Estate Planning Archives - Page 2 of 3

Should I Share My Will with My Financial Advisor?

Posted on February 26, 2018

And the answer is: No. Usually. See you next week. Okay, okay, I’ll elaborate. Your Last Will and Testament is a confidential document while you are alive. When you pass away your Will may be Probated in a court – at which time it’s contents are publicly available – so that your estate’s assets are properly distributed to your choice of beneficiaries. So only you and your lawyer have access to the contents of your Will. Disinherit your son? He can’t find out while you are alive. Have more assets than your family knows about? They shall continue to live in ignorance. Don’t trust third parties with access to your confidential information? No problem, nothing to see

Don’t Leave Money to Charity Using Your Will

Posted on December 28, 2017

Charities receive some of their largest gifts upon the passing of a benefactor. While this is a kind gesture on your part, if you live in New York you should leave money to your preferred charity using any method other than your Will. Probate is Annoying: Probating a Will requires New York’s involvement, meaning Probate can be an expensive, tedious and slow process. You will need to both place the charity on notice that they are a beneficiary under the Will, send them their funds, and procure a Release from the charity. All of this takes time, meaning an attorney is billing for all of this. Attorney General’s Involvement: As if New York’s courts weren’t inefficient enough for

No One Likes Your Uncle Marvin: Isolated Aging Men

Posted on November 14, 2017

Many of us have an aging male friend or family member who is unmarried and has no children. This man, also known as your “Uncle Marvin”, is getting older, lives alone, and is probably financially prepared for the remainder of his life. But he may be completely unprepared for the legal consequences of his aging. Unlike his female counterparts, such as your Aunt May, Uncle Marvin and his male contemporaries are more likely to be emotionally isolated from other family members and socially separated from his community. In addition, our society still erroneously views men as competent, stoic loners who don’t require or desire our involvement with their lives. Even our health care and aging mechanisms are geared toward

Your Brother is Taking Your (Parent’s) Money

Posted on November 3, 2017

My grandmother used to counsel her friends with young children by sharing the phrase “Small children, small problems; big children, big problems…” Some siblings work a lot, take pride in their independence, and save their hard-earned money. And some siblings have bad luck, are victims of financial predators or our legal system (divorce, criminal “justice” matters, etc.), or they may just be lazy. While the stars perfectly aligned for the former children, the latter child gets stuck in a perpetual rut, parents or other family members start financing his lifestyle, and sibling bitterness boils. Down-on-their-luck children drain family assets, become increasingly disinterested in working, and cause fraternal discontent and animosity. Parental assets that could one day pass

Legal Documents You Should Share With Your Family

Posted on September 20, 2017

When you pass away certain information dies with you, such as where you keep your legal documents and what the contents of those documents are. Keep in mind written documents matter: The basis of our lives is run by contracts. But if those contracts cannot be found your wishes and desires could be confounded. Here are some suggestions regarding sharing and not sharing certain legal documents: Prenuptial and Postnuptial Agreements should always, always, ALWAYS be shared with multiple family members. These are not recorded anywhere, so if you and your soon-to-be-ex-spouse mysteriously lose your copies you need to contact your former attorneys. And remember: Attorneys in New York only have an obligation to hold onto legal work product for

What and When Should I Tell My Kids?

Posted on September 5, 2017

Parents who have gone through the estate planning process typically ask what information they should share with their children and when. The answer requires balancing many factors, but can be boiled down to a simple concept: Take responsibility and own up to your decisions, and don’t leave it to your kids to fight about it. First, if a child has been left out of a Will or is receiving less money than other siblings you may want to tell them so, and why. Clearly this is not a universal approach, but taking responsibility and informing them up-front allows the child to reconcile this fact. This will also help minimize your other children having to deal with the dispossessed child’s bitterness

Your Prenup: How Your Family Law Attorney Betrayed You

Posted on July 26, 2017

If you have a prenuptial agreement, chances are that the family law attorney who represented you betrayed you and didn’t even realize it. I often tell clients to get a prenup if they are getting married later in life, and insist my older clients pay for their child’s prenup. And soon thereafter, much to my dismay, I see yet another prenup that unintentionally-yet-completely screws my client if his or her spouse dies unexpectedly. Prenups serve one vital purpose: “Split Money.” There is usually a financial disparity between the parties when the couple marries, so the wealthier spouse naturally wants to protect his or her money from the other spouse’s financial grasp after a short marriage. So the prenup

College Kids in Trouble! Draft Your Child’s Health Care Proxy

Posted on July 14, 2017

Ah, the Ivory Tower, where high school kids aspire to escape to, and parents best hope for 4 years of peace and quiet. But with independence comes responsibility: Travel, driving, concerts, and protests. And drinking. Lots of drinking. And then comes a horrible injury or hospital admittance, followed by a parental realization: You are not allowed access to your adult child’s health care information, and cannot make decisions regarding their health care. In most states, the age of majority is 18, and once he or she moves out of his or her parent’s residence they are considered an adult with all of the privacy rights that inure to adults. The only individual who, by default, has access to

The Roadmap to Your Family Should be in Your Will

Posted on June 9, 2017

The cornerstone of Probate, leaving your estate to whomever you want, is almost paradoxical since the process is not as easy as most people think. To the great surprise of heirs that are listed in the Will, the decedent’s descendants (or next closest relatives) must be put on notice during the Probate process to validate the Will. The very concept of the requirement of placing the next of kin on notice is foreign to most clients: Why does a person’s nearest relative, who the Testator may have loathed, still have to be placed on notice of the Probate of the Will, even if that relative is being disinherited? The answer: Our estate laws allow your closest family members the right

“Name That Witness” (to Your Will)

Posted on May 24, 2017

When you execute your Will you MUST have it witnessed by at least two competent adults who are not beneficiaries in the Will. When you die New York’s Surrogate’s Courts require the names of the witnesses to be listed in the Probate Petition. And so it is nothing short of stupefying to me how many Wills have witness signatures that are completely illegible. This is somewhat understandable if you execute your own Will, since non-attorneys are not in the business of drafting Wills. The signers of illegible signatures are also more easily identified in the event it was the Testator’s friends or neighbors who signed (and thus the identities of the witnesses are more easily deduced). But many attorneys’ witnesses

“Don’t Forget About BoBo: Pet Trust for Your Animal Companion”

Posted on May 16, 2017

One of my dearest aging clients have a dog named Bo Bo. Bo Bo is a true companion to this couple: They are in their 90s and have outlived many of their friends, the husband is more mobile than his wife and likes to get physical activity by walking Bo Bo, and the dog is absolutely in love with them. Bo Bo also smells bad, barks at the littlest disturbance, is a manic that constantly jumps on visitors, (and gets slobber and fur on my suit, which needs to be dry cleaned after every single visit) and is begrudgingly tolerated (at best) by anyone other than my clients. Unfortunately, when my clients pass to the eternal human boneyard, Bo Bo’s

What is the New York Public Administrator?

Posted on May 2, 2017

The New York Public Administrator is one of a chosen office of attorneys in each county that the Surrogate’s Court often calls upon to administer to non-standard probates and estate administrations. The Public Administrator generally has the job of handling estates of people who die without a Will and who have no close relatives who are able to administer the estate: If your nearest living relative is a cousin (or more distant) the Public Administrator will need to be placed on notice, and usually handles the estate if there is no Will in these circumstances. In addition, the Public Administrator often replaces initial Executors or Administrators who are unable to qualify or unable to serve due to being felons, having

3 Ways An Irrevocable Trust Really Isn’t Irrevocable?

Posted on April 25, 2017

As I have discussed in the past, https://www.investopedia.com/advisor-network/articles/only-3-reasons-why-you-should-have-irrevocable-trust/ there are three reasons to create irrevocable trusts. The word “Irrevocable” usually implies no ability to change, and most people believe that a Trustee is required to adhere to the language contained in the irrevocable trust, even though times and circumstances may have changed. Nonetheless, in many circumstances, irrevocable trusts may actually be legally changed, modified or revoked in New York State. ALL PARTIES AGREE TO MODIFY: The first circumstance exists when the Grantor of the Trust is still alive, wants to make a change and ALL the beneficiaries of the Trust agree with the proposed change. In this case, an amendment of the Trust or a revocation can be done –

The Top 5 Things to Do When a Family Member is Terminally Ill

Posted on April 14, 2017

Watching a person’s last days of life is often a horrible, gut-wrenching process. The dying individual may or may not be able to communicate, and the trauma of seeing a loved one approaching their end makes it difficult for spectators to make decisive decisions. But no matter what the case, if you want to do what is best for your family, you must utilize the precious remaining days of your loved one’s life to take action on certain items, as these matters get much more difficult and stressful upon his or her passing. Figure Out Funeral Arrangements: May people have funeral plots or pre-paid burial arrangements, but these details are often not formally shared with family and friends beforehand. If the

3 Times Your Retirement Plan is Not Protected from Creditors

Posted on April 4, 2017

Many people know that IRAs and 401(k) plans have creditor protection. However, most people do not know the limits of that creditor protection. It may come as an unwelcome surprise, but if someone is suing you: (1) if you owe money to the IRS or to an ex-spouse, (2) if your retirement plan is of a certain type, or (3) if your beneficiaries are under creditor attack, your retirement funds may not be protected at all. First, if you owe tax dollars to the IRS, or are late on alimony or child support payments, your retirement plan is almost never a safe haven. The IRS, an ex-spouse, and minor children act as “super creditor” against your retirement plans. Ex-spouses

Increase Executor Commissions by Including Real Estate Transfers

Posted on March 28, 2017

You have a good deal of latitude structuring Executor’s commissions in a Will. There are many subtleties to default Executor commissions that apply if you don’t substitute them; in order to be fair to your Executor, one that you may want to modify relates to instructing your Executor to transfer real estate under the terms of your will. In New York, Executor commissions are based on collecting and distributing property, primarily intangible investments. These commissions are easy to calculate, since investment assets are easy to price, transfer and sell. But the family home – typically the largest Probate asset – is not so easy to administer, and is not always commissionable. If the real estate is sold as

Medicaid Pitfalls: Cash Value Life Insurance

Posted on March 10, 2017

Qualifying for Medicaid can be a pain in the neck: You can only qualify for benefits if you have a limited amount of assets and income. Yes, there are some exceptions, but in most cases there are financial limits. Unfortunately, people’s past investment decisions may severely impact their current eligibility. One of the worst former financial decisions for Medicaid planning is the limits placed on cash value life insurance. “Permanent” life insurance is meant to last until you reach age 95 or 100, then pay out to you or your beneficiary even if you are still alive. These policies allow you to invest extra money to the policy’s “cash value” so that as the annual cost of the insurance

Naming Beneficiaries: When to Start (and Stop) Asking “What If?”

Posted on February 17, 2017

My mentor was a meticulous, forward-thinking attorney. When she retired from private practice I succeeded her and took over her client files. As a result, I had the pleasure of reading many of the wills she had drafted (not a recommended activity for narcoleptics who don’t want to fall asleep). She was absolutely scrupulous when it came to naming contingent beneficiaries to an estate. For some of her clients, and indeed for me too at times, it seemed like a maddening process. Here is a common scenario: I imagine going to an attorney to draft my Will, create beneficiary designation forms, and consider creating a trust. Now comes the moment of truth: When I pass away, who gets what?

IRAs v. Roths? Choose the “Absolute Benefit”

Posted on February 14, 2017

No one knows their financial future with certainty, but when given the choice, I almost always suggest taking a sure thing now (an “Absolute Benefit”) over risking an uncertain future (an “Uncertain Benefit”). In this regard, I tell all of my clients to take a tax deduction now and invest in a tax deductible IRA or 401(k) instead of contributing to a Roth IRA or Roth 401(k) plan, in order to optimize the certainty of income tax savings. Remember that you take an immediate income tax deduction on a 401(k) or most traditional IRA contributions; you only pay taxes when you withdraw funds (usually after you are retired, and your tax bracket is lower). In contrast, Roth accounts require

When Should I Use or Avoid A Joint Trust?

Posted on February 3, 2017

A joint trust is a trust created during your lifetime, where both you and at least one other individual are the Grantors (creators). These are almost always “inter vivos” (created during your life, and not by a will upon your passing), and tend to be done by happily married spouses. While they tend to simplify most people’s estate plans by only having to deal with one document, joint trusts also have a time and a place when they should be avoided. The most ideal time to utilize joint trusts is when the creators of the trust are (1) married, (2) want the same end-result for the funds, and (3) trust the surviving creator to control the funds when he/she

Minimizing Capital Gains Taxes: Being Conscious of Cost Basis

Posted on January 5, 2017

Of all the taxes that get reported by the press, capital gains taxes get the least exposure despite the significant impact they have on Americans. Yes, income taxes affect everyone who has ever received a paycheck, and estate taxes are in the news all the time (even though less than 6,000 estates owed federal estate taxes in 2015). But it is capital gains taxes which are so often paid when they could have been avoided, capital gains taxes which get paid no matter what your income is, and capital gains taxes which may substitute estate taxes as government’s significant source of revenue if the estate tax is repealed by the in-coming Trump Administration and Republican Congress – and they will

Why Trusts are Still Relevant in a Post-Estate Tax World

Posted on December 21, 2016

The Trump Administration is about to join forces with a Republican Legislature, meaning there is a huge chance that the federal gift and estate taxes could be repealed. I have heard many of my colleague bemoan the fact that their bread-and—butter (complex estate tax-saving trusts) will become irrelevant, their careers are over, and how they wish they went into Medical School or they are moving to Canada in January or something else equally insane. While trusts have been useful devices to preserve a spouse’s estate tax exemption for Credit Shelter Trust purposes, this has by no means ever been their only purpose. Indeed, plenty of people already have trusts for a multitude of other purposes that shall continue to

Trusts: How to Protect a (Troubled) Child from Your Money

Posted on December 3, 2016

Parents: You are responsible for the financial education and well-being of your child. You have more life experience, you are the ones who brought your children into the world, and you are the one leaving your money to them. So take the extra step and make sure you give your children money in a responsible way. We’ve all heard of it: The child who spent all of his inheritance before he received it, the gambler, the substance abuser, spendthrift, and so on. In 2011, I had a 29 year old female client, whom I shall call “Janice” who didn’t have one penny to her name: Janice was living in a homeless shelter, on all types of public assistance, and almost thoroughly ignored

Leaving the Right Gift to the Right Person

Posted on September 30, 2016

I meet several clients who, upon death, want to automatically give their daughters their jewelry and split their remaining property equally between their children. This is also the default position suggested by general practitioner attorneys who will draft a two page Will for their lifetime client, and avoid the consultation time needed to truly understand their client’s desires. My experience suggests that serious consideration must be given to distributing the correct amount of property, and the right type of property, to each beneficiary. Most people leave property first to their spouse, then to their children equally – they have equated equally loving their children with bequeathing them equal amounts of property. It goes without saying that even in “healthy” families this may not be

How to Choose an Estate Planning Attorney

Posted on September 23, 2016

You may have some idea of how an Estate Planning Attorney can help you (Wills, Powers of Attorney, Health Care Proxies, Trusts), but may not know how to choose one. In addition to the questions you would ask any service professional, here are some thoughts and questions you may want to consider prior to signing a Retainer Agreement with the attorney, who will help you establish your estate plan: EXPERTISE: Does the attorney primarily practice New York estate planning, or are they a general practitioner licensed in multiple states? If your estate planning needs are relatively simple (minimal assets, you are married in a first marriage without kids, no disabled relatives) a general practitioner may suffice. However, I have also seen some horrible Wills drafted by

What is a “Guardianship” for Disabled Individuals?

Posted on September 12, 2016

Many people think of a guardianship as being a legal affair that determines who will raise a minor child (such as a parent, or a non-parent if both parents are unavailable); I shall cover this type of guardianship in the future. A Guardianship Proceeding over a disabled individual essentially takes place when a person can no longer make financial or health care decisions. There are two types of Guardianship Proceedings: Those for minors who have always been disabled and are nearing the age of majority, and those for adults who once had mental capacity but no longer do. For people who are disabled as minors the Guardianship Proceeding takes place under New York’s Surrogate’s Court Procedures Act, Article 17-A (lawyers refer to this as a “SCPA 17

Should I Serve as an Executor?

Posted on August 16, 2016

Most client I meet with name their most trusted family member or friend to serve as Executor of their Will when they pass away. Upon their death that person usually does serve; I would say approximately 90% of proposed Executors do serve in this position (if they themselves are still alive). These people think it will be “fun”, or that they “deserve to be in control” of the Probate. And then the wheels fall off: The Executor finds out that the decedent was a hoarder and has to clean out dumpsters of worthless garbage; beneficiaries fight, are impatient and ungrateful; collecting assets is hampered because they weren’t in easy-to-find places; the Executor lives in Los Angeles, but the decedent’s estate is being Probated

“No Contest” Clauses in Wills

Posted on August 6, 2016

No family is perfect. Sometimes a child is mean or indifferent to parents’ needs as they age, while the others go out of their way to help. Though parents / aunts & uncles / grandparents may say they love all of their potential beneficiaries equally, the truth may be different. And (of course) there may be an obvious disincentive to leave the troubled beneficiary equal (if any) proceeds upon passing away. These clients tend to leave a lesser sum of money to the beneficiary in their Will, not realizing that the beneficiary may attack the Will, and line the pockets of a few attorneys and diminish the estate in the process. There has been a good deal of discussion recently surrounding

Simple Dos and Don’ts of Gifting for College Education

Posted on August 1, 2016

Higher education is usuriously expensive. The fact that a child’s education may cost as much as you paid for your first house should highlight the importance of gifting these funds in the correct way. You can pay an unlimited amount of money for a child’s education expenses, provided you pay the money directly to the educational institution. Qualified education expenses are looked at as a benefit to public policy, and therefore do not require the donor to fill in a gift tax return. The funds are also not deducted from your lifetime gift tax exemption, meaning you can continue to gift additional funds without having to assess a tax. Paying a child back for their student loan payments

Keeping Your Trust Private

Posted on July 22, 2016

As followers of my blog know, I am a proponent of passing property using a Trust instead of a Will. While a Will is a contract between the deceased individual and the State in which it is Probated, Trusts are contacts between the Creator and Trustee of the trust. Wills submitted to the Surrogate’s Court are public knowledge (as are the decedent’s assets), while Trusts are private documents. It is this last point that we are discussing here. In order to make a Trust “effective” you have to fund the Trust. The owner on the Deed is now “The John Doe Revocable Trust” (not “John Doe”); the beneficiary of the life insurance policy is likewise the Trust. An unfunded Trust is more effective

When to Contact Your Estate Attorney

Posted on July 15, 2016

Many people figure that once their estate planning documents are executed the estate planning process has ended. From the client’s perspective, several consultations have been attended and a lot of hours have gone into ordering beneficiary designation forms, real estate documents, and the like (unless the client went to an estate chop shop, in which case almost no time has been spent and the significance of the affair has not been realized). From the old school estate attorney’s perspective, the only financially significant moments of the process are during the drafting/execution phase, and entering Probate upon the client’s death, so follow-up appointments are viewed as a waste of time. I find this viewpoint to be both unfortunate and potentially hazardous to client and

When Do I Tell My Children They Are My Financial & Health Agents?

Posted on June 28, 2016

Most people name their children as their agents (or else as successor agents if the client has a spouse). This includes naming a child as a Power of Attorney, Health Care Proxy, Executor or Successor Trustee. Of course, the child sometimes doesn’t know about this, and many attorneys do not discuss the topic in depth with the client. Most children don’t even know where their parent’s legal documents are. This can cause confusion, and can lead to their frantic scrambling at crucial times. Knowing when to tell your children they are agents is tricky, and often relies on a case-by-case analysis of the family and the children. Some 21 year olds may be ready to know their role before some 40 year

Turnover Proceedings: Retribution for First Come, First Served

Posted on May 27, 2016

The early bird often gets the worm, even if he was not supposed to. When a person passes away many people have a tendency of ransacking the decedent’s property. Co-Signers often run to the bank to empty the safe deposit box (which is illegal in New York), people with access to the house take all types of personal belongings, and some absconders legally use the decedent’s credit cards. Outsiders may redirect mail containing financial information to their own addresses, then act as they see fit. Other times people will have an incapacitated person sign a Power of Attorney or blank checks, or even forge the signature. When that person dies the property that was supposed to go to one person goes to someone else. I

The Missing Pre Nup: Add a Family Trusts Band Aid

Posted on May 20, 2016

Attention parents with assets: Tell your children they must have a prenuptial agreement! And when they respond “No, I love him, that is not romantic, we will be together forever!”……panic!!! Then take a breath…PANIC a little more, then contact your T&E attorney to discuss how to protect your family assets using a family trust with a suitable trustee. The Family Court (more appropriately called the “Divorce and Fleece Court”) is known as a “court of equity”, meaning it can look at any factor relating to assets and income, and make a completely subjective (some may say arbitrary) decision as to who gets what. When a child is too shy or stubborn to get a prenuptial agreement, it is your job

Celebrity Estates: Prince’s Royal(ty) Issue

Posted on April 27, 2016

2016 is seeing it’s share of celebrities pass away: Glenn Frey, Abe Vigoda and Garry Shandling. But none so far, aside from perhap David Bowie, left as much of an impact on our world as Prince. And none, I would dare to say, has such a complicated estate. Prince faces several tricky issue upon his passing: The nature of his property, and the absence of a nature heir. Considering the shear amount of wealth Prince’s estate will create, starting with the millions of dollars it made from ITunes downloads mere hours after he died, Prince needed to carefully about who would receive his music royalty rights. Copyrighting music ensures several financial rights, such as charging a station or organization for playing it to the public

Quiet Targets: Protecting Single Aging Men

Posted on April 22, 2016

While single men tend to pass away at younger ages on average than married men, I have met a number of aging single men without children. Unlike aging single women, who tend to both emote their needs and take steps to elicit sympathy and the help they require, aging single men tend to continue toughening up, not ask for help from others, and ignore seemingly unimportant health concerns that turn out to be rather serious. Single men often do not age well, are financial targets, and tend to do age without the familial concerns their female counterparts receive. They also tend not to ask their male friends for help. If you have an uncle, brother or male friend who doesn’t

College Kids in Trouble: Parents as Health Care Agent for Children

Posted on April 13, 2016

When a person may be subjectively considered an adult varies based on the person and the observing individual: My clients presume I was an adult long ago, my parents have begrudgingly accepted I may have final come of age, and an ex-girlfriend stated moments after we broke up that I would remain a child for the rest of my life. Fortunately, that girlfriend is long gone and, fortunately for her other ex-boyfriends and the rest of us in doubt as to our maturity, the law states that we are all considered an adult for legal purposes at age 18. This is an interesting public policy, since we are not physically or emotionally finished maturing at that age, and (probably due

Assets Good, Income Bad: Taxes, Government Programs, Planning

Posted on March 18, 2016

Here is a surprise for you: America favors people who have money already, not people building their wealth. If you want to build and preserve wealth in modern day America I can boil down the correct methodology in words a caveman could understand: Assets good, income bad. Example 1: Income Taxes versus Capital Gains & Estate Taxes. While your assets are private information, the government (and sometimes the public) has full knowledge of your (legal) income. Try it: Google your favorite sports star and see how much income they earn, then find out how much they are actually worth; I will be shocked if you see a net worth that is not noted as an “estimate.” Governments also know people

NEVER Videotape You Executing Your Will

Posted on March 9, 2016

I must apologize for my prolonged absence from blogging: I lost my proofreading and Blogging Accountability Partner Alix Purcell due to her successes. I shall attempt to continue this part of our journey in her absence as best I can. I have heard of some attorneys videotaping clients executing their wills, and I have in fact once been a witness to another attorney executing a will while recording the execution of the document. Attorneys think recording the testator’s actions (thereby supposedly proving his or her mental capacity at the time of execution) will make it clear to a court that the person “knew what they were doing” (executing a will) at that time (a key requirement for a valid will).

On-Going Planning: Generic Estate Plans Still Create Unique Post-Mortem Issues

Posted on October 16, 2015

Your estate plan is generic. I can almost guarantee it. Sure, perhaps 1% of people have something original, fantastic and truly thoughtful created for them, but (much like movie plots) there are somewhere between 9 and 14 standard estate plans out there for 99% of the population. That is because only .25% of us are truly wealthy enough to justify non-traditional planning, and .75% have the actual need for original content. Congratulations: You are normal. When you die, however, your estate is unique, special, its own miracle or monster. You have accounts at different financial institutions than everyone else, you leave behind a family with different relations, health concerns and creditor issues than everyone else, and leave assets to certain