New York estate planning is a necessity for virtually all local residents, no matter where on the income scale one falls. Easing the emotional, social, and financial burden on one’s family and ensuring wishes are carried out upon one’s death is important if one has $400,000 or $400 million to pass on. Unfortunately, New York estate planning mistakes are made at all income levels, often with serious results for the individuals involved. The most common mistake includes not taking advantage of all of the legal tools available. For example, while wills are still commonly thought of as a basic estate planning necessity, in truth they are becoming obsolete for many families. Trusts are much more useful in that they can avoid probate and provide for substitute decision-making if disability strikes. Yet, many local residents, including those with vast fortunes, still fail to take advantage of the benefits that trusts bring.
One high-profile local example is that of Huguette Clark. The reclusive heir to her father’s copper and mining fortune died earlier this year at the age of 105. She was rumored to have more than $400 million at the time of her passing–an estate she inherited upon her father’s death over eighty five years ago in 1925. Ms. Clark had been a mysterious figure, having lived in a hospital room since the late 1980s. She left her Fifth Avenue apartment empty for over twenty two years even though she was in relatively good health until just before her passing. Ms. Clark was long estranged from her family, and only a very small and intimate group of advisors had any contact with her for the last quarter century.
Surprisingly, even though she had such a large estate, Ms. Clark’s advisors never had her create a trust to protect her long-term financial affairs. An article about her story published today by Forbes explains how most estate planning attorneys would have at least advised the client to utilize a revocable living trust, instead of a will. The need for a trust was made even more necessary considering the size of Ms. Clark’s wealth. In addition, there are questions about the terms of the will–drafted and signed when Ms. Clark was ninety eight years old. The will left most of the woman’s fortune to a newly created art fund and gave a significant amount to Ms. Clark’s long-time nurse. However, the will also named a partner in the very law firm that drafted the will as a beneficiary. Even if this was the exact intent of Ms. Clark, the potential conflict of interest issues would usually counsel the firm in question not to prepare the will. Many other questions remain surrounding her advisors spending over $100 million of her estate in the last two decades of her life.
As it quite common when a will is used, Ms. Clark’s family members have contested the will. They are claiming that she was mentally incompetent at the time she signed the document and will likely allege that the small group of advisors around her exercised undue influence. If successful, the distant family members may ultimately obtain the fortune. All of this fighting likely could have been averted had trusts been used to provide for her charity and pass along assets as intended.
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