New York Estate Planning Lawyer Blog

A Florida Court of Appeals sorted through a complicated question of bank accounts and estates in a case at the end of last year. This case illustrates the complexities of banking law and administering estates in addition to the importance of reviewing the state law regarding estate administration before creating an estate plan.

Facts of the Case

In the case of Brown v. Brown, Elizabeth Brown died in 2007, leaving behind six adult children. She had an estate plan in place that distributed several specific bequests and left the remainder to be distributed equally amongst her children. She named one of her children as the executor of the estate, and he filed this lawsuit against one of his siblings, Joseph.

The first part of this article dealt with tips to keep in mind when helping an aging loved one with estate planning matters. This included watching for waning mental capacity, exercising any necessary swap powers, reviewing trust principal distribution standards, adjusting the timing of any charitable gifts, amending family limited partnerships, and providing for any shifts in the trust situs. This section of the article discusses tips to keep in mind after your loved one has passed in order to derive the most value possible for the heirs.

Tips for After the Passing

In addition to looking out for an estate before a loved one passes, you should also keep in mind what is important after they pass away. There are many different opportunities available to ensure that the heirs of the estate also get as much value as possible that their loved one wished to pass on. Issues that can arise after the passing of a loved one can include:

Estate planning lawyers agree that there has been a fundamental shift in their clients’ estate planning concerns over the last couple of decades. There has been less worry about estate tax minimization and more concern for income tax minimizations and other valuable planning ideas. Thankfully, there are things that can be done with an estate before and after your loved one passes away that can add value to an estate for them as they age as well as for their heirs.

Tips for Aging Loved Ones

If you are going over your elderly’ loved one’s estate plan, there are some important items that you should review or look out for in their estate. These issues can include:

On March 3, a bipartisan bill was introduced in the House of Representatives in Washington D.C. that would take away the federal estate tax. The Death Tax Repeal Act, otherwise known as HR 1105, is the first bill of its kind in over ten years that has actually reached the point of a vote on the floor. The House Ways and Means Committee plans to vote next week on a bill to repeal the U.S. estate tax.

Key Points of Legislation

The main points in the Death Tax Repeal Act can be boiled down to three key areas: estate tax repeal, generation-skipping transfer tax repeal, and the modification of gift taxes. First, the bill eliminates the federal estate tax for “decedents dying on or after the date of the enactment of the Death Tax Repeal Act of 2015.” In addition, “with respect to the surviving spouse of a decedent dying before the date of the enactment of the Death Tax Repeal Act of 2015–[federal estate taxes] shall not apply to distributions made after the 10-year period beginning on such date, and . . . shall not apply on or after such date.”

An IRA, either in its traditional form or as a Roth, gives you the opportunity to reduce your taxes and grow your wealth for the future. The deadline for 2014 IRA contributions this year is April 15, and the maximum contribution amount is $5,500. If you are fifty years old or older, you can contribute another $1,000 annually as a catch-up contribution. However, many people do not understand the differences between IRAs or what other opportunities exist that can help you with your retirement wealth.

Traditional v. Roth IRAs

There are two main types of IRA accounts. The first is a traditional IRA, where earnings can grow tax deferred until you reach age 70½ years old. However, if you make withdrawals before age 59½, you may incur both ordinary income taxes and a ten percent penalty. As soon as you reach 70½ years old, you are required to start taking the minimum required distributions (MRDs) and start paying taxes on that amount.

Many people who are planning their estate are told by advisors to give annual gifts to children and grandchildren up to the $14,000 yearly limit. It can help you avoid the estate tax of up to forty percent if your estate exceeds the federal exemption level. This year, the exemption is $5.43 million for a single person, $10.86 million for a couple. However, there is a lot more that you can do with this money than simply give it away. You can pass along wealth and wisdom through these annual gifts in a variety of ways.

Why Give Differently

The problem with giving an outright gift to a child or grandchild of up to $14,000 per year is that it may not have the intended effect that you had hoped. If the gifts are significant over time, your loved ones may take advantage or feel like they do not need to accomplish as much. However, you can use these gifts to create a different set of incentives for your loved ones that will help them for years down the road if you invest your annual gift in an alternative way.

The Eighth Circuit U.S. Court of Appeals recently ruled on a case where an estate claimed that the decedent made a gift during his lifetime that actually belonged to the estate after his death. The court ruled that the gift was actually a conditional gift that had its reversionary interest end when the decedent died without asking for the gift back from the recipient.

Facts of the Case

In the case of Estate of Pepper v. Whitehead, Sterling Pepper Jr. owned a large collection of Elvis Presley memorabilia. When he moved into a nursing home in 1978, he told Nancy Whitehead to “keep it.” Mr. Pepper died two years later in the home, and Ms. Whitehead kept the Elvis collection. In 2009, after maintaining the collection for over thirty years, the Pease Family Partnership put it up for auction, and it sold for more than $250,000.

One of the biggest concerns for people entering retirement is whether they will be financially secure, and many think that it is impossible to save enough given a limited income and never ending expenses. However, there are several steps that you can take to ensure that you will have a more financially secure retirement. The most important aspect of planning is to focus on what you can control, and not the unknown.

Steps for Financial Security

By starting early, saving the right amount, and investing wisely you can be financially secure in your retirement. The following steps can allow you to focus on the most important parts of your retirement savings plan.

Robin Williams’ widow and his children from previous marriages were in court more than eight months after his death arguing over what personal items should go to whom. His wife, Susan Schneider, conceded that the children should get the suspenders that he wore on the television show, “Mork and Mindy,” but wanted to keep the tuxedo that he wore at their wedding. These were two items in a list of assets that have more sentimental value than monetary value, but it is often an overlooked part of the estate planning process.

Robin Williams’ Estate

Robin Williams was very careful about his estate plan. He left money and property in trust to his children, set up a trust for his wife, and masterfully protected his publicity rights through the creation of a nonprofit 501(c)(3). However, the terms in his estate plan regarding his personal, more sentimental assets were left unfortunately vague. He left clothing, jewelry, and personal items accumulated before his last marriage to his children.