The Complexity of New York’s New Estate Tax Exemption

Apr 24, 2014  /  By: Barton P. Levine, Esq.  /  Category: Uncategorized

Initially, when news broke that New York was doubling its estate tax exemption, many breathed a sigh of relief. For some, though, it was a short lived sigh of relief. Here’s a breakdown of the pros and cons that many who are planning their estates should know.

First, every year through 2019, the exemptions continue to increase, ultimately matching federal exemptions. It’s believed the federal exemption will be close to $6 million in 2019.

Before today, if your assets equated $1.2 million, the $200,000 would be taxed at a top rate of 16%. It didn’t apply to the first $1 million, which is the current exemption rate. That’s now changed.

Double Your Estate Tax Exemption

The exemption rate now has more than doubled. It’s at $2,062,500. If, though, you leave an estate valued at $3 million, you pay an estate tax on the entire $3 million instead of the difference between the exemption and your estate’s value. This is what economists refer to as the “New York cliff”. Worse, your estate could be subject to a whopping 164 percent marginal estate tax rate should you fall off that proverbial cliff.

Some estates could end up paying more in the estate taxes than the value of the difference between the exemption and the actual estate value. Forbes provided this example:

By the time the exemption is $5.25 million in 2017 and 2018, a New York taxable estate of $5,512,500 would pay New York estate tax of $430,050. In other words, the estate tax is $430,050 on the extra $262,500.

As mentioned, the exemptions will roll out over the course of a few years. For deaths after April 1, 2014 but prior to April 1, 2015, the tax exemption is $2,062,500. For those deaths after that, but before April 1, 2016, the exemption is $3,125,000. Between 2016 and 2017, the exemption is $4,187,500. Finally, for those deaths after the April 1, 2017 date, the exemption comes in at $5,250,000.

Other Problems

Many couples take advantage of the portability provision, which allows a surviving spouse to not only shelter assets up to his limit, but those of his deceased spouse as well. That’s no longer an option unless there are specific trusts in place. The exception is if the gift was made while the tax filer resided in another state.

Three Year Look Back

Taxable gifts are defined for these purposes as those that are “pulled back” into your estate) and there’s a three year look back period that’s now in place. There’s a three-year look-back for taxable gifts (those gifts are pulled back into your estate) for gifts made on or after April 1 and before Jan. 1, 2019, but not including any gift made when the decedent wasn’t a New York state resident.

Unfortunately, this is one of the more complex changes made in recent years. Overlooking one important aspect can wreak havoc on your estate. If you’re unsure of what these new laws mean for you, we strongly encourage you to contact us today. Our team of experienced estate planning lawyers can point out ways to make the most of these new laws while keeping your estate tax bill as low as possible. We can also explore your estate plan as a whole to ensure it’s serving your purposes to provide for your family after you’re gone.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Within One Will, Lessons on What not to Do

Apr 24, 2014  /  By: Barton P. Levine, Esq.  /  Category: Beneficiaries, Estate Planning

For those with considerable wealth, they’re seemingly always surrounded by financial and legal people, all with sound advice. When you’re a celebrity, multiply it by ten. That’s why it’s difficult to understand L’Wren Scott’s motives now that her will has been read. Scott, a well recognized celebrity who also happened to be in a serious relationship with Rolling Stones’ founder Mick Jagger, took her own life in March. Since then, her will has been unveiled and it’s causing more than a few hurt feelings – not to mention the legal inconsistencies.

Scott left her entire estate, valued at $9 million, to Jagger. She also left nothing at all for her two siblings – and they’re not taking it well. In New York, the law is clear: if you die intestate (without a will), a drawn out process begins in which a fiduciary is appointed by the courts. Scott recognized the importance and made sure those bases were covered. Beyond that, it gets complicated when trying to understand her reasoning.

As mentioned, she left her estate to Jagger and as for her siblings, they’ve been invited, via a personal message in her will, to “start a lawsuit”. That’s exactly what will happen since New York law also is clear on what happens when the obvious does not: the next of kin is assumed to receive the estate and when that didn’t happen, those siblings now must either consent to her wishes or begin a court hearing.

Scott’s will is less than a year old, too. This could present the opportunity for those siblings to claim her mind wasn’t right and she lacked the necessary legal capacity to properly execute it. Make no mistake: this can drag on for years, but they just might win. Further complicating matters is that an attorney in California drafted her will. Further, the attorney overnighted the will to her and did not actually witness her sign it. Again, this could be grounds for overturning the will since it very well may not meeting the necessary formalities for its legality.

Next, we take a look at her decision to stop at a will. If she wanted to “lawsuit-proof” it, she could have – and indeed, should have – established a trust for Jagger. This would have saved him a lot of headaches that are now going to affect his life.

Consider the dynamics: Jagger’s already worth more than $300 million. Imagine his tax bracket. This gift Scott left him, of course, increases that estate. When he dies, there will be millions due in estate taxes because she failed to set up a proper revocable trust. Now, though, it’s part of his taxable state, creditors can actually come after him for that $9 million and she could have left instructions for how she wanted any remaining inheritance to be distributed at the time of his own death. Had she done this, she would have avoided the now-necessary court hearings, her siblings wouldn’t have been forced to consent to the will or battle it out in court with Jagger’s lawyers and in fact, she could have even put a “no contest” clause in place that would have sealed the deal in terms of preventing her siblings from any kind of legal recourse. Naturally, that works best when those siblings are actually left something, which Scott’s weren’t.

The biggest purpose this latest legal brouhaha serves is a reminder for others of what not to do. Scott would have fared far better had she met with an estate planning lawyer in New York who truly had the best intentions at heart and who could have avoided what’s sure to be a costly and time consuming process for her siblings and the man she loved.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Former Marine Fights for Her Partner — A German Shepherd Named Rex

Apr 23, 2014  /  By: Barton P. Levine, Esq.  /  Category: Estate Planning

Dogs have long been referred to as “man’s best friend.” A service dog can be more than a friend — it can be your partner and protector. Take, for example, the case of Marine Cpl. Megan Leavey and her canine partner Sgt. Rex.

Leavey and Sgt. Rex completed over 100 missions during two six-month tours in Iraq before returning home in 2007. Upon their return home, the partners were separated. Leavey soon realized that her bond with Rex was a deep one and that she did not want to be apart from her canine partner. Leavey decided to petition for Rex’s adoption. Although adopting a military service dog is not a simply process, Leavey was determined to have Rex with her. With the help and support of U.S. Senator Schumer, as well as the signatures of over 21,000 supporters on an online petition, Leavey’s petition for adoption was finally approved just last week. Leavey and Sgt. Rex will soon be together again.

For anyone who has a beloved pet that is considered part of the family, be sure that you treat your pet as part of the family when it comes time to create your estate plan as well. A pet trust is an excellent way to guarantee that your pet will be well taken care of in the event that you predecease him or her.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Seniors Want Control and Choice at The End of Life

Apr 22, 2014  /  By: Barton P. Levine, Esq.  /  Category: Uncategorized

In the mid 1990s, the State of Oregon took the concept of a Do Not Resuscitate, or DNR order one step further and began using a two page form known as a “Physician Orders for Life-Sustaining Treatment”, or POLST for short. DNR orders had been used for decades to allow an individual to make the choice ahead of time that he or she does not want CPR to be administered if he or she is not breathing or is in cardiac arrest. Oregon’s POLST form offers the prospective patient the ability to make more choices than a DNR order, yet falls short of an advanced directive, or living will, since a POLST does not appoint a proxy who can make decisions on behalf of the patient when the patient is unable to do so.

Although a POLST form does allow a choice to be made regarding CPR, it also allows the person to make critical decisions regarding two other important areas of treatment as well — Medical Interventions and Artificially Administered Nutrition. The individual executing the form has the option to select a response in each section. In the Medical Interventions section, for example, the individual may choose either “Comfort Measures Only”, “Limited Additional Interventions” or “Full Treatment”. The option you choose in each section is then a legally binding choice that a physician must abide by if a decision is required regarding the treatment covered in the section.

The popularity of the POLST form is an indication of how important choice is to Americans. Not only has the Oregon POLST system now computerized, making a POLST form accessible to any physician at any hospital, but a number of other states have also adopted the use of the POLST form, or one similar.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Amy Winehouse Died Intestate — Another Example of The Importance of Estate Planning

Apr 21, 2014  /  By: Barton P. Levine, Esq.  /  Category: Estate Planning

Singer Amy Winehouse was found dead of alcohol poisoning last July at the young age of just 27 years old. While the world mourned the loss of Winehouse’s deep, soulful voice, speculation also began about who would receive her fortune. Initially, it was believed that Winehouse left behind a Last Will and Testament. Moreover, reports were that the young star had the presence of mind to update that Will when she divorced her ex-husband Blake Fielder-Civil. It appears as though those early reports were mistaken.

The probate of Winehouse’s state has now been filed. Probate documents show that Winehouse died intestate, or without leaving behind a Will at all. Since Winehouse was not married at the time of her death, and left behind no children, her entire estate will go to her parents. Despite the fact that she was supposedly still close to her ex-husband, and had a close relationship with older brother Alex, they will receive nothing form her estate because she did not leave behind a Will.

Winehouse is another in a long line of young stars who have died prematurely and who failed to leave behind an estate plan. Her story reminds all of us of the importance of creating an estate plan early on in life. Just as Winehouse shot to the top in a relatively short period of time, the same thing could happen to anyone. Without an estate plan in place, the vast fortune that you earn will be distributed according to state law in the event of your death, leaving your wishes out of the decision making process altogether.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

New Study Reveals How Well Seniors Adapt to Disability

Apr 18, 2014  /  By: Barton P. Levine, Esq.  /  Category: Uncategorized

Most of us worry about our parents and their wishes and efforts of living independently. Most of us can also relate to sitting at the office and wondering if Mom is sitting in her favorite recliner watching reruns of Gunsmoke or The Andy Griffith Show or if she’s attempting to reach that top shelf that houses her secret stash of chocolate. It’s about that time we pick up the phone to call her again…for the fifth time that day. And so our days go, a balance of wondering if our elderly parents are safe and sound and making sure the quarterly numbers match the report that’s on its way to our boss.

A new study published by the American Journal of Public Health provides interesting insight and statistics on just how successful our older loved ones are when it comes to adapting to living independently and especially if they’re disabled in some way.

Disability is defined for these purposes and by the Journal as a reduced ability to perform activities such as bathing, using the toilet, getting around, cooking or shopping because of deteriorating strength, mobility, pain or other physical or cognitive challenges.

The study focused on Medicare enrollees, 38 million of them, who were placed into five distinct categories:

  • Those live alone and with no assistance
  • Those who have disabilities but who are able to incorporate assistive technology
  • Those who have reduced their physical activities but aren’t likely to admit to it
  • Those who say there are daily difficulties in living independently, but are able to do so despite that; and
  • Those who rely on some form of daily assistance, either from friends, family and/or neighbors

The study itself was conducted by researchers with Johns Hopkins University, the Urban Institute, the University of Michigan and other institutes that contributed to some degree.

What their combined efforts found were that 12 million elderly are “fully able” to manage daily living on their own with no help. This equates to 31 percent of Medicare recipients. Another 25 percent of Medicare recipients, or 9 million, have found a way to adapt successfully to their disability while 6 percent, or 2.1 million, have reduced their activities without necessarily admitting it and 7 million are finding it increasingly difficult to function on their own.

Around 7.7 million received assistance at least once a month, and that includes those living in nursing homes.

What’s so enlightening about this report is that it’s the first of its kind and really focuses less on categories of “disabled” or “independent” and instead stresses their day to day lives that may or may not have assistance, even in a minimal way. It suggests that even if we lose some of our ability to function as easy as we used to, we’re not losing our independence.

This plays a big role, both now and in the future, of those preparing for retirement and wondering what that looks like. For too long, many assumed they would find themselves facing nursing homes or other living facilities versus remaining at home. It also provides insight as more of us move towards putting those important powers of attorney into place, such as who will be making our medical and financial decisions at some point. In other words, just because we lose the ability to climb that stepladder to retrieve the chocolate we “hid” from ourselves, we don’t lose our ability to rethink that decision and hide it a bit closer on a shelf we can reach without the aid of a stool.

Even if you’re already living independently, it’s a good time to give your estate plan a check-up. Review those powers of attorney, update your will, be sure you’ve included any changes you’ve been considering. Give us a call today to learn more so that you can get back to the business of those Andy Griffith reruns

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Elder Abuse Laws Gain Traction

Apr 17, 2014  /  By: Barton P. Levine, Esq.  /  Category: Elder Law, Uncategorized

Tennessee’s version of an elderly abuse law is gaining traction as it cleared the Senate this week, courtesy of Sen. Rusty Crowe (R). The goal is to put in place stronger safety mechanisms that will better protect the elderly and other adults with disabilities against abuse. If Senate Bill 1852 makes it over the remaining political hurdles, the punishments will be increased for those who abuse, exploit or neglect the disabled or elderly.

This will empower district attorneys’ efforts in prosecuting those crimes. It removes some of the challenging hurdles that have traditionally required extraordinary evidence, partly because the victims are often unable to testify on their own behalf due to dementia, Alzheimer’s or other disabilities.

Elder Abuse Statistics & Reporting

One big problem every state faces is the realization that many don’t report the abuse. The statistics reveal only one in 24 cases of elder abuse are even reported. This, according to the New York Elder Abuse Network, truly highlights the tragedy and much needed overhaul to every state’s laws.

New York’s laws have been on the books since 1995. The Elderly Abuse Education and Outreach Program was founded to provide resources, including education and outreach, for the public, but specifically to the state’s elderly and their caregivers. Recently, New York lawmakers laid aside $945,000 in order to keep the program available.

Because the elderly are at a higher risk of death, injury and illness, they’re far more likely to be victimized. In New York, more than 14 percent of seniors have experienced some type of elder abuse since turning 60.

While the changes to the various laws in Tennessee will help prosecutors, this state took it a step further with a statewide database, “Adult Abuse Registry”. This will require cities and counties to report those people who have been convicted of elder abuse and those in the healthcare sector are required to check the database prior to hiring an employee.

Every state has some form of reporting elder abuse, though typically, the mandatory aspect of those reports usually fall to medical providers, government agencies and mental health counselors.

Legal Protections

For many families, guardianships provide an additional level of security for their loved ones so that they’re less likely to be taken advantage of, especially from a financial perspective (elderly financial abuse is on the rise, as well). A guardianship can be used for health decisions, which means there are no legalities that prevent meeting with loved one’s doctor with the patient. This open line of communication is crucial as a physician can often spot signs of elder abuse that others miss. When guardianships or powers of attorney are in place, there’s no break in communication and loved ones are less vulnerable

One of the biggest problems, regardless of which state it is, are the startling statistics on who commits elder abuse. In New York financial abuse cases, more than one-third of the criminals are family members. It can be difficult for families to learn an elderly loved one has been abused, but it’s worse when they learn it’s their own family member. With legal protections in place, it can help ensure this type of abuse never occurs.

Need legal guidance for an elderly loved one? Our office can help put into place powers of attorney, guardianships and much more. Give us a call today for a free consultation.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Can You Probate Your Will Before You Die?

Apr 09, 2014  /  By: Barton P. Levine, Esq.  /  Category: Estate Planning, Probate, Wills

Probating your Will before your death often makes practical sense. By pre-probating your Will, you can avoid confusion about your Will, including whether it is your most recent Will and if you actually died with a written Will. You do not have to keep track of your Will and do not have to provide multiple sets of instructions to your loved ones about where they should keep your Will. If you can probate your Will before your death, your county clerk’s office or county recorder can index and record it for public retrieval. Not all county recorders, probate courts, or circuit courts (names for courts vary by jurisdiction) can probate your Will before you die. If your local rules allow you to pre-probate or register your will before your death, you may want to ask your probate attorney to do so or speak with he or she as to whether it is a good idea. If you draft a will, but your relatives or executor cannot locate it, you may be subject to your state’s intestacy statute. This means that the heirs to your estate are not established by your will. Instead, the succession laws applicable in your state establish them.

Even if you can probate your Will before you die, you should let your heirs know so that your Will directs or controls your testamentary intent, instead of the state intestacy statute.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Why You Need to Avoid Ambiguity in a Last Will and Testament

Apr 08, 2014  /  By: Barton P. Levine, Esq.  /  Category: Estate Planning

An estate plan can be an elaborate set of legal documents or it can be as simple as a Last Will and Testament. In all estate plans, however, a Will is where it all starts. Your Will provides the basic framework and guidance for the way in which you want your estate handled upon your death. For this reason, you must be certain that you have not included any ambiguous terms in your Will that will cause your entire estate plan to become the subject of a long, drawn out estate battle. Not only will this hold up all of your estate assets for months, even years, but it will costs your estate a considerable amount of money in legal fees. Ambiguous terms in a Will can be found in almost any part of the Will, including the following:

  • Specific bequests – failing to describe the item with specificity so that a court is clear on what you are gifting. For example, using “my grandmother’s lamp” when no one is certain which lamp belonged to your grandmother
  • Specific bequests – failing to identify the person to whom you wish to make the gift with specificity. For example, using “my grandson” when you have more than one.
  • Residual clause – This is where the remainder of your estate is handled after specific bequests have been honored. Failing to name the beneficiaries with clarity can cause a problem. For example, saying “my heirs” may not be sufficient.
  • Residual clause – Failing to be clear about how much of the estate will go to each beneficiary.

Avoiding ambiguity is simple when you consult with an estate planning attorney. Although using a generic form may seem like a great money saver, in the long run it may cost your estate and your beneficiaries considerably more money than you saved.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.

Beware of Offshore Accounts

Apr 05, 2014  /  By: Barton P. Levine, Esq.  /  Category: Estate Planning

Years ago, sheltering money from taxes, creditors and even spouses by placing it in off shore accounts was a common practice for United States citizens. Times have changed though, and the U.S. government has really cracked down on loopholes that were used to avoid the payment of debts and taxes, including the offshore account tactic.

Despite changes in the laws relating to banking and taxes that all but make offshore accounts the thing of the past, unscrupulous companies continue to try and lure investors into transferring money into offshore accounts. This is one of those situations that falls into the “if it sounds too good to be true, then it probably is”. Advertisements abound by planners that claim they can set up accounts or trusts that will shelter money from U.S. taxes, creditors and even from current spouses or ex-spouses in the event of a divorce. While this sounds attractive, the asset protection an investor is looking for could actually land him or her in jail. At a bare minimum, the funds placed in those accounts will likely still be accessible by the U.S government and most courts. In some cases, the investor could be accused of outright fraud.

Before you become a victim, or worse a criminal, sit down and talk to your estate planning attorney. If there is a legal way to protect your assets from taxes or creditors, your estate planning attorney can help you do it without the risks involved in trusting a planner you don’t know.

The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.