Trusts

Estate Planning, Values, & Spirituality

Published on: November 21, 2012 | by Ettinger Law Firm

A perennial hot-button topic in estate planning and the creation of inheritance documents involves the passing on of personal values. Of course, the majority of work related to estate plans invovles physical assets: who gets the house, the bank accounts, the stocks, the insurance, the family china, and more. Making these allocations efficiently and saving on taxes are the hallmarks of these preparations. But our team often discusses the other aspects of estate planning, including setting in place material that ensures one leaves a legacy for those they are leaving behind.

This often includes spiritual issues but can just as well include secular notions like hard work, the importance of charity, and other values.

But how are these issues woven into an estate plan?

Hurricane Sandy, Pets, & Planning

Published on: November 19, 2012 | by Ettinger Law Firm

Many lessons can be taken from the beating that our state took in recent weeks as a result of Hurricane Sandy, not least of which is the resiliency of New Yorkers. However, as we piece things back together, some advocates are reminding community members of one overlooked victim of lack of preparation: pets. A story from Today discussed how many families were forced to make tough choices about their pet, partiularly when they had to evacuate or seek other shelter that did not allow animals.

Of course, there were no easy answers, but in all cases it was a reminder of the need to have some preparations in place ahead of time so that beloved animals are taken care of no matter what the circumstances. While few expect severe weather patterns to disrupt the care of an animal, there are some events which we all must plan for: death and disability.

The article points to statistics from the American Society for the Prevention of Cruelty to Animals (ASPCA) that nearly 100,000 pets are forced into shelters each and every year as a result of guardians who pass away or become disabled without planning for their care. The future for those animals is unclear. Resources are incredibly tight, and so, depending on where the animal is taken, their long-term prospects are varied. It is truly a tragic sitaution that affects far too many pets that were devoted companions to their owners throughout their lives.

Forbes Estate Tax Article Catches Fire on Social Media

Published on: November 15, 2012 | by Ettinger Law Firm

The popularity of social media sites has led to an outburst in use of the word “viral.” “Viral” videos and articles are frequently pointed to as a product of the mega-popularity of sites like Facebook and Twitter. This just refers to stories and movies/clips that spread very quickly from person to person over these channels.

It isn’t very often that any story related to estate planning in any way “goes viral.” However, this week one story in Forbes on the estate tax was shared, re-tweeted, and “liked” far more than anything else on the topic. In the world of financial planning and long-term legal preparation it is fair to say that this artcle went viral. You can take a look at the story here.

The issue discussed in the article is one that we have frequently touched on–the likely changes to the estate tax starting January 1st. The summary is that while over $5 million can be used on gift and estate tax exemptions per individual this year (double that for married couples), the exemption will likely drop to $1 million on the first of the year. In other words, large chunks of assets can be given without any tax implications right now, but hundreds of thousands (or even millions) might be lost in taxes if that transfer does not occur until 2013.

Charitable Giving Tips: What to Consider

Published on: November 2, 2012 | by Ettinger Law Firm

Charitable giving is a critical part of many estate plans and not just for the super-wealthy. Many New Yorkers have worked hard their entire lives to ensure the financial well-being of their families. Besides passing on assets to loved ones, many local residents consider it an incredibly important testament to their values to share some wealth with charitable organziations that they hold dear. That does not have to mean donating enough money to have your name placed on the side of a new building. Instead, it often simply means providing a concrete indication of one’s commitment to having a goal beyond oneself and the merit of giving back to others.

However, it is important to be educated about some pitfalls in charitable giving and the ways to make the donations prudently. For example, a brief article from The Hill this month provided a helpful “Do and Don’t” list with regard to charitable donations. The issues shared in the story are worthwhile for donations made at any point in the year as well as long-term gifts like those crafted into estate plans. The underlying theme of the article is a basic checklist of tips to ensure the money you give actually acts to help the individuals that you hope it will and will be used in the manner you desire.

The story points to a list of “charity watchdog” groups that offer comprehensive analysis and recommendations to ensure that your donation is used as efficiently as possible. Those websites include: Charity Navigator, GuideStar, CharityWatch and The American Institute of Philanthropy.

Business Finally Reopens After Bitter Estate Dispute

Published on: October 29, 2012 | by Ettinger Law Firm

It is an all-too-common problem: A family business is decimated following a patriarch’s death because of feuding and fighting between family members over the estate. Preventing family feuds and ensuring seamless transfers of assets is the centerpiece of all estate planning efforts. But that need is paramount when certain issues are at play–such as a family business. It is important to remember that this planning invovles much more than just creating a will. Instead, long-term thinking is needed which looks not just as who should inherit certain pieces of property immediately, but instead considers how the business might look decades into the future. Thinking only about who will receive the assets immediately upon a death can lead to mistakes, particuarly because once those assets are transfered, the new owner can do whatever he or she likes with them.

The dangers of thinking too provincially on these issues are demonstrated in a high-proifile family estate planning feud that raged over the past few years. The Journal-Sentinel reported on the fighting surrouding the assets once own by David Derzon–the founder of a well-known coin and collectibles business. Mr. Derzon died in 2008, leaving all of his assets to his second wife (who he had been married to for 30 years). Mrs. Derzon ultimately died 8 months after her husband. However, within that 8 month time-frame Mrs. Derzon apparently drafted a new will which cut out Mr. Derzon’s own two sons and entirely removed the family fortunate from the Derzon name. Instead, the new will provides mostly for Mrs. Derzon’s half sister. This is surprising, considering that the half-sister admits to not seeing her sibling for decades at at time before befriending her again only shortly before her death.

As expected, this led to a protracted legal battle with upwards of $3 million at stake–including ownership of the business itself.

Less Than 90 Days Left Before “Estate Tax Time Bomb”

Published on: October 22, 2012 | by Ettinger Law Firm

Concerns are rising among many in the financial and estate planning fields as the year winds down without any more clarity on the future of the estate tax. A recent post from Advisor One, for example, explained that the shrinking 2012 calendar means that there are less than three months until the “ticking estate tax time bomb” explodes.

Here’s the reality: without Congressional action, on January 1, 2013 the current $5.13 million exemption level will drop to $1 million and the current 35% top tax rate will increase to 55%. In other words, many more families will face an inheritance tax and the bite will be much stronger than in the past. While it may seem like any time is a good time for estate planning (that is true), it is undeniable that taking proactive steps in the next few months to plan for possible estate tax changes may prove incredibly beneficial down the road.

As the Advisor One post explains, that need to plan is critical because changes are undoubtedly coming no matter who wins the elections next month. Each Presidential candidate has very different ideas about the estate tax. On top of that, of course, a President cannot make changes to these laws on their own. The final partisan make-up of both the U.S. House of Representatives and the Senate will play into any ultimate resolution. In addition, it is not just exemption levels and tax rates that are at issue. Different policymakers also have different ideas about what assets are or are not included in the “gross estate” which determines the amount to be taxed. For example, the President has suggested that he supports including certain assets held in grantor trusts in the estates.

Creating a Trust & Funding It Are Different

Published on: October 9, 2012 | by Ettinger Law Firm

Failing to use a living trust as part of one’s estate planning is one of the most common mistakes that local residents make. Relying solely on a will or (even worse) the intestate rules of succession, means that a family is forced to endure complex, stressful, and conflict-inducing hoops to pass on assets and otherwise handle end of life affairs. Trusts are far superior methods of ensuring one’s wishes are carried out in as direct a manner as possible.

However, as a Yuma Sun article this week reminded, creating the trust is only half the battle–it must also be funded.

What does it mean to fund a trust?

Keeping an Eye on Upcoming Supreme Court Cases

Published on: September 27, 2012 | by Ettinger Law Firm

Late September is well-known as the official start of autumn. In the legal world, it also marks the beginning of the new United States Supreme Court term. Many legal observers keep close watch of court actions at this time to figure out what major issues might be decided in the upcoming year. That is because the Court is currently deciding exactly what cases to take for the upcoming term (which begins in October). Thousands of appeals are filed, but only a small fraction will actually be accepted. In many ways it is much harder to get a legal case heard than it is to actually win the case in front of the Court.

Some cases that the high court might hear this year could have implications on elder law or estate planning issues. The most high-profile of these related to same-sex marriage. There are two separate cases that the Court might take, both which would have different effects on the rights of same-sex couples–and their planning.

1) Constitutionality of DOMA: The Defense of Marriage Act (DOMA) has long been a bane for same-sex couples seeking equality in their planning. The law defines marriage as only between a man and a woman for federal purposes. That means that even couples legally married in their state, like New York, receive no federal recognition of their union. Appeals Courts have consistently found DOMA unconstitutional. The law continues to force same-sex couples to work around their lack of recognition of their union in estate planning and long-term care strategizing.

Death & Student Loan Obligations

Published on: September 24, 2012 | by Ettinger Law Firm

Not many years ago student loans and estate planning were rarely discussed in the same sentence. That is because in decades past far fewer individuals took out student loans and, even when they did, the size of the loans were smaller. Things are changing, however. Higher education is becoming more and more crucial to long-term employment and the cost of that education is increasing. These changes mean that more individuals have to take student loan obligations into account when conducting long-term financial planning. Those loans may the planner’s own loans or (even more likely) loans for children on which they co-signed.

In any event, more and more families have to take these issues into account in long-term planning. One issue on which there is much confusion is the discharge (or lack of discharge) of these obligations upon death.

Student Loan Obligations & Death

Fundamentals of Estate Planning: Naming a Trustee

Published on: September 12, 2012 | by Ettinger Law Firm

A trust is the central legal tool used to provide the flexibility and protection most residents use when planning for their long term financial, inheritance, and health care needs. There are many different types of trusts which provide different benefits to residents; each type comes with its own rules. However, one common theme is that the when creating a trust a trustee must be named. Deciding upon the right trustee in your case is crucial to ensure that things proceed as you intend when you are gone.

The exact role of a trustee varies, depending on the long-term plans of the individual who creates the trust. Yet, in general the trustee will manage the assets and make distributions from it according to predetermined rules and wishes. Some trusts will last for decades, and so the choice can truly can set the course for one’s long-term legacy.

A Wall Street Journal post this week touched on the importance of the trustee selection topic, and provided a list of key factors that should influence the final decision, including: