Estate Planning

Huguette Clark’s Only Friend Has Her Own New York Estate Plan Settled

Published on: January 26, 2012 | by Ettinger Law Firm

One of the most well-known New York estate planning stories (and mysteries) of recent years is that of Huguette Clark. The extremely reclusive heiress recently passed away, leaving hundreds of millions of dollars with many wondering where exactly the money will end up. Of course, in most cases an inheritance will go to surviving close family members, dear friends, or well-known charitable causes. However, Ms. Clark had very few surviving family members, and it is now being reported that she only one “real” friend, a French woman named Suzanne Pierre.

Ms. Pierre had become somewhat of a liaison between Ms. Clark and the rest of the world. It was alleged that Ms. Pierre was one of the few people who was privy to the heiress’s estate planning documents. In fact, according to the New York Observer, Pierre once helped anonymously sell some of Ms. Clark’s impressive art collection. She was also the recipient of a $10 million gift of a rare painting from the estranged heiress. Before Ms. Clark’s passing some predicted that Ms. Pierre would actually be named heir to much of Ms. Clark’s fortune. However, that possibility vanished when Ms. Pierre herself passed away a few months before Ms. Clark moved on.

One of Ms. Pierre’s own most valuable assets, her Park Avenue apartment, was recently sold during the disposition of her estate. City records indicate that the unit sold for just under $2 million. The sale comes as many in the real estate world speculate on the prospects of Ms. Clark’s own, massive Park Avenue apartment. The 42-room unit is expected to fetch somewhere around $70 million. Many are calling the unit the most sought-after apartment in the entire city and “the listing of the young century.”

Protecting Assets When Facing Uncertainty

Published on: January 23, 2012 | by Ettinger Law Firm

NuWire News published an interesting blog post last week that runs down a few ways that community members can use estate planning techniques to protect assets in “uncertain times.” Of course, our New York estate planning lawyers realize that uncertainty exists at all times, because no one knows for sure what tomorrow might bring. However, there are always some circumstances when future financial trouble seems particularly likely–such as when one might need long-term care either at home or a long-term care facility. The article authors note that it is always beneficial to shield assets before they become a target, otherwise, depending on the circumstances, there are a range of penalties that may attached to the conveyance. For example, when it comes to applying for New York Medicaid, it is vital that asset transfers be made at least five years before applying. Strategies exist to protect assets even when on the nursing home doorstep (without five years to wait), but there is much more than can be done the earlier one takes the time to plan for these issues.

Outside of the long-term care context, there is similar benefit from protecting assets well ahead of time, before they may be targeted by a creditor. The article discusses ten different techniques that may be applicable, depending on one’s circumstances. For example, the story discusses spousal gifting trusts. These are special trusts (also known as irrevocable grantor trusts) that allow married couples to protect assets from creditors and estate taxes while still retaining control and use of the assets.

Obviously insurance considerations are also important for protecting assets in uncertain times. After all, insurance is all about having security in the face of potential problems down the road. Long-term care insurance is clearly helpful to account for senior care costs. Unfortunately, that particular insurance is often out of reach for middle class community members. However, even basic life insurance should not be forgotten when thinking about estate plans. For younger families with children life insurance provides security in the case of untimely death. For wealthier families the insurance can also be important to protect assets from estate taxes.

Golden Globe Winning Film Explores the Trust Industry

Published on: January 19, 2012 | by Ettinger Law Firm

Estate planning usually doesn’t come to mind when one thinks about award winning Hollywood movies. Most popular films are about great adventures, tragedies, and disasters. Planning for one’s long term financial and medical well-being, on the contrary, is all about prudently working to avoid major crisis or drama. However, a film that many movie buffs believe has the inside track to win this year’s Academy Award for Best Film actually involves estate planning, with a trust and a trustee at the center of the action. This weekend the movie won the Golden Globe Award for Best Dramatic Film.

“The Descendants” tells the tale of a man who is dealing with the impending death of his wife who suffered a traumatic injury and is on life support. The film’s protagonist, played by George Clooney, is the victim’s husband. As his wife slips away he is forced to deal with the consequences of handling her estate. She had come from a very wealthy family, and the couple (along with their two children) had lived on acreage of land in Hawaii that was held in trust.

Clooney, as the husband, is the trustee of his wife’s multi-generational estate worth billions. The other trust heirs (his cousins) want to sell the land to generate income to meet their personal needs. However, Clooney remain unsure of the best long-term decision. He knows that the original intent of the family was to preserve the land for succeeding generations.

Common Estate Planning Mistakes

Published on: January 17, 2012 | by Ettinger Law Firm

Last week an article in the Mansfield Patch listed “Five Vital Estate Planning Mistakes” made by local community members. The list touched on a few issues that each New York estate planning lawyer in our firm has seen time and again. Like history, these errors tend to repeat themselves. Being aware of the common problems is the best way to ensure you don’t make them yourself.

Of course common mistake number one is putting off estate planning efforts entirely. Passing on is usually not a topic that most enjoy thinking about. Estate plans inherently involve some considerations and preparations in the event that one is no longer alive, and so many simply avoid the idea altogether. This delay ultimately serves no purpose. As the article author remarks tough-in-cheek, “If you don’t die before retirement, chances are pretty good you’ll die sometimes afterwards.” Considering that death is inevitable, there is simply no logical reason to do no planning and risk paying more in taxes, the uncertainty of the probate process, or the potential squabbling of family members.

Second on the list was failure to consider naming guardians for one’s children. While most local residents conducting New York estate planning have adult children, planning is important for younger community members as well, particularly those who have young children. When crafting an elder law estate plan for clients, we always take into account the family dynamics involved. When young children are present it is important to make plans for those children in the event something happens to you, the parent. This is another task that is often put off, because it is not pleasant to think about orphaned youngsters. However, at the end of the day failing to name a guardian only means that the buck will be passed to some other decision maker if anything happens–usually the court. No one is better positioned than a parent to name a potential replacement in case of tragedy, and so it is always prudent for parents to do so.

Adding Charitable Giving As Part of Your Estate Plan

Published on: January 10, 2012 | by Ettinger Law Firm

New York estate planning is primarily concerned with passing on assets to family members and saving taxes in the process. While the inheritance planning portion of the effort may seem straightforward, there are many considerations involved. It is much more than simply saying that John gets the house and Jane gets the car. When done right, the process should include consideration of many issues like what legacy one wishes to leave, how they’d like their children to remember them, and what values they wish to pass on. For many families this process involves leaving some assets to a charity of choice.

A story in this weekend’s Western Farm Press emphasized how charitable giving is an important part of estate planning for many families. It was a follow up to an article that had been recently written about the value that farm families have in visiting an estate planning attorney to keep a farm alive in the future. The latest story noted that including valued charities in one’s inheritance is a helpful way do some good while saving on taxes in the process.

It was explained how using these charitable donations in combination with estate tax exemptions can go a long way to pass along assets to desired family, friends, and causes without losing it to the government. Many assets that have appreciated significantly in value can be given to charity which may allow them to avoid being eaten up by capital gains taxes. Also, retirement savings, like IRAs, can be included in estate planning efforts to benefit charity. This often helps to reduce or eliminate tax liabilities. When done properly it can increase the funds that are going to heirs while also increasing the amount provided to a charity.

Farm Assets Protected By Estate Plan

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

Western Farm Press published a story yesterday reminding readers of the importance of conducting proper estate planning. The publication, geared toward those in the agricultural industry, explained that many farms had been saved that otherwise would have been split up because of savvy planning ahead of time. The story reminded readers of a basic principle that ourNew York estate planning lawyers wholeheartedly endorse. It noted that planning is important regardless of the size of one’s estate so that “if something happens to you today, your assets will go where you want them to go, to the people you want to have them.”

In the context of farms, it is particularly important to consider the tax implications of asset transfers upon death. It was explained that many farms have been lost when one party in the operation dies, leaving others unable to pay the taxes that come due. Estate taxes are hard to pay without selling the very property that one acquires. Farmers are often asset and land rich, but cash poor. That means that those who inherent a farm are often required to sell the land itself to come up with the cash needed to pay the tax bill. Estate tax issues may not be a problem for those in certain income brackets, but there remains constant volatility in the area. For many families their tax liability could change dramatically from year to year depending on what the laws happen to be at the time that one passes on.

Regardless of estate tax concerns, however, there are many basic estate and inheritance planning issues that are important for farmers to consider. The story suggests that it is helpful to think of one’s estate as in either accumulation mode, conservation mode, or transfer mode. The younger generations are often still acquiring assets, while older community members are likely to want to preserve what they have or pass it along. Estate planning helps most clearly with preservation and transfer.

Digital Assets May Seem Unimportant, But Families Will Want Access

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

Modern New York estate plans require consideration of a range of issues that were unheard of even a few decades ago. Of course some of the core aspects remain the same, such as deciding how to pass on tangible assets like the house, car, and personal property. But in this digital age, our New York estate planning lawyers know that complete preparation now must take digital assets into account. Many researchers who have looked into the subject have found that even when an individual does not place any value in their own digital assets, the surviving family members usually have great interest in accessing them.

A story this week from KHAS TV explored the issue. Many community members–including a growing number of older residents–have a wide range of digital data. Interpersonal communication is tracked on Facebook, photos are stored on Flickr, articles are written on blogs, and a range of other information is stored on personal laptops. When a loved one passes on, having access to these sentimental items is something that many grieving family members deem very important. As the story explained, “those things that we sort of use as a vehicle to remember each other by, those things have now become digital.” These days many more items are viewed on a screen than a piece of paper.

But when proper steps are not taken, it is not always easy for family members to access those digital items. As many estate planners are realizing, it is increasingly important for access to these digital assets to become integrated in long term plans. Stories continue to accumulate of widows and children who are desperately searching for information about computer passwords in order to get access to important photos, videos, stories, recipes, and other information that exists only in digital form.

Holidays Are Prime Time to Discuss Family Estate Planning

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

Estate planning is about setting ones affairs in order for the benefit of friends and family. In that way, the holiday season is a natural time to discuss these matters, because it is now when many families are getting together and celebrating. Particularly for families that do not live close together, this time of the year may be the only one when everyone is all in one place. For those in our area, it may be an ideal time for adult children to sit with parents and siblings to talk about creating or updating their New York estate plan.

Of course, one need not spend time delving into the specific details of a plan over turkey dinner, but simply mentioning the topic lightly can be important. As a recent article in The Gazette suggested, if parents do not seem willing to get into the details during the holiday, adult children should simply explain that they’d like to discuss the subject at a later time. However, if parents seem receptive, it is helpful to ask them some basic questions. For example, some parents may already have wills drafted. If so, it is important for other family members to know where it is located and how to access it. If a will is used, children should ask who has been named executor. The same is true when more advanced tools like trusts are used, where successor trustees have to be named. Our New York estate planning attorneys know these seemingly simple choices come loaded with problems. Discussing them ahead of time, when everyone is together, is often a good approach. For example, choosing one child over another for either of these duties may create hard feelings.

Beyond subtle prompting to get certain estate planning affairs clear, the holidays may also be a good time for parents to share exactly how certain sentimental objects will be distributed. Of course, the holiday gathering may be inappropriate if it is known that certain decisions will cause family discord. However, it is never a good idea for family members to learn who is set to receive certain objects only after a loved one has passed, particularly items with emotional attachments. Because everyone is together the holidays may be the ideal time for grandparents to clearly explain what steps they’ve taken and to answer any questions that family members may have. The input that the elders receive from family members may also prove helpful in case something has been left out of planning. At times adult children can remind parents of certain assets or family issues that should be incorporated in estate planning documents that had originally been left out.

Tax Litigation Continues to Rage Four Years After Death of Brooke Astor

Published on: December 9, 2011 | by Ettinger Law Firm

New York estate planning mishaps and disputes often make headlines when they involve large sums of wealth and larger-than-life characters. Perhaps none has received more publicity recently than that surrounding the “grand dame of New York City society,” Brooke Astor. Ms. Astor died four years ago at the ripe age of one hundred and five. However, inheritance and tax issues continue to rage around her estate and they show no sign of nearing a resolution. As discussed in Forbes, seven new lawsuits were recently filed by her estate refuting IRS demands that she owe an additional $62 million in taxes.

It seems that one of the key issues is the overall size of her estate. Every New York estate planning lawyer knows that the total value of an estate is a fundamental factor in evaluating the overall tax burden. A smaller taxable estate means a smaller tax. In some cases, if an estate is below a certain threshold, then certain taxes need not be paid at all. That is why most tax litigation involves dispute between the government and the individual (or their estate) about the total value of taxable assets. In this case, the government claims that the value of Ms. Astor’s estate is $223 million, but representatives for Ms. Astor say the figure is around $93 million. Tens of millions of dollars in potential taxes hang in the balance depending on what sum the court ultimately decides is accurate. The tax bill could be anywhere from $35 million to $97 million. The disagreement between the parties centers mostly on charitable bequests (totaling $96 million) that the estate claims can be deducted but which the IRS disputes. In addition, the IRS claims that there was $20 million in lifetime gifts which should have been included. Part of the IRS request includes over $2 million in penalties for the failure to file and pay those gift taxes properly.

The estate admits that certain gift tax returns were not filed. However, many of those gifts were to her son, who was earlier convicted of 14 different crimes related to neglecting her care and stealing from her estate. Many estate planning attorneys have used the drama surrounding Ms. Astor’s estate and her son’s crimes as an example of what can go wrong when a Power of Attorney is in the wrong hands. As the Forbes article author noted, “the Astor case is a reminder to families that it’s important to make sure you get these basic estate and disability planning document right.”

Favorable Tax Rates and Tools May Soon End

Published on: December 7, 2011 | by Ettinger Law Firm

This week Barron’s–a publication of the Wall Street Journal–discussed how many favorable tax breaks, rates, and regulations are either set to expire or may soon be eliminated by policymakers. It was explained how those at the top of the income ladder have seen a steady stream of tax cuts over the past ten years. Under President Bush the top income tax level was cut, the capital-gains tax was slashed, and dividend tax rules were changed. Our New York estate planning lawyers know that there were also many alterations to trusts, gift rules, and other wealth transfers issues over the past decade.

However, many speculate that changes will now be made in the other direction as policymakers look for ways to tackle growing debt and budget deficits. As one observer explained, “acting now on any kind of tax break is wise given the mood in Congress these days.” For example, perhaps that largest benefit set to expire is the $5 million gift and estate tax exclusion. The exclusion allows couples to essentially give away $10 million tax-free. The rates are currently set to revert back to $1 million at the end of 2012 unless legislative action is taken. This alone should be motivation for some families to focus immediate attention on their estate planning.

Other tax-saving tools may also not last indefinitely. For example, Grantor Retained Annuity Trusts (GRATs) are popular for some. GRATs are created for a set term (often two to five years) with an annuity stream from the trust being given to the one who set it up over that term. When the term expires the remainder above a set interest rate goes to heirs. When an experienced estate planning attorney helps create the trust, it can be “zeroed out” so that the annuity stream is set such that there are no gift tax consequences. However, there are currently discussions about changing GRATs. They may soon require a ten year term and zeroing out may no longer be allowed.