New York Estate Planning Lawyer Blog

The Supreme Court of Virginia recently ruled on a case involving the question of whether a copy of a will passed muster for probate. Typically, the law provides that the original will must be submitted in order to probate an estate, but exceptions to the rule do exist. The case highlights the importance of keeping an original will as well as what must be proven in order to have a copy allowed for probate.

Facts of the Case

In the case of Edmonds v. Edmonds, et al, James Edmonds passed away in 2013 and left behind his wife, Elizabeth Edmonds, daughter Kelly, and Christopher, a son from a previous relationship. It is undisputed that in 2002, Mr. Edmonds executed a will that left all of his personal property to his wife and the remainder to a revocable living trust. The will stated that if Elizabeth passed away first, the property would go to Kelly and specifically stated that Christopher was omitted from the estate.

A few decades ago, one of the most popular estate planning tools was the irrevocable trust. The assets in this type of trust pass along to the beneficiaries free from estate taxes; however, once the trust is created the settlor of the trust no longer has control. As such, the trust is considered irrevocable even if life changes and other events make the initial purposes of the trust less effective. Thankfully, there are now options available for the creator of an irrevocable trust to amend the provisions without the need for court involvement.

Reasons for Amending an Irrevocable Trust

There are many reasons why the creator of an irrevocable trust would want to amend the initial provisions of the instrument. The settlor may wish to amend the beneficiaries if death, divorce, or other situations arise that would affect who would inherit the assets. In addition, state laws may change over time that would make the trust more effective if it was administered in a different state. Finally, some settlors simply do not like the original provisions of the trust because it does not suit the purposes of the settlor any longer or the trustee is no longer fulfilling the responsibilities of the role.

Many people in the United States can expect to get some type of inheritance during their lifetime, and some of those inheritances will be substantial. It is projected that over the next thirty years, many trillions of dollars will be passed to the next generation through inheritance. If you are one of the lucky people who inherit such wealth, it is definitely cause to celebrate; however, once that is over it is time to consider what should be the best way to handle the assets that you have inherited.

Initiate a Cooling Down Period

If you have inherited significant wealth, by all means treat yourself to something nice, but before you start to seriously spend your inheritance you should consider instituting a cooling-down period to consider your options. You should assess your retirement goals, short and long-term financial planning, and figure out how to maximize the wealth that you have inherited. One of the biggest pieces of advice given to people who inherit wealth is to not react emotionally and develop a financial plan of attack.

While it has fallen out of favor in the last few years, the “Qualified Personal Residence Trust” (QPRT) is gaining traction once again as an estate planning option for people who wish to transfer their home to the next generation when they pass away. The QPRT allows for a parent to transfer their home to their children with the minimum amount of taxes while the parent continues to live in the home.

Reasons for Establishing a QPRT

The main purpose of establishing a QPRT is the state and federal tax benefits. If the family home is a significant asset, or the most significant asset, in the estate and the family believes that it will appreciate in value then a QPRT might be a viable option for tax savings. This is also incredibly important if you believe that the value of the home would exceed the estate’s value above the federal tax exemption limit of $5.43 million for 2015. Placing the home inside of a trust will shield it from the estate taxes by effectively removing the residence from the estate.

More and more people are taking it upon themselves to prepare for the future with an estate plan. While some take it upon themselves to craft an estate and succession plan for their family, it is always a good idea to work with an estate planning attorney to ensure that there are no holes in what you have created. This case illustrates how even the best intentioned estate plans can still have issues that could cause a lot of unintended problems if not corrected now.

Discovering Errors in the Plan

For example, one doctor had built a small specialized practice over the last fifteen years that grossed $1.7 million annually. He had crafted a will and trust for his family that included a wife and children in addition to the creation of a succession plan for his thriving medical practice. However, when the doctor reviewed his plan with an estate planning attorney, a large hole was discovered in his succession plan.

A contentious case for estate planners has been reversed, allowing attorneys and clients both to breathe a sigh of relief. The case revolved around whether creditors could go after assets left to a beneficiary in a spendthrift trust. The issue arose in Bankruptcy Court and was recently reversed in the Northern District of Illinois federal court.

Facts of the Case

In the case of Safanda v. Castellano, Faith Campbell created a living trust in 1997 for the benefit of her four children. The trust provided that at her death the assets of the trust would be divided equally among her four children. In addition, the document provided a spendthrift clause that was meant to shield the assets of the trust from any creditors. She passed away in 2007 and one of her children, Linda Castellano, along with her husband filed for bankruptcy in 2011.

Like something out of a made for television movie, last week a woman was sentenced to 23 years in prison for the murder of her eighty year old mother-in-law for the inheritance. It is one of the rare times that a set of laws known as the “slayer statutes” has been applied to a criminal case but serves to highlight the importance of these laws. These statutes prevent a person who has murdered another from inheriting from their victim’s estate.

Facts of the Case

In this case, Diana Nadell was arrested and convicted of the murder of her mother-in-law, Peggy Nadell. The reason behind the killing was that Diana wished to obtain the inheritance from Peggy’s estate, which was worth a little over $4 million. Diana and her husband were expected to inherit half of the estate, but Diana could not wait for her mother-in-law to pass away naturally.

Estate planning for ranchers and farmers is incredibly important because of the nature of the assets in those estates. Most farmers and ranchers do not have many liquid assets, such as bank accounts and other forms of cash. Instead, most of their estate is invested in their ranch or farm and in order to perpetuate those endeavors a comprehensive estate plan is necessary. These are some of the most common estate planning mistakes of ranchers and farmers as well as how to avoid them.

Failing to Create or Update Estate Plan

Farmers and ranchers typically have more complex estate planning needs than in the typical estate planning process. In many cases, a farmer or rancher will have some children who want to continue the business and others that do not. The types of assets in a farm or ranch can also make splitting an estate much more difficult if you are trying to keep things equitable among your heirs.