Upon visiting an estate planning lawyer for the first time and learning about available options, many are surprised at the flexibility of different legal tools involved in the transfer of property. Far from simply doling out assets to specific friends and family members, one has immense control in deciding how those assets are used, when they are received, and what can trigger the loss of those assets. In this way, unique plans can be crafty which account for any number of family dynamics--multiple marriages, concerns about ex-spouses, children with special needs, relatives with poor money management skills, and more.

Similarly, the same flexibility often exists with gifts to charity. Many New Yorkers decide to share part of their assets with favorite non-profit causes. Those gifts can be one-time transfers or they may involve the creation of trusts for use in specific ways. For example, one of the most common charitable trusts involves setting up a scholarship fund to an alma mater to benefit future students. The trust may be funded with various assets, growing over the years and helping countless students.

Those creating these trusts can set many different terms on the gifts. Perhaps you'd like the funds to be used solely for those interested in pursuing nursing or for those who came from a certain disadvantaged background. In most cases, an attorney can help craft the legal arrangement so that your exact wishes are carried out.

The flexibility of trust details is vividly displayed in a story about an old scholarship trust that a university is hoping to modify. As discussed in The Chronicle, Columbia University asked a court to alter the terms of a trust that come with rigid requirements for those who benefit from it. Specifically, students who receive the "Lydia C. Roberts" Graduate Fellowship are required to have been born in Iowa and attended a Iowa undergraduate school. They must also move back to Iowa for at least two years after their graduation. In addition, they cannot pursue law, medicine, dentistry, veterinary surgery, or theology. Most egregiously, the trust--created in 1920--specifies that the recipients of the scholarship must be "from the Caucasian race."

Of course, this is a blatantly discriminatory requirement--a product of its time. That is why the University is seeking to have the race requirement thrown out by the court. While no one can support discrimination in this way, the fact that the university is still forced to seek court approval to modify the terms--nearly 100 years after the trust was created--is a testament to the extreme power of these legal tools. They allow individuals to exert significant control over their assets even a century down the road.

The New York Daily News reported this weekend on more developments in an estate feud case that we have previously touched on. It is yet another testament to the lengths that some are willing to go when significant sums of money are involved. It is also a reminder of how even the closest family bonds can be destroyed by fights over an inheritance.

Mother & Son At Odds
Generoso Pope was a highly successful publisher, creating the well-known tabloid still seen in many grocery store check out lines: The National Enquirer. Generoso Pope died many years ago, and the publishing business was sold for several hundred millions dollars. This represents a huge estate that was divided between Generoso's surviving wife and son. Per the terms of the inheritance plan, the man's wife, Louis Pope, received $200 million. The son, Paul Pope, received $20 million. Other siblings also received sizeable inheritances.

For most families, that amount of money would seems sufficient to live off for a lifetime. However, as so often happens with large estates, feuding came immediately, with accusations being hurled on both sides about wasteful spending and withholding of funds.

Over the ten years that the mother and son have been squabbling, multiple civil lawsuits have been filed. From accounts of the family discord, most of the problems stem from Paul's extravagant lifestyle. He reportedly has spent the majority of his inheritance, and has already been given an additional $5 million from his mother. However, that has not stopped him from filing suit against his mother claiming that she is mismanaging her own inheritance which will result in him not receiving as much as he might when she passes away.

All of that culminated this weekend in the arrest of Paul Pope. While the exact charges are unclear, it may stem from an order of protection that Louis Pope previously sought over her son after his money demands became aggressive. In seeking the court order, the mother explained that her son "maliciously and repeatedly harassed (her) with cruel behavior (that) is causing (her) to suffer substantial emotional distress and to genuinely fear for her safety." She went on to note that he lives "an excessive and extravagant lifestyle, but has never had meaningful employment."

While inheritances worth hundreds of millions of dollars are unique--the issue of adult children with questionable financial management skill is not. New York families frequently have questions about how to best arrange an inheritance so that spendthrift children are not cut out but protected from blowing through wealth with poor managements skills. In our area, a NY estate planning attorney can provide tailored advice and explain the range of unique options available to account for your situation.

Celebrity estate planning complications and feuds are often used to illustrate basic planning principles or common problems. Perhaps none of those examples are as well-known, especially for New Yorkers, as the sad case of the estate of Brooke Astor. The legendary socialite and philanthropist died several years ago. Since her passing, a wide-range of claims were made regarding the distribution of her assets and criminal activity on the part of those responsible for her care and affairs in the later years of her life.

Astor reportedly suffered from Alzheimer's at the end of her life--an affliction that similarly affects many New York seniors. Unfortunately, also like many others, it seems that her condition was abused by the very people who were supposed to look-out for her.

Astor's son, Brooke Marshall, was criminally charged with exploiting his mother to funnel more money to himself. Marshall was ultimately convicted, along with a co-defendant, of illegally giving himself a $2 million "raise" to administer the estate. Claims also suggested that an amendment to Astor's will in 2004 included a forged signature.

The criminal conviction actually came more than three years ago, when the pair was sentenced to serve between one to three years in jail for their conduct. However, they have yet to serve a day as various appeals are worked out.

As reported by the New York Post, Marshall was in court again a week ago. The Manhattan Supreme Court justice handling the matter allowed Marshall to remain out on bail while his final appeal request to the highest court in the state--New York's Court of Appeals--is considered. If the Court decides not to hear the case, then Marshall and his co-defendant will be completely out of options and likely report to jail in mid-June. That would mark the end to the most drawn-out, contentious, high-profile inheritance controversy in recent New York memory.

Seamless Estate Planning
While most may not have the wealth of Brooke Astor, the other dynamics of the situation are the same for many: declining health, disagreement among children about inheritance amounts, pressure from in-laws, last-minute will changes, and more.

The general lessons are myriad. Be sure to seek out the help of legal professionals with a reputation for honest dealing and whom you trust. Be forthright about various family dynamics that may come into play in the aftermath, even if it involves difficult conversations about family members. Do not delay, as one's health is never certain.

By following these basic principles, one can be in the best position to ensure an inheritance is handled efficiently and exactly as one wishes

Residents are often warned to complete their estate planning--wills and trusts--before it is "too late." Most assume that the planning is only "too late" if they die before getting it done. But that is a mistake. In many cases "too late" actually refers to losing the competency to create the legal documents. As a practical matter, it may even mean before one even has the appearance of mental health issues, because even a hint of problems may open the door to legal challenge from others.

Estate planning is about ensuring one's wishes are carried out and maximizing the preservation of assets without controversy. Limiting that controversy includes completing the planning early and efficiently, minimizing the risk of problems down the road. Thought of in that way, "too late" is far earlier than simply "before you die."

John duPont Estate
Legal issues related to the inheritance planning and mental stability recently made headlines with the passing of multi-millionaire (and convicted murderer) John duPont.

An accomplished natural scientists, duPont was known as a renaissance man of sorts, with a wide range of interests and quirks. He collected a shells and birds that now don the halls of natural history museums. He even authored and illustrated several books on birds that are highly regarded in the field. DuPont maintained an extensive stamp collection, at one point paying nearly $1 million for a single stamp from Britain. He also was an athlete, became a coach, and was a financial backer for various U.S. Olympic teams.

However, all of these interests were apparently tempered by mental instability. Eventually, in 1997, he was convicted of murdering a man in his home--a wrestler that he coached. At trial he was deemed mentally unstable, and many have assumed him to be a paranoid schizophrenic. The official adjudication was "guilty but mentally ill."

DuPont died in prison two years ago. At the time, his estate was valued at over $500 million. In the subsequent two years, much of the state was liquidated, and many of his famous collections and property continue to reach auction.

Since his passing his family and other interested parties have engaged in endless fighting over the future of the fortune. DuPont had several wills, but the most recent was signed only three months before his death. That document left most of the estate to a Bulgarian wrestler as well as some to his attorney. However, the duPont family is challenging the will, claiming that his previous adjudication as mentally unstable invalidated the most recent will. If a court agrees, they may go back to a previous will signed at a time he was stable or come up with alternative modes of dividing the assets.

Reports suggest that even though the feuding has been ongoing for years, it is far from complete. It now stands as another tragic example of the complexities of estate planning--a reminder of the need to act early and comprehensively to avoid infighting and settle matters outside the purview of the courts.

Digital estate planning has attracted more and more attention in recent years as online assets become more central to our lives. On a legal front, the rules regarding inheritance destruction, and/or preservation of these online accounts remains unclear. That is because most rules are based on the terms and conditions of each individual social network or online program. For example, the process of taking down a Facebook page of someone who has passed away is not the same as taking down a Twitter account. There is little uniformity.

However, as the issues related to passing on access to these accounts grows, more social networking companies are working to enact different procedures and protocols to make the transition easier.

Passing on Google Account Data at Death
For example, last week the internet giant Google announced a new plan to help account users pass on access to their account in a seamless manner. According to reports on the policy change at the Wall Street Journal, this means that Google "became one of the first major Internet companies to put control of data after death directly into the hands of its users."

Per the policy changes, users of various Google services can now use a dashboard to set up a plan to take effect upon a certain period of inaction. Specifically, users can either delete account data or pass on data to a third party after either 3, 6, or 12 months of inactivity. This service is known as Google's "Inactive Account Manager," but most have colloquially begun referring to it as setting up your "Google heirs." The manager allows one to set up this process for most of Google's major services, including Gmail, Google Drive (cloud storage system), the Google+ social network, and more.

Importantly, even under this new protocol, Google does now allow a third party to actually control access to these accounts. This only refers to passing on data (emails, messages, pictures, etc.). That means that if you'd like to ensure your heir has actual access to manage these accounts, you will need to come up with alternative arrangements. Those alternatives might include having a running list of passwords and account names to be given to a set party upon death. There are many online versions of these "password lock boxes" which one can use. Some are free while others offer more advanced dissemination of online account for a fee.

At the end of the day, it is a good sign that Google is taking step to address the digital assets issue. Hopefully more and more networks take the same steps, preventing what is becoming a clear estate planning problem that many families must deal with in the midst of grief.

The last few months of 2012 were filled with mass speculation about how many federal tax issues would ultimately be decided. One part of the high-profile "fiscal cliff" proposal and competing options was the estate tax. As oft-discussed, the final tax details could have fallen anywhere between a $1 million or $5 million exemption level, with rates anywhere from 35% to 55%. Fearing that no agreement would be made and the country would "go over the cliff," many local residents conducted last minute wealth transfers to take advantage of what was assumed to be relatively favorable rates in 2012 that might disappear in 2013.

As we now know, the country did not go over the cliff. As for the estate tax, the compromise did not see nearly as sharp a rise as expected, with a $5.25 million exemption level and 40% rate (up somewhat from the 35% in 2012).

Considering that the concerns which led to many transfers in late 2012 were false alarms, is there anything that can be done to reverse the transfers? That was the subject of a recent Forbes article discussing the "Buyer's Remorse" of many who pulled the trigger on different financial plans as a result of tax uncertainties.

The story reminds that wealth transfers to others--usually children or grandchildren--can be reversed only in certain circumstances, depending on how the arrangements were crafted. Fortunately, in most cases the transfers were made via trusts with "controls" attached. Those control often allow changes to be made which can help when seeking to effectively take the gift back.

Alternatively, the story explains how having a spouse can have the same effect. That is because in many cases the transfers gave large gifts to children in trust. Those transfers usually allow one's spouse to use the funds (both income and principal) in any way that they chose. In that way, a couple may still have use of funds as if a gift wasn't made.

The only way to know your options for sure are to work with your financial advisor and estate planning attorney to get tailored advice. Each financial transaction is different, and there is significant flexibility in how different trusts are set-up. The options for a "do over" hinge on those details. Even if you did not conduct end-of-year transactions in 2012 ,this situation is a helpful reminder of the need to think clearly in the future about whether or not you want certain planning actions to be revocable or irrevocable. There are different benefits to each, but it is critical to understand what steps are permanent and what steps are not when working through long-term financial planning and asset transfers.

Yet another celebrity has passed away unexpectedly, perhaps without conducting any estate planning. She left behind a complex family arrangement filled with disagreement and a fortune estimated at nearly $25 million. Telemundo star Jenni Rivera was a household name in Mexico when she died last month in a plane crash at the age of 43. The tragedy struck just as the singer was poised to make a breakout in the United States entertainment industry with a starring role in an ABC television show.

Complex Family Life
Obviously using trusts and having a will for inheritance issues is critical for all families but especially for those with large fortunes and complex family arrangements. Rivera fit the bill on both accounts. According to a recent Forbes article, she was married three times. The first two ended in divorce, with her second husband passing away in 2009. At the time of her death she was technically still married to her third husband, but that marriage was in the midst of divorce at the time. Rivera had four children in total from her first two marriages. There are significant age differences between the children, as she had her first when she was only 15 years old.

It is obvious from even that brief explanation that there are a seemingly endless possibilities for infighting over the fortune. But it gets even more mysterious. That is because Rivera's sister has come forward with a letter that she claims laid out the singer's wishes. The letter seems to indicate that the singer wanted the sister to inherit her assets, manage her business affairs, and take care of her minor children.

So how will this all shake out if the singer did not use trusts or have an official will? It is impossible to predict, as the court battle will undoubtedly drag out for a length of time before any resolution is reached. On one hand, the state where the singer's affairs will be probated have intestacy rules that would seem to give half of the estate to the third husband. Unless they had put some legal documents in place ahead of time, the fact that they were in the midst of divorce is of no consequence. They were still technically married at the time of her passing, and that fact would determine the outcome.

It is also unclear whether the letter will be considered a valid holographic will. This refers to a will written by hand and signed by the individual who died. In New York, holographic wills are generally not acceptable, so the letter would likely have no effect here (even more reason for New Yorkers to visit with an estate planning professional). However, this rule differs state to state and so it may complicate matters in resolving this particular affair.

In any event, the sad passing of Jenni Rivera is yet another reminder of the fact that none of us knows for sure what tomorrow might bring. That is why prudent planning now--no matter what your age--is a wise choice.

The Daily Jeffersonian published a story recently on the bizarre details of a case involving a lottery winner's apparent murder and the subsequent estate battle. Like the plot of a Hollywood crime drama, the tale includes a mysterious death, a series of hidden family feuds, and considerable money on the line. While quite dramatic, it is a vivid example of the difference that common sense estate planning can make in the aftermath of a death.

Money & Murder
The case centers of the estate of Urooj Khan who immigrated from India in 1989 and established several successful businesses. In 2010 he hit a jackpot and won a state lottery; his actual take-home from the winnings were about $425,000. According to reports, he planned on using the windfall to pay off his mortgage, expand his business, and donate a sizeable sum to a local children's hospital.

Unfortunately, his long-term planning was for naught. A few days before he was set to collect his winnings, after a dinner with family, he became very ill. He collapsed that night and ultimately passed away. It was only later that the strange circumstances of his death became known.

According to published reports, officials at first assumed the death was due to natural causes. However, when a relative came forward with suspicions, investigators looked closer. A toxicology report was authorized and a lethal amount of cyanide was found in his system. He had been murdered.

No Estate Planning
As you might expect, the murder of a middle-aged man just after he won the lottery led to immediate speculation about who could have been involved. Authorities have yet to arrest anyone for the crime or name suspects; the man's body is set to be exhumed, indicating that authorities are still working to collect evidence.

Money is the likely motive in the murder, and speculation is rampant about who may have played a role. For one thing, Khan apparently did not conduct any estate planning before his untimely death. No trusts exist to pass on assets seamlessly, and there is no will to indicate who he wanted to have his assets.

As often happens in these cases, a court battle ensued. Intestacy laws in the state suggest that the man's wife and daughter (from a different relationship) would split the assets. However, Khan's siblings have voiced concerns about the inheritance and have suggested that their brother's wife might not properly protect Khan's daughter's share of the money. Khan's ex-wife has also come forward claiming that she did not even know that Khan or her daughter was still in the country, as she assumed they had moved back to India.

Considering that Khan's wife is set to inherit, many have questioned whether she played a role in his passing. For example, reports indicate that Khan's wife previously claimed that she, her husband, her daughter, and her own father ate the same meal the night before his passing. However, the meal was lamb curry, which the wife would not have eaten on account of her vegetarianism. In addition, her own father has come under suspicion, as he owes over $124,000 in federal tax liens.

The saga truly has the makings of who-done-it murder mystery. One can only hope that authorities are able to get to the bottom of the situation to ensure justice and fairness.

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

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

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

On the following day, March 27th, the Court will conduct hearings on the second case, United States v. Windsor. This is the legal matter that originated with a New York couple and has more direct bearings on the rights of local same sex couples. The Windsor case, if it survives past the standing issues, will decide whether or not the Defense of Marriage Act (DOMA) is constitutional. As readers know, DOMA acts a bar that prevents federal recognition of even state marriage for same sex couples. This has implications on issues like estate taxes and qualification for federal benefits, including Social Security.

Obviously it is important for all couples who may be affected to follow as these cases are argued and then decided. Following these March hearings, it will likely be several months before the justices reach their opinion and release it to the public. While the final date is impossible to predict it is likely that the judgement will be issued sometime in late June. Also, the changes may not take effect immediately. Depending on what is decided it could be weeks or even months before the implementation date of certain components. In any event, it remains critical for same sex couples to be diligent about their planning so that they are protected right now, no matter what the future holds.

Chances are you have already heard that a bipartisan agreement was reached on New Years Day which averts the significant tax increases and spending cuts demanded by the so-called "fiscal cliff." The agreement certainly went down to the wire, with the Senate passing a bill on the last day of the year and the House passing the same bill the following day. Up until the end it was unclear if a compromise could be reached, as House leaders initially claimed that they would amend the Senate bill and send it back to that chamber. In the end, however, a vote was taken on the Senate bill without any changes, passing with support from members of both parties.

The compromise legislation does not resolve all of the issues in disagreement between the parties. More negotiation and legislation will be needed in the coming months to settle those other matters.

The Basics of the Deal
A few aspects of the compromise have direct bearing on long-term planning for New Yorkers. Perhaps most obviously, the estate tax levels have been set, presumably for the indefinite future. Per the agreement the highest tax level will be 40%, with a $5 million exemption level pegged to inflation. That is a far higher exemption level and lower rate than would have taken effect if the fiscal cliff proposals were enacted. It is also better for opponents of the tax than the main proposal offered by the Obama Administration of a 45% rate and $3.5 million exemption level.

Additionally, the agreement makes tax changes to retirement accounts that many community members use as part of their long-term financial planning. The new law will convert 401(k)s into Roth IRAs. Essentially, the change alters when the funds put into these special retirement accounts are taxed. While 401(k) contributions can be deducted right away (providing a tax savings on the front-end), Roth IRA contributions cannot be deducted. Conversely, while a Roth IRA withdrawal is not taxed, a 401(k) withdrawal is taxed. Lawmakers are pushing residents away from 401(k)s so that more tax revenue is collected in the short-term instead of the long-term.

In addition, many different changes were made on tax rates in general. The 2% payroll tax reduction was allowed to expire, which will affect virtually all residents. The income tax on high-income earners ($400,000 for individuals and $450,000 for couples) will rise, and the capital gains tax on those same high-income households will also rise.

If you have any questions about how these federal legal changes might affect your estate planning in New York, be sure to contact our office to see how we can help.

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

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

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

In this midst of this tragedy and custody fighting, the children's mother has been making strange requests of the $1 billion trust fund that the two teens will inherit when they turn 21 years old. The large fund is currently managed by JPMorgan with specific rules about how much funds are dispersed to the children while they remain minors. Recently, the mother has been making large, somewhat bizrre requests of the trustees, claiming that the children "feel like they are poor" because of the trustee's denial of many of the requests.

Right now the family received a range of monthly allotments, including $8,000 for housing, $1,800 for food, $3,600 to rent a car, $500 for gas, $2,000 for random monthly expenses, and pre-pad nanny service, tuition, medical insurance, and more. All of this, however, is apparently not enough and the mother has been making repeated calls for more money. For example, $6,000 was requested for a Halloween party, with the trustee providing only $2,800. At Christmastime, the mother asked for $50,000 to cover expenses for gifts and several trips. That request was denied.

In the midst of all of these financial requests, the trustee asked a Manhattan Court for guidance on how to respond to the financial requests. As often happens in these cases, the court has appointed an independent guardian to act in the children's best interest in the matter. It is still pending with the court.

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Protecting Assets While Facing Uncertainty

Is it possible to receive too large of an inheritance? Of course most community members want their family members and friends to be helped in various way by receiving an inheritance. However, few want that inheritance to fundamentally alter the character-building efforts of the recipient or to come with more baggage than necessary. It is not always easy to determine how to most appropriately split an inhertiance between different indiviuals and outside causes. As with everything related to estate planning, careful thought must be involved. Not all goals are best met by simply saying, "Give everything to my children."

This principle is best illustrated by a story we have touched on frequently, the legal battle over the inheritance of Whitney Houston's daughter. Ms. Houston's daughter inherited the entirelty of her mother's roughly $20 million estate. However, the young woman's grandmother and aunt, the executors of the estate, have serious concerns about the daughter's ability to handle that inheritance at such a young age. The executors basic argument is that Houston's wishes were to provide long-term stability to her daughter (now 19 years old), and those wishes are not kept by the current disbursement schedule. The legal case is on-going, and it remains unclear how much the daughter will challenge the request.

While this sort of situation might seem unique to celebrities and those with unique family situations, the underlying principle exists for many local families. There is such a thing as receiving too much too soon. It is reasonable for parents to have reservations about their children's ability to have an inheritance in a safe, responsible manner. Fortunately, tools exist to take those concerns into account. One need only be clear and comprehensive in estate planning matters to provide an extra layer of protection to guard against an inhertiance damaging one's motivation and self reliance.

Some of those issues were touched upon in a CNBC story late last week. A financial advisor shared a common refrain noting that "ideally one would set aside enough funds to allow our family members to do anything they could do, but not so much that they could do nothing."
How do you do that?

A discretionary trust is the best general tool. The trust holds assets and allows the one who creates it to set various guidelines for how those funds will be given to the beneficiary. Those guidelines mght include protections against third-parties receiving the money (perhaps in divorce) or delineate the specific things on which the funds can be spent (i.e. a home). However, it is critical to keep these documents properly updated--otherwise, they still may not work as desired when the time comes.

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Too Much Inheritance Too Soon