax will not be affected.

Also, couples may now file joint state income tax returns. Depending on the income level of those individuals, this may either increase or decrease the couple’s overall state tax burden. However, spouses in gay marriages must still file individual federal tax returns.

Partners who had previously taken advantage of domestic partnership insurance will no longer be required to pay state taxes on those benefits (they will still owe taxes at the federal level). New York state employees will now be able to treat their spouses like their heterosexual counterparts, making them eligible for health insurance, pension survivor benefits, and other rights. In addition, same-sex spouses now have access to workers’ compensation benefits and the ability to bring wrongful death lawsuits on behalf of their partner.
Continue reading

June 24, 2011

Adult Children Often Remind Senior Parents of Estate Planning Importance

by Ettinger Law Firm

Proper New York estate planning has ramifications beyond the lives of the planners themselves. Whole families are impacted by these decisions. The far reaching consequences mean that it is often appropriate for concerned family members–like adult children–to remind parents of the value in proper estate preparations.

An article yesterday in the Monterey County Herald discussed the role that adult children often have in encouraging their parents to adequately create and update estate plans. A concerned daughter had contacted the paper to ask for help working with her parents through the process, because she noted that “their estate is a mess.” Apparently several years ago the woman’s parents contacted a small firm with only one office seeking help to create a living trust. The trust was created and then forgotten about. Several years later the family wanted to update the plan. However, the employee who created that trust had left town without leaving any contact information. The senior couple eventually gave up trying to contact the man and have resigned themselves to being satisfied with the outdated documents.

The couple’s daughter explained that, like many area residents, her parents did not like to discuss the issue. The adult child knew that her parents’ most valuable real estate holding was not in the trust and she was completely unaware if they had valid wills, list of assets, life insurance, or burial insurance.

Expectedly, the daughter was strongly encouraged to have her parents get in touch with a new, competent estate planning professional to update the plan. It was explained how it was imperative that the parents trust, will, and medical directives be in place and reflect the couples’ current assets and wishes. The failure of valuable assets to be included in the trust would lead to unnecessary and costly probate.

These issues are often tough for many parents to discuss with their children. That is why it is sometimes necessary for children and other loved ones to take time to ask about estate planning matters and provide encouragement to ensure that the task is not ignored. The protection of important assets, security of long-term care plans, and necessity of clear medical directives affect everyone in a family.
Continue reading

June 22, 2011

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

by Ettinger Law Firm

Earlier this week an article authored by our New York estate planning lawyer, Bonnie Kraham, Esq., appeared in the Times-Herald Record. The story discussed the need to avoid two of the biggest estate planning pitfalls–failure to address all relevant issues and failure to properly update the plan. The planning process is usually more than the creation of a single document or solution to one particular issue. Instead it should be a comprehensive review of a client’s entire situation. The plan should address potential disability issues, minimize or avoid estate taxes, streamline the cost and duration of the settling of an estate after death, and protect assets from nursing home costs. Seeking professional help in this area ensures that each and every one of these issues is addressed and included as part of the overall plan.

Ms. Kraham explained the importance of taking stock of life contingencies that may alter the legal position of an individual and affect an estate. New marriages, divorces, children, and deaths have significant impacts on New York estate planning matters–a proper plan accounts for them. One example is a situation where a client’s children are in a second marriage but have their own children from a previous marriage (the client’s grandchildren). Special steps may need to be taken to protect the rights of those grandchildren to appropriate assets from the client. If the client’s child predeceases her second spouse then the family assets may pass to the second spouse while leaving the grandchildren with nothing. An inheritance trust is one way to avoid this scenario and provide protection to all those in the family who need it.

Besides accounting for as many contingencies as possible, a proper estate plan must also be updated on a regular basis. There is no way around that fact that life changes will alter the family situation in ways that may require modification to a plan. Also, changes in the law may also have occurred which require alterations to previous strategies. Therefore, our attorneys suggest that the plan be reviewed at least once every three years. The important point is to remember that the best plans are not documents that are drafted and then collect dust in a drawer for decades.
Continue reading

June 20, 2011

Estate Planning May Be A Family Decision

by Ettinger Law Firm

New York estate planning is often delayed by some local residents because it generates unpleasant thoughts about mortality, personal loss, and difficult healthcare issues. Like other uncomfortable tasks, many community members put off the process even when they honestly accept the need to properly get their affairs in order. In many cases, proper planning is only commenced when an entire family comes together to discuss the issue.

Yesterday, a Question and Answer section of the Northwest Times included a query from a woman who was having trouble getting her husband to meet with an attorney to discuss their estate plan. She explained how the two of them had scheduled several meetings but that he had always come up with an excuse at the last minute to cancel it. She was asking for advice on ways to better explain the importance of the issue to her husband and get him to proceed.

It was shared how individuals have different reasons for their reluctance to getting the ball rolling. For some, there is a misconception that they do not have enough wealth to require any kind of plan. Others wrongly assume that they do not really need a will or other fancy legal documents because they know someone who died without one. Still others have concerns about the time and cost of these plans.

The story concluded by advising the woman that she might want to share with her husband that these plans are actually important family decisions that affect everyone, including children. Besides ensuring that as many assets are passed along to them as possible, these plans also help with issues like who will raise the children in case something happens. Proper estate planning requires careful thought, discussion, and document review. The best plans sometimes require entire families to explain their thoughts, concerns, and goals. These and similar decisions are much better made by family members ahead of time than by state lawmakers and courts using default rules.
Continue reading

June 16, 2011

Succession Plans Are Essential for Family Businesses

by Ettinger Law Firm

Emil Deister founded the Deister Machine Company in 1912. The business makes pieces of equipment known as vibrating screens which are used in the mining industry to separate different sizes of gravel, stone, coal, and sand. Despite ups and downs, the company is still in business today shipping products around the world and employing 160 individuals in its four plants. In fact, not only is the company still running, but because of solid business succession planning it is still family owned and operated.

This weekend the Journal Gazette profiled the current CEO and chairman of the enterprise, 82-year-old Irwin Deister Jr. The man was recently honored by his company for his 60th official year as an employee of the family business. He represents the third generation of family leaders of the company founded by his grandfather.

Unfortunately, the Deister family is unique its ability to maintain its family business throughout the years. Ninety percent of American businesses are family owned, but less than one-third of them survive to the next generation. Even fewer make it into the third generation like Deister Machine Co. Many family businesses in our area fail to survive throughout the transitions because of a lack of a New York business succession plan.

The process of ensuring the smooth transition of a business into the next generation is a difficult one for many. It involves tough discussions about mortality, family preferences, and conversations about letting go of a venture that may be a life’s work for those involved. Yet the challenges of the process should not be a deterrent to responsible planning.

For example, while still going strong after 60 years on the job, Irwin Deister and his family co-owners have long had a proper succession plan in place to ensure that the business carries on. He has worked with his cousin to divide responsibilities. Details in his will provide for his interested relatives to buy his shares of the business. In addition, the family has had preparations made to determine which of the younger children are interested and capable in succeeding in running the operation.
Continue reading