manhattan estate planning

What Happens to Your IRA When You Pass Away?

Published on: March 20, 2017 | by Ettinger Law Firm

Unfortunately, traditional social security often doesn’t provide the means for seniors to live comfortably after they retire. The cost of living often rises quicker than adjustments can be made to social security allowances. There are many different types of retirement savings strategies to help supplement your retirement income so that you do not have to rely solely on social security. One such strategy is an Individual Retirement Account, or IRA, which is a type of retirement savings account where you can contribute funds for your own retirement. The two main types, traditional IRAs and Roth IRAs, differ in how they are taxed but offer the same basic benefit: supplemental retirement income. However, it is important to be aware of what happens to an IRA when the person who owns it passes away.

When the IRA Has a Valid Beneficiary

Typically, an IRA is a non-probate asset. That means that all you usually need to distribute an IRA upon death is a valid beneficiary form. In cases where a valid beneficiary form has been filed with the administrator of your IRA, then there is usually little issue ensuring that the IRA transfers to that beneficiary. In these cases, a beneficiary to an IRA that has not yet reached 70 ½ years of age can choose to withdraw the entire amount of the IRA within five years of the owner’s death. After a certain age, a beneficiary may have to make periodic withdrawals as the owner would have had to do, or they may choose to do this to stretch the funds within the IRA over a longer period. With a traditional IRA, the beneficiary withdrawing it will need to pay taxes on the amount of the IRA. Tax consequences of a Roth IRA can be different, and you should consult with an investment planner or estate planning attorney to find out more about rules governing their distribution.

When Equal Estate Distribution Isn’t Necessarily Fair

Published on: March 12, 2017 | by Ettinger Law Firm

There are many factors that can influence how we decide to distribute our assets to heirs after our death. Most of the time, a large portion of our estate is left to our closest family members, including a spouse and children. However, determining exactly what we leave to those family members can be challenging especially when we consider the many additional factors that can be important in this part of the process.

When Equal Isn’t Necessarily Fair

Many individuals seek to make the asset distribution process easier by simply dividing assets among their heirs equally. However, depending on the personal dynamics of your family, that may not be the wisest choice. The following example, adapted from a recent article from Forbes, helps highlight this type of situation.

Common Ways to Transfer Property After Death

Published on: March 1, 2017 | by Ettinger Law Firm

The estate planning process is individual and unique to each person that goes through it. There is no one-size-fits-all template that will work for everyone. There are various tax concerns to think about, familial relationships, and many other factors that influence how we decide to distribute our assets after we die. The process can be confusing, but an experienced New York estate planning attorney can help simplify it for you. However, assets transfer in four ways common for almost everyone.

Transfer Via Last Will and Testament

Most people are familiar with the concept of a Will. A Last Will and Testament is a written document that expresses your wishes as to how your assets should be distributed upon your death. While many assets simply require nominating a beneficiary, which is discussed below, other assets require you to specify how you wish your assets to be distributed upon your death. A Last Will and Testament generally only includes property that is individually owned and is subject to validation by New York’s Surrogate Court.

Are You Subject to the Estate and/or Gift Tax?

Published on: February 5, 2017 | by Ettinger Law Firm

Taxes are never fun, but when it comes to estate planning taxes are a major concern for most people. Understanding the different types of estate taxes is an important part of creating a comprehensive estate plan to distribute your assets after you are deceased. To help you understand more about the estate tax and gift taxes, which are two common types of taxes many people are subject to in estate planning, the following information provides a brief introduction as to what these taxes are and when they may come into play for you.

Estate Tax

The good news about the federal estate tax is that, according to the IRS, most simple estates do not require filing an estate tax return. This is because only estates for decedents dying in 2017 valued at $5,490,000 or more are subject to this tax. Generally, the estates exempt from this tax are adjusted for the annual rate of inflation, so the value of exempt estates can change from year to year. As a general rule, marital gifts – or those where an estate passes to a surviving spouse – are wholly exempt from the federal estate tax, which does not kick in until the estate passes down the line to a person’s heirs. For estates valued at or over the legally prescribed threshold for the federal estate tax that pass to heirs, the maximum effective tax rate is 40 percent. There are many steps involved in computing what qualifies as your taxable estate as well as deductions that may change the value of your estate which can be discussed with an experienced estate planning attorney to help you make choices about your assets that will ease the financial tax burden that could otherwise accompany the distribution of your assets.

Tax Identification Numbers For Trusts

Published on: December 3, 2016 | by Ettinger Law Firm

Trusts are common estate planning tools in which a person can transfer ownership of assets to the trust. While this person is alive, they retain control over the assets in their life. Upon their death, the assets are distributed to the beneficiaries named in the trust.

While the Person is Alive

A revocable trust uses the social security number of the person who created the trust. A revocable trust does not have to file its own tax return. All income is, instead reported in the same manner as any other income on the tax return of the trust creator. People who jointly own a revocable trust, such as a married couple, both hold the power to revoke the trust. This means that either person’s social security number can be used. Couples who file tax returns separately must be careful. The person who reports the income on their personal tax returns should be the same as the person whose social security number is used.

Back to Basics: How to Include Health Care in Your Estate Plan

Published on: October 24, 2016 | by Ettinger Law Firm

For people who reach age 65, the odds of needing long-term care benefits during their lifetime are nearly 70 percent. People are living longer and in turn needing care in their old age. On average men require 2.2 years worth of care and women require 3.7 years. Preparing for this level of care and any other type of medical care you may receive requires forethought and careful planning.

Appointing a Health Care Agent

We’ve previously discussed in this blog New York’s Family Health Care Decisions Act and the appointment of a patient’s family member or close friend to act as a surrogate decision maker for a patient who has become incapacitated. This act allows close relatives to make decisions even if the patient had never given them decision making power.

No One’s Favorite Inheritance

Published on: August 25, 2016 | by Ettinger Law Firm

Parents believe that leaving their children the family home is a great boon but experience shows that beneficiaries are not happy with the bequest.

For many people in the United States chances are that their house is their most valuable asset. It makes sense then for most parents to leave their most valuable asset to their children. But this common inheritance is only a blessing for a small few of beneficiaries and a burden on most others.

Not A Quick Sell

Back To Basics: Witnesses and Your Will

Published on: August 20, 2016 | by Ettinger Law Firm

It is common knowledge that in order for a New York will to be valid that there must be other people to witness you signing your will as well as putting down their own signatures on your will. Despite this knowledge though improper execution of the will is the most common reason that a will is found to be invalid.

Why Do I Need Witnesses At All?

Witnesses provide an important evidentiary function to the probate process. Witnesses to your signing can provide first-hand accounts of the execution of the will. If a will is ever contested, the witnesses can testify about the procedures that were followed when executing the will, the testamentary capacity of the testator as well as the mental capacity of the testator.

Determining Incapacity in New York

Published on: August 5, 2016 | by Ettinger Law Firm

Many people believe that estate planning is primarily a tool to minimize taxes by the state and ensure that your assets are passed on to the people you want them to go to. However, an important part of estate planning is ensuring that when you are incapacitated that your wishes will be respected and that you are taken care of when you cannot adequately express your wishes or provide for yourself. But how exactly is that decision made in New York? Who decides when you are incapacitated and when you will need someone else to make your decisions for you?

Your Living Will or Healthcare Directive Can Dictate The Terms of Your Incapacity

The best option for setting forth standards to decide when you are incapacitated is making sure that you are the one dictating the terms of your own incapacity. This can be accomplished through your living will, also known as a healthcare directive. Your living will traditionally acts to provide those making your healthcare decisions with your wishes as to how you would like to be treated in medical situations where you cannot give consent.

Family Feud Forever: Dr. King’s Family Squabbles Continue

Published on: June 19, 2016 | by Ettinger Law Firm

Dr. Martin Luther King Jr. left behind a legacy of peace and understanding, but he may have been surprised by the legacy that his estate is forging. Last Friday, a Fulton County Superior Court Judge declined to make a ruling in a dispute over two items left behind by Dr. Martin Luther King Jr, his Bible and his Nobel Peace Prize. Fox News reports that the case over these two items is likely to go to trial, with King’s estate, controlled by his two sons, against their sister, Bernice. This is only one of many lawsuits that have crept up in years past over the legacy of Dr. King.

Managing Estate Assets and Legacies

Dr. Martin Luther King Jr’s estate is not technically what many would consider an estate in the traditional sense. It is not a probate estate, with his assets being liquidated according to his will. Rather, Dr. King’s estate is the for-profit Martin Luther King Jr. Estate Inc. with his three surviving children being the sole shareholders and directors. As the sole shareholders and directors, his three children control Dr. King’s name, image, likeness and his possessions.