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Many families in New York, as well as the rest of the country, are considered “blended”, which means that many families bring children from previous relationships into new relationships or marriages. Whether or not a family is blended can end up influencing how families should structure estate plans to achieve various goals. 

Under New York law, an adopted child is treated identically to how biological children of the adopting parent are. There are, however, unique issues to consider when it comes to adoption and estate planning. Some of these key concepts are discussed in this article.

# 1 – Establishing a Trust

In the recent case, In the Estate of Hohmann, a person passed away without leaving an executed will. The deceased man’s caretaker, however, found a handwritten document where the deceased man stated his wishes for his assets. The deceased’s cousin later applied to probate the handwritten document like a written will. An heir of the deceased man later filed an opposition to the probate process. The trial court then granted summary judgment for the opponent and the applicant appealed.

The court of appeals subsequently held that valid wills must be in writing, signed by a testator, and attested by two or more credible witnesses. Even if a document does not meet these requirements, however, it can be admitted to probate as a holographic will if it is handwritten entirely by the testator and the testator placed a signature or initials on the document to execute it. 

The court then held that the document had not been signed and was not valid. The court also noted that while signatures can be informal and that the location of signatures is of secondary importance, the testator must intend his name or mark to constitute a signature. In this case, however, the court found no evidence indicating that the testator intended the phrase to be used in such a way. The court also found that when the written document is viewed as a whole, the testator’s signed names bore no connection to any other provisions in the document.

In the November 2020 case of Ochse v. Ochse, a Texas court heard a case that could potentially have a ripple effect on how trusts are interpreted. In this case, a mother established a trust that provided the trustee was authorized to make distributions to both the trustee’s son as well as the son’s spouse. At the time the trust was executed, the son was married to his first wife, but later divorced and married a second wife. The son’s children then initiated legal action against the son for breaching fiduciary duties as trustee and joined with the first wife who is also the mother as necessary parties. The first wife and son then filed competing summary judgment motions addressing whether the first or second wife was the son’s “spouse” as referenced in the trust. The trial court then held that the second wife was the correct beneficiary at the time of the suit. The first wife subsequently appealed.

What the Case Involved

The second wife and son argued that the use of the word, “spouse”, in trust documents did not mean the first spouse’s actual name. Instead, these parties argued that the term referred to the class of whoever was currently married to the son. The court of appeals, however, disagreed. The first wife argued that in the absence of contrary intent, a gift to a “spouse” of a married individual must be construed to mean the spouse at the time of the document’s execution instead of a future spouse. The first wife further argued that the terms “primary beneficiary’s spouse” as well as “son’s spouse” referred to the first wife because she was the son’s spouse at the time that the trust was executed. Both interpretations requested the court to view spouses as either statuses or class gifts. 

Executors as well as the personal representatives of estates can be held personally liable for either applying or distributing estate assets when there are unpaid estate taxes owed in case the Internal Revenue Service is not paid. When estate tax returns are not filed, the final amount of estate taxes due is not determined until either the statute of limitations expires or an audit occurs. Consequently, estate fiduciaries are left uncertain about whether or when an adjustment to estate taxes will occur if the Internal Revenue Service has accepted an estate tax return as filled. 

This type of response is unfair to both fiduciaries and beneficiaries because the most fiscally responsible fiduciaries can hold back on distributions until the amount taxed is more certain. To assist fiduciaries in assessing whether tax is due, an estate tax return is filed with the IRS. These returns are often issued following review by the Internal Revenue Service and a decision about not to audit or following the completion of post-audit procedures or litigation. 

The Role of Estate Tax Closing Letters

One of the most recurring themes about estate planning as well as retirement strategies is to minimize risk. As a result, if you plan on creating a comprehensive retirement plan, you should make sure to also include an adequate estate plan. While you will hopefully enjoy a long and comfortable retirement, it is still important to consider what will happen if you don’t survive to retirement. This article reviews some of the most critical reasons why you should make sure to address estate planning issues while plotting your retirement. 

# 1 – What Happens If You Pass Away Without a Will

If you pass away without a will describing how your assets should be passed on, a New York court will be required to follow in regards to how assets are distributed. This often results in family members fighting one another for the outcome of a case. While the news is full of this dilemma happening with famous people like Prince and Tom Petty, it’s also a common occurrence among people with smaller estates. As a result, it is critical to make sure that you at least write a will addressing how your assets are distributed. Even if you do not have a large estate, wills can still play a critical role in passing on any meaningful type of property that you own. 

After moving between states, many people are overwhelmed and overlook critical estate planning steps. This can lead to undesirable estate planning results because different states treat issues like marital property and taxes differently. In these situations, it helps to understand some helpful advice about how to revise and update your estate plan.

# 1 – Estate, Gift, and Inheritance Taxes

Federal estate tax only applies to individuals with estates whose assets are greater than $11.58 million, but state estate and gift taxes can be placed on much lower asset values. Currently, 18 states and the District of Columbia place either state or inheritance taxes on both residents and non-residents with assets in the state. The tax rate as well as the amount of excluded assets, however, varies substantially between states. Most states do not place estate taxes on transfers to a surviving spouse. Whether you move into or out of a state that imposes an estate or inheritance tax, your estate plan might need to be revised to reflect the change in taxes. For example, the New York estate tax ranges from 5 to 16 percent and is substantially lower than the federal tax rate.

A power of appointment allows a person engaged in estate planning to direct where interest in an estate or trust is passed. Appointments are often classified as either general or limited/special. A general power of appointment gives the holder broad power to transfer a deceased person’s property. For example, if a person is permitted to give the property to anyone, this is a general power of appointment. A special power of appointment gives a person the power to give a deceased person’s assets to a certain group of individuals. These groups cannot include the recipient, the recipient’s estate, or the recipient’s creditors. 

When utilized correctly, powers of appointment are a powerful estate planning tool. These powers are highly nuanced, however, which is why this article reviews some critical details that people engaged in the estate planning process should remember about powers of appointment.

# 1 – Powers of Appointment Provide Flexibility

Trusts are a nuanced part of estate planning and can make sure that assets are passed on to your loved ones in a controlled manner. While there are many terms and concepts to grasp when it comes to understanding trusts, it also helps to appreciate that there are several types of trusts. This article examines just a few of the most common trusts which can be used advantageously to achieve various estate planning goals.

# 1 – Bypass Trust

Sometimes referred to as a credit shelter trust, these trusts are primarily used for tax reduction. The trust, however, also has several non-tax related benefits. For example, bypass trusts can protect assets from poor investment decisions as well as creditors and financial scams. Bypass trusts can also help to guarantee that children or beneficiaries are the ultimate recipients of the trust’s assets. As a result, these trusts are commonly used when one spouse has been previously married. The challenge presented by bypass trusts, however, is deciding how much to transfer into the trust. There’s no universal answer as to the extent of an estate to transfer to a bypass trust, but an experienced estate planning attorney can help you make this decision.

The field of estate planning involves various types of documents. While some of these documents have long-recognized roles, people have less exposure to others and are more uncertain about the role they can play in estate plans. One commonly asked question is what the difference is between power of attorney and guardianship forms. While these documents can function similarly in some situations, they are vastly different in others. As a result, this article considers the relationship between guardianship and power of attorney documents.

The Role of Guardianship

Guardianship refers to a legal relationship established where a court assigns a person the legal right to make decisions for another individual who cannot make these choices on their own. Most times, the family member, friend, or other individual seeking guardianship files a petition in Probate Court in the county where the “ward” lives. A medical examination by a physician is often required to establish this person’s condition. If it is decided that the individual can meet essential requirements involving health or safety, the court will appoint a guardian to make decisions for this individual. Additional details about the guardianship system in New York can be found in Article 81 of the state’s Mental Hygiene Law. 

Aside from federal and state tax, estate planning is a vital process for anyone seeking a risk-free future for they family. Without formation of a will, estate, or trust, assets are distributed pursuant to state law in the jurisdiction of residence of the decedent. The estate planning process ensures that a surviving spouse, children, and other named beneficiaries are in receipt of valuable assets according to a decedent’s wishes when state laws are inadequate. Here are ten essential reasons estate planning should be part of your retirement strategy.

  1.     Financial Control

A constructive priority, estate planning offers enhanced financial control. Taxation also falls under this general framework of fiscal responsibility and reporting accountability. Control, the exercise of financial accounting management, enables an estate owner to dictate how assets will be transferred, held, and distributed during their life, and upon death. A testamentary document such as a will or estate document, established during a decedent’s life, is a written directive that provides a Trustee or Executor instructions for distribution of estate or trust assets to named beneficiaries.

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