While everyone needs an estate plan, demographics show that women in particular should take steps to address the matter.
Living Longer & Needing Care
On average, women live five years longer than men. This means women have to face a few realities: (1) they are more likely to require long-term care, and (2) will require care for a longer period of time than their male counterparts.
The first time you meet with your estate planning attorney can be stressful and emotional. Many people go into the meeting not knowing what to expect. In order to make your first meeting as painless and hassle free as possible, here are a few things to consider ahead of time
Think About Your Wishes Beforehand
Come to the meeting prepared. During this meeting, you will be making decisions that will affect your future and your family for generations to come. Estate planning decisions should not be made lightly. The size of your estate and the unique makeup of your family can determine aspects of your plan. Consider your specific needs.
Newly proposed IRS regulations meant to curb common estate and gift tax planning tactics is being met with a firestorm of resistance from financial advisers and estate planners across the country. The proposed regulations (REG-163113-02) place limitations on the use of current valuation discounts that reduce the overall value of assets in family-owned businesses, thus lowering a decedent’s estate and gift tax liability at the time of death. The IRS hope to achieve this end by disregarding restrictions that enabled taxpayers to use these discounts in the past.
Wealth Preservation In Closely Held Businesses
Currently, interests in closely held businesses are not taxed the same as other property interests due to their illiquid nature. Many tax and estate planners put a family’s assets in a closely held business to reduce their estate and gift tax liability. While this is a boon for many families seeking to preserve their wealth, others argue that what started out as a helpful tax break for legitimate family businesses is being abused and exploited by those who have no legitimate use of it.
Many people believe that estate planning is primarily a tool to minimize taxes by the state and ensure that your assets are passed on to the people you want them to go to. However, an important part of estate planning is ensuring that when you are incapacitated that your wishes will be respected and that you are taken care of when you cannot adequately express your wishes or provide for yourself. But how exactly is that decision made in New York? Who decides when you are incapacitated and when you will need someone else to make your decisions for you?
Your Living Will or Healthcare Directive Can Dictate The Terms of Your Incapacity
The best option for setting forth standards to decide when you are incapacitated is making sure that you are the one dictating the terms of your own incapacity. This can be accomplished through your living will, also known as a healthcare directive. Your living will traditionally acts to provide those making your healthcare decisions with your wishes as to how you would like to be treated in medical situations where you cannot give consent.
Most people plan their estate believing that everyone they have left money or bequests to will survive them, such as when a parent specifies that money or property will be left to a child. But sometimes unexpected deaths happen and when it does, many people are left wondering what will happen to the property that they specified to go to the predeceased. It is a tricky situation, but thankfully New York law and proper estate planning precautions can address the problem.
New York “Anti-Lapse” Statutes
Common law followed in the past dictated that gifts to someone who was deceased was null and void. This is due to the fact that a dead person cannot own property. Since they cannot have property, they cannot inherit it. When someone left property to a person who had predeceased them, the bequest would be said to have lapsed. This would have unintended consequences, such as cutting out people who would have inherited the property if the bequest had not failed and others receiving more than the testator intended.
There are many ways to pass on your assets without having to go through probate. Any account or policy with a beneficiary designation, payable on death clauses or joint ownership with rights of survivorship will not be considered to be a part of a probate estate. Those assets will pass to the person designated or the other joint owner at the time of your death. Despite being handy estate planning tools that help assure that the assets in question are never out of reach or frozen, many people fail to understand the nuances and rights associated with such designations and it is this failure that can frustrate and cause unintended consequences when dealing with a person’s estate.
Only After You Pass
Many people are familiar with a beneficiary designation on a life insurance policy. After you pass, the insurance company gives the money from the policy directly to your beneficiary avoiding probate. Similar to a beneficiary designation is what is called the payable on death clause (POD). At the time of your death, your designated beneficiary can claim the assets in the account by showing a death certificate, similar to claiming a life insurance policy. The designated beneficiary has no claim to the assets in the account while you are alive and cannot withdraw or otherwise dispose of them.
2016 will not relent in claiming high profile celebrities. This week’s death was as tragic as it was needless. Anton Yelchin, aged only 28, an only child, was killed in his Hollywood home’s driveway when his Jeep rolled down a slope and pinned him between a brick wall and the car, possibly due to a known defect in the Jeep. Mr. Yelchin, most prominently known for his starring roles in Odd Thomas and Charlie Bartlett, will be deeply missed by all.
An Estate Unplanned
There is no information currently available about whether or not Mr. Yelchin had a will or an estate plan when he passed, but if he is like the majority of Americans, chances are that he did not even have a simple will. According to a survey by Rocket Lawyer, 51 percent of Americans age 55 to 64 do not have wills. Even worse, 62 percent of those ages 45 to 54 have never drafted a will. The lower the age, the higher the chance that that person does not have a will.
One of the many goals of estate planning is to limit the amount of fighting that will occur once a person passes on, and there are many ways to achieve that goal. Often this involves making sure that all the proper requirements are observed when executing documents, careful drafting of trusts and keeping estate planning documents’ terms clear and concise. None of these tools however serve as a disincentive to a disgruntled family member who feel that they were unjustly treated as beneficiary. For that purpose, many New York estate planners may turn to the ‘No Contest’ or ‘In Terrorem’ clause.
Risk All, Lose All…
A ‘no contest’ clause in a New York will states that a beneficiary who unsuccessfully challenges the validity of the will is prevented from inheriting under the will. Testators include these clauses in their wills in order to dissuade beneficiaries from taking action against the estate, the idea being that no one will want to risk losing out on their inheritance by risking an unsuccessful challenge.
NOT AS USEFUL BUT STILL GOOD TO HAVE
This blog has explored the issues revolving around an ABC trust in the past and how its previously primary reason for existence is now no longer a consideration for many people. The primary reason for their existence was to ultimately lowering the overall tax liability of the parties by sheltering one spouse’s assets and estate tax liability from the others. With the higher estate tax exemption and exemption portability allowed between spouses, its utility is diminished. For those in New York, however, there is some need to maintain it for New York estate tax purposes. There are other benefits to having such a trust. ABC trusts are known by many names, including a credit shelter trust or a joint spousal trust.
There is little if any difference between the names. Another benefit to such trusts is the step up basis that is accomplished upon the passing of the owner. Whenever title to that asset eventually does pass, the new owner will have a higher basis, so that when they in turn pass title, they will have a lower capital gains tax bill. Indeed under federal estate tax law, the stepped up basis will likely be not be an issue for estate tax liability, given the large federal estate tax exemption and availability of the portable exemption between spouses. New York’s estate tax, however, makes it more likely that a joint spousal trust should be employed, so that the deceased spouse’s original basis can be noted and the surviving spouse can account for any increase in basis for their estate when they pass away, since the surviving spouse gets full stepped up basis of the asset. This can help to possibly reduce the overall tax bill.
MODERN PROBLEM WITH ANCIENT ROOTS
New York is one of approximately 19 states, along with the District of Columbia and the Virgin Islands to specifically adopt the Uniform Simultaneous Death Act in some significant form or another. The law was drafted in 1940 and amended through the decades, last time in 1993. It was written by the Uniform Law Commission in an effort to provide uniformity and the accompanying benefits that uniformity provide across the 50 plus jurisdictions that exist in these United States. Of course each state is free to adopt the uniform act in its entirety, part of the law or just use it as a template to base a similar but different law on it.
New York adopted the Uniform Simultaneous Death Act, at least in part, early on in the early 1940s. By 1944 at least 24 states and the then Territory of Hawaii also adopted the Uniform Simultaneous Death Act. It was designed in large part to address the issue of when two or more people pass away in a common disaster, with no meaningful difference in the order of death. For example, if both father and son or husband and wife both pass away in a tragic automobile accident. Such tragedies were much more commonplace in previous decades with the rapid and significant increase in medical technology. Not surprisingly reports of how the law was resolve such legal technicalities goes back centuries, to at least 1784. Even ancient Roman law had presumptions in place to deal with such tragedies.
New York Estate Planning & Elder Law Blog