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Rochester Estate Planning Law Blog

New tax law should be considered when estate planning

As the reality of the new tax laws hit home, it is important to think about how they will affect estate planning. New Yorkers who have significant assets should be aware of certain ways to take advantage of the changes to the law. Often, people who have already taken the necessary steps to craft an estate plan will be reluctant to change the document. Understanding the new tax laws might alter that view.

The wording of a will could negatively impact how much a spouse gets after the testator's death. People who drew up a will prior to 2018 might not have an actual dollar amount that will go to their children. If that is the case, the will could mention the current exemption amount that will determine how much the children will inherit. The rest of the estate will be placed into a trust for the spouse. Because the amount for 2018 has doubled from $5.49 million to around $11 million, that could leave those whose assets surpassed that amount facing a different outcome than their original intent.

Estate litigation continuous since famed singer's death

Issues with estate plans and their aftermath following the death of the testator happen relatively frequently in New York and across the nation. While many do not reach the level where they are discussed in the public sphere and reported in the news, it is useful to look at situations in which there is a legal dispute regarding the estate plan of a famous or prominent person. Some of the same circumstances that led to the court battle can apply to anyone. Such is the case with the late performer James Brown.

Mr. Brown died on Christmas in 2006. None of his assets have gone to his listed beneficiaries. Included are underprivileged children to whom Mr. Brown wanted to donate as much as tens of millions of dollars. There have been more than a dozen legal filings regarding Mr. Brown's estate. The estate administrator and the decedent's widow are being sued by his children and grandchildren as they allege there were unpublicized agreements regarding Mr. Brown's songs and their accompanying copyrights. One case was filed to determine if his wife at the time of his death was legally his wife. That case is on appeal.

Predatory Guardians Are A Growing Problem

For many people, there comes a point in life where it becomes difficult or impossible to make sound personal decisions. For people with special needs, illnesses that affect mental capacity, and minor children, a guardian may be appointed to make those decisions. When done correctly, a guardianship provides a necessary level of safety and protection for the vulnerable person (called the “ward”).

Unfortunately, there are situations where the guardian abuses his or her power to the detriment of the ward. Elderly people are particularly vulnerable to predatory behavior from people who use their newfound authority to siphon away their assets and leave them worse off than they were on their own. Part of elder planning involves considering who could safely act as a guardian if you were to become incapacitated or incapable of making personal decisions in the future.

Understanding how to account for cryptocurrency in an estate plan

As technology increases and different methods of accruing assets become more prominent, New Yorkers who have these assets in their portfolio should be aware of how to account for them in an estate plan. This is true even if these assets fluctuate in value, popularity and prominence. Shielding them might be viewed as complicated estate planning. Having legal assistance with these types of products can help to preserve assets regardless of their immediate value. Cryptocurrency falls into this category.

Bitcoin is one item of cryptocurrency. With the reduction in value of bitcoin recently, it is not a justification to ignore shielding them in an estate plan. Since bitcoin and any other form of cryptocurrency is so new and is digital in nature, there should be steps to track the account details or face the danger of losing it and its value. Having an on-paper record of cryptocurrency is crucial. The details of purchasing and having cryptocurrency in a portfolio is constantly changing because it is so new. For example, regulators in the U.S. have yet to require the providing of identification to purchase it. Having a record of it for those who have purchased cryptocurrency in this way can protect it for heirs.

What should I know about probate in New York?

The death of a loved one is a difficult situation to deal with for people throughout New York. One issue that many do not want to think about is how the decedent's assets will be handled after they have died. But, the distribution of assets and probate administration is an important part of wrapping up the person's affairs. Understanding probate is a key part of that and should not be ignored.

After the death of a person who had a will, there will be the filing of the will in Surrogate's Court so it can be admitted for probate. With probate, the goal is to show that the will is valid. Once the court is satisfied that there is a valid will, the will's executor - named as part of the will - will distribute the assets and follow through on the testator's desires as they were laid out in the document. The executor will then file the will. A death certificate and the probate petition will be filed.

How are assets divided when one dies without a will in New York?

For people in New York who have not yet moved forward with estate planning or have a loved one who died without a will, it is important to know what will happen. For those with significant assets or limited assets, it is wise to think about a basic estate plan, regardless of the circumstances. If there was no will, the heirs should have legal help as well.

When there is no will, there are certain rules for who gets what. In a situation where the decedent was married but did not have any children, everything will automatically be given to the spouse. If there were children but no spouse, the children will be left everything. If there was a spouse and children, the spouse will get the first $50,000 and half of the balance. Children will receive everything else. If the parents of the decedent are still alive but there is no spouse or children, the parents will get everything. If there are siblings and no spouse, children or parents, the siblings will get everything.

How estate planning documents should be adjusted as time passes

New Yorkers who are thinking about their estate plan or already have an estate plan will want to pay strict attention to potential changes to the law and other factors that could necessitate changes. Simply drafting estate planning documents does not mean that it is sacrosanct and could not or should not be altered as needed. With the new tax bill that was recently passed, it is imperative that people have a grasp on the tax implications from the law once it is implemented. There are certain factors that should be considered to properly address this and other issues.

One concern is the estate tax. When a person dies, the government will collect a certain amount from the estate. The estate tax is contingent on how much is in the estate. If the total surpasses a certain amount, it will be taxed. The amount will change with the new law. Individuals who have an estate between $5.6 million and $11.2 million will be exempt from the estate tax. Married couples might be thinking about how the new law affects them since one spouse will often die first. A spouse can be protected from the estate tax based on portability. There is certain language that must be put in the estate plan to make certain that there is portability.

When estate planning, can giving gifts avoid tax implications?

As New Yorkers take steps to plan their estate, there are many alternatives available that should be weighed and considered before jumping in with both feet. For those with substantial assets, a major concern will be how to protect their beneficiaries from a massive tax bill after the person dies. For those who would like to avoid the tax implications, it might be a wise step to consider giving gifts before death in lieu of wills and other common documents in an estate plan. Understanding the options with gifts is imperative.

It must be remembered that there are new tax codes being implemented, so numbers might change. In 2017, the annual gift exclusion was $14,000 per recipient. This is a tax-free gift. A gift tax is in effect for any amount that went beyond $14,000. For people who are married, that amount is doubled, as each spouse can be given $14,000 each, making the tax-free total $28,000.

A Good Time To Plan Ahead

The best time to create an estate plan is now. In general, people contemplate estate planning for weeks, months or even years before finally taking action. For some, it is a birthday, a life event or the start of a new year that finally inspires them to get started. If you are finally ready to put down in writing your plans for the future, you should speak to an experienced professional to make sure everything is done properly.

Creating a will

When is guardianship possible in New York?

When New Yorkers are confronted with the reality that an elderly loved one is no longer fully capable of handling their own affairs, it might be necessary to consider a guardianship. While it might sound intimidating to think about guardianship elder law, the law is relatively straightforward. There are certain criteria that must be met, but, if it is in the best interests of senior citizens or anyone else who is unable to adequately care for themselves, it is wise to understand how it can be done.

It is possible for the court to appoint a guardian if it determines that the guardian is needed to care for the person with one or more of the following: clothing, shelter, health care, food, safety, managing property and financial affairs. The person must agree to the appointment unless they are deemed incapacitated. The court will have a court evaluator provide a report regarding these matters and the person's competency. The guardian will have powers that are needed to provide for the person's personal needs and management of property.

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