New York Estate Planning & Elder Law Blog

Forbes posted earlier this month on the continued squabbles over the estate of civil rights pioneer Rosa Parks. Unfortunately, our New York estate planning attorneys appreciate that the higher the profile of the individual (and the more assets at stake), the more common an inheritance fight is to arise. That is true no matter who is involved, including a beloved icon like Rosa Parks.

This case is also a testament to the drawn-out nature of these disagreements. Parks died nearly seven years ago, in mid-October of 2005 at ninety-two years old. In 1998 she created a will and trust indicating that she wanted all her belongings given to a charitable endeavor she created. A close friend and judge were named executors, with the friend to receive 90% of subsequent royalties. Parks nieces and nephews were set to receive the remaining 10%.

The relatives contested the will and at one point the friend was removed as executor by the probate judge over claims of undue influence. Shortly before trial the parties were able to settle the matter, re-appointing the friend in her role as head of the charitable organization–the Rosa and Raymond Parks Institute for Self-Development.

The possibilities to tailor an estate plan to one’s exact specifications is virtually endless. That is perhaps most evident in the various ways that heir’s can be required to meet certain guidelines as part of a gift or inheritance. The Wall Street Journal dove into this idea last week with an article on “controlling heirs from the grave.” While that phrasing likely conjures images of busybody relatives, the basic concept of securing one’s wishes after death is entirely prudent

The story explains that many consider adding “strings” when passing on assets to others. The conditions can be placed both on inheritances and gifts given while still alive. Our New York City estate planning lawyers appreciate that many community members are strategically making sizable gifts this year in order to take advantage of favorable exemption levels and tax rates that are set to expire at the end of December.

One common concern about large gifts is the requirements that one give up control of the asset entirely–they are usually given as part of an irrevocable trust. Yet, it is important to realize that some strings can still be attached to those gifts. In general, gifts can be given with any requirement attached, even when the requirement seems silly–like demanding that family members spell their name a certain way. One of the most common provisions are “spendthrift clauses” which strive to protect a gift given to one who is known to have poor financial acumen.

Designating inheritances is not the only purpose of a New York estate plan. Some local residents may feel like there is no rush to have a plan in place, because they do not have many assets to pass on or have no particular wishes about their possessions. But inheritances are just a part of the planning. For one thing, all families with children–regardless of their net worth–need to have a plan in place to designate alternate caregivers for their children in the event of death or disability.

Naming an appropriate guardian is one of the most important preparatory steps that a parent can take to ensure their child’s well-being no matter what the future holds. If the parents do not make their wishes known in appropriate legal documents, then the decision is left to the court. While the court will work to make the best decision with the information in front of it, there is obviously no replacement for a parent’s choice.

In our area it is crucial to have a New York estate planning lawyer guide your family through this process. That is both to ensure the legal formalities are met and also to have an experienced third-party involved in the event of disagreement.

The financial world is a complex one. It is easy for local residents to get lost in the mire of special accounts and various loopholes to maximize their savings while protecting their hard-earned dollars. As always, the professional guidance of financial experts, estate planning attorneys, and others is usually the only foolproof way to ensure costly mistakes aren’t made. This also comes with the added benefit of having a trained set of eyes ensuring that one doesn’t fall for one of the many financial scams.

For example, the Wall Street Journal published a story late last month discussing the prevalence of Individual Retirement Account (IRA) scams. A growing number of states have opened investigations into fraud as a result of “self-directed IRAs. These special retirement accounts allow investors to use funds in a range of ways, including things like hedge funds and land purchases. The investments involved in these efforts are not publicly-traded which, officials advise, makes them far more susceptible to fraud.

For example, in one high profile case several defendants were accused of convincing individuals, mostly seniors, to roll their retirement accounts into these self-directed IRAs. Those doing so thought that the decision was a safe alternative to stocks or bonds. In this case, the investors were told that the money would be used to fund profitable small businesses.

Prenuptial agreements commonly make headlines as celebrities getting hitched try to protect their fortunes. But the focus on celebrities (or the ultra-rich) is misleading. In reality, average Americans should, and frequently do, make use of the benefits of prenuptial agreements. In our area, New York estate planning attorneys know that these agreements are an important part of one’s long-term planning, particularly in the event of late-in-life or second marriages. These agreements allow for an individual to prepare and protect themselves and their families. But the creation of these legal documents is not without some pitfalls.

The Basics

A prenuptial agreement is essentially a contract between two people planning to get married. They agree prior to marriage on how they will divide their assets if they are divorced and on any number of other issues. While this process can be emotional, especially because the couples are naturally optimistic and excited about their future, forming this agreement while everyone still cares for each other and wants the best for each other is always the preferred model. If the good feelings should disappear, this agreement allows a couple to separate as fairly and painlessly as possible.

An appraisal is an expert assessment of the value of a particular asset at a given time. Many factors involved in the appraisal of a property can easily distort its value–overvaluing or undervaluing it.

The IRS uses appraisals in the process of assessing property taxes, which requires the appeal of experts in the subject. As such, the IRS’s Art Appraisal Services’ (AAS) job consists of assessing the value of works of art for tax purposes. Our New York estate planning lawyers work with families who have valuable art collections and whose tax burden is significantly affected by these appraisal services.

A recent article in Accounting Today discusses the IRS’ need to improve its appraisal of the value of art and the Government Accountability Office (GAO) report on the matter.