Trusts and Estates

September 29, 2011

AARP: Dads Have Fewer Heart Problems, But Still Must Plan Estate in New York

A new study by AARP, university research and the government shows that fathers are less likely to die of heart-related illnesses than men without children, the Associated Press reports. The study is considered the largest ever to look at fertility and mortality and involved 138,000 men nationwide.While this may be good news for dads, genetics and lifestyle must also be factored into studies about heart health. This study may present a good time for fathers to discuss heart health, it also can be used as an opportunity to talk about New York estate planning.

New York probate lawyers have seen many older New Yorkers struggle at the end of their lives, perhaps after diagnosis of an illness or disease or following an unexpected accident. Too often, seniors may wait until dementia or other illness robs them of their ability to plan. .

Men in America suffer from heart problems. Long hours earning a living and raising a family can take a toll. Taking the time to ensure loved ones are protected can bring peace of mind. Thus, men in their 30s, 40s and 50s should have plans in place. The process does not have to be complicated. And not just those with significant assets need estate plans.

The large-scale study found that marriage, having many friends and even having a dog as a companion, can lower the chances of heart problems and cardiac-related deaths. And the study shows that having children may be motivation for fathers to take care of themselves physically.

Researchers found a link between infertility and later health problems. Testosterone levels can affect good cholesterol, the article reports.

But the study also had some caveats:

Researchers couldn’t calculate how many in the study were childless by choice and not because of infertility.
They didn’t study the men’s partners’ infertility problems.
They didn’t calculate blood pressure or cholesterol numbers.
Fewer than five percent of participants were minorities.

While it is an interesting topic and certainly one to consider, it may not necessarily apply to everyone. But what does apply to everyone is proper estate planning — for both those with children and those without.

For the fathers, New York estate planning is critical in order to ensure their children are properly taken care of when they pass on. When a person is nearing death, they don’t want the added stress of worrying about where their money will go or if their children will be left with valuable or sentimental heirlooms.

For the childless, the need is no less important. Even if there aren’t children to leave assets to a spouse, siblings, other family members, friends or even a trust established to support philanthropic desires can result from careful planning.

Don’t wait until major health problems have struck to take the initiative and plan out your will or estate in New York. Have peace of mind and focus on more important things in your time of need.

September 22, 2011

Queens Estate Probate May Involve The Turnover of Property Wrongfully Transferred

by Jules M. Haas

New York estate probate cases in Queens and Brooklyn, as well as other counties throughout New York State, can become very complicated due to improper pre-death transfer of assets.

In what has become a familiar occurrence, a close family member or confidant such as a health care aide, arranges for the ownership of assets belonging to another to be transferred to the name of the family member or confident. These transfers often occur only a short time before the death of the individual owning the assets who is making the transfer. The transfers can take many forms such as an outright change of title on a deed or the mere addition of a name as a joint owner or beneficiary on a bank account or retirement fund or insurance. The result of such transfers is that once the transferring person dies, his or her estate has already been stripped of the property due to the pre-death transfer. When the person’s Last Will is probated, the estate plan and beneficiary designations that are set forth in the Will cannot be effectuated since there are no assets to implement the plan.

I have represented many clients in situations where such transfers have occurred. The unfortunate and distressing reality is that the client’s recently deceased parent or other loved one would never have transferred all of their assets prior to death and, in effect, disinherited their close family members. Demonstrating that the pre-death transfers were improper and wrongful can be difficult.

At this juncture, Court intervention becomes imperative. The Surrogate’s Court Procedure Act [SCPA] provides for proceedings by which wrongfully transferred assets of a decedent may be recovered by an estate. These proceedings are commonly referred to as Turnover Proceedings. The most common form of such legal action is found in SCPA Section 2103 entitled “Proceeding by fiduciary to discover property withheld or obtain information”.

Both intestate and probate estate settlement can benefit from utilizing the statutory process of SCPA 2103 to recover estate assets. A recent example of the use of this law was seen in the case of the Estate of Hill, Surrogate’s Court, Queens County as reported in the New York Law Journal on August 19, 2011. In Hill a Preliminary Executor sought to recover the decedent’s real estate that one of the decedent’s daughters had transferred to herself prior to the decedent’s death using a power of attorney that authorized the making of gifts. The Preliminary Executor also sought to recover bank account transfers, as well. While Hill involved procedural motions prior to a final determination of the merits, the scenario of possible wrongful pre-death transfers using a power of attorney illustrates the problems facing many estates and family members. Although the preparation of a Last Will and New York estate plan are essential, very often a watchful eye and general oversight of an older family member’s affairs is equally important and can protect them from exploitation.

September 20, 2011

Smart New York Estate Planning Leaves Millions to Michael Jackson’s Family

by Jules M. Haas

The Associated Press is reporting that Michael Jackson’s estate has generated $310 million since he died two years ago mired in debt, enough to allow officials to make a $30 million payment to his mother and three children.

It must have taken an astounding amount of work to generate $310 million in two years. But because the King of Pop has such a fan base, it is apparently very possible especially considering a new album release and the selling off of memorabilia and personal possessions that likely have fetched high-dollar amounts at auction.Yet most of us don’t have millions of fans and the assets to sell to make those types of strides financially after death. That’s why being smart now is so important. Effective New York estate planning is crucial because without properly considering your assets, debts and what you will leave behind, your surviving family members could end up paying the price. That’s why it is prudent to consult with an experienced New York City Probate Attorney before it is too late.

Jackson’s case shows why choosing an executor for a New York City estate can make all the difference in the world. Two men were appointed executors of Jackson’s estate and, according to the news article, they have generated $310 in gross revenues. Additionally, they have refinanced and secured the estate’s interest in the Michael Jackson music catalog, MiJac and the Sony/ATV publishing catalog. The executors have reduced debt obligations by more than $90 million, and refinanced loans Jackson had taken out at far lower interest rates to save money.

Creditors have been paid off and taxes paid. While some creditor claims are open, the deadline for collecting has passed. A hearing to approve the plan is set for Sept. 28.

An executor is a person named in the person’s will and is appointed by the court when the will is admitted to probate in New York. The executor is responsible for distributing assets after paying taxes, debts, claims and other financial matters.

While it may seem simple, it is a very complex job and one that should be entrusted only to the most qualified and trusted person in your life. Look at Jackson’s case — he left mounds of debt from reckless spending before he died and left his executors with quite a task. But with smart financial moves and advice from well-informed probate lawyers, they have been able to erase or pay down debt and produce money for his family members.

As mentioned before, the average citizen doesn’t have the fame or assets to pull this off, so planning now for assets to be distributed and how you want your affairs handled upon death should be a priority, regardless of your age or financial situation.

September 13, 2011

Do Women Care Less About Estate Planning in New York?

by Jules M. Haas

As the New York Probate Lawyer Blog recently reported, women in New York and elsewhere are resistant to planning their estate. A recent Forbes article encourages women to take the necessary steps.

While women aren’t alone in their procrastination of estate planning in New York, they seem to take an approach more lax than their male counterparts. While no one likes to plan their death and what will happen to their assets after, it is a critical aspect of adulthood. Many women take to the task once they realize its importance as, in many ways, they are more organized and more conscientious — particularly when it comes to providing for children.No one really wants their assets dealt with by a judge and other strangers. And if you have children, they must be taken care of, with specific plans to help them live their lives without the aid of parents. Yet a recent survey found that 47 percent of women were concerned with their weight, compared to 43 percent who care about protecting their assets and contacting an experienced New York City Probate Lawyer to help them get their affairs in order.

A new Forbes article, by the same author, looks at the topic again, questioning why woman are so resistant to taking the matter into their own hands. To be fair, men are not exactly lining up at the doors of estate planners. It’s a problem for both sexes. A reluctance to deal with death is just part of it. Another is the mistaken belief that only the rich need such services. In reality, proper estate planning and making the most out of your legacy is even more important for those middle class families of moderate means.

By most accounts, the average person believes death is a far-off event that can be addressed at a later time. But the reality is that these estate matters must be handled now, with sound mind and with the best interests of the person and their loved ones in mind.

As the author of the article states, women with children are unlikely to plan their estates. Yet the 10-year anniversary of the Sept. 11 attacks should remind us all that planning is essential, even when chances of death seem remote. And older women are even more behind in their estate planning. Because they tend to live longer and marry older spouses, they are more likely to be widowed and must make decisions on what will be left to survivors.

Here are a few estate-related questions for women to consider:

What’s the difference between a will and a living trust? Both a will and living trust are documents able to transfer assets, but only a will can be used to appoint a child’s guardian. A living trust can hold assets while you are alive, which can have a number of benefits.

Whom to trust? The power of attorney is critical and should appoint a person you trust, like a family member or close friend.

Who will take care of the kids? Without proper planning, children can be thrust into a custody battle or maybe no family members will be willing to step up and take care of your child. That’s why filing formalized documents can clear the air and decide who will care for the children subject to Court oversight.

What is in savings? Make sure there is money set aside to pay for funeral costs, burial and other short-term related costs because often, joint money or retirement accounts can be frozen for some time.

September 8, 2011

New York Executors Use Their Powers to Collect Assets For Estate Settlement

by Jules M. Haas

Executors and other fiduciaries in New York, such as Administrators, are given numerous powers to help them handle estate settlement including the collection of estate assets. A fundamental job of a fiduciary such as an Executor in Manhattan or Westchester or other New York locality, is to protect and collect estate assets.

Estates, Powers and Trusts Law section 11-1.1 is entitled “Fiduciaries’ Powers “and sets forth many of the powers that a fiduciary can exercise. For example, paragraph (b)(3) of the statute authorizes a fiduciary “To invest and reinvest property of the estate or trust under the provisions of the Will, deed or other instrument or as otherwise provided by law.”

Estate assets can be varied and range from common items such as bank accounts, stock portfolios, and residential real estate to more less common interests such as royalty earnings relating to publications, inventions or compositions or oil, gas or mining, or various types of business entities such as limited liability companies or family business corporations. Estate assets may also be in the form of life insurance, annuities and retirement funds.

In each instance, it is necessary that the estate fiduciary identify all of the estate assets, collect the assets and distribute the assets to the estate beneficiaries in accordance with the terms of the Last Will or the laws of intestacy, as the case may be.

In many instances, estate assets may not be readily identified. For example, an article by Eric Gardner that appeared in the Hollywood Reporter on August 31, 2011 “Elvis Presley Estate Sues to Recover Ringtone Revenue” talks about a lawsuit recently filed in Germany by Elvis Presley’s estate which seeks payment for “new media income such as ringtones, downloads and entertainment apps.”

Another type of estate asset that is more common is a recovery due to the wrongful death of the decedent. However, the damages that the estate may be entitled to due to the decedent’s death may not always be apparent. As was recently reported in the Beverly Hills Courier on August 17, 2011 in a report entitled “Wrongful Death Lawsuit Over Christian Brando’s Death Settled” the ex-wife of the late actor, Marlon Brando, had commenced a lawsuit against a doctor due to the death of her son, Christian. As reported, the lawsuit alleged that due to the doctor’s negligence, Christian’s estate was “harmed because when he [Christian] died, he lost the benefit of an inheritance from his father’s [Marlon Brando] estate.”

I have acted as the attorney for Executors and Administrators on many occasions and helped my clients identify, protect and collect estate assets.

September 1, 2011

New York Power of Attorney Issues Overlap Guardianship and Estate Matters

by Jules M. Haas

Brooklyn and Nassau estate attorneys, as well as those assisting their clients throughout all parts of New York State, are often confronted with a myriad of issues relating to Powers of Attorney, Health Care Proxies, Article 81 Guardianship and estate settlement.

In a typical situation, an individual may have prepared a Last Will while at the same time preparing a New York Power of Attorney and a Health Care Proxy. The New York Probate Lawyer Blog has previously discussed the importance of preparing advance directives such as a Power of Attorney and Health Care Proxy by which others can be appointed to handle a person’s property and health care issues in case of illness or incapacity.

All parties involved in these matters should be particularly aware that agents appointed in a Power of Attorney and Health Care Proxy have similar fiduciary duties to act appropriately as do Court appointed fiduciaries such as Article 81 Guardians and Executors and Administrators. In many instances, questionable conduct by these lifetime agents may end up being reviewed by a Court in a Guardianship Proceeding or in proceedings in the New York Surrogate’s Court after the appointing person dies. Issues regarding property transfers, expenditure of funds, and the change of names or beneficiaries on bank accounts, life insurance and retirement funds can result in disputes that overlap lifetime and post death periods.

A recent lawsuit entitled Kaufman v. Kaufman, in New York State Supreme Court, New York County, provides an excellent example of the problems and issues that can arise in these situations. Kaufman involved two brothers, Allen and Kenneth, both of whom were appointed as agents in a Power of Attorney by their father, Hyman. Allen and Kenneth were also Co-Trustees under family trusts. Hyman, who had suffered a brain injury, had been in a nursing home for a number of years.

Allen petitioned the Court for an accounting and requested among other things, that Kenneth be removed as attorney-in-fact under the power of attorney and as a trustee for violating his fiduciary duties. As recounted by the Court, Allen claimed that Kenneth was “refusing to share financial information, failing to provide a complete record of financial transactions, and using Hyman’s assets for personal and business purposes.”

Following a review of the parties assertions, Justice Donna Mills in a decision dated August 4, 2011, directed Kenneth to provide an accounting of his activities pursuant to New York General Obligations Law Section 5-1505. This Statute, entitled “Standard of Care: fiduciary duties; compelling disclosure of record”, requires in paragraph 2(3) an agent under a power of attorney “to keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal and to make such record and power of attorney available to the principal or to third parties at the request of the principal”
It is apparent that issues involving fiduciary duties and the safeguarding or misuse of assets can overlap from the lifetime stage to a post death estate settlement controversy. Suppose Hyman had died prior to the resolution of the Supreme Court case. In such event, questions regarding the propriety of Kenneth’s acts might need to be resolved in the Manhattan Surrogate’s Court as part of the administration of Hyman’s estate.

I have counseled clients, both fiduciaries and beneficiaries, in many situations similar to those raised in Kaufman. The appointment of lifetime agents, as well as executors and trustees, requires thorough consideration and the problems faced by the fiduciaries and those whose interests they are protecting can arise and require resolution in many different forums.

August 25, 2011

New York Women Must Plan Out Their Estates

by Jules M. Haas

A recent Forbes.com article by a Forbes Senior Editor makes the case for why women should be taking a more thorough approach to wills and estate planning in New York and throughout the country.

The article leans on a recent survey by EZLaw, which the New York Probate Lawyer Blog commented on recently. According to the survey, which was conducted with a random sampling of Americans about the importance of wills and estate planning, women were more concerned with their weight (47 percent) than with the protection of their assets (43 percent). All told, the majority of those surveyed believe that having a will is important, but few have the documents in place.In the last half a century, women have made many positive strides in gaining rights, working toward equality in the workforce and in their ability to join the hierarchy of many of the country’s Fortune 500 companies. For this reason and for many others, women, just like men, must take an interest in protecting their assets. But this is best done with the knowledge and experience of a New York City Estate Planning Attorney, who can guide clients through the complex area of estate planning, wills and trusts.

“Does this mean women have more will power when it comes to their waistlines, than when it comes to estate planning?” the Forbes article’s author asks. “If so, it’s a shame, because estate planning affects women profoundly.”

According to the article, among Americans 65 and older, 42 percent of women, compared to 14 percent of men, are widowed. Women are expected to live longer. This longevity combined with a woman’s tendency to marry older spouses and earn less over the span of their lifetime, means they could suffer the consequences if their estate isn’t planned properly.

“Perhaps worst of all is how a lack of planning can affect families of young children,” the author writes. “Without a will, if your children are minors and you were a single or surviving parent, a court will appoint a guardian for them.”

The author implores women to have the talk about estate planning not only with their spouses, but also with their adult children and their own parents.

With spouses: Relating the end of life to current events, a person they know who’s sick or even wanting to provide for the kids may be ways to bring up this less-than-attractive topic of conversation. But either way, it needs to be done. Estate planning isn’t just a when-I-die necessity, it should be done so that the individual will be taken care of if their health fails at any stage of life.

With adult children: While a parent to an adult child has no obligation to change their plans based on their kids’ preferences, talking it over can help. Explaining the decision rather than making it a surprise upon death can save lots of frustration and sibling rivalry down the road.

With your parents: This can be difficult because some people would view this as being greedy, but it is important to talk with your parents if you notice a decline in mental capacity later in their life. Once they lose competence, they can’t make binding commitments, so estate-planning documents must be handled before that happens.

August 24, 2011

New York Estate Planning Timing Good With Market Bad

by Jules M. Haas

A recent Wall Street Journal article reports that now is a good time to consider planning an estate in New York and elsewhere, given the volatility of the economy.

With interest rates low and Congress increasing the federal gift-tax exemption to $5 million from $1 million for people until the end of 2012, there are some advantages to planning your future now.Putting together a will and other estate plans is a critical step too often delayed. No one wants to plan out their death, but the reality is that it is a necessary step for adulthood. Especially those with children; consultation with an experienced New York Probate Lawyer is a must. Estate planning is as much for the peace of mind of the person as it is for the time and energy it saves the relatives and friends who may be inheriting assets.

Not planning an estate can cause greed and frustration to lead to arguments and fighting; sometimes, tragically, the rift becomes irreparable. And for those with minor children, a lack of estate planning can leave the kids without clear direction of where they will live and how they will be cared for. The Wall Street Journal article hits on the current economy market and how this may be a good time to take the steps to planning out an estate.

Discounts:

Those who have large amounts of stocks in private companies can give away the stock at a big discount. Regardless of the market’s typical ups and downs, an investor usually gets a discount when giving away some stock in a business that doesn’t trade publicly.

In normal times, the Internal Revenue Service allows a 30 to 35 percent discount because it may be harder for the company to find a buyer. But with the stock market so volatile lately, owners of private stock can argue for a bigger discount.

With the stock market up several hundred points one day and down several hundred the next, the Chicago Board Options Exchange Volatility Index has reached in the 40s. The index measures the expected volatility of the S&P 500 over 30 days. Stock owners may be able to argue for discounts in the 45 to 65 percent range.

GRATs:

A grantor-retained annuity trust allows a person to give an asset to a trust, but also retain rights to annuitized payments over a certain time frame. For people with battered stock of publicly traded companies, you are really giving away future appreciation tax free.

If the stocks do well, a GRAT allows a person to transfer the upside to children or a trust without paying a gift tax. The gift-tax exemption is $5 million, but will go to $1 million after 2012. However, assets put into a GRAT must appreciate more than the IRS’s “hurdle rate,” which is 2.2 percent a year.

If the assets don’t hit that hurdle, they go back to the original owner or the GRAT can be “reset” and transferred to a new GRAT. A GRAT can be as short as a two-year period.

Loans:

With low interest rates, loans to fund an investment can be beneficial right now. If a loan is taken out by a trust, the children can use the money to buy stock or depressed real estate at a low price and could pay back the loan and still reap the benefits of the investment now.

August 23, 2011

IRS Provides Guidance for Executors of New York Estates for 2010 Deaths

by Jules M. Haas

A recent article on Forbes.com lays out the long-awaited guidance for executors of estates of people who died in 2010, explaining how executors can opt out of the estate tax and which tax rules apply to assets if they do.

Being named an executor in a New York estate or trust carries a big responsibility and one of those responsibilities is determining how best to handle the assets and minimize New York Estate Taxes. But this isn’t something a person must handle on their own. Hiring an experienced and knowledgeable New York City Estate Lawyer to provide guidance in this area of law is a smart move for someone who isn’t familiar with the law.While New York state law doesn’t conform to the federal estate tax laws, there are ways to save on estate taxes through various strategies that can be used, such as by giving a lifetime gift or charitable contribution. There are many areas of this law and a New York Estate Lawyer should be hired to provide advice for every step of the way.

According to the article, the estate tax and the generation-skipping transfer tax were repealed on Jan. 1, 2010, but last December, President Obama signed a law that reinstated them. This law gives people who died in 2010 a special tax break, meaning executors can opt out of the default estate tax regime. In 2010, the maximum federal estate tax rate was 35 percent. The New York Probate Lawyer Blog has previously reviewed the new federal estate tax laws.

Opting out requires the filing of Form 8939 and also means opting out of the stepped-up basis rule and into the carryover basis rule under the Internal Revenue Code.

Carryover means that assets keep the same basis and the basis in the hands of the decedent “carries over” to the recipient. If the basis is greater than fair market value, the basis is limited to the fair market value, however, the article states.

The article also reports that the generation skipping transfer tax exemption in 2010 was set at $5 million with a 0 percent tax rate and that the wealthiest of taxpayers had only a brief opportunity to take advantage.

It’s obvious from this article how complicated being an executor can be in a New York estate. There are many options to consider when determining how to handle a New York estate or will. There are both state and federal tax laws to take into consideration, all while balancing the desires of the decedent and perhaps the constant bickering from estate beneficiaries. It is a lot to balance and must be handled carefully in order to properly care for the decedent’s assets.

August 12, 2011

New York Executors Have Fiduciary Responsibilities and Are Subject to Court Review

by Jules M. Haas

The New York estate settlement process involves many different requirements and responsibilities. An Executor is the person or institution appointed by the Surrogate’s Court to administer or carry out the terms or provisions in a Last Will. The responsibilities of a person named as Executor begins immediately after the death of the decedent.

An Executor’s first duty is to file the Will with the Court and prepare a petition for probate. The Court must officially appoint the Executor before he or she has authority to handle estate affairs. While information provided in the probate petition is the same whether filed in Nassau, Suffolk or Queens counties, it may not always be easy to provide the required data. Among the items needed to be completed is a list of the names and addresses of all of the decedent’s distributees (i.e., next of kin). While this may be a simple task where a decedent is survived by a spouse and/or children, the information may not be so easy to provide where the decedent’s closest relatives are cousins and spread out throughout many different countries.

In a number of estates where I represented the Executor, distributees numbered in the twenties and many lived overseas. Also, particular problems arise when the decedent was orphaned or estranged from his or her family at a young age.

The named Executor is often faced with kinship issues such as these. Also, the potential for a Will Contest always exists. Thus, the Executor’s obligations can be quite extensive and complex even before the actual administration of the estate begins.

Once the Executor is actually appointed by the Court, it is his or her job to collect the decedent’s assets; pay bills, taxes and claims; and distribute the estate assets to the estate beneficiaries. In some instances, the Will may name more than one person as Executor and disputes may arise between the Executors. In a recent case decided by Surrogate Edward W. McCarty on June 2, 2011 and reported in the New York Law Journal on June 20, 2011, one of the Executors interfered with the sale of the decedent’s
residence. This conduct prompted the other Executor to commence a Court proceeding pursuant to Surrogate’s Court Procedure Action section 719 for removal of the Executor.

Even routine matters may pose extraordinary problems. As noted above, one duty of an Executor as a fiduciary is to determine and satisfy a decedent’s debts or the claims against the estate. An Executor who improperly performs this task may end up personally responsible for payment. However, determining the extent and validity of a claim or debt can be difficult. As reported by Letitia Stein on July 27, 2011 in the St. Petersburg Times, a lawsuit was filed against the estate of a woman by a hospital which claimed the deceased woman incurred over 9 million dollars in medical expenses prior to her death.

Determining and paying estate taxes or estate income taxes is also a complex matter. Just this past year Executors and other fiduciaries were required to examine the new tax laws very closely to determine whether an option concerning the cost basis of estate assets or utilizing an increased estate tax exemption would be most beneficial.

Distributing estate assets to beneficiaries can also have many problems. Quite often, beneficiaries are minors and payment must be made to a Trust or to a Guardian appointed by the Court. Also, beneficiaries may not agree with the calculations utilized in computing their shares or may object to some action taken or not taken by the Executor. A contested accounting proceeding may result from these disputes. Additionally, a beneficiary may die before receiving his or her distribution and a proper estate fiduciary must be appointed for the beneficiary’s estate before his or her share can be paid out.

The many responsibilities and issues faced by Executors and other estate fiduciaries in administering an estate are endless. Having an experienced estate settlement attorney is important to advise the fiduciary concerning these matters in estate administration