New York Estate Planning Lawyer Blog

June 4, 2011

Parents Grapple with Effect of Inheritances and the Meaning of Money

New York inheritance planning involves passing on values as well as assets. No matter how large the family estate, most parents think long and hard about how their inheritance will affect the lives of their children. For many there are no easy answers to questions like how new wealth will affect their children’s independence or how much wealth is the appropriate balance between proper inheritance and philanthropy.

As a story last week in the Belleville News Democrat explained, many parents are taking steps to share important information about the meaning of money as part of their inheritance plan. Most families strive to pass on the right amount of money so that children are provided for but still maintain the incentive to work, strive, and succeed.

One hardworking family, including a 60-year old retired teacher and 62-year old real estate broker, explained how they have worked with their now 30-year old daughter on financial matters, noting “We really want to encourage her to develop a personal financial plan, a personal philosophy, and become really familiar with the types of investments.” The family admits that frankness and early discussions about these issues is important. Children should know what to expect and parents should not be afraid to share their concerns with their loved one.

Some are worried that their loved ones may be unprepared to handle the estate that they receive. Those families often face issues with asset planning for spendthrift children. They are aware that their children are poor at handling money or inexperienced with such matters. Many options exist for parents in those situations. For example, trusts are perfect tools to ensure that a child has access to reasonable assets but is unable to abuse the overall value of the estate. In these situations a designated “trustee” manages the actual estate with rules about what the child receives and when they receive it.
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June 2, 2011

$100 Million Estate Finally Reaches Relatives After 92 Years

by Ettinger Law Firm

An important benefit of visiting with a New York estate planning lawyer to help with your asset planning is that on top of carrying out your wishes, the professional can share avenues available to you of which you may not be aware. For example, many area residents are under the impression that their will is nothing more than a document that specifically divvies up assets. In reality wills can be crafted in virtually unlimited ways depending on specific family dynamics and the ethical values of the testator.

Perhaps no high-profile case better illustrates the complexity with which a will can be drafted than the story of Wellington R. Burt. At one point one of the richest men in America, Mr. Burt made his wealth in the robber baron age and was primarily involved in the lumber industry. Mr. Burt lived to age 87, passing away in his Michigan mansion in 1919 with an estimated net worth around $60 million.

The lumber giant gained notoriety following his death as the details of his will were revealed. Mr. Burt was particularly careful to ensure that his living relatives received only a small part of his fortune. To avenge an apparent family feud, Mr. Burt left his children relatively small annual payments from $1,000 to $5,000–except for one favored son who received $30,000 yearly. The rest of the man’s estate was held in trust until 21 years after the death of his last direct descendant alive at the time of his death.

ABC News reported recently that that final requirement was met in 2010–92 years after Mr. Burt’s passing. Mr. Burt’s last grandchild died in 1989, triggering the 21 year wait which finally expired in 2010. Last month the twelve descendants of the lumber tycoon reached an agreement to split up the estate now valued over $100 million. Based on seniority, the individuals received values ranging from $16 million to $2.5 million.

While a “spite clause” is perhaps not advisable for many area families, the case of Wellington Burt stands as an evidence of the immense flexibility that exists to all those considering what to do with their assets following death.
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May 31, 2011

Lack of a Will Leads to Controversy in Estate of NFL Legend Gene Upshaw

by Ettinger Law Firm

New York estate planning is often given little thought by some local residents until a specific event brings attention to the issue. A retirement, death of a close friend or relative, and similar occurrences often act as a catalyst leading residents to consider plans for their own affairs. Unfortunately, for many residents that triggering event never occurs, and they end up waiting too long to properly prepare matters related to their estate. It is in those cases that controversy and disagreement often leads to fighting among surviving relatives.

That appears to be what happened with the estate of NFL football great and union leader Gene Upshaw. Earlier this month The Washington Post reported on the saga surrounding Mr. Upshaw’s death, lack of will, and controversy among his friends and family in the aftermath of his death. The 63-year old Upshaw was vacationing with his wife in 2008 when he unexpectedly fell ill. He was taken to a local hospital and died three days later.

Mr. Upshaw did not have a will or any other estate planning matters settled before his sudden illness. As a result, there was a chaotic, questionable attempt to have a will drafted and signed in the three days between his illness and ultimate death. According to reports the last-minute document appeared to leave all of the man’s assets to his wife, naming her as trustee and executor. However, many questions remained about Mr. Upshaw’s mental state at the time the will was drafted and whether or not he actually signed the document.

A few months after his death, Mr. Upshaw’s eldest son filed suit disputing the will. He claimed that his father was essentially unconscious in his final days and unable to execute the paperwork. His mother-in-law, however, asserted that he was conscious and capable of speaking. It was later revealed that Mr. Upshaw had not in fact signed the document but that his friend had done it on his behalf. Both sides entered into a prolonged dispute. The matter was set to go to trial earlier this month but was finally settled privately a few days before the start.
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May 29, 2011

Are Prenuptial Agreements for Everyone?

by Ettinger Law Firm

Over the past few decades stories in popular culture have raised the profile of one type of contract–the prenuptial agreement. Some area residents use this document as an important part of their New York estate plan to help clearly set out the rights and responsibilities of both married partners in case of divorce. They are most common for those not entering their first marriage.

Many couples remain unclear about whether a prenuptial agreement is right for them. For example, most young couples who are entering into their first marriage do not find the idea of creating a contract in case of divorce to be very romantic or indicative of their plan to spend their lives together. In those cases the couples often do not have large assets with which to be concerned, and so a prenuptial agreement may not be appropriate.

However, confusion remains because some financial experts continue to insist that all couples should consider entering into these agreements. As discussed this month by Investing Answers the most common reason for this opinion is the high divorce rate. Yet the off-hand remark that “half of marriages end in divorce” has been debunked as inaccurate or at the very least, misleading. Measuring the divorce rate is complicated, because even if there are half as many divorces as marriages in a single year, that does not necessarily mean that 50% of marriages do not last. In fact, some segments of the population, like those with college degrees, are shown to have only a 10% chance of divorce within the first 10 years.

Of course even though divorce may not be as frequent as some suggest, they still do occur, making prenuptial agreements important for certain couples. Individuals who are entering a marriage with significant assets may want those protected. If one partner has significant debt, the other may reasonably want protection.
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May 27, 2011

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

by Ettinger Law Firm

Perhaps no New York estate planning effort has received more attention over the past few years than that of well-known New York hotelier Leona Helmsley. Upon her death in 2007 a scramble ensued to determine what would happen with her estate, estimated to be worth billions. As a post yesterday at Financial Planning explains, the subsequent way in which her assets were divided imparts lessons for all local residents, regardless of the size of their estate.

Mrs. Helmsley’s wishes captured the public attention when it was revealed that the she left $12 million to care for her dog, Trouble, and created a charitable trust worth billions to be spent primarily for the care and welfare of dogs. Mrs. Helmsley’s wishes were placed in a “mission statement” where she explained that she desired the trustees to use their discretion to disperse funds first for the care of dogs and only secondly for “other charitable activities as the Trustees shall determine.”

But there were concerns about the legal effect of the intentions placed in the statement. For one thing, the statement gave the trustees discretion to spend the resources. On top of that, the statement was never incorporated into her will or other trust documents.

As a result, the trustees have been given the power by local judges to essentially disperse the charitable trust funds in any way they wish. So far the trustees have donated $450 million to charity; of that amount only $100,000 has been given to dog-related efforts. That constitutes less than one fiftieth of one percent–hardly an amount which would indicate dog welfare as the main priority suggested in Mrs. Helmsley’s mission statement. Several animal charities sued to force a larger share of the trust given to animal efforts, but their legal efforts have been unsuccessful.

The overarching goal of all New York estate plans is to ensure that an individual’s specific wishes are carried out when they won’t be around. However, without a clear, consistent plan a judge usually decides what happens to an estate, regardless of one’s actual wishes. Even when some planning is done, as in this case, confusion may remain unless those planning documents are updated and integrated so that there remains no ambiguity about how to handle affairs.
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May 25, 2011

Estate Planning is Particularly Important for Families with Autistic Children

by Ettinger Law Firm

Virtually all local families have much to gain from taking the time to conduct proper New York estate planning. However, for some the need to ensure that future finances are in order and loved ones are secure indefinitely is a particularly strong necessity. Families who have children with special needs, like autism, must give careful thought to how their vulnerable children will have the resources that they need no matter what the future holds.

Yesterday the Sacramento Bee profiled one young family that is taking steps to ensure that their four children–including three with signs of autism–will be financially secure in the future. Considering many forms of autism make communication and basic social interaction a challenge for these children, their dependence on loved ones will often last a lifetime. There remain millions of families in this situation as an average of one child out of every 110 suffers from autism.

Paying for medical expenses alone is often a challenge for these families. While the average American usually spends about $317,000 in direct medical costs in a lifetime, individuals with autism often pay roughly twice that amount, nearly $630,000. Of course that does not even account for non-medical expenses, including basic needs like clothing, food, education, transportation, entertainment, and countless other costs. Thinking about these details is overwhelming for some, but it is important to remember that it is manageable. One of the first steps is to contact a New York estate planning lawyer to learn what options are available to you.

One possible choice that can be explained to you is the creation of a special needs trust. Depending on your family’s financial situation, this option may allow you to pass on more of your assets to your child without risking the loss of government benefits like Supplemental Security Income (SSI), Medicaid, or state residential programs. However, even if the trust is created there are risks of government benefit reductions depending on how the trustees make payments.
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May 23, 2011

New York Estate Planning is Much More than Wills & Trusts

by Ettinger Law Firm

When many area residents are told to consider visiting a New York estate planning lawyer their mind immediately envisions someone who will craft a will or a create a trust. However, estate planning is much more than document creation. Instead, it is best viewed as a process by which an individual works to eliminate future uncertainties and reduce potential financial complications for their loved ones. Wills and trusts may be a component of that process, but they are by no means its sum total.

This multifaceted approach to estate planning was nicely summarized this weekend in an article at Today Online. Most local community members spend a large part of their lives on asset accumulation–the process of building up their estate. Yet the important considerations of asset preservation and distribution are often given only minimal thought. That is where the New York estate planning attorney comes in.

Beyond mere drafting of wills and trusts, these professionals are capable of helping you determine what strategies will ensure that extended medical costs, taxes, and other factors swallow as little of your accumulated wealth as possible. This may involve the creation of a Medicaid Asset Protection Trust or perhaps advice on the acquisition of long-term care insurance. In any event, the most important part of the process is figuring out what needs to be done to best save your wealth–the creation of documents to actually carry out those wishes only occurs later.

In addition to preserving your estate, the planning process also involves a discussion of its ultimate distribution. This includes both ensuring that your estate is divided as you wish but also that the division occurs in as quick and straightforward a manner as possible. Many clients remain surprised by the type of advice and information that they receive about how their estate can be distributed. For example, many conditions can be placed on when an inheritance is dispersed or how it is spent for certain family members. The options are essentially unlimited. Understanding those choices and matching them with your wishes is a vital part of the process.
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May 21, 2011

Now Remains a Good Time for Baby Boomers to Conduct Estate Planning

by Ettinger Law Firm

A New York estate planning lawyer knows that there is never a bad time to prepare and plan for your financial future. Some area community members, however, don’t begin to seriously consider seeking estate planning help until their mind turns toward retirement. Busy New Yorkers often figure that they can push off asset planning until sometime down the road.

However, as a recent study summarized in the Journal of Accountancy this month explained, the previous retirement plans of many aging residents have recently changed in light of the national economic climate. Many baby boomers are finding themselves in situations that they did not expect. A survey of CPAs noted that nearly 80% had clients whose retirement has been delayed because of economic concerns. About a third of those individuals are expected to work an additional three years, another third an additional four to six years, and the remaining third even longer.

However, regardless of the changing work and financial situation of many area residents, there is no reason for local baby boomers to put off contact with a New York estate planning attorney. The benefits of talking with a professional in this area and learning about the options available to you remain striking.

Categorized as those born between 1946 and 1964, baby boomers represent roughly 77 million Americans or 37% of the nation’s population. This year marks the first time when some of that group of citizens will turn 65 and begin to retire. However, as this study demonstrated, the financial situation of many seniors in this group remains complicated.

One individual involved in the research explained, “Boomers have been scarred by the economic turmoil of the past few years and face complex challenges going forward.”
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May 19, 2011

Not All New York Elder Law Attorneys Are Alike

by Ettinger Law Firm

Many seniors know that they need to get in touch with a New York elder law attorney to help update and handle matters related to their estate. Yet much of the actual work that those lawyers do is shrouded in mystery to the average community member. Some believe that it all has to do with filling in the blanks of certain legal forms. That often leads to the assumption that all elder law attorneys are capable of doing essentially the same quality of work. Nothing could be further from the truth.

It is imperative that all planners ensure that they work with experienced New York estate planning lawyers to avoid common pitfalls in the process. Only the best practitioners in this area are aware of all options available to a client to best protect their assets and ensure that their wishes are carried out. The law changes often at both the federal and state level–it is your attorney’s job to know those changes and advise you on its potential impact on your situation.

Besides keeping abreast of updates in the law, your attorney must also have the practical skills to explain to you how certain future events may affect the estate. Careful planning and strategizing is important in these matters. For example, there may be no easy answers when it comes to how many assets to place in a wife’s name or trust to offset a husband’s IRA assets. There is a tendency among some attorneys to place too many assets with a wife, while ignoring the practical reality that the husband’s life expectancy is lower. This mistake may then results in no estate tax savings. Only the most experienced attorneys would be capable of understanding these possibilities and ensuring that you have all the options on the table when making your plan.
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April 4, 2011

New Estate Tax Rules for 2011: Portability

by Ettinger Law Firm

Over the last two years, four sets of estate tax rules have been in effect, with the individual exemption ranging from $2 million (2008) to $3.5 million (2009) to unlimited (2010) to $ 5 million (2011). Besides these varying exemption levels, another major change in the new estate rules includes the “portability” factor.

Portability allows each partner of a married couple to use the rest of the other’s estate-tax exemption. It facilitates planning when one spouse has a relatively large, indivisible asset.

The Tax Relief Act of 2010, Title III provision illustrates how portability works: