Estate Planning

Developments in Anthony Marshall Case – Brooke Astor Estate Fiasco

Published on: April 29, 2013 | by Ettinger Law Firm

Celebrity estate planning complications and feuds are often used to illustrate basic planning principles or common problems. Perhaps none of those examples are as well-known, especially for New Yorkers, as the sad case of the estate of Brooke Astor. The legendary socialite and philanthropist died several years ago. Since her passing, a wide-range of claims were made regarding the distribution of her assets and criminal activity on the part of those responsible for her care and affairs in the later years of her life.

Astor reportedly suffered from Alzheimer’s at the end of her life–an affliction that similarly affects many New York seniors. Unfortunately, also like many others, it seems that her condition was abused by the very people who were supposed to look-out for her.

Astor’s son, Brooke Marshall, was criminally charged with exploiting his mother to funnel more money to himself. Marshall was ultimately convicted, along with a co-defendant, of illegally giving himself a $2 million “raise” to administer the estate. Claims also suggested that an amendment to Astor’s will in 2004 included a forged signature.

The DuPont Case, Mental Illness, and Wills

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

Residents are often warned to complete their estate planning–wills and trusts–before it is “too late.” Most assume that the planning is only “too late” if they die before getting it done. But that is a mistake. In many cases “too late” actually refers to losing the competency to create the legal documents. As a practical matter, it may even mean before one even has the appearance of mental health issues, because even a hint of problems may open the door to legal challenge from others.

Estate planning is about ensuring one’s wishes are carried out and maximizing the preservation of assets without controversy. Limiting that controversy includes completing the planning early and efficiently, minimizing the risk of problems down the road. Thought of in that way, “too late” is far earlier than simply “before you die.”

John duPont Estate

New Case: Inheritance Rights of “Adopted Out” Children in New York

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

A case recently came before a New York court that delved into a very unique inheritance issue. The case, Matter of Svenningsen involved the inheritance rights of “rejected” adopted children. “Rejected” is a harsh word, but refers to children who were adopted and whose adopted parents terminate parental rights. It is a rare occurrence, but various health issues or circumstantial factors may make such change in parental rights necessary in some cases.

The circumstances in the Svenningsen case are somewhat complex. Essentially, a New York family adopted a child, Emily, from China in 1996. The family had executed a trust in 1995 the had specifically included adopted children. A second trust was executed in 1996 that specifically named Emily. Sadly, the patriarch of the family died the following year, in 1997.

Eventually, Emily began attending a boarding school for children with special needs. Apparently Emily developed a close bond with those working at the school. As such, several years later, in 2003, Emily’s adopted mother agreed to terminate her parental rights under the assumption that Emily would be adopted by one of the director’s of her boarding school. No mention of Emily’s trust was provided during that second adoption hearing.

Federal Estate Tax — Back on the Agenda?

Published on: April 12, 2013 | by Ettinger Law Firm

Earlier this week we touched on the fact that estate tax issues need to be on all New Yorkers’ radar, because the state tax kicks in at a far lower level than the federal tax. The federal rate was seemingly fixed as part of the compromise legislation that averted the “fiscal cliff” earlier this year. While any law can be changed, the passage of this legislation was assumed by most to signal some level of finality on the matter. Debate had raged for months (even years) about the exemption level and rate. The uncertainty was a challenge for estate planners, because it is more difficult to craft complex protection plans when the tax rules are a moving target

In that vein, regardless of one’s own opinion of the estate tax, passage of the compromise bill was a welcome relief–offering stability. But that stability may be short lived, as proposals about changing the federal estate tax have are already making their way back into national political discussions.

Here We Go Again

Don’t Forget: There is a New York Estate Tax on Top of Federal Tax

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

Much discussion at the end of last year dealt with the estate tax. As federal officials groped for a compromise to avoid the so-called “fiscal cliff,” details about the federal estate tax were one part of the negotiations. Democrats wanted it returned to levels during the Clinton Administration while Republicans wanted it eliminated altogether.

Just before the deadline, a law was passed which apparently settled some of the matters of contention. In so doing, it seemed to finally provide some permanence to the federal estate tax. The tax rate now tops off at 40% (a jump from the previous 35%) and begins on parts of the estate over $5.25 million. The exemption level is pegged to inflation, and so it will rise slightly each year.

With news of this new estate tax compromise (and its relatively high exemption level), many have pointed out that the federal tax is now only a concern to a small slice of the population. After all, the majority of residents will not die with assets over $5.25 million, and so estate planning to avoid that federal tax is unwarranted.

Washington Post Article on Family Struggles in Dividing Up Assets

Published on: April 5, 2013 | by Ettinger Law Firm

A recent Washington Post article discussed the lethal combination of family and finances. The author recounts how even the most close-knit families can be torn apart by disagreements about money matters. The article included one reader to wrote a letter offering an example of how his parent’s will is causing tension and turmoil.

The letter was written by an adult son who was asked by his parents to assist with their estate planning. He was named executor and helped with locating financial documents. The son saw a copy of the will after it was completed, noting that it left assets to a few charities and then split the remaining estate between himself and his one sibling–a sister. This represents a pretty common situation, with families assuming that such a simple estate plan and division will not come with any disagreement.

But then a few years later the parents updated their will. Instead of splitting the assets between their two children, they decided to split it in thirds. Their two teenage grandchildren (from their daughter) will receive a third, and the two adult children will each receive a third. The son noted with shock that his share suddenly went from one half to one third.

Effect of Presidential Budget on Estate Planning

Published on: March 29, 2013 | by Ettinger Law Firm

Nothing about the law is every entirely static. Obviously legal rules and principles change over time. However, some practice areas are far more stable than others. For example, the general process to recover for personal injuries in a car accident are roughly the same now as in the past. At the other end of the spectrum, certain estate planning processes can change virtually every year. That is because much of this planning is centered on tax savings. In that way, it mirrors applicable tax rules, and any change in those rules requires changes in estate planning details.

Possible Changes

For example, consider the estate planning changes that may need to be made if the latest presidential budget proposals are enacted. Financial One recently shared information on those possible alterations. The President’s proposed 2013 budget includes some so-called “tax loophole” closings which may alter what planners do for future clients.

Family Feuding Over High-Profile East Coast Cavern Dynasty

Published on: March 25, 2013 | by Ettinger Law Firm

Infighting over control of family assets is far from uncommon no matter the value of the holdings. History is replete with examples of siblings, step-relatives, and other engaged in estate battles over property that has little to no value. Of course, that is not to say that the possibility a disagreement increases with the value of the property. Things can get especially sticky when things like family businesses, land holdings, and other tangible and valuable items are at issue. Many of these assets may have been within a family for decades (or generations) and fighting over control is quite predictable, especially when estate planning is inadequate.

For example, the Wealth Strategist Journal reported recently on the battled over control of supposedly the largest underground series of caves in the eastern United States–Luray Caverns. The caverns are incredibly popular, and it is reportedly the third most visited cave in the country. Considering its popularity, the location has grown into a significant business for the family which owns it. A Washington Post story notes how the cave has been open to the public for nearly 130 years. At $24 for a one-hour tour, the business of showing the cave is estimated to bring in about $30 million annually.

Unfortunately, control over the caverns is apparently is disarray as the family in charge seems perpetually mired in controversy. The Post story explains how two of the family siblings recently sued two others in an attempt to disqualify them for participating in a family trust. In total, control of the caverns rests with six children bore of a family patriarch who died in 2010 at the age of 87.

Becoming a “Paradigm” of Financial Health

Published on: March 21, 2013 | by Ettinger Law Firm

Money is always at the top (or near it) of lists describing issues that most commonly bring stress into our lives. It’s cliche to say that “money is the root of all evil,” but its obvious that dealing with financial issues is a common concern for families of all shapes, sizes, and even income levels. There is so much different advice out there about what you should be doing or could be doing as it relates to money matters that it is hard to distinguish between the useful and the fluff.

One such story posted in Yahoo Finance this week offers a somewhat helpful distillation of seven basic concepts that can be used for those of all income levels and at different life stages. They are referred to as “paradigms” of financial health. The entire list is worth browsing, but a few of the items on the list include:

***If you are a couple with two incomes, you can pay for “essentials” with only one spouse’s income. Those essentials are things like the mortgage, insurance, child care , and similar items that cannot be cut easily. Essentially this is one way to check whether you may be living above your means. It is an easy shortcut to figure out if you can survive in the event of a lost job or other emergency.

Estate Taxes & New York Legend Ed Koch

Published on: March 19, 2013 | by Ettinger Law Firm

One of the biggest names and personalities in recent New York City history passed away in early February: Ed Koch. Koch has a wide-ranging career, most notable for his three terms as New York City mayor. The mayor emeritus apparently died with healthy bank accounts, as a recent Forbes article suggests that his estate is valued at about $10 million. Apparently most of the wealth was accumulated after he left office in the late 1980s. A high-profile name, Koch made money giving speeches, writing books, appearing and the radio and television.

As usually happens after a celebrity passing, many have asked how Koch’s fortune might be distributed. Court documents recently filed in the matter shed light on how it all might shake out–offering yet another example of the need for community members to be vigilant about their affairs to protect against large tax obligations.

According to reports, Koch left most of his fortune to various relatives along with some charities. He made specific cash distinctions to certain relatives (i.e $500,000 to sister and husband, $100,000 to sister in law, etc.), and left the “residuary estate” (everything remaining after specific gifts) to three nephews.