Estate Planning

February 11, 2014

Estate Battles the IRS – The Michael Jackson Example

When most hear the phrase “estate battle” the mind immediately jumps to fighting between families. Sadly, in the tumult of a passing, it is not uncommon for even close relatives to disagree sharply over how an assets should be divided. However, estate fights can also refer to legal problems related to taxes and the IRS. Tax matters are intricately woven into estate matters, and when problems arise, you can be sure that the IRS will be ready to defend their position in court.

How Much Was Jackson’s Estate Worth?

To understand how these IRS estate battles often play out, one need look no further than continued wrangling over perhaps one of the largest estates in recent memory. Famed entertainer Michael Jackson died in 2009. However, the estate is still fighting with the Internal Revenue Service regarding how many taxes need to be paid.

February 7, 2014

New York Gift Tax Calculations May Change Soon

by Ettinger Law Firm

This week we discussed the growing belief among policymakers that estate tax changes are on the way for New York. Governor Cuomo proposed changing the exclusion rate for the NY estate tax up to the federal level ($5.25 million now and pegged to rise with inflation). This would be accompanied by a lowering of the top tax rate from 16% to 10%. Altogether, this represents a positive step for those hoping for a simpler, smaller estate tax bite.

However, less discussed are other changes that the Governor propose be included with the tax overhaul. Specifically, as noted in a Wealth Management story from last week, taxation on gifts will be folded into these total estate calculations. The gift issue is important, because it may lead some New York resident to alter their long-term strategies immediately.

Gift Taxes in New York

February 6, 2014

Federal Charitable Deduction Debate Continues

by Ettinger Law Firm

In December we shared information on proposed changes at the federal level which might limit the tax-saving benefits of charitable deductions. President Obama previously suggested limiting certain charitable tax breaks for high earning individuals. This possible change was just one part of large ideas about re-writing significant portions of the U.S. tax code. Many are hoping to simplify the code in an effort to increase transparency.

The charitable deduction change proposal in particular drew the ire of many when first suggested. Now a large group of sitting U.S. Senators are adding their names to the effort to protect the charitable deduction status quo.

The Senate Letter

February 3, 2014

Clamor Continues Around State Estate Tax – Are Increased Exemptions Coming?

by Ettinger Law Firm

The New York Times reported late last month on a growing trend across the country–discussions about lowering estate tax obligations on state residents. The estate tax is the bite the government takes out of an individual’s assets before they go to heirs. There are two layers of tax, at the federal and state level. Under current law, the federal tax kicks in on all assets over $5.34 million for individuals at a top rate of 40%.

But the federal tax is not the only concern of residents, because many individual states have their own tax, including New York. The New York tax starts far lower–at $1 million. This means that even those residents who have no concerns about the federal estate tax still must account for their obligation under state law.

Lower NY Estate Taxes

January 31, 2014

NFL Players & Estate Planning Errors – It Can Happen to Anyone

by Ettinger Law Firm

For sports fans, all eyes this weekend are planted squarely on New York City with the Super Bowl set to kick off early Sunday evening. Beyond the usual chatter about who will win and lose, many commentators are discussing how this single game will impact the long-term legacy of many players in it.

Of course, at the end of the day, this game represents just a single game in a career. And for many players, that career is relatively short-lived. Football is a demanding sport, and it is not uncommon for players to retire in their late twenties or early thirties. It is only a rare few who play successfully into their late thirties.

This presents an unique dilemma for players who must then find other careers and/or properly manage their affairs early in life ensure financial stability for what is hopefully a many-decades long retirement. As you might imagine, many players are clumsy in this regard, making a plethora of estate planning mistakes that cause harm to themselves and their families down the road.

January 27, 2014

Understanding Social Security Benefits for Seniors

by Ettinger Law Firm

The words “Social Security” remain synonymous with retirement benefits for seniors. Earlier generations grew up with the understanding that Social Security would provide an income net in their golden years, allowing a modest but safe retirement. However, the current generation does not have nearly the same picture of the system. Political debates are daily filled with arguments about the “impending” collapse of the system and the bare bones support given to those on the program.

For many New Yorkers, Social Security represents only a small part of their retirement plans. Still, considerations must be given in estate planning to when one should begin collecting Social Security. There are different options for taking early withdrawals, regular withdrawals, or delaying payments for potential benefit down the road.

In general, payouts range from 75% of “entitled benefit” for payments at age 62; 100% of benefits of age 66; and 132% of benefit at 70. Lawmakers are frequently discussing changes to this scheme, particularly in light of rising life expectancies, and so it is critical to be aware of the potential alterations down the road.

January 23, 2014

Former New York State Medicaid Inspector General Sets His Sights on Charity Regulation

by Ettinger Law Firm

There will soon be a new chief in town when it comes to monitoring the activities of New York charitable organizations. According to a report last week in the Wall Street Journal, James Sheehan was named the head of a state agency known as the Charities Bureau. This entity may not be a well-understood by most community members, but it plays a role in trust regulation and other activities which hit upon estate planning matters.

The New Chief

Mr. Sheehan is well known to many in the estate planning elder law community as the former New York Medicaid inspector general. The inspector general is charged with acting as a check on the system to watch out for misdeed and violations. It is that same commitment to enforcement and transparency in activities that Sheehan will take to the new office.

January 21, 2014

Thinking About the Un-thinkable – When Children Are Involved

by Ettinger Law Firm

According to a survey by legal services website RocketLawyer, 70% of American parents with minor children do not have a Will. The survey revealed that 76% of respondents believe that a Will is not an “urgent” matter. Parents of young children certainly must have many urgent claims on their attention. Many of them, it seems, are not inclined to give any consideration at all to the horrible possibility that they may not be around to raise their children themselves.

What would happen to your children if the unthinkable did happen and you were no longer there to care for them? If your children have two parents in their lives, then you might think that the chances of both parents dying in a common accident are too remote to merit serious consideration. Still, remote as the chances may be, we know that it does happen. Every day, couples face deadly risks together. How many times have you and your spouse found yourselves in a place where some quite plausible accident might befall you both? A car accident? A plane crash? A house fire? Upon reflection, you might discover that you face the risk of common accident almost every day.

Protect Your Child’s Future

January 16, 2014

Do-It Yourself Estate Planning Problems: Transferring Real Estate

by Ettinger Law Firm

There are some tasks where the “do-it-yourself” approach makes sense. This includes tightening a leaky pipe under the sink or changing the headlight bulb on your old car.

With those tasks, it is clear right away if your skills were up to the challenge and you did it correctly. If the sink still leaks or the light is still out, then you know that your efforts failed and you may need to call in a professional.

But there are some challenges where this “safety net” does not exist, and where do-it-yourself attempts can cause serious, irreparable harm. That is certainly the case with estate planning. Crafting a plan to transfer assets and save on taxes is delicate in that the only time when it will be used is at the very moment when it cannot be changed–after a passing. In other words, there are no “do overs” with estate planning, and so it is essential to have the aid of an experienced estate planning lawyer when making decisions about these issues.

January 15, 2014

Disorganization & IRA Inheritances

by Ettinger Law Firm

Many New Yorkers invest a sizeable portion of theirs assets into IRAs–retirement accounts to fund their golden years after their work life is over. Of course, no one knows exactly what their future holds, and so it is common for IRAs to contain significant funds upon one’s passing. Deciding who will receive those assets is a critical part of estate planning.

Unfortunately, as discussed in a recent Forbes article, sloppy planning on that front, which leaves designated beneficiaries in the dark, may ultimately cost those beneficiaries their inheritances.

Make Your Wishes Known