Estate Planning

DOMA Developments May Have Implications for Married Same-Sex New York Couples

Published on: March 9, 2012 | by Ettinger Law Firm

The Defense of Marriage Act (DOMA) is a federal law passed in 1996 that defines marriage for federal purposes as only between one man and one woman. As our New York estate planning lawyers have often discussed, this means that same-sex couples married in our state are still not considered married for federal purposes. This has serious implications for tax preparation, estate planning, and a host of other concerns facing these residents. DOMA prevents married individuals from filing joint federal tax returns, receiving Social Security benefits, or having tax-free inheritances.

Many advocates on all sides of the aisle are working to overturn the law. Bills have been advanced in Congress which would repeal DOMA. However, with the current partisan split it appears unlikely that these legislative measures are likely to pass anytime soon. But that does not mean DOMA is here to stay. Most of the recent action on the issue has taken place in the courts. Several federal lawsuits have been filed which challenge the constitutionality of the legislation. President Obama has refused to defend the measure, and so the law is currently being defended under the auspices of the Republican leadership in the U.S. of Representatives.

Last month a U.S. District Court judge in one of those cases found that DOMA (or at least section 3 of the law) violates the equal protection clause of the U.S. Constitution. The case is being appealed to the federal appellate court. This particular ruling relates only to one provision of the law as applied to one couple. However, it is a clear indicator that the entirety of DOMA may one day–perhaps soon–be found unconstitutional.

Make Plans for Dividing Up or Preserving Collections in Estate Plan

Published on: March 7, 2012 | by Ettinger Law Firm

One important part of the elder law estate planning process involves working out inheritance details. This comes with unique concerns for each family as various assets have different meanings for each individual, far beyond their market-value. Accounting for these emotional attachments is a delicate process that should not be done hastily. For example, one valuable that may present unique inheritance challenges are collections. Our New York estate planning lawyers appreciate that many residents have spent years building collections–from holiday villages and marbles to art–and have strong feelings about how they’d like to see the valuables handled after they are gone. A recent story in The Ledger argues that planning is paramount.

Collections, like other art and antique valuables, can present somewhat complex inheritance concerns. Large collections can be hard to physically manage, have difficult value estimates, and still may have tax implications. On top of all of that, collections are often laden with emotional value–some family members may love the collections, others may not. But it may not even be as simple as passing it on to one who cares for the objects. Some children may have no desire for the objects beforehand but may become emotionally attached after their parent’s passing because of the way that the collections helps them remember their loved one. In this way, family fights over what to do with collections–particularly large ones that are hard to manage–can be common.

For local residents, avoiding the potential inheritance mess comes down to one thing: have a specific New York inheritance plan in place. The planning process will involve asking tough questions about the best options for the future.

Famous Feuds and New York Estate Planning Lessons for Every Family

Published on: January 30, 2012 | by Ettinger Law Firm

A Reuters story late last week suggested that while estate planning feuds of the famous usually involve millions, the principle issues are the same as those faced by all local residents. Every case must be evaluated individually, but the same main issues are found again and again. That is why our New York estate planning lawyers urge residents to visit with experienced professionals when making preparations because they have likely seen similar issues in the past and can help anticipate problems that might come up down the road. As this latest story explained “anyone thinking about wealth transfer faces the same issues: dysfunctional families, potentially unequal positions in the family business, perhaps multiple marriages with kids from each.” This applies whether one has $50,000 or $50 million.

For example, second marriages often create planning problems. When crafting an estate plan, one must balance the needs of the second spouse with the children of the first marriage. If one doesn’t do it, as the author notes, “you’re basically buying a litigation case.” For example, the longest estate litigation case of the last century was that of Anna Nicole Smith. She was a second wife of a billionaire investor. The children from the man’s first marriage engaged in a prolonged battle to ensure that Ms. Smith did not receive any substantial portion of the man’s wealth. The case was still not resolved with Ms. Smith herself passed away.

Family businesses also present common issues for those in all income brackets. Much family wealth is wrapped up in a business. Often some of the children participate in the business while others do not. This often creates significant estate planning issues regarding who gets what share of the business. One of the most well-known examples of this is that of the Koch family in New York. The patriarch had created a fortune after developing a new cracking method in oil refinement. However, upon his death the man’s four sons engaged in a prolonged legal dispute over control of the business. As the article notes, “there are a lot of ticking time bombs in family businesses that creates litigation.”

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.

Estate Planning Mistakes (and Lessons) of the Rich and Famous

Published on: January 4, 2012 | by Ettinger Law Firm

Most local residents will nod in agreement when one explains the importance of conducting New York estate planning as soon as possible. It is easy for most to understand the value of planning an inheritance, saving on taxes, and preparing for alternative decision makers. Yet, all estate planning lawyers know that there is a difference between recognizing the importance of a task and actually taking the time to get it done. Psychologists have found that when it comes to making the leap from knowing that a task should be completed to actually doing it, personal examples are usually the most effective motivators. It is one thing to learn about the value of planning, it is another to hear about a specific case of proper planning that helped an actual person. In fact, experts have also found that even more effective than stories of positive benefits are stories of plans gone awry. The stick is often more persuasive than the carrot.

That is where the estate planning misadventures of the rich and famous can be useful. Unfortunately, recent history is replete with stories of many well-known figures who did not take care of their affairs properly (or at all) before their passing. This week the SM Mirror ran down a quick list of some of the more well-known cases of celebrity estate planning blunders. A few included examples:

Jimi Hendrix

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.