New York Estate Planning Lawyer Blog

For the last two decades, employers across the country have watched pensions go the way of VHS cassettes and tube televisions. Even many state governments are now doing away with bloated pensions and instead offering self-managed 403(b) accounts that allow employees to invest their own money in retirement. The argument often says you can take control of your money, be in charge of how your money is spent, maximize growth potential, and transfer your earnings time and again throughout your career, no matter how many times you change employers. But what of the millions of Americans who have neither – no pension nor 401(k) or 403(b) options?

White House Support

Recently, the Obama administration released its plan to support a new Secure Choice Pension Initiative. This plan, which is being spearheaded by California and Illinois, promotes employees of small businesses being offered a self-managed IRA that allows for payroll deduction. Notwithstanding several concerns about employer compliance with ERISA, it sounds like states may be moving toward making this a reality, and with the White House claiming it wants to see this in place by 2017, it may be coming to a state near you soon.

Few things are as dreaded as probate. This is especially true for wealthier families who have large estates spread across multiple states and jurisdictions. For instance, there are quite a few people living in New York who invest in Florida retirement properties. Perhaps they rent these properties during the off-season or during the winter, just using them for small vacations. The plan is to have them paid off by retirement, sell the New York house, and retire mortgage free. But what happens when they die before retirement? Now there are homes in two states to deal with. Here are just a few considerations for those holding assets in more than one state.

Real Property in Other States

Probate laws vary from state to state. Most states share similar rules, but some are quite unique. One common rule is that probate is only required if the decedent has over a set threshold of assets. In Illinois, for instance, you do not need probate at all if the estate is worth less than $100,000. In that case, you can simply use a small estate affidavit. In New York, there is a shortcut available for those with less than $30,000. However, most jurisdictions require probate when real property – real estate – is concerned. For this reason, many people prefer to hold real estate in joint tenancy so that the property passes outside of probate directly to the co-owner. This may also be a wise idea for anyone whose only holding in another state is a home. Making a trusted adult child or a spouse a joint tenant will avoid probate.

Many people wish to leave a large inheritance to their children. This is one of the greatest generational wealth-building tools in our society. However, what does one do when the next generation is less than responsible? Or, more commonly, what does one do when an adult child is mentally impaired in some way? To leave a large amount of money to such an individual would spell almost certain disaster, because much of the money could be lost in a short period of time. Likewise, an irresponsible or incompetent person could easily be taken advantage of, thereby losing the bulk of his or her inheritance. The answer for some is a spendthrift trust.

What is a spendthrift trust?

Trusts, unlike wills, offer the creator the option of controlling how money is dispersed and spent for as long as funds remain. This “eternal control” offers many individuals greater comfort and peace of mind, knowing that their heirs will be provided for in the best way possible.

When a child becomes an adult, it is a great day for most parents. It means less financial responsibility for their mistakes. Remember those crystal decorations that she broke when she was 12? You remember – the ones that cost you nearly $500 at the store? No doubt, raising a child is expensive. There is also the satisfaction that comes with knowing you did a good job and got them that far. Most importantly, many parents glow with pride each year as they pack their 18-year-olds in their cars and send them off to college to chase their dreams. But just because they are now legally adults, this certainly does not mean they are “adults.” We all know just how impulsive and irresponsible young adults can be, and parents should take certain precautions to ensure they still have ways to protect those children.

Make legal preparations for the possible

It is highly unlikely any 18-year-old heading off to state college is thinking about his or her powers of attorney, but this should be at the top of every parent’s list. Why? For one, when they were still minors, doctors and hospitals would just automatically give you access to health records; you could talk to doctors freely and make health decisions for them if they are unconscious. Things are different now that they have grown up. Federal HIPAA laws and state regulations say that you need written permission to do these things. Likewise, banks may not be willing to communicate with parents about an 18-year-old’s finances or accounts. For these reasons, it is highly advisable for parents to sit down with an estate-planning attorney to get these documents in place before the youngsters head off to school.

Although most couples make similar wills that leave their estate to their children and other loved ones, some may have reasons why they prefer to distribute their assets differently. For instance, people who marry later in life might have children from previous marriages. In those circumstances, they may ask their estate planning attorneys to create contracts that ensure the bulk of their estate goes to their own children, as opposed to letting the surviving spouse leaving everything to his or her children instead.

These cases can get messy. Once a person dies and leaves his or her estate to a spouse, that surviving spouse is free to dispose of everything freely without concern for the deceased spouse’s wishes.

Markey v. Estate of Markey

This is a continuation of last week’s discussion of virtual legacies. There was once a time that people could easily recall the phone numbers and addresses of all family members and most of their friends. We kept this information in Rolodexes or address books. Today, things have changed quite a bit. Most of us can hardly recall one or two phone numbers. Many people have a hard time remembering their own spouse’s number. After all, these telephone numbers are stored in our cellular phones and often backed up to the Cloud. E-mail addresses have become the new address, and we don’t need a book or Rolodex, because these are also securely saved in our e-mail server and often backed up to the Cloud as well. We do, however, have hundreds of user names and passwords to remember.

So how on earth would our heirs be able to access our many accounts to easily print bank statements, remove information about us, or obtain records for accountants, attorneys, funeral directors, and other people handling our final affairs. Consider all of the sites and access accounts that would simply be left unattended out their in the drift upon death.

Try this exercise

Today, everything is online. People build complex virtual realities through social media, professional and personal websites, and even dating sites. We date online, buy groceries online, sell everything from books to brake pads online, and we even register stars online. So, naturally when we die, there is a lot of personal information about us still available on the Web. After all, the Internet does not come to a screeching halt just because one person passes away. Some have even asked attorneys if they can leave their virtual reality to a loved one. In some ways, the answer may be yes.

But one might ask, what becomes of all that information? What if we own a business or have a public brand, such as a celebrity or business owner? Believe it or not, there are several interesting ways that people can preserve their virtual presence after death and even leave certain intangible benefits found uniquely in the virtual world.

Facebook Legacy Accounts

In this tight economy, people are always looking for value. Budget options are popping up in every industry, from substandard tires to refurbished televisions. Some even view legal services this way. Let’s face it; folks do not want to pay top dollar for a product they will never use. This is the plight of estate planning. The one who pays for a will or trust will never personally use it. Instead, that individual’s children will be using it to ensure things go right later. Even tools like powers of attorney are created many years before their intended use. Much like passive investing in a 401(k), these are purchases that may not truly prove their value for decades. Naturally, many are turning to low cost DIY form providers, and worse yet, office supply stores, in order to create their estate plan.

While the Internet is full of attorneys and other experts who strongly oppose these DIY options, you may be surprised how many lawyers love Legal Zoom and its kindred. Here are 3 big reasons why experienced attorneys love DIY estate plans.

Litigation is far more expensive than skilled estate planning

Attorneys strongly advise gay and lesbian clients to prepare their estate plans, because the law generally would not offer many of the same protections as it does heterosexual couples. But following the recent Supreme Court decision in Obergefell v. Hodges, striking down the Defense of Marriage Act (DOMA), misinformation abounds, especially on the Internet, regarding whether LGBT seniors should bother considering estate planning now that marriage is an option for all. The short answer is a resounding yes.

Here are just a few benefits of estate planning that elderly LGBT clients can and should take advantage of, regardless of their marital status.

Wills & Trusts

It seems estate-planning attorneys are often asked to help clients avoid probate. In fact, this is typically one of the first questions people ask in a consultation. There are likely many reasons why people are so focused on probate avoidance, not the least of which is probably a wide misunderstanding of the process. Perhaps family members have told horror stories of oppressive attorney fees or family feuds that destroyed close relationships. Nevertheless, probate is not a dirty word. While probate is a perfectly useful process for disposing of a person’s estate, there are a few points to consider.

A last will and testament does not necessarily avoid probate

Many people mistakenly believe that having a will means not having to go through probate. This is not always the case. While every state has different rules, New York only requires probate if a person dies with more than $30,000 of probate assets. Not every asset is subject to probate. For instance, joint accounts, properties held in joint tenancy, life insurance accounts, 401(k) accounts, generally any asset that has a beneficiary designation, and assets held in trusts are not included in the probate estate. The will simply tells the probate court what the decedent wanted. It also usually waives an executor’s bond requirement and provides a more streamlined method of moving through the process.