New York Estate Planning & Elder Law

How Do I Talk to the Children about My Estate Planning? / New York, NY & Greenwich, CT

“Many baby boomers may hesitate to discuss money with their children, but the reality is that a massive amount of wealth will be transferred in the next couple of decades.”

Some $68 trillion will move between generations in the next two decades, reports U.S. News & World Report in the article “Discuss Your Estate Plan With Your Children.” Having this conversation with your adult children, especially if they are members of Generation X, could have a profound impact on the quality of your relationship and your legacy.

Staying on top of your estate plan and having candid discussions with your children will also have an impact on how much of your estate is consumed by estate taxes. The historically high federal exemptions are not going to last forever—even without any federal legislation, they sunset in 2025, which isn’t far away.

One of the purposes of your estate plan is to transfer money as you wish. What most people do is talk with an estate planning attorney to create an estate plan. They create trusts, naming their child as the trustee, or simple wills naming their child as the executor. Then, the parents drop the ball.

Talk with your children about the role of trustee and/or executor. Help them understand the responsibilities that these roles require and ask if they will be comfortable handling the decision making, as well as the money. Include the Power of Attorney role in your discussion.

What most parents refuse to discuss with their children is money, plain and simple. Children will be better equipped if they know what financial institutions hold your accounts and are introduced to your estate planning attorney, CPA and financial advisor.

You might at some point forget about some investments, or the location of some accounts as you age. If your children have a working understanding of your finances, estate plan and your wishes, they will be able to get going and you will have spared them an estate scavenger hunt.

If possible, hold a family meeting with your advisors, so everyone is comfortable and up to speed.

Most adult children do not have the same experience with taxes as parents who have acquired wealth over their lifetimes. They may not understand the concepts of qualified and non-qualified accounts, step-up in cost basis, life insurance proceeds, or a probate asset versus a non-probate asset. It is critical that they understand how taxes impact estates and investments. By explaining things like tax-free distributions from a Roth IRA, for instance, you will increase the likelihood that your life savings aren’t battered by taxes.

Even if your adult children work in finance, do not assume they understand your investments, your tax-planning, or your estate. Even the smartest people make expensive mistakes when handling family estates.

Having these discussions is another way to show your children that you care enough to set your own ego aside and are thinking about their future. It’s a way to connect not just about your money or your taxes, but about their futures. Knowing that you purchased a life insurance policy specifically to provide them with money for a home purchase, or to fund a grandchild’s college education, sends a clear message. Don’t miss the opportunity to share that with them while you are living.

Reference: U.S. News & World Report (Feb. 17, 2021) “Discuss Your Estate Plan With Your Children”

For more information on asset preservation and estate planning, please visit my estate planning website.

Estate Plan Updates in the Age of Coronavirus / New York, NY & Greenwich, CT

“Financial advisors and estate attorneys say they are seeing a flurry of inquiries from people seeking to update or draft wills and take other estate-planning measures amid the coronavirus crisis.”

With the ever-increasing number of deaths in Europe and the U.S., many people are now doing what estate planning attorneys have advised them to do for years—get their estate plans in order. Many are having phone meetings or videoconferences with estate planning attorneys, says Barron’s in the article “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know.” People are worried, and they are in a hurry too.

However, estate planning can be complex, even when there is plenty of time to prepare. Here are a few tips:

Everyone should have three basic documents: a last will and testament, a durable power of attorney and an advance health care directive like a health care proxy. These documents will allow assets to be distributed, give another person the ability to make financial decisions, if you are too sick to do so and also allow another person to talk to medical professionals on your behalf on treatment and care. These same documents are also a good idea for any young adults in the family, anyone older than 18 in most states.

With the proper documents prepared in accordance with the laws of your state, you may be able to avoid having a court appoint a guardian for minor children or having a probate court determine asset distribution.

However, there’s more. In addition to these basic documents, everyone needs to review their beneficiary designations on assets that include bank accounts, IRAs, annuities, insurance policies and any other assets. If family situations have changed, these may be out of date.

It’s also a good idea to have an attorney create a health care proxy for a minor child in case another family member needs to take a child to the doctor, discuss their care, and make decisions.

While young adults may be more worried about the financial impact of the pandemic, seniors and the elderly are concerned about having documents in order. Wealthy people are concerned about the impact that the pandemic may have on estate planning law, and some are engaged in planning to make substantial gifts, in case the current estate and give tax exemptions are lowered.

Other issues to be discussed with an estate planning attorney:

• Irrevocable and revocable living trusts, which provide an opportunity to direct how assets in a trust will be held, invested and distributed before and after death.

Reference: Barron’s (March 22, 2020) “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know”

For more information on asset preservation and estate planning, please visit my estate planning website.

Generational Wealth Transfer through Education / New York, NY & Greenwich, CT

Is it true that wealth lasts for many generations?

The real root to accumulating and transferring wealth is through supporting education, helping in the purchase of a home or in getting married, according to Fast Company in “5 lies you’ve been told about generational wealth.”

Here are a few commonly held misconceptions about generational wealth:

Wealth lasts many generations. Yes, wealth can and does trickle down and set up future generations for success, but it’s harder to maintain across the generations than you’d think. About 70% of wealthy families lose their wealth by the second generation, and 90% of them do so by the third generation.

One reason could be that the generation that inherits the money may not be well equipped to manage the money they inherit. However, it’s also that family wealth is diluted, as it is divided up among children, especially if each sibling has a different idea of what to do with their inheritance.

Some financial experts recommend that families create a mission statement, like any organization, to establish what their values and goals are.

Their parents talk to them about money. You might think that wealthy parents talk with their kids about money, how to manage it, how to invest it, etc. However, that’s not always the case. For some parents, the less said about the family wealth the better. They don’t want the children to know how much they might inherit, and don’t always offer guidance about how they should spend or invest their money.

Many reach their thirties, forties, or even fifties with no clue as to how to handle money. Even people who work with the wealthy, are often surprised at their client’s lack of knowledge about finances or legal issues. Someone who saved a million dollars, may know more than someone who inherited tens of millions of dollars.

They know what to do with their money. Here’s a surprise: even people who work at hedge funds or in private equity don’t always know what to do with their money. They know about their area of expertise, but when it comes to paying for college or how to pass wealth down through the generations, they are just as likely to be in the dark as anyone else.

A big inheritance can also come with a lot of stress. Do you think that’s a problem you’d like to have? It may be. However, depending upon how their inheritance is structured, it may not be so easy. An inherited IRA requires annual distributions, which can wreak havoc on tax planning, if they don’t have good advisors. Trusts may come with restrictions on what can and cannot be done with the assets.  If the money is lost through their actions, that’s a family affair.

They’re lazy and irresponsible about money. There’s a big difference between what we see in the headlines and what’s really happening in families with inherited wealth. While some rich children do flaunt and fritter away their wealth, many don’t. Children from wealthy families often receive excellent educations and want to make sure the family wealth does not end with them.

They spend their money differently than parents or grandparents. Most of us learn how to manage money and spending from our parents. It’s no different for wealthy people. However, those who built their own wealth tend to be more frugal—they feel lucky to have the assets they never expected to have. A wealthy kid might use family money to put a down payment on a home, but they are thoughtful about spending. For some people, receiving an inheritance may come with a sense of guilt to have so much more than others, or a responsibility to make sure they are good stewards of the family wealth.

An estate planning attorney can advise you on creating an estate plan that fits your specific circumstances and can include generational wealth transfer.

Reference: Fast Company (July 18, 2019) “5 lies you’ve been told about generational wealth”

For more information on asset preservation and estate planning, please visit my estate planning website.

Dads Should Protect Their Children / Greenwich, CT & New York, NY

Many men hesitate, when it comes to creating an estate plan.

It is difficult for many people in America to begin the process of creating an estate plan. However, included in the list of those who procrastinate, are fathers who fail to set up a plan, in the event they are no longer there to take care of things, according to Fatherly in “If You Do One Thing For Your Kids, Plan For Your Death.”

The question is why do so many great dads hesitate when it comes to addressing the tasks of having a will prepared and creating estate and guardianship plans for their children? Many say getting dads into their offices to get the process of creating an estate plan started is extremely difficult. Having conversations about who should rear their children, if they should die, is nearly impossible.

The same dads who are obsessive about getting their collector cars tuned up every three months and checking smoke alarm batteries monthly, will keep putting off the will-signing appointment for months or years at a time.

It’s a superstitious thought: if I don’t have a will, I don’t die. However, it’s more than that.

Many men feel that if they don’t have a lot of money, why bother with a will? Others say they don’t care what happens, since other people will figure out what to do after they are gone. Some say that their fathers didn’t have a will and things worked out. If you grew up in a family where estate planning and wills were discussed and not considered taboo subjects, you will be more likely to have an estate plan in place.

Sometimes, the men whose fathers were difficult about having a will are more proactive about creating a will, since they don’t want to do what their dad did.

However, if you have the responsibility of fatherhood, you must have a will. A will is used to name a guardian (the person you want to raise your children), if you are dead or incapacitated. It can also name a person who will take care of the money left behind for your children. Children are perhaps the biggest reason for dads to have an estate plan.

Failure to have an estate plan means that a court will make the decision about who will rear your child and opens the possibility of a family battle over who will have that responsibility.

An estate planning attorney can advise you in creating a plan that fits your family’s particular circumstances and may include planning for minor children.

Reference: Fatherly (Sep. 12, 2018) “If You Do One Thing For Your Kids, Plan For Your Death”

For more information on asset preservation and estate planning, please visit my estate planning website.

Baby Boomers Need Updating on Estate Planning / Greenwich, CT & White Plains, NY

Everyone needs an estate plan. No exceptions.

It was determined recently that more than half of the Baby Boomers in America do not have an estate plan and should know more about estate planning, according to Country Living in “Everything Baby Boomers Need to Know About Estate Planning.”

The first and most fundamental fact: everyone needs an estate plan. Whether you are wealthy or just getting by, older or a young parent, you need to have an estate plan.

Estate planning doesn’t have to be scary or complicated. Many people feel that creating a will and other related documents will be overwhelming.  However, it doesn’t have to be. An experienced estate planning attorney will help by explaining options that fit your particular situation. It won’t take as long as you think. The time and expense you save your heirs make having a professional do this for you well worth the money spent.

You can make a difference with your estate plan. Many people use their estate plans to give to a charity or cause that is important to them. Many use a charitable gift in their will, known as a “bequest,” to leave money behind—often the biggest donation they make. It’s a way to build a legacy and know that you’ve contributed to making the world—or a small corner of it—a better place.

If your family includes minor children, you need a will that names a legal guardian to care for them if something should happen and you and their other parent are no longer able to do so. You don’t want someone else making this decision. You can also appoint someone who will be in charge of the finances for your children.

If you have “furry kids,” aka pets, you can also choose a guardian for them. Many pets end up in animal shelters, because no one in the family can take care of them and no provisions have been made for their care. You can also establish a pet trust so money for their care is provided.

Creating your will is just the first step. Estate planning documents need to be updated as your circumstances and laws change. Many people update wills after a trigger event such as marriage, birth, death or divorce. But laws and assets change, and your will needs to be updated, especially after major tax law changes.

The will is just the beginning of an estate plan. There are several basic documents that will protect you while you are alive and after you have passed. They include the power of attorney, which determines who can make financial decisions on your behalf, if you are ill and cannot do so.

You also want a health care proxy. This document names a person, your health care agent, to make healthcare decisions on your behalf, should you be unable. Be certain to explain to this agent your wishes with regard to staying alive through artificial means.

Finally, accounts where you have named a beneficiary should be reviewed every now and then. The beneficiary designations appear in accounts like IRAs, 401(k)s, bank and investment accounts, to name a few. The designation supersedes anything in your will, so make sure you know who these beneficiaries are and update them as life changes.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances, Baby Boomer or not.

Reference: Country Living (Aug. 17, 2018) “Everything Baby Boomers Need to Know About Estate Planning”

For more information on asset preservation and estate planning, please visit my estate planning website.

Take a Fresh Look at Your Estate Plan / New York, NY & Greenwich, CT

There are many reasons to look at your old estate plan. What should not be forgotten is that everyone needs a will.

There are many reasons to revisit your estate plan that don’t include the new tax laws that doubled the individual estate gift and GST tax exemptions to about $11.2 million per person (and doubled it for married couples), according to Forbes in “7 Reasons to Revisit Your Estate Plan, Trump Tax Law Aside.”

A will serves as the primary vehicle to convey your assets according to your wishes and explain your legacy. The provisions of the will can be used to designate how assets will be transferred, whether outright to beneficiaries, to existing trusts or into a new trust that is created under the provisions of the will. If you use the will to create a testamentary trust, the will is where you specify the age for commencement of distributions to the beneficiaries and other important details. The will also is the way to convey your wishes to make a gift to specific institutions and who should receive family heirlooms.

The executor or personal representative of the estate is the person or institution in charge of managing your affairs after you have passed. The executor gathers all the information about your estate, including assets and debts, filing taxes, and administrative tasks. That person is named in the will but must be appointed by the Probate Court in order to act on behalf of your Estate.

If you have minor children, or a child with a disability, it is important to choose a guardian and a successor guardian. If you do not, the court will appoint someone to raise your child(ren), and that may not be the person you would have wanted. Your spouse is always the obvious choice, but there are instances where both parents die unexpectedly, with no plans in place for their children.

There are many different types of trusts used to accomplish different goals. They can be used to control assets and their distribution, which is particularly important when minor children are in the family. Trusts should be used when there is an individual in the family with a disability, an addiction or other issues who cannot manage their finances on their own.

Tax planning is a major part of any will. For a long time, estate planning attorneys focused on how assets were titled so that the first of a married couple to pass would be able to fully use their estate tax credit.  However, the relatively new concept of “portability,” which allows any unused credit from the first spouse to pass to be used for the benefit of the second spouse, eliminates the need for any unused estate tax credit to go into a bypass trust.

Not only do you need a will but this year you should consider reviewing your will, if you have not done so.

Reference: Forbes (March 15, 2018) “7 Reasons to Revisit Your Estate Plan, Trump Tax Law Aside”

For more information on asset preservation and estate planning, please visit my estate planning website.

No Children? You Still Need an Estate Plan / White Plains, NY & New York, NY

Creating a plan for distribution of assets is practical.

If you do not have children, it isn’t possible to follow the standard practice of caring for your spouse and your offspring when considering an estate plan. Exploring the options when childless requires a bit more thinking, according to The New York Times in "If You Don't Have Children, What Do You Leave Behind?"

People without children still need to have estate plans. Otherwise, everything they have at the time of their death will pass to their closest living relatives, as determined by state laws. For some people that might be an acceptable outcome.  However, most people would prefer choosing where their assets are going to go.

Without children of their own, people have almost unlimited options. They can leave assets for their nieces and nephews, if they wish. They can leave things to other favorite family members or friends. They can also leave assets to any charitable cause they want to support.

Estate planning for people without children might require making different decisions.  However, that also allows for more freedom than the norm. That freedom has its own benefits.

An estate planning attorney can advise you on creating a plan that fits your particular circumstances and may or may not include children.

Reference: New York Times (February 27, 2017) "If You Don't Have Children, What Do You Leave Behind?"

For more information on asset preservation and estate planning, please visit my estate planning website.

You Have Minor Children? You Need an Estate Plan / New York, NY & Greenwich, CT

It is not the wealthy singles who are most in need of an estate plan.

Most people think protecting their children is more important than money. That's why parents with minor children have more reasons to plan their estates than wealthy single people, according to Volume One in "When There's a Will."

When parents of minor children plan their estates, they accomplish two very important tasks. First, they figure out how their children's expenses will be met. Parents who thoughtfully prepare their estate plans can decide who will handle their assets for the benefit of their children and how that will be done. Even more importantly, they can decide who will take care of their children, should they be orphaned.

An estate plan is the only means by which parents have a say regarding who should be appointed as the guardian of their minor children, if anything happens to the parents.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include minor children.

Reference: Volume One (March 7, 2018) "When There's a Will."

For more information on asset preservation and estate planning, please visit my estate planning website.

What Is the Best Way to Treat Children Equally? / New York, NY & Greenwich, CT

A challenge can be created when one child is responsible, and others aren’t.

Varying degrees of financial responsibility by children can be a challenge to creating an estate plan, according to Market Watch in "My son is responsible, my daughter is in debt -- how do I split my estate?"

A common way to meet the challenge if financial responsibility isn’t the same among the children is to create an estate plan that limits how the trust assets can be used. Provisions can be written into the trust, so an irresponsible child cannot waste any money received on frivolous things. This is unlikely to offend any responsible children, if they use the money in reasonable ways.

An estate planning attorney can advise you on creating an estate plan that best fits the circumstances of your family.

Reference: Market Watch (Feb. 16, 2018) "My son is responsible, my daughter is in debt -- how do I split my estate?"

For more information on asset preservation and estate planning, please visit my estate planning website.

Leaving Assets to Minors Is Different than Adults / Greenwich, CT & White Plains, NY

Protecting assets for your minor heirs can be a challenge.

If you plan on leaving assets to minors, you can leave it to the courts to decide on the best person to handle the funds or you can do it yourself through an estate plan, according to the Times Herald-Record in "Proper legal planning for minor beneficiaries."

The best option may be to create a trust and to fund the trust with the assets you would like to leave for the minors. You can appoint a trustee of your own choosing to administer the assets for the benefit of the minors. You also can leave instructions about how and when the assets are to be distributed for the children. That does not have to be the moment they reach the age of majority.

An estate planning attorney can advise you on creating an estate plan that fits your needs and may include leaving assets to minor children in a trust.

Reference: Times Herald-Record (Feb. 1, 2018) "Proper legal planning for minor beneficiaries."

For more information on asset preservation and estate planning, please visit my estate planning website.