New York Estate Planning Lawyer Blog

The Supreme Court of Montana recently ruled on a case that decided whether the Workers’ Compensation Court properly held that it lacked jurisdiction to consider an estate’s petition because the personal representative of the estate lacked standing. The court reversed and remanded the lower court’s decision to dismiss the representative’s petition.

Facts of the Case

Cristita Moreau’s husband Erwin worked at the W.R. Grace mine from 1963 until 1992. He passed away in 2009 from asbestos-related lung cancer, and in 2010 Ms. Moreau filed a claim for occupational disease benefits with her husband’s workers’ compensation insurance carrier as a personal representative of his estate. The insurance company, Transportation Insurance, denied the claim.

On Dec. 12, 2014 the Internal Revenue Service issued Private Letter Ruling 201450003, in which it considered whether an estate is entitled to a charitable deduction under the federal tax code Section 2055(a) if a portion of a defective charitable remainder trust (CRT) was reformed to satisfy the statutory requirements for a charitable remainder unitrust (CRUT).

IRS Determination

The IRS concluded in its Private Letter Ruling that the proposed reformation would be a “qualified reformation” within the meaning of Section 2055(e)(3) as long as the reformation is effective under local law and the CRUT, as reformed, meets the requirements under Section 664 of the code. The definitions of the CRUT are detailed in that section of the code in addition to in relevant regulations. As a result, as long as the reformation is a qualified one, an estate is entitled to a federal estate tax charitable deduction under Section 2055(a) equal to the present value of the charitable remainder interest and charitable income interest of the CRUT.

Many experts in estate planning focus on the financial planning that must be done while going through a divorce. However, there are separate money matters to consider once the divorce is finalized. You will need to close the loop on any outstanding financial matters that result from the separation. The following are areas that should be looked at to minimize any problems that could arise in the future.

Beneficiary Designations

Some accounts do not automatically pass to heirs in an estate. Retirement accounts, life insurance, and other assets that require a beneficiary designation pass along everything into the account to the person that is named. If your former spouse is named as the beneficiary to these accounts, that spouse will take those assets even though you are no longer married.

The first part of this article listed some of this year’s most notable celebrity deaths and the estate planning issues that arose as a result. This next part of the article is a continuation of lessons that can be learned by the estate planning problems of celebrities who passed away this year.

Paul Walker

Mr. Walker tragically died at the young age of forty this year in a car accident. He did take the steps to plan for his estate at a young age, but at the time of his death he had not updated his documents in over twelve years. His estate had a will, trust, and over $25 million in assets when he died.

Factoring in retirement to an estate plan can be confusing, tiresome, and complex. In fact, this aspect is arguably the most difficult part of estate planning because you can never be positive about exactly how much money you will need in retirement. With the influx of new estate planning tools this year also came some changes in the way retirement planning should be approached. Here are five changes that could affect the way that you plan for retirement next year.

Decreased Creditor Protection in Inherited IRAs

This year, the United States Supreme Court ruled that creditors can gain access to the funds in an inherited IRA. As discussed in a previous post, the justices in Clark v. Rameker found that inherited IRAs are not considered retirement funds for the heir, and therefore they do not get the same protections as the original IRA holder under federal law.

According to a report released by U.S. Trust, in the United States there are nearly 1.8 million households that have assets totaling $3 million or more. Many of these families will struggle with how to give their children an inheritance that provides for their needs while not giving them so much that they lose their sense of work ethic and independence. The question being asked is simply, how much is enough?

Trust Fund Babies

The advent of reality television and social media has given the public an eye into the world of some so-called “trust fund kids.” The media attention on Paris Hilton, the Kardashians, and “Rich Kids of Beverly Hills” show us the very worst that can happen when children inherit an abundance of wealth from their families with little to no guidance.

James Brown’s life was full of life, music, and manic energy. It was also full of broken marriages, estranged children, tax liens, and legal problems related to drugs, guns, and domestic violence. However, James Brown’s estate was meant to be a mea culpa for his transgressions in life and to help others after his death. Yet, almost eight years after his passing the charity that was supposed to receive a significant portion of James Brown’s estate has not seen a dime, his family is entangled in lawsuits, and even the state has attempted to intervene.

Estate Problems

James Brown signed his most recent will in 2000, and he explained on audio tape that he wanted a portion of his estate set aside for the use of a scholarship fund to benefit black and white children in his home state of Georgia as well as South Carolina. In addition, the will provided $2 million in scholarships for his seven grandchildren and divided his other personal property worth another $2 million between the six children that he recognized. Any heir who challenged the estate would be disinherited.

Joan Rivers’ estate continues to be a topic of interest as it has been recently discovered that she reduced her estate tax burden by claiming residence in one state while actually living in another. Ms. Rivers’ died in September at the age of 81, and she had a will on file at the Surrogate’s Court in New York that was dated November 16, 2011. The will is of interest to estate planning attorneys and experts because of some of the wording regarding her place of residence.

Joan Rivers’ Will

The will on file states that Joan Rivers was a resident of New York state, but it also states that her state of domicile where she intended to stay “indefinitely and on a permanent basis” was California. Furthermore, her estate document contends that New York estate law will apply to the validity, interpretation, and administration of the will unless she died in California. If that was the case, California law would apply.

Recently, Apple and Facebook made the headlines when both companies announced that it is paying the expenses for its female employees to freeze their eggs. Most people do not assume that an announcement like this will affect their estate plan, but if you have a daughter or granddaughter you may want to reconsider that opinion. If either decides to use assisted reproductive techniques and freeze their eggs, you must consider whether you would like to include these potential descendants in your estate plan.

Defining Descendants and Heirs

For estate planning purposes, descendants and heirs are people who are genetically, biologically, or legally related to you. However, with the advent of egg freezing there is a chance that you will have a descendant that is not biologically or genetically related to you, and you must decide whether to include them in your estate.

Planning ahead and drafting an estate plan can reduce a lot of stress and worry in your life once you know that you family and loved ones are protected in your estate. The first part of this article began to list specific aspects besides determining the inheritance of your heirs that you should also decide upon when creating an estate plan to make it as stress-free as possible for you and your family’s future. This part of the article continues with more tips to create a stress-free estate plan.

More Elements of a Stress-Free Plan

Create a financial framework for heirs too young to manage an inheritance