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Ademption: A Stumbling Block To Your Estate Plan

Published on: September 20, 2016 | by Ettinger Law Firm

Your estate plan exists to make sure that your wishes are known and fulfilled. In particular, you have a will to make sure that your family is provided for and that your assets go to the people you want to care for and believe are deserving. However, failure to keep your will up to date or not managing your assets while keeping your will in mind can cause major problems with ademption.

Ademption and Your Will

Ademption occurs when the property that the Will leaves to someone is not present in the Testator’s estate when the Testator dies. Ademption only applies to specific bequests which are particular pieces of personal or real property.

What is a Delaware Directed Trust?

Published on: September 18, 2016 | by Ettinger Law Firm

A directed trust is a type of investment trust that appoints a particular trustee, usually a bank or firm, to administer specific aspects of the trust. Trustees who are responsible for directed trusts generally have a number of other professionals who assist in their administration of the trust by providing investment recommendations and distribution recommendations to the beneficiaries. By delegating these duties, the trustee as well as the beneficiaries are benefitted because the beneficiaries now are receiving expert advice in areas such as investing, while trustees can focus on maintaining the purpose of the trust and can in some cases limit their liability, depending on the state law.

Delaware directed trusts are a specific type of directed trust that is administered in the state of Delaware. Trustees will recommend that a trust be held and administered in Delaware depending on the nature of the assets that a party holds and what they seek to do with those assets. Many advisors or trustees will recommend a Delaware directed trust if the grantor, or maker of the trust, had assets that are concentrated, illiquid or difficult to manage. Illiquid assets are those assets which cannot be sold without a substantial drop in value or assets and are unique in that they are difficult to sell because there is not an immediate demand or interest by investors to purchase the asset. Other examples of concentrated or difficult assets that may be suited for Delaware directed trusts include stocks or other securities which have historical value to the family or that the beneficiaries think will perform well long term. Here, the trustee can continue to be responsible for managing the diversified assets, while an investment advisor can work with the beneficiaries in handling the concentrated asset.
Other benefits of this type of trust involves protecting the grantor’s interest by appointing a trust protector who will act on the behalf of the grantor to ensure his or her goals come to fruition, which includes the ability to remove a trustee they feel is not following the grantor’s wishes. A distribution advisor can also be appointed to assess what is important in their specific situation when making future distributions. Additionally, in the majority of situations, Delaware’s tax laws apply to trusts as well. Delaware courts also do not require court filings in an effort to maintain the privacy of individuals and grantors can restrict a beneficiary’s access to some information, depending on the situation and trust.

Back To Basics: Preventing Will Contests

Published on: September 16, 2016 | by Ettinger Law Firm

Every family has at least one horror story of a death in a family turning into a protracted legal tragedy well documented publicly by a probate court. An angry heir dissatisfied with their share of inheritance or a disinherited family member desperately trying to claim a stake of the predeceased’s estate contests the will and alleges a whole manner of improprieties in order to invalidate the will or one of the bequests made under it. A testator considering a future will contest can take steps to protect his or her estate from challengers and minimize the negative effects that a challenge can have.

Destroy All Previously Revoked Wills

A common occurrence in the probate court is for someone who was to inherit under an older version of a testator’s will to present the revoked copy as the testator’s true and most recent will. This can only happen though if the testator does not take proper steps to discard and make it apparent that an older will is now revoked. Writing ‘void’ or ‘revoked’ on each page of an older will or physically destroying the will shows everyone that the will is no longer valid.

The Right to Die: New York’s Medical Aid in Dying Act

Published on: July 12, 2016 | by Ettinger Law Firm

Nationwide

The Death with Dignity Act gained national attention when it Brittany Maynard, a 29 year old woman suffering from an incurable brain tumor, chose to end her life with the help of a lethal dose of medication. Since then, a national debate has resurfaced about terminally ill patient’s ability to decide when, not if, they are going to die. Currently, the Death with Dignity Act has been passed in California, Oregon, Vermont and Washington, with proposals in many more states, including New York.

New York

What To Do When There are Multiple Wills Written: Which Takes Precedence?

Published on: June 20, 2016 | by Ettinger Law Firm

Over the course of your life, you go through many stages. For some people that includes moving to and from different states, entering or dissolving a marriage, having children, losing loved ones, and having significant changes in income. As these events shape your life, your outlook and perspective on how you want your assets to be taken care of may change. If you decide your wishes have changed and you execute a new will, you should carefully assess whether any previous wills or documents differ from the terms of your new will, as to make sure your wishes are properly followed.

Two Wills

Traditionally, in estate planning if a person leaves two wills and both are offered into probate, the court will look at the surrounding circumstances to determine which will ends up taking precedence and which will be considered revoked. The best way for the maker of the will to express that the most recent will is the one they want followed, is by explicitly revoking the earlier will in the writing of the new will. Issues can arise in probate court when it is not clear whether the maker of the will, also known as the testator, wanted the first will completely revoked.

ARBITRATION CLAUSES IN WILL OR TRUST

Published on: February 3, 2016 | by Ettinger Law Firm

NEW YORK RULE ON ARBITRATION FOR PROBATE DISPUTES

The idea of using quasijudicial means to settle disputes is as old as the country itself. More specifically arbitration is a method that parties utilize that is usually cheaper, quicker and often with much less formality, yet still adheres to principles of fundamental fairness. George Washington famously included a proviso in his will that outlined a method to arbitrate certain disputes in the execution of his will. Certainly this was no minor matter, as President Washington was perhaps the wealthiest landowner in Virginia and by extension maybe the wealthiest American at the time.

In today’s dollars, President Washington would be worth an estimated half a billion dollars, succeeded by perhaps only President John F. Kennedy’s wealth. By the time of President Washington’s passing in 1799, arbitration was already well established in the United States. New York no longer permits arbitration in the context of a dispute over a last will and testament, as it would unconstitutionally interfere with the power of the Surrogate’s Court to adjudicate disputes involving the disposition and transfer of property of decedents, the administration of estates and probate of wills. Matter of Jacobovitz, 58 Misc. 2d 330 (Nassau County, 1968). The same cannot be said of arbitration clauses in trust documents. There is much diversity of treatment of arbitration clauses found in trust documents, with New York taking a middle of the road approach to interpretation and enforcement of arbitration clauses in trust documents. That principle, however, only applies to the application of the transfer of property via an individual’s last will and testament. It does not apply to the mediation and adjudication of disputes in trust documents controlled by New York law.

MORE ON SHORT TERM ANNUITIES AND MEDICAID PLANNING

Published on: December 23, 2015 | by Ettinger Law Firm

SOME ANNUITIES DO NOT RENDER APPLICANT INELIGIBLE FOR MEDICAID

As this blog wrote about several months ago, certain financial products purchased by a Medicaid applicant do not render them ineligible for Medicaid benefits. While the previous post discussed why a short term annuity did not render a Medicaid applicant ineligible, this blog will discuss why such a choice may be a good fit. For sure, the short term Medicaid annuity must satisfy certain criteria to qualify for the federal “safe harbor” provisions that would otherwise render the purchaser of the short term annuity ineligible for Medicaid.

RECENT CASE

CAMERAS IN THE NURSING HOME

Published on: December 11, 2015 | by Ettinger Law Firm

MANY ISSUES TO ADDRESS – PRIVACY AND LEGAL CONSIDERATIONS

The issue of video cameras in nursing homes has exploded over the last several years. With the large scale saturation of such user friendly technologies as Skype, Facetime and similar video technologies it should not come as a surprise that these issues are cropping up in nursing homes. Video cameras can be a major liability for nursing homes, including even criminal liability. It seems almost weekly that someone is arrested or charged due to evidence gleaned from video cameras located in nursing home residents’ rooms or other areas. While management may decide to utilize video monitoring equipment in public areas, there are many problems with residents using the same or similar video technology even in their own rooms.

Certainly there are common areas that are not public in nature that are a definite problem area for video imaging. The distinction lies in the public versus private designation. You do not have an expectation of privacy in public. There is an expectation of privacy in a residential unit. With a video camera a resident may be able to, unwittingly, record another resident without his or her permission, in a private area of the nursing home. Such a broadcast, depending on the audience, could be grounds for an invasion of privacy lawsuit. In addition, it could be a violation of the Health Insurance Portability and Accountability Act, usually known as HIPAA, the federal law that requires the confidentiality of medical records. In addition, if there is an audio recording function, recording a third party’s conversations may also violate state criminal wiretapping laws. New York is in the majority of states that require the consent of at least one of the interlocutors for any interception to be deemed legal.

ASSUMPTION OF POTENTIAL TAX LIABILITY MAY AFFECT ESTATE PLANNING

Published on: November 21, 2015 | by Ettinger Law Firm

GIFT TAX LIABILITY

Gift tax liability and estate planning sometimes intersect. The tax Court case of Steinberg v. Commissioner, 141 T.C. No. 8 (Sept. 30, 2013) deals with an interesting issue, if tax law can ever be interesting, where gift tax liability and estate tax liability intersect. It is important to note that the opinion deals with gift tax liability and how to measure gift tax liability, it nonetheless deals with some important estate tax implications. In 2007, Ms. Jean Steinberg gifted approximately $71,000,000 in cash and securities to her four daughters. In exchange, the daughters agreed to pay the gift taxes as well as the estate tax on the transfer should Ms. Steinberg pass away within three years of the gift transfer. An appraiser valued that the daughters assumed approximately $6,000,000 in tax liability for the estate taxes alone. When Ms. Steinberg filed her tax return, the IRS disagreed with the $6,000,000 write off, as the daughter’s assumption of estate tax liability did not increase the value of the estate. The Internal Revenue Service (IRS) claimed that Ms. Steinberg owed an additional approximately $2,000,000 in taxes and mailed her a notice of deficiency.

ESTATE TAX LIABILITY

Using Beneficiaries as Part of Your Estate Plan – Part II: Considerations

Published on: October 13, 2015 | by Ettinger Law Firm

An earlier post on this blog provided an overview of using beneficiary designations as part of your estate plan. Recall that beneficiary designations are a way to transfer property automatically upon the death of the asset owner outside of the probate process. This post is part II of that discussion, and include some of the pros and cons of using beneficiary designations, as well as a few special considerations related to certain forms of beneficiary designations.

Pros and Cons of Using Beneficiary Designations

Beneficiary designations can be a simple and effective mechanism to transfer your property in much the same a will or trust distributes your property. The advantages of beneficiary designations include the ease in which it can be set up and the speed and in which the beneficiary receives the asset. Also, the owner of the asset has flexibility to designate any of combination of shares to any number of primary and contingent beneficiaries. Beneficiaries may be individuals, trusts, charities, or the property owner’s own estate by way of its personal representative.