nyc estate planning

HOW TO WRAP UP THE AFFAIRS OF A SPECIAL NEEDS TRUST?

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

TRUST SETTLOR GIVES UP CONTROL

When a settlor creates a trust, he/she passes title of the property or asset to the trust or gives cash money to the trust, wherein the trustee invests the money as a fiduciary or manages the asset or asset in issue for the best interest of the trust beneficiary. It is true that in some circumstances the settlor, or the person who created the trust and most likely provided the seed capital, asset(s) or property for the trust, is or can be the trustee. The settlor is also known as the grantor, trustor or even donor; the terms can be used interchangeably. Often enough also, the settlor may not give up complete control of the money, asset(s) or property that he/she otherwise gives to the trust, for the trustee to manage, by, for example, providing for a life estate of the property in the settlor or his/her spouse.

There are a great many types of trusts that are permitted with a great variety of factual scenarios imaginable. For some special needs trusts, however, the trustee must receive assets, properties or monies from a third source, for the sole use by the beneficiary. Many rules apply for the funding and ongoing management of a special needs trust in order for the trust to maintain its privileged position, being excluded from the assets of the beneficiary for government benefits qualification. This blog has already discussed the various elements of special needs blogs, here, here and here. It is important to note that there are important restrictions on trusts, such as what the distribution of the funds can be used on as well the method and manner of initial funding and ongoing funding of the trust. The question should also be asked, how does a trustee wrap up the affairs of a special needs trust? What if the beneficiary uses up all of the funds? Is legally unable to recieve the funds? For any number of reasons. What if the beneficiary passes away and there are still funds in the trust? What then?

UNDERSTANDING CELEBRITY BONDS

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

DAVID BOWIE BONDS

As the world learned, David Bowie passed away on January 10, 2016. Mr. Bowie was always on the leading edge of creativity, an advocate for meaningful social change and a musical genius to boot. He started his musical career at the same time as the Beatles, Rolling Stones and the Who and remained just as socially relevant, if not more so, compared to his contemporaries. As well as being a singer and songwriter, Mr. Bowie was also an accomplished actor and painter. More pertinent to the topic of estate planning, Mr. Bowie was a trailblazer in financial or investment products. In 1997, Mr. Bowie issued Bowie bonds, the first of any celebrity bonds. Since their initial offering, many credit agencies downgraded Bowie bonds status to just one level above junk bond status. True to form, Mr. Bowie was a first, with many other talented artists following suit.

BACKGROUND TO MR. BOWIE’S FORTUNE

ARBITRATION CLAUSES IN WILL OR TRUST

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

NEW YORK RULE ON ARBITRATION FOR PROBATE DISPUTES

The idea of using quasijudicial means to settle disputes is as old as the country itself. More specifically arbitration is a method that parties utilize that is usually cheaper, quicker and often with much less formality, yet still adheres to principles of fundamental fairness. George Washington famously included a proviso in his will that outlined a method to arbitrate certain disputes in the execution of his will. Certainly this was no minor matter, as President Washington was perhaps the wealthiest landowner in Virginia and by extension maybe the wealthiest American at the time.

In today’s dollars, President Washington would be worth an estimated half a billion dollars, succeeded by perhaps only President John F. Kennedy’s wealth. By the time of President Washington’s passing in 1799, arbitration was already well established in the United States. New York no longer permits arbitration in the context of a dispute over a last will and testament, as it would unconstitutionally interfere with the power of the Surrogate’s Court to adjudicate disputes involving the disposition and transfer of property of decedents, the administration of estates and probate of wills. Matter of Jacobovitz, 58 Misc. 2d 330 (Nassau County, 1968). The same cannot be said of arbitration clauses in trust documents. There is much diversity of treatment of arbitration clauses found in trust documents, with New York taking a middle of the road approach to interpretation and enforcement of arbitration clauses in trust documents. That principle, however, only applies to the application of the transfer of property via an individual’s last will and testament. It does not apply to the mediation and adjudication of disputes in trust documents controlled by New York law.

ANTICIPATED CHANGES IN IRS RULES REGARDING FAMILY BUSINESS VALUATIONS

Published on: December 8, 2015 | by Ettinger Law Firm

WHY IT MATTERS FOR ESTATE PLANNING

Every year the Federal Department of Treasury publishes the greenbook which outlines the then current presidential administration’s revenue proposals, tax policies, job creation issues that relate to the Department of Treasury and other related fiscal and policy issues. The greenbook is scrutinized by tax pundits, politicians and others for what it contains, but what it does not contain is also important. Within the 2013 greenbook, there was an obvious lack of discussion of 26 U.S.C. § 2704, which mandates how the law measures the value of certain family controlled entities for estate and gift tax purposes. Some observers took that to indicate that the IRS plans on amending the regulations pursuant to this statute. This suspicion was validated when an official from the Department of Treasury spoke at an American Bar Association, tax section meeting in May, 2015. She indicated that a proposed regulation may be released as early as September, 2015. As of mid-November 2015 such regulations have yet to be published. This issue is of substantial import for estate planning throughout the nation. If and when a family business is transferred via an estate or even to a trust created by an owner of the business, it is likely be a taxable event, depending on the specifics of the transaction.

PASSING A FAMILY BUSINESS ON TO NEXT GENERATION

WHEN YOUR ATTORNEY IS A POTENTIAL WITNESS IN SURROGATE COURT

Published on: November 16, 2015 | by Ettinger Law Firm

WITNESS ADVOCATE RULE

In New York, as well as perhaps every other jurisdiction, an attorney may not serve as an attorney as well as a witness in the same case. Rules of Professional Conduct, Rule 3.7 is mandatory and not permissive. It does not matter if it is a bench trial, jury trial, traffic court case or surrogate’s court case. In fact, the rule is so important to judicial administration that even partners and members of the same firm cannot act as a witnesses. Courts refer to the issue as the lawyer-witness rule and it comes up often enough in surrogate court cases. The June 2, 2015 case of Will of Lublin, 2015 NY Slip Op 31038(U) is a good example of how estate lawyers face these issues. While the lawyer in Lublin avoided the issue of Rule 3.7, a small change could have made it not so. Very briefly, the decedent, Mr. Irving Lublin, executed a will in 1997 and passed away in 2010. Someone objected, claiming that the decedent did not have sufficient mental capacity to create such a will, the will was not properly executed and that the will was the result of fraud and undue influence. The lawyer who drafted the will was deposed during the discovery phase. If, perhaps, the attorney who created the will also represented the executor, an entirely plausible and even relatively normal scenario, the attorney would be disqualified, as he/she would be a material witness.

UNIQUE POSITION IN THE CASE