Estate Planning

Are “Stretch IRAs” Going to be Phased Out?

Published on: July 17, 2013 | by Ettinger Law Firm

Structuring an estate plan to account for taxes can be a complex task. While state and federal estate taxes make up the majority of discussion about taxation, there are other issues to consider. For example, there are ways to structure disbursement of various assets–insurance policies, retirement accounts, and more–so that Uncle Sam takes as small a bite as possible.

Adding to the complexity is the fact that laws frequently change which either open up more opportunities or take away previously available tax-saving options. For example, last week Forbes discussed a U.S. Senate vote that may eliminate a commonly-used tax strategy.

Stretch IRAs

Update: Gandolfini’s Estate Faces Huge Estate Tax Liability

Published on: July 15, 2013 | by Ettinger Law Firm

Last week we discussed the recently unearthed will of former Sopranos star James Gandolfini. The document was filed with a Manhattan court late last month, with the actor’s assets being left to a wide range of people including his two children, wife, sisters, and several friends. Those earlier reports noted that Gandolfini’s assets including life insurance, real estate in Italy, and more. All told he allegedly had more than $70 million in assets.

With fortunes of that size, estate taxes are obviously an immediate concern. There are both federal and state taxes that apply to inheritances. The rates for each are different and they take effect at different income levels. Federal estate taxes apply to non-exempt assets over $5.25 million with a top rate of 40%. Alternatively, New York’s separate tax kicks in at assets over $1 million with rates between 5% and 16%.

Considering there are two levels of taxation and rates that are not trivial, it is critical to account for these potential taxes in an estate plans. Attorneys working on these issues for local residents must be intimately aware of all legal options to guard against the largest tax bills.

Estate Planning Tips from the Stars – James Gandolfini’s Will Filed in Manhattan

Published on: July 9, 2013 | by Ettinger Law Firm

Last month many in the entertainment world were shocked and saddened by the sudden death of New Yorker James Gandolfini at the age of 51. His passing from an apparent heart attack is a somber reminder that none of us know for sure what the future holds.

This week reports were released discussing some of the estate details. Gandolfini’s will was made public and filed with a court in Manhattan. Wills are public documents when filed with the court. The only way to keep these matters private is by using trusts and other devices which transfer property automatically without the need to go through the probate process–Gandolfini did make some arrangements outside of the will that are not known publicly.

Gandolfini Will

Michael Jackson Estate Saga Continues — $500 Million in Debt Paid Off

Published on: July 2, 2013 | by Ettinger Law Firm

When someone passes away, the basic principles of settling the estate seem straightforward: collect assets, pay off debts, and distribute what is remaining per the deceased’s wishes. While that cursory sketch appears easy enough, in practice, dealing with these matters can take years, have a significant cost, and result in prolonged disagreement, destroyed relationships, and even legal battles.

As always, a high-profile celebrity example offers a helpful look at how it plays out in the real world.

The Las Vegas Sun recently reported on the latest in the prolonged battle related to famed pop star Michael Jackson’s estate. The singer died over four year ago, but from most reports the matter is nowhere near being resolved. For one there, there is still pending litigation related to the billion-dollar tour production Jackson was set to complete just before his passing.

Per Stirpes – What Is It?

Published on: July 2, 2013 | by Ettinger Law Firm

If you read a bit about estate planning you may come across the term “Per Stirpes.” It is an awkward phrase to say, and there is little reason to use it outside the context of inheritance planning. It comes up when one lays out their inheritance designations, perhaps with a phrase like, “Fifty percent of the estate to Bob and Tom per stirpes.” Similarly, it may be written as “by representation.” This usually refers to the same thing.

So what is it? The short answer: Per Stirpes is Latin for “by the roots.” But that translation doesn’t help much. What it means in estate planning terms is that if the beneficiary dies then their descendants will get their share of the estate.

For example, say that the estate is worth $100,000. Per the terms of the will 50% of the estate should be split between Bob and Tom, with each getting $25,000. But what if Tom is not alive when he is set to receive that inheritance? Does Bob get his share instead? If the will stated that Bob and Tom were to receive their share on a per stirpes basis then the answer is No. Bob would not get the extra share. Instead, that share would go to Tom’s descendants–his own children. If Tom had one child, that child would get $25,000. If he had two children, then those children would split the $25,000.

Federal Marriage Rights Now Available for Same-Sex Couples

Published on: June 28, 2013 | by Ettinger Law Firm

Whether one is married or single is obviously a vital factor that impacts elder law and estate planning. Of course, that placed married New York same-sex couple in a strange position, as they were married under New York law, but single under federal law. As mentioned yesterday,with the U.S. Supreme Court decision in Windsor v. U.S., the federal law which deemed those couples unmarried is now gone. This will hopefully lead to a far more straightforward picture for those couples.

Marriage Rights & Obligations

Yesterday, The Globe published a story that delved a little more deeply into the specific rights which will now be afforded to married same-sex couples. The article is worth a look to get a better idea of some of the practical effects of yesterday’s ruling–beyond the obvious cultural and social effect of finally eliminating the stigma.

The 3 Generation Rule – Legacies the Last

Published on: June 26, 2013 | by Ettinger Law Firm

You’ve built a nest egg after years of consistent work, prudent planning, strategic risk, a lot of focus, and a bit of luck. You want to retire peacefully and provide a legacy that will hopefully secure some degree of wealth for you family for generations to come.

But what are the odds of wealth making it decades (or even centuries) after you are gone? If history is any indication, most inheritances won’t make it long at all. Wealth surviving into the third generation only happens in one out of ten cases. As a recent Senior Independent story on the subject reminded, this principles takes the form of an often-used refrain: “Shirtsleeves to shirtsleeves in three generations.”

The story points out that over the course of their lifetimes about two-thirds of Baby Boomers in the United States will inherit about $7.6 trillion. Yet, those same individuals will lose about 70% of that wealth before passing any of it on to their own children or other relatives.

Forbes on Gifting – When an Inheritance Can’t Wait

Published on: June 24, 2013 | by Ettinger Law Firm

One of the most common questions that local families ask related to estate planning and assets protection involve gifts: Whether to give them, when to give, how much, and in what form.

Of course, no two situations are identical, and so it is impossible to list a set of rules regarding when and how large-scale gifting should be done in every case. However, a Forbes article this week on the topic provides a good starting point for New York families to familiarize themselves with the basic concept and major issues to consider.

Helping Children Now

Luxury Services for the Afterlife

Published on: June 10, 2013 | by Ettinger Law Firm

The Sun Sentinel recently published an interesting story on the growth of luxury services for those making funeral and burial decisions. While it may seem strange to some for such focus on high-end items in the afterlife, those familiar with estate planning appreciate the intensely personal nature of these decisions.

For example, the article includes an interview with one man who decided to build a large mausoleum where dozens of his family may one day be buried. The retiree explained: “I was making good money, and I could afford to do that for my family. It was the idea that most of my family preferred to be buried above ground rather than in the ground.”

Industry insiders working on these burial details note that there is a significant market for more high end plots and amenities. Some include large indoor mausoleums, granite-walled locations and even entire private burial estates with air conditioning provided for visiting guests.

Estate Planning for Spouses: The Basics

Published on: June 7, 2013 | by Ettinger Law Firm

This week Forbes published an article that outlines the basics of how to fund an estate plan for spouses. The story is a helpful reiteration of many of the basic issues that are common for all New York couples thinking about their future and trying to create security no matter what the future holds.

Helpfully, the story explains how estate planning is not the creation of a stack of legal documents that are signed and then stored until needed. Instead, the process is far more comprehensive and involves examination of all of one’s assets, wishes, legacy interests, elder care goals, and more.

As a general matter, on the estate planning side, one of the main goals is avoiding probate at all costs. That means that something like a last will and testament is inefficient. Instead, for most New York couples it is best to create a series of revocable living trusts which are far superior, allowing property to be protected and passed to others without the need for court intervention. After the trust is created spouses transfer property directly into the trust.