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Estate Planning

Thursday, January 12, 2017

What to Do When Your Spouse Becomes Ill

Knowing what to do when a loved one becomes ill can alleviate some of the uncertainty and anxiety that normally follows. Oftentimes, people panic and start making changes to their estate plan without first consulting with an experienced attorney or tax advisor. Family, friends, and others who want to help, tend to give well-meaning advice. They may suggest putting assets into the name of the well spouse alone, transferring assets, and/or adding or changing beneficiaries to accounts.  Following such advice without considering the tax and other consequences can have unintended, adverse consequences.  One should not begin to make changes to bank accounts and other investments unless and until all of the tax implications have been examined.


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Wednesday, November 9, 2016

Conducting a Periodic Review of Your Estate Plan

It is important to review all of one’s estate planning documents, from time to time, to see if the contents of the documents still adequately reflect one’s wishes.  At a minimum, your will, health care proxy, living will and durable of power of attorney should be looked at by an experienced attorney, to make sure the documents have been properly prepared and that no revisions are needed due to changes in the law.


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Thursday, October 20, 2016

Long Term Health Care Planning: How To Protect Your Home

It is a well-known fact that nursing care, whether rendered at home or in a nursing facility, is extremely expensive. Even if one possesses substantial assets, those assets will be eroded quickly as a result of spiraling health care costs.  Often, the most significant asset owned by the person needing such care is the family home.  Therefore, it is important to take steps to ensure its protection.


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Friday, October 7, 2016

Estate Planning in a Down Economy



There is no doubt that economic downturns take their toll on everyone.  Even if a parent has not been affected directly by a job loss or salary reduction, in many instances, parents are how helping their adult children who have been directly adversely affected. The mere mention of the word “probate” usually engenders a rather negative reaction. For many people, the word conjures up visions of extensive delays and enormous expense involved in settling an estate.  Seminars promoting living trusts are pervasive and they promote the misconception that probate is an evil to be avoided.
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Wednesday, September 7, 2016

The Importance of Getting Your Affairs in Order




There are a number of relatively easy steps which can be taken in order to simplify your estate plan, thus saving time and money for you and your family. 

It is not uncommon to have many separate savings accounts, mutual funds and brokerage accounts, and certificates of deposits held by a variety of institutions.  Consolidating your accounts will certainly make it easier to monitor them.  Additionally, in the event of your death or disability, it will save your heirs a great deal of time and energy in collecting and managing your assets. Eliminating bank accounts and putting those funds into investments accounts is also a good idea, since brokerage houses and mutual fund companies are usually easier to deal with than banks.
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Sunday, July 31, 2016

What to Do Upon the Death of a Loved One


 

 

Knowing what to do when a loved one dies can alleviate some of the uncertainty and anxiety that normally follows. Of course, funeral arrangements must be made quickly and family members must be notified.  One should order sufficient copies of the death certificate, as there may be a delay in obtaining additional copies later on. Death certificates will be need for each asset owned, as well as for filing(s) with governmental agencies.  If the decedent was collecting social security and/or a retirement pension, the appropriate entities must be notified.
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Wednesday, July 13, 2016

Beware the Dangers of Joint Ownership and Beneficiary Designations



It is quite common for a parent to put a child’s name on his or her checking account, savings account, or brokerage account, with the intent of making it easier for the child to access funds in the event of the death or disability of the parent.  Sometimes this is also done because a parent believes that by adding the child’s name to an asset, he/she is protecting the asset from taxes and long-term care costs.  While the purposes for which this is done may be well-intended, adding a child’s name to one’s assets can have serious, unexpected and undesirable consequences.  

By putting a child’s name on one’s accounts, you are making that child a joint owner with the power, during your lifetime, to withdraw monies from these accounts.  Even though you may trust your child implicitly, you need to be concerned about the unintended consequences of making the child an owner.
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Monday, June 20, 2016

Minimizing Estate Taxes: Some Simple Techniques


As of January 1, 2016, the amount of money which you can leave to your family and friends at death-- the “unified credit”-- is $5,450,000 at the federal level. This credit may also be used to make gifts while you are alive.  Most states impose their own estate tax and/or inheritance tax so one needs to research what the applicable state exemption is as well.

Of course, the easiest way to reduce your taxable estate is to make gifts of up to $14,000 per person each year. These annual gifts are tax-free and they do not reduce your unified credit amount.


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IRS Circular 230 disclosure: We inform you that any tax advice contained in this communication is not intended or written to be used, and may not be used by your or anyone else for the purpose of avoiding penalties imposed under the Internal Revenue Code.


                                                     



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Wednesday, May 11, 2016

Probate: Dispelling the Myths



The mere mention of the word “probate” usually engenders a rather negative reaction. For many people, the word conjures up visions of extensive delays and enormous expense involved in settling an estate.  Seminars promoting living trusts are pervasive and they promote the misconception that probate is an evil to be avoided.

The truth is that the process of “probating” a will is quite simple, at least if the decedent is a resident of the State of New York.  It involves the preparation and filing with the Surrogates Court of a probate petition and other documents which are typically prepared by an attorney.
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Tuesday, April 12, 2016

Providing for Minors


  

 

A very common mistake clients make, in their estate planning, is that they name grandchildren, or other persons under the age of 18, as the beneficiary of their retirement accounts, annuities, or other investments.  Since persons under the age of 18 can not legally inherit assets in New York, and in most other states, this creates a serious problem.  Institutions are not permitted to disburse monies to minors; rather, they will normally require that someone be legally appointed as guardian of the minor in order to receive the funds.  That the minor has parents is not sufficient--the parents will be forced to commence legal proceedings in order to be appointed guardian for the purpose of accepting funds.

While it is certainly understandable that one wants to provide for grandchildren, the proper way to do so is by preparing a will that provides for a trust to receive the assets at least until the child attains the age of majority.


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Saturday, February 27, 2016

Understanding Trusts

Clients are often understandably confused about the differences between revocable trusts, irrevocable trusts, and testamentary trusts.  Very simply, testamentary trusts are those created pursuant to one’s last will and testament. Such trusts do not get established until the death of the person who created the will, and the provisions which govern the trust are contained in the will itself.  These are usually created for the benefit of minors, spouses and disabled children.  These trusts can be changed by the testator at any time, but they become irrevocable at his or her death.

A revocable trust is created during the maker’s lifetime, by a separate document. Revocable trusts, also commonly referred to as living trusts, can be amended or revoked at any time by the maker of the trust (the “grantor”).  Only upon the death of the grantor does the trust become irrevocable. The primary purpose of the revocable trust is to avoid probate.  In order to accomplish this purpose, all assets of the grantor must be transferred to the trust during the grantor’s lifetime.  Contrary to what is often discussed at revocable trust seminars, these trusts do not accomplish any tax savings, nor do they protect assets in the event one needs long-term health care.  

Irrevocable trusts are also created during the grantor’s lifetime, by separate documents.  There are many types of irrevocable trusts and their primary purpose is to achieve tax savings, prevent disabled beneficiaries from losing government benefits, and/or protect assets from long-term health care costs, while also avoiding probate.  They are often used in the case of second marriages, to allow a surviving spouse to receive income from the assets but ensure that upon the death of the surviving spouse, the assets pass to the grantor’s children.  Irrevocable trusts, by definition, may not be amended or revoked by the grantor.  Moreover, they necessarily entail some loss of control by the grantor over the assets transferred to the trust.  Of course, there are many types of irrevocable trusts.  For example, if one’s primary goal is to avoid or reduce estate taxes, one can establish a qualified personal residence trust, a grantor retained annuity trust, or a charitable remainder trust, to name a few.  Life insurance trusts are extremely useful, as they remove the entire value of life insurance proceeds from one’s taxable estate. As is the case with all irrevocable trusts, the grantor may not act as Trustee of these trusts, nor exert any control over the trusts.

         Prior to establishing any type of trust, one should first give serious thought to what objectives one is looking to achieve. Obtaining advice from an attorney who is knowledgeable in the areas of taxation and estate planning will prove invaluable.

 

 

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IRS Circular 230 disclosure: We inform you that any tax advice contained in this communication is not intended or written to be used, and may not be used by your or anyone else for the purpose of avoiding penalties imposed under the Internal Revenue Code.


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