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Estate planning can have ramifications decades (or even centuries!) after an individual passes away. On one hand, this is true because how one leaves assets and guidance to others can influence their long-term personal legacy. More specifically, however, planning can dictate legal matters far into the future. Whoever is in control of administering an estate has significant control over how some of those legal issues are handled.

Sudden Celebrity Death

Consider a dispute that recently arose between the estate of Rick Nelson and Capitol Records. Nelson was a popular musician an actor in the 50s, 60s, and 70s, best known for his role in the TV series “The Adventures of Ozzie and Harriet.” Unfortunately, Nelson died unexpectedly in a 1985 plane crash at the age of 45.

Of the many estate planning lessons pulled for the tragic death of Philip Seymour Hoffman in New York last month is the need to properly update your documents. Hoffman’s will was drafted nearly ten years earlier. It had not been changed to reflect his new life circumstances, particularly the birth of two more children. While his first son was left assets in trust, there was no mention of his two daughters.

This is a common problem when an estate plan is outdated. In addition, the opposite problem can also arise. Instead of failing to account for a new birth, a plan can also miss the fact that one has died. Many New York residents may have questions about what happens when someone set to inherit per the terms of a will or a trust beneficiary is not alive.

“Anti-Lapse” Statute in New York

Making preparations for funeral services, burial preferences, and other memorial issues is a natural part of New York estate plans. These details have been a staple of the mourning and remembrance process for centuries. However, if trends continue, a new form of memory may be added to many plans: professional, digital tributes.

Online Memorial Websites

The stratospheric rise in popularity of online social networks and blogs should make it no surprise that remembrances for lost loved ones are moving online. Placing an obituary in the local paper or buying a memorial ad on the yearly anniversary is no longer the only way to share information about a passing and gracefully remember those who are gone. The process has moved online.

One of the more unique estate planning issues arising in recent years relates to “posthumous births.” This refers to a child who is born after one of their parents has already died.

This was always a possibility, as a parent could pass away in the months after a child was conceived by before the actual birth.

Yet, the issue has grown more acute with reproductive technology advances, including tools that allow the extraction and storage of genetic material, combined with in vitro fertilization. Children are now able to be conceived years after one of their parents has died. While the option is available to anyone, families in certain situations are currently more likely to take advantage of the technology, including those deployed in the military and when a partner has a serious medical ailment, like cancer.

The discrepancy in the law related to recognition of same sex unions may lead to some bizarre moves as part of an estate plan. That is particularly true when trying to avoid large tax burdens. For example, ABC News reported last week on a story out of Pennsylvania where a long-term couple decided to have one partner adopt the other to protect their long-term financial interests.

The couple has been together for four and a half decades. Yet, state law does not allow them to marry. As a result, even though they each planned to leave all of their assets to one another in the event of death, they would not be able to take advantage of inheritance tax exemptions for spouses.

One partner explained the situation regarding state inheritance taxes, “If we just live together and Gregory willed me his assets and property and anything else, I would be liable for a 15 percent tax on the value of the estate. By adoption, that decreases to 4 percent. It’s a huge difference.”

The National Association of Personal Financial Advisors was recently polled to get an idea of common surprises encountered by their clients–those planning for retirement. A a Chicago Tribune article highlighted one of the most common responses from those advisors: a failure to appreciate the need to set aside significant income for a surviving spouse.

Our New York estate planning lawyers understand the inherent complexity of this issue. It is one thing to examine how long an individual is expected to live, subtract that from their current age, and determine how much is needed each of those years. By no means is this an exact science, but it is somewhat intuitive to roughly understand how much a single individual needs to retire. Things quickly get confusing, however, when spouses get thrown into the mix. Tackling this dilemma for locals is a key part of New York estate planning.

As one planner interviewed for the story noted, “One thing people don’t plan for is the reduction of income if a spouse or partner dies.”

Every New York elder law estate plan should likely include a Power of Attorney and Health Care Proxy. These documents allow another person to handle a variety of legal, financial, and medical affairs on your behalf in the event of disability. Our New York elder law attorneys know that preparing for all possible contingencies is the main purpose of this planning, and so inclusion of these documents remains essential.

Some residents are less familiar with the importance of these decision-making tools and may assume them to be unnecessary in their particular case. They may believe that their friends or family members will step up and handle affairs appropriately without the need for formal legal documents. Unfortunately, that assessment is misguided because very often family disagreement arises among these individuals under the stress of dealing with the disability–setting the stage for conflict without prior delegation of decision-making power. The director of a local public aging services center explained that “the last thing you want is if you age and lose capacity, to become a pod in a power struggle between your kids or your grandkids.” On top that, even if one’s family members do not disagree on any financial or medical issue, the law will not automatically grant these powers to a certain friend or family member. In many cases, the disability requires court intervention to appoint a guardian which is a situation that should always be avoided.

Failure to provide this legal clarity ahead of time can have wide ranging effects. For example, KFBB News reported late last week on one man who is facing felony kidnapping charges after allegedly taking his 92-year old mother out of her long-term care facility and bringing her into another state without permission. The man was not his mother’s Power of Attorney. The family was confused about the local elder care laws, and the man assumed he had the right to move his mother. He didn’t. He is now awaiting extradition to face possible criminal sanctions for his conduct. It is likely that the man would not be facing any charges at all had a Power of Attorney been drafted.

Nearly nine hundred same sex couples were married in New York on Sunday. It marked the first day that members of the LGBT community could receive marriage licenses after the landmark marriage equality bill was passed late last month and signed by the Governor. Marriage equality will provide each partner with a variety of financial benefits and legal rights at the state level. However, the lack of any federal recognition means that many area same-sex couples will still need to conduct unique New York estate planning to protect their assets and provide for their loved ones.

The 1996 Defense of Marriage Act (DOMA) defines marriage at the federal level as a legal union between one man and one woman. The federal government usually recognizes any marriage so long as it is valid in the state where it was entered into, but that is not true for same sex couples. That is why a story this weekend in the USA Today suggested that all local LGBT newlyweds visit a New York estate planning attorney when they get back from their honeymoon. The main reason is that complications remain for these couples because the federal government will continue treating them as two economic units. This presents these married couples with financial planning complications.

Married same sex couples will still be denied the over one thousand federal benefits automatically given to heterosexual married couples. As a result, transferring assets from one spouse to another is not as seamless or certain for LGBT newlyweds. For example, even after the passage of marriage equality in New York, married same-sex spouses cannot pass assets upon death to the other without an estate tax bill nor do they have a right to the other spouse’s Social Security benefits.

One important goal of a New York estate plan is to provide a degree of certainty when it comes to family property issues. Each family is different. Deaths, marriages, divorces, children, and other events create various relationship dynamics within every family. Those relationships are often changing. When it comes to estate planning, each relative may have different expectations about how a loved one’s property and affairs will be handled. A death is often a trigger point that allows those different expectations to create conflict. Some families have been ripped apart as a consequence.

An article yesterday in Home Town Life highlighted the inherent conflict that exists noting that, “family infighting happens across the board, whether it’s a large estate, small estate, or even sometimes where there’s no money involved.” It is an issue of which all residents need be aware. No amount of planning can completely eliminate the chance of disagreement. However, a proper New York estate plan has the potential to drastically minimize the loose ends that will be left to loved ones. In this way, they have fewer issues to deal which could damage their relationships with one another.

Many residents fail to appreciate the possibility of infighting if they die without having conducted necessary planning. This risk exists even in families with no history of disagreement. Deaths are incredibly stressful times, and so the rules so often change after a passing. Thus, a proper estate plan is important to benefit those left behind. It offers welcome relief to those that matter at the time that they need it most.
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