Estate Planning

April 5, 2013

Washington Post Article on Family Struggles in Dividing Up Assets

A recent Washington Post article discussed the lethal combination of family and finances. The author recounts how even the most close-knit families can be torn apart by disagreements about money matters. The article included one reader to wrote a letter offering an example of how his parent’s will is causing tension and turmoil.

The letter was written by an adult son who was asked by his parents to assist with their estate planning. He was named executor and helped with locating financial documents. The son saw a copy of the will after it was completed, noting that it left assets to a few charities and then split the remaining estate between himself and his one sibling–a sister. This represents a pretty common situation, with families assuming that such a simple estate plan and division will not come with any disagreement.

But then a few years later the parents updated their will. Instead of splitting the assets between their two children, they decided to split it in thirds. Their two teenage grandchildren (from their daughter) will receive a third, and the two adult children will each receive a third. The son noted with shock that his share suddenly went from one half to one third.

April 3, 2013

U.S Supreme Court Hears NY Estate Tax Case for Gay Couples — Decision in June

by Ettinger Law Firm

Last week is already being referred to as one of the most important in the history of the equality movement for gay and lesbian couples. That is because, as all news outlets reported on significantly, the U.S. Supreme Court heard two cases related to marriage rights for same sex couples. We have discussed these cases frequently over the last few months, one of them deals with the federal law known as the “Defense of Marriage Act” (DOMA) and the other involves a state referendum in California known as Proposition 8.

For New York estate planning purposes, the DOMA case has very obvious ramifications. The very plaintiff in the case is a New York resident (Edith Windsor) who is suing in her capacity as executor of her later partner’s estate (Thea Spyer). Windsor and Spyer were married in Canada and that relationship was legally recognized in New York. However, because of DOMA, the federal government did not recognize the marriage. The divergent recognition of the couple’s relationship was not merely a symbolic difference, it had very real legal impacts. Specifically, Ms. Windsor was forced to pay over $360,000 in estate taxes to the federal government that she otherwise would not have paid if her relationship to Spyer was recognized. It is a pretty cut-and-dry demonstration of how same sex couples are impacted because of a lack of federal recognition of their marriage.

Obviously, the Supreme Court’s ultimate determination of the constitutionality of the challenged portion of DOMA will affect the planning of same sex couples.

March 29, 2013

Effect of Presidential Budget on Estate Planning

by Ettinger Law Firm

Nothing about the law is every entirely static. Obviously legal rules and principles change over time. However, some practice areas are far more stable than others. For example, the general process to recover for personal injuries in a car accident are roughly the same now as in the past. At the other end of the spectrum, certain estate planning processes can change virtually every year. That is because much of this planning is centered on tax savings. In that way, it mirrors applicable tax rules, and any change in those rules requires changes in estate planning details.

Possible Changes

For example, consider the estate planning changes that may need to be made if the latest presidential budget proposals are enacted. Financial One recently shared information on those possible alterations. The President’s proposed 2013 budget includes some so-called “tax loophole” closings which may alter what planners do for future clients.

March 25, 2013

Family Feuding Over High-Profile East Coast Cavern Dynasty

by Ettinger Law Firm

Infighting over control of family assets is far from uncommon no matter the value of the holdings. History is replete with examples of siblings, step-relatives, and other engaged in estate battles over property that has little to no value. Of course, that is not to say that the possibility a disagreement increases with the value of the property. Things can get especially sticky when things like family businesses, land holdings, and other tangible and valuable items are at issue. Many of these assets may have been within a family for decades (or generations) and fighting over control is quite predictable, especially when estate planning is inadequate.

For example, the Wealth Strategist Journal reported recently on the battled over control of supposedly the largest underground series of caves in the eastern United States–Luray Caverns. The caverns are incredibly popular, and it is reportedly the third most visited cave in the country. Considering its popularity, the location has grown into a significant business for the family which owns it. A Washington Post story notes how the cave has been open to the public for nearly 130 years. At $24 for a one-hour tour, the business of showing the cave is estimated to bring in about $30 million annually.

Unfortunately, control over the caverns is apparently is disarray as the family in charge seems perpetually mired in controversy. The Post story explains how two of the family siblings recently sued two others in an attempt to disqualify them for participating in a family trust. In total, control of the caverns rests with six children bore of a family patriarch who died in 2010 at the age of 87.

March 21, 2013

Becoming a “Paradigm” of Financial Health

by Ettinger Law Firm

Money is always at the top (or near it) of lists describing issues that most commonly bring stress into our lives. It’s cliche to say that “money is the root of all evil,” but its obvious that dealing with financial issues is a common concern for families of all shapes, sizes, and even income levels. There is so much different advice out there about what you should be doing or could be doing as it relates to money matters that it is hard to distinguish between the useful and the fluff.

One such story posted in Yahoo Finance this week offers a somewhat helpful distillation of seven basic concepts that can be used for those of all income levels and at different life stages. They are referred to as “paradigms” of financial health. The entire list is worth browsing, but a few of the items on the list include:

***If you are a couple with two incomes, you can pay for “essentials” with only one spouse’s income. Those essentials are things like the mortgage, insurance, child care , and similar items that cannot be cut easily. Essentially this is one way to check whether you may be living above your means. It is an easy shortcut to figure out if you can survive in the event of a lost job or other emergency.

March 19, 2013

Estate Taxes & New York Legend Ed Koch

by Ettinger Law Firm

One of the biggest names and personalities in recent New York City history passed away in early February: Ed Koch. Koch has a wide-ranging career, most notable for his three terms as New York City mayor. The mayor emeritus apparently died with healthy bank accounts, as a recent Forbes article suggests that his estate is valued at about $10 million. Apparently most of the wealth was accumulated after he left office in the late 1980s. A high-profile name, Koch made money giving speeches, writing books, appearing and the radio and television.

As usually happens after a celebrity passing, many have asked how Koch’s fortune might be distributed. Court documents recently filed in the matter shed light on how it all might shake out–offering yet another example of the need for community members to be vigilant about their affairs to protect against large tax obligations.

According to reports, Koch left most of his fortune to various relatives along with some charities. He made specific cash distinctions to certain relatives (i.e $500,000 to sister and husband, $100,000 to sister in law, etc.), and left the “residuary estate” (everything remaining after specific gifts) to three nephews.

March 15, 2013

Family Offers Example of Need for Clear End of Life Planning

by Ettinger Law Firm

As with all aspects of estate planning, one of the biggest mistakes that families continue to make is assuming that they will “just know” how to handle certain issues when the time comes. That includes figuring out how to divide assets, handle long-term care, and otherwise make complex end-of-life decisions. There is no need to go through any complex legal planning, the thinking goes, because our family is different or our issues are not complex.

Countless feuds, legal battles, and prolonged disputes began with that mindset. The bottom line is that it is never smart to leave any of these issues to chance. The stress and emotion tied into the decisions can make mountains out of molehills and split up even the most tight-knit family. Planning ahead and leaving no room for doubt is not only to ensure that your own wishes are fulfilled but to spare family members the struggle of deciding on their own.

Personal Example

March 13, 2013

PBS Program on Lack of Clarity on Digital Asset Rules

by Ettinger Law Firm

The need to plan for the transfer of digital assets after a death is the “topic du jour” in many recent estate planning discussions. The issue remains timely because while more and more people are understanding the important role that online assets and accounts have on their lives, the law in many areas (including New York) has yet to fully catch up. Confusion, uncertainty, and disagreement reign, making it an important topic to be shared.

For example, PBS Newshour recently aired a segment on the minimal clarity in the digital estate process. A full transcript and video of the exchange can be viewed here. The segment includes a conversation between two involved in the issues–a law professor and legal author–who discuss both the legal as well as ethical issues that are tied up with transferring access to online accounts and property that exists solely in digital form.

The program mentioned how unlike some estate planning issues (dynasty trusts, estate taxes, etc.), this is not an issue that only affects a slice of the population. It affects virtually everyone. Consider just one social media site: Facebook. About one billion people worldwide currently use the site. Because of its size, about one user dies every three minutes. What happens to their profile, uploaded photographs, messages, history of postings, and other details? There is no easy answer. Courts, legislatures, social media operators, and community members have been grappling with the legal and ethical implications for the past few years.

March 11, 2013

Fighting to Care for the Ailing Zsa Zsa Gabor

by Ettinger Law Firm

It is often argued that estate planning is necessary to prevent family feuding in the aftermath of a passing. Disagreements about “who gets what,” how to handle funeral issues, and other concerns are known to tear friends and family apart. Being explicit about one’s wishes ahead of time–and letting relatives know early on–is the ideal way to avoid surprises and present the best opportunity for disputes to be squelched.

But proper planning does more than prevent feuding after a passing; it can also prevent it before one’s death. That is because disagreements about caring for aging relatives is often a bone of contention. Arguments about who is going to make decisions on their behalf, what type of long-term care will be pursued, and similar concerns can cause ruined relationships just as much as any inheritance dispute. All of this makes it imperative for local community members to visit with an NY estate planning lawyer early on to ensure legal documentation is in place so that there is no uncertainty about how any of these issues are to be decided. Considering the prevalence of cognitive brain issues (i.e. Alzheimer’s and dementia), prudent planning requires these matters be handled as soon as possible.

Celebrity Example

March 7, 2013

DOMA Case Update: Amicus Briefs Mount in New York Couple’s Case

by Ettinger Law Firm

We have frequently discussed the federal law known as the Defense of Marriage Act. Passed in 1996, the law essentially prevents the federal government from recognizing as married same-sex couples who are legally wed in individual states. Of course, New York allows gay couples the right to marry. Under state law, all couples, gay and straight alike, are treated the same. However, while in most cases the federal government defers to state law on legal marriages, that is not so for same-sex couples. To this day they are treated as legal strangers for federal purposes, creating a whole host of complex long-term planning, tax, and government support complications.

New York DOMA Challenge

Over the past few years a few legal challenges have been heard in federal courts arguing that DOMA violates federal constitutional principles. In virtually all of those cases the courts have ruled in favor of the plaintiffs, agreeing that parts of the law are unconstitutional. However, considering the magnitude of the issue, it was almost guaranteed that the decision would ultimately lie with the U.S. Supreme Court.