Estate Planning

Back to Basics: Discussing Death and Your Estate In New York

Published on: June 22, 2016 | by Ettinger Law Firm

No one likes discussing their own demise. The topic is generally considered taboo amongst most people and is possibly the most uncomfortable conversation topic. This is unfortunate for everyone though, because if a person is unable to discuss their own death, chances are they are unwilling to plan for it either. That is one of the worst cases possible for not just for the person who fails to plan but their family members and people who rely on them as well. Discussing death is the first step to engaging people to plan their estate and while it is a difficult topic to broach, there are certain steps that a person can take to help bring people closer to planning their estate.

Do Not Put Estate Planning In Terms of Death

People looking to engage others about estate planning should not discuss death, rather they should focus on planning for incapacity. A good estate plan does not just encompass what happens when a person dies. It will also discuss plans for what happens when a person becomes incapacitated such as if they are in an accident and unable to communicate and are unconscious.

What’s In a Name? Publicity Rights of Deceased Celebrities

Published on: June 13, 2016 | by Ettinger Law Firm

What’s In a Name Depends on Who You Are. It Could Be Hundreds of Millions According to the IRS

There has been an ongoing battle in recent years between decedents’ estates and the Internal Revenue Service (IRS). While it is only to be expected that the IRS attempt to collect as much as it can, their recent focus has turned to a rather contentious area in their quest for collections: intangibles. This category that includes property interests like computer software, patents, copyrights, publicity rights and literary, musical and artistic compositions can be difficult to put a price.

Most recently, the estate of former singer Whitney Houston has been fighting off an inexplicable valuation of Ms. Houston’s publicity rights, according to The Hollywood Reporter. Ms. Houston’s estate is just one of many in recent years, most notably, Michael Jackson, who are embroiled in heated tax claims over the valuation of certain assets, most contentiously the valuation of the celebrity’s public image. How exactly does the IRS come to the conclusion of the worth of the decedent’s image, and why are valuations of this intangible so hard to get right?

Back to Basics: No Contest Clause in New York Wills

Published on: June 10, 2016 | by Ettinger Law Firm

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.

New York’s Family Health Care Decisions Act

Published on: June 7, 2016 | by Ettinger Law Firm

In a previous post about healthcare and end of life decision making, we discussed the importance of the election of a healthcare proxy or agent. However, not everyone is able to make these advanced plans prior to an unexpected incapacitation. In June 2010, New York enacted the Family Health Care Decisions Act in order to address the issue of healthcare decision making for those individuals who do not have a predetermined healthcare agent or have not left instructions with a living will or Do Not Resuscitate Order.

The Family Health Care Decisions Act allows for the appointment of the patient’s family member or close friend to act as a ‘surrogate’ and step in to make medical decisions for the patient if they have become incapacitated and do not have prior designations made. Similar to a health care proxy’s ability to make decisions, this only applies when the patient is incapacitated. The Act lays out the order of priority that surrogates would be named, starting with a court appointed guardian if one exists, then the spouse or domestic partner of the incapacitated person, followed by adult children, a parent if still alive, a sibling, and then a close friend. Once elected, the surrogate is able to make all decisions regarding healthcare for the person, subject to some limitations. If the patient objects to the election, their objection prevails, absent a court finding that there is reason to override the patient’s decision. Additionally, if the patient made determinations prior to incapacitation while hospitalized, and in the presence of two witnesses, the surrogate’s consent is not needed for any life sustaining treatment, the patient’s wishes will prevail.

Adult Patients

PROTECTING YOUR INDIVIDUAL RETIREMENT ACCOUNT FROM CREDITORS

Published on: June 4, 2016 | by Ettinger Law Firm

STATE SPECIFIC PROTECTIONS

The current aggregate value of retirement assets in America is roughly $21 trillion, with individual retirement accounts (IRAs) amounting to the largest single investment asset. While many, if not most, types of retirement assets and accounts are protected against creditors, the IRA is not necessarily one of them. The various protections for IRA are dependent on the amount, how long ago you put the money into your account and the state or jurisdiction you live in. Employer sponsored plans are covered by protections found in federal law, so it is much easier to talk about what protections exist for such plans. The Employer Retirement Income Security Act of 1974 (ERISA) created a large host of protections for employees, including protections against creditors, except when the creditor is the Internal Revenue Service (IRS) or a spouse or former spouse for debt incurred through domestic relations.

The protections found under ERISA have expanded over time through both Congressional action and judicial interpretation of the law. ERISA plans must provide periodic updates to the employees, information about the plan features, creates fiduciary responsibilities for the plan administrators as well as things such as an appeal process for certain decisions that the employee disagrees with. One large collective group of accounts that are not protected, however, are IRAs. IRAs, as the name implies, are owned by an individual and thus do not fall under the protections of ERISA. Most protections for IRAs are found in state law.

PROPOSALS TO LIMIT THE GENERATION SKIPPING TRANSFER TAX EXEMPTION

Published on: June 1, 2016 | by Ettinger Law Firm

PROPOSAL TO MOVE BACK TO PREVIOUS TRUST LAWS

As this blog discussed in the recent past, dynasty trusts are trusts that allow for a benefactor to pass wealth on to future generations via various legal mechanisms that allow a trust to carry on for literally hundreds of years, overcoming the traditional rule against perpetuities that limited trusts to a life in being plus 20 years, thereby ending the legal life of a trust essentially at about 90 to 100 years. In March, 2016 President Obama submitted a proposed budget that includes a provision that would effectively eliminate these state trusts at about 90 years.

Every year, the Department of Treasury prints what is called a green book which outlines proposals, which, among other things, contains suggestions that the presidential administration believes are needed and appropriate changes to the law, policy or other regulatory and legal matters. It also contains information regarding exceptions and issues that are unique to dealing with the federal government. Under President Obama’s proposal, as found in after page 190 in the green book, this would be done by eliminating the generations skipping tax exemption at 90 years from the date of its creation.

BACK TO THE BASICS – HOW TO BE AN EXECUTOR

Published on: May 30, 2016 | by Ettinger Law Firm

AN IMPORTANT AND SOMETIMES THANKLESS JOB

There are times in life when we all will have to do or engage in a thankless job. One such time is when a close friend or a family member asks you to be the executor of their estate. The difference between an executor and an administrator of an estate is small but noteworthy. An executor is someone who is appointed by the terms of the will itself to administer the estate. If there is a trust document to convey property to heirs, they are then known as trustee.

An administrator is the title for the person who appointed to administer the estate by the Court when someone dies intestate, or without a will, or when the appointed executor refuses or cannot complete the task. In either event the probate Court Judge must approve of the selection. A recent survey by U.S. Trust found that three-quarters of high net worth individuals choose a family member or close and trusted friend to be the executor of their estate and two-thirds of the same people chose a friend to be the trustee for their testamentary trust. The process is started when the executor presents the will and a death certificate to the Surrogate Court in the County in which the deceased resided. The Court then issues letters testamentary to the executor, which is when the hard work begins.

WHAT DOCUMENTS TO KEEP AND WHAT TO SHRED

Published on: May 27, 2016 | by Ettinger Law Firm

SPRING CLEANING TIME MEANS CLEARING OLD PAPERWORK

With tax day over and the need to collect and forward any number of financial and tax documents to the government and with the coming of spring, it is time to turn to spring cleaning. The question should be asked, what paperwork can I throw out, should I throw out and what paperwork should I keep. To be accurate, you should never throw out any financial paperwork, you should shred or incinerate such documents. It is inevitable that in any such endeavor, you will come across documents that matter for purposes of your estate planning, such as wills, trusts and the various financial documents that speak to your estate planning. In any event, you should rely on a system to help you collate these important documents for future use.

You should keep certain original documents in an easily accessible but safe place, such as a fire proof safe or perhaps even a safety deposit box. Things such as birth certificates or adoption paperwork, licenses and passports, marriage certificates, judgments of divorce, military discharge papers and social security cards. Other documents do not necessarily need to be kept as an original, they should be regularly review, at least bi-annually, if not more often. Documents such as a will, trust or other testamentary documentation will be kept by your attorney or law firm, but it still always best to maintain a copy or, better still, several copies on hand.

HOW TO HELP YOUR EXECUTOR

Published on: May 24, 2016 | by Ettinger Law Firm

CHOOSING THE RIGHT PERSON AND STEPS TO TAKE

As noted in a previous blog, being an executor of an estate can be a thankless job. There are ways, however, that can allow you to make the job and life of an executor easier and less painful. It is a job that carries with it much responsibility, so taking a few proactive steps may help to save the executor a lot of heartache. One of the first steps you need to do, even before helping a named individual is to name the individual. In other words, pick the right person; in fact it is even better to pick a few individuals as successors in the event that the executor passes away before you or is otherwise unable to serve as the executor of your estate. Even better is to pick two people who will serve as co-executors; if you do this, you must make someone the primary person who shall serve and who has the final authority to make whatever decision needs to be made in the event that there is a disagreement.

It is important to keep in mind that the person you chose is going to in charge of your assets that you amassed throughout your life. All other things being equal, it is best to have someone who lives local and in the same state as you. Few things in life provide such a stark choice. It may be more important to you and the heirs, however, that you pick someone who is familiar with you, your wishes and your assets, even if they live further away or in a different jurisdiction. If you choose a professional, such as an attorney, it is important to keep in mind that there will be costs associated with this. If you permit and allocate a specific payment structure into the will or testamentary trust, it may not matter, since even a family friend or relative may also be entitled to a fee. Finally, it is best to speak with that person in advance to ensure that they understand that they are being named as the executor of your estate and that they will do so.

BACK TO THE BASICS – MEDICAID PENALTY PERIOD

Published on: May 19, 2016 | by Ettinger Law Firm

RULE OF HALVES

Many people find themselves going into nursing homes earlier than expected and without the appropriate planning. Things happen in life to derail our best laid or thought out plans. With more and more elderly Americans living longer, the need for nursing home care is increasing and will continue to increase indefinitely. Whenever someone does not properly plan for going into a nursing home, often their personal funds will be the basis upon which they will pay for their nursing home care. Certainly, there are those amongst us who purchase long term care insurance but for the majority of us, we rely on utilizing Medicare or private insurance or some combination of the two.

This is a misconception, insofar as the most that Medicare will pay for is 20 days for full nursing home care and up to 80 days partial care, for a total of 100 days. Moreover, this stay must be preceded by a three day hospital stay. Any more time in the nursing home requires that the patient either pay through private insurance or by private pay. Granted entry into a nursing home often comes as a surprise to many, but for those who have an idea that they may have to enter into a nursing home, they scramble last minute to dispose of their assets with the mistaken belief that they will be able to show to the government that they do not have any assets and are thus eligible for Medicaid, to pay for their further nursing home stay.