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New York Estate Planning & Elder Law Blog

Questions Remain About Huguette Clark’s $400 Million New York Estate Plan

Published on: November 28, 2011 | by Ettinger Law Firm

New York estate planning is a necessity for virtually all local residents, no matter where on the income scale one falls. Easing the emotional, social, and financial burden on one’s family and ensuring wishes are carried out upon one’s death is important if one has $400,000 or $400 million to pass on. Unfortunately, New York estate planning mistakes are made at all income levels, often with serious results for the individuals involved. The most common mistake includes not taking advantage of all of the legal tools available. For example, while wills are still commonly thought of as a basic estate planning necessity, in truth they are becoming obsolete for many families. Trusts are much more useful in that they can avoid probate and provide for substitute decision-making if disability strikes. Yet, many local residents, including those with vast fortunes, still fail to take advantage of the benefits that trusts bring.

One high-profile local example is that of Huguette Clark. The reclusive heir to her father’s copper and mining fortune died earlier this year at the age of 105. She was rumored to have more than $400 million at the time of her passing–an estate she inherited upon her father’s death over eighty five years ago in 1925. Ms. Clark had been a mysterious figure, having lived in a hospital room since the late 1980s. She left her Fifth Avenue apartment empty for over twenty two years even though she was in relatively good health until just before her passing. Ms. Clark was long estranged from her family, and only a very small and intimate group of advisors had any contact with her for the last quarter century.

Surprisingly, even though she had such a large estate, Ms. Clark’s advisors never had her create a trust to protect her long-term financial affairs. An article about her story published today by Forbes explains how most estate planning attorneys would have at least advised the client to utilize a revocable living trust, instead of a will. The need for a trust was made even more necessary considering the size of Ms. Clark’s wealth. In addition, there are questions about the terms of the will–drafted and signed when Ms. Clark was ninety eight years old. The will left most of the woman’s fortune to a newly created art fund and gave a significant amount to Ms. Clark’s long-time nurse. However, the will also named a partner in the very law firm that drafted the will as a beneficiary. Even if this was the exact intent of Ms. Clark, the potential conflict of interest issues would usually counsel the firm in question not to prepare the will. Many other questions remain surrounding her advisors spending over $100 million of her estate in the last two decades of her life.

Governor Cuomo Warns of Potential Effects of “Super Committee” Stalemate

Published on: November 23, 2011 | by Ettinger Law Firm

All those with an eye toward New York Medicaid planning have been closely following the actions of the federal “Super Committee.” This unique federal, bipartisan committee was charged with coming up with a long-term federal deficit reduction plan totaling $1.2 trillion over 10 years. Failure to reach an agreement on any plan will trigger automatic and deep cuts to a variety of federal funding areas, including Medicaid. Considering that New York Medicaid programs are funded jointly by the federal government and state government (including local governing bodies), the Super Committee’s decision (or lack of decision) may ultimately have significant impact on local program participants.

We now know that the Super Committee has reportedly not reached an agreement. This means that the triggered cuts will likely take effect, so long as national leaders don’t reach some other agreement. This presents a troublesome situation for all those who rely on these programs for basic services; though it remains unknown exactly what effect the potential cuts will have on local residents. In a pre-emptive move, New York Governor Andrew Cuomo sent a letter to the state’s congressional delegation last week urging them to do everything in their power to prevent blanket cuts that may do much more long-term fiscal harm than good.

In the letter, reprinted in the Times Union, the Governor reminded our state’s federal delegation that the Super Committee’s actions or the resulting automatic cuts will “have a direct and significant impact on the finances and economy of the state of New York.” Recognizing the long-term viability problems caused by our current federal debt, the Governor argued that progress can be made on the debt front without taking an axe to New York Medicaid and other programs that local citizens have come to rely on.

Governor Cuomo Declares November As New York Caregiver Recognition Month

Published on: November 21, 2011 | by Ettinger Law Firm

Last week the Director of the New York State Office for the Aging held the first-ever New York Caregiving and Respite Coalition Conference. Over 120 participants attended the event, which was meant to honor all those family members across the state who provide vital services to their friends and family members in need of New York elder care or disability assistance. Literally hundreds of millions of caregiving hours are provided every year in informal settings by community members who provide anything from around the clock help to periodic aid to seniors and disabled residents. As an AARP report last month revealed, the value of the senior care services provided free of charge dwarfs the total care provided by public bodies, usually via Medicaid. Specifically, the report found that New York coffers alone are saved $3.2 billion because of the work of these friends and family members.

Recognizing the sacrifices made by so many family members was at the heart of Governor Andrew Cuomo’s issuance of a proclamation declaring November as Caregiver Recognition Month. In making the statement at last week’s conference, the Governor explained of family caregivers that “their commitment, generosity and dedication make a profound difference in the lives of others and reflects the best of the Empire State.”

Our New York elder law attorneys know the impact that family caregivers have on the lives on their loved ones–and on the state’s entire elder care system. As the Governor explained in his address, the state estimates that more than 50% of senior New Yorkers would likely be placed in institutional settings without the aid of unpaid caregivers. These nursing homes and other special facilities are rarely the preferred living option of seniors who are almost always happier when they age in place, close to their loved ones.

Forbes Shares Information on Celebrity Estate Planning Stories

Published on: November 18, 2011 | by Ettinger Law Firm

Families across the country will come together to celebrate the Thanksgiving holiday next week. As a Forbes article recently explained, the holiday is a perfect time to discuss estate planning issues, because the planning is all about helping out one’s family. One of the main goals of an estate plan is to ensure that surviving family members will be taken care of and not forced to endure stressful, complicated, and costly procedures to get financial affairs in order following a death.

One way to broach the topic over Thanksgiving dinner, say the article authors, is to frame the talk in the context of high-profile celebrity stories. The article includes a list of the “Top 5 Celebrity-Based Estate Planning Conversation Starters.” Kim Kardashian’s story made the list to highlight the role that marriages have on one’s estate. The socialite ended her seventy two day marriage last month. Of course all marriages (short and long) have significant effects on one’s estate planning documents, and estate planning attorneys should be consulted when a marriage is entered into or ended. It is smart to make appropriate changes even before a divorce is finalized; otherwise the estranged spouse may still retain control if a death occurs before the separation is official.

The feud over Michael Jackson’s estate is also ripe with lessons. It was explained how the music pop star created a trust before he died and named his mother, three children, and personal charity as beneficiaries. Two trustees were named to help manage the trust. Our New York estate planning lawyers help clients in our community create these legal entities all the time. However, besides creating the trust, it is vital that the trust be “funded.” Funding is the process where assets are moved from an estate and into the trust. Failure to do this makes the trusts seemingly ineffective. That is where problems have arisen for the Jackson estate.

Authorities Often Act Too Late to Prevent Elder Financial Abuse

Published on: November 17, 2011 | by Ettinger Law Firm

The Bellingham Herald discussed an often overlooked but vital matter that is of serious concern to our New York elder law estate planning attorneys: elder financial exploitation. Our work helping local residents avoid the probate process, save taxes, and plan for disability, involves elements of trust and relationship-building. Yet, we understand that there are some criminals who are bent on building up trust with seniors only to use their position of influence for their own gain. These fraudulent actors can be found in various settings, from nursing homes and assisted living facilities to one’s own network of friends and family. All local seniors must remain alert to these dangers.

Prevention is particularly important with elder financial abuse, because after the crime is perpetrated there is often little that authorities can do to correct the harm. The Herald story discussed one senior who lost nearly $775,000 in a scheme in which he thought he was investing money only to learn that it was being stolen. The company in which he invested filed for bankruptcy and as was later described as a mere Ponzi scheme. The man leading the fraudulent enterprise was arrested, but the money taken from the senior victim was gone.

Some advocates are raising concerns about the tools available to authorities to help these victims, making it difficult to protect them before they suffer actual financial harm. For example, at the time the victim described in this story began dealing with the fraudulent investor, that investor was already the target of multiple ethics probes for misappropriation of client funds and had actually been charged with a crime. Yet nothing was done to stop the criminal from swindling others. One advocate explained that this case is far from unique. He noted, “It is a common complaint in fraud cases involving the elderly: prosecutors, social service agencies, and attorney regulators are often slow to act, and by the time they do, the damage is done.” Prosecutorial inexperience handling these cases is part of the problem. In addition, some claim that local police officials are not properly trained to handle these matters.

AARP Report Finds Expanding Costs of Family Elder Caregiving

Published on: November 15, 2011 | by Ettinger Law Firm

The AARP Public Policy Institute recently released a new report discussing the contributions that family members nationwide make to caring for their elderly family members. Recent news has focused on how local, state, and federal governments will handle the burdens of caring for an aging population. Yet, as this new report points out, the costs bore by family caregivers actually dwarfs that spent by these public bodies. It is a reminder that long-term care planning remains more than just a necessity for seniors but also for their entire family.

The size of the numbers is undeniable. Roughly 42 million family members are acting as caregivers for their senior loved ones at any point in time, with nearly 62 million providing at least some support throughout the year. In economic terms, these caregivers provide over $450 billion in annual, unpaid care. That total is up 20% from two years before ($375 billion). These totals include the contributions of millions of area residents who provide support for aging family members whose New York elder care planning went awry or whose plan was nonexistent. The financial estimates are actually conservative. They do not account for care given by those under the age of 18. They also do not include caregivers who provide assistance outside of basic daily living tasks, like help with bathing, dressing, managing medications, and aid with finances.

It is helpful to put these family-provided long-term elder care costs into context. The $450 billion annual sum is more than the total Medicaid spending, for both basic health and long-term support services. When looking only at Medicaid support for senior care, the costs bore by families is four times larger. Researchers believe that the $75 billion increase in the previous two years was primarily caused by an increase in the total number of caregivers and hours of care provided. In other words, the allotted value of the work ($11.16 per hour) remained constant over that period of time.

Estate Planning Documents Must Be Updated So They Work When You Need Them

Published on: November 9, 2011 | by Ettinger Law Firm

Yesterday the Kansas City Star published a story on the necessity of properly updating estate planning documents. The article shared the story of a local woman whose mother had just died. The mother had created a living trust several years before and placed her residence within the trust. However, a few years after the planning occurred, the mother sold her house and moved into a different home. She died shortly after the move. The adult daughter was left wondering whether or not probate would be required for her to obtain her mother’s home.

The daughter learned after talking to legal professionals in the area that the key issue was whether her mother had taken title to the new home in the name of her trust. If so, then the new home would likely be part of the mother’s living trust to be passed to the named beneficiary of the trust per its terms. However, if the new home was not titled in the trust’s name, then it likely would not pass on via the trust. Instead the public probate process would be required for the daughter to obtain the residence.

Of course the entire purpose of the mother creating a trust in this case was to avoid probate, save on taxes, and ensure that her family members would have as seamless a transfer process as possible in the inherently difficult time. By not taking her earlier planning into account when making future transactions or consulting her estate planning attorney to assure everything was in order, the mother risked having her plan fail to work as desired at the very moment it was needed.

An Estate Planning “Perfect Storm”

Published on: November 7, 2011 | by Ettinger Law Firm

Investment News published a story yesterday declaring that the current financial, political, and social climate made it a “perfect storm” for estate planning. It was explained how tax policy proposals, low interest rates, and a relatively weak economy make now a particularly worthwhile time for local families to take steps to plan for their long-term financial future. Our New York estate planning attorneys continue to help many local families do just that. As one observer explained in the article, “If individuals are trying to transition assets to the next generation, we currently have a perfect storm–in a good sense–to do it.”

Any time is a good idea to visit a professional and make future financial preparations. However, it may be particularly valuable to do so now, because planning strategies currently available might soon be gone. For one thing, large estate tax and gift tax exemptions now make it possible for individuals to transfer up to $5 million (or $10 million for couples) tax free. However, it is unlikely that the current tax scheme will remain–it is only a matter of what changes will be made and when. Observers have noted that estate rules have been changed 19 times in the last quarter century alone.

The current climate may present particularly attractive options encouraging some families to make major decisions to save on taxes and pass on assets. But many advocates explain that the tried and true planning tools that have long been available often remain the best way for many community members to accomplish their long-term estate planning goals. For example, while it may be favorable to give large gifts in the current environment, many families are uncomfortable making extremely large gifts. Instead, their goals may be best met by making smaller gifts under the $13,000 annual exemption amount. Those families can then save on estate taxes down the road by setting up trusts that distribute money more conservatively along the way.

Congressman Shares Information About Federal Attempt to Solve Long-Term Care Crisis

Published on: November 4, 2011 | by Ettinger Law Firm

On Wednesday Congressman Ted Deutch published an editorial in Politico advocating on behalf of a stalled federal initiative known as the Community Living Assistance Services and Supports Act (CLASS). The measure was hailed as the first federal attempt to address the nation’s long-term care crisis. All those in our area who have dealt with the complexities and expense of finding proper New York elder care are likely familiar with this crisis. CLASS was part of the high-profile Affordable Care Act that passed Congress, but CLASS was recently suspended by the President.

The Representative explained that CLASS was essentially a means by which middle class families could have a voluntary and affordable long-term care insurance option. An important part of the CLASS program that needed to be addressed was the idea of “adverse selection”–the notion that insurance would only be bought by those who already needed the care. Of course, the maximum benefit is derived only when individuals have this insurance plan in place ahead of time. The measure is currently stalled specifically because of concerns about adverse selection. Yet, many, including Representative Deutch, believe that federal officials have statutory power to implement anti-adverse-selection measures.

CLASS was pushed by those who understand the looming problem facing the long-term care system. Only five percent of Americans have long-term care insurance, even though seventy to seventy five percent of all Americans will need some form of long-term care. The gap is often replaced by federal programs, like Medicaid. The Congressman explained that the reliance on Medicaid is unsustainable at the federal level. This is in addition to the fact that qualifying for Medicaid often requires residents to spend themselves into poverty, especially when planning is absent. Fixing the problem before it gets worse was the motivation behind CLASS. The measure hopes to steer residents away from the most expensive institutionalized care to more balanced programs that encourage cost-effective and resident-focused community care. Besides the cost savings, these programs are almost always preferred by seniors, because they allow them to live at home, maximizing their freedom.

Reality Star Feuds with In-Laws in Estate Fight

Published on: November 3, 2011 | by Ettinger Law Firm

Last month Forbes discussed an estate feud that brewed followed the suicide death of a reality show star. Late this summer, the 47-year old star of “Real Housewives of Beverly Hills,” Russell Armstrong, took his own life. His wife, Taylor Armstrong, had filed for divorce shortly before the death. However, the divorce was not final at the time of Mr. Armstrong’s passing, meaning that per the rules of the state she was the next of kin. As such she maintained a certain level of control over his affairs–including his funeral and burial plans. Without instructions to the contrary in estate planning documents, even estranged spouses may maintain this control.

Making matters worse in this situation, it appears that Mrs. Armstrong never maintained a good relationship with her former husband’s family. As a result, she did not initially tell the family about the funeral, burial, or memorial plans. The man’s parents and siblings wanted his remains buried in his home state of Texas, but Mrs. Armstrong claimed that she wanted to bury him in Los Angeles. It remains unclear exactly how the ugly situation will be resolved.

Unfortunately, the burial dispute may be just the beginning. Depending on Mr. Armstrong’s estate planning documents, his estranged wife may still be entitled to inherit most of his assets. That is why it is important to seek out professional help in the middle of a divorce. Otherwise, there is no telling what might happen. As the article notes, “Fights over the estate of someone who passed away in the midst of a divorce are especially common.” Other recent high-profile examples include the deaths’ of Dennis Hopper and Gary Coleman.