New York Probate Lawyer Blog

A recent Forbes.com article by a Forbes Senior Editor makes the case for why women should be taking a more thorough approach to wills and estate planning in New York and throughout the country.

The article leans on a recent survey by EZLaw, which the New York Probate Lawyer Blog commented on recently. According to the survey, which was conducted with a random sampling of Americans about the importance of wills and estate planning, women were more concerned with their weight (47 percent) than with the protection of their assets (43 percent). All told, the majority of those surveyed believe that having a will is important, but few have the documents in place.

In the last half a century, women have made many positive strides in gaining rights, working toward equality in the workforce and in their ability to join the hierarchy of many of the country's Fortune 500 companies. For this reason and for many others, women, just like men, must take an interest in protecting their assets. But this is best done with the knowledge and experience of a New York City Estate Planning Attorney, who can guide clients through the complex area of estate planning, wills and trusts.

"Does this mean women have more will power when it comes to their waistlines, than when it comes to estate planning?" the Forbes article's author asks. "If so, it's a shame, because estate planning affects women profoundly."

According to the article, among Americans 65 and older, 42 percent of women, compared to 14 percent of men, are widowed. Women are expected to live longer. This longevity combined with a woman's tendency to marry older spouses and earn less over the span of their lifetime, means they could suffer the consequences if their estate isn't planned properly.

"Perhaps worst of all is how a lack of planning can affect families of young children," the author writes. "Without a will, if your children are minors and you were a single or surviving parent, a court will appoint a guardian for them."

The author implores women to have the talk about estate planning not only with their spouses, but also with their adult children and their own parents.

With spouses: Relating the end of life to current events, a person they know who's sick or even wanting to provide for the kids may be ways to bring up this less-than-attractive topic of conversation. But either way, it needs to be done. Estate planning isn't just a when-I-die necessity, it should be done so that the individual will be taken care of if their health fails at any stage of life.

With adult children: While a parent to an adult child has no obligation to change their plans based on their kids' preferences, talking it over can help. Explaining the decision rather than making it a surprise upon death can save lots of frustration and sibling rivalry down the road.

With your parents: This can be difficult because some people would view this as being greedy, but it is important to talk with your parents if you notice a decline in mental capacity later in their life. Once they lose competence, they can't make binding commitments, so estate-planning documents must be handled before that happens.

Continue reading "New York Women Must Plan Out Their Estates" »

A recent Wall Street Journal article reports that now is a good time to consider planning an estate in New York and elsewhere, given the volatility of the economy.

With interest rates low and Congress increasing the federal gift-tax exemption to $5 million from $1 million for people until the end of 2012, there are some advantages to planning your future now.

Putting together a will and other estate plans is a critical step too often delayed. No one wants to plan out their death, but the reality is that it is a necessary step for adulthood. Especially those with children; consultation with an experienced New York Probate Lawyer is a must. Estate planning is as much for the peace of mind of the person as it is for the time and energy it saves the relatives and friends who may be inheriting assets.

Not planning an estate can cause greed and frustration to lead to arguments and fighting; sometimes, tragically, the rift becomes irreparable. And for those with minor children, a lack of estate planning can leave the kids without clear direction of where they will live and how they will be cared for. The Wall Street Journal article hits on the current economy market and how this may be a good time to take the steps to planning out an estate.

Discounts:

Those who have large amounts of stocks in private companies can give away the stock at a big discount. Regardless of the market's typical ups and downs, an investor usually gets a discount when giving away some stock in a business that doesn't trade publicly.

In normal times, the Internal Revenue Service allows a 30 to 35 percent discount because it may be harder for the company to find a buyer. But with the stock market so volatile lately, owners of private stock can argue for a bigger discount.

With the stock market up several hundred points one day and down several hundred the next, the Chicago Board Options Exchange Volatility Index has reached in the 40s. The index measures the expected volatility of the S&P 500 over 30 days. Stock owners may be able to argue for discounts in the 45 to 65 percent range.

GRATs:

A grantor-retained annuity trust allows a person to give an asset to a trust, but also retain rights to annuitized payments over a certain time frame. For people with battered stock of publicly traded companies, you are really giving away future appreciation tax free.

If the stocks do well, a GRAT allows a person to transfer the upside to children or a trust without paying a gift tax. The gift-tax exemption is $5 million, but will go to $1 million after 2012. However, assets put into a GRAT must appreciate more than the IRS's "hurdle rate," which is 2.2 percent a year.

If the assets don't hit that hurdle, they go back to the original owner or the GRAT can be "reset" and transferred to a new GRAT. A GRAT can be as short as a two-year period.

Loans:

With low interest rates, loans to fund an investment can be beneficial right now. If a loan is taken out by a trust, the children can use the money to buy stock or depressed real estate at a low price and could pay back the loan and still reap the benefits of the investment now.

Continue reading "New York Estate Planning Timing Good With Market Bad" »

A recent article on Forbes.com lays out the long-awaited guidance for executors of estates of people who died in 2010, explaining how executors can opt out of the estate tax and which tax rules apply to assets if they do.

Being named an executor in a New York estate or trust carries a big responsibility and one of those responsibilities is determining how best to handle the assets and minimize New York Estate Taxes. But this isn't something a person must handle on their own. Hiring an experienced and knowledgeable New York City Estate Lawyer to provide guidance in this area of law is a smart move for someone who isn't familiar with the law.

While New York state law doesn't conform to the federal estate tax laws, there are ways to save on estate taxes through various strategies that can be used, such as by giving a lifetime gift or charitable contribution. There are many areas of this law and a New York Estate Lawyer should be hired to provide advice for every step of the way.

According to the article, the estate tax and the generation-skipping transfer tax were repealed on Jan. 1, 2010, but last December, President Obama signed a law that reinstated them. This law gives people who died in 2010 a special tax break, meaning executors can opt out of the default estate tax regime. In 2010, the maximum federal estate tax rate was 35 percent. The New York Probate Lawyer Blog has previously reviewed the new federal estate tax laws.

Opting out requires the filing of Form 8939 and also means opting out of the stepped-up basis rule and into the carryover basis rule under the Internal Revenue Code.

Carryover means that assets keep the same basis and the basis in the hands of the decedent "carries over" to the recipient. If the basis is greater than fair market value, the basis is limited to the fair market value, however, the article states.

The article also reports that the generation skipping transfer tax exemption in 2010 was set at $5 million with a 0 percent tax rate and that the wealthiest of taxpayers had only a brief opportunity to take advantage.

It's obvious from this article how complicated being an executor can be in a New York estate. There are many options to consider when determining how to handle a New York estate or will. There are both state and federal tax laws to take into consideration, all while balancing the desires of the decedent and perhaps the constant bickering from estate beneficiaries. It is a lot to balance and must be handled carefully in order to properly care for the decedent's assets.

Continue reading "IRS Provides Guidance for Executors of New York Estates for 2010 Deaths" »

Most would agree that the recent death of 27-year-old singer Amy Winehouse was tragic. Winehouse continually battled drug and alcohol addiction as her music made millions -- including a song called "Rehab."

But she got her will right MSN Money reports. It leads a New York Estate Planning Lawyer to believe this is a perfect example of why people of any age must consider putting together a will. These types of plans do not just apply to people who are older, but people of any age, regardless of financial status. In order to make sure your assets go to the people you want, a New York will must be prepared.

According to the article, Winehouse's revised will reportedly prevents any of her fortune -- about $16 million -- from going to her ex-husband. Instead, the money will go to her father, mother and older brother.

Under English law, a divorce doesn't undo the presumption that the natural inheritor is the spouse. Without a will, in England, divorcees would inherit assets. However, in New York, Estates, Powers and Trusts Law section 5-1.2 disqualifies a spouse from inheriting if the parties were divorced. Under New York intestate laws, a person's spouse and children typically inherit assets. Thus, people who may have a poor relationship with the decedent may benefit, while others who were close to the person may receive nothing. It's best not to leave these issues up to the state. Setting up a clearly laid out will can avoid any confusion and can make sure the person's desires are carried out after death.

Preparing a New York estate plan involves many considerations particularly in the case of a divorce. While the New York statutes and a valid Last Will may exclude a divorced spouse, other assets that have designated beneficiaries should also be reviewed and revised. These include retirement funds and jointly owned interests. An example of the problems caused by incomplete planning were displayed recently in the case of an attorney who divorced his wife and had named her as the beneficiary of his Individual Retirement Account during their marriage. As reported in insurancenewsnet.com on August 2, 2011, following the divorce the attorney never removed his ex-wife's name as the beneficiary of his IRA. Ultimately, the account was paid to the ex-wife. Adding insult to injury, the IRA contained proceeds from another retirement account that was rolled over into it.

According to an AARP poll, more than one third of Americans over 50 lack a will, living trust or power of attorney. Most people consider death a long, down-the-road event. But as we see every day, death can happen at any time. It is critical to put plans in place to make sure finances are in order after death.

MSN calls parents of minor children "negligent" if they don't have these documents in place. While people don't want to plan their own demise, setting up a will saves the children from a potentially ugly child custody battle as well as providing guidance concerning the manner in which the children are to be taken care of after the parent's death.

While do-it-yourself estate planning web sites exist, the MSN article points out that they include outdated information, lack of customization and too little flexibility. They also leave out certain topics, such as creating a special needs trust.

The bottom line is that estate planning requires some effort, but people lack motivation to accomplish this simple step in their lives, thinking they won't need to do it for a while. We are a nation of procrastinators in this regard. But you can save your family members a lot of stress and frustration by establishing a will or trust now, before it's too late.

Continue reading "In Death, Amy Winehouse Appears Clever After Smart Will and Estate Planning" »

The New York estate settlement process involves many different requirements and responsibilities. An Executor is the person or institution appointed by the Surrogate's Court to administer or carry out the terms or provisions in a Last Will. The responsibilities of a person named as Executor begins immediately after the death of the decedent.

An Executor's first duty is to file the Will with the Court and prepare a petition for probate. The Court must officially appoint the Executor before he or she has authority to handle estate affairs. While information provided in the probate petition is the same whether filed in Nassau, Suffolk or Queens counties, it may not always be easy to provide the required data. Among the items needed to be completed is a list of the names and addresses of all of the decedent's distributees (i.e., next of kin). While this may be a simple task where a decedent is survived by a spouse and/or children, the information may not be so easy to provide where the decedent's closest relatives are cousins and spread out throughout many different countries.

In a number of estates where I represented the Executor, distributees numbered in the twenties and many lived overseas. Also, particular problems arise when the decedent was orphaned or estranged from his or her family at a young age.

The named Executor is often faced with kinship issues such as these. Also, the potential for a Will Contest always exists. Thus, the Executor's obligations can be quite extensive and complex even before the actual administration of the estate begins.

Once the Executor is actually appointed by the Court, it is his or her job to collect the decedent's assets; pay bills, taxes and claims; and distribute the estate assets to the estate beneficiaries. In some instances, the Will may name more than one person as Executor and disputes may arise between the Executors. In a recent case decided by Surrogate Edward W. McCarty on June 2, 2011 and reported in the New York Law Journal on June 20, 2011, one of the Executors interfered with the sale of the decedent's
residence. This conduct prompted the other Executor to commence a Court proceeding pursuant to Surrogate's Court Procedure Action section 719 for removal of the Executor.

Even routine matters may pose extraordinary problems. As noted above, one duty of an Executor as a fiduciary is to determine and satisfy a decedent's debts or the claims against the estate. An Executor who improperly performs this task may end up personally responsible for payment. However, determining the extent and validity of a claim or debt can be difficult. As reported by Letitia Stein on July 27, 2011 in the St. Petersburg Times, a lawsuit was filed against the estate of a woman by a hospital which claimed the deceased woman incurred over 9 million dollars in medical expenses prior to her death.

Determining and paying estate taxes or estate income taxes is also a complex matter. Just this past year Executors and other fiduciaries were required to examine the new tax laws very closely to determine whether an option concerning the cost basis of estate assets or utilizing an increased estate tax exemption would be most beneficial.

Distributing estate assets to beneficiaries can also have many problems. Quite often, beneficiaries are minors and payment must be made to a Trust or to a Guardian appointed by the Court. Also, beneficiaries may not agree with the calculations utilized in computing their shares or may object to some action taken or not taken by the Executor. A contested accounting proceeding may result from these disputes. Additionally, a beneficiary may die before receiving his or her distribution and a proper estate fiduciary must be appointed for the beneficiary's estate before his or her share can be paid out.

The many responsibilities and issues faced by Executors and other estate fiduciaries in administering an estate are endless. Having an experienced estate settlement attorney is important to advise the fiduciary concerning these matters in estate administration

Continue reading "New York Executors Have Fiduciary Responsibilities and Are Subject to Court Review" »

Attorneys familiar with probating a Last Will throughout New York, such as in the Bronx and Brooklyn, are often confronted with issues that result in Court litigation. Many of these controversies involve family disputes and disagreements that have origins many years before the death of the decedent. Once a person dies, opportunities are presented to activate long held disagreements and family disharmony.

It is not uncommon for a testator to prepare a Will and disinherit a child or other close relative. New York law does not require that a person leave anything to a child. However, as previously discussed in the New York Probate Lawyer Blog, Estates, Powers and Trusts Law section 5-1-1-A requires that a portion of an estate be left to a spouse.

After being disinherited, a disgruntled child can use the requirements of the probate process to Contest a Will. In his or her view, the testator's Will should be deemed invalid because lack of capacity or undue influence was the cause of the disinheritance and not the personal disharmony that existed for many years. Since the decedent is no longer around to express his or her desires, it is now up to the Court and the litigants to sort out the family dynamics or dysfunctional relationships.

Will contests in the New York Surrogate's Court, like elsewhere, can be time consuming and costly. Examinations of attesting witnesses, review of the Will execution ceremony and discovery of information reflecting upon the decedent's capacity can be an excruciating experience for the family members involved. A recent article by Mary Ann Spato appearing in NJ.com on July 26, 2011 recounted the story of author Belva Plain who died last October. It appears that for almost 20 years prior to her death the decedent had fully supported her son, John, based upon an agreement that John would not contact members of the family or claim any part of her estate. Notwithstanding the agreement, after Belva died, John sought to void the agreement and claimed that his mother had been unduly influenced by his sisters. The Court ultimately ruled against John finding that he had no claim against his mother's estate.

A similar pattern was seen with regard to the estate of the late entertainer James Brown. As reported by Matt Birbeck on July 20, 2011 in RollingStone.com, Brown, who had an estate valued at about $100 million dollars, died in 2006. He left almost his entire estate to a Trust to benefit underpriviledged children in South Carolina and Georgia. However, after a Will contest by his seven children and fourth wife, the estate was split between the family and the Trust. Nevertheless, as reported, none of the estate money has yet to be paid out and there is still an ongoing dispute concerning Brown's final place of burial.

Another area that has been a source of many Court battles concerns the transfer of a person's assets prior to their death. Such transfers can destroy even the best estate plan and leave an estate without any assets to be paid to the beneficiaries named in a Last Will. The creation of joint ownership or designating beneficiaries on bank accounts causes these assets to pass to a joint owner or beneficiary automatically upon death, thus insulating them from the control of an estate fiduciary such as an Executor or Administrator. The provisions of a Will or the intestate statutes are essentially avoided. As a Nassau estate attorney, I have seen many instances where children, friends and caretakers rearrange a person's assets prior to death by having their names added as co-owners or beneficiaries. After the decedent passes on, the Will beneficiaries and estate Executor or Administrator are faced with the arduous task of engaging in litigation to discover and recover the decedent's assets. Questions of undue influence and intent surround these proceedings and the decedent cannot express his or her actual desires.

Continue reading "Estate Litigation Can Complicate and Delay Settlement of Decedent's Estates" »