Articles Posted in Estate Planning

New York Inheritance Issues in Second Marriages

Published on: October 3, 2011 | by Ettinger Law Firm

Proper Inheritance planning requires much more than simply filing in the blanks on standardized forms. That is why experienced New York estate planning attorneys are essential advisors when local community members are evaluating their long-term financial preparations. Proper planning of these affairs requires consideration of unique family dynamics and an ability to anticipate potential issues before they actually arise. Anticipating possible conflict and accounting for it ahead of time is one of the main benefits that local residents can derive from creating and updating their New York estate plan.

For example, local families often have concerns about the effect that a second marriage will have on their inheritance plans. Many emotions are at play when a parent remarries after a divorce or the death of a spouse. As a CNN story this weekend explained, adult children commonly express apprehension when a parent re-enters the dating pool or indicates a wish to get remarried. Financial concerns are occasionally the cause of that trepidation. One woman who lost her father several years ago explained, “I want my mom to be happy, but how do I know that her suitors don’t have ulterior motives? I’m concerned that she’ll jump into another marriage and her second husband will take advantage of her financially.”

Conversations between loved ones about these issues are frequently thorny and often result in strained family relationships. On one hand, as the article author notes, a parent is free to use their finances as they see fit. After all, an inheritance is not an entitlement but a gift. However, adult children need not stand by if a parent is genuinely making damaging financial decisions or is legitimately being taken advantage of–elder financial exploitation is a common problem. Therefore, in these situations an experienced, trained professional can often provide a crucial perspective to balance the competing concerns.

Careful Consideration Required Before Selecting a Successor Trustee in Estate Plan

Published on: September 28, 2011 | by Ettinger Law Firm

Local residents usually take the time to craft a New York estate plan because they wish to prepare for disability, save estate taxes, and avoid the probate process. In most cases these goals are best met through the use of a living trust. The trend over the past several decades is for middle class families to craft trusts instead of wills for their inheritance planning. As our New York elder law estate planning attorney Bonnie Kraham explained in an article published this week in the Times Herald-Record, unlike wills, trusts are private documents that do not need to be filed with the Surrogate’s Court. No costly, stressful, time-consuming probate process needs to be undertaken upon one’s death when a trust is used.

Instead of court involvement, a trust is usually administered by a successor trustee. Upon the death of the original trustee (the individual who created the trust), the successor trustee must inform the beneficiaries of the situation, gather and invest the grantor’s assets, notify creditors, pay taxes, and distribute assets per the trust provisions.

Attorney Kraham notes that the trustee who administers the trust has a variety of other obligations. They must remain loyal to all beneficiaries, including the contingent beneficiaries–acting impartially between them at all times. Also, the trustee must ensure that trust property produces income. Therefore it is incumbent upon the trustee not to keep large amounts in non-interest bearing accounts or allow a home to sit vacant. At the same time, all investments must be prudent, and a sound overall investment strategy must be employed. This typically requires diversification which balances both income production and investment safety. Other trustee duties include the filing of tax returns, distribution of trust income, handling of expenses, and the maintenance of proper records.

Family Disagreement Over Special Needs Trust Leads to Court Battle

Published on: September 26, 2011 | by Ettinger Law Firm

A New York special needs trust is usually the premier method for local residents to provide a disabled child with financial assistance without disqualifying them from receiving government benefits like SSI and Medicaid. Our New York estate planning lawyers know that providing adequate resources for children with special needs is particularly important today because of the increasing life expectancy of disabled youth. The resources needed by these individuals are often substantial, necessitating very careful planning. All families in this situation must ensure that they seek out professional assistance to learn what legal arrangements are best for their unique situation. No two families are identical, and so specialized help is essential.

Failure to seek out experienced legal aid when dealing with these trusts often results in government benefit penalties, negative tax consequences, and damaging family turmoil. Earlier this month Special Needs Answers reported on developments in a complex legal case related to family disagreement over a special needs trust. The case stems from a trust that was set up in 2002 for an 18 year old high school student who suffered severe brain damage after suffering a heart attack. A lawsuit was filed and settled on his behalf against school officials who failed to take action which would have limited the brain damage. The settlement funds were placed in a special needs trust.

The young man died five years later without a will. Per the rules of intestate succession in the state, the trust funds–valued at $8 million at the time of the young man’s death–were supposed to be split between his parents. The child had been estranged from his father for most of his life, but the victim’s mother did not discuss her specific family situation when the trust was created. In order to avoid having her ex-husband share in the fund assets, the mother had a disclaimer drafted and convinced her ex-husband to sign it by claiming it was a document related to burial. The former spouse initiated a legal challenge when he eventually learned that he had signed away his share of $8 million. The ensuing legal battle lasted several years. It was only this year that a local court ruled that the mother acted wrongly in trying to deceive her ex-husband into signing the disclaimer. The estranged father will be allowed to collect half of the funds left in the trust.

Many Challenges Face Estate Executors

Published on: September 20, 2011 | by Ettinger Law Firm

For decades our New York estate planning lawyers have helped local residents use living trusts instead of wills to plan their affairs. For many clients a will simply creates more problems than it solves. For example, yesterday the Wall Street Journal published a story exploring the myriad of issues faced by a will executor–the person named to manage the estate of a deceased individual in a will. It was explained how a wide variety of complex tasks are required of the executor, there are legal repercussions when mistakes are made, and many relationships are ruined in the process of settling the estate.

Executors are often siblings or other family members of the deceased. It is the executor’s job to administer a will through the probate process by accounting for assets, paying debts, and distributing property. Red tape, complexity, tedium, and relationship conflicts are inherent in the process. Many professionals in the field report that there has been a steady increase in the number of “executorships gone bad.” Some believe that recent economic troubles have led to more inheritance fights as of late, complicating the executor’s job even further. When a will is challenged by an heir (a frequent occurrence), the executor is usually thrown into the middle of depositions, court appearances, and other legal situations that most would prefer to avoid.

Observers admit that the role of executor is generally not suited for amateurs. Often the individual is required to be aware of taxation rules, potential conflicts of interest, and even investment strategies like picking stocks and bonds. All of this comes with little pay, because state guidelines set the amount of money that an executor can receive.

When Considering Inheritances, Baby Boomers Fear Children’s Financial Acumen

Published on: September 15, 2011 | by Ettinger Law Firm

Professional inheritance planning continues to rise in popularity among all classes of society as more and more seniors reach retirement age and come to appreciate the legal tools available to help in their planning efforts. Interestingly, a new poll discussed in Time magazine this month explains that many of the newest retirees from the Baby Boomer generation have doubts about their heirs’ ability to manage an inheritance. This is a common concern, and our New York estate planning lawyers work with many clients in this area who are specifically tailoring their plans to account for it.

The new survey found that only 49% of millionaire Baby Boomers indicated that leaving money to their children was a priority in their estate planning. When analyzed closely it is clear that the polling figures do not indicate that these parents have stopped worrying about the well-being of their children. Instead, many of them have deep concerns about the effect that a large inheritance will have on their offspring. For example, one-fifth of survey respondents felt that their children would simply squander the inheritance and a quarter of these seniors thought that receiving too much money would only make their heirs lazy. Perhaps because of this, a majority of these retirees admit that they keep their children in the dark about their exact net worth so as to prevent expectations about what will be left behind.

Fear about the financial sense of children has long been a concern for local community members. For decades, attorneys at our New York elder law estate planning firm have worked with residents who were worried about a family member’s ability to handle money. Fortunately, tailoring inheritance plans to account for spendthrift children is exactly a benefit one derives from seeking professional help in this area. A variety of trusts exist which allow parents to pass on the assets they feel appropriate to their heirs in a way that guards against their fears that the inheritance would be wasted, abused, or usurped by a non-relative.

Estate Planning for Disabled Heirs

Published on: September 14, 2011 | by Ettinger Law Firm

Last week the Wall Street Journal‘s “Family Values” blog discussed the often challenging estate planning issues faced by families who are providing for a disabled loved one. Our New York estate planning lawyers know that more families are in this situation than some might suspect. The latest U.S. Census data shows that roughly 12% of the population has a severe physical or mental disability. When planning for the future it is particularly important for these families to closely consider how they want to leave assets to their heirs because of the effect that the asset transfers may have on their disabled relative’s access to public assistance.

Budget shortfalls are causing many state and local governments to cut support services to these residents. A common cost-cutting measure includes tightening income restrictions for those seeking to qualify for medical benefits and support services. As a result, it is vital that all families structure inheritances for disabled heirs so that they are not disqualified from the government help that they will likely need. Yet, research shows that two-thirds of parents and caregivers with disabled loved ones do not have plans in place to account for the long-term needs of these vulnerable heirs.

This is particularly unfortunate, because there are planning strategies that exist specifically to assist families in this situation. For example, a special needs trust can be used to leave assets to heirs with disabilities while ensuring that they keep government benefits like Medicaid and Supplemental Security Income (SSI). Before this trust was available parents were often forced to disinherit their disabled children lest they lose all their government support. Now, those who create a special needs trust can leave assets for the child’s use beyond that which they will receive from the government. Families can set aside funds for clothing, education, entertainment, household goods, healthcare costs, and many other future wants and needs for their disabled relative.

Estate Planning Tips For Providing One Child a Larger Share of Inheritance

Published on: September 12, 2011 | by Ettinger Law Firm

There is often a default assumption that local parents wish to provide all of their children with equal shares of an inheritance as part of their New York estate plan. However, no two families are identical, and there are a variety of reasons why some parents feel it necessary to provide different assets to each of their children upon their death. The ability to tailor an inheritance using rules different than the default to suit a family’s specific desires is one of the main reasons why local families seek the assistance of New York estate planning lawyers. As one lawyer put it, “there’s nothing so unequal as the equal treatment of unequals.”

Most families take a variety of factors into account when deciding how to distribute their property. For example, one child may already be more financially successful, another may have a larger family of their own, and yet another may be estranged from the family. In other cases a parent may have already helped one child while alive–such as by providing down payment money on a house–and want that prior help to be reflected in the inheritance.

A Wall Street Journal story this weekend discussed how many families have questions about the best way to go about giving one child a larger share than another. Trusts are usually a more effective estate planning tool than a will. However, if a will is used, it is important that certain steps be taken to ensure that the uneven child distribution is capable of withstanding legal challenge. Part of that process involves being open and honest with family members about the inheritance so that children know about the terms while you are alive. This minimizes the surprise factor and may quell later suspicions. Having these conversations is often difficult, so as an alternative a video or instruction letter can be included with the estate planning documents to explain why a certain decision was made.

Many Middle Class Families in New York Use Trusts in Estate Plan

Published on: September 6, 2011 | by Ettinger Law Firm

One of our New York estate planning attorneys, Bonnie Kraham, Esq., recently authored an article that shares information on the increasing use of trusts in the estate plan of many local middle class families. The story was published in this weekend’s Times Herald-Record, and explains the various types of trusts that residents can use and the way that each holds and transfers property. Unfortunately, there remains a misconception among some local community members that creating a New York trust is a project only for the wealthy. That is not the case. As attorney Kraham notes, there has been a “living trust revolution” over the past few decades where many middle class families have discovered the ways in which these legal entities can be used to avoid probate, save taxes, and protect assets.

All trusts begin with a written agreement, and each includes at least three necessary parties. These include a “grantor” who creates the trust, “trustee” who manages the assets, and “beneficiaries” who use the trust assets. For example, the three roles may be filled when a senior couple creates a trust (grantors) to be managed by their lawyer (trustee) to provide for the couple’s children (beneficiaries). The three roles need not be filled by different individuals, however. Often a grantor will also act as beneficiary, so that they can still use those assets while they are alive. Following the written agreement which establishes the trust, assets are transferred into the entity by way of “retitling.” This involves changing the name on accounts, mutual funds, and stock certificates to the name of the trust, and transferring title to property to the trust.

The two main types of trusts are testamentary and living. Testamentary trusts are created only after an individual’s death pursuant to their will, while living trusts are created while a grantor is still alive. Living trusts are an increasingly common way for many families to transfer assets at death. Among other benefits, a living trust can help families avoid probate, saving time and expense in closing the estate.

Estate Tax Issues Continue to Plague Married New York Same Sex Couples

Published on: August 30, 2011 | by Ettinger Law Firm

Thousands of same sex New York couples have wed since the state became the sixth to legally allow such unions last month. At the time our New York estate planning attorneys noted how the change means that these couples are no longer required to pay state taxes on domestic partnership benefits, will gain access to worker’s compensation benefits, can bring wrongful death lawsuits on behalf of their spouse, and can file joint state tax returns. In addition, surviving same sex spouses are no longer subject to New York estate taxes on assets they receive from their partners at death.

However, the fight for equality continues. Same sex marriages are specifically repudiated at the federal level through the Defense of Marriage Act (DOMA). This has significant repercussions on the estate planning needs of married same sex couples. These couples cannot file joint tax returns or joint bankruptcy petitions. Upon the death of one spouse the other cannot inherit veterans benefits or Social Security benefits. Also, property passing to a surviving spouse is subject to federal estate taxes.

Our New York estate planning lawyers work with families on plans that account for both state and federal tax and asset transfer issues. We understand the complexities that same sex couples continue to face when preparing for the future as a result of the divergence in the law at the state and the federal levels. These inequalities led several area publications to issue joint appeals last week calling for DOMA to be declared unconstitutional. For example, the Syracuse Post-Standard noted that “the law discriminates by denying homosexual spouses significant federal benefits that flow automatically to heterosexual spouses.”

Proper New York Estate Planning Necessary to Combat Possible Legal Challenges

Published on: August 24, 2011 | by Ettinger Law Firm

Our New York elder law estate planning attorneys are proud of our work as counselors at law, acting as trusted advisors for the clients who count on us. In this capacity we spend each day meeting with community members to understand their family dynamics and listening to their concerns and fears about the planning process. By familiarizing ourselves with the unique circumstances of each client we are able to anticipate possible challenges to their plan and ensure that all the bases are covered ahead of time. In this way we can use our knowledge and experience to help clients pass on their assets and protect those assets in a seamless manner that avoids legal challenges and court proceedings.

The use of trusts is one of the key ways that our New York estate plans help clients stay out of the courtroom. Unlike wills, trusts do not require court proceedings to settle, both in this state and in other states where property might be owned. Avoiding probate saves the time, stress, and high costs of the legal proceeding.

Besides avoiding probate, our New York estate planning attorneys work hard to craft plans that cannot be successfully challenged by those who may be upset by client decisions. This is where taking the time to understand the family dynamics of each client is essential. It is important to anticipate ahead of time individuals that might have hurt feelings because of the details of a plan or become disgruntled upon learning of a client’s decision regarding their assets. Unfortunately, family disagreements arise frequently in these situations, often leading some upset individuals to challenge the legality of the plan in an effort to overturn it.