New York Estate Planning Lawyer Blog

September 22, 2011

Surviving Spouses Should Seek Help From Financial and Legal Professionals

Few spouses are thinking clearly after they lose their partner. Yet, it is usually at that time when many major financial and legal decisions must be analyzed and made by the grieving widow or widower. Our New York estate planning lawyers know that families are able to provide much relief at this difficult time by preparing ahead. As a Wall Street Journal story this week explained, proper estate planning not only eases stress for the surviving spouse, but it also may prevent legal and financial mistakes being made by that spouse in the immediate aftermath of the death which could be impossible to undo down the road.

For example, some grieving widows and widowers believe that they have little need for insurance benefits following the tragedy. However, as one professional in the field explained, “if you have been living on income from two people, you should get an idea of what your monthly expenses are before you’re magnanimous with the money you just received.” In addition, many individuals make quick decisions about the sale of a home or the transfer of other valuable assets without fully considering the long-term effect of those actions.

Following a death in our area it is vital for families to contact a New York estate plan lawyer to receive assistance with the wide variety of tasks that must be completed. The estate transfer process can be time-consuming and stressful, especially if professionals are not consulted and mistakes are made. For example, pension plans need to be notified of the death. Those involved have to determine what debts of the deceased must be paid and which do not need to be paid. Survivors must also be cognizant of what funds they can use to pay for expenses after the death. Sometimes a spouse may have been using a power of attorney to write checks out of the deceased’s account. That authority ends at death, which means that the survivor may not technically have the authority to access the funds.

September 20, 2011

Many Challenges Face Estate Executors

by Ettinger Law Firm

For decades our New York estate planning lawyers have helped local residents use living trusts instead of wills to plan their affairs. For many clients a will simply creates more problems than it solves. For example, yesterday the Wall Street Journal published a story exploring the myriad of issues faced by a will executor–the person named to manage the estate of a deceased individual in a will. It was explained how a wide variety of complex tasks are required of the executor, there are legal repercussions when mistakes are made, and many relationships are ruined in the process of settling the estate.

Executors are often siblings or other family members of the deceased. It is the executor’s job to administer a will through the probate process by accounting for assets, paying debts, and distributing property. Red tape, complexity, tedium, and relationship conflicts are inherent in the process. Many professionals in the field report that there has been a steady increase in the number of “executorships gone bad.” Some believe that recent economic troubles have led to more inheritance fights as of late, complicating the executor’s job even further. When a will is challenged by an heir (a frequent occurrence), the executor is usually thrown into the middle of depositions, court appearances, and other legal situations that most would prefer to avoid.

Observers admit that the role of executor is generally not suited for amateurs. Often the individual is required to be aware of taxation rules, potential conflicts of interest, and even investment strategies like picking stocks and bonds. All of this comes with little pay, because state guidelines set the amount of money that an executor can receive.

September 15, 2011

When Considering Inheritances, Baby Boomers Fear Children’s Financial Acumen

by Ettinger Law Firm

Professional inheritance planning continues to rise in popularity among all classes of society as more and more seniors reach retirement age and come to appreciate the legal tools available to help in their planning efforts. Interestingly, a new poll discussed in Time magazine this month explains that many of the newest retirees from the Baby Boomer generation have doubts about their heirs’ ability to manage an inheritance. This is a common concern, and our New York estate planning lawyers work with many clients in this area who are specifically tailoring their plans to account for it.

The new survey found that only 49% of millionaire Baby Boomers indicated that leaving money to their children was a priority in their estate planning. When analyzed closely it is clear that the polling figures do not indicate that these parents have stopped worrying about the well-being of their children. Instead, many of them have deep concerns about the effect that a large inheritance will have on their offspring. For example, one-fifth of survey respondents felt that their children would simply squander the inheritance and a quarter of these seniors thought that receiving too much money would only make their heirs lazy. Perhaps because of this, a majority of these retirees admit that they keep their children in the dark about their exact net worth so as to prevent expectations about what will be left behind.

Fear about the financial sense of children has long been a concern for local community members. For decades, attorneys at our New York elder law estate planning firm have worked with residents who were worried about a family member’s ability to handle money. Fortunately, tailoring inheritance plans to account for spendthrift children is exactly a benefit one derives from seeking professional help in this area. A variety of trusts exist which allow parents to pass on the assets they feel appropriate to their heirs in a way that guards against their fears that the inheritance would be wasted, abused, or usurped by a non-relative.

September 14, 2011

Estate Planning for Disabled Heirs

by Ettinger Law Firm

Last week the Wall Street Journal‘s “Family Values” blog discussed the often challenging estate planning issues faced by families who are providing for a disabled loved one. Our New York estate planning lawyers know that more families are in this situation than some might suspect. The latest U.S. Census data shows that roughly 12% of the population has a severe physical or mental disability. When planning for the future it is particularly important for these families to closely consider how they want to leave assets to their heirs because of the effect that the asset transfers may have on their disabled relative’s access to public assistance.

Budget shortfalls are causing many state and local governments to cut support services to these residents. A common cost-cutting measure includes tightening income restrictions for those seeking to qualify for medical benefits and support services. As a result, it is vital that all families structure inheritances for disabled heirs so that they are not disqualified from the government help that they will likely need. Yet, research shows that two-thirds of parents and caregivers with disabled loved ones do not have plans in place to account for the long-term needs of these vulnerable heirs.

This is particularly unfortunate, because there are planning strategies that exist specifically to assist families in this situation. For example, a special needs trust can be used to leave assets to heirs with disabilities while ensuring that they keep government benefits like Medicaid and Supplemental Security Income (SSI). Before this trust was available parents were often forced to disinherit their disabled children lest they lose all their government support. Now, those who create a special needs trust can leave assets for the child’s use beyond that which they will receive from the government. Families can set aside funds for clothing, education, entertainment, household goods, healthcare costs, and many other future wants and needs for their disabled relative.

September 12, 2011

Estate Planning Tips For Providing One Child a Larger Share of Inheritance

by Ettinger Law Firm

There is often a default assumption that local parents wish to provide all of their children with equal shares of an inheritance as part of their New York estate plan. However, no two families are identical, and there are a variety of reasons why some parents feel it necessary to provide different assets to each of their children upon their death. The ability to tailor an inheritance using rules different than the default to suit a family’s specific desires is one of the main reasons why local families seek the assistance of New York estate planning lawyers. As one lawyer put it, “there’s nothing so unequal as the equal treatment of unequals.”

Most families take a variety of factors into account when deciding how to distribute their property. For example, one child may already be more financially successful, another may have a larger family of their own, and yet another may be estranged from the family. In other cases a parent may have already helped one child while alive–such as by providing down payment money on a house–and want that prior help to be reflected in the inheritance.

A Wall Street Journal story this weekend discussed how many families have questions about the best way to go about giving one child a larger share than another. Trusts are usually a more effective estate planning tool than a will. However, if a will is used, it is important that certain steps be taken to ensure that the uneven child distribution is capable of withstanding legal challenge. Part of that process involves being open and honest with family members about the inheritance so that children know about the terms while you are alive. This minimizes the surprise factor and may quell later suspicions. Having these conversations is often difficult, so as an alternative a video or instruction letter can be included with the estate planning documents to explain why a certain decision was made.

September 8, 2011

New York Estate Planning Pitfalls to Avoid for Widows

by Ettinger Law Firm

No matter what stage in life, all local residents have much to gain from conducting New York estate planning. However, proper financial preparation is particularly vital for those who have assets built up over a lifetime or who are nearing the age when long-term care planning is becoming more of a concern. One group which often faces unique planning needs are the recently widowed. As a New York Times article this weekend shared, these widows continue to be predominantly women and are often unfamiliar with issues like investing, taxes, insurance, and healthcare planning.

The article explains how one common problem faced by new widows is the myriad of individuals who may wish to take advantage of the situation. Many recently widowed have fallen victim to salespeople who make disingenuous promises while trying to sell investments, like annuities. Besides unscrupulous salespeople, some community members are also forced to deal with adult children who make requests that might not be in the individual’s best interest. For example, one advocate noted how some relatives may seek an advance on an inheritance by using arguments like, “How can you deny me this when we’re going through so much emotional pain already,” or “Dad would have given me the down payment money if he was still around.”

Dealing with these and similar demands can be particularly distressing for those already going through an incredibly difficult situation following the passing of a loved one. One advocate who now works as a counselor for the newly widowed explained that it is often best to let trusted financial assistants, like an estate planning attorney, help in those situations. She urges widows to “let that professional be the stingy one.” One of the main benefits of having professional guidance with these financial affairs is the aid that can be provided with complex inheritance issues and dealing with those who make demands on funds.

September 6, 2011

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

by Ettinger Law Firm

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.

September 1, 2011

Questions Remain Regarding Rights of Posthumously Conceived Children

by Ettinger Law Firm

Last month we shared information on the unique estate planning issues related to the inheritance rights of children conceived posthumously. A growing number of community members are cryopreserving their gametes for use through in vitro fertilization. This is a particularly popular process for those diagnosed with cancer and undergoing chemotherapy and for those in the military who are leaving on a tour of duty. The Centers for Disease Control and Prevention report that assisted reproductive technology accounts for only 1% of yearly births in the country. However, the overall use of the technology is rising dramatically. The total number of these births doubled in the last ten years, rising to 60,190 in 2009.

The expanding use of cryopreservation has presented novel legal questions about the rights of children conceived after the death of one of their parents. The inheritance rights of these children remain unclear, particularly as they relate to government benefits and trust participation. Several high-profile legal battles have ensued in the last few years as parents fought with the U.S. Social Security Administration to have their children receive their former partner’s benefits even though the child was conceived after the partner’s passing. The Social Security Administration usually defers to state rules regarding parentage and inheritance rights. Currently, most states only grant inheritance rights to children born after the death of a parent if they are conceived naturally.

Yesterday, Fox News reported on an appellate court decision in one of those cases where the court found that an 8-year-old girl born two years after her father’s death was not entitled to his Social Security benefits. This decision overruled a lower court ruling in the same case which had found otherwise. The appellate judges declared that the federal government’s interpretation of the state law was reasonable, and therefore the denial of benefits was upheld. The resolution in this case and several others like it lead many observers to believe that the United State Supreme Court will be forced to decide the matter soon.

August 30, 2011

Estate Tax Issues Continue to Plague Married New York Same Sex Couples

by Ettinger Law Firm

Thousands of same sex New York couples have wed since the state became the sixth to legally allow such unions last month. At the time our New York estate planning attorneys noted how the change means that these couples are no longer required to pay state taxes on domestic partnership benefits, will gain access to worker’s compensation benefits, can bring wrongful death lawsuits on behalf of their spouse, and can file joint state tax returns. In addition, surviving same sex spouses are no longer subject to New York estate taxes on assets they receive from their partners at death.

However, the fight for equality continues. Same sex marriages are specifically repudiated at the federal level through the Defense of Marriage Act (DOMA). This has significant repercussions on the estate planning needs of married same sex couples. These couples cannot file joint tax returns or joint bankruptcy petitions. Upon the death of one spouse the other cannot inherit veterans benefits or Social Security benefits. Also, property passing to a surviving spouse is subject to federal estate taxes.

Our New York estate planning lawyers work with families on plans that account for both state and federal tax and asset transfer issues. We understand the complexities that same sex couples continue to face when preparing for the future as a result of the divergence in the law at the state and the federal levels. These inequalities led several area publications to issue joint appeals last week calling for DOMA to be declared unconstitutional. For example, the Syracuse Post-Standard noted that “the law discriminates by denying homosexual spouses significant federal benefits that flow automatically to heterosexual spouses.”

August 26, 2011

Tips for Giving Financial Aid to Family and Friends

by Ettinger Law Firm

These tough economic times have placed many local residents in difficult financial situations. Many established families in our area may be considering ways to help out their less fortunate friends or family members who have faced recent financial bumps. However, there are often concerns about how tax issues will affect this generosity and whether or not certain giving will have consequences on inheritance plans. Whenever local families are considering large gifts it is helpful to consult with their New York estate planning attorney to understand how the law applies in their particular case.

Tax considerations are not the only thing that local families care about when considering helping out a friend or relative in need. However, there are various ways in which aid can be given, and it may be prudent to consider helping in one way instead of another based on tax issues. Unless the assistance is to one whom you are legally obligated to assist, such as a minor child, then the government will likely consider the gift in the same light that it would all others–including those intended to shrink an estate to protect it from other government taxes or benefit programs. These gifts will likely count against a lifetime gift exclusion amount, and therefore they may have consequences on a local family’s previous New York estate planning.

Forbes published a story this week explaining some options for families in this situation. For example, often the easiest way to avoid gift taxes is to give a value less than the annual federal exclusion amount of $13,000. Couples can combine this amount and may be able to give $26,000 to an adult child or other loved one in need without triggering tax consequences. Another alternative is to pay directly for the medical, dental, or tuition expenses of another. However, these payments must be made directly to the service providers, not to the individual whom the help is intended to benefit.