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Tuesday, February 14, 2017

Main Reasons Why Families Fight Over Estates

1. Location of Siblings. It is often the case that one sibling provides care and support for an aging parent, while other siblings are distant (either physically or psychologically). While the local sibling provides support, that same sibling may also control the parent’s finances. The same sibling may also bring the parent to an attorney to get his affairs in order.


Read more . . .


Tuesday, January 10, 2017

Can you adopt an adult in New York?


Sometimes adults get adopted. Even though most adults no longer need a parent to make legal and financial decisions for them, adult adoptions still happen for other reasons.

The main reason for adult adoption is usually inheritance. If a person is not related to you biologically or legally, if there is no Will, then the person will not inherit your money. Of course, this issue can often be easily resolved by writing a Will and naming that specific person in the Will.


Read more . . .


Tuesday, January 3, 2017

Don't live an isolated life (and help seniors in your life to connect)


It's a New Year. People are trying to fulfill their new resolutions about money,  weight loss and projects.

I would suggest a resolution about friends.

It is well known that seniors who are isolated are more likely to be sick and depressed. We all need companions, if only to complain to about our health and current politics.


Read more . . .


Monday, October 24, 2016

Protecting Your Estate Starts with a Prenuptial (or a Postnuptial) Agreement


The rate of second and third marriages in the United States continues to increase. Each spouse may bring children, assets, heirlooms, and very specific wishes into the new marriage. Some want their children to inherit the bulk of the assets. Others want specific heirlooms (painting / jewelry / watch) to be passed down to specific people. Relationships within the extended family can deteriorate very fast.

Read more . . .


Thursday, July 7, 2016

ABLE accounts


The newly enacted ABLE accounts permit people with disabilities to save money without jeopardizing their government benefits. Account holders can have up to $100,000 in these accounts without jeopardizing their SSI (Supplemental Security Income) benefits. Medicaid benefits do not get jeopardized regardless of the amount of money held in these accounts.

These accounts enable disabled individuals to hold money in their name without a need for a Supplemental Needs Trust. This can be very beneficial for people with limited assets.


Read more . . .


Wednesday, June 29, 2016

You may want to think twice before leaving an outright distribution and gift


There are many things that can go wrong with an outright distribution:

  1. Judgment creditor can seize a beneficiary’s inheritance

  2. Bankruptcy court can seize a beneficiary’s inheritance

  3. An incapacitated beneficiary can squander an inheritance before anyone can step in to help him.

  4. A divorce court can award some of the beneficiary’s inheritance to an ex-spouse

  5. If the beneficiary doesn’t plan properly himself, his spouse’s family can receive your money

A lifetime discretionary trust, set up either during your life or through a Will, can mitigate against some of these risks. Some of the benefits of a lifetime discretionary trust include:

  1. Protection from beneficiary’s liabilities

  2. Protection from beneficiary’s divorce

  3. Protection during beneficiary’s incapacity

  4. Protection from beneficiary’s profligacy 

Talk to an estate planning attorney to see if setting up a lifetime discretionary trust may be beneficial for your family.

Disclaimer: This article only offers general information.  Each situation is unique.
Read more . . .


Sunday, June 28, 2015

International Estate Planning

I frequently see clients with global ties. New York community is home to many multinational technology, finance, consulting, and other companies.  Frequently, skilled employees of these businesses have family ties overseas, or have worked for their companies in other countries. Workers often bring their families with them, to live and to study and to work in New York. Families like this, which are increasingly common in today’s world, require careful estate planning services, often from an international team of experts.

Hypothetical Family:

Imagine our hypothetical family owns a half-million dollar apartment in Moscow, a half-million dollar house in Queens and a half-million dollars worth of stocks in US brokerage accounts.  The family has lived in the US for two years.  All family members are dual Russian-US citizens.  Every summer the family goes back to Moscow for a month for the children to visit their grandparents, but spends the rest of the year in New York.  The family may one day return to the Russia or live in a third country, depending on where the company sends them next.

The Local Component

Because the family is living in New York, it is extremely important that the parents work with an estate planning attorney licensed to practice law in New York.  If either or both parents became disabled or die, a New York power of attorney (in the event of disability) or a well-drafted trust (in the event of disability or death) would help ensure the family is properly cared for.   Many families with this level of assets also plan ahead to avoid the difficulties of probate, typically through the use of a living trust.  Perhaps most importantly, the family should name guardians for their children in the event of their deaths, as a New York judge would ultimately decide who should serve as guardians.  Without instructions from parents, a judge may pick someone the parents would not have chosen.

So far, the family’s discussion with a New York attorney is similar to the discussion any typical New York family might have with their attorney.  However, the family’s ties to Russia add a layer of complexity.

Russian Estate Plans

Only a lawyer licensed to practice law in Russia is qualified to give advice about an estate plan in that country.  The ideal time for a family to create an estate plan for its overseas property is at the same time as when dealing with US property.

If the US and Russian lawyer are working on their respective pieces of the estate plan at the same time, the family would be wise to ask the two lawyers to coordinate.  Some potential reasons:

-Probate is aggravating, expensive, and time consuming enough in one country.  It would be unfortunate if the family ultimately had to go through the process in two countries, due to a lack of planning.  A conservative estimate would be $6,000 in legal fees per probate estate, per country. 

-Local counsel in Russia can properly advise on the formalities of Russian will execution.

 -If the family has overseas relatives, there is a chance it will inherit further overseas property    after drafting its estate plan.  This could exacerbate foreign estate tax and probate problems.     Planning ahead with Russian counsel would be wise.

EXECUTORSHIP/TRUSTEESHIP

The successor trustee of a living trust ensures that its terms are carried out after the death or disability of the settlor (the person who created the trust).  Typically this means distributing funds, maintaining accounts, ensuring children are financially cared for, etc.  Similarly, the executor of a will closes out the estate in probate, if probate is necessary.

In New York, an executor may be anyone who has attained the age of 18 years, is a resident of the United States, is not of unsound mind, is not an adjudged disabled person and has not been convicted of a felony. So for the family in question, it is important the executor appointed in any Will be a US resident, not a relative in Russia.

For different reasons, all successor trustees of a living trust should ideally be US residents.  Under IRS regulations, allowing a non-US resident to serve as trustee will cause the trust to be classified as a “foreign trust” and incur much more burdensome tax reporting obligations. 

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.


Tuesday, April 28, 2015

Taking family dynamics into consideration, or thinking of expected family issues when planning!

When drafting a testamentary or an estate plan, one always should always consider family dynamics in order to preserve family relationships.

Parents may have several concerns about their children: entitlements, sibling rivalry, children’s spouses, safeguard from malpractice actions, and safeguard from drug abuse.

Entitlements: for parents of younger or minor children, the parents may not know what the children are going to be like when they grow up. It is up to the parents to build in incentives into their estate plan, so that the child graduates college, gets a career, waits until a certain age to get married, etc. One must be careful of entitlements that are against ‘public policy’ as those may be found void by the courts. Explicitly racist bequests (i.e. no money if she marries a Chinese) will not be upheld.

Sibling rivalry: most parents should be concerned about sibling rivalry. Once the parent is gone, the glue that held the family together may be gone as well.  A typical parent usually names the older child as the trustee or an executor of the trust, despite the feeling of ill-will that this nomination may cause. One method to avoid the rivalry may be to name a third party executor or a trustee.  This way the children may actually unite against a common enemy, who is not distributing the assets fast enough (in their opinion).

If the parent has left different provisions to children, it is imperative that the parent have a conversation with the children about his plan prior to his own demise. It is unfair to all siblings involved, if the disinherited child will find out about his disinheritance from the other siblings. In addition to feelings of resentment against the parent, the disinherited child may also suspect the other siblings in coercing the parent into doing what was done, and may start litigating.

Spouses of the Children:  parents usually want to leave bequests to their children and grandchildren, but not necessarily to the spouses of their children. Bequests to spouses may either be specifically avoided, or restricted, such that if the spouse divorces the child, the bequest will terminate.

Protection from malpractice action: A lot of the trusts that are now set up are done to protect the beneficiaries from creditor actions. The trust can be structured in a way that permits the beneficiary to enjoy the assets but not to technically own them.

Protection from drug abuse: if the parent is concerned about a child who has a drug, alcohol or gambling problem, naming a third party trustee is almost a necessity. The trust may also permit a trustee to engage in periodic testing of the child, and to stop making any payments to the child, in full discretion of the trustee. The goal is to provide for the child’s basic needs (shelter, food, clothing), and potential rehabilitation, without supporting the problem.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.


Saturday, April 11, 2015

Estate considerations for blended families

Second marriages bring additional estate planning considerations, especially when children from past relationships are involved. Here are some suggestions for addressing a blended family in estate planning:
  • If you are not married yet, write a prenuptual agreement, which specifies who owns which asset, the support arrangement in case of future separation, and asset distribution in case of death.  
  • If you are already married, communicate with the your new-spouse and any adult children regarding your current financial situation, and desires for distribution of those assets.
  • Set up a trust to make sure that the surviving spouse will be provided for.
  • Set up a trust to make sure that the children of each spouse get their assets.
  • Update power of attorney and advance health care directives.
  • Update any forms with beneficiary designations.
  • Prepare and share a list of personal and work contacts with your new spouse.

The information in this blog was adapted from

http://www.huffingtonpost.com/alexandra-smyser/estate-planning-for-blend_b_6754664.html

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.


Tuesday, April 7, 2015

The importance of Using the Proper Language When Setting up a Special Needs Trust

In a recent New York case, In re Paradiso, the court did not reform a father’s will which left money in a trust to a disabled daughter. In the Will, the father attempted to create a testamentary special needs trust, which would not have jeopardized the daughter’s government benefits (Medicaid and SSI). However, the language that was used to create a trust was not the statutory language!

There is a statute, EPTL 7-1.12, which requires that the supplemental needs trust language must clearly show that the intent of the deceased was “to supplement, not supplant, impair or diminish, government benefits”. If there is no such precise language, the intent of the testator is not clear, and the Trust will not be considered a Special Needs Trust.

As a result, the father’s money went in a regular Trust to a disabled daughter. Since the government will consider this money available to her, she is likely to lose her government benefits. These benefits can range from housing assistance and vocational training to home care and a stipend for basic food needs. 

This result could have been avoided by talking to a special needs attorney, who would have drafted a proper testamentary Special Needs Trust.  

 

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.


Tuesday, March 31, 2015

Planning for Children with Special Needs

There are many considerations when planning for your children. There are even more issues to consider when planning for your child with Special Needs. Regardless of the child’s age, the need for special care will continue.

  1. Advanced Directives. You need to have a trusted family member or a friend to make financial decisions and health care decisions on your behalf, if you are not able to do so. The documents needed are Power of Attorney and a Health Care Proxy. Having these documents will ensure that someone has access to your money and will be able to support your children even if you are incapacitated. .

  2. Will. You can only name a guardian of your children through a Will. If you are named as a guardian of your special needs child, you can either specify an alternate guardian through the guardianship paperwork or do it through your will. You can also set up a Supplemental Needs Trust through a Will.  

  3. Guardianship. Once the child turns 18, your authority to make decisions for him will end. Prior to this age, you may want to commence a 17A guardianship, which will permit you to continue making financial and health care decisions on the child’s behalf.

  4. Supplemental Needs Trusts. These trusts provide funds for the enhancement of life for special needs children and adults, without jeopardizing their receipt of government benefits.

    1. These trusts can either be set up during life or through a Will.

    2. There are two types of Supplemental Needs Trusts:

      1. Payback Trusts: set up using the individual’s own money, need to have a Payback provision to the State

      2. Third Party Trusts – set up with other people’s money, there is no need for a payback provision.

  5. Government Services. There are many government benefits available to special needs children and adults. You need to review the various options available and plan accordingly.  

    1. Supplemental Security Income (SSI): provides a monthly stipend to a child once he or she is eligible. Funds are used to meet basic needs.

      1. Typically a child qualifies at 18 (when he is deemed to be cut off from parents’ income and assets

      2. SSI has a 3 year look back period for transfers of applicant’s own funds – so planning must start early

      3. Eligibility is based on resources (maximum of $2,000)

    2. Medicaid and Medicaid Waiver Programs: provide for home and community care, prevocational services, supported employment, respite care, vehicle modification.

      1. Some programs are resource based, others are not

 


Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

 


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