New York Estate Planning Lawyer Blog

September 3, 2013

IRS Issues Guidance on Federal Taxes for Same Sex Couples

Last week the Internal Revenue Service (IRS) released information on what has been dubbed a “hugely important” questions for same sex couples. Essentially, the new rules mean that same sex couples who are legally married in one state will still be treated as married for tax purposes by the federal government, even if they move to a state which does not allow same sex couples to marry.

More Protection for Couples

While the U.S. Supreme Court’s landmark gay marriage decisions last summer were seen as a huge leap forward for equality, the decisions did not come close to permanently settling the matter. A majority of states still do not allow same sex couples to marry. This creates a complex patchwork of rules for taxes, inheritances, public benefits, and privileges. Same sex couples can be treated very differently simply by crossing a state line.

August 30, 2013

Delaying Social Security: Should You Do It?

by Ettinger Law Firm

There is no such thing as universal financial advice. When reading any news story, blog post, or magazine article, one must remember that any advice or discussion about financial topics are general–they may not be best choice in your particular case. Many decisions about investments, use of trusts, and similar matters should only be undertaken after consultation with a professional upon explaining your exact situation.

But that is not to say that it isn’t important to learn about some of the general issues beforehand to better understand common financial planning themes. For example, what are the pros and cons of delaying the receipt of Social Security benefits?

A Q&A story from the Herald provides a helpful summary of the issue. A questioner just turned 62 years old. He was wondering if he should start taking Social Security now ($1,800 a month), wait until he is 66 years old ($2,4000 month), or wait even longer.

August 29, 2013

New Rules: Reverse Mortgages Will Be Harder to Get

by Ettinger Law Firm

One tool that seniors can use to receive funds for long-term care are known as “reverse mortgages.” A reverse mortgage works by converting home equity into cash–either a line of credit, monthly payments, or lump sum. The individual can remain in the home at this time, with the loan (and interest) due either upon the borrower’s death or moving out of the home. Reverse mortgages are only available to those who are at least 62 years old.

Shifting Rules

As reported recently in the Wall Street Journal, the rules about reverse mortgages are about to change. The U.S. Federal Housing Administration insures these mortgages and has power to regulate how they work. Not long ago the FHA decided to modify the program. The underlying goal of the changes are apparently to lower default rates and ensure borrowers are not unknowingly biting off more than they can chew.

August 26, 2013

How Does New York Stack Up for Retiree Taxes?

by Ettinger Law Firm

Do you have enough money to retire? It is a questions that tens of thousands of New Yorkers ask themselves every day. When talking with attorneys and financial advisers, many factors are weighed to determine whether enough resources are available for one to have the type and length of retirement that they want and need.

One of those factors, as always, is taxes. Retirement income is frequently taxed, with a portion of money going to state and local government. These are not necessarily trivial amounts, as the exact size of the tax burden may affect whether or not the nest egg is large enough to cash in one’s chips and begin the next phase of life.

Federal taxes will obviously be the same everywhere, but the rules about retirement taxes vary considerably from state to state. When making long-term plans regarding finances, it is critical to understand how state tax rules will affect your retirement

August 23, 2013

IRS Valuation & Taxes – The Michael Jackson Examples

by Ettinger Law Firm

Death and taxes; the two constants in life. There has been significant discussion in the past few years over the one tax that is itself most closely tied to death: the estate tax. At the federal level, the President and Congress have debated the exact rate of the the tax and at one point it should kick in.

But once those details are set, it is still not entirely easy to determine what one’s total estate tax bill is. That is because most individuals have assets whose value is hard to gauge. It would be straightforward if all of one’s wealth was in a bank account with a set balance or stocks with a clear value.

That’s not how it works in the real world, however. Instead, many have assets that must be “valued” before added to a tax bill. Who does the valuing and what decisions they reach may ultimately have significant effects on how much of an estate goes to Uncle Sam. As you might imagine there is frequently considerable disagreement regarding this matters.

August 21, 2013

DOMA Ruling & Retirement for Same Sex Couples

by Ettinger Law Firm

Much discussion around the Windsor case that struck down DOMA dealt with the estate tax. As a result of the decision, married same sex will indeed be privy to the same federal estate tax exemptions as their heterosexual counterparts. But the effects will go well beyond taxes at death. In fact, it is important for same sex couples to remember that federal recognition of their marriage will also affect retirement planning.

The sweeping ruling granting federal equality will likely mean that many same sex couples will need to “re-do” planning that they previously undertook to account for their unequal status under the law.

Retirement Planning

August 19, 2013

Issues with Family Vacation Homes

by Ettinger Law Firm

Many New York families have vacation homes. While the reference often conjures up images of the super-wealthy wintering in palacial estates, the truth is that owning a second piece of real estate in a favorite location is not only for the elite. Middle class families who prudently save often decide to purchase a second home for investment purposes.

Considering the frequency of these homes, it is important for families to be aware of some financial and estate planning issues that they may create. A Forbes story from last week provides a helpful introduction into the topic.

Unfortunately, the use and future ownership of these homes is often cause for confusion, misunderstanding , and argument. For one thing, parents and children often have different ideas about the property. Is it meant to be a family keepsake that is passed down through the generations as a meeting place and memory maker? Or is it simply an investment item that can be sold if necessary without much thought? Often different family members have different levels of attached to these homes. One sibling may hold the location dear and never dream of getting rid of it while another may have few memories of the home and not wish to hold onto the property if it does not make financial sense.

August 16, 2013

New York Taxes & Part-Time Residents

by Ettinger Law Firm

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.

August 14, 2013

Reminder: More Estate Planning Opportunities for Couples After Windsor v U.S.

by Ettinger Law Firm

A JDSupra post from last month offers a helpful reminder of the changing legal landscape for New York same sex couples who are married.

As virtually everyone knows, in late June the U.S. Supreme Court declared the main portion of the federal law known as the “Defense of Marriage Act” (DOMA) unconstitutional. The crux of the particular case, Windsor v. United States, related to the estate tax. Windsor, a New York resident, was forced to pay over $350,000 in estate taxes following the death of her wife, Thea Spyer. The couple’s marriage was legally recognized in New York, but the federal government treated the pair as strangers.

Estate Planning Options

August 12, 2013

Children on Famed Football Coach Challenge Will

by Ettinger Law Firm

The State recently reported on another “will contest” involving a well-known South Carolina family. The story is an example of a very common estate planning problem, disagreement between adult children and a second (or third) spouse.

The basics of the family situation are well known. The patriarch, former University of South Carolina football coach Jim Carlen, had three children with his first wife, Sharon. In the early 1980s, Carlen divorced Sharon and married his second wife, Meredith. Carlen and Meredith had one child together. While specific details are sparse, it seems that Meredith and the Carlen children from the first marriage may not have had the best relationship. Tension of this sort is quite common among all families with parents who re-marry following divorce or death.

In Carlen’s case, the children are claiming that the man’s second wife exercised undue influence on him in his waning years, taking advantage of his dementia. Carlen apparently wrote a series of wills (among other estate planning documents). The first, in 1970, left his assets to his wife and children. All subsequent wills were similar, with the children left substantial property.