Estate Planning

Political Bequests in a Will

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

When an individual uses only a will (instead of a trust) and does not have professional advice, there is a greater chance that the intended beneficiaries will not receive the property that the testator (the person who creates a will) wanted them to receive. For one thing, the will itself may not be executed properly. At other times, the beneficiary may pass away before the testator’s death without the will being updated. At still other times there may be unique complications with the ability to give in certain ways. Take, for example, political gifts.

Leaving Money to a Political Party in a NYC Will

Many community members have strong attachments to a political party and may want to leave part of their estate to that party. However, this presents some complications, because there are special rules–campaign finance laws–that often apply to what gifts can be given to these parties (or candidates). It is crucial to take those rules into account. Otherwise, the final decision is left up to the court, with extreme uncertainty as to where the money will actually go.

The Bernard Matthews Case: Putting a Mistress in a Will

Published on: September 14, 2012 | by Ettinger Law Firm

Last week AOL Money shared the story of yet another estate planning feud–this time involving Turkish business magnate Bernard Matthews who died two years ago when he was 80 years old. Like many others, Matthews family life did not quite fit the traditional mold. He married his wife decades ago and soon adopted three children. Later on he had a relationship with another woman who bore him a son. Still later he started a long-term relationship with a third woman, Odile Marteyn. He remained in that relationship with Marteyn until his death. Through it all he never divorced his wife, and did not marry Marteyn after his wife’s death.

As it is easy to guess–the convoluted family arrangements spawned bitter feuding following Matthews’ death.

From the information that has been provided so far, it seems clear that Matthews’ wished to have part of his estate go to Marteyn. The estate is worth roughly $64.5 million. Part of that includes a villa in St. Tropez worth about $19 million. Matthews wrote a letter to his children outlining his wishes, noting that Marteyn “has supported me unfailingly for many years and particularly so during my recent illness. Without such support, I might not have been able to continue directing our family company for our mutual benefit.”

Fundamentals of Estate Planning: Naming a Trustee

Published on: September 12, 2012 | by Ettinger Law Firm

A trust is the central legal tool used to provide the flexibility and protection most residents use when planning for their long term financial, inheritance, and health care needs. There are many different types of trusts which provide different benefits to residents; each type comes with its own rules. However, one common theme is that the when creating a trust a trustee must be named. Deciding upon the right trustee in your case is crucial to ensure that things proceed as you intend when you are gone.

The exact role of a trustee varies, depending on the long-term plans of the individual who creates the trust. Yet, in general the trustee will manage the assets and make distributions from it according to predetermined rules and wishes. Some trusts will last for decades, and so the choice can truly can set the course for one’s long-term legacy.

A Wall Street Journal post this week touched on the importance of the trustee selection topic, and provided a list of key factors that should influence the final decision, including:

DOMA Challenges Mount

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

The Defense of Marriage Act continues to make headlines, as several states have now challenged the constitutionality of the federal law which defines marriage as exclusively between a man and a woman. New York is among three states (including Vermont and Connecticut) which currently allow same-sex couples to wed and are challenging the law which denies federal recognition to those state marriages. The outcome of the legal challenges will have significant estate planning consequences for local same-sex couples.

The underlying legal issue is an old one–the intersection between federal and state law. The states are arguing that the federal government does not have the power to regulate marriage and family relationships–those issues should be left entirely up to the states. DOMA goes too far, they say, by enacting clear harm on married families in individual states.

Estate taxes are at the root of the issue. The most high-profile DOMA plaintiff, Edie Windsor, was forced to pay $350,000 in estate taxes after the death of her long-time partner (and wife). Because her wife was of the same gender, the IRS did not allow her partner to transfer assets under traditional marital deduction rules. This enacted a very real financial penalty which would not have applied to opposite-sex couples. In this way the state argues that the federal government unconstitutionally “unmarried” the plaintiff.

New York Executrix Ordered to Return Estate Funds

Published on: September 6, 2012 | by Ettinger Law Firm

New York estate planning lawyers are often tasked with advising their clients as to how to choose the proper people to administer their estates. The people they designate are put in positions of immense trust and responsibility. Whether the client is designating an executor/executrix, a trustee, or a power of attorney, the client must exercise extreme caution as to whom they entrust with these duties.

In many cases, the natural choices for these estate administration positions are the family members of the decedent. After all, the decedent’s family members are most likely to be in touch with the decedent’s wishes and to have an idea as to the decedent’s assets. It is not uncommon, however, for a decedent’s own family member to abuse his or her position of power over the estate administration. As the following case demonstrates, impropriety is always possible where there is a financial gain at stake, even amongst family.

In re Goodwin, NYLJ, Apr. 10, 2012, at 31 (Sur. Ct. Suffolk County) involves a dispute between a brother and sister over the administration of their mother’s will. Mildred Goodwin, the decedent, appointed her daughter, Maureen Burns, as executrix of her estate and executed a durable power of attorney to entrust Burns with acting in the best interest of the estate’s finances. Before Mildred Goodwin died, Burns opened several bank accounts that were jointly titled in hers and Mildred’s names. Burns consulted a New York elder law estate planning attorney to help execute an inter vivos transfer of estate assets from Mildred’s estate to the jointly titled bank accounts. The transfers were characterized as gifts, and there was little doubt that Burns was to be the sole beneficiary of the funds.

Irregularities with Estate of Monkee’s Star Davy Jones

Published on: August 31, 2012 | by Ettinger Law Firm

The probate process is public, and so most families whose estate planning includes only a will usually have the details of the document laid out to anyone in the community who chooses to examine it. Yet, that rule is usually best exemplified by looking at the exceptions. While a will is generally a public document, a family can try to have the will “sealed.” Most of the time this is not successful. In fact, the few cases where it is allowed often related to the death of celebrities or high-profile individuals. For example, Joe Paterno’s will was sealed earlier this year.

Similarly, Financial Planning just reported that the family of Monkee’s band member Davy Jones also successfully petitioned to have his will sealed. Jones died last February after a heart attack at age 66.

In this case, Jones’s eldest daughter–the representative of the estate–argued in court documents that the will should be sealed because “public opinion [after reading the will] could have material effect on his copyrights, royalties and ongoing goodwill.” Our New York estate planning lawyers appreciate this request is a good example of why most community members cannot have a will sealed. It is not sufficient to request these planning documents hidden from public view simply because one is a “private person”–there usually has to be real, demonstrable material reason to do so.

Contingent Beneficiaries for IRA Accounts

Published on: August 29, 2012 | by Ettinger Law Firm

Properly naming beneficiaries in things like Individual Retirement Accounts (IRAs) is obviously a crucial component of all New York estate plans. One of the most common planning mistakes is failing to update these beneficiary designations. These mistakes are serious, because assets in these accounts usually transfer at death automatically–outside of the probate process.

One common concern with IRA designations involves a beneficiary dying before you do. What happens if the beneficiary is deceased when the account holder (owner) dies?

If a contingent beneficiary is not named and the primary beneficiary is not alive, then the IRA may go to the account holder’s estate. This can have serious adverse consequences, because the estate cannot “extend” the life of the account which will result in significant probate costs and potential tax-free growth lost. For planning purposes it is often the worst case scenario.

Be Careful of Credit Card Debt at Death

Published on: August 27, 2012 | by Ettinger Law Firm

What happens to all of the money that you owe at death? Does someone else pay for it or does it just disappear? Our New York estate planning attorneys know that many local residents have questions about these sorts of issues when thinking about their long-term financial and inheritance issues. All of these preparations require understanding about the effect of debt after a passing, because that debt must be taken into account when figuring out inheritances, disability planning, and similar details.

In general, upon one’s death all of their debts are paid off by their estate, and the remaining assets are split according to inheritance wishes spelled out in legal documents If one’s debts are larger than available assets, then some creditors are likely to receive less than they are owed. Yet, there are a few special circumstances where survivors may be hit with obligations on that debt. It is crucial for estate planning to be done to identify all of these issues ahead of time to avoid an unwelcome surprise.

For example, take credit card debt; many residents have it. When one dies with a balance, their estate must pay that debt. If there is not enough in the estate, then the credit card company may eat the balance. But not always.

Hidden Complexities in Basic Estate Planning

Published on: August 24, 2012 | by Ettinger Law Firm

Some estate planning concepts may seem so straight-forward that community members try to go it alone. After all, a will is just a document that clearly spells out one’s wishes and lists who gets what on a piece of paper. Other assets, like retirement funds, just need a beneficiary named. What could be complex about that?

The answer, of course, is many things.

Take the retirement funds. It may not be as simple as just picking someone. A New York estate planning attorney knows that sometimes special steps have to be taken to guarantee that the desired beneficiary actually receives the funds in as hassle-free a manner as possible. For example, there may be problems when one wants to name children as the beneficiary of an employer retirement plan–like a 401(k). The rule in most cases requires a spouse to give their consent when anyone other than the spouse is named beneficiary This is true even if the named beneficiary is someone like a child– a stepchild, adopted child, or even a natural child.

Annual Gift Tax Exclusion Is Not Going Anywhere

Published on: August 22, 2012 | by Ettinger Law Firm

With so much attention focused on the future of the estate tax rate and exemption levels, it is easy to forget about other tools to save on taxes while passing on assets. Perhaps the most easily understood is the “annual gift tax exclusion.” Each New York City estate planning lawyer at our firm knows that this is a very helpful way to transfer property tax free–and it will likely remain in effect regardless of what Congress does in the future.

The exclusion exists above and beyond the estate tax exemption. It allows each taxpayer to give up to $13,000 per year to anyone tax free. Because the exemption applies to individuals, couples have two bites at the apple and are able to transfer $26,000 yearly to each individual they chose. In fact, due to inflation the annual gift exclusion level is likely to jump to near $14,000 next year according to a recent Wall Street Journal article.

Estate planning lawyers often advise that, considering the uncertainty of the federal estate tax next year, it is helpful to use the annual gift exclusion now to transfer assets beyond the reach of taxes at death. This is especially true in states like New York with state estate tax exemption levels below the federal rate. Therefore, even if one currently has an estate below the federal exemption level ($5.12 million per individual), there will be a state tax so long as the estate is above the state exemption level ($1 million).