GLASS'
WILLS, TRUSTS & ESTATES UPDATE
The Dangers of Your Digital Death
(Posted Feb 12, 2012)
Ian Fleming once wrote in one of his James Bond novels that you only live twice. Well, it now seems that you die twice as well. The first is your paper death and the second is your digital death. Digital death is quite a new phenomenon, so most of us simply aren't prepared for it. But your digital death could be far more troublesome than the paper version.
You already know what to do about your good old-fashioned paper death. You write a Will, setting out which of your loved ones will inherit your property and other assets. Of course, half of us still don't bother to do a Will, which is ridiculous, but that's the topic for another day.
Unfortunately, even fewer of us are prepared for our digital death.
When we die, our body and soul aren't the only things that stop functioning; our online persona will also stop dead in its tracks. This is a big problem, now that we live such active online lives. We have net-based bank and savings accounts, pensions and investment portfolios, and personal effects such as music, movies, photographs, blogs and social media accounts.
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Special Care for Special Needs Children
(Posted Jan 19, 2012)
"Special needs children" are those who need extra assistance. They may be disabled, have learning issues, Down Syndrome, Cerebral Palsy, ADD, autism, muscular dystrophy, depression, obsessive compulsive behavior, closed head injury, spinal cord injury, or any one of a host of other physical or mental challenges. Sometimes those problems are severe, other times children function normally only at a lower level. Special needs children usually need more emotional support, have higher expenses and need additional financial resources for a longer period of time. It is possible (if not probable) that a special needs child will require assistance throughout his or her adult life.
When a special needs child loses his or her parents (whether that special needs child is 8 years old or 50 years old), he loses his prime support network. It is important to understand the devastation of that loss and to try to put a support system in place -- just in case -- to cushion the blow. Issues change with age, but in general parents must think through who will monitor that child's welfare, help him apply for and continue to receive benefits, help him decide whether to continue working, how to get around, and fulfill supplemental needs like vacations or travel. Special care must be given to who the guardian, trustee and advocate will be, and it is especially important in this case to line up successors.
Many special needs children and adults pay for food, shelter and some medical costs with money from governmental programs funded by the Social Security Administration and Medicaid and some state sponsored programs. Even if a child is covered under a private health insurance plan, that may not be enough. Medicare and private insurance do not cover residential care or most medication expenses. Medicaid does cover those expenses and for most special needs children.
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Tax and Estate Planning for Same-Sex Marriages in New York
(Posted Dec 20, 2011)
New York's Estates, Powers and Trusts Law ("EPTL") contains a number of provisions that give special rights to surviving spouses. For example, if an individual dies without a will, his or her surviving spouse is entitled to receive the deceased spouse's entire estate if there are no surviving issue or $50,000 and one-half of the remaining estate if there are surviving issue. A surviving spouse also has the right to elect to take one-third of the assets of his or her deceased spouse regardless of what the provisions of the deceased spouse's estate plan provide. The legislative intent above makes it clear that whether all the statutes in the EPTL governing these rights have been changed to gender-neutral or not, they are to be considered gender-neutral.
Before the Marriage Equality Act, there was some judicial precedent for extending the benefits of these provisions to the surviving spouses of same-sex marriages. The Act now provides a statutory basis for this extension. But make no mistake, whether it be a same-sex relation or a different-sex relation, these benefits do not extend to unmarried couples, no matter how long the relation existed.
The application of the New York tax rules to same-sex married couples becomes very complicated because of the fact that federal tax law does not recognize same-sex marriages. For most income and estate tax purposes, New York tax law follows federal tax law. Under the Defense of Marriage Act (DOMA), the federal law provides:
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Do I Have to Leave It To The Children?
(Posted Nov 6, 2011)
It's a question estate planning attorneys hear a lot. For whatever reason, a person desires not to leave any property to one or more of the natural objects of his or her affection. These could be a spouse, children, other family or even a partner.
The answer, with a couple of important exceptions, is no. You are free to leave (or not leave) any or all of your estate to anyone you want. The exceptions are for surviving spouses, minor children and, possibly what are known as pretermitted heirs. This shows how writing a will has just enough quirks to warrant an attorney's help.
Spouses: unless there's a premarital agreement, in New York, a surviving spouse can elect a statutory share of a deceased spouse's estate. Similarly, New York state laws account for children in the intestate distribution. Finally, a forgotten, unknown or unmentioned child may also have a claim to part of the estate.
Usually, spouses leave their estate or the largest part of their estate to each other. That seems simple enough, but sometimes the spouse in question is not easily identified. In order to be certain, the spouse is usually specifically identified by language like "I leave my estate to my wife, Mary Jane." This way there is no confusion as to who the decedent was talking about.
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Talking to Your Parents
(Posted Oct 2, 2011)
As an estate planning attorney, I know how common it is for each generation to avoid planning for their death. I have heard many adult children speak to me about how hard it has been to get mom and dad to even talk about it. Few people are eager to spend time thinking about their own mortality, especially the parents that raised and cared for us. Unfortunately, not spending a little time with an attorney can end up costing more than just a little time.
Let's face it, most people don't wake up in the morning and decide that they are going to call an attorney to do an estate plan. Most of them call because either something has happened to them directly (they were appointed as an executor and found out firsthand the difficulties in probating an estate and they didn't want their family to have to deal with that) or something happened indirectly (a family friend died leaving behind minor children and they didn't have a plan in place).
Discussing estate planning with your parents can be difficult and uncomfortable for everyone. Neither of you wants to think about the fact that they will one day pass away. You may also be thinking that your parents are looking at you as the greedy, uncaring child. The way to approach this topic with parents may be to first help them understand that you have their best interest at heart and that you are coming from a place of compassion and love.
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Tax Deadlines for 2010 Deaths? IRS Finally Issues Guidance
(Posted Sept 7, 2011)
On August 5, 2011, the IRS finally published some guidance for executors of estates of people who died in 2010. Notice 2011-66 explains how these executors can opt-out of the estate tax, and Revenue Procedure 2011-41 explains the special tax rules that apply to assets when executors opt-out of the estate tax.
The estate tax and the Generation-Skipping Transfer (GST) tax were repealed on January 1, 2010; but on December 17, 2010, President Obama signed a law that reinstated them retroactive to January 1, 2010.
This law gave people who died in 2010 a special tax break: executors of 2010 decedents can opt-out of the default estate tax rules. Under the new law, the estate tax rate in 2010 was set at 35% and the exemption was $5 million. This is the same as it now is for 2011 and 2012. This second method of estate tax has one main benefit: assets received from a decedent are generally stepped-up to fair market value under Internal Revenue Code §1014 whereas if the executor chooses to opt-out, there is generally no step-up in basis.
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Understanding the Rules of Inherited IRAs
(Posted July 20, 2011)
Do you want to hand your heirs big tax problems? Would you like to hand the IRS a sizable chunk of your inheritance? Probably not. But if you misunderstand the rules when it comes to inherited IRAs, you just might. Here are some mistakes that IRA owners and IRA heirs often make.
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Many clients think that a will or a trust can facilitate the transfer of IRA assets.
IRAs don't pass to heirs through wills or trusts (a few rare exceptions aside). The beneficiary form takes precedence. This is a form the IRA owner filled out and signed when opening the account.
Problems arise when:- • The IRA owner dies without designating a beneficiary;
- • The designated beneficiary has passed away before the IRA owner; or
- • No one can find the beneficiary form (not even the IRA custodian,
i.e., the financial institution that hosts the IRA).
Estate and Gift Taxes Explained
(Posted June 5, 2011)
Estate and gift taxes are used to tax large transfers of wealth between individuals. Gift taxes are imposed on transfers made during an individual's lifetime, and estate taxes are imposed on transfers made at the time of death. If you are married, and your spouse is a citizen of the United States, there is no limit on the value of the gift that you may give your spouse. But other than your spouse, there are limits on the amount of money you can pass on before you are taxed on the transfer. Once an individual reaches that exempt amount, everything above that is subject to a transfer tax.
As of January 1, 2011, there has been a substantial change in the federal estate tax. But in order to understand and fully appreciate the change, we need to go through a quick history first and see how we got here.
In 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act, which slowly raised the federal estate tax exemption from $625,000 to $3,500,000 in 2009 and then completely eliminated the estate tax for 2010. The gift tax exemption went up and locked in at $1,000,000. Unfortunately, there was a sunset provision in the Act that had the estate tax revert back to $1,000,000 as of January 2011.
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Intro to the Wonderful World of Wills, Trusts & Estates
(Posted Apr 1, 2011)
In case you didn't know, this is my first foray into the world of blogging. That being the case, I thought that I'd spend this month just explaining some of the more general concepts of Elder Law and Estate Planning; a general introduction to begin. Although they are pretty basic (at least to me), I've found that there are a large percentage of people that don't know anything about these primary ideas.
The first concept is "What are Elder Law, Estate Planning, and Trusts and Estates?" Unlike tax law or criminal law or motor vehicle law, there is no one body of law that we (as attorneys) can go to. Instead, it's a mixture of Social Security, Medicare, Medicaid, Tax, Estates, Trusts, Mental Hygiene and even torts (personal injury) and Penal Law (criminal). The idea is that we look at all these types of law and see how they apply to our clients.
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