manhattan estate planning

What’s In a Name? Publicity Rights of Deceased Celebrities

Published on: June 13, 2016 | by Ettinger Law Firm

What’s In a Name Depends on Who You Are. It Could Be Hundreds of Millions According to the IRS

There has been an ongoing battle in recent years between decedents’ estates and the Internal Revenue Service (IRS). While it is only to be expected that the IRS attempt to collect as much as it can, their recent focus has turned to a rather contentious area in their quest for collections: intangibles. This category that includes property interests like computer software, patents, copyrights, publicity rights and literary, musical and artistic compositions can be difficult to put a price.

Most recently, the estate of former singer Whitney Houston has been fighting off an inexplicable valuation of Ms. Houston’s publicity rights, according to The Hollywood Reporter. Ms. Houston’s estate is just one of many in recent years, most notably, Michael Jackson, who are embroiled in heated tax claims over the valuation of certain assets, most contentiously the valuation of the celebrity’s public image. How exactly does the IRS come to the conclusion of the worth of the decedent’s image, and why are valuations of this intangible so hard to get right?

AMERICAN BANKERS ASSOCIATION – SAFE BANKING FOR SENIORS

Published on: May 16, 2016 | by Ettinger Law Firm

LARGE NEED TO REDUCE AND PREVENT FINANCIAL EXPLOITATION

The American Bankers Association is looking to serve a large market that is only getting larger by the day. At the same time, they are working to shore up the larger financial markets in a larger effort to prevent financial fraud perpetrated against seniors. As one banker noted during a speech on the topic, the banking community responded to the need to protect those with diminished ability to discern the difference between a real deal being sold by a legitimate vendor and a scam by predators. In February, 2016 it launched the Safe Banking for Seniors program, with various state bankers association across the nation rolling out their own version modeled on the American Bankers Association.

As of the inception of the program, 30 states joined in to help usher in the program. The New York Bankers Association is not one of the 30 states and does not currently such a program. Nevertheless, it is gaining popularity across the nation and many states bankers associations are seeing the utility and popularity of such a program. Furthermore, the program is not restricted to states bankers associations, individual banks, regional banks and bank chains can join in the program. As the American Bankers Association notes, 30% of the population of the country will be 60 or older by 2025. The Consumer Finance Protection Bureau and the American Bankers Association both note that $2.9 billion per year is lost to fraud perpetrated against elder Americans. Some estimates are as high as $36 billion per year, with only one in 43 cases of financial fraud against an elderly American properly documented and reported. The primary program is designed for banks and bankers associations, which will in turn filter down to individual elderly bank customers.

CREDITORS OF AN ESTATE

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

ORDER OF PAYMENT

It should not be a surprise to anyone that when someone passes away, their estate must pay for all legally binding outstanding debt owed by the decedent just prior to passing. New York as well as just about every other jurisdiction has laws that address how the estate puts creditors on notice that they must file a claim, but how the creditor must go about making a claim and getting paid from the estate. As in other areas of the law, there is an order and priority to the claims that can be paid. The administrator has a fiduciary obligation to the heirs to distribute the estate to the terms of the will. That fiduciary obligation also extends to creditors of the estate. The payment of expenses, ensuring that all disbursements are properly documented and all taxes and fees are paid are core responsibilities of the estate administrator.

To do this, the estate administrator must first understand what assets the deceased owned, the value of those assets, which in and of itself costs money. When an estate is insolvent, the creditors will surely examine every expenditure by the administrator to determine if they acted appropriately. On the other side of the ledger, the administrator must determine if the claims are valid or overpriced and inflated. The estate administrator has an obligation to dispute all claims, except properly owed, legally enforceable obligations. Since the final accounting by the estate administrator presupposes that all parties are already involved in litigation and there is a Court already scrutinizing all credits and debits, the likelihood that a party will enforce their rights, or, more specifically, object to the final accounting, is all the much greater. The balancing act that the estate administrator must engage in can be a complicated endeavor.

WILL DOES NOT REVOKE PREVIOUS TRANSFER OF PROPERTY TO TRUST

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

BEST LAID PLANS DO NOT ALWAYS WORK OUT

A case with an interesting factual background came out of Texas recently. While it was based on Texas law and the case is binding in only Texas, the legal principles discussed by the Court are equally applicable to New York or any other jurisdiction for that matter. More importantly, the set of events that gave rise to the case could happen anywhere. It just so happened that it occured in Texas rather than New York or somewhere else. The Texas Court of Appeals case of Gordon v. Gordon revolved around a trust that took ownership of a specific peace of real estate property and how that transaction related to a will signed subsequent to the trust. More specifically, the Court determined that the act of creating and endorsing a will by the testator subsequent to the transfer of the real estate did not overturn or cancel the previous transfer of the real estate to the trust. The will, however, contained language that by endorsing the will, the testator supersedes all previous transactions indicated in the trust documents, such as annuities or certificates of deposit. It never mentioned the real estate.

In 2009 (Mother) Beverly Gordon and (Father) Patrick Gordon executed a trust document which they funded with personal property and real estate. The very terms of the trust indicated that the trust could only be revoked by either Father or Mother and only by following the specific set of instructions laid out in the trust document, namely by signing and delivering a letter to the trustee. The letter had to indicate that they individually or jointly are going to cancel or revoke the trust. The trust further provided that upon the death of either of them the trust become irrevocable. They funded the trust with personal property and real estate. Soon thereafter, their son John sought to reduce the risk of an estate battle by creating a will that specifically stated that the parties want to cancel the terms of the trust. Neither Mr. Gordon nor Mrs. Gordon did anything to transfer their personal property or real estate out of the trust. Moreover, John did not act to convince his parents to move the property out of the trust. Mr. Gordon passed away within a year of signing the new will.

HOW TO ASSURE AN ESTATE BATTLE

Published on: April 11, 2016 | by Ettinger Law Firm

HUGUETTE CLARK AS EXEMPLAR

The last member of the gilded age passed away just a few years ago. Huguette Clark’s life, in some ways, seems to mirror the classic Orson Welles classic

One of the first things that she did to insure an estate battle was to pass the entirety of her estate via a will. While the larger family itself may have created various trusts for family members to pass on the overwhelming wealth, Ms. Clark herself chose to pass her wealth via a will. While it is alleged that Ms. Clark’s attorney and accountant had something to do with these limited and financially irresponsible decisions, Ms. Clark did not create a trust to ensure the passage of her large and very valuable art collection to charity, which included a painting by Monet, valued at at least $25 million as well as a Picasso worth over $31 million.

ABC TRUST PLANNING – WILL IT BE A BURDEN?

Published on: March 16, 2016 | by Ettinger Law Firm

NEW LAWS MEANS NEW RISK AND LEGAL OBLIGATIONS

President Obama signed into law the American Taxpayer Relief Act on January 2, 2013 which permanently raised the estate tax exemption and added an inflation index, such that it rises every year to account for inflation. Better still, the same law allows for spousal portability of estate tax exemptions, which this blog recently examined . The amount for 2016 is $5.45 million per person, $10.9 million per couple. This is a significant change from just 2008 when it was $2 million dollars and even as low as $675,000 in 2001 and $1 million in 2003 which was not that high considering that most people pay off their mortgage and probably have substantial retirement assets by the time they of retirement age.

For those amongst us who continue to work because that is part of their identity and not out of necessity, the $1 million threshold could easily be met. With the much larger $5.45 million exemption, less than .3 percent of estates in this country will met that threshold. So for all of those couples and individuals who planned on the much lower threshold your plans were likely well designed, but only under the then lower tax exemption. Now, with the much higher threshold and spousal portability, it is best to reexamine these estate planning documents. If one of the previous tools that you employed to insure lower tax liability was the AB trust also known as a bypass trust or even a family trust, it is likely that this will no longer serve you, your spouse, your estate or your heirs. Very briefly, depending on the size of your estate, it may no longer provide as great of tax relief as it once did and may unduly restrict your spouse by limiting their income, increase accounting costs, impose unneeded legal filing and generally complicate their life with other unforeseen complications that no longer serve their purpose.

IRS ART ADVISORY PANEL

Published on: March 14, 2016 | by Ettinger Law Firm

GOVERNMENT HAS BEST AT HAND – FOR FREE

Whenever a taxpayer submits tax documents that deal with a work of art or of cultural significance that is valued at least $50,000, according to the taxpayer’s own estimate, the IRS goes through a process by which it independently evaluates the items. The IRS has on hand the very best of the best when it evaluates art and cultural items. More specifically, it has the Art Advisory Panel of the Commissioner of Internal Revenue, which is composed of the very best of the best when it comes to art evaluation. Better still, at least from the perspective of the IRS, they are volunteers and only reimbursed for travel and related costs.

It is relatively easy to understand that they would evaluate paintings, such as Degas, Monet and Van Gogh or photographs from the likes of Matthew Brady, Edward Curtis or Dorothea Lange. But things such as collections of samurai swords, vases and other decorative items from Tang era China, and even doll collections also are considered. The panel may not have a very important sounding name, but they do wield considerable influence over particular tax cases. Any time a work of art worth more than $50,000 changes hand, is donated to charity or gifted, the government wants to know the true value of the property.

WHAT HAPPENS IF MY HEIRS OR BENEFICIARIES PASS AWAY AT THE SAME TIME AS ME?

Published on: March 4, 2016 | by Ettinger Law Firm

MODERN PROBLEM WITH ANCIENT ROOTS

New York is one of approximately 19 states, along with the District of Columbia and the Virgin Islands to specifically adopt the Uniform Simultaneous Death Act in some significant form or another. The law was drafted in 1940 and amended through the decades, last time in 1993. It was written by the Uniform Law Commission in an effort to provide uniformity and the accompanying benefits that uniformity provide across the 50 plus jurisdictions that exist in these United States. Of course each state is free to adopt the uniform act in its entirety, part of the law or just use it as a template to base a similar but different law on it.

New York adopted the Uniform Simultaneous Death Act, at least in part, early on in the early 1940s. By 1944 at least 24 states and the then Territory of Hawaii also adopted the Uniform Simultaneous Death Act. It was designed in large part to address the issue of when two or more people pass away in a common disaster, with no meaningful difference in the order of death. For example, if both father and son or husband and wife both pass away in a tragic automobile accident. Such tragedies were much more commonplace in previous decades with the rapid and significant increase in medical technology. Not surprisingly reports of how the law was resolve such legal technicalities goes back centuries, to at least 1784. Even ancient Roman law had presumptions in place to deal with such tragedies.

INHERITING A ROTH IRA ACCOUNT

Published on: February 17, 2016 | by Ettinger Law Firm

ROTH IRA ACCOUNTS ARE FUNDAMENTALLY DIFFERENT

This blog explored the topic of inheriting an individual retirement account (IRA) in a previous blog. It is necessary to explore the topic of inheriting a Roth IRA, as a Roth IRA is fundamentally different from a traditional IRA. Some of the differences between a Roth IRA and a traditional IRA:

Taxing event – The money going into a Roth IRA is taxed prior to going into the account, while a traditional IRA is generally deposited as pre-taxed income and only taxed after withdrawal from the IRA.

LET GO OF MY INHERITANCE – INTERFERENCE WITH AN EXPECTANCY

Published on: January 6, 2016 | by Ettinger Law Firm

WRONGFUL INTERFERENCE WITH WILL

It is known by many different names, depending on the state and the era. Most recently it made its appearance in news headlines with the name – intentional interference with expected inheritance, sometimes even shortened it IIEI. The United States Supreme Court referred to it as “a widely recognized” cause of action and as the “tort of interference with a gift or inheritance” in the Anna Nicole Smith case. Marshall v. Marshall, 547 U.S. 293, 296 (2006). The matter has surfaced in the news over at least the last century, most famously (perhaps infamously) in the Father Divine case in New York, in 1949. Latham v. Father Divine, 299 N.Y. 22 (1949).

The American Law Institute published the The Restatement of Torts (Second) of Torts in 1979. That was the first time that the tort, known by many names, was formally recognized as such. Prior to this, the principal and concept was recognized but only in the most egregious of circumstances. There are several seminal cases that speak to the larger concept, one of which was the New York case dealing with Father Divine case noted above.