Results tagged “albany estate planning” from New York Estate Planning Lawyer Blog

Court Rules on Statutory Shares of an Estate

June 19, 2015,

The Supreme Court of Connecticut recently ruled on a case involving a statutory share of an estate. Every state has laws regarding how much of an estate must be given to close family members, which is known as the statutory share. A person must petition for a statutory share of an estate when their spouse, child, parent, or other loved one leaves them nothing in the estate either through the will or by dying intestate.

Facts of the Case

In the case of Dinan v. Patten, et al, Althea Dinan was married to Albert Garofalo. He passed away in 2000 and left behind a will for his estate. The will left everything to his daughter, Anne Patten, and her three children Nicole, Aaron, and Alexis while leaving nothing for Ms. Dinan. After his death, Ms. Dinan petitioned the court for her statutory share of the estate pursuant to Connecticut law. In 2008, after years of being unable to agree upon the proper amount of her share, the executor of the estate asked the court to render a ruling on the issue.

In Probate Court, the judge ruled that the statutory share should be calculated based on the value of the estate after state and federal taxes. The court also ruled that for her distributions, Ms. Dinan should receive income based on the average yield of the estate between the date of death and the date of distribution. Finally, the judge ruled that the statutory share should be valued at the time that the final account is presented.

Ms. Dinan appealed to the trial level that then ruled that her share should be calculated before state and federal taxes while agreeing on all other points. In addition, it struck down Ms. Patten's arguments that waiver, estoppel, and election of remedies barred Ms. Dinan from collecting her statutory share. Ms. Dinan and Ms. Patten appealed and cross-appealed the trial court's ruling up to the state Supreme Court.

Ruling of the Court

The state Supreme Court affirmed the ruling of the trial court in all parts. First, it held that the doctrines of waiver, estoppel, and election of remedies do not bar Ms. Dinan from her statutory share. Then, the Supreme Court turned to the statutory share laws for Connecticut. The law states that a statutory share is "a life estate of one-third in value of all the property passing under the will, real and personal, legally or equitably owned by the deceased spouse at the time of his or her death."

The judges ruled that because state and federal taxes are not considered "debts and charges against the estate" under the law, the statutory share should be calculated before taxes. Furthermore, the value of the statutory share should be calculated based on the value of the estate on the day of the final accounting and not on the date of the estate holder's death. Therefore, the trial court was affirmed and Ms. Dinan was awarded her statutory share.

Altering the Irrevocable Trust

June 15, 2015,

A few decades ago, one of the most popular estate planning tools was the irrevocable trust. The assets in this type of trust pass along to the beneficiaries free from estate taxes; however, once the trust is created the settlor of the trust no longer has control. As such, the trust is considered irrevocable even if life changes and other events make the initial purposes of the trust less effective. Thankfully, there are now options available for the creator of an irrevocable trust to amend the provisions without the need for court involvement.

Reasons for Amending an Irrevocable Trust

There are many reasons why the creator of an irrevocable trust would want to amend the initial provisions of the instrument. The settlor may wish to amend the beneficiaries if death, divorce, or other situations arise that would affect who would inherit the assets. In addition, state laws may change over time that would make the trust more effective if it was administered in a different state. Finally, some settlors simply do not like the original provisions of the trust because it does not suit the purposes of the settlor any longer or the trustee is no longer fulfilling the responsibilities of the role.

Options for Amending the Trust

A number of states now allow for the settlor of an irrevocable trust to amend the original instrument through means that do not involve the courts. One option available to change the provisions of an irrevocable trust is through "decanting." This process refers to the act of distributing assets from an existing irrevocable trust into a new trust that is designed by the initial trust settlor.

By moving the assets of the irrevocable trust into a new trust, the trust creator can establish updated, better terms for the trust. Decanting typically occurs when the original irrevocable trust does not meet the settlor's intent, fails to provide for the beneficiaries, fails to provide the optimal tax strategy due to changing laws, or some combination of these reasons.

Another option for amending an irrevocable trust is through "non-judicial reformation." While the specifics of non-judicial reformation differ slightly from state to state, the typical rules for altering an irrevocable trust in this matter require that the trust settlor no longer be alive, the trust was created by a certain date, all of the beneficial interests of the trust must vest in a certain time period, and unanimous consent from all interested parties in the irrevocable trust including the beneficiaries, trustee, and any possible beneficiaries to the trust.

One final option for amending an irrevocable trust is to go through the probate system. It requires a petition, multiple court appearances, and a very good argument for amending the terms of the irrevocable trust. The process is often expensive and time consuming, which is why many in the industry highly recommend the use of decanting a trust or non-judicial reformation as easier means for amending the irrevocable trust terms.

Slayer Statutes and Inheritance

June 1, 2015,

Like something out of a made for television movie, last week a woman was sentenced to 23 years in prison for the murder of her eighty year old mother-in-law for the inheritance. It is one of the rare times that a set of laws known as the "slayer statutes" has been applied to a criminal case but serves to highlight the importance of these laws. These statutes prevent a person who has murdered another from inheriting from their victim's estate.

Facts of the Case

In this case, Diana Nadell was arrested and convicted of the murder of her mother-in-law, Peggy Nadell. The reason behind the killing was that Diana wished to obtain the inheritance from Peggy's estate, which was worth a little over $4 million. Diana and her husband were expected to inherit half of the estate, but Diana could not wait for her mother-in-law to pass away naturally.

According to the trial, Diana attempted to recruit a number of co-conspirators to help her with the crime before Andrea Benson agreed to help establish her alibi and perpetrate the crime. Under the guise of traveling to Peggy's hometown for a wedding, the two women convinced Peggy to allow them into the home before beating and stabbing her to death. For her role in the crime, Ms. Benson was sentenced to twenty years in prison.

Slayer Statutes and Estates

Known colloquially as "slayer statutes," these laws were enacted to prevent heirs from killing those they were set to inherit from in order to obtain the inheritance earlier. The slayer statutes vary from state to state, but the common theme is that a person cannot inherit from someone that they murder specifically to inherit early. The laws are meant to prevent a wrongdoer from profiting from their crime. In addition, slayer statutes also apply to other types of inheritance outside of a will, such as pensions, employee benefits, life insurance policies, and the like.

In this case, New York's slayer statutes applied to the case, and their laws are based on common law rulings instead of black and white statutes. Under New York law, the equitable concept is that "no one should be able to profit by his own fraud, take advantage of his own wrong or found any claim upon his own iniquity, or acquire property by his own crime." Applied to Diana's case, she is now not allowed to inherit any money from Peggy's estate.

Diana undermined her own ability to inherit by perpetrating the killing of the person that she was set to inherit from. Because her husband is the biological son of Peggy and was not implicated in the crime, he can still inherit normally from his mother's estate. However, New York law prevents a person convicted under the slayer statute from indirectly inheriting the money from anyone else. Therefore, Diana is also prevented from inheriting any of the money from Peggy's estate that was passed down to her husband.

The Right Tools for Retirement

February 6, 2015,

Just like you would not attempt a do-it-yourself project around the house without the proper hardware tools, you should not go into retirement without the proper estate planning tools. This means that you need to have the right planning vehicles and strategies in place that will ensure that you are receiving a paycheck or funds for decades into retirement. Thankfully, there is a basic estate planning toolkit that can help you get started on your retirement planning.

Realistic Budget

The foundation of every retirement plan is a realistic budget that plans for all incoming money from things like Social Security, pensions, and savings as well as plans for all outgoing expenses like basic necessities, medical care, and miscellaneous costs. This is not a tool that is created and forgotten; you should revisit your budget frequently to make sure that your finances are still on track.

If possible, try to think of all expenses to add to your retirement budget like annual insurance premiums and other infrequent costs. You should also have a slush fund to account for any expenses that may occur without warning, such as a medical emergency, housing repairs, or a new car in addition to any money that you plan on using to help family members.

Asset Allocation

Even before reaching retirement, you should start to reallocate assets within your portfolio to match your lifestyle. This typically means taking more assets out of risky ventures and investing them in assets that can give you sustained, long-term growth. This helps prevent against inevitable market declines, especially when you do not have an employer's paycheck to rely upon.

An Experienced Attorney

While many people are uncomfortable discussing their personal lives with a lawyer, retirement age is not the time to shy away from asking for help from an experienced attorney. An estate planning attorney can go over what you have already done to prepare for retirement as well as draft the necessary documents that ensure that all of your affairs are in place. An attorney can also give you advice about the proper time to take care of things like Social Security withdrawals and structure your estate in a way that minimizes taxes.

Up to Date Documents

Updating all estate planning documents is also a must. Like the budget, your estate plans should not be something that is created and then ignored. As life events occur, you should be reviewing and updating your estate plans accordingly. This includes all actual documents regarding your estate that could pass through probate in addition to any and all accounts that include a beneficiary designation.

A Non-Financial Plan

Finally, you should also draft a non-financial plan to keep you and your loved ones physically and mentally engaged in retirement. Many retirees do not contemplate how such a drastic shift in living can affect them, body and mind. A lot of people who reach retirement find themselves depressed or becoming coach potatoes when they do not have a non-financial plan in place for their retirement years.

Balancing the Trustee & Beneficiary Relationship

December 9, 2014,

Balancing the relationship between a trustee and beneficiary can be delicate, and if it is not handled properly the results can be costly problems and years of frustration. The beneficiaries are set to inherit valuables, homes, stock, and other assets. Yet it is the very nature of those assets that can cause tension with a trustee who controls the purse strings. However, there are some tips that can help ease the tension and create a good relationship between the person in charge of managing a trust and those set to inherit it.

Address Sources of Tension

The entire purpose of a trustee is to be a barrier between an heir and the money, so there are natural sources of tension between a trustee and a beneficiary. Most often, an heir wants access to their inheritance faster, and the trustee is hesitant out of fear that the money will be spent unwisely.

If a beneficiary wants access to the trust earlier, they should look into the terms of the trust and see if a case can be made to the trustee. However, some trusts give a lot of leeway to the trustee to change the terms as the circumstances change.

Both parties need to try and see the other perspective. For example, a beneficiary may think that taking money from the trust to put a down payment on a house is a good reason for distributions, but the trustee may be hesitant because money was distributed recently and wants to grow the portfolio before distributing again.

Discuss Money Issues

Fees are often another source of conflict between a trustee and beneficiary. The terms for fees can vary widely: private trustees can set their own terms, some states offer guidelines for fees, and other trustees do it for free as a personal favor to the trust creator. If a beneficiary thinks that the fees are too steep, he may hire another person to run the investment of the trust funds.

Splitting the roles may help keep the trustee's costs down and thereby ease tension with the beneficiary. However, another money issue that sometimes arises is the actual investment of trust funds. Beneficiaries need to keep an eye on how the funds are being invested, and it should be tailored to the needs of the beneficiary at that time in their life.

Try to Resolve Disputes

If the beneficiary is unhappy with the way that the trust is being handled, the first thing to do is open the lines of communication to the trustee before doing something drastic, like litigating. Try setting a meeting with the trustee, and feel free to bring an attorney to mediate the situation.

First, try to figure out the reasoning behind the trustee's actions because there may be a good reason why the decision was made. Also, try to seek compromise between the wishes as a beneficiary and the trustee. If the relationship is beyond saving, a change in trustee may be necessary. However, whenever possible, try to resolve disputes before taking more serious action.

Estate Planning for Childless Couples: Assigning Power of Attorney

December 3, 2014,

Couples without children have two main tasks when it comes to estate planning: the first is determining how to distribute the assets in the estate. The second, and arguably trickier task, is to assign a person or people who will handle your medical and financial affairs in the unfortunate event that you become incapacitated.

Durable Power of Attorney and Healthcare Proxy

A durable power of attorney form names a person to handle all of your financial matters if you become incapacitated or otherwise unable to take care of your own finances. This includes some legal matters, as well. A healthcare proxy is similar to a durable power of attorney, but this person is responsible for all medical decisions if you are incapable of making those decisions for yourself.

Naming the Proper Proxies

Couples with children typically name one of them as the durable power of attorney and healthcare proxy; however, oftentimes people without children struggle to find someone that they can trust. Spouses can appoint each other to these positions, but almost every estate planning attorney recommends having a "Plan B." This usually entails naming another, younger person to serve simultaneously or in succession to these positions in case the spouse also becomes incapacitated or passes away.

Horror stories abound of childless couples that only named each other as proxies and then had something happen to them both. Their loved ones or extended family members then had to go to court in order to have a successor appointed, a process that takes time and thousands of dollars in court fees.

In some states, there are professional fiduciaries that can be hired as professional powers of attorney or as a healthcare proxy. Some geriatric care managers will also agree to serve in proxy positions, as well. Other possible candidates for childless couples include nieces, nephews, friends, trusted neighbors, clergy, siblings, or cousins.

Other Considerations

When naming a durable power of attorney or healthcare proxy, it is important to do more than sign the forms. Be sure to sit down with the person or people that you appoint and go over what your wishes are for your legal, financial, and medical future.

For the healthcare proxy in particular, consider drafting a living will. This estate planning document lists your wishes regarding any and all medical care should you become incapacitated. This includes certain medications, procedures, resuscitation, and the like that you do or do not wish to have done to you in a medical emergency. Your healthcare proxy is bound to your wishes in the living will, and it can ensure that your medical wishes are carried out.

In addition, consider paying or bequeathing assets to your proxies as payment for services rendered. This lets them know not only that you appreciate the service that they are providing, but it also prevents your proxies from feeling resentful. It can also prevent your proxies from helping themselves to your assets or money while you are incapacitated.

Avoid the Estate Planning Aggregator Scam

November 21, 2014,

One estate planning scam is growing in popularity for people who are looking to begin crafting their estate plan and have amassed wealth or business over their lifetimes. The estate planning aggregator claims to do comprehensive planning for people who have concerns about taxes on their wealth or business issues in their estate.

Estate Planning Aggregator

An aggregator is a person who claims to do comprehensive estate planning for individuals with complex estates. Typically, they recommend that you purchase a "wealth blueprint" or something similarly named for tens of thousands of dollars that will detail how exactly your estate will be taken care of.

Once a person agrees to purchase a wealth blueprint and sends in information regarding their estate and assets, the aggregator will create a thick booklet full of flowery discussion of your wealth, all sorts of spreadsheets and discussion that shows how you can reduce your estate taxes to zero, give your assets silver-bullet protection against creditors, and also reduce your income taxes to a pittance. It sounds great, but once you agree to the plan, the scam kicks in.

The Aggregator Scam

The aggregator will inform you that he does not actually do any of the work for the estate plan, but he can recommend the professionals who will know how to get it done. The planner then sends you a letter recommending that you go see Attorney A about drafting one part of the plan and Attorney B about another part. You also have to meet with Insurance Salesman C because you must have life insurance with your estate plan, and do not forget to see Financial Planner D to invest your moneys.

That is the scam of the aggregator - someone who does not make money doing any of the actual planning but makes great money putting together the information into a pretty booklet. For the tens of thousands of dollars that you paid, he took a couple of hours inputting your information into a program, five minutes printing the pages, and another ten minutes to bind it and stick it in the mail.

Sometimes the aggregator will tell you that the reason for the price is the state of the art software that he developed or the countless hours that he spent creating your plan. However, several companies license software to aggregators and claims of their own proprietary software should not be seriously considered.

Strength of the Plan

Some people might think that the aggregator is still worth it because in the end you got an amazing plan, but the aggregator does not know whether his strategies will work or fail. His job is simply to cast a wide net for planners and strategies that he can sell to potential clients. It does not matter if the strategy works as long as it looks like it could create huge savings for the client.

In addition to the tens of thousands of dollars received by the client, the aggregator also makes much more. Each strategy peddler that the aggregator sends a client to also sends him a referral fee for services, depending on what they spend. The planners are usually just mills, meaning that they only do one or two specific transactions but does a lot of them cookie-cutter style. No matter the client's particular circumstances or needs, the client is going to be squished into fitting that strategy.

Estate Planning Benefits of Marriage

October 3, 2014,

According to the Pew Research Center, the number of never married Americans is at an all-time high. In 2012, almost twenty percent of all adults over the age of 25 had never been married, compared to only nine percent in the same age bracket back in 1960. The research center cites shifting public attitudes towards marriage as one of the top reasons why Americans are putting off marriage or never marrying at all. Half of all never married adults do not wish to ever walk down the aisle and are perfectly comfortable just remaining in a committed relationship.

But for a committed couple, there are estate planning benefits that come with marriage that you do not receive with a domestic partnership. Here are some of the few financial and legal benefits that come with a marriage certificate:

Qualifying for an estate tax marital deduction

When one spouse dies, the estate is passed to the surviving spouse tax free. For domestic partners the deduction does not apply, and although the federal level of exemption is high at $5.34 million, the state estate tax exemption levels can be very low.

Qualifying for a gift tax marital deduction

As long as your spouse is an American citizen, you can make gifts of any amount tax free. Unmarried couples are subject to a gift tax if they financial support the other spouse, and the maximum tax free gift an unmarried person can make each year is only $14,000.

Rolling over deceased spouse's IRA into surviving spouse's IRA

If your partner dies with an IRA and names you as the beneficiary you must start taking distributions immediately, regardless of your age. If you are married, the surviving spouse has the option of rolling the IRA into their own, allowing the surviving spouse to delay making distributions until age 70 ½.

Contributing to a spousal IRA

If you are domestic partners and one does not work, that partner cannot contribute to an IRA for retirement savings because there is no earned income. However, if you are married and one spouse is not working, the non-working spouse can use the working spouse's income to qualify for IRA contributions.

Receiving survivor's benefits from a pension plan

If your spouse has a pension and elected for survivor's benefits you will continue to receive pension benefits after the other spouse dies. However, that does not apply for domestic partnerships.

Receiving Social Security benefits

Married couples can file for spousal benefits that allow the surviving spouse to collect up to fifty percent of the deceased spouse's social security amount. There is also the possibility for a larger benefit upon the death of a spouse. In a domestic partnership there is no option.

Saving on health insurance

Even if it is an employer sponsored plan, most health insurance plans are cheaper for one plus a spouse, as opposed to two single plans. This is particularly helpful if one partner does not have access to insurance through an employer, like if one partner is self-employed.

Legal advantages in case of spouse's incapacitation

If one partner is incapacitated in the hospital, it can be incredibly difficult to see them if you are not a blood relative or a spouse. You must go to a judge in order to be named as a healthcare proxy, and that takes time and money. If there is any family discord you could be battling family members over everything.

The Hazards of Unequal Inheritance

September 7, 2014,

When many people begin the estate planning process, they sometimes believe that they are doing the right thing by giving more to one child than the other. One child may be making more money, is more successful, or has married into wealth of his or her own. Parents think that giving an unequal share of the estate to one child over the other is the best way to rectify the situation; however, unequal inheritance comes with hazards that parents may not consider when creating an estate plan.

Punishing Success

By giving one child an unequal share of the estate, it punishes the success of others. In addition, with today's economic and financial climate the success of one child today does not guarantee it for life. A lot can change over the course of five, ten, or twenty years to your children financially. The more successful child could fall on hard times, and the less successful child could start doing much better financially.

Creating Family Drama

More importantly, unequal distribution of an estate can lead to resentment among children after their parents die and create a lot of family drama. At the very least, the more successful child is going to be asking why, and questioning whether the parents did not love them as much as the child that got more. Unequal distribution can lead to fights among siblings, and accusations of undue influence could be raised to challenge the will.

Fights among siblings can lead to long, protracted legal battles in probate court that can destroy a family and burn through the estate assets. Some estate battles take years and the estate only serves as a legacy of pain.

Creative Solutions

One solution that some parents attempt when unequally distributing an estate is to discuss with their children the reasons behind it. Explaining why there is an unequal distribution can at the very least eliminate the questions of "why" after the parents have passed away. Typically, this can temper some of the family anger but in the end the parents are still punishing the success of some of their children.

Another way to account for children's differing financial situations without showing favoritism in the will is to use an irrevocable trust. The parents appoint a trustee that is not one of the children, and they place the assets of the estate into the trust. The trustee then has the authority to make distributions to the children based on need or other specifications left by the parents. This way, the child that is having more trouble financially can be supported by the trust at an unequal rate to their siblings. In the future, if the financial situation flips for the children the trust can then provide for the child that was more successful at the time when the parents created the trust.

The irrevocability prevents the children from opposing the trust instrument and keeps the estate out of probate court. It can provide the flexibility of unequal distribution without the hazards of explicit unequal division of assets in a will.

Two Estate Planning Documents Every 18-Year Old Should Sign

August 22, 2014,

Many people believe that estate planning is only for the elderly or those at retirement age. However, there are some documents and tools within estate planning that should be considered at a much earlier age. If you have a child that is about to leave for college or go on a gap-year trip there is one last thing that you should do as you prepare for the separation: ask your child to sign a durable power of attorney and health care proxy forms.

Why These Forms are Important

Estate planning forms like a durable power of attorney and health care proxy forms are important for a number of reasons. Without them, most states will not allow a parent of an adult child to make health care decisions or manage money for their kids. This applies even if the parent is paying for college, claiming the child as a dependent on tax returns, and still covers their kid for health insurance. Without these estate planning forms if your child is in an accident and becomes disabled, even temporarily, you would need a court order to make decisions on their behalf.

The risk for these possibilities is very real. Accidents are the leading cause of death for young adults, and over 250,000 people in the United States between the ages of 18 and 25 are hospitalized with nonlethal injuries every year. Without these documents, even finding out about your child's medical condition can be a challenge, let alone gaining the authority to make medical choices on their behalf.

Why Some Children Do Not Want to Sign

A few different reasons have routinely been cited for why a child is hesitant to sign a durable power of attorney or health care proxy form. One big reason is because at this age, adult children are finally attempting to become independent for the first time. Most kids think that they know better, do not want their parent's help, or want to try to do everything for themselves. Another major reason why children do not want to sign these documents is because as a power of attorney a parent can gain access to their child's grades.

Different Ways to Approach the Situation

Even though at this age most children believe that their parents are clueless, there are ways to approach the subject of estate planning forms and becoming your adult child's proxy. Gentle persuasion is usually the most effective technique. Explain that these documents can help in case of an emergency, wiring money to a bank account, and signing forms like an apartment lease when the child is gone.

Another tactic is to make the forms a condition of your child's education or trip. In exchange for signing the estate planning documents, the parent agrees to help pay for college or time abroad. A final way of approaching the situation is to have an experienced estate planning attorney draft the forms as a back-to-school package. You all sit down as a group and have the attorney explain the significance and importance of the documents to your child.

Court Ruled Donald Sterling Properly Removed as Trustee

August 6, 2014,

In an oral ruling last week a probate court judge ruled in favor of Shelly Sterling selling the Los Angeles Clippers against Donald Sterling's objections. Judge Michael Levanas ruled in a probate Los Angeles Superior Court case that Shelley has the authority to sell the professional basketball team to businessman Steve Ballmer, who has agreed to purchase the team for $2 billion.

Appellate Proof Ruling

The judge's ruling took the extraordinary step of granting Shelley's request for an order under section 1310(b) of the California Probate Code. It states that the trial court can direct the powers of a fiduciary to exercise powers as though no appeal was pending. Under this provision, the sale of the Clippers could be completed regardless of an appellate court intervention on the part of Donald Sterling.

Donald Sterling's Removal as Co-Trustee

One of the most significant parts of the ruling was that the judge stated that Shelley had her husband properly removed as a co-trustee of the family trust, which held the ownership of the Clippers, before she made the sale. According to sources, the Sterling family trust included a provision that if either Shelley or Donald was found by two qualified doctors to have "an inability to conduct affairs in a reasonable and normal manner" he or she could be removed as co-trustee. Shelley had Donald see two neurologists back in May for a competency test, and those doctors found that Donald was incompetent to manage the trust as co-trustee due to Alzheimer's disease.

Removing a Trustee

Removing a trustee from a trust is usually a painful and lengthy process. Under the law, trustees are presumed to be competent in order to be able to perform their duties. Therefore, when beneficiaries or co-trustees want a trustee removed for incompetence they must prove to the court that the trustee is incapacitated to the point that he is unfit to serve in the position.

Most actions to remove trustees involve family members. Oftentimes, the trustee in question is a parent that is serving as trustee for their children's trust or like in the case of the Sterlings one spouse is petitioning to remove the other. Litigation to remove a parent or spouse as trustee is costly, time consuming, and often comes at the expense of emotionally devastating a family.

How to Establish Incompetence

Because the court presumes competence for trustees there are only a few ways to prove that a trustee is unable to serve and incompetent for the position. Some trusts, like the Sterling family trust, come with instructions about how to prove incompetence or how to remove a person as trustee. If no such language exists, the beneficiaries or co-trustee must turn to case law. Typically, it involves a showing that the trustee is unable to resist fraud, undue influence, or duress. The other option is usually to show that the trustee is no longer able to provide himself with personal needs like food, clothing, and shelter without aid.

A final option in some states to remove a trustee is to deem him unfit to run the trust by a doctor or medical professional. The doctor must test the trustee and testify that medically he is unfit by reason of health problem or mentally incompetent to fulfill the duties as trustee. This, aided by language in the family trust document, was the route that Shelley took to have her husband ruled incompetent as co-trustee so that she could complete the sale of the Clippers.

Estate Planning Tips for Business Owners

July 17, 2014,

Many people, business owners and everyone else, are concerned about the federal estate tax when creating their estate plans. Although the federal estate tax is 40%, it does not apply unless the decedent has an estate worth over $5.34 million, and the estate amount is doubled if the person is married. However, there are other concerns besides the federal estate tax that a business owner should take into account when creating an estate plan.

Other State and Federal Taxes

The estate tax should be the least of a business owner's worries when creating an estate plan. Before an estate tax is even considered other state and federal taxes are first deducted from a business and the estate. The federal income tax rate on an equity owner of a business can top out at 44.6%. State income taxes compound the issue by charging even more on an equity owner's share. A business owner should first try and minimize the damage done by income taxes on his estate before dealing with the possibility of an estate tax.

Living Issues

Before creating an estate plan that involves a business it is important to consider how issues that arise during life could affect the business after a death. For example, after the announcement of his cancer and subsequent death of Apple founder Steve Jobs the stock in the company plummeted. Another issue that may arise is the founder of the company spending all of the equity for senior and long-term care. These and other risk management issues must be addressed first before any kind of effective estate plan can be enacted.

Asset Transfers

A business needs to have a solid plan in place for asset and stock distributions after the death of an equity owner. Loss in share value can occur from issues in probate, problems in the boardroom, and the simple passage of time. If the distribution of wealth is anticipated and prearranged in the estate plan less of the wealth will be lost in the actual distribution.


A business owner needs to provide liquidity in his estate plan for the continuation of the business. After the death of an owner the business will still have bills to pay, creditors to appease, benefit plans to fund, and need money to supplement any lost revenue. When liquidity is not arranged in the estate plan assets are usually sold at a discount in order to quickly pay the bills. However, if it is planned for in the estate there will be plenty of liquid assets to pay off all debts and still have distributions available for the heirs.

Family Issues

One of the largest hidden problems for a business owner when drafting an estate plan comes from the family. Sometimes the biggest predator to the business is a family member who got the least in the rest of the estate. A business owner can avoid this issue if the estate plan establishes a solid post-death business transfer to the correct heirs.

Back to the Basics: What is the Difference Between Revocable and Irrevocable Trusts?

May 1, 2014,

While many New York residents familiar with and have an existing will in place in the event of their death, most people do not realize that estate planning documents extend far beyond a last will and testament. The world of estate planning documents includes not only living wills and advanced medical directives, but also trusts. Trusts offer several benefits associated with them, and come in two forms: revocable and irrevocable.

Benefits of Having a Trust
Trusts can not only provide for loved ones upon death, but they can provide for the person who created the trust during their lifetime. This is important in cases where the creator has a health issue, a mental disability or incapacitation, and other scenarios. Trusts can be administered without the need to involve a probate court, and can therefore protect privacy as to the contents of the trust. Trusts also serve as protection of assets for trust beneficiaries, and offer a wide variety of options in creating them to suit different needs.

Revocable Trusts
Revocable trusts are a type of trust that can be changed at any time. The creator of the trust could simply modify the terms of the trust through an amendment. Or, if they want to revoke the trust in its entirety, they can do that as well. In revocable trusts, the assets contained within the trust are considered the creator's assets and will be treated as such for tax purposes and if creditors exist.

Irrevocable Trusts
As one may expect from its name, an irrevocable trust is not able to be changed once it is signed by the creator of the trust. These trusts are often complex and require a special degree of care in drafting them in order to meet the creator's needs and desires for his or her estate. It is imperative to consult with an experienced estate planning attorney when setting up an irrevocable trust in order to ensure your estate is properly protected, and any concerns you have about being unable to change the terms of such a trust are addressed and handled appropriately.

That being said, irrevocable trusts have a number of specific benefits associated with them. Often times, estate taxes are significantly lessened or even eliminated through the creation of an irrevocable trust. Irrevocable trusts also offer a high degree of asset protection for the creator of the trust and the trust's beneficiaries. Both of these advantages are possible with irrevocable trusts because once the assets are placed into an irrevocable trust, the creator gives up his or her control and ownership of the trust assets.

NY Estate Planning Attorney
If you are interested in securing estate planning documents or are interested in further discussing the benefits of trusts and how they apply to you, the experienced estate planning attorneys can help you.

Undue Influence in NY & Pressuring Vulnerable Seniors

April 21, 2014,

Family feuding is all too common, and finances are often at the root. One argument often made in legal cases involves these matters is that an adult child or other close relative is abusing a position of trust and confidence with a parent to take advantage of them financially. Proving such an abuse is the challenge of an undue influence lawsuit.

Undue influence is usually defined the use of confidence for the purpose of taking unfair advantage of one with a weakness of mind (or other vulnerability). In other words, undue influence is about pressure. The question is when does pressure become excessive, and thereby amount to undue influence. In a legal case where undue influence is an issue, a court may consider a number of factors:

1. Unusual or inappropriate time of discussion of the transaction;
2. Unusual location of the completion of the transaction;
3. Insistence that the transaction be finished at once;
4. Repeated warning of the adverse consequences of delay;
5. Involving multiple individuals to apply persuasive pressure;
6. Absence of third-party advisors.

To illustrate, it is useful to consider a few real world examples:

In 2011, the children of actor Tony Curtis claimed that their father was the victim of undue influence. Curtis, redid his Will and changed other aspects of his estate plan a few months before he died from heart failure. As a result, Curtis's five children, including actress Jamie Lee Curtis, were left with nothing. The Will stated that Curtis intentionally disinherited his children, yet no reason was given. Shocked and deeply suspicious, daughter Kelly Lee Curtis sued, accusing Tony's widow Jill or others of convincing Tony to change his Trust through undue influence, fraud, or duress.

In 2009, comedian Pauly Shore filed a lawsuit against his brother, Peter, alleging the use of undue influence against their 79-year old mother, Mitzi. Mitzi suffers from neurological problems, including Parkinson's disease. Prior to her decline in health, Pauly, Peter, and their mother were joint directors of The Comedy Store, a famous Hollywood comedy club. When Peter subsequently took to managing the club's finances, Pauly requested that Peter turn over about three years worth of tax returns and financial documents. After Peter refused Pauly's request and instead fired Pauly from the club's Board of Directors. Pauly brought an undue influence lawsuit, claiming that Peter orchestrated firing Pauly from the Board by taking advantage of their mother's frail health.

Undue influence doesn't just disturb the families of the rich and famous. Too often it surfaces in the financial matters of everyday people, whether in wills and trusts, or the operation of a family-owned business. When it does, it's time to speak with an experienced attorney about your legal rights so you can protect the vulnerable from the unscrupulous.

Estate Fights for Music Royalties in the Digital Age

April 14, 2014,

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.

Reports explain that complex feuding took place shortly after the death. Nelson was divorced, had a child outside of wedlock, and was dating a woman at the time of his death who was also killed in the plane crash. The estate was administered by David Nelson, Rick's brother. Fortunately, even though Nelson's death was sudden, he had some steps in place to protect his interests. A will left everything to his children from marriage (his out-of-wedlock child was ignored).

However, even though there was a will, problems arose. Nelson's ex-wife threatened a suit in order to claim life insurance money. She also attempted to take control of the estate away from David Nelson but failed. In addition, the parents of Nelson's then-girlfriend filed a wrongful death lawsuit against the singer's estate.

All of these issues were eventually resolved either via settlement between the parties or by the courts.

Drama Re-surfaces Decades Later
Interestingly, the estate of Rick Nelson made a recent reappearance in the news. That is because the heirs of the estate--his children--filed a lawsuit in 2011 against Nelson's former record label. At issue were royalties that the family claimed were owed to them under his original 1957 contract. Specifically, the family argued that the company was shorting them their share of income from digital downloads and streaming music agreements.

Fortunately, earlier this month, a settlement agreement was reached between the two sides. A spokesman for the record company announced the decision, noting that they are looking forward to working with the family to further promote the singer's most famous recordings.

Planning for an Uncertain Future
This example is an interesting reminder of how these decisions can have ramifications decades down the road. Obviously, at the time of Nelson's passing--and when his will was created--the idea of digital downloads and streaming music were unheard of. There was no way for administrators to understand how those issues would affect a contract, royalties, or inheritances in an estate.

All those crafting long-term plans now must appreciate that new technologies or issues may arise in coming decades that we simply cannot fathom now. As a result, it is critical to create plans that are flexible, providing a framework for any possible dispute to be resolved as efficiently as possible.

April is Financial Literacy Month - Plan for Your Future

April 8, 2014,

In the spirit of raising awareness of sound money management, April is officially deemed "National Financial Literacy Month." The U.S. Senate even passed a resolution on the matter a few years ago. The National Foundation for Credit Counseling usually leads the yearly effort, and many others in the financial world also use the occasion to discuss important money matters.

For example, Money Management International, a non-profit credit counseling agency, created a robust website sharing a variety of resources for consumers: The website provides helpful tools on basic financial information, income worksheets, debt load calculators, financial goal tracking, and more.

While much of the information is focused on very general money management skills, if recent poll data is accurate, a majority of Americans remain far behind in prudent planning. Consider that a recent National Foundations for Credit Counseling (NFCC) survey found that over 60% of Americans do have any sort of budget. In addition, the survey found that nearly one in three Americans do not put anything from their annual income toward retirement savings. It is perhaps no wonder then that "retiring without having enough money set aside" is the most commonly cited financial issue that worries Americans according to the NFCC survey.

All of this suggests that far too many residents are living each month without a clear assessment of how their spending may affect their savings and long-term financial future.

Estate Planning - Thrive in your Golden Years
It is impossible to know exactly what the future will look like. That holds true for every aspect of life, from health and relationships to finances. Yet, that is not an excuse to avoid any long-term planning. In fact, the uncertainty counsels toward the opposite--taking steps to best position yourself to meet goals regardless of the future. Elder law estate planning is a key component of that preparation. Beyond designating one's wishes at death, this work also ensures steps are taken to secure a happy retirement with appropriate senior care.

Our team of legal professionals is proud to work with families throughout New York on a range of estate planning matters. We encourage all residents to take use National Financial Literacy Month as a time to re-evaluate current practices and take necessary steps to lead a safer financial life. From personal budgeting and saving to crafting long-term plans, getting a handle on these issues brings enormous peace of mind. Give us a call today to see how we can help.

Understanding Estate Sales - What Can You Sell?

March 14, 2014,

Most legal matters have built-in complexities. Anyone who has purchased a home, for example, can appreciate the mountain of paperwork will dense legalese that must be filled out . Things are only made more challenging where there are significant emotions tied up in the dealings--like when the home was owned by a loved one who just passed away.

One common example of a process that many New York residents face with a mix of intense emotions and legal complexities is an estate sale.

No two families are the same. Some wish to go through with a sale as soon as possible to settle the matter and move on. Others take more time to process the situation before handling matters like an estate sale. In all cases, however, it is critical to proceed with an understanding of the legal requirements.

The Basics
Most importantly, one must understand what can be sold, when, and by whom. It is not as simple as adult children automatically being able to do whatever they want with their parents possessions. Answers to these questions will hinge on what estate planning was done beforehand. Use of tools like a living trust, for example, would likely streamline the process. On the other hand, those without any planning at all will have to wait for court resolution before anything can be done.

In general, all property can be labeled either as a probate asset or non-probate asset. Probate assets are those that must be collected and distributed through the court. When a will is used to pass on assets, then virtually all property in the decedent's name (individual who passed away) will be required to go through probate. Alternatively, non-probate assets pass to another automatically, or at least outside of the court's purview. This may include property held jointly with a right of survivorship, certain insurance benefits, or assets held in trust.

Those assets that do not need to pass through probate can be dealt with almost immediately. There will be a new owner or trustee who can do whatever they wish with the items, including sell them in an estate sale. Alternatively, probate assets cannot be immediately handled. Instead, the family must go to court and either present the will or have the court deal with the resolution per state intestacy laws. The court will appoint a "fiduciary" whose job it is to collect the assets and distribute them as necessary. This may include arranging a sale of a home. In more complex cases, like when the home is part of a cooperative, the same formal requirements must be met, including approval by a Cooperative Board.

Estate planning attorneys appreciate that on top of all of these legal details are very real emotional pressures. When it comes to an estate sale it is common for disputes to arise between grieving family members regarding what to sell and when. The stress and confusion is far more likely the less preparation and professional support is available. Feel free to contact our NY estate planning professionals for guidance on streamlining this process for your family.

Secret Marriage, New Will Leads to NY Estate Fight

March 6, 2014,

It is impossible to predict exactly how every family member will respond in the aftermath of a passing. However, as experienced will and trust lawyers know all too well, there are many situations that dramatically increase the likelihood of controversy that leads to a contested estate. Mixed families, a large age-gap between spouses, and secrecy are often signs of family tension that may erupt after a death.

A high-profile New York estate feud offers an example of that very situation.

NY Photographer Bern Stern's Estate Fight
Celebrity photographer Bruce Stern is well-known for his legendary photos of Marilyn Monroe--many taken just before her death. Stern died last year at the age of 83, leaving a roughly $10 million estate behind. As discussed in a recent Post story, family members are in bitter disagreement over how the estate should be divided.

Stern had three children, all from his first marriage that ended in 1975. As far as the children knew, their father's assets were to be distributed per the terms of a 2007 will that split half the estate between the children while giving the other half to his own photography foundation.

However, just before his passing, Shannah Laumeister came forward claiming that she and Stern were married in secret in 2009. She directed a documentary about Stern in 2010 and is nearly 40 years his junior. The adult children had no idea of the union.

Laumeister produced a second will from 2010 that created a private trust with all of the assets and gave control of the trust to Laumeister. According to Surrogate Court filings, Laumeister claims that the adult children would still receive cash bequests as part of the new will, but the details of those bequests are unclear.

Psychiatry Records & Questions About Mental State
Expectedly, the adult children challenged the 2010 will. The feud is making its way through the court system. Most recently, reports suggest that the Laumeister is fighting to block sharing of information about Stern's meetings with a psychiatrist.

For their part, the children argue that information about Stern's mental and medical state when the contested will was created is of obvious relevance. Alternatively, the younger wife argues that release of the information would permanently damage Stern's reputation. The value of his estate is closely tied with his artistic works and reputation-damage would significantly harm the estate, she claims.

An obvious take-away lesson from this story is a reminder that an experienced estate planning attorney can point out the many red flags that suggests a feud may be likely. A legal professional can offer counsel on steps to take that may eliminate secrecy or otherwise increase the chance of a smooth, conflict-free process that is resolved fairly and efficiently.

Marriage Matters - A Reminder of the Tax Benefit

February 28, 2014,

Earlier this week we discussed the tragic death of New York actor Philip Seymour Hoffman. There are many estate planning lessons to take away for Hoffman's situation, including the need to update a will after every life event. Hoffman unintentionally left out two of his children by not updating his will to include them specifically--his oldest son is named directly as a beneficiary of a trust.

Yet another lesson that fellow New Yorkers can take from the case is the role that marriage can play in these matters.

Companions vs. Spouses
According to reports, the mother of Hoffman's three children was long-time girlfriend Marianne O'Donnell. The couple was together for years, though they apparently were split in the few months before the death (allegedly as a result of Hoffman's relapse). At no point was the couple married. This is not necessarily an unusual state of affairs for couples today. Due to many personal factors, even the most intimate partners with decades together may choose not to formalize that union by way of a marriage. In the eyes of the parties, their relationship is the same regardless of whether there is official government sanction or not.

However, it is important to remember that the law does not view all couples the same. In fact, the entire purpose of marriage is to classify couples into different camps with thousands of rights on the line. Those rights have clear estate planning implications.

Per the terms of Hoffman's will the bulk of his suspected $35 million estate will go to O'Donnell. However, both New York State and the federal government impose an estate tax. Above the exemption amount, the tax can hit as high as 40%. Of critical importance, the tax does not apply to transfers between spouses. But Hoffman and O'Donnell were not married, and so she will likely be hit with an estimated estate burden of $15 million or more. A marriage would have eliminated 100% of that burden.

The bottom line is that in cases like this, marriage saves on taxes. There are many different situations where a transfer of wealth to another would be taxed except for transfers between spouses. While no one should make life decisions regarding marriage based entirely on taxes, one should not overlook the reality that marriage matters under the law.

Basic New York estate planning principles apply in virtually all cases, no matter if you have a $35 million estate or if your main asset is a family home. To ensure you take steps to protect your loved ones for the future, be sure to contact a NY estate planning attorney today.

Estate Battles the IRS - The Michael Jackson Example

February 11, 2014,

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

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

As discussed in an LA Times story this weekend, the IRS and Jackson's executors are miles apart on what is owed. The executors claimed that Jackson's net worth at the time of his death was $7 million. The IRS, on the other hand, valued the estate and exponentially higher--$1.25 billion.

As most know, one's estate tax burden is based on the total value of assets. Obviously then, the executors and the IRS have staggeringly different ideas about how much tax is owed. For their part the IRS claims that the total estate tax was $505 million. Not only that, but they claim that errors with the tax return trigger double penalties, adding an addition $197 million in penalties to a total tax obligation of $702 million. Keep in mind, this tax bill alone is 100x larger than the executors claimed the entire estate was worth.

How could the two sides be so far off? Apparently, the main dispute surrounds the value of Jackson's "image" and his rights to a valuable trust which holds rights to legendary songs (including almost the entire Beatles collection). The executors argued his likeness was worth $2,105 and that Jackson had no interest in the song collection because he had borrowed hundreds of millions of dollars against it.

Unique Assets & Appraisals
When it comes to intangible assets that do not necessarily have an obvious value, then disputes often arise between the IRS and an estate. While very few will leave an estate or assets as large (or unique) as Jackson, the issue of proper appraisals and subsequent tax burden is not uncommon among New York residents. As always, the best approach is to structure an estate so that these assets are not included at all and not factored into possible estate taxes.