Articles Posted in Estate Administration

While many New York residents familiar with and have an existing will in place in the event of their death, most people do not realize that estate planning documents extend far beyond a last will and testament. The world of estate planning documents includes not only living wills and advanced medical directives, but also trusts. Trusts offer several benefits associated with them, and come in two forms: revocable and irrevocable.

Benefits of Having a Trust

Trusts can not only provide for loved ones upon death, but they can provide for the person who created the trust during their lifetime. This is important in cases where the creator has a health issue, a mental disability or incapacitation, and other scenarios. Trusts can be administered without the need to involve a probate court, and can therefore protect privacy as to the contents of the trust. Trusts also serve as protection of assets for trust beneficiaries, and offer a wide variety of options in creating them to suit different needs.

Family feuding is all too common, and finances are often at the root. One argument often made in legal cases involves these matters is that an adult child or other close relative is abusing a position of trust and confidence with a parent to take advantage of them financially. Proving such an abuse is the challenge of an undue influence lawsuit.

Undue influence is usually defined the use of confidence for the purpose of taking unfair advantage of one with a weakness of mind (or other vulnerability). In other words, undue influence is about pressure. The question is when does pressure become excessive, and thereby amount to undue influence. In a legal case where undue influence is an issue, a court may consider a number of factors:

1. Unusual or inappropriate time of discussion of the transaction;

New York residents are urged to craft an estate plan so that their assets are passed on per their own wishes–and not based on arbitrary state laws. Unless you explicitly make your desires known, then all decisions will be left up to others. However, there are actually a few rare instances when the law explicitly prohibits you from making certain planning choices. These situations are not common, but it is important to be aware of them in case they conflict with your plans

The most notable rule of that nature relates to disinheriting a spouse. In most cases, the law automatically allows a spouse to inherit certain assets if he or she chooses–regardless of the specific estate planning provisions.

Marriage is deemed a special legal relationship that is voluntarily entered into under the law. As a result, state statutes include default rules that protect the relationship. This is somewhat different from other close relationships–like parent-child. A resident can always end a marriage to legally break the spousal relationship. That is why it is usually possible to disinherit a child but not a spouse.

Most legal matters have built-in complexities. Anyone who has purchased a home, for example, can appreciate the mountain of paperwork will dense legalese that must be filled out . Things are only made more challenging where there are significant emotions tied up in the dealings–like when the home was owned by a loved one who just passed away.

One common example of a process that many New York residents face with a mix of intense emotions and legal complexities is an estate sale.

No two families are the same. Some wish to go through with a sale as soon as possible to settle the matter and move on. Others take more time to process the situation before handling matters like an estate sale. In all cases, however, it is critical to proceed with an understanding of the legal requirements.

One of the biggest misconceptions about settling an estate is that all of the loose ends will be handled within weeks or months of the passing. In reality, it often takes years or more before all of the details are finalized. In cases of sizeable wealth, unique assets, or complex administration arrangements, the estate details may linger for decades.

Consider a story in last week’s New York Post regarding the estate of former New York Dolls guitarist Johnny Thunders. Thunders was only thirty eight years old when he died in 1991. Yet, even though the death occurred more than 23 years ago, there is a legal estate planning battle brewing over control of his assets.

Thunders Estate Fight

The “Golden Years” – that peaceful time of life after retirement; a time to watch the grandchildren grow up, to take that long-awaited vacation and to….get married? Statistics indicate that both men and women are getting married later in life, and although the rate of marriage and remarriage significantly declines with age, an estimated 500,000 Americans 65 and older get married (or remarried) every year.

While marriage at any age raises a number of legal and financial concerns, individuals 65 and older who marry later in life tend to bring significantly more assets to a marriage than individuals who marry earlier in life. In addition, those entering into in these later-life marriages are more likely to have adult children, and even grandchildren. For these reasons, it is critical that those who rediscover love during their “Golden Years” be mindful that the failure of these types of marriages can create complex estate planning legal issues.

A unique problem for later-life marriages involves potential disputes between a surviving spouse and the adult children from a previous marriage. Most states require that a portion of the deceased spouse’s estate pass to the surviving spouse. This portion is known as the elective share. In New York, that share is equal to 1/3 of the deceased spouse‘s estate. New York, like most states, does not allow the disinheriting of a spouse to his elective share unless the spouse to be disinherited legally consents. Consequently, spouses who want to determine the terms of possession of their assets upon their death should consider creating a prenuptial agreement, one made by the spouses prior to marriage that concerns the ownership of their respective assets in the event of divorce. Without a prenuptial agreement, a “Golden Years” divorce has the potential to lead to a disastrous, and often disheartening, outcome.

The New York estate feud that dominated headlines for months may finally be nearing an end. Mysterious New York heiress Huguette Clark died in 2011 at the ripe old age of 104. For several decades before her death, Clark lived inside a hospital room–even though she was healthy enough to live elsewhere. Her several mansions remained empty for years. In fact, a documentary film based on Clark’s life and death is currently in creation–several books have already been published.

Because of her unique lifestyle and secretive existence, many were intensely interested in her estate plan–curious as to how her $300 million fortune would be passed on. So began a complex back-and-forth between dozens of different parties who apparently had a stake in the estate–including Clark’s doctor, lawyer, nurse, the hospital where she stayed, her distant relative, named charities, and more.

Clark’s estate planning was relatively bare considering the size of the assets. Essentially two wills were produced. The two wills were both created in 2005. The terms of those two wills could not be more different. The first will gave most of her assets to her distant relatives. The second will cut the family out entirely and instead sprinkled money to her doctor, nurse, lawyer, accountant, and arts-related charities.

Death and taxes; the two constants in life. There has been significant discussion in the past few years over the one tax that is itself most closely tied to death: the estate tax. At the federal level, the President and Congress have debated the exact rate of the the tax and at one point it should kick in.

But once those details are set, it is still not entirely easy to determine what one’s total estate tax bill is. That is because most individuals have assets whose value is hard to gauge. It would be straightforward if all of one’s wealth was in a bank account with a set balance or stocks with a clear value.

That’s not how it works in the real world, however. Instead, many have assets that must be “valued” before added to a tax bill. Who does the valuing and what decisions they reach may ultimately have significant effects on how much of an estate goes to Uncle Sam. As you might imagine there is frequently considerable disagreement regarding this matters.

When someone passes away, the basic principles of settling the estate seem straightforward: collect assets, pay off debts, and distribute what is remaining per the deceased’s wishes. While that cursory sketch appears easy enough, in practice, dealing with these matters can take years, have a significant cost, and result in prolonged disagreement, destroyed relationships, and even legal battles.

As always, a high-profile celebrity example offers a helpful look at how it plays out in the real world.

The Las Vegas Sun recently reported on the latest in the prolonged battle related to famed pop star Michael Jackson’s estate. The singer died over four year ago, but from most reports the matter is nowhere near being resolved. For one there, there is still pending litigation related to the billion-dollar tour production Jackson was set to complete just before his passing.

Epic estate planning battles–particularly involving the wealthy and famous–have long been fodder for newspapers. There have even been a few high-profile movies touching on the topic, like the recent George Clooney film, “The Descendants.” But now it appears that the sagas may make their way into yet another medium: television.

Reality TV continues to captivate audiences, and now some are looking to cast a new television show based on unique, intense, and interesting inheritance fights. The Trust Advisor recently shared information on the project which, if it becomes popular, is sure to raise awareness of common estate planning issues even more.

The show is still in the early stages of development, but it is clear that a large TV production team is looking for families to be filmed as their inheritance issues and planning details are sorted out. These early reports suggest that the show will center on inheritance and trust disputes among wealthy families. The purpose, one presumes, is to find families with the most unique issues, including family businesses, generations-long dynasties, and large personalities. The filming (and packaging as a television show) will likely highlight both the characters themselves as well as the unique processes involved in settling estate fights. While it may seem common knowledge to those of us working on these affairs, it is easy to forget that for most community matters, estate planning issues are foreign.

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