New York Probate and Estate Administration Blog

Many people tend to overlook the likelihood of being hit with an estate tax because they aren’t considered “rich.” But according to NY Estate Lawyers many upper middle-class citizens could be hit with a tax rate as high as 35%.
Currently the law indicates an exemption for estate tax of up to $5 million for those who die in 2011 and 2012. What many people are unaware of is that this amount can easily be exceeded when you take life insurance coverage, a valuable home, healthy retirement balances and other assets into account.
“Don’t forget to count any private business ownership interests such as shares in a family corporation or partnership,” explained a New York Probate Lawyer.
He continued explaining an example about a divorced single parent. “She earns a healthy salary, she has a $4 million term life policy to provide for her three teenagers, has $800,000 of equity in her home, $1 million in retirement plan accounts, and $500,000 worth of assorted personal assets (cars, clothes, furniture, jewelry, and so forth). She has no debt other than her mortgage and because she has never considered herself to be anything close to ‘rich’ she has never done any estate-tax-avoidance planning.”
The lawyer explained that if she died tomorrow, her estate would be worth $6.3 million for federal estate tax purposes ($4 million + $800,000 + $1 million + $500,000), and her estate would accumulate a state bill of $455,000.
This scenario is all too common and they also add that for unmarried people, high life insurance coverage is the biggest reason for unexpected federal estate taxes. Married couples, he sited have an advantage because of the unlimited marital deduction privilege. This deduction is only good for U.S. citizens he added.
Lawyers are now recommending to their clients setting up an Irrevocable Life Insurance Trust. This basically helps avoid traditional estate taxes on the life insurance policy because it is not officially owned by anybody. The only catch is if you die within three years of setting up the trust you are subject to estate tax on it. People in The Bronx and Brooklyn should seek advice as to what road to follow.
In the end experts recommend talking to a professional to find out what your situation is. Although many people think they are exempt, often times they are not and only a professional can make the right recommendation. “It’s money well-spent,” one lawyer concluded.

Continue reading "Seeking an estate planning lawyer’s advice is essential" »

Extensive trust-planning and maneuvering tax law in order to protect a surviving spouse has long been a central part of the job of any qualified New York City Estate Planning Lawyer. Almost as soon as the United States Government christened the estate tax, wealthy families began finding ways around paying. Of central concern for many married couples is how to avoid the estate tax long enough that if one partner in the marriage dies, the other partner’s assets are protected, and any shared wealth is not taxed.

One of the most time-trusted methods of escaping the estate tax is a bypass trust- known more familiarly as a “family trust”. This trust is typically used to set up a trust-fund. The money which is set aside in a trust fund or other tax sheltered annuity (another common example is a charitable trust), is not taxable by the government. The surviving spouse can continue to live on whatever interest the fund might bear. In some cases, he or she can actually use a small percentage of the principal as well. Lawyers in Brooklyn and The Bronx are constantly trying to improve their handling of these problems.

According to the New York Estate Planning Lawyer we spoke with, the new tax law enacted at the end of 2010 could spell good news for married couples trying to plan their estate. By significantly raising the exemption and making those exemptions portable (in other words, transferable from one spouse to another in the event of death), the federal government has given couples the option of leaving funds directly to one another, without going through a trust or other tax shelter.

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August 13, 1970, Julia Eckhart died leaving two children, Charlotte Eckart and Frank Darmody. In her will that was dated August 4, 1966, she left each of them the sum of $50 and the rest to Watch Tower Bible and Tract Society of Pennsylvania. The will was admitted to probate and daughter, Ms. Eckart and Mr. Darmody submitted intent to contest the will. This is because of the size of the estate distributed by the will. A New York Estate Litigation Lawyer says that in the Estates, Power and Trusts Law, gifts to a charitable institution should not be more than half of the estate if contested by a descendant or parent. The law further states that the person can only contest if they are to receive a monetary benefit if the contest is successful as the beneficiary of the will.
Being the children of the deceased is not questionable. What needs to be decided on is if they have the right because they will receive a pecuniary benefit. The executor’s point of view was that the children did not have the right as the will expressed that Mrs. Eckhart, the deceased, did not want to give her children more than the $50, she provided for each of them. He relied on the case of Joseph Cairo as an example. The Cairo case had the specific words that said that the deceased did not wish to give the grandson, Joseph Cairo, anything from the estate. The grandson was not going to benefit from a successful contest.
In this matter, according to a report, the deceased placed her relatives in different levels as her children got $50 inheritance while the others did not. There was nothing that specifically or expressly stated she wished they do not receive anything more than the $50, she had appropriated in her will. The $50 in this case is insignificant. It does not show the intent of the testatrix if she wished to take away inheritance from her children. The law takes out intention with its provision. It keeps only what is stated in the will.
The policy of Stare decisis, which is for a judge to respect prior instances and follow that example, does not apply to this case because they are different. It is also not a hard-and-fast rule because if there is a compelling reason or if there was a misinterpretation of the law, then they can deviate from the old decision. The exceptions also have limitations.
A New York Estate Lawyer also mentioned that there is Mortmain Act that checks how much a charitable organization can get so as not to deprive or cheat relatives and dependents of the testator. It is similar to the rule that prohibits a testator from disinheriting a spouse. This does not stop the testator fully from giving everything to charity as they can still place a ‘no contest’ clause that can make sure of it. This revision in the will is a way for the testator to dodge the rule. This modification on the will did not appear in the deceased will.
The order appealed from was reversed by the Court of appeals. The matter was given back to the Surrogates court. The costs were given to each party separately payable from the estate. This would be handled in a similar way in Brooklyn and Long Island.

Continue reading "Julia Eckhart died leaving two children" »