Estate Planning Category Archives

Estate Battles the IRS – The Michael Jackson Example

Published on: February 11, 2014 | by Ettinger Law Firm

When most hear the phrase “estate battle” the mind immediately jumps to fighting between families. Sadly, in the tumult of a passing, it is not uncommon for even close relatives to disagree sharply over how an assets should be divided. However, estate fights can also refer to legal problems related to taxes and the IRS. Tax matters are intricately woven into estate matters, and when problems arise, you can be sure that the IRS will be ready to defend their position in court.

How Much Was Jackson’s Estate Worth?

To understand how these IRS estate battles often play out, one need look no further than continued wrangling over perhaps one of the largest estates in recent memory. Famed entertainer Michael Jackson died in 2009. However, the estate is still fighting with the Internal Revenue Service regarding how many taxes need to be paid.

Federal Charitable Deduction Debate Continues

Published on: February 6, 2014 | by Ettinger Law Firm

In December we shared information on proposed changes at the federal level which might limit the tax-saving benefits of charitable deductions. President Obama previously suggested limiting certain charitable tax breaks for high earning individuals. This possible change was just one part of large ideas about re-writing significant portions of the U.S. tax code. Many are hoping to simplify the code in an effort to increase transparency.

The charitable deduction change proposal in particular drew the ire of many when first suggested. Now a large group of sitting U.S. Senators are adding their names to the effort to protect the charitable deduction status quo.

The Senate Letter

Clamor Continues Around State Estate Tax – Are Increased Exemptions Coming?

Published on: February 3, 2014 | by Ettinger Law Firm

The New York Times reported late last month on a growing trend across the country–discussions about lowering estate tax obligations on state residents. The estate tax is the bite the government takes out of an individual’s assets before they go to heirs. There are two layers of tax, at the federal and state level. Under current law, the federal tax kicks in on all assets over $5.34 million for individuals at a top rate of 40%.

But the federal tax is not the only concern of residents, because many individual states have their own tax, including New York. The New York tax starts far lower–at $1 million. This means that even those residents who have no concerns about the federal estate tax still must account for their obligation under state law.

Lower NY Estate Taxes

Understanding Social Security Benefits for Seniors

Published on: January 27, 2014 | by Ettinger Law Firm

The words “Social Security” remain synonymous with retirement benefits for seniors. Earlier generations grew up with the understanding that Social Security would provide an income net in their golden years, allowing a modest but safe retirement. However, the current generation does not have nearly the same picture of the system. Political debates are daily filled with arguments about the “impending” collapse of the system and the bare bones support given to those on the program.

For many New Yorkers, Social Security represents only a small part of their retirement plans. Still, considerations must be given in estate planning to when one should begin collecting Social Security. There are different options for taking early withdrawals, regular withdrawals, or delaying payments for potential benefit down the road.

In general, payouts range from 75% of “entitled benefit” for payments at age 62; 100% of benefits of age 66; and 132% of benefit at 70. Lawmakers are frequently discussing changes to this scheme, particularly in light of rising life expectancies, and so it is critical to be aware of the potential alterations down the road.

Do-It Yourself Estate Planning Problems: Transferring Real Estate

Published on: January 16, 2014 | by Ettinger Law Firm

There are some tasks where the “do-it-yourself” approach makes sense. This includes tightening a leaky pipe under the sink or changing the headlight bulb on your old car.

With those tasks, it is clear right away if your skills were up to the challenge and you did it correctly. If the sink still leaks or the light is still out, then you know that your efforts failed and you may need to call in a professional.

But there are some challenges where this “safety net” does not exist, and where do-it-yourself attempts can cause serious, irreparable harm. That is certainly the case with estate planning. Crafting a plan to transfer assets and save on taxes is delicate in that the only time when it will be used is at the very moment when it cannot be changed–after a passing. In other words, there are no “do overs” with estate planning, and so it is essential to have the aid of an experienced estate planning lawyer when making decisions about these issues.

Disorganization & IRA Inheritances

Published on: January 15, 2014 | by Ettinger Law Firm

Many New Yorkers invest a sizeable portion of theirs assets into IRAs–retirement accounts to fund their golden years after their work life is over. Of course, no one knows exactly what their future holds, and so it is common for IRAs to contain significant funds upon one’s passing. Deciding who will receive those assets is a critical part of estate planning.

Unfortunately, as discussed in a recent Forbes article, sloppy planning on that front, which leaves designated beneficiaries in the dark, may ultimately cost those beneficiaries their inheritances.

Make Your Wishes Known

Favorable New York Estate Tax Laws on the Horizon?

Published on: January 13, 2014 | by Ettinger Law Firm

New York State, known as one of the heavier tax-imposers in the country particularly when it comes to estate tax, may soon be more appealing to retirees. New York may be following on the heels of the federal government’s revamped estate tax codes, which raised exemption amounts to levels that effectively omitted the vast majority of individuals and families from an Uncle Sam estate tax hit. The New York State Tax Relief Commission issued a December 2013 report that proposes changes in 2014 to lower the highest estate tax rate and raise the exemption amount to the same levels as that imposed by the federal government.

The Potential for Major Estate Tax Relief

The federal government and seventeen states impose taxes on estates upon the death of the individual. Each exempts a certain amount of an estate’s net worth from these taxes, although these amounts differ state to state. Thanks to the passage of the American Taxpayer Relief Act of 2012, starting in 2013 the federal government began operating under new rules for estate taxes that significantly increased the exemption amount and provided that this value would be indexed each year for inflation.

Last Minute Gift? Cashing A $100,000 Check

Published on: January 8, 2014 | by Ettinger Law Firm

Estate planning disputes can arise in any situation and based on any number of facts. However, one situation where disagreement is far more likely to arise is when planning steps are taken, gifts are made, or other actions pursued while an individual is on their death-bed or known to be very sick. Naturally, observers are skeptical of these actions, because they are more likely to involve fraud, mistake, coercion or other means.

That does not mean that all death-bed actions are unenforceable. On the contrary, many Wills are and signed and trusts created at just this time specifically because one wishes to get their affairs in order near the end. However, because of the potential for abuse and the natural skepticism, estate cases frequently involve last minute actions.

Was It a Legitimate Gift?

Estate Lawsuit Reinstated Involving Claimed Executor Fraud

Published on: January 6, 2014 | by Ettinger Law Firm

Famed rock music promoter Bill Graham made his name as the organizer of popular music festivals and concerts. His events are credited for launching the careers of legendary groups like the Grateful Dead, Jefferson Airplane, the Eagles, and many others. Unfortunately, Graham’s life was cut short over twenty years ago, as he died in a helicopter crash in 1991.

In a testament to the longevity of many estate battles, just last week, a lawsuit involving Graham’s estate was revived by a federal court. The case is yet another reminder of the need to be very careful about all aspects of estate planning–from use of trusts to selection of executors–in order to give your family the best possible chance of handling these matters without conflict.

The Estate Battle

The Basics: The Importance of Living Trusts in Estate Planning

Published on: January 2, 2014 | by Ettinger Law Firm

An important element of estate planning is ensuring the financial security of your family after you are gone. Like most people, we have worked our lifetime to provide financial stability for not only ourselves but our loved ones. An easy, burden-less way of providing for your loved ones is through a living trust.

As outlined here, a living trust holds many advantages compared to a will. Establishing a trust is fairly easily. Upon creating the living trust agreement, you essentially transfer a portion, or all, of your assets to a trustee. To retain control of the assets, people sometimes name themselves as the trustee. A grantor must name beneficiaries to the trust who will inherit the trust upon your death. Establishing a living trust bank account will allow you to solidify your savings while also easing any financial burden on your beneficiaries. The provisions of the trust can always be changed, or if you have second thoughts the entire trust can be revoked.

A living trust provides three important factors. Firstly, living trusts avoid the probate process. At the time of the person’s death, the assets of the trust will pass directly to the named beneficiaries. Secondly, living trust provide privacy that wills cannot by avoiding probate. A last will and testament that has been admitted to probate becomes a public record that anyone can freely see and read. In contrast, a living trust agreement, the property, and the beneficiaries remain private. Lastly, a living trust avoids a will contest. A living trust goes into effect the moment it is created, and a contestant must prove the grantor was incompetent or under the influence at the time the trust instrument was signed and the assets were transferred. This is a very hard, possibly impossible, burden to overcome.