Estate Planning

The Secure Act and Your IRA

Published on: November 2, 2022 | by Ettinger Law Firm

The Secure Act governs distributions from IRA’s and other retirement plans. After the death of the account holder, most named beneficiaries are required to take the funds out over ten years.

While the IRS has not finalized the regulations, the safest approach is to take minimum distributions for the first nine years, based on the life expectancy of the beneficiary. More may be taken, and taxes will be based on that amount. The way the minimum distribution works is as follows. Let’s say the beneficiary has a life expectancy of forty years when the account holder dies. In the year following the account holder’s death they must take one-fortieth, the following year one-thirty-ninth, and so on until year ten when they are required to take the retirement account balance in full.

There are a few exceptions to the ten year rule. Spouses may roll the inherited IRA into an IRA of their own and continue it for their own lifetime — generally waiting until they are 72 to start taking required minimum distributions (RMD’s) unless they need the funds earlier.

Avoiding Guardianship in New York

Published on: October 13, 2022 | by Ettinger Law Firm

For the ever-increasing number of those who become legally incapacitated later in life (i.e. unable to handle their legal and financial affairs) having a legal guardian appointed looms as a distinct possibility.

A guardianship proceeding may be commenced by a hospital, nursing home, assisted living residence, family member or a professional involved in the affairs of the “alleged incapacitated person” or “AIP”. These proceedings arise for various reasons such as the facility looking to secure payment or a family member or professional finding that the AIP is either not handling their affairs well or is being taken advantage of financially.

Once the proceeding is commenced a vast bureaucratic process begins to unfold. Notice of the proceeding and of the date and location of any hearings are sent to all interested parties, including all immediate family members.

Estate Planning for Pets

Published on: October 5, 2022 | by Ettinger Law Firm

In the event of their death, many people wish to provide for the adequate care and feeding of their beloved dog, cat, bird or other pet. Here is an abridged version of New York’s statute authorizing a trust for your pet;

The intended use of the principal or income, of a trust for the care of a designated domestic or pet animal, may be enforced by an individual designated for that purpose in the trust instrument. Such trust shall terminate when no living animal is covered by the trust.
No portion of the principal or income may be converted to the use of the trustee or to any use other than for the benefit of a covered animal.

The Value of Revising Your Estate Plan

Published on: July 7, 2022 | by Ettinger Law Firm

You should strive to review your estate plans every few years. While it might not seem like it, many events can occur during this period that impacts your estate planning goals. Besides personal changes, the country also experiences national elections every four years which often lead to changes in estate taxes.

Consider Role Appointments

One of the most critical parts of estate planning is appointing who among your friends and family members will act in the role of executor, power of attorney, and other estate planning positions. You should also question whether the parties you nominate to act in such a role remain fit and willing to act in these positions. It’s also important to remember that the suitability of appointments can change. While a person might seem like a good executor, they might not be a suitable executor a decade from now.

Advice on Removing an Executor from an Estate

Published on: July 7, 2022 | by Ettinger Law Firm

After a person is named an executor, the individual takes on the obligation to adequately and promptly complete the estate’s administration in addition to distributing an estate’s assets to anyone listed as a beneficiary. Assuming that the executor appreciates the duty that he or she owes to the estate and pursues appropriate assistance, an estate’s administration can be performed in a timely manner, and assets are distributed appropriately.

It’s not unique for new challenges to appear during estate administration. This article highlights some situations where a court might remove an executor after paperwork is filed by an estate beneficiary.

A common issue faced by beneficiaries is when executors do not timely administer an estate. Even though estate administration is nuanced, executors have a duty to administer estates in a timely manner. Unfortunately, executors sometimes do not expediently process how an estate should be administered. Instead, executors sometimes take too long to complete estate planning processes.

Estate Planning Is Critical During a Period of Wealth Transfer

Published on: July 5, 2022 | by Ettinger Law Firm

Although it was long predicted, the country is currently in the middle of the biggest transfer of assets in current history. The Federal Reserve reports that at the end of 2021’s first quarter, people in the United States who are 70 years of age and older had net worths of approximately $35 trillion.

The question of whether people in the United States will prepare to transfer assets depends on the extent of funds that pass on to attorneys, courts of love, and needy loved ones.

When someone you love passes away, assets are ideally passed to people and organizations chosen by the deceased individual. Many people are not adequately prepared to pass on assets, though. One study reveals that approximately 46% of Americans own wills, which are vital estate planning documents. Estate planning helps a person appoint who will take care of loved ones and determine how assets will be assigned after you pass away. While some people make the mistake of thinking that only the wealthiest individuals need estate plans, everyone including people of modest means need estate plans to achieve their estate planning goals.

Taking Advantage of the Estate Tax Portability Provision

Published on: July 5, 2022 | by Ettinger Law Firm

The estate tax exemption is slated to return to $5 million in 2026. For married individuals, the exemption is considered portable”, which means that the estate of the second spouse to pass away can benefit from the unused amount of the exemption that was available to the first spouse who passed away.

This change in tax law means that wealthy individuals’ estates can be protected from the claw of federal law through a $10 estate tax exemption. The indexed amount is $12.06 million for people who pass away in 2022. Meanwhile, transfers among spouses remain exempt from taxation due to the unlimited marital deduction. Consequently, many people do not need to be concerned about the federal estate tax.

The portability election, which has been titled by legislatures the “deceased spouse unused exemption” (DSUE) is an election utilized by an estate’s executor.

What You Should Know About Creating a Special Trust for Your Elderly Loved One

Published on: July 5, 2022 | by Ettinger Law Firm

Many adults with special needs children routinely worry about how the child will survive when the parent can no longer support them. Often, leaving money directly to a special needs child can end up jeopardizing that child’s ability to receive any support from government-funded programs including Medicaid and Supplemental Social Security Income. To receive funds from these programs, beneficiaries often must have below a few thousand dollars in assets.

In these situations, special needs trusts can help to provide for the beneficiary once the parent or loved one is no longer around. Because the special needs trusts are viewed as owning assets, they are exempt from asset limit tests associated with government programs. Special needs trusts can meanwhile help to support quality-of-life improvements for a beneficiary. Special needs trusts also help to avoid situations where a family member receives funds and the other relatives are left to face the burden of this responsibility as well as the cost of care.

Due to the interest in special needs trusts, the number of these trusts has been growing substantially. Despite these benefits, special needs trusts come with certain regulations regarding who can qualify to use them as well as how earnings are taxed, which can end up influencing situations that warrant using these trusts.

Estate Planning Alternatives to Quiet Trusts

Published on: June 22, 2022 | by Ettinger Law Firm

Many people want to avoid involving children in conversations about trusts. This article reviews some ideas that are helpful to consider when people decide whether to establish a quiet (or “silent”) trust or a trust that allows keeping the trust’s existence or details about the trust from beneficiaries as well as for the extent of time that the trust will remain quiet.

Research reveals that approximately 70% of wealth transfers do not operate properly by the third generation. Not operating properly in this context involves the receiving generation losing control of assets in the trust. Routinely, this is not due to inadequate wealth planning or unwise investing, but instead to an absence of trust, transparency, and lack of planning. Before considering quiet trusts, it’s a good idea to consider the wider picture of family governance as well as preparing children for the assets that they will one day receive. Instead of considering quiet trusts as an alternative to wills, you should also consider involving your beneficiaries directly in discussions about the trust once they reach the appropriate age. What constitutes an appropriate age is influenced by the structure of a family, but in many cases is earlier than a person thinks.

How Wealth Is Transferred

Raising Issues of Incapacity or Undue Influence to Challenge Estate Plans

Published on: June 22, 2022 | by Ettinger Law Firm

After a loved one passes away and you learn about that person’s estate plan for the first time, it’s common to encounter various emotions as you respond to the terms of the plan including shock, sadness, or even anger. Based on the estate plan’s appointments, beneficiaries, or other times, you might be left wondering if you will be able to raise any type of claim to challenge the terms of the estate plan. This article reviews some of the basics that you will need to follow if you plan on raising a strategy based on either undue influence or incapacity.

# 1 – Not Everyone Can Challenge a Will

Beneficiaries do not acquire protected interests in a person’s property until after that person passes away. Often, a person cannot attack a will until after that person’s death. This is because the person who creates the estate plan can theoretically alter the terms of an estate plan any time before the creator passes away. If a person is interested in challenging a Durable Power of Attorney or Health Care Proxy, however, a person can challenge these documents during a person’s lifetime. No restriction exists regarding who can challenge a person’s will. Often, one or more family members of the person who created the estate plan can challenge the document’s terms.