Results tagged “New York wills attorney” from New York Estate Planning Lawyer Blog

Misconceptions About Cost of Insurance

May 31, 2012,

Market Watch reported last month on new research that suggests that many community members are misinformed about the cost of certain types of insurance. As New York estate planning attorneys we understand the importance of life insurance policies in many local resident's financial planning efforts. Similarly, an important part of an elder law estate plan often involves securing long-term care insurance. Misinformation about the practicalities of these insurance options may leave local residents less legally and financially secure down the road.

The latest research focuses mostly on life insurance and was conducted by LIMRA and the non-profit group, LIFE (Life and Health Insurance Foundation for Education). Most surprisingly, the effort--conducted via surveys--found that consumers often overestimate the cost of life insurance. The confusion about the costs means that some families may have less protection than they need.

The research involved asking respondents to estimate the cost of different types of policies. The average estimates were four to seven times higher than the actual cost. For example, the annual cost of a 20-year, $250,000 life-insurance policy for a healthy 30-year old is about $150, but the average consumer guess was over $400.

Our New York City estate planning lawyers understand that buying more life insurance is not always in the best interest of local residents. However, there are times when it might be a prudent choice. Understanding whether it is a good fit requires an accurate understanding of the costs and benefits.

A 2012 "Insurance Barometer" study found that 66% of consumers admitted that they needed more life insurance. The main reason that they did not have it was because it was "too expensive." However, this latest research suggests that misconceptions about the cost may be influencing that assessment. The research found that women, minorities, and young adults were the most likely to be underinsured and misinformed about the costs of life insurance.

The CEO of LIMRA explained that it was the group's hope "that the broader industry will use these insights to help address the crisis of underinsurance this country faces."

At the end of the day, insurance needs must be based on each individual's very specific circumstances. Long-term care insurance, for example, will have very different costs depending on the age and health of the one purchasing the policy. Also, it is important to remember that insurance is one part of the overall financial and legal planning that should be conducted to ensure one's affairs are secure in the future.

See Our Related Blog Posts:

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

The Dynasty Trust May Keep Inheritance In the Family

Graduation Season is Perfect Time for Grandparents to Consider Gifts

May 30, 2012,

This is the time of year when many teenagers and young adults end one chapter of their lives and prepare for the next. It is also a time for many families to consider how far they've come and what the future holds for themselves and their loved ones. For those graduating high school, the obvious next step is college. Our New York estate planning attorneys are intimately aware of the challenges of paying for a college education these days--tuitions seem on a never-ending upward spiral.

No matter what the family financial situation, there is benefit to properly planning for these costs and understanding the implications of certain financial decisions. For example, Daily News published a story this week on the way that grandparent gifts to grandchildren heading to college can be properly tailored to meet tax goals. The story noted how the tremendous student loan burden faced by so many college graduates make tuition support one of the best gifts any grandparent (or other loved one) can provide to a young person.

But not only is the gift an act of generosity, it may be a particular prudent financial decision this year. Right now the lifetime gift and estate tax exemption rate is at $5 million. The level is set to drop down to $1 million next year. It may be logical to take advantage of these rates, so that assets can be passed on now instead of through one's estate.

A New York estate planning attorney can explain the many different ways that gifts can be passed down to young adults to pay for college tuition or other expenses. For example, trusts can be created for minors with the assets controlled by a trustee until the minor reaches a certain age. In this way, the trustee can ensure that the funds are used to pay for desired expenses, like college. When done properly, the trust not only helps the minor, but it ensures that the transfer qualifies as a gift, with the applicable tax benefits.

It is important to have professional advice for these matters, because there are other consequences to take into account. For example, certain trusts are irrevocable, and so they should not be entered into lightly. Also, the trust assets may be counted toward the minor's estate for financial aid purposes. As with all estate planning issues, it is prudent to be fully advised of the legal and financial details so that the exact transfer occurs in the most advantageous way.

See Our Related Blog Posts:

Now Remains a Good Time for Baby Boomers to Conduct Estate Planning

Estate Planning May Be A Family Decision

Supreme Court Rules on Survivorship Benefits in Posthumous Birth Case

May 23, 2012,

We previously discussed the Supreme Court case Astrue v. Capato. At root in the case was the issue of whether or not children conceived after the death of a parent are entitled to federal survivorship benefits. It is important to note that this refers only to those whose actual conception occurred following the passing, usually using frozen sperm that was saved while the parent was still alive. While representing a relatively small group of children, our New York City estate planning lawyers know that these sorts of techniques are actually growing in popularity. Cancer patients and military servicemembers are the most likely to take advantage of this option.

The father of the children that sparked this case had his sperm frozen after being diagnosed with cancer in 2000--he passed away in 2002. Not long after his passing, his wife became pregnant with twins. After their birth she applied to the U.S. Social Security Administration for survivorship benefits. The agency denied the claim, sparking a lawsuit.

The district court sided with the SSA in denying the claim because application of the state intestacy laws would not have allowed the children to recover. On appeal, the U.S. Court of Appeals reversed. The U.S. Supreme Court agreed to hear the case and arguments were made in the middle of March.

This week the nation's highest court issued its opinion in the case--reversing the U.S. Court of Appeals and siding with the district court. In other words, the decision agrees with the Social Security Administration, allowing them to deny benefits to the children conceived after the death of their father. Estate planning lawyers understand that this decision will need to be taken into account when families who may be in this situation conduct long-term financial planning.

The ruling holds that the Administration is free to interpret the Social Security Act to allow benefits to children only if those children could inherent from a father under state intestacy laws. The Court found that this reading of the law better matched the purpose of providing support to those who were supported by the deceased wage earner during his or her lifetime.

Court observers noted that there seemed to be genuine disagreement between the justices during the arguments on this issue. However, those disputes must have been worked out, because the final decision was a 9-0 opinion with all justices in agreement.

For local families, this ruling means that a genetic link to a parent is not necessarily enough to trigger Social Security survivorship benefits. This should be taken into account when conducting estate planning or when deciding whether to take advantage of new assisted reproduction technology.

See Our Related Blog Posts:

U.S. Supreme Court Hears Arguments on Benefits for Posthumously Conceived Children Case

Questions Remain Regarding Rights of Posthumously Conceived Children

More Options to Account for Animals in Estate Planning

May 21, 2012,

Many senior residents have concerns about outliving their beloved pets. That concern can be met as part of a thorough New York estate plan. Our state allows residents to create "pet trusts" that work just like regular trusts. Individuals can transfer assets into these entities with the funds to be managed by a trustee (or multiple trustees) to arrange proper care for the animal for the remainder of their lives.

While trusts are a helpful way to account for the long-term care of pets, a pet trust may not be the only option. Our New York elder law estate planning attorneys also know that some additional programs exist to help residents--particularly seniors--create alternative care arrangements for their dogs, cats, and birds. A recent Business Insider article discussed some special programs that animal shelters have set up to help care for pets after a senior dies.

The article shared the story of an 84-year old woman who adopted a dog from a local shelter a few years after her husband died. The companionship of a trusted dog or cat has long-been shown to provide significant health and well-being benefits to seniors living alone. The woman in this case had concerns that she might not outlive her new pet. The dog was only six years old, and as a Shih Tzu mix it was expected to live for many years ahead.

To account for her concerns, the woman enrolled in a special program through the shelter. In exchange for a certain donation to the "no kill" shelter, the facility guaranteed that it would take care of the animal throughout his life.

This was a simple way for the senior to gain the peace of mind of knowing that a plan was in place for her animal friend for the rest of his days.

Yet, that sort of pet estate planning may not be for everyone. For one thing, only certain shelters have such programs in place, and many of them only allow one to participate if the animal was adopted from the shelter itself. In addition, many residents do not enjoy the idea of their pet living out their years in a shelter. In those situations a pet trust likely remains the best available option.

Provisions can be made in a will to pass on ownership of an animal to another. However, the problem with will transfers is that they place no obligations on the individual who receives the pet. There are no guarantees that the person will keep the animal or ensure that the pet is properly cared for. Trusts provide much more accountability. They also avoid the probate process so the new caregiver can take ownership of the animal immediately without the limbo period while the court process works itself out.

See Our Related Blog Posts:

Family Trustees Must Be Aware of Their Duties and Requirements

Estate Plan Can Provide for Lifetime Care of Pets

Not All Children Treated Alike

May 16, 2012,

Two of the most common claims local seniors give for failing to visit with a New York estate planning lawyer are:

(1) I do not have much wealth, so I don't need fancy planning.
(2) I just want my children to split everything and make decisions together.

Neither of these situations actually makes elder law estate planning unnecessary.

For one thing, this planning involves issues that affect everyone, regardless of how many assets they have. Keeping their affairs out of the courtroom, saving on taxes, ensuring family members won't have complex paperwork to deal with, saving costs on long-term care, preparing for alternative decision-making in case of disability, and similar issues shouldbe a concern to everyone--not just the rich.

In addition, assuming that everything about the planning should involve splitting things equally between the children may not be appropriate. That doesn't necessarily mean that all the children will not receive the same inheritance, but allocating assets is just one part of the New York estate planning effort.

For example, the plan will likely require naming an executor to handle various affairs after a passing. While it is possible to name all the children, it is usually best to name only the one who is best with these sorts of management responsibilities. The duties of the executor are not only confusing, but they must be handled at the most stressful of times. Forcing children to decide all of these issues jointly is setting them up for even more drama. In many cases, in fact, it may be appropriate to choose a third-party to take this role, like a trusted friend or professional.

It might also be appropriate to treat children differently in the form of their inheritance. For example, even though one wants to split an inheritance equally, it is rarely as easy or simple as writing checks for equal amounts to each beneficiary. Instead, it is often necessary for each child's specific situation to be considered. Children with special needs are usually best served by receiving an inheritance via a special needs trust, instead of outright. Similarly, if a child has substance abuse problems or otherwise might have many creditors, it is often far superior to leave the child an inheritance via trust.

At the end of the day it is impossible to know for sure what strategies will be best in your situation without first talking to a legal professional about your family. In virtually all cases there is a benefit to planning ahead. Leaving issues to random intestacy rules and the probate process is more costly, time-consuming, and stressful.

See Our Related Blog Posts:

Estate Planning May Be a Family Decision

The Dynasty Trust May Keep Inheritance in the Family

Passing On Religious Values at Death

May 4, 2012,

A New York elder law estate plan usually includes a range of features, from a trust and pour-over will to a Power of Attorney and Health Care Proxy. Yet, no two plans are identical. While inheritance, retirement, and long-term care issues are common to all, the exact way to accomplish those goals depend on one's situation, perspective, and values.

For example, religious belief can have very obvious implications on some of these issues. End-of-life decisions delineated in a living will reflect an individual's personal perspective on advanced life support measures--often guided by a particular faith. In some case an advanced medical directive might include a clause that indicates such end-of-life decisions must be made by an individual with a particular religious perspective--perhaps an Orthodox rabbi with an expertise in Jewish law.

Religious traditions and inheritance issues are usually the most controversial way that one's faith can affect their estate plan. Many families have individuals with varying kinds and degrees of religious faith. This is often a recipe for feuding for a family when religious issues are involved in how assets will be dispersed. Often there are few easy answers.

The most conflict-ridden of these issues relates to parents who wish their children to marry someone within the tradition. These parents often seek to disinherit those who marry outside the faith. Disinheritance on these grounds may lead to family divisions and costly legal fights. That is why it is important to talk with experienced professionals about these concerns to be made fully aware of one's options and the potential ramifications of certain actions.

Clauses in inheritance documents that hinge on marriage decisions by heirs have been upheld in many courts so long as they are not deemed to encourage divorce. Yet, one purpose of planning is to account for possible legal challenges before they occur to hopefully prevent them altogether. One common alternative that may be less divisive is to leave assets to heirs in trust with a trustee given broad criteria to make distributions. In that way, religious conduct may play a role in the inheritance while allowing special circumstances to be taken into account.

In addition, our New York estate planning lawyers often advise clients on the benefit of crafting an "ethical will." These wills are not legally binding but instead are exercises undertaken by thinking about one's overall legacy. An ethical will is often given to a family while one is still alive. It acts as a way to pass on the values, wisdom, and perspective gained over the course of a lifetime. Quite often an ethical will shares morals and lessons rooted in the author's spiritual faith. It is yet another way for one to pass on those faith-based beliefs to loved ones.

See Our Related Blog Posts:

Thinking Beyond the Paperwork--Creating an Ethical Will

New York Estate Planning Can Address Religious Goals

Rumors About the End of Living Trusts Have Been Greatly Exaggerated

March 1, 2012,

A small minority of misguided observers might suggest that using estate planning tools like revocable living trusts are becoming less necessary in recent years because of increases in the federal estate tax exclusionary amount. According to this line of thinking, use of the trust was limited solely to avoiding estate taxes--taxes on the assets given as part of an inheritance. Because community members can currently pass on up to $5 million individually without triggering the tax, there may be a mistaken assumption that those with fewer assets do not have much need for trusts. Of course, our New York trust lawyers work with thousands of clients who are living proof that this suggestion is a drastic oversimplification of the use of these legal tools.

An article last week in LifeHealth News made the same point, reminding readers of the various benefits that trusts provide beyond estate tax savings. Just two of the many benefits include: (1) avoiding probate; (2) allowing flexible inheritance arrangements

Perhaps most importantly, use of these trusts allows families to avoid the time-consuming, stressful probate process that is required when only a will is used. The probate process is court supervised, which means that judges ultimately decide how everything shakes out. Depending on the circumstances, the judge's final decision might be far different than what the family thinks appropriate or even what the one who passed on might have wished. Using trusts and keeping the process out of the courts is a huge benefit for those who want to ensure that their wishes are actually carried out in the most straight-forward manner possible.

Not only is the trust process easier for the families, but it may also be cheaper. Fees and court costs that need to be paid to settle an estate via probate are often anywhere from 3% to 10% of the assets of the estate. That means that tens of thousands of dollars of an inheritance can be lost just in the process of having the court determine where it should all go. Trusts avoid this, because they operate automatically upon one's death. In that regard, trusts are also private, whereas the probate process is made public. This is a very real concern for those who do not want names and information about beneficiaries to be available to everyone.

Beyond avoiding probate, our New York estate planning lawyers appreciate that use of trusts give planners much more flexibility and control over how they'd like to disperse their assets. Wills simply give assets to certain people. Trusts, conversely, can pass along assets with very specific conditions and limitations. This, for example, allows parents and grandparents to pass on assets while putting in place some protections so that those assets are safe even in the event of divorce, bankruptcy, or even spendthrift relatives.

The list of trust benefits is long. In any event, it is important to remember that those benefits are apparent for community members of all income and asset levels. These are not legal tools just for the well-to-do.

See Our Related Blog Posts:

Be Aware of Potential Pitfalls with Joint Bank Accounts

Consider Alternative to a "Last Will & Testament"

Avoiding Lump Sum Inheritances for Young Adults

February 23, 2012,

Parents often worry about their children--even their adult children. In many cases, no one knows about a child's strengths and weaknesses better than their parents. Local residents often take this into account when crafting New York estate plans. For those whose children may not be ready to handle a large inheritance, many parents reasonably want to know what options they have to both pass on assets to children but protect them from getting the funds before they can handle them.

In fact, this issue has been getting a bit of media coverage over the past two weeks upon the death of pop star Whitney Houston. As reported in Forbes this week, speculation abounds regarding the star's estate planning. Most suspect that the singer is likely to have left her entire fortune, reportedly worth $20 million or more, to her only daughter--18-year old Bobbi Kristina. The young girl is undoubtedly fragile at this stage in her life, especially after just losing her mother. In addition, many family members have voiced concerns that the young woman has also battled substance abuse problems over the past few years. This is leading many to question the daughter's ability to handle a lump sum payout from her mother's estate.

Early reports suggest that Ms. Houston had done some estate planning--but not much. She apparently had a will which left everything to her daughter. Because her daughter is a legal adult, under a will she will receive the money immediately. As most community members appreciate, few 18-year olds are truly ready to handle millions of dollars. However, without any other advance planning, the only option for the family is likely to go to court and try to get the teenager declared legally incompetent to manage her finances. They could then seek a conservatorship which would allow a third party to control the inheritance until such time that the court finds the daughter able to handle the responsibilities of the inheritance.

How could this have been avoided? By using a trust.

Our New York estate planning attorneys have helped many local families prepare for this possibility and plan ahead. Trusts are the ideal tool to accomplish this goal. They are private, meaning that they take place outside of the court process. This allows families to conduct much more detailed preparation with the assurance that the decision won't be changed by a judge when they are gone. One popular option is to have the trust dispense money to children at different rates throughout their life. For example, they may receive 20% at age thirty, another 40% five year later, and then the remainder at age forty. Alternatively, the payments can be set not at specific ages but times after the parent's death--20% at the parent's death, 40% five years later, and the remaining 20% ten years later, regardless of the age of the child.

See Our Related Blog Posts:

When Considering Inheritances, Baby Boomers Fear Children's Financial Acumen

Parents Grapple with Effect of Inheritance and the Meaning of Money

Fixed Annuities and the Benefit of Longevity Insurance

February 21, 2012,

It is a common question asked by area seniors conducting New York estate planning: How do I know if I have enough money to last the rest of my life? There are no easy answers. A lot depends on the source of income that one has when conducting their planning and exactly how those funds are being used. However, some financial planning tools exist which can provide peace of mind for those who want it, particularly in volatile market conditions. As explained this weekend by Investment News, one of the options is a deferred-income fixed annuity, often known as the main type of "longevity insurance."

Fixed annuities are essentially investment contracts with an insurance company. This means that the insurance company agrees to pay out a set income based on the value of the investment. These annuities can be either deferred or immediate. For estate planning purposes, deferred annuities often allow those thinking ahead to make investments before hand for guaranteed payouts down the road. Many different types of fixed annuities exist. Some are for a set rate of income while others take into account market conditions to some extent--blunting the effect of marketing downturns while allowing the recipient to share in some of the market booms. In this way, our New York retirement planning lawyers realize that lifetime annuities are often beneficial for those thinking about their long-term finances.

While they may be important investment tools for some, annuities are not for everyone. When compared to other investments, this type of insurance can offer lower rates of return. Many advisors suggest that the insurance is best when higher interest rates are present. This means that investors can put less money up front to get the same guaranteed income stream down the road. Often annuities are used in combination with other investment tools. Yet, many annuity plans have steep penalties for early withdrawal, which is unattractive to some.

However, where appropriate these insurance options are good ways for residents to have the peace of mind of never having to worry about "outliving" their money. In addition, this insurance can be helpful in some situations involving multigenerational trusts. For example, when a senior establishes a trust for an adult child, longevity insurance can be taken out on the adult child's life--the grandchildren are named as beneficiaries. This protects against the risk of the child living too long and using up funds that were intended for grandchildren.

See Our Related Blog Posts:

Adult Children Often Remind Senior Parents of Estate Planning Importance

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

Tax Changes in the President's 2013 Budget Proposal

February 17, 2012,

Earlier this week President Obama unveiled his proposed 2013 federal budget. The mammoth document details how much money he proposes the government take in from taxes, possible changes to the tax code, and information on how that money should be spent. Considering the proposal includes various changes to what is taxed and at what rate, estate planning attorneys always pay attention to the details of the proposal. The budget applies to the federal fiscal year 2013, which actually begins on October 1, 2013.

However, each New York estate planning lawyer at our firm appreciates that this bill is simply a blueprint--a starting off point to begin discussions about the budget, not a detailed map of what will likely occur. That is especially true this year, because election years are always known for their lack of compromise and avoiding of controversial tasks. It is important to read this proposal from that perspective. That doesn't mean that the budget proposal has no value when it comes to estate planning. The ideas set forth in the proposal are indicative of at least some ideas that will likely be brought forward for consideration that may become law. For one thing, contrary to the claims made by many reformers on both sides of the political aisle, the budget does little to simplify the tax code. Instead it suggests a range of increased layers of tax complexity.

The budget would change basic income tax rates, particularly for those in higher income brackets. For example, the budget calls for an increased minimum income tax rate of 30% for those making over a million dollars. In addition, the proposal assumes that the current income tax breaks for those making over $250,000, which were first passed by President Bush, will be allowed to sunset. Without Congressional action, these income tax rates will return to higher levels at the end of this year. In addition, the estate tax would rise in the current proposal to 45% from 35%, with the exemption rate dropping to roughly $1 million from $5 million.

Business taxes would also see some changes in this proposal. Bloomberg News explained that while the President has talked of simplifying the corporate tax code, the proposal does not suggest any ways to do that. Instead of lowering the 35% tax rate, the budget would simply add more credits and deductions. The incentives would be geared toward manufacturing and "high-tech" manufacturing companies, while domestic oil and gas production interests would lose billions of dollars in current tax "preferences."



See Our Related Blog Posts:

U.S. Senate Proposal to Alter Inherited IRA Rules

Will Estate Tax Limbo End This Year?

Bizarre Estate Planning Strategy: Adopting A Girlfriend

February 9, 2012,

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.

However, many are questioning the legality of this particular strategy. For one thing, there was apparently a side-agreement with Ms. Hutchins whereby she agreed to give his natural born children 95% of the funds remaining in the trust when it ends. It is unclear how this side agreement could contravene the terms of an irrevocable trust.

It is not uncommon for those with considerable wealth to engage in particularly unique techniques to plan for their financial future. However, our New York estate plan lawyers appreciate that these sorts of efforts, like adopting one's adult girlfriend, are quite rare and usually not of much use for local community members. Yet, there is nothing wrong with exploring all the legal options available when deciding on the best course of conduct in these matters. The very reason that most visit an estate planning attorney is to hear about the range of legal choices that are in front of them to save on taxes, pass on inheritances, and plan for their own future well-being.

See Our Related Blog Posts:

High-Profile Example Highlights Need for Clarity in the Estate Planning Process

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

Will Estate Tax Limbo End This Year?

February 7, 2012,

Last week we discussed the uncertain future of the estate tax. It was noted that the issue would likely hinge on the outcome of the 2012 elections. As with all legislation, action usually requires support from sufficient members of Congress and the President. Therefore, the rates and exemption levels for the estate tax would likely depend on the partisan affiliation of most members of Congress and the White House. Each New York estate planning attorney at our firm appreciates that the uncertainty over the issue presents complications for those families who are hoping to create strategies to minimize their estate tax burden. The idea of waiting for the outcome of an election is cold comfort for prudent planners who are working to provide for contingencies and bring stability to the process as soon as possible.

Some policy insiders are now suggesting that estate planning lawyers will not need to wait long after the election to see what happens next with the estate tax. According to a report in Advisor One, the consensus opinion among those most familiar with Washington thinking on the issue believe that Congress will decide what to do with the issue this year--in the lame-duck session in December.

We've previously explained how, without any action, the current tax rate (created as part of the so-called "Bush tax cuts") would expire at the end of 2012. That means that by January 1, 2013 the rate would be 55% (up from 35%) and at a $1 million exemption level (down from $5 million).

Now those who intimately follow the issue in Congress are suggesting that no matter what the outcome this November, the current tax levels are likely to be extended. Not only that, but some are suggesting that Congressional leaders have no stomach for a short-fix, and so they will push to extend the current, lower rates for at least another ten years. The President of the National Association of Insurance and Financial Advisors reported after a "Day on the Hill" that the eight members of Congress that he spoke with all suggested that the likely outcome this year was an extension of the current tax rates--either for a year or longer.

However, all local residents thinking about their New York estate plans should temper their faith in these pronouncements. As recently as the "State of the Union" address last month, the President noted that he'd like to see the current rate revert back to pre-Bush levels. He said, "Right now, we're poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2% of Americans...Do we want to keep these tax cuts for the wealthiest Americans?" The estate tax was certainly part of those temporary tax breaks. The President believes that the former rates and exemption levels are more appropriate. However, it remains unclear how much a priority he places on that issue and whether he would be willing to compromise on the estate tax disagreement in order to gain support for his preferred policies in other arenas.

See Our Related Blog Posts:

The Estate Tax Chess Match - We Are All Pawns

Proposed Tax Policy Changes May Affect Future Options For Estate Planners

Four Possible Estate Tax Scenarios

February 1, 2012,

Uncertainty is almost always attached to discussions about the estate tax. As our New York estate planning attorneys have often shared, it is vital for those of certain income levels to pay close attention to the prevailing political winds to understand if estate tax changes might apply in their situation. When a New York estate plan is crafted it will take into account the current estate tax scenario. However, what is true now may not be true in the future. It is for this reason that estate planners must remain in close contact with clients to ensure modifications to a plan are made if necessary.

When it comes to the estate tax, many prognosticators make various predictions about what we can expect in the future. For example, a story this week at Producer's Web suggested that the future of the federal estate tax depends almost entirely on what will happen in the upcoming November elections. The author suggests that there are four possible scenarios.

1) If Congressional gridlocked continues after the election then the new law may be allowed to sunset. This means that that there will be a $1 million estate tax exemption and a 55 percent tax rate. This would take effect January 1, 2013.

2) If the legislature remains split between the parties, then there is also a chance that Congress could extend the current law. Under this scenario the exemption would remain near $5 million (though slightly higher after adjusting for inflation) with a top tax rate of 35 percent.

3) Some argue that the political winds are shifting in favor of the Democrats. If the party gains control of the House and retrains power in the Senate (and the Presidency), there may be more room to make widespread changes. While this might lead to a range of possibilities, the preference of the Democrats is likely to craft a plan close to the previous law, with exemption levels near $1 million and rates closer to 55 percent.

4) Conversely, if Republicans take control of Congress then there is a chance that the federal estate tax could be repealed altogether.

It will be interesting to see if any of these predictions actually materialize. In the meantime, it might be helpful to listen to what candidates--Presidential and Congressional--have to say about the estate tax while on the campaign trail. That is likely the best indicator of what might happen if either party gains control of the legislative process and is able to muster enough votes to make changes to the current plan.

See Our Related Blog Posts:

The Estate Tax Chess Match - We Are All Pawns

Proposed Tax Policy Changes May Affect Future Options For Estate Planners

Huguette Clark's Only Friend Has Her Own New York Estate Plan Settled

January 26, 2012,

One of the most well-known New York estate planning stories (and mysteries) of recent years is that of Huguette Clark. The extremely reclusive heiress recently passed away, leaving hundreds of millions of dollars with many wondering where exactly the money will end up. Of course, in most cases an inheritance will go to surviving close family members, dear friends, or well-known charitable causes. However, Ms. Clark had very few surviving family members, and it is now being reported that she only one "real" friend, a French woman named Suzanne Pierre.

Ms. Pierre had become somewhat of a liaison between Ms. Clark and the rest of the world. It was alleged that Ms. Pierre was one of the few people who was privy to the heiress's estate planning documents. In fact, according to the New York Observer, Pierre once helped anonymously sell some of Ms. Clark's impressive art collection. She was also the recipient of a $10 million gift of a rare painting from the estranged heiress. Before Ms. Clark's passing some predicted that Ms. Pierre would actually be named heir to much of Ms. Clark's fortune. However, that possibility vanished when Ms. Pierre herself passed away a few months before Ms. Clark moved on.

One of Ms. Pierre's own most valuable assets, her Park Avenue apartment, was recently sold during the disposition of her estate. City records indicate that the unit sold for just under $2 million. The sale comes as many in the real estate world speculate on the prospects of Ms. Clark's own, massive Park Avenue apartment. The 42-room unit is expected to fetch somewhere around $70 million. Many are calling the unit the most sought-after apartment in the entire city and "the listing of the young century."

However, it remains unclear when the unit will actually be listed, because a fiasco still exists regarding the ownership of Ms. Clark's assets.

As it now stands Ms. Clark's estimated $500 million is in limbo. Accusations of fraud and undue influence have already been made. Caregivers, financial professionals, and distant relatives are all locked in a legal struggle to determine what happens to the fortune. Our New York estate planning lawyers always find these drawn-out legal feuds to be quite sad. Of course this sort of situation is almost expected when there is so much money at stake. However, similar in-fighting occurs even when much less is on the line. The emotions of the situation often run high and the focus becomes "winning" as opposed to properly respecting the wishes of the one who passed on. Anything that can be done to prevent such situations ahead of time should always be explored.

See Our Related Blog Posts:

New Twist in Huguette Clark Estate Plan Controversy

Questions Remain About Huguette Clark's $500 Million New York Estate Plan

Protecting Assets When Facing Uncertainty

January 23, 2012,

NuWire News published an interesting blog post last week that runs down a few ways that community members can use estate planning techniques to protect assets in "uncertain times." Of course, our New York estate planning lawyers realize that uncertainty exists at all times, because no one knows for sure what tomorrow might bring. However, there are always some circumstances when future financial trouble seems particularly likely--such as when one might need long-term care either at home or a long-term care facility. The article authors note that it is always beneficial to shield assets before they become a target, otherwise, depending on the circumstances, there are a range of penalties that may attached to the conveyance. For example, when it comes to applying for New York Medicaid, it is vital that asset transfers be made at least five years before applying. Strategies exist to protect assets even when on the nursing home doorstep (without five years to wait), but there is much more than can be done the earlier one takes the time to plan for these issues.

Outside of the long-term care context, there is similar benefit from protecting assets well ahead of time, before they may be targeted by a creditor. The article discusses ten different techniques that may be applicable, depending on one's circumstances. For example, the story discusses spousal gifting trusts. These are special trusts (also known as irrevocable grantor trusts) that allow married couples to protect assets from creditors and estate taxes while still retaining control and use of the assets.

Obviously insurance considerations are also important for protecting assets in uncertain times. After all, insurance is all about having security in the face of potential problems down the road. Long-term care insurance is clearly helpful to account for senior care costs. Unfortunately, that particular insurance is often out of reach for middle class community members. However, even basic life insurance should not be forgotten when thinking about estate plans. For younger families with children life insurance provides security in the case of untimely death. For wealthier families the insurance can also be important to protect assets from estate taxes.

At the end of the day there is a seemingly endless array of combinations that may work in each individual case to protect assets from the uncertainty of the future. In many cases a combination of trusts, gifts, donations, insurances, and other strategies combine to protect assets from taxes, long-term care costs, and creditors. Sadly, many community members fail to take advantage of these options until it is too late, when the adverse event--death, divorce, lawsuit--has already occurred.

See Our Related Blog Posts:

Adult Children Often Remind Senior Parents of Estate Planning Importance

Tips for Giving Financial Aid to Family and Friends

Common Estate Planning Mistakes

January 17, 2012,

Last week an article in the Mansfield Patch listed "Five Vital Estate Planning Mistakes" made by local community members. The list touched on a few issues that each New York estate planning lawyer in our firm has seen time and again. Like history, these errors tend to repeat themselves. Being aware of the common problems is the best way to ensure you don't make them yourself.

Of course common mistake number one is putting off estate planning efforts entirely. Passing on is usually not a topic that most enjoy thinking about. Estate plans inherently involve some considerations and preparations in the event that one is no longer alive, and so many simply avoid the idea altogether. This delay ultimately serves no purpose. As the article author remarks tough-in-cheek, "If you don't die before retirement, chances are pretty good you'll die sometimes afterwards." Considering that death is inevitable, there is simply no logical reason to do no planning and risk paying more in taxes, the uncertainty of the probate process, or the potential squabbling of family members.

Second on the list was failure to consider naming guardians for one's children. While most local residents conducting New York estate planning have adult children, planning is important for younger community members as well, particularly those who have young children. When crafting an elder law estate plan for clients, we always take into account the family dynamics involved. When young children are present it is important to make plans for those children in the event something happens to you, the parent. This is another task that is often put off, because it is not pleasant to think about orphaned youngsters. However, at the end of the day failing to name a guardian only means that the buck will be passed to some other decision maker if anything happens--usually the court. No one is better positioned than a parent to name a potential replacement in case of tragedy, and so it is always prudent for parents to do so.

Another common mistake includes failing to update policy beneficiaries. Single parents or those who are divorced are more susceptible to this error. For example, when their children are young a single parent may name a grandparent as a beneficiary on things like an IRA, 401(k), or life insurance policy. They then fail to change that designation down the road, after their children have grown. Similarly, divorced spouses often forget to change each other as named beneficiaries after the divorce.

See Our Related Blog Posts:

Now Remains a Good Time for Baby Boomers to Conduct Estate Planning

Estate Planning May Be A Family Decision

News Years Resolution: Finally Take the Time to Create (or Update) Your New York Estate Plan

January 6, 2012,

To ring in 2012, many New York estate planning attorneys urged local residents to use the holiday as a reminder of the importance of preparing for inheritance and disability. A humorous Huffington Post article yesterday walked readers down the same path. The story noted that even conducting the most rudimentary planning puts one ahead of the curve, as anywhere from 58-65% of Americans have done no planning whatsoever. In explaining her own reluctance to plan, the story's author quipped, "I got a trust together a few years ago but haven't really planned for life two years from now, never mind when I'm in the Great Beyond, since I'm too busy planning for the Great Here and Now."

The author rightly notes that estate planning is linked to death--an unpleasant connection that makes many put off thinking about it. Children are often the difference maker. It was explained that "when children come into the picture parents often enter the Kingdom of Anxiety, and concerns about what we leave behind are harder to sweep under the carpet." For the author, her wake-up call came when she realized that not visiting an estate planning lawyer to figure things out ahead of time meant that if anything happened to her, decisions about who would care for her children would be decided by then-anonymous decision makers in the probate court system.

Obviously all parents have an interest in ensuring their children are cared for properly no matter what the future holds. So what prevents many from conducting even basic planning? The author believes that part of the problem is the word "estate." Many hear the word and assume that "estate planning" is only for those with large portfolios, several homes, and valuable possessions. Sadly, many community members never realize that one needn't have vast wealth to gain immensely from estate planning. Besides deciding who will care for children and divvying up assets, planning also helps loved one's deal with the traumatic time after a passing.

Also, unpleasant as it might seem now, many have reported that the estate planning process forces one into the incredibly worthwhile task of thinking about where one's life is now, where it is headed, and what is still left to accomplish. The Huffington Post story references the irreverent book "A Lively Guide to the Bitter End," which explains, "of all the traits that distinguish humans from other animals...perhaps the most fundamental is our awareness of our inevitable deaths...What we do with that awareness is another story entirely."

See Our Related Blog Posts:

Now Remains a Good Time for Baby Boomers to Conduct Estate Planning

Estate Planning May Be A Family Decision

Estate Planning Mistakes (and Lessons) of the Rich and Famous

January 4, 2012,

Most local residents will nod in agreement when one explains the importance of conducting New York estate planning as soon as possible. It is easy for most to understand the value of planning an inheritance, saving on taxes, and preparing for alternative decision makers. Yet, all estate planning lawyers know that there is a difference between recognizing the importance of a task and actually taking the time to get it done. Psychologists have found that when it comes to making the leap from knowing that a task should be completed to actually doing it, personal examples are usually the most effective motivators. It is one thing to learn about the value of planning, it is another to hear about a specific case of proper planning that helped an actual person. In fact, experts have also found that even more effective than stories of positive benefits are stories of plans gone awry. The stick is often more persuasive than the carrot.

That is where the estate planning misadventures of the rich and famous can be useful. Unfortunately, recent history is replete with stories of many well-known figures who did not take care of their affairs properly (or at all) before their passing. This week the SM Mirror ran down a quick list of some of the more well-known cases of celebrity estate planning blunders. A few included examples:

Jimi Hendrix
The great young guitarist passed away tragically at the age of twenty seven. As is common for those around that age, Mr. Hendrix did not have a will. Possession of his estate was disputed for decades, with Mr. Hendrix's father officially taking ownership twenty years after the death. Upon the father's passing, everything went to the father's daughter from a second marriage. The father had adopted the daughter who was his second wife's child from her former marriage. That means that Mr. Hendrix's nearly $80 million fortune (which continues to grow) is owned by someone he never knew. This is the case even though there remain many family members who are still alive and were much closer companions to Mr. Hendrix during his life.

Marlon Brando
Marlon Brando supposedly explained to his long-time housekeeper that she would be able to keep the home in which they lived following his death. She had been living there for years beforehand. However, the promise was never committed to writing. Oral promises are easily contested and often invalid. Upon Mr. Brando's death the housekeeper lost her bid for the home and received only a small settlement.

Anna Nicole Smith
The model and TV reality star died without updating a will she had written six years earlier. The old will left everything to her son Daniel. However, Daniel had died several months before Ms. Smith. Therefore, the probate court will likely have to apply default rules to determine how her assets are distributed. However, the case remained unresolved five years after her death, because Ms. Smith herself was involved in a fifteen year battle for a share in the assets of her billionaire former husband after his own will was contested.

See Our Related Blog Posts:

Reality Star Feuds with In-Laws in Estate Fight

Iron Clad Will Likely Avoids Inheritance Fight After Death of Amy Winehouse

Tax Litigation Continues to Rage Four Years After Death of Brooke Astor

December 9, 2011,

New York estate planning mishaps and disputes often make headlines when they involve large sums of wealth and larger-than-life characters. Perhaps none has received more publicity recently than that surrounding the "grand dame of New York City society," Brooke Astor. Ms. Astor died four years ago at the ripe age of one hundred and five. However, inheritance and tax issues continue to rage around her estate and they show no sign of nearing a resolution. As discussed in Forbes, seven new lawsuits were recently filed by her estate refuting IRS demands that she owe an additional $62 million in taxes.

It seems that one of the key issues is the overall size of her estate. Every New York estate planning lawyer knows that the total value of an estate is a fundamental factor in evaluating the overall tax burden. A smaller taxable estate means a smaller tax. In some cases, if an estate is below a certain threshold, then certain taxes need not be paid at all. That is why most tax litigation involves dispute between the government and the individual (or their estate) about the total value of taxable assets. In this case, the government claims that the value of Ms. Astor's estate is $223 million, but representatives for Ms. Astor say the figure is around $93 million. Tens of millions of dollars in potential taxes hang in the balance depending on what sum the court ultimately decides is accurate. The tax bill could be anywhere from $35 million to $97 million. The disagreement between the parties centers mostly on charitable bequests (totaling $96 million) that the estate claims can be deducted but which the IRS disputes. In addition, the IRS claims that there was $20 million in lifetime gifts which should have been included. Part of the IRS request includes over $2 million in penalties for the failure to file and pay those gift taxes properly.

The estate admits that certain gift tax returns were not filed. However, many of those gifts were to her son, who was earlier convicted of 14 different crimes related to neglecting her care and stealing from her estate. Many estate planning attorneys have used the drama surrounding Ms. Astor's estate and her son's crimes as an example of what can go wrong when a Power of Attorney is in the wrong hands. As the Forbes article author noted, "the Astor case is a reminder to families that it's important to make sure you get these basic estate and disability planning document right."

See Our Related Blog Posts:

High-Profile Example Highlights Need for Clarity in the Estate Planning Process

New York Estate Planning is Much More than Wills & Trusts

Professional Help Needed When Crafting a Will

November 22, 2011,

Our New York estate planning lawyers continue to advise local community members that wills are virtually obsolete for many residents. A will often creates more problems than it solves, because probate is still involved, the information is made public, and legal challenges to the will provisions are common. Estate planning is meant to simplify the transfer of assets, and wills often fail at that goal. Instead, the creation of trusts is usually a far superior method of saving taxes and streamlining the process to distribute assets quickly and seamlessly.

However, there may be limited situations where a will might be appropriate, depending on the age of the individual and their assets. As Forbes explained in an article last week, even when a will is used instead of a trust, it is vital to have professional help writing it. While do-it-yourself projects are worthwhile for home improvements and car maintenance, it is not the same vital financial planning tasks. When professional help is not sought and problems are created, it is only at the exact moment when the document is needed to work that its flaws come to light. At that point, there is no going back.

As the article explains, when done without experienced aid, wills are often filled with errors. For example, failing to sign the will, not updating it, or adding amendments improperly are common mistakes that can nullify the document. Without the guidance of professionals, imprecise wording is often used. It is much harder than many suspect to craft legal documents with language that is void of any ambiguity. Vague language is easy to misinterpret, and the one who knows for sure what was intended will not be around to explain the mistake. Estate planning lawyers are well versed in crafting legally precise terms in standard language that doesn't equivocate.

Besides making sure one's specific intentions are explained without ambiguity in the will, a legal professional can also ensure that important issues are considered and incorporated into the document if necessary. For example, when drafting a will on their own, many community members fail to consider important issues. What happens if an heir dies first? What happens when an asset distributed in a will is no longer owned when the will is executed? Who is responsible for paying the expenses on certain assets, like a house? A professional experienced in these matters can bring up these and many concerns that may need to be considered when going through the drafting process. This is particularly important in more complex situations, such as with blended families.

See Our Related Blog Posts:

New York Estate Planning Lawyer Explains Dangers of Joint Accounts


Many Forget to Include Letters of Instructions in Estate Planning Documents