Recently in Living Trusts Category

New York Taxes & Part-Time Residents

August 16, 2013,

Our government is based on federalism, which is why we have different laws in individual states as well as federal laws. This allows for legal "experimentation," with representatives in each state free to make different rules in many areas, from taxation and healthcare to marriage and even crimes.

One complexity in living in such a system exists when laws conflict and individuals do not necessarily live in one state or another. Sometimes the conflict is easy to resolve. For example, if one state allows you to drive while talking on the phone and another does not, then citizens are forced to abide by the law of the state they are in at any given moment.

But sometimes it is not that easy. There is often much complexity when it comes to different estate planning and tax rules.

NY Income Taxes For "Snowbirds"
Late last month Forbes published an article that touched on one of those complexities, discussing how New York residents who winter in warmer states struggle with tax obligations. The story notes that it is often difficult for someone who splits time between two states to convince the higher tax state that their primary residence has changed, leading to no tax obligation.

A recent New York Division of Tax Appeals case illustrates the point. The couple at issue spends most of the year in a Queens home in the Malba neighborhood. In the mid-1990s the couple transferred the house to a QPRT. This refers to a "qualified personal residence trust" and usually used to transfer a home to others (in this case the couple's children) with gift and estate tax savings. Even though the couple's children technically own the home now, the seniors still live there most of the time and pay rent to the children. In addition, the seniors own a Florida home where they live in the winter.

The tax dispute in question was whether the couple owed New York income tax. They did not technically own a home in New York. In a somewhat complex ruling, the state of New York won, successfully arguing that the couple met both "domicile' and "residence" requirements. There are detailed rules and requirements about how these two locations are decided as a legal matter.

While this case related specifically with income tax, similar disagreement may arise with inheritance and estate taxes, as seniors may split time between different locations. For help understanding how different state tax rules may apply to your family, be sure to get help from an estate planning lawyer.

New Yorker Wins DOMA Case at U.S. Supreme Court

June 27, 2013,

Yesterday was a blockbuster moment for those who believe in equal marriage rights for all couples, as well as all those who follow important developments at the U.S. Supreme Court. That is because he Court issued two opinions that will surely be included in some Constitutional Law textbooks in the years to come.

Perhaps most importantly, the Court ruled in the case of Windsor v. U.S. that a portion of the federal law known as the Defense of Marriage Act (DOMA) is unconstitutional. In so doing, the Court's decision will have immediate impact on the rights and long-term planning of all married same sex couples in New York--as well as the other eleven states that allow such unions.

The Ruling
Justice Kennedy wrote the opinion for the divided 5-4 Court. Many observers expected Kennedy to be the swing vote in the case, but if he decided to strike DOMA (which he did), it was unclear what his underlying arguments would entail. More specifically, many thought that Kennedy might base his decision entirely on "federalism" grounds, arguing that, regardless of the merit of the law, it was not the federal government's role to make such sweeping decisions about marriage when those decisions have almost always been left to the states.

Yet the logic used in the opinion is far more sweeping. The crux of DOMAs unconstitutionality, said the court, was in its violation of gay couples rights to equal protection implicit in the 5th Amendment to the U.S. Constitution. Kennedy wrote, "The avowed purpose and practical effect of the law here in question are to impose a disadvantage, a separate status, and so a stigma upon all who enter into same-sex marriages made lawful by the unquestioned authority of the States."

Kennedy goes on to make clear the harm of the law, "Under DOMA, same-sex married couples have their lives burdened, by reason of government decree, in visible and public ways. By its great reach, DOMA touches many aspects of married and family life, from the mundane to the profound."

The Implications
So what does this mean for New York same-sex couples? Essentially, the "second-class" status of their marriages are now gone. All couples legally married in New York receive the same federal benefits (and obligations) as every other. This will apply to estate tax exemptions, Social security benefits, income tax filing options, immigration concerns and much more.

This marks an incredibly positive development for those who value equality and fairness under the law. For assistance understanding how this decision may affect your family's elder law or estate planning, please contact our team of attorneys today.

The 3 Generation Rule - Legacies the Last

June 26, 2013,

You've built a nest egg after years of consistent work, prudent planning, strategic risk, a lot of focus, and a bit of luck. You want to retire peacefully and provide a legacy that will hopefully secure some degree of wealth for you family for generations to come.

But what are the odds of wealth making it decades (or even centuries) after you are gone? If history is any indication, most inheritances won't make it long at all. Wealth surviving into the third generation only happens in one out of ten cases. As a recent Senior Independent story on the subject reminded, this principles takes the form of an often-used refrain: "Shirtsleeves to shirtsleeves in three generations."

The story points out that over the course of their lifetimes about two-thirds of Baby Boomers in the United States will inherit about $7.6 trillion. Yet, those same individuals will lose about 70% of that wealth before passing any of it on to their own children or other relatives.

Can you do anything to prevent this rapid dissipation in your case?

While it is usually impossible to have a 100% guarantee that wealth will survive indefinitely, there are many different steps that can make it far more likely. Those steps usually take two forms: (1) Taking advantage of legal tools that structure the inheritance in smart ways; (2) Having open conversations with beneficiaries so they understand money management and the importance of financial acumen.

In the first regard, various legacy trusts and "spendthrift" trusts exist which may be able to insulate wealth from beneficiaries who are not prepared to handle too much wealth too early (or all at once). An estate planning attorney can explain the prudent moves in your case. It usually depends on the size of your assets, type of assets, and unique family situation.

Regardless of specific legal planning, it is also critical to have honest conversations with family members about money management and financial responsibility. Also, it may be helpful to provide some inheritance early on, to get a feel for how the children will handle it. This may serve as a lesson for them in prudent financial smarts as well as provide you an opportunity to evaluate if safeguards needs to be put in place to protect their inheritance down the road. If family businesses are involved it may similarly be helpful to allow a second-generation family members to exert some control early on, so that are not completely blindsided by the decision-making process when you are not there to provide guidance and support.

The DuPont Case, Mental Illness, and Wills

April 26, 2013,

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.

Is the IRS Going to Crack Down on Non-Cash Charitable Deductions?

January 28, 2013,

Our estate planning attorneys often help New Yorkers create trusts that are used to pass on assets to charities. When structured properly, gifts to favorited causes is both a great way to give back and a smart financial move to save on taxes and ensure that your long-term inheritance wishes are met.

A Charitable Remainder Trust, for example, is sometimes a prudent estate planning tool. This is particularly useful for those with assets that have significantly appreciated who wish to save on taxes while generating an income stream on something that will eventually go to charity. Essentially, this works by creating a trust that is managed by the charity to which the asset will go. The trustee (the charity) then pays you a portion of the income generated by the trust for so many years or the rest of your life. Upon your passing the charity retains the principal.

These trusts have many benefits. They can take assets out of one's estate for estate tax purposes. Also, income tax deductions can be taken on the fair market value of the interest that remains in the trust. By using appreciated assets, the capital gains tax can also be avoided.

Changing in the Future?
All those considering leaving sums to favorite causes should learn more about the charitable remainder trust option to see if it is a good fit. It is also crucial for individuals to remain aware of any possible changes in the tax code which might alter how charitable donations affect one's tax obligations. With tight budgets on the federal level specifically, policymakers continue to make noise about limiting the tax benefits of giving to these organizations in certain ways.

Part of the problem, as discussed in a recent Accounting Today story is that many taxpayers may mistakenly take income tax deductions that violate current law. Specifically, the story points to a new Treasury Inspector General for Tax Administration report which found that nearly $4 billion of deductions are taken by taxpayers annually for "noncash" charitable contributions erroneously. While it is perfectly legal to take deductions on noncash contributions (like those that are often part of charitable remainder trusts), there are specific reporting requirements that must be met Many taxpayers are apparently skirting over those rules.

All of this may lead to IRS changes to crack down on those taking these deductions and lowering their tax liability without following proper protocols. The report itself identified six recommendations, such as better educating taxpayers and more aggressively enforcing the rules.

It is unclear what specific changes, if any, will be made in the coming year to deal with this issues. But, at the very least, this is a key reminder of the need to have professional help with all of these inheritance and tax issues to ensure that the law is following every step of the way.

New York Estate Planning Beyond Taxes

January 11, 2013,

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

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

Some of those issues include:

***Protecting assets in subsequent generations. Far from being taken by the government, many have concerns that an inheritance might be taken by a relative's creditors, angry spouse, or other. Fortunately, in certain situations steps can be made to provide protection so that any inheritance is secured from the uncertainties of the future. After all, if an asset is properly passed on only to be snatched away by a third-party, then it makes no difference if taxes were paid on the inheritance or not.

***Protecting confidentiality. One overlooked aspect of the planning is simply the speed at which it allows the process to unfold. When all assets must pass through the court's probate process, then the timelines to resolve everything are dragged out. In addition, probate records are public, and so anyone can learn of the details of the situation Keeping this private requires use of trusts and other tools that an estate planning attorney can explain.

***Plan for incapacity. Estate planning is not just about passing on assets. It also involves planning for possible disability or incapacitation. Who will make end-of-life medical decisions? Who will handle family finances if you cannot? It is a grievous error to assume any sort of "default" rules for this decision-making are sufficient. They usually are not. That is why a power of attorney and health care proxy need be used to leave no doubt about your wishes in these situation. Often family members remark on how grateful they were for these legal documents so that they were not required to make difficult choices in the midst of the stressful situation.

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

January 9, 2013,

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.

Estate Planning, Values, & Spirituality

November 21, 2012,

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

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

But how are these issues woven into an estate plan?

For one thing, as discussed in a recent article, "spiritual" estate planning is on the rise. This includes making inheritance allocations based on values, such as donating to religious charities or non-profits that support favored causes. In fact, according to one industry group--Charity Navigator--bequests to charities are up 19% this year as opposed to last year. Working with a professional beforehand can be crucial if one wants to leave sums to charity, because the gifts can be structured in various ways to ensure they are of maximum value for all parties.

On the other hand, some may want to incorporate their faith or values more directly into their plans, including trying to influence the actions of heirs with regard to respecting the faith. For example, a recent Wall Street Journal story on the tricky subject of using an estate plan to pass on religious values.

The article explained how there are a wide range of throny legal issues tied up in connecting inheritances with these faith-based requirements. Perhaps the most common heavy-handed approach invovles disinheriting those who are not spiritually devote or who marry outside of the faith. In most cases courts have upheld these requirements so long as they are not written to encourage divorce. Yet, even when legal, those familiar with these situations frequently explain that this often comes with very severe family controversy and confusion. As such, while the intentions are to honor one's religion, the ultimate consequences of this sort of feuding often do little to advance that cause.

In most cases, the best bet is still to share one's faith and values while alive, instead of trying to force the matter via inheritance details in an estate plan.

See Our Related Blog Post:

Passing on Religious Values At Death

Thinking Beyond the Paperwork--Creating an Ethical Will

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

November 7, 2012,

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.

See Our Related Blog Posts:
Court Rules Woman Must Give Up Kafka Papers She Inherited

Protecting Assets While Facing Uncertainty

Mike Wallace's Passing Reminder of Planning Needs for Dementia

April 13, 2012,

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

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

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

Dementia has obvious estate planning consequences. Most clearly, once one loses capacity they generally cannot make changes to their estate plan. If preparations are not made ahead of time, families may face significant challenges in getting the legal authority to make basic decisions for the senior to help with their safety and well-being. Courts and court-appointed guardians often must get involved--a prospect that no family wants to face.

There is an assumption that dementia symptoms arise slowly and so there will be time to make proper plans down the road. A sense of urgency is often lacking. This may be a mistake. For one thing, in some situations families may not notice capacity faltering until it is too late. In addition, there is no way to know what the future holds--it is not at all uncommon for one to suffer a stroke, face a serious fall, or otherwise end up in a state mental disability. Without a plan in place it will be a challenge for the family to take control after the incident to ensure the loved one's financial, medical, and general well-being.

See Our Related Blog Posts:

Primary Progressive Aphasia Remains Little-Known Form of Dementia

The Rising Incidence of Alzheimer's Disease

Special Needs Trusts for New York Families

February 27, 2012,

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

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

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

As all estate planning attorneys will explain, an important consideration in each of these financial preparation efforts is determining if trust assets can be reached by creditors. Because the stand-alone trust usually involves assets being transferred into the trust while the benefactor is alive and solvent, those assets cannot be reached by creditors. They are essentially removed from the benefactor's estate. Conversely, is the trust is not funded until the death of the individual, then the total assets are subject to creditor claims before they are transferred into the trust.

See Our Related Blog Posts:

New York Estate Plans Tailored for Those with Multiple Sclerosis

Family Disagreement Over Special Needs Trust Leads to Court Battle

Bizarre Estate Planning Strategy: Adopting A Girlfriend

February 9, 2012,

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

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

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

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

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

See Our Related Blog Posts:

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

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

New Survey Reveals Financial Planning Helps in Bereavement Process

November 16, 2011,

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

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

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

Many surveyed said that the situation would have been better had some consultation been done before the loved ones' passing. Nearly two out of three survey respondents admitted that they did not have financial planning advice at the time of the death, and virtually all of them agreed that they would have been better off had they sought professional advice. Among the one third of survey respondent who did have the help of professionals with long-term financial planning, the vast majority of them found the aid help to be "very helpful." They explained that the helpfulness came in two forms: actual assistance with finances and basic emotional support while interacting with the family at the difficult time.

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Estate Planning May Be A Family Decision

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Careful Consideration Required Before Selecting a Successor Trustee in Estate Plan

September 28, 2011,

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

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

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

For many individual trustees, the requirements of the role are quite complex and time-consuming. In addition, the emotion involved in the death of a loved one often results in the reappearance of family conflicts at the very time when an estate must be settled. It is often difficult for individual trustees who are relatives or close personal friends to prevent the turmoil from affecting the proper administration of the trust. That is why professional trustees are often chosen; they are trained in these matters and can ensure that everything is handled properly. Banks, lawyers, and trust companies often serve in this role. For decades our New York estate planning lawyers have helped many local families in this very capacity.

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

September 6, 2011,

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

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

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

Usually these trusts are revocable, meaning that they can be dissolved at any time. However, a few special types of trusts are irrevocable. For example, when a local family wants to protect assets from future nursing home costs they may create a New York Medicaid Asset Protection Trust. These irrevocable trusts have special rules that apply to how trust property can be used and transferred. Some legislative changes have recently been proposed which may limit the effectiveness of these special trusts to save assets from long-term care costs. Therefore, it remains ever important to consult an experienced elder law estate planning attorney to understand what options are available and prudent in your particular case.

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