Living Trusts

January 11, 2013

New York Estate Planning Beyond Taxes

Some mistakenly assume that estate planning only deals with minimizing taxes. With all of the focus on the estate tax in recent weeks it is easy to see how this assumption might gain ground. And it is true that for some families, significant planning must be conducted to ensure that as large a portion of an estate as possible makes its way to the intended beneficiary instead of the pockets of Uncle Sam.

But it is a mistake to suggest that taxes are the only or even the most important factor for most long-term planning for New Yorkers. The reality is that many tangential issues are just as important and often even more important. A recent WRALTechwire article reminds readers of several “non-tax” issues that are critical and must be addressed in estate planning efforts.

Some of those issues include:

January 9, 2013

U.S. Supreme Court Sets Date for Gay Marriage Case Hearings

by Ettinger Law Firm

Late last year the U.S. Supreme Court agreed to hear two separate cases impacting various same-sex marriage issues. As we have frequently discussed, in ruling on these issues the Supreme Court may set precedent which impacts marriages across the country, including in New York. In so doing the Court may set in motion legal changes that impact estate planning issues for all of the thousands of same sex couples living throughout the state.

However, we will have to wait a while longer before anything is finalized. That is because agreeing to hear the case was just the beginning of the process. The next step was the setting of specific dates for hearings in which both sides argue their case and answer questions posed by the nine justices.

This week the Court released its schedule for those gay marriage cases. As reported in the Huffington Post, the hearings will take place over two days in late March. First, on March 26th the court will hear arguments in Hollingsworth v. Perry. Perry is the case related to Proposition 8 out in California. Beyond “standing” issues, this legal matter may clarify what the U.S. Constitution has to say about the substantive right to marry for same-sex couples. Depending on what they decide, nothing can change, gay marriage may be allowed in California, or, theoretically, gay marriage could become the law of the land across the country.

November 21, 2012

Estate Planning, Values, & Spirituality

by Ettinger Law Firm

A perennial hot-button topic in estate planning and the creation of inheritance documents involves the passing on of personal values. Of course, the majority of work related to estate plans invovles physical assets: who gets the house, the bank accounts, the stocks, the insurance, the family china, and more. Making these allocations efficiently and saving on taxes are the hallmarks of these preparations. But our team often discusses the other aspects of estate planning, including setting in place material that ensures one leaves a legacy for those they are leaving behind.

This often includes spiritual issues but can just as well include secular notions like hard work, the importance of charity, and other values.

But how are these issues woven into an estate plan?

November 7, 2012

Two Teens, a Custody Battle, and $1 Billion New York Trust

by Ettinger Law Firm

DNA Info in New York shared an interesting story on the intersection of a custody dispute, estate planning, and a one billion trust fund waiting in the wings. The tale is a reminder of how money and the emotions following a death are a breeding ground for feuding and conflict among many different parties. It is always best to proceed with the assumption that strong disagreement will arise and to crafts plans and take those into account. Perhaps those worst fears won’t materialize, but, if they do, they must be accounted for.

The situation in this story concerns two teens who are set to inherit the $1 billion inheritance from their great aunt’s fortune–the New York philantropist Doris Duke. Duke was a tobacco heiress andspent much of her time in a $44 million Upper East side apartment. Duke obtained the fortune after the death of her husband–Lucky Strike cigarette magnante “Buck” Duke–and holding from her own mother’s fortune. Upon Doris’s death in 1993, the fortune passed down to her nephew with whom she was close–the father of the twins. Sadly, he died in 2010 at age 57 due to a methodone overdose. He had divorced the teens’mother in 2000 and was awarded custody at that time.

As one might expect, confusion broke loose following the father’s death. The children’s biological mother was given custody at first, though serious concerns have been raised about her ability to raise the children, with past reports identifying her as suffering from paranoia and post-traumatic stress disorder. The twins’ stepmother has been trying to obtain custody of the children but has thus far been unsuccessful.

April 13, 2012

Mike Wallace’s Passing Reminder of Planning Needs for Dementia

by Ettinger Law Firm

Dementia refers to the loss of cognitive ability to a degree beyond what is expected from normal aging. It is not a specific disease but simply a phrase to collectively refer to a set of symptoms. In later stages of the condition, the affected may have severe impairments, becoming disoriented in time and place. They may also be unable to understand who they are or who is around them. Alzheimer’s disease is perhaps the most common form of dementia, but there are many others including semantic dementia vascular dementia, and dementia with Lewy bodies.

Dementia is far more common among the geriatric population. For example, according to the Alzheimer’s Association, one out of every eight Baby Boomers will get Alzheimer’s disease after they turn 65. However, “early onset dementia” can also occur, affecting those under 65 years old. The risks posed by dementia and the uncertainty with which it strikes makes it common sense for elder law estate planning efforts to be put into place ahead of time to guard against the risks. As a Forbes article notes, the recent passing of veteran newsman Mike Wallace is a reminder of this.

Wallace’s son, news anchor Chris Wallace admitted that his father suffered from dementia in his later years. “Physically, he’s okay. Mentally, he’s not. He still recognizes me and knows who I am, but he’s uneven,” the son explained. Our New York elder law estate planning lawyers know that many local residents have families in the same situation. Fortunately for the Wallace family, planning had been conducted to account for this possibility.

February 27, 2012

Special Needs Trusts for New York Families

by Ettinger Law Firm

Special needs trusts are helpful legal tools that allow parents and grandparents to leave behind assets to loved ones with special needs without damaging the beneficiary’s ability to receive SSI and Medicaid benefits. Our New York estate planning attorneys know that in the past the best strategy for these families was often to disinherit relatives with disabilities. Otherwise, assets might be given to the individual which would disqualify them from receive certain federal benefits. Of course this seems a perverse effect and unfair effect for those with disabilities. The special needs trust fixes that. The trust is a device that allows a resident with special needs to receive an inheritance and keep their benefits, all without the state actually receiving less than it likely would otherwise. The trust funds can be used to pay for a wide range of services for the individual like clothing, education, entertainment, household goods, and similar costs. Families have much to gain from taking advantage of this tool.

An article this weekend from Lake County News explored these trusts, distinguishing between the various types of special needs trusts. For example, testamentary trusts and stand-alone special needs trusts are compared. Testamentary trusts are those which are established at the death of the benefactor. Conversely, stand-alone trusts are created while the one passing on the assets is still alive.

One key difference between these trusts is that the stand-alone special needs trust can receive assets from different individuals. Some families may have a few parties that want to help provide for their loved one with special needs. The stand-alone trust, because it is not tied to any single parties’ will or trust, allows for these multiple benefactors. In addition, accessing the funds in the trust can be somewhat easier in a stand-alone special needs trust. That is because the funds are made available to the beneficiary in the stand-alone trust instantly upon the death of the benefactor. Conversely, in a testamentary trust, the assets must first need to be transferred into the trust following the benefactor’s passing.

February 9, 2012

Bizarre Estate Planning Strategy: Adopting A Girlfriend

by Ettinger Law Firm

A media wildfire spread this week after word got out about a particularly exotic estate planning strategy crafted on behalf of a Florida man. According to a report yesterday in The Huffington Post, the new estate planning strategy involved the man adopting his 42-year old girlfriend. Apparently this was done in an effort to strengthen their relationship legally without marriage while ensuring she has access to resources down the road.

The situation might make a bit more sense in context. The client in this case, John Goodman, is a wealthy man, having created a trust years earlier that is now worth hundreds of millions of dollars. The trust was created for the benefit of Mr. Goodman’s descendants–his children. Two years ago Mr. Goodman was involved in a particularly deadly auto accident. According to criminal charges filed against him, he was apparently driving drunk, ran a stop sign, and hit another car–killing the other driver. A civil lawsuit has been filed by the surviving family members of the car accident victim. However, because the trust was set up years before the accident, the plaintiffs in the civil case will not be able to access those trust funds regardless of the outcome of the legal matter.

Having already had one marriage end in divorce, Mr. Goodman did not want to walk down the aisle a second time. However, he was in a very serious relationship with a 42-year old woman named Heather Laruso Hutchins. He wanted to strengthen that relationship without resorting to marriage. That’s when he was advised to adopt her. By adopting Ms. Hutchins, she now becomes a legal descendant of Mr. Goodman’s and is therefore entitled to distributions from the trust that was created earlier for the benefit of his heirs. In addition, Mr. Goodman himself may now be able to access the trust funds indirectly via his girlfriend/adopted daughter.

November 16, 2011

New Survey Reveals Financial Planning Helps in Bereavement Process

by Ettinger Law Firm

Our New York estate planning attorneys have decades of experience helping local families following the death of a loved one. We have come to appreciate the role that we play in this difficult time via the estate administration and probate settlement process. Financial uncertainty is the last thing that families need when struggling with emotions after losing a loved one.

A recent New York Life Foundation survey of local residents who had lost a spouse confirmed the vital role that New York estate planning plays in many lives. As reported yesterday in Life Health Pro, nearly sixty percent of survey respondents admitted that “losing my spouse has significantly impacted our standard of living.” More than half of survey respondents explained that they were not financially prepared at the time that they lost their spouse. For those widows and widowers who still had children living with them at the time of the loss, the financial struggles were even more severe.

The report found that “nearly everything involving money–either on their own behalf or on behalf of their children–was harder following the loss.” These money troubles were especially pronounced among families that had lost a spouse young or had failed to conduct any estate planning. For example, two out of three spouses agreed that it was much harder to save money following the loss. Sixty percent admitted that they had trouble managing household finances after the loss, with few able to find any available resources to spend even modest sums on themselves. For families with children, the consequences of these money troubles can be long-lasting. Over sixty percent of parents said that it was virtually impossible to save for their children’s college education following the death. Nearly half had the same problem in paying for affordable health care.

September 28, 2011

Careful Consideration Required Before Selecting a Successor Trustee in Estate Plan

by Ettinger Law Firm

Local residents usually take the time to craft a New York estate plan because they wish to prepare for disability, save estate taxes, and avoid the probate process. In most cases these goals are best met through the use of a living trust. The trend over the past several decades is for middle class families to craft trusts instead of wills for their inheritance planning. As our New York elder law estate planning attorney Bonnie Kraham explained in an article published this week in the Times Herald-Record, unlike wills, trusts are private documents that do not need to be filed with the Surrogate’s Court. No costly, stressful, time-consuming probate process needs to be undertaken upon one’s death when a trust is used.

Instead of court involvement, a trust is usually administered by a successor trustee. Upon the death of the original trustee (the individual who created the trust), the successor trustee must inform the beneficiaries of the situation, gather and invest the grantor’s assets, notify creditors, pay taxes, and distribute assets per the trust provisions.

Attorney Kraham notes that the trustee who administers the trust has a variety of other obligations. They must remain loyal to all beneficiaries, including the contingent beneficiaries–acting impartially between them at all times. Also, the trustee must ensure that trust property produces income. Therefore it is incumbent upon the trustee not to keep large amounts in non-interest bearing accounts or allow a home to sit vacant. At the same time, all investments must be prudent, and a sound overall investment strategy must be employed. This typically requires diversification which balances both income production and investment safety. Other trustee duties include the filing of tax returns, distribution of trust income, handling of expenses, and the maintenance of proper records.

September 6, 2011

Many Middle Class Families in New York Use Trusts in Estate Plan

by Ettinger Law Firm

One of our New York estate planning attorneys, Bonnie Kraham, Esq., recently authored an article that shares information on the increasing use of trusts in the estate plan of many local middle class families. The story was published in this weekend’s Times Herald-Record, and explains the various types of trusts that residents can use and the way that each holds and transfers property. Unfortunately, there remains a misconception among some local community members that creating a New York trust is a project only for the wealthy. That is not the case. As attorney Kraham notes, there has been a “living trust revolution” over the past few decades where many middle class families have discovered the ways in which these legal entities can be used to avoid probate, save taxes, and protect assets.

All trusts begin with a written agreement, and each includes at least three necessary parties. These include a “grantor” who creates the trust, “trustee” who manages the assets, and “beneficiaries” who use the trust assets. For example, the three roles may be filled when a senior couple creates a trust (grantors) to be managed by their lawyer (trustee) to provide for the couple’s children (beneficiaries). The three roles need not be filled by different individuals, however. Often a grantor will also act as beneficiary, so that they can still use those assets while they are alive. Following the written agreement which establishes the trust, assets are transferred into the entity by way of “retitling.” This involves changing the name on accounts, mutual funds, and stock certificates to the name of the trust, and transferring title to property to the trust.

The two main types of trusts are testamentary and living. Testamentary trusts are created only after an individual’s death pursuant to their will, while living trusts are created while a grantor is still alive. Living trusts are an increasingly common way for many families to transfer assets at death. Among other benefits, a living trust can help families avoid probate, saving time and expense in closing the estate.