New York Estate Planning Lawyer Blog

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.

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.

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.

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.

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.

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Passing on Religious Values At Death

Thinking Beyond the Paperwork--Creating an Ethical Will

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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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.

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Primary Progressive Aphasia Remains Little-Known Form of Dementia

The Rising Incidence of Alzheimer's Disease

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.

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Family Disagreement Over Special Needs Trust Leads to Court Battle

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.

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

New York Estate Planning Attorney Shares Common Estate Planning Mistakes

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

Adult Children Often Remind Senior Parents of Estate Planning Importance

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

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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Local residents visit our New York estate planning attorneys for professional assistance to protect and pass on their assets. Many also expect guidance identifying the items that should be considered an asset and included in the planning. Most area families need to consider things beyond homes, cars, investment portfolios, and similar items when creating their New York estate plan.

For example, what happens to frequent flier miles and rewards upon an individual's death? Many residents spend years and thousands of dollars in airfare racking up mileages and benefits in airline sponsored loyalty programs. A recent article in Payments News explained how many fliers spend time accumulating these "miles" and rewards only to leave them unused at their death. Some reports indicate that as many as 3.5 trillion miles currently remain unused in these programs. Interestingly, each airline has a different policy in place regarding transferability of loyalty benefits at death. American Airlines specifically allows accumulated mileage credit to be transferred to a person named in a court-approved will or estate plan. Other carriers, such as United Airlines, require that a beneficiary be named with the program, a fee be paid, and require an executor to contact the airline before miles can be transferred.

Another asset which one may wish to leave behind is the option to purchase valuable season tickets. Area residents often spend years waiting for the opportunity to become a season-ticket holder for their favorite teams. A post this weekend at The Faculty Lounge recently discussed this topic. Most teams have policies in place that allow an individual's decedents to gain the right to purchase. However, it is important to closely examine the team policy related to ticket transferability to understand what issues might arise. For example, there may be conflict over who gains the right if several children share in ones' assets. Many team policies indicate that there will be no transferability if several individuals share in the right and do not agree on a single transferee. Some teams also expressly prohibit a non-relative from receiving the right to purchase the tickets.

Loyalty reward points and season tickets are just two of an array of assets that an individual may need to consider in their estate plan. Credit card reward points often present the same issues as airline loyalty programs. Many online efforts--like blogs--are becoming important spaces that some may want to leave to others. Also, our New York estate planning attorneys understand the important of passing on values. That is why we often help clients create "ethical wills" which help residents pass on morals and principles gained over a lifetime.

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Proper New York estate planning has ramifications beyond the lives of the planners themselves. Whole families are impacted by these decisions. The far reaching consequences mean that it is often appropriate for concerned family members--like adult children--to remind parents of the value in proper estate preparations.

An article yesterday in the Monterey County Herald discussed the role that adult children often have in encouraging their parents to adequately create and update estate plans. A concerned daughter had contacted the paper to ask for help working with her parents through the process, because she noted that "their estate is a mess." Apparently several years ago the woman's parents contacted a small firm with only one office seeking help to create a living trust. The trust was created and then forgotten about. Several years later the family wanted to update the plan. However, the employee who created that trust had left town without leaving any contact information. The senior couple eventually gave up trying to contact the man and have resigned themselves to being satisfied with the outdated documents.

The couple's daughter explained that, like many area residents, her parents did not like to discuss the issue. The adult child knew that her parents' most valuable real estate holding was not in the trust and she was completely unaware if they had valid wills, list of assets, life insurance, or burial insurance.

Expectedly, the daughter was strongly encouraged to have her parents get in touch with a new, competent estate planning professional to update the plan. It was explained how it was imperative that the parents trust, will, and medical directives be in place and reflect the couples' current assets and wishes. The failure of valuable assets to be included in the trust would lead to unnecessary and costly probate.

These issues are often tough for many parents to discuss with their children. That is why it is sometimes necessary for children and other loved ones to take time to ask about estate planning matters and provide encouragement to ensure that the task is not ignored. The protection of important assets, security of long-term care plans, and necessity of clear medical directives affect everyone in a family.

Continue reading "Adult Children Often Remind Senior Parents of Estate Planning Importance " »

A common provision in wills and trusts, where one of the couple in a second marriage owns the marital home, goes something like this "My surviving spouse shall have the right to reside in the home for so long as he/she desires, provided he/she pays all taxes and insurance premiums thereon and shall maintain the premises in good order and repair. Upon his/her vacating the premises, the same shall be sold and the net sale proceeds distributed to my children in equal shares, per stirpes."

Sounds fair, doesn't it? After all, the surviving husband or wife gets to live in the house as long as they like, rent-free, subject only to payment of the carrying charges. In practice, however, the plan carries a significant defect. It puts the surviving spouse in a "Catch 22". If they find the house is too large, too difficult or too expensive to maintain they have the choice to leave, but then face the prospect of a significant expense to purchase another residence out of their own funds or, in the alternative, the cost of rental which may add thousands of dollars in monthly outlay.

For this reason, we recommend that the surviving spouse gets not only the use and enjoyment of the home for life, but also the use and enjoyment of the proceeds of sale of the home for life, to either purchase a smaller home or condo or use the income from the sale of the home to pay for a rental apartment. In our view, the children of the previous marriage lose nothing. The surviving spouse could have lived in the house for life so why not give him or her the flexibility to trade down as they get older? If there are excess sale proceeds, these can be invested to provide additional income to the surviving spouse. The co-trustee, perhaps the attorney as previously suggested in these pages, makes sure the funds stay intact for the deceased spouse's children after the second spouse dies.

A word of warning about leaving the house to the spouse for life. The trust or, if there is no trust, the children themselves, remain responsible for major repairs such as a new boiler or a new roof. As such, leaving a home in trust for the lifetime of the surviving spouse in a second marriage may end up a burden to your children. Good planning by a New York elder law estate planning attorney will consider whether the home should be sold within a fixed period, perhaps between two and five years from the date of death, to avoid this problem.