Connors & Sullivan, Attorneys at Law, PLLCNew York Estate Planning Lawyer | Brooklyn Elder Law Attorney | Queens Medicaid Planning Law Firm | NY2024-03-28T06:41:35Zhttps://www.connorsandsullivan.com/feed/atom/WordPressOn Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520422024-03-26T16:49:19Z2024-03-26T16:49:19ZEstate planning isn’t just something that matters once you are gone – it’s also a way to make sure that your life is stable while you’re alive. High-net-worth individuals looking to preserve their familial wealth and minimize estate taxes may want to consider a Qualified Personal Residence Trust (QPRT).
A Qualified Personal Residence Trust (QPRT) is a type of irrevocable trust designed to transfer a primary residence or vacation home out of an individual's estate while allowing them to retain the unrestricted right to continue living in the home for a specified period (usually measured in years). At the end of that term, the property is transferred to the trust’s beneficiaries (which are usually other family members).
What are the key features of a QPRT?
This unique strategy combines elements of gifting, estate tax planning and real estate management. Once established a QPRT cannot be altered or revoked without the consent of the beneficiaries. This irrevocability is a crucial factor in removing the property from the grantor's taxable estate.By transferring the property to the QPRT, the grantor makes a taxable gift to the trust. During the “retained interest” period where the grantor continues to reside in the home, the grantor continues to pay property taxes, maintenance costs and other related expenses. However, the taxable value of the gift is reduced by the retained interest, potentially minimizing gift tax liability.If the grantor survives the retained interest period, the property is excluded from their estate for estate tax purposes. However, the grantor would then need to either relinquish the property to the new owners (the QPRT’s beneficiaries) or begin paying fair market rent. That helps avoid any adverse tax consequences that would undo all the previous gains.If the grantor passes away during the retained interest period, the property is included in their estate for estate tax purposes through a residence reversion clause. Then, the property would pass through the estate and probate according to the estate’s controlling documents.
What makes a QPRT such an advantage in estate planning?
New York has its own estate tax, and a QPRT can be instrumental in reducing both federal and state estate tax liabilities. If the property appreciates during the term of the QPRT, the appreciation is not subject to estate tax upon the grantor's passing. QPRTs provide a means for individuals to transfer their family homes to the next generation while maintaining residency. It is much safer than simply adding someone’s name to a deed and offers more specificity and control over the future.Qualified Personal Residence Trusts offer an innovative solution for high-net-worth people in New York seeking to protect their real estate assets for their families and minimize estate taxes. However, due to the complexity of this kind of estate planning and the intersection of several different areas of concern, it’s important to remember that this is just one possible approach. Good estate planning involves a careful assessment of your goals and a full exploration of all the legal options available.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520442024-03-26T16:47:40Z2024-03-26T16:47:40ZA revocable trust, often referred to as a “living” trust, is a legal entity created by an individual, known as the grantor, to hold and manage their assets during their lifetime.
Unlike an irrevocable trust which cannot be altered once it is made without some difficulty, a revocable trust allows the grantor to retain control over their assets and make changes to the trust's terms throughout their lifetime. They can even revoke the trust entirely if they wish.
What happens to the revocable trust after you die?
Upon the grantor's death, a revocable trust undergoes a transition. It immediately becomes irrevocable upon your death. That means that the successor trustee you named will automatically take control of your trust. Once any debts that must be addressed have been paid, the assets will be distributed according to the terms you laid down when you either established or last updated your trust.
Should you consider a revocable trust?
Irrevocable trusts are often established to benefit a child with special needs or provide for a grandchild’s education – but most people do not want to lock the majority of their assets up in an irrevocable trust while they’re still alive. Revocable trusts lack some of the advantages of irrevocable trusts, such as asset protection, but they do have their uses, such as:
Probate avoidance: One of the primary benefits of a revocable trust is that it enables the seamless transfer of assets to beneficiaries without the need for probate. By placing your assets in a revocable trust, those assets can bypass probate, allowing for a quicker and more private distribution of assets to your beneficiaries.
Incapacity planning: Revocable trusts are valuable tools for planning for incapacity. If you ever become unable to manage your affairs due to illness or disability, the successor trustee that you named in the trust document can step in and manage the trust assets on your behalf, ensuring a smooth transition without the need for court intervention. This can actually be superior to powers of attorney designations since those are not always recognized by every financial institution.
Privacy and flexibility: Unlike a will, which becomes a public record during probate, a revocable trust allows for a more private distribution of your assets. Additionally, the trust can be amended or revoked at any time, offering the grantor flexibility to adapt the trust to changing circumstances or preferences. They are also less vulnerable to challenges by disgruntled heirs.
In summary, a revocable trust is a powerful estate planning tool that offers flexibility, privacy, and the ability to avoid probate – but it is far from the only tool available. Once you understand the benefits and implications of a revocable trust you will be able to make informed decisions about your estate plans.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520622024-03-26T16:45:46Z2024-03-26T16:45:46ZUnderstanding what a surviving spouse is entitled to share
In New York, a surviving spouse is only entitled to a share of the marital property, not a share of their deceased spouses’s separate property. Marital property broadly includes assets and debts acquired during the marriage, regardless of whose name is on the title or account.
This means that a surviving spouse is generally entitled to a fair share of any portion of the estate considered marital property, but they may not be entitled to any share of other assets. That would include assets acquired before the marriage and gifts or inheritances that were solely given to the deceased spouse.
How New York’s state’s elective share laws affect the options
One of the key considerations when disinheriting a spouse in New York is the state's elective share laws. These laws are specifically designed to protect surviving spouses from being disinherited outright. Under New York law, a surviving spouse has the right to claim a portion of the deceased spouse's estate as their “elective share,” regardless of what provisions are actually in the deceased spouse's will.
The elective share in New York is currently set at $50,000 or one-third of the deceased spouse's net estate – whichever is greater. (If the estate is worth less than $50,000, then the surviving spouse is entitled to the whole thing.) This means that even if a spouse is expressly disinherited in their deceased spouse's will, they still have a claim.
Exceptions may apply to the elective share choice
Like most things in the law, there are always some exceptions. While elective share laws generally provide surviving spouses with good protection against disinheritance, there are certain circumstances in which the surviving spouse may still be disqualified from claiming their elective share.
These exceptions include situations where the surviving spouse:
Abandoned the deceased spouse
Caused the deceased’s death
Signed a prenuptial or postnuptial agreement
The last is the most common exception to arise. Sometimes (especially when a couple has both been previously married and have children from those prior relationships), each party will agree to disinherit the other. To circumvent the default provisions of New York's elective share laws, prenuptial and postnuptial agreements can be used. Both prenups and postnups are legal agreements that allow couples to define their own terms regarding the distribution of assets in the event of divorce or death, including provisions for disinheriting a spouse.
However, for a prenuptial or postnuptial agreement to be enforceable in New York, it must meet certain requirements, including full disclosure of assets, absence of duress or coercion and fairness at the time of execution – so this, too, is something that has to be handled with care. It is also important to note that both individuals should be advised by separate counsel or at least have an acknowledgement that they are entitled and chose to forego the option.
What’s the bottom line?
Disinheriting a spouse in New York is not impossible, but it isn’t exactly a simple issue, either. It's essential to navigate these matters with the guidance of experienced legal counsel. To accomplish your goals, it may be necessary to consider a combination of steps, such as premarital agreements, trusts and the use of beneficiary designations.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520462024-02-20T00:25:39Z2024-02-07T18:10:37ZState and federal estate taxes
Both New York authorities and the federal government may assess taxes against an estate. In New York, both state and federal estate taxes may apply. New York estate taxes apply to estates worth more than $6.94million as of 2024. The tax is progressive, meaning it increases with the value of someone's estate. The top tax rate currently is 16%. Federal estate taxes might also apply. The threshold for federal estate taxes in 2024 is $13.61 million. The federal estate tax is also progressive with a top tax rate of 40%.
Income taxes
It is common for people to sell some of their assets. Testators may recognize, for example, that their family members may not want their home or any of their personal property. If the sale of estate resources generates more than $600 in income, it may be necessary for the personal representative to file an income tax return and save funds to pay estate income taxes. There could also be outstanding income tax obligations for the decedent that their estate may need to cover after the representative files their final tax return.
Capital gains taxes
Technically, capital gains taxes are the responsibility of beneficiaries. If someone receives valuable property from an estate and sells that property, they might owe taxes on the increase in value. Capital gains taxes can significantly reduce the financial benefit that loved ones derive from inheriting and selling certain resources.
Testators can prevent the inappropriate sale of assets by using a trust or might otherwise create a more structured estate plan as a means of limiting an estate's tax obligations and the tax responsibilities that fall to their beneficiaries. For these and many other reasons, planning for taxes may help someone maximize the positive impact their estate has on their loved ones.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520302024-01-05T21:29:30Z2024-01-05T21:29:30ZBlended families, where couples who have children from previous relationships marry, are increasingly common in today's society.
Having a family with children (whether they’re adults or minors) who can be defined as “your, mine and ours” can be very rewarding – but it can also be uniquely challenging when it comes to estate planning. You want to protect the future well-being of all your family members, and that takes some careful planning and a strategic approach. Here’s how to get started:
1. Recognize the family dynamics involved
Understanding the dynamics of your blended family is the first step toward effective estate planning. Step-siblings, for example, may have vastly different (and weaker) bonds than full siblings and half-siblings. Children who were raised together may also be more accommodating to each other’s needs than children who see themselves as virtual strangers. You need to take into account the real dynamics of your situation when you name your executor, establish a trustee or designate powers of attorney.
2. Consider how to fairly divide the estate
You and your spouse need to also have some frank discussions about the future so that you are both on the same page. Stepparents (and stepmothers, in particular, since they tend to outlive their husbands) get a bad reputation for “usurping” the inheritances of their stepchildren because too many spouses assume that they can simply trust their spouse to pass on family heirlooms as directed. Put your bequests – large and small alike – into writing.
3. Establish trusts to meet specific goals
Do you have children in various age groups? Are you worried that, should you die, your youngest children won’t get the benefit of a good college education even though you paid for their older siblings to attend school? You can set up trusts that are designed for that purpose so that the money is already put aside and separated from the rest of your estate.Trusts can be powerful tools in addressing the specific needs of all your children. Whether it's funding education, providing for healthcare expenses or ensuring financial stability, trusts offer flexibility in tailoring your estate plan to the unique requirements of each child.
4. Look carefully at your end-of-life plans
In a blended family, nothing can start conflict faster than a medical crisis when the family members don’t agree on how to proceed and the person in question cannot speak for themselves. Make sure that you carefully explore your options with a health care proxy so that your wishes are followed.
5. Keep your estate plan updated
Finally, you need to regularly review and update your plans once you make them. Family situations may continue to change over time. Regularly review and update your estate plan to reflect any changes in your family structure, financial situation or personal preferences. This ensures that your plan remains relevant and aligned with your evolving goals.Crafting an inclusive estate plan for a blended family involves a blend of legal considerations, open communication and a genuine understanding of each family member's needs. When you are striving to protect your children's futures, the importance of a well-crafted estate plan cannot be overstated. Experienced legal guidance can help you create the plan that’s best tailored to your needs.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520252024-01-03T15:15:48Z2023-12-21T15:13:30ZCreating a comprehensive estate plan is a crucial step in securing the financial well-being of your loved ones and ensuring that your legacy is preserved according to your wishes.
While a will is a fundamental component of estate planning, incorporating a trust into your plan can offer numerous benefits – not the least of which is that it can help you keep most or all of your estate out of probate and minimize taxation.Here are some of the top reasons to consider adding one or more trusts to your plan:
1. You can protect yourself and your family in the event of incapacity
A revocable trust allows you to maintain control over your assets during your lifetime. Should you become incapacitated, however, your successor trustee – someone you trust and designate – can step in to manage the trust on your behalf without lengthy court involvement. That can allow for seamless management of your assets at a time when your family needs stability the most.
2. You have out-of-state property and want to avoid ancillary probate
Whether it’s a second home in Florida, a condo out in California or a cabin and some undeveloped property up the coast, having real property in another state usually means that your loved ones have to go through probate in both states. This additional probate process can delay the transfer of those assets and cost your estate more money, but property held in a New York trust avoids the ancillary probate problem.
3. You can tailor the asset distribution to each beneficiary’s unique needs
Trusts offer a high degree of flexibility when it comes to the way assets are distributed. Whether you have minor children, beneficiaries with special needs, or complex family dynamics, a trust enables you to provide specific instructions on how and when assets should be distributed. This tailored approach ensures that your loved ones are cared for in a manner that aligns with your intentions.
4. You can better protect your assets from losses
Certain types of trusts, particularly irrevocable trusts, provide an enhanced level of asset protection that wills do not. Assets held in such trusts may be shielded from creditors, offering an added layer of financial security. Additionally, trusts can be structured to protect assets from being divided in the event of a beneficiary's divorce or death, preserving family wealth for future generations. You can also use Medicaid asset protection trusts to protect your assets from being lost to your long-term care needs.If you’re contemplating making changes to your estate plan and adding a trust, the wisest thing you can do is seek experienced legal guidance to help you assess what’s most appropriate for your needs. That way, you can make informed decisions on the issues that will so profoundly affect your family’s future.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520222023-12-20T21:37:59Z2023-12-13T21:35:45ZPutting inheritance in a trust
One of the best ways to control how others use an inheritance is to put assets in a trust, rather than giving them to your beneficiaries directly.
For example, perhaps you want to ensure that your children get a good college education. You don’t want them to spend their money traveling or making frivolous purchases. You could put the inheritance in a trust with instructions stating that it must be used for college tuition. When your children graduate from college, only then can they have the remaining balance of the trust to use as they wish. This arrangement can be set up while you’re living. Not all trusts are testamentary in nature.
If you don’t have a specific way that you would like your children to use their inheritance, you can put it in a discretionary trust. If you do this, then the trustee that you name gets to use their own discretion to decide how the money should be distributed. It’s important to choose someone who has the same values and goals in mind that you do. This can prevent your children from taking money out of their trust to use for anything that they want. Your trustee could approve purchases like a family home or buying a business, while denying purchases that are considered nonessential or frivolous.
Setting a trust up
Depending on your goals and circumstances, it may be highly beneficial to use a trust when doing your estate planning. The exact specifics of your situation are unique, so seeking legal guidance tailored to your situation is wise.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520192023-12-20T21:28:09Z2023-12-11T12:00:40ZThose battling chemical dependence may have a difficult time maintaining social and familial relationships. They may lose their jobs or find themselves struggling with debilitating symptoms as they withdraw from their substance of choice. Addiction often leads to criminal activity as people seek to source their substance of choice through any means possible. Some people will steal from friends and family members to fund their addiction. Others will steal medication and alcohol, either from people or possibly from businesses. They may give their families hope when they regain sobriety, only to relapse when life becomes difficult.
Someone who is trying to put together an estate plan needs to consider not just who expects to inherit but what they would do with an inheritance. The good news is that disinheriting a loved one with addiction is not the only option for concerned family members.
Trusts can help people more than a will-based inheritance
The reason that so many people disinherit family members with an addiction is that they worry about triggering a relapse. Even if someone currently has their substance abuse disorder under control, the trauma of losing a loved one combined with an influx of capital could lead to some very bad decisions. Of course, the trauma of losing a loved one combined with the shame they may feel over their disinheritance might also lead to someone relapsing.If someone wants to leave an inheritance for a child or grandchild struggling with alcoholism or drug abuse, a trust is the most realistic solution. Trusts can limit how much of an inheritance people receive at one time. The trustee can also directly control the distribution of assets. Instead of giving resources and capital to the beneficiary, they may issue payments directly to healthcare providers, landlords and educational institutions.An individual's history, the type of addiction they struggle with and the resources they might inherit will all influence the best way to create a trust for someone with a substance abuse disorder. Properly structuring and funding a trust can allow testators to leave resources for those who might harm themselves if given a lump-sum inheritance.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520162023-12-11T18:18:59Z2023-12-04T18:16:32ZA lot of seniors need to rely on in-home caregivers as they start to mentally and physically decline, usually because they hope to age in place. Unfortunately, that can leave them ripe for financial exploitation.
Finding a trustworthy caregiver isn’t easy. According to the federal Consumer Financial Protection Bureau, one in every nine cases of elder financial abuse involves non-family caregivers. Sometimes seniors put misplaced faith in a neighbor or acquaintance who volunteers to “help” them, and other times they find caregivers through want ads or social media forums instead of agencies. Even agencies, however, sometimes do little screening on the caregivers they hire beyond basic criminal background checks. The entire industry is poorly regulated.Since the average financial loss to a senior who experiences economic abuse by a nonfamily caregiver is $57,800, it pays to keep a close eye on the situation with your loved one. Here are four common signs that can indicate trouble:
Unexplained financial transactions
If your loved one suddenly seems to need more cash than usual or they’re making frequent cash withdrawals from their bank without any clear explanation as to where the money is going, that’s a huge red flag. This is especially true if you believe that their caregiver has been escorting them to the bank or has access to your loved one’s ATM card.
New credit cards and expensive purchases
If your elderly loved one was always conservative with their money or credit, expensive purchases and a sudden influx of credit cards could be a troubling sign. They may have been tricked into opening new lines of credit (for their caregiver to use) without really understanding what is happening.
Isolation and control
If someone is trying to hide their financial abuses, it’s easier to do when the victim is kept separated from anybody who might ask too many questions. If the caregiver is suddenly intercepting your loved one’s mail, monitoring or limiting phone calls and visits, that is an indication that they’re being isolated. You may need to be particularly concerned if your loved one is suddenly antagonistic toward everybody but their new-found friend, since that’s a sign the caregiver may be using physiological tactics to manipulate your senior’s affections.
Missing assets and unpaid bills
Utility shut-off notices, unpaid property tax bills and the like can all be an indication that a senior has lost control of their finances – especially if they should have sufficient funds to cover their expenses. Their caregiver may be siphoning away the money that’s supposed to go to routine bills. Similarly, missing jewelry, antiques, coins and other small valuables are a common sign that someone is stealing from a senior who has memory issues or is largely confined to a bed or chair.]]>On Behalf of Connors & Sullivan, Attorneys at Law, PLLChttps://www.connorsandsullivan.com/?p=520132023-12-04T15:25:39Z2023-11-06T15:22:17ZWhen you’re crafting your estate plans, you have a lot of decisions that have to be made – not the least of which is who to choose as your executor.
Your executor is the person who will ultimately manage your estate, so that includes locating and securing your assets, paying your final bills, filing your final taxes, inventorying and obtaining appraisals for your valuables, resolving any disputes and – ultimately – distributing what remains to your beneficiaries.
1. Choose someone you trust
One of the most critical aspects of selecting an executor is trust. You need to choose an individual who is not only personally trustworthy but someone you also trust to be capable of handling the financial and administrative aspects of the job. This person should be organized, detail-oriented and willing to commit.
2. Consider their legal and financial acumen
Estate administration can be complex. While it's not a requirement for your executor to have a legal or financial background, you do need someone who can make solid decisions. You also need someone who has the good judgment to know when they need experienced assistance and when to defer to the wisdom of others.
3. Evaluate their level of availability
Being an executor is a significant responsibility that can take several months – or even years – to complete, depending on the complexity of your estate. The person you choose needs to be readily able to devote the necessary time and effort to these responsibilities. You don’t want to pick someone whose life is unstable or already overwhelming.
4. Pick someone with strong communication skills
Nothing can lead to an estate dispute faster than an anxious or disgruntled beneficiary or heir, and nothing ramps up the stress of a situation like poor communication. Your executor is the person who has to convey any important information about the estate to your beneficiaries and heirs and manage their expectations, so make sure they’re the sort of person to be both responsive to questions and clear.
5. Think about the family dynamics involved
Family dynamics can be complicated, especially if there are second (or third) marriages involved or step-children in the picture. You want to make sure that the person you name as your executor is someone that everybody trusts and respects. This isn’t the time to try to force people who don’t get along (like two siblings who are usually at odds) to work together.
6. Make sure they meet all the legal requirements
In New York, there are specific legal requirements for who can serve as an executor. The person you select must be at least 18 years old, of sound mind, have no substance abuse and generally be of good character. The court can also declare an executor ineligible if they are unable to speak and read English fluently or have certain felony convictions. Keep these requirements in mind when making your decision.When you want to make sure that your final wishes are carried out accurately and efficiently, legal guidance can help you make informed decisions that will safeguard the best interests of your estate and your beneficiaries.]]>