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Articles Posted in Estate Planning

shutterstock_96626983-300x300Estate and gift taxes have effects that may vary widely depending on the value of an estate and the place where you live.  When a person engages in estate planning, the tax consequences are always considered.  Like most taxes, estate and gift taxes are imposed by various states and by the Federal government.  Estate lawyers in New York can assist their clients with these matters.

During recent years, most individuals have not had to worry about paying estate or gift taxes.  At present the exemption for Federal estate tax is $11.7 million per individual.  Even in a highly taxed state like New York, the individual exemption is presently $5,930,000.00.  There are various strategies to diminish the impact of these taxes.  Provisions in Last Wills can utilize trusts and other methods to defray taxes.

What is important to realize is that the step-up in basis is really an income tax concept.  Basis, from an accounting standpoint, is the cost of an item.  This cost or basis is used to determine the taxable gain, typically a capital gain, which is incurred when an asset is sold.  As an example, if you purchased a house for $1,000.00 (the basis) (ignoring any additional costs or depreciation), and then sold the house for $2,000.00, the gain would be $1,000.00.  This gain would be the amount subject to tax.

shutterstock_204507106-300x254Estate planning in New York is important.  It provides an individual with the opportunity to memorialize the manner by which assets can be disposed of upon death.  The creation of a Last Will and sometimes a revocable or irrevocable trust develops provisions designating beneficiaries and the portion of assets they are intended to receive.  The New York Probate Lawyer Blog has published numerous articles regarding estates and trusts.  Estate lawyers are aware of the value of creating appropriate documents.

One aspect of planning often involves life insurance.  This blog post cannot discuss all of the considerations and issues regarding life insurance in such a brief space.  However, a few aspects are worthy of mention.  Life insurance typically takes the form of one of two types.  There is term insurance, which provides only an insurance payment on death without there being any accumulated value to the policy.  Whole life policies not only provide a pay-out of funds but also have an accumulated value over time which may be able to be withdrawn or even used as security for a loan.

Probably the most important item to bear in mind is the designation of beneficiaries.  When a beneficiary is designated (other than a person’s estate), the insurance proceeds are going to be paid directly to such beneficiary.  Since these funds are not paid to the decedent’s estate, the provisions of a Last Will are not going to control the disposition of this asset.  The asset is not included in the probate estate.  Thus, when planning an estate it is important to know which assets are controlled by a Will and which assets pass outside of the testamentary document.  An individual wants to be certain that certain beneficiaries receive only the assets and values intended.

shutterstock_1123004039-300x199Estate planning in New York has always been important.  The New York Probate Lawyer Blog has published numerous articles over the years discussing the need for, and issues involved with, a Last Will, Living Will, Health Care Proxy, Power of Attorney and Living Trust.

However, as estate planning lawyers are aware, concerns about estate taxes have largely taken a back seat.  This is because during recent years, the exemption levels for incurring estate tax liability have been quite high.  Thus, most estates do not need to worry about New York State and Federal estate tax.  During 2021 the Federal estate and gift tax exclusion is $11.7 Million per individual.  As a result, a married couple could pass $23.4 Million without fear of any tax.  On the State level, New York provides an exemption of $5,930,000.00 per individual.  Also, there is no New York gift tax.  When these amounts are coupled with an unlimited deduction for transfers between spouses, there are relatively few estates where estate tax issues may be encountered.

With the advent of the new administration in Washington, D.C., there is renewed consideration by some lawmakers of overall tax increases.  This includes reducing the Federal exemption limits and raising taxable estate rates.  While the specifics of what new laws will be enacted are unknown, the imposition of increased taxes typically results in new models for planning to diminish the effect of potential tax increases.  The use of marital deduction trusts, insurance trusts, transfers of interests in small businesses and other gift structures all may gain renewed popularity.

shutterstock_571088005-300x200Everyone talks about preparing a Last Will or engaging in estate planning.  Particularly now, with the advent of the pandemic, there is the reality of facing the need for post-death and advance directive documents.  It is easy for an individual to view planning as the simple function of disposing of assets to named individuals.  However, the actual process and considerations needed encompass much more thought and preparation.  Estate lawyers in New York City are familiar with this more rigorous examination.

Some of the more fundamental, yet highly important, considerations are listed below:

  1. Designating Beneficiaries: While identifying beneficiaries in a Will or Trust is important, it is equally necessary to consider alternate or contingent designations in the event the primary persons are pre-deceased or even renounce their bequest.  As a Will lawyer, I am constantly surprised when clients have not even considered alternate beneficiaries.  Another aspect of selecting beneficiaries concerns assets that pass outside of the administration estate such as pay on death accounts or life insurance or retirement funds where a beneficiary is named as the pay on death recipient.  The estate planning process necessitates that all of these types of assets must be considered so that there is no conflict with Will provisions or the goal of the plan as to the values each person is to receive.

shutterstock_330039464-300x200Preparing and probating a New York Will is important in order for a testator to effectuate an estate plan.  There are many considerations that an individual needs to consider when planning an estate such as how assets are to be distributed and the identity of the beneficiaries who are to receive dispositions under the Will.  Guidance from an experienced estate lawyer regarding these matters should be sought.

There are many subtle and not generally thought-of issues which may have some impact on a plan and the ultimate probate of a Will.  A few of these matters are discussed in this blog post.  One such issue concerns the proper execution of a Last Will.  Estates, Powers and Trusts Law Section 3-2.1, entitled “Execution and attestation of wills; formal requirements,” provides the basic rules regarding execution.  Among these guidelines is that there must be at least two (2) attesting witnesses.  Nowadays many people prepare a Will from online forms and without the assistance of legal counsel.  An important rule to know is that if an attesting witness receives a disposition in the Will, he may need to forfeit his inheritance unless there are two other witnesses who do not receive a benefit under the Will.  This rule is provided in EPTL 3-3.2 entitled “Competence of attesting witness who is beneficiary; application to nuncupative will.”  The statute provides a number of additional rules and exceptions.  However, in view of the general prohibition, it is always best to have completely disinterested persons act as attesting witnesses so as to avoid any possible problems when it comes time to probate the Will.  The New York Probate Lawyer blog has many articles dealing with probate issues.

Another matter that should be recognized is that sometimes a Will contains what is known as a No Contest Clause or in terrorem clause.  This language in a Will provides that a beneficiary forfeits his disposition if he contests the Will.  Many individuals include this type of provision in a Will in the hope that it would discourage a discontented party from filing a Will Contest due to the prospect of forfeiting their inheritance if they lose the Court case.  The use of a no contest clause is controlled by EPTL 3-3.5 entitled “Conditions qualifying dispositions; conditions against contest; limitations thereon.”  However, the statute provides certain exceptions to the general rule of forfeiture.  For example, if there is probable cause, the condition does not apply if there is a contest based upon forgery or to show that a decedent left a later Will.  Also, a no contest clause does not prevent the initial discovery allowed by Surrogate’s Court Procedure Act Section 1404 which permits the examination of the Will witnesses, the Will draftsperson and the nominated executor and Will proponent.  In view of these and other exceptions to a no contest clause, a testator may want to consider other alternatives to avoid a Will challenge such as setting up asset beneficiary designations or a Living Trust.

shutterstock_571088005-300x200The consideration of estate matters in New York always involves a number of variables.  New York, as well as the country as a whole, is comprised of a diversity of personal relationships controlled by numerous laws that are evolving all of the time.  A recent article written by Sarah O’Brien entitled “If you live with your partner and are unmarried, this is what happens when you die,” which appeared at CNBC.com on February 27, 2020, highlights just one of many problematic areas of personal concern.

In New York, as elsewhere, the formalization of a partnership through marriage creates certain spousal rights that have a direct impact on inheritance.  The New York Probate Lawyer Blog has published numerous posts talking about these matters.  For example, if a person dies intestate without a Last Will, his administration estate is, according to estate laws, (Estates Powers and Trusts Law section 4-1.1), going to be distributed to his next of kin.  An unmarried partner is not included in this class.  As an estate lawyer, I have seen many situations where upon the death of an unmarried partner, the surviving partner cannot share in the estate despite the longevity of the relationship.

Ms. O’Brien’s article discusses these types of issues.  Of course, there are some relatively simple solutions which require some thought and time and effort to complete.  First and foremost, each partner should complete a Last Will which names the other as primary beneficiary and executor.  It is also important to designate alternate beneficiaries and fiduciaries so that the creator’s intentions and desires can be fully carried out.  Living Trusts can also serve the purpose of having a valid document delineating the individuals who are to receive benefits upon death.

20200522-Estate-Planning-300x200Estate planning in New York involves the preparation of different documents.  These include a Last Will and Testament, Living Will, Living Trust, Power of Attorney and Health Care Proxy.  All of these papers have terms and language which should be clear and specific so that the writer’s intentions are precisely spelled out.

In particular, a Will can have numerous provisions that involve descriptions of property being disposed of and identification of beneficiaries who are to receive benefits pursuant to the document.  The New York Probate Lawyer Blog has published many posts regarding Wills and estate planning and the need for proper drafting.

Some of the considerations that need to be taken into account include the recognition that a Will may describe property that is being disposed of.  Such property may be tangible items like pieces of jewelry or furniture.  Other types of assets may include real estate or business interests.  In all these situations it is important to take extra care to describe the gift with precision.  The last thing a testator should want is for beneficiaries to engage in post-death Surrogate’s Court litigation as to which item owned by the testator was given to them.  For example, a bequest of my “gold watch” is not helpful if the testator owned multiple gold watches.

original_1074565532-300x107During the course of preparing a New York estate plan, many different issues must be considered.  Initially, the basic plan must identify beneficiaries and the property or amounts each is to receive.  A thorough review and understanding of the creator’s assets and the ownership interests are essential.  As extensively discussed in the New York Probate Lawyer Blog, a Will only controls assets that are held in the decedent’s name alone.  Joint assets and assets with designated beneficiaries pass to the named parties automatically upon death.

Still another concern is whether to create a Living Trust as a primary vehicle for post-death transfers or to rely primarily upon a Last Will.

Regardless of the type of estate plan created, some consideration should be given to any possible effect of estate taxes.  In recent years, estate taxes have received less of a review because the exemption amounts have generally increased.  For the year 2020, the Federal estate tax exemption protects assets up to $11.58 Million.  A husband and wife combined can protect double this amount.  Also, all assets passing between a husband and wife are fully deductible and are not subject to estate tax.

shutterstock_571088005-2-300x200Estate planning in New York, and probating a Last Will in Surrogate’s Court, go hand in hand.  When a person engages in preparing and executing a Last Will, attention must be given to the eventuality of submitting the document to the probate process.  As discussed in many posts in the New York Probate Lawyer Blog, a Will must be executed in accordance with the statutory requirements set forth in Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements.”

It has become more common that individuals prepare their own Will documents.  Many forms of Wills are available on the internet.  These can be found in legal document catalogues or through various legal document drafting services.  When it comes to a Will, not only does the document need to contain specific and properly worded and organized information, the execution and signing process needs to meet statutory requirements.  Thus, when self-help methods are utilized without the assistance of an attorney, the prospects for estate litigation and confusion can increase dramatically.  Such was the situation in a recent Rockland County estate case entitled Matter of Estate of Tsinopoulos, which was decided by Rockland Surrogate Keith Cornell on July 17, 2020.

In Tsinopoulos, the decedent used a Will form which she completed herself without the assistance of an attorney.  She then had the Will executed in her local bank, again, without the assistance of counsel.  While there is no prohibition against preparing and executing a Will without an attorney, the involvement of an estate lawyer gives the execution of the document a presumption of validity.  In this case, the Will left virtually all of the decedent’s assets to her daughter, which prompted the decedent’s son to file objections to the Will and engage in a Will contest.

shutterstock_96626983-300x300We know that when a person engages in the process of creating an estate plan, it is important to review all assets that may be part of the disposition framework.  Assets that are owned in a person’s name are typically subject to the provisions of a Will.  The testator creates the planning for the estate by molding intentions around such assets and other property like joint accounts which may pass directly to named beneficiaries.

Similarly, after a person dies, the estate fiduciary, whether an executor or administrator, investigates the ownership of the decedent’s property and collects the estate assets and pays the estate expenses and obligations.  The New York Probate Lawyer Blog contains many informative articles regarding estate settlement.

During the course of administering an estate, the fiduciary must also ascertain whether the decedent was subject to any obligations under various types of lifetime agreements.  These obligations may continue after the decedent’s death and constitute claims against the estate or otherwise affect the distribution of the estate property.  A few examples of such documents and their potential impact will highlight the necessity for a full review during the planning process and post-death settlement of the estate.

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