New York Estate Planning & Elder Law Blog

The New Rules to International Estate Planning

Published on: August 9, 2018 | by Ettinger Law Firm

As of 2018, cross-border families planning an estate will require an investment plan meeting relevant rules to domicile, succession, generation-skipping transfer, and gift tax laws in each country where distribution will occur at the time of a decedent’s death. International estate planners use investment techniques specific to cross-border transfers and enforceable transfer tax situs rules, domestic and foreign credits, and treaties where they may apply.

Recent Domestic Tax Reforms

U.S. federal Internal Revenue Service (“IRS”) tax law reforms in 2018, have modified estate and gift tax lifetime exclusion amounts for:

What are My Inheritance Rights as a Spouse in New York?

Published on: August 7, 2018 | by Ettinger Law Firm

The last will and testament is an important document an individual creates to spell out his or her final wishes to pass on the assets of an estate to friends, family, and business partners. However, New York probate laws do put limits on the extent to which a person may exclude his or her surviving spouse spouse from a will. Just as in many states, New York does not allow spouses to be cut out of wills, not matter the language contained in the document.

In situations where a deceased person excludes his or her spouse from a will, the New York Surrogate’s Court hearing the case will step in to award a certain percentage of the estate to the surviving spouse. Just as in a divorce, the law gives certain property rights to spouses to assets like homes, cars, and bank accounts that cannot necessarily be undone by a written document.

Whether or not someone passes away with a last will and testament, the deceased’s heirs must be notified my the executor of the estate that a the estate has been entered into Surrogate’s Court. In order to pass the estate through probate, the executor will need each of the decedent’s heirs to sign a waiver giving up their individual rights to challenge the will and the estate. Although it is usually not an issue to have heirs sign the waiver and agree to the split of the estate, not every situation is harmonious.

Foreign Pension Plan Contribution and Taxation

Published on: August 6, 2018 | by Ettinger Law Firm

U.S. citizens currently residing and working abroad and foreign residing in the United States who are participating in a foreign retirement contribution plan, should evaluate the most recent federal Internal Revenue Service (“IRS”) tax reporting requirements to avoid penalties on those assets or future estate transfer. Foreign pension fund contributions made in the interest of retirement and trust formation in preparation of an estate, may be subject to taxation without the professional assistance of an estate law attorney.

Tax Exemption and Treaty

U.S.-based participants contributing to foreign pension funds in some jurisdictions such as Canada, the United Kingdom and Belgium, are not required to file tax reporting with the IRS due to treaty. An example of tax-free treaty is Article 18 of the U.S./U.K. Income Tax Treaty, which allows for transfer without taxation by either jurisdiction. The U.S. also allows for a U.K. national assignee to be temporarily employed in the country while continuing participation in a 401k pension plan abroad with limited tax obligation under IRC section 402(g) covering tax treatment of earnings in a foreign plan. Pension funds located in non-treaty host countries are subject to taxation if a fund is not considered a “qualified plan” under IRS rules.

Do Small Estates Need to go through Probate in New York?

Published on: August 4, 2018 | by Ettinger Law Firm

In New York, not every estate needs to pass through the probate process in Surrogate’s Court. The law gives this exemption to so-called “small estates” valued under a certain number and provider the executor to the estate handles the process correctly. Although small estates are allowed to pass through a more simplified probate process, executors will still need to perform some of the same duties as if he or she were overseeing a larger estate.

Estates with real property valued less than $30,000 are considered small estates and can avoid the lengthy and expensive formal probate process for larger estates. Even though the asset threshold for small estates may appear quite low, there are still circumstances where even large estates could pass through the small estate probate process. This is because not all personal property needs to be counted towards the $30,000 small estate threshold, thus allowing the more simplified probate process.

Under New York probate laws, only property owned exclusively by the deceased counts towards the small estate probate threshold. What his means is that jointly owned assets like homes, vehicles, and family businesses in two people’s names will not count towards the $30,000 limit. Additionally, only real property like life insurance, an IRA and similar assets with a named beneficiary do not need to be counted as these pass automatically to a beneficiary upon the passing of the deceased policyholder.

Financial Capacity the Key to Avoiding Probate Controversy

Published on: August 3, 2018 | by Ettinger Law Firm

By 2060, the population of the United States 65 years and older will more than double, increasing to over 98 million from 46 million in 2016. Coinciding with this demographic change will be the estimated 14 million elders diagnosed with Alzheimer’s disease and other related disorders associated with the onset of old age. The presence of dementia in older family members presents a challenge in the field of estate planning. Characterized as “diminished capacity” within U.S. law, an incapacitated party no longer has the mental ability to make routine and complex decisions, yet still holds legal rights to their own property and assets. To avoid risk, estate planning of a will, estate, or trust with the counsel of a licensed estate law attorney will protect an elder with diminished capacity from exploitation.

Estate Planning and Financial Capacity

The mental capacity and self-efficacy required to exercise investment decision and management of finance and property assets must be present to plan a will, estate, or trust document. Financial capacity is essential for completion of the estate planning process. When signs of Alzheimer’s emerge, an elderly client may not entirely understand their investment options, or the implications of designated asset distribution. This includes tax implications for heirs and beneficiaries. If a loved one is experiencing diminished mental capacity it is likely they lack sufficient financial capacity to make estate planning decisions. If a family member has already been deemed the trustee of an elderly family member’s estate, they have the power-of-attorney to administer a will, estate, or trust, yet not the power to resolve controversy.

FAPT vs. DAPT: The Comparative Advantages of Trust Asset Protections

Published on: August 1, 2018 | by Ettinger Law Firm

When planning a will, estate, or trust, protecting assets from taxation is a primary concern. Today, U.S.-based estate planning investors have the option of offshore or onshore trust formation. Rooted in the English common law traditions of wealth and property protections, the offshore tax-exempt Foreign Asset Protection Trust (“FAPT”) of trusts in Belize, the Cayman Islands, Cook Islands, Isle of Man, or Luxembourg is a customary “institution” dating several centuries. For U.S. high net worth investors, offshore trusts remain an option for the protection of vital financial assets, yet the benefits of offshore tax-exemption can also be found domestically, in the statutory trust provisions of some states.

Offshore Protections, Still Reporting Obligation

There have been rule changes to offshore investment since President Trump’s tax reforms of 2017 insofar that failure to file a Foreign Bank Account Report (“FABR”) with the Internal Revenue Service (“IRS”) on a foreign bank account or $10,000 or more, is no longer subject to “delinquency” penalties. Transfer of wealth to a FAPT account for purposes of tax-exemption, does not entitle the account holder universal immunities from legal penalty, however. If an offshore trust account is called into question by a court, the establishment and transfer of assets to the account will be reviewed to determine if the amount qualifies for sentencing under federal fraudulent conveyance rules.

Laws for Appointing Executors in New York

Published on: July 30, 2018 | by Ettinger Law Firm

One of the most important parts about planning your estate is appointing an executor to oversee an estate and carry out your final wishes which can include passing an estate through the probate court, settling estate debts, and ensuring heirs receive their inheritance. Often times, family members or close friends are asked to serve as executors to estates but in New York, there are only a few restrictions on who may act in this capacity.

Under N.Y. Surr. Ct. Proc. Act § § 103, 707, the basic rules for serving as an executor of an estate are:

The person is at least 18-years old

Estate Enrichment from Wrongful Death Compensation

Published on: July 29, 2018 | by Ettinger Law Firm

On the two-year anniversary of the Artist known as “Prince’s” opioid overdose related death in April 2018, the representative of his Estate sued the Walgreens company and an Illinois Hospital for damages. Like New York, Illinois law allows the representative of a decedent’s estate to pursue a wrongful death action for just compensation on behalf of the victim and the surviving family members.

Can an estate collect wrongful death claim compensation?

An estate pursuant of a wrongful death claim on behalf of a deceased victim of an accident or other negligent act of malpractice or product defect may seek enrichment from both tortious damages and criminal charges. To be compensated fully in a wrongful death tort claim, however, a plaintiff must evidence that the alleged responsible party committed the act causing the death of the victim at the time of the accident.

Military Pension Apportionment and Divorce

Published on: July 26, 2018 | by Ettinger Law Firm

Divorce can be an interpersonally challenging life-change, and complex legal matter. With two Department of Defense (“DoD”) appropriations bills currently before the House and Senate, the rules to pension fund distribution to U.S. federal Air Force, Army, Navy or Military Reserve ex-spouses at time of divorce will be revised in favor of fixed allocations. If enacted, the new rules would revoke state legislative rules for dividing military retirement contribution funds; effectively reducing apportionment to former spouses. Exception to the proposed federal military pension fund apportionment rule, would be any statutory provision for intestate succession within the jurisdiction of the decedent’s residence at time of death.

Federal Rule Reform of Spousal Entitlements

Military pension apportionment and divorce under the proposed law will effectively entitle spouses apportionment according to a military spouse’s rank and duration of enlistment. For example, a spouse of an Army sergeant first class (E-7) with thirty years of service would be accorded 50 percent of 20/30 or two-thirds of actual pension fund pay at time of retirement. No cost of living adjustments will be accorded spouses under the DoD’s new rules.

CMS Expands Grace Period for Medicare Late Enrollments

Published on: July 25, 2018 | by Ettinger Law Firm

The Centers for Medicare and Medicaid Studies recently announced it has extended its grace period to remove or reduce financial penalties for those late to switching their insurance from plans on the Affordable Care Act (ACA) to Medicare. As a result of moving the deadline, seniors and those on disability now have until September 30, 2018 to switch over from their ACA marketplace insurance plans to Medicare without having to pay increased Medicare premiums or reimburse the federal government for ACA subsidies.

For most Americans, Medicare eligibility begins at age 65 and are automatically signed up if already receiving Social Security benefits but not if the individual is already receiving health insurance through their job or spouse’s employment. If neither of these scenarios apply, individuals need to enroll in Medicare within six-months (three-months before or after) turning 65-years old.

Failing to enroll in Medicare in a timely manner can lead to very expensive penalties including increases to Medicare Part B premiums as much as 10 percent for each full 12-month period the individual should have been enrolled. The Medicare Rights Center (MRC), a nonprofit consumer service organization that works to ensure access to affordable health care for older adults, estimates that if someone turned 65 in 2010 and delayed signing up for Medicare until 2018, premiums would be $227, which is 70 percent higher than the base Part B premium of $134.