Articles Tagged with manhattan estate planning lawyer

Estate planning is vital for all people wishing to have control over the distribution of their assets following their death. Women, in particular, should take time to plan their estates. In the U.S., women control nearly 40% of the nation’s investible assets and nearly half of those assets are managed solely by women.

Surviving Spouses

Many women outlive their husbands by a number of years. Outliving your partner tends to mean that you inherit their estate. Most spouses will be sole beneficiaries of each other’s’ estates. This means that the surviving spouse will be in full control over the final disposition of the assets. If your spouse didn’t make plans and you are aware of special instructions or requests they would have wanted, it is your job to make those plans now. For instance: if your spouse had children prior to your marriage and wanted them to have an inheritance but didn’t plan, it is now up to you to decide whether or not to include those wishes in your own estate plan.

COMMON PROBLEM

There is much talk lately of how to deal with email, facebook, twitter accounts, et cetera of people who pass away.  For those of us who have friends or family who passed away and see their facebook account send a reminder to all of their friends on their birthday or some other event, it is nothing short of strange, even ery to see their former friend live into perpetuity in the digital realm.  Many people use it as an opportunity to post memories and give a public shout out to the living that their friend or family is still alive in their heart.  Others find the matter to be a painful memory.  

Facebook instituted a policy whereby a legacy contact can delete your account or transition the account to a memorialized account, whereby your name will be changed to a remembered account (more properly a “remembering account“).  Currently, New York does not allow an executor, or anyone else for that matter, to access the emails, online drives and various other digital accounts owned by a person after they pass away.  If it was private while the person was alive, shouldn’t it be alive after they pass away?  Yet, this is a rapidly evolving area of the law, with private corporations creating their own rules in the absence of legislative pronouncements to the contrary.   In the 2012-2013 legislative session, Representative M. Kearns introduced a bill that would address the issue of access to such accounts by an executor.

FURTHER CHANGES MAY BE NEEDED

When a person receives an asset via the probate process, the transaction must be reported to the IRS, even if it does not trigger any tax liability as to the estate or the recipient.  This is because the IRS needs to track the basis of the asset to determine any net capital gains or other calculations for tax liability purposes.  Price minus basis equals profit is the rough calculation to determine how much a person realized in a sale, which in turn determines the capital gain on the sale of the asset.  

There is a tension built into the system whereby the executor wants to assign the lowest possible value to the asset, so as to keep the value of the estate low, while the beneficiary wants to have the highest possible value assigned so when they dispose of the asset in the future it will incur less tax liability.  The IRS sought to address this tension when they lobbied Congress create 26 U.S.C. § 6035, which in turn enabled them to create the new IRS form 8971.  Form 8971 requires an executor to notify the IRS which beneficiary receives what and the value of the asset.  Part of the same legislation also created 26 U.S.C. § 1014 which requires beneficiaries to use the value of the asset at the date of death for purposes of reporting basis.  This value cannot be greater than the amount that the executor reported on the estate tax return.

CHANGE IN APPROACH BY IRS BUT STILL SOUND ESTATE PLANNING CONTINGENCY

It is obvious that no one knows when they will shake off their mortal coil and pass from this earthly realm.  The IRS and the law in general consult their own mortality tables to guide certain decisions.  These tables are based on probabilities and generalities, drawn up by bean counting actuarians.  They are undoubtedly reliable enough to warrant an individual to make a decision that may take decades to play out or even by institutions to guide their decision making.  Insurance companies calculate risk by consulting them and Courts sometimes use them to determine future damages.  They can be used by those engaging in estate planning for many things, but, in particular to help calculate a risk premium in a limited set of circumstances.  A self cancelling installment note can be a method and means to transmit wealth to the next generation if properly structured.  A recent Chief Counsel Advisory (CCA) opinion by the IRS called into question one specific means to calculate risk for a self cancelling installment note but did not question the overall appropriateness of the use of a self cancelling installment note.  The self cancelling installment note works by one person selling an asset or loaning a certain sum of money, pursuant to a promissory note, with at least a minimal amount of interest charged.  

In addition, the promissory note acknowledges that in the event that the person who holds the promissory note (the lender) passes away while the note is still being repaid, the remaining balance of both principal and interest is considered paid in full.  The note must incorporate a specific increased interest rate in light of the increased risk that the note holder/lender may not collect the entire amount.  If unfortunately the note holder/lender passes away the money passes outside the estate, without incurring any estate or gift tax liability and without any additional legal obligations for the borrower.

When you create an estate plan, you face many decisions. One of those decisions will be how you should divide and distribute your property. You will spend a great deal of time deciding who will get what upon your death. One area that may need special attention is the distribution of your tangible personal property, especially those items that may not have significant monetary value, but may hold substantial sentimental value to you and your loved ones.


What is tangible personal property?

Under New York law, property is anything that may be the subject of ownership. The property specifically devised by your will or trust commonly includes real property, cash, stocks, motor vehicles, and other items of value you wish to pass on to those named in your will or trust. It is a good idea to define what you mean to include as part of your tangible personal property, which typically excludes cash, securities, and tangible evidence of intangible property. Generally, tangible personal property will include property, other than real estate, whose value is derived from the item itself, or its uniqueness, such as furniture, decor, jewelry, coin collections, photos, and other personal items you use in daily life. While you may consider your pets as members of your family, the law classifies pets as tangible personal property.

Without you around to clarify your testamentary intent, those receiving property, and likely those intentionally omitted from your will, might battle over your estate for years. There are many potential sources of dispute, but there are steps you can take to make sure your intent is carried out without an ongoing legal battle after you pass on.

Common Sources of Dispute

  • One child may have received more financial help over the years while the decedent was alive, and the will or trust does not take into account this prior assistance, which may leave the other children or beneficiaries with a sense of unfairness.
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