New York Estate Planning Lawyer Blog

May 8, 2017

Changes to the Estate Tax Lien Process

Estate planning is heavily dependent upon the law both at the time of planning and at a person’s time of death. The law is constantly changing, especially laws that impact estate planning. That is why it is crucial to make sure that you work with an experienced estate planning attorney that can help you stay abreast of changes in the law that could affect your estate plan. Recently, such a change occurred regarding the estate tax and lien releases.

What is an estate tax lien?

Internal Revenue Code 6324 says that a federal estate tax lien is put in place on the day a person passes away. This allows taxable assets to be determined, at which point property may become subject to an assessment lien until such time as any taxes due are paid in full. What this means is that the executor of a person’s estate, or the people responsible for the disposition of the deceased person’s property, cannot dispose of real property until it is discharged from either the estate tax lien or the assessment tax lien. If you try to dispose of any real property prior to it being discharged, the buyer of the property will be unable to take the property free and clear of any liens that may be placed on it. This could cause unexpected delays and other issues related to the disposition of property within an estate. By placing such liens, the Internal Revenue Service is able to ensure that any taxes due to it by the deceased or as part of the deceased’s estate are actually paid.

May 5, 2017

Understanding Donor Advised Funds

by Ettinger Law Firm

Many individuals want to make sure that part of their estate is dedicated to their favorite charitable causes, and many make the move to guarantee this during their lifetime. There are several ways to do this. Some individuals may consider structuring an endowment while other may choose deferred gifts or planned giving. Another vehicle to ensure your charitable wishes are carried out can include the creation of a private foundation. However, for some people, the best option for charitable donations during one’s lifetime and after might be to create a donor advised fund.

The Basics of a Donor Advised Fund

When we give to various charities, their tax status allows us to take advantage of a tax deduction. However, in order for our donations to qualify as tax deductible, the organization must typically be registered as what is known as a 501(c)(3) organization. These types of organizations must comply with certain rules established by the IRS, including restricted political and legislative activity while following other important guidelines. The IRS defines a donor advised fund as a fund or account that is maintained and operated by a 501(c)(3) organization known as the sponsoring organization.

May 2, 2017

Long-Term Care Insurance and Estate Planning

by Ettinger Law Firm

Almost every post, we remind people that estate planning is a comprehensive undertaking that has many different options that can be tailored for individual needs. Experienced estate planning attorneys can help clients understand the role that different option can play in the estate planning process. Another vehicle that can provide individuals and their loved ones with financial security is long-term care insurance. With the growing cost of medical care and the average life expectancy of people reaching 65 today at approximately 85 years of age, high healthcare costs can become a severe drain on a family’s financial resources. However, planning for the cost of long-term medical care can help you maintain the bulk of your estate to distribute to your heirs as you see fit.

What Is Long-Term Care Insurance?

Long-term care insurance not only protects your heirs from the expenses associated with caring for elderly family members, but can also help you prepare for the costs of caring for your aging family members. The purpose of long-term care insurance is to help offset the costs of long-term care that can come with age. For instance, caring for an aging family member that has developed cognitive impairments such as Alzheimer’s disease can sometimes require a daytime visiting nurse while you and your family are at work and/or school, or even around-the-clock medical care in a nursing home facility.

April 28, 2017

Estate Planning and Debt

by Ettinger Law Firm

Estate planning is a complex process that involves a great deal of attention to detail. However, truly comprehensive estate planning goes beyond creating a Last Will and Testament or even a trust and includes things like understanding how debt will affect your estate once you die. The best way to avoid the negative effects of debt on your estate is, of course, to avoid debt. However, that is often impossible to do today. In fact, according to sources cited by a recent Yahoo! Finance article around 73 percent of Americans have outstanding debt when they die with an average debt of $62,000 per person. As such, it is important to understand your debt as well as how to manage it appropriately to minimize any potential financial burden such debt could cost your loved ones.

Different Types of Debt

There are several different types of debt, and understanding the differences between them as well as how each type will affect you can help you understand how to manage them. The first type of debt is secured debt. Secured debt is debt that has been guaranteed by some type of collateral. This allows lenders to provide better interest rates on secured debt because a default on such debt typically awards the collateral to the lender. The most common examples of secured debt include residences and vehicles.

April 28, 2017

Fives Ways to Protect Your Estate Plan

by Ettinger Law Firm

Estate planning should be a lifelong process. It is never too early to start the estate planning process, even with minimal assets at a younger age. Once you have a comprehensive estate planning framework in place, it is important to update it as life events change your circumstances. Much like your life is always evolving, so should your estate plan. It must be reviewed on a regular basis to ensure it is up-to-date and continues to comply with changes in laws governing it. When you put this much time and effort into such an important component of protecting your loved ones, it is important to ensure there are mechanisms in place to protect it. The following suggestions, adapted from a recent article from CNBC, can help you ensure your estate plan is secure.

Pre-Paid, Pre-Planned Funerals

When a loved one passes away, it can be an extremely difficult experience. One of the most difficult parts of the grieving process is trying to make funeral arrangements while grieving, and funeral expenses can often be very high. By pre-paying for your funeral arrangements, you can spare your family from the unexpected costs related to funeral expenses while also saving yourself money by locking in prices before they grow over time. Pre-planning your funeral arrangements allows you to ensure that your wishes for your funeral are carried out and help your family avoid stressful decisions during the grieving process.

April 26, 2017

Don’t Discount Social Security in Estate Planning

by Ettinger Law Firm

One of the most important components of estate planning is ensuring that you have an in-depth understanding of your assets. Not only is this important at the onset of estate planning, but it is an important factor to consider when looking down the road to the future. With lawmakers painting a sometimes bleak and uncertain future for social security, many individuals are looking at ways to plan for their financial future in case they are unable to rely solely on social security. While this is certainly a wise financial move, discounting social security’s impact on your estate can be a costly mistake.

As it stands now, social security provides a steady stream of monthly income when conditions for its receipt are met. That’s not likely to drastically change anytime soon. Given that the current projected life expectancy for those turning 65 this year is approximately 85, those monthly payments could add up to around $1 million over the terms of period of installments. A recent article from MarketWatch.com reminds us that we should not discount the impact social security can have on our estates, and an experienced estate planning attorney can help you understand what social security benefits can meant to your estate.

Social Security as a Safety Net

April 23, 2017

Estate Tax Portability Elections and Extensions

by Ettinger Law Firm

Laws governing estate planning are extremely complex and can change frequently. Working with an experienced estate planning attorney can help you anticipate changes to applicable laws as well as adjust your estate plan to continue providing the benefits you want whenever the law does change. One of the most misunderstood elements of estate planning involves the estate tax. Many individuals don’t believe the estate tax will apply to them because their estates are not large enough to exceed the exemption allowed, which in 2017 is $5.49 million for individuals and $10.98 million for married couples. While this is often true, many people often don’t calculate the value of their estate correctly. Even an otherwise average estate can exceed the exemption limit, especially if you factor in one spouse dying first and the second spouse inheriting the bulk of first spouse’s estate. However, there are tools that can protect your assets from the estate tax by keeping it within your allotted exemption amount.

Portability Elections

A portability election is a tool available to spouse’s that survive the other spouse. When one person in a marriage dies, their estate is totaled to determine what – if any – tax consequences are triggered. When a first-to-die spouse’s estate is completely covered by the individual estate tax exemption and the bulk of the assets within that estate pass to the surviving spouse, this can cause the surviving spouse’s estate to surpass the individual estate tax exemption limit so that the combined value of the estates of both the first-to-die spouse and surviving spouse are taxed when the surviving spouse passes away. A portability election allows a surviving spouse to use leftover exemption amounts from the first-to-die spouse so there is a chance that the surviving spouse’s personal exemption can be combined with the leftover exemption from the first-to-die spouse to shield the surviving spouse’s estate from the estate tax, too.

April 20, 2017

Beneficiary Forms and Estate Planning

by Ettinger Law Firm

Understanding the different aspects of estate planning is a crucial part of creating a comprehensive estate plan that accomplishes your individual goals. For probate assets, many individuals utilize a Last will and Testament to direct the distribution of assets subject to probate. Non-probate assets, such as life insurance policies and assets held within a trust, are distributed upon death according to the mechanism for distribution contained within the asset and are usually directed by the nomination of a beneficiary. It is extremely important to remember beneficiary nominations when creating, reviewing, and revising your estate plan.

Common Beneficiary Pitfalls

One common beneficiary pitfall occurs with assets like bank accounts that often have a payable on death beneficiary option. With these options, a bank is directed to distribute assets within the account covered by that designation to the person listed as the payable on death beneficiary. This can cause unintended problems if your Last Will and Testament directs your bank assets to be distributed differently, and may result in an unintended Will contest that could jeopardize other aspects of your Will. Making sure that beneficiaries for these types of assets are properly aligned with other provisions of your estate planning documents is an important part of ensuring your wishes are carried out.

April 18, 2017

Millennials and Estate Planning

by Ettinger Law Firm

Estate planning can be an uncomfortable and confusing topic for many people. Nobody necessarily likes thinking about what will happen when they die. However, estate planning is an important activity for adults to consider, even those in their 20s and 30s. A recent article from USA Today highlights the need for millennials to consider estate planning as part of their plans as they move forward. In fact, the article cites a 2015 study that found more than 60 percent of Americans don’t have a will. This number likely includes a disproportionate number of millennials.

Responsible Financial Planning

Responsible, comprehensive financial planning doesn’t just involve being good with money. In the still-lingering shadow of the most recent recession and with an increased potential to carry large amounts of student loan debt, it isn’t uncommon for millennials to have a sense of the importance of treating money responsibly. However, while short-term money management can provide the foundation for a lifetime of financial stability, it is important to keep long-term financial planning in mind, too. Long-term financial planning includes the creation of a comprehensive estate plan that includes documents such as a Last Will and Testament, power of attorney, trust, and/or other related financial planning documents. As the article notes, these things are not just important for older adults – but for everyone.

April 15, 2017

Business Ownership and Estate Planning: Recapitalization

by Ettinger Law Firm

The estate planning process can be complex and confusing, which is one of the reasons it is a good idea to work with an experienced estate planning attorney as part of creating a comprehensive estate planning strategy. This is especially true for business owners. Recently, we wrote about some important estate planning considerations for business owners. One potential question many business owners may have when considering estate planning for their business is whether or not it is a good idea to remain in control of their business or transfer their business to their heirs.

When a business owner wants to remain in charge of their business, this can be a difficult question because transferring the ownership of a business can often mean transferring the management responsibilities of the business, too. While the answer as to whether or not remaining in control of your business is right for you depends on each business owner’s individual circumstances, one possible technique to consider is business recapitalization. Business recapitalization will allow you to separate ownership from management, and could be the right strategy for you.

Benefits of Recapitalization