New York Estate Planning & Elder Law Blog

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.

Editorial on Presidential Medicaid Proposals

Published on: October 26, 2012 | by Ettinger Law Firm

In the back-and-forth of the presidential debates and the obviously skewed TV ads, it is hard for local seniors to make heads or tails of the different proposals that candidates have on the Medicare and Medicaid system. Millions of New Yorkers rely on the programs for their healthcare and long-term care needs. Nearly one in five New York seniors participates in the Medicaid program, as it funds 70% of all nursing home stays. It is natural for residents to be confused and downright worried about what changes may or may not be coming to the program.

Most concern focuses on potential changes that the challenger, Governor Mitt Romney, might make in the event that he is elected. Those concerns are likely amplified by Governor Romney’s choice of Congressman Paul Ryan as a running mate. Congressman Ryan previously focused much of his attention while in the U.S. House of Representatives on various sweeping financial changes, including alterations to the Medicare and Medicaid programs.

What are those possible changes and how will they affect local seniors? A recent editorial in City and State New York took a look at the Romney proposals and offered a critique of the long-term impact of the program proposals. It is critical to note that this particular editorial was crafted by a current Democratic Congressman who previously worked with President Obama. It remains important to collect as many perspectives as possible to get an idea of the real impact of these possible changes. However, the editorial does offer a helpful discussion of one perspective.

Help with the Financial Stresses of Having a Child with Special Needs

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

The New York Times published an interesting story last week discussing the “psychic toll” paid by families working to raise a child with special needs. The article attempts to delve into some of the more nuanced issues related to conducting special needs planning to take care of the finances and long-term care issues for these loved ones. The basic tasks–often including things like creating a special needs trust–are not necessarily confusing or complex. However, that doesn’t mean the planning is easy. That is because there are a plethora of mental and emotional challenges that go into this work.

The author explains, for example, that simply deciding on the appropriate living situation for a family member with special needs can be emotionally and spiritually taxing, regardless of the financial issues tied into the decision. Should the child live at home for as long as possible? Is it better for him or her to move into a group home? What happens if the child lives at home but is then forced to move out into unfamiliar territory after the parents pass away? These and many similar questions must be discussed thoroughly to ensure long-term financial plans best matcht the family’s wishes.

On top of that, the story explains how working through this issues must be done in such as way as to ensure other family dynamics are kept intact. Stress and disagreement associated with these challenges has led to many divorces or other family feuds. It is helpful to be aware of these risks and make decisions in a manner that does not destroy important relationships. One frightening and oft-repeated statistic is that 75% of couples with a special needs child ultimately get divorced. Many have challenged that accuracy of that statistic, but it is accepted that various strains are placed on a relationship when raising a child with these challenges. Couples must undoubtedly be proactive in their planning efforts so that the situation is as controlled as possible. Leaving things up to chance and simply taking every new crisis fresh is a recipe for relationship drama.

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.

Is “Prepaid” Life Insurance Becoming Popular?

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

Life insurance is an important piece of long-term financial security for local families. It is entirely reasonable for parents and family breadwinners to wish to provide some security to their loved ones in case the unthinkable happens. However, with money tight and uncertainty about financial security remaining, some are unsure about the benefits of life insurance. Those in the life insurance industry have argued recently that their market is shrinking and returns are dropping. To jump-start the industry, some are now turning to a new product to sell to more community members.

A recent story in “The Motley Fool” provides some context for the product that may or may not be a good fit for some local families. This unique insurance option is actually a prepaid life insurance policy. It has been called the “marvel of simplicity.” The product, spearheaded by a unique collaboration between MetLife and retail giant WalMart, is essentially a short-term one year life insurance policy that provides up to $25,000 in coverage. These are not huge sums, but the idea is to open the insurance up to a much larger market. MetLife likely sought out the arrangment so that they could tap into Walmart’s large consumer base while saving costs of middlemen broker fees.

Interstingly, this approach is not the first of its kind. In the past Canadian insurer Manulife offered life insurance products through the U.S.-based big retailer Costco. In addition, in the past Walmart has sold customer various financial products, even including things like mortgages.

Court Rules Woman Must Give Up Kafka Papers She Inherited

Published on: October 18, 2012 | by Ettinger Law Firm

The New York Times published an fascinating story this week on a foreign court ruling that is a testament to the way that estate wishes sometimes have ripples effects for decades and generations into the future. Of course, it is critical to note that the legal rules underlying this case are far different than what a New York court might determine. However, the principles of needing to think about estate plans and personal property distribution for many years into the future still holds.

The Kakfa Papers Inheritance

Franz Kakfka, the well-known and incrediby influential author of the early 20th century, wrote a number of books, short stories, and letters in his shortened life. One of Kakfa’s closest friends (and the executor of his estate) was the journalist Max Brod. Kafka died in 1924. When Mr. Brod fled from Europe in 1939 ( to avoid the Nazi invasion) he took with him a suitcase full of Kakfa papers. Mr. Brod died in 1968, leaving behind his own and Mr. Kafka’s papers as an inheritance to his secretary, Esther Hoffe. Ms. Hoffe lived in Tel Aviv where she kept the incredibly valuable documents. In 1988 Ms. Hoffe sold the manuscript for a Kafka story, “The Trial” for $2 million. However, scholars have not been able to view the rest of the materials since the 1980s.

Deal Reached in Museum vs. Estate Feud

Published on: October 17, 2012 | by Ettinger Law Firm

Unfortunately, there is a tendancy to assume that so long as end-of-life affairs are reasonably spelled out, then everything will go as planned. The reality is that when making estate plans it is usually best to reiterate Murphy’s Law: “Everything that can go wrong, will go wrong.” It is only with that comprehensive planning, taking into account all possible scenarios, that true peace of mind is afforded. This need to be clear about taking into account all contingencies is even more prudent when larger estate are invovled. That is because money often brings out that most aggressive side of others. Even wishes that seem straight-forward might be complicated in the heat of a feud involving money or valuable proeprty.

The Kevorkian Example

Take, for example, a recent story on the estate of controversial doctor Jack Kevorkian. Shortly before the assisted-suicide proponent was to serve his stint in federal prison, he loaned at least 17 paintings to a museum. He ended up serving eight years before being paroled in 2007. He died about three years later at age 83. The executor of Kevorkian’s estate explained that it was his wish for the paintings to be returned to his estate and used to supplement the inheritance for his neice.

Elder Caregiving By Family Members

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

The acting commissioner of the Dutchess County Department of Services for Aging, Veterans and Youth penned an article this week on the toll that elder caregiving takes on family members throughout the state. The purpose of the piece was two-fold: to recognize the amazing work done by so many local residents and to remind community members of the immense benefit of planning for the elder care they will likely need down the road.

The article, published in the Poughkeepsie Journal this week, refers to the recent AARP study which found that a staggering 42% of working-age U.S. citizens provided some form of unpaid elder care, with half of all citizens expecting to do that in the coming five years. In other words, this is not an isolated concern that affects “other people.” All of us, at one time or another, will have to deal with this situation.

Sadly, as noted in the AARP Report, the effect of providing this care (averaging 20 hours per week) is often more far-reaching than many suspect. It is not uncommon for elder caregivers to face limited work flexibility, denied leave, or even termination from their own paid job as a result of the care they are providing to their senior friend or family member. All of this is on top of data which suggests that senior caregivers has negative health consequences of their own. A MET Life study on the issue found that poor health was more common among those helping senior in poor health themselves.

Court Battle Set to Begin in $300 Million Fight over Huguette Clark Estate

Published on: October 10, 2012 | by Ettinger Law Firm

Mystery permanently surrounded the heiress Huguette Clark–a reclusive woman whose $300 million estate is often referred to as the last collection of wealth drawn from the American “Gilded Age.” Her father was a copper magnante many decades ago and was also a former senator from Montana. He is well known as the founder of the city of Las Vegas. Huguette inherited the fortune upon his (and her mother’s) passing. However, she never sought business or public notoriety like her father. Instead, she was intimately private. In fact, she reportedly spent the last twenty years of her life inside a New York City hospital–even when she was healthy enough to live on her own.

Huguette eventually passed away in May of last year. As often happens in cases of great wealth–particularly when there is much mystery surrounding one’s life–various fights ensued over control of the fortune.

A trial in the case is set to begin soon, according to a recent NBC report on the case.

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?