Posts Tagged ‘estate plan’

Is Your Estate Plan Up To Date?

Thursday, May 11th, 2017

By: Amy C. O’Hara, Esq., Littman Krooks LLP

In order to ensure your existing estate plan meets your objectives, it is imperative that it be reviewed at least every 3-5 years and updated when needed.  Here are some issues that might necessitate updating your estate plan:

  • You want to avoid probate;
  • You or a beneficiary become disabled or have a long-term illness;
  • Death of a beneficiary;
  • Marriage, divorce or remarriage;
  • Birth or adoption of a child;
  • Death or change of executor, trustee, and/o guardian;
  • A change in the distribution of your estate;
  • A significant increase or decrease in your net worth;
  • Retirement;
  • Expecting to change state of domicile; and
  • Finally, any time you feel uneasy about any of your documents, making changes and/or speaking with your estate planning lawyer to make you feel comfortable with them.

Never make any changes on your current estate planning documents.  Mark-outs, interlineations and other informal changes are of no effect and will not be honored during an illness or after your death.  It is important to meet with an experienced estate planning lawyer to ensure you estate plan is updated properly to protect you and your loved ones.

 

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How a Succession Plan for a Family Business Fits Into Your Estate Plan

Wednesday, October 21st, 2015

When a family business is transferred to the next generation, careful planning and proper timing are essential. The succession plan should take into account interest rates, taxes and the effect that the transfer may have on one’s estate plan.

One factor that family business owners should take into consideration is interest rates. The importance of this factor depends on individual economic circumstances, but generally speaking it is beneficial for the transfer of a family business to take place when interest rates are low. The seller may wish to finance the sale of equity or make a distribution that is financed through borrowing, or the buyer may wish to borrow funds so that the seller can be paid in full. In any of these scenarios, lower interest rates will benefit both parties, so the owners of a family business may want to have a succession plan in place but wait to implement it until the interest rate environment is most beneficial.

A succession plan for a family business also needs to take income tax issues into account. The 3.8 percent net investment income tax (NIIT) will apply to many business sales. In addition, many transfers of a family business involve an installment sale. If the older generation’s estate plan calls for that debt to be forgiven, then there will be debt cancellation income to the estate, which can create an income tax burden for the estate. Starting the transfer of the business sooner reduces this risk.

A family business succession plan involves many individual factors, including the crucial matter of when the next generation is ready to lead. It is important to take a long view and have a plan in place that can be implemented at the right time, but business owners should also stay abreast of fluctuation in interest rates and any changes in tax laws that may be on the horizon.

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It’s Time to Protect Your Family and Your Future – 2015 National Financial Literacy Month

Tuesday, April 14th, 2015

In support of the 2015 Improving Financial Awareness & Financial Literacy Campaign built around National Financial Literacy Month (April) and six month later during National Estate Planning Awareness Week (3rd week in October) the following estate planning article contains a very important message.

Over 50% of our adult population does not have a current or up-to-date estate plan to protect themselves and their family’s assets; that’s half your family, friends, and associates.

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Estate planning is a financial process that can protect you and your family and is a very important component of your overall financial planning. Now is the perfect time to put your estate planning house in order. If you don’t have an up-to-date estate plan and you happen to get hurt or sick and cannot manage your financial affairs, the courts will have to appoint someone to manage them for you. The person they appoint might not be the one you would want to perform those tasks.

Without an estate plan, when you pass away, your affairs will be settled by default through a complex legal system called “probate.” The handling of your financial affairs can turn into a costly and frustrating ordeal for your family and heirs.

The crafting of a good estate plan starts with planning, followed by the proper drafting and signing of appropriate legal documents such as wills, trusts, buy-sell agreements, durable powers of attorney for asset management, and an advanced health-care directive or health-care power of attorney. Having these documents in place saves you and your family a lot of money and time at a very difficult and emotional time. 5-2-Graphic-EPArticle
Your estate planning should also address the coordination of the way you hold title to your various assets, your beneficiary selections, and the possible transfer of certain assets while you are alive.

Regardless of the extent of your net worth, estate planning is important for everyone. Complex strategies may be used by wealthy people to reduce death taxes and costs. Others may only require a simple will and/or trust to pass on property to their heirs and provide for minor children.

Even if a simple will is all you require, an estate plan is an essential part of your financial planning. Everybody will need it someday. The time to address or update your estate plan is now.

For more information on estate and financial planning content, contact
V.Sabuco@TheFinancialAwarenessFoundation.org.

 

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LGBT Retirees Have Additional Estate Planning Concerns

Tuesday, October 16th, 2012

Members of the LGBT community tend to save more money for retirement than the population as a whole.  But LGBT seniors planning for retirement also face unique concerns.

According to experts, people in the LGBT community tend to be higher earners, and have smaller families, some with no children.  While lower family expenses may make it easier to plan for retirement, LGBT couples without children may also have to plan for additional caregiver costs as they approach retirement age.

Although same-sex couples may now marry in New York, the federal government does not yet recognize those marriages, and this creates complications for LGBT couples in terms of tax and estate planning.

As one example, estate taxes in 2013 will revert to a $1 million exclusion.  When a heterosexual spouse passes away, his or her assets over $1 million can usually pass to the surviving spouse without being subject to the tax, but this federal right does not apply to LGBT couples, married or not.

Social Security is another concern for LGBT couples, as spousal benefits are not provided to same-sex partners.  In addition, federal pension plans do not provide for spousal benefits.  LGBT couples must also be careful when moving property into joint ownership, as this can result in a large gift tax.

With careful estate planning, there are solutions to many of these issues.  LGBT couples planning for retirement would be advised to seek the counsel of a qualified estate planning attorney familiar with the unique needs of the LGBT community.

For more information about our estate planning and elder law services, visit www.elderlawnewyork.com.

Chronic Illness and the Estate Plan

Monday, May 16th, 2011


Martin M. Shenkman, Esq., (www.shenkmanlaw.com) focuses on the estate and business planning needs of high-net-worth individuals, closely held business  owners, and real estate owners/developers. We recently spoke to him about estate planning when a loved one has a chronic disease.

Q: What’s different about estate planning for someone with a chronic illness?

A: You need to focus on the specific disease, the individual’s experience with it, and its likely future course. There’s lots of variability.  Generic approaches don’t work; I can’t think of a worse candidate for online estate planning. The standard disability clauses that appear in most legal documents, even lawyer-prepared documents such as a shareholder’s agreement, should be examined. People make lots of dangerous assumptions—even professionals.

Q: Can you give me an example?

A: For instance, they may automatically structure an estate as if the person will be or has been unable to work.  Take MS–you can be diagnosed with it as a child but the average age is in the thirties. Someone with MS may be able to work for 10-20 years, some until retirement. Or look at Parkinson’s.  Most people experience its onset in their mid-sixties or later, but some begin to have symptoms in their thirties.  The older individual diagnosed with chronic illness may have had a full career during which to acquire assets. Planning is not only for the elderly and not only about special needs issues. Each situation requires a different approach.

Q:  What about advance directives?

A:  That’s another area that requires careful consideration.  Consider diseases such as MS and Crohn’s that involve uncontrolled attacks. A good way to approach power of attorney (POA)  in such cases might be to structure an immediate limited POA that would authorize someone to handle routine matters—bill paying—for a couple weeks.  But they wouldn’t be able to handle anything major, such as selling someone’s home.  The comprehensive POA would “spring” when the illness became incapacitating.

Q: You’ve said that estate planning tools should empower, not disempower.  What do you mean?

A: Disease disempowers. If you are living with a chronic illness or disability it limits what you can do. It disempowers you on some level or in some manner. There’s a big emotional component to planning for a loved one with a chronic illness, and there are creative means of preserving someone’s independence as much as possible. Take a situation in which an individual has bipolar disorder.  The person may be exceptionally bright and capable, but a manic episode could pose serious problems. The bulk of this person’s estate could be protected by establishing a fully funded living trust having family and institutional trustees.  But the trustees could be directed to establish a small account –say, $5,000–outside the trust that’s accessible to the individual by checkbook, credit and debit card. This would empower the person to do anything anyone else can do.  It could be replenished, as necessary, while the bulk of the estate would remain protected.

Estate planning tools should be used to ensure quality of life.  They shouldn’t be used as blunt instruments.

Thanks, Marty, these are thoughtful approaches to complex situations.  I hope they prompt readers whose loved ones have chronic illnesses to think creatively about their own estate planning.