QTIP Trusts

May 24th, 2010

A qualified terminable interest property trust (QTIP) limits a surviving spouse’s access to, and control of, the trust property. Its main objective is to enable your spouse to use your assets at the same time that you determine the distribution of those assets. Under a QTIP trust, the spouse has direct access to any income from the trust assets for the remainder of his/her life, but the trust’s principal is actually left to someone else, usually one’s children.

A QTIP trust can offer many benefits to your family, especially if you are in a second marriage and you want to protect your assets for your children. You should consider the following provisions before making a decision:

• Giving your spouse the ability to change trustees. It may be difficult for your spouse to deal with the trustee you have chosen, so you may want to give him/her the opportunity to appoint another individual.

• Deciding how much discretion your spouse will have to make withdrawals from the trust principal. Placing too many restrictions on your spouse’s ability to make withdrawals may cause conflicts with the trustee. It may be a good idea to discuss these provisions with your spouse before making any decisions regarding withdrawals.

• Reviewing the trust’s beneficiaries with your spouse. Your spouse needs to know that regardless of what happens to his/her financial or personal situation, the trust cannot be altered.

A QTIP trust offers you the opportunity to make sure that your wishes are carried out and that your spouse’s future is protected. An estate planning attorney can help guide you through the process.

To learn more, visit http://www.littmankrooks.com.

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Don’t Leave Children Unequal Shares

May 14th, 2010

Siblings do not always receive equal shares of a parent’s estate. Sometimes the inequality is intentional and sometimes it is accidental. Regardless of how it happens, it can cause arguments among the children. However, there are some steps parents can take to promote family harmony.

If you intend to leave your children equal shares of your estate, don’t forget to consider any money or property held jointly with a child. Property in a joint account passes outside of your estate. If you add a caregiver child to one of your bank accounts out of convenience, the account will pass to that child alone when you die. This is true for any property held in joint tenancy or any property in a POD (Pay on Death) account. If you don’t intend for that child to receive a bigger share of your estate, you can add a provision in estate planning documents stating that any property passing through joint tenancy to a beneficiary will be treated as an advancement of that beneficiary’s share.

On the other hand, you may intend to leave one child a different share of your estate than your other children. For example, you may want to reward a caregiver child or you may feel that a child with a disability needs a bigger share. If you do decide to favor one child over another, you should explain in detail your reasoning in your estate planning document. This may help your children understand your decision. You also need to make it clear that it is your decision and not the influence of the favored child. If your children are unhappy with how much they have received, they may try to challenge your will.

A qualified elder law attorney can help you ensure your estate is divided the way you intend.

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Estate Planning After a Divorce

May 8th, 2010

While all relationships do not end amicably, divorced or divorcing parents of minor children should put aside their differences in order to plan for their children’s future. There are several key issues that should be considered before or during a divorce: guardianship, financial inheritance, and remarriage.

Guardianship is an important issue that parents should discuss with great care. When you die, guardianship of your minor children will pass to their surviving biological parent. This is true even if you had full custody of the child, unless a court finds that the surviving parent is unfit to care for the child. You and your ex should discuss and provide for the appointment of alternate guardians. Doing so will make you and your children feel more secure about the future.

Your will should provide that your children’s share of your estate is held in trust. You will need to appoint a trustee who will be responsible for maintaining the trust assets, as well as making distributions to the guardian for the benefit of your child. It is important to remember that the trustee and guardian will have to work together on a regular basis. If you and your ex can agree on a trustee with whom you are both comfortable, it will make the process easier on all of the involved parties.

Remarriage inevitably affects your financial situation. It is important to remember that if you don’t make provisions for your children in your estate plan, your assets may end up going entirely to your new spouse when you die. This can be easily avoided. If your first spouse was the designated beneficiary of your 401(k), pension, life insurance policies or retirement plans, you should also remember to change the beneficiary designations, or your ex may end up with a considerable part of your assets, and your new spouse will be left out.

To learn more about New York elder law, New York estate planning, visit http://www.elderlawnewyork.com.

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What is a Trust Protector

April 23rd, 2010

April 23, 2010

Trust protectors — long popular in offshore trusts set up by high rollers — are now gaining popularity in trusts established here in the U.S. by less affluent folks. A trust protector is someone who is appointed to watch over a trust that will be in effect for a long time and ensure that it is not adversely affected by any changes in the law or circumstances.

There are a number of reasons for appointing a trust protector. Having a protector allows a long-term trust to be more flexible and adapt to factual and legal changes. For example, beneficiaries may get divorced or die prematurely or the law may change. A protector can also be helpful if you believe there may be conflict among the beneficiaries and the trustee or if you don’t fully trust the trustee to fulfill your wishes.

You can name a trust protector in your trust document, which will also dictate the trust protector’s powers. Here are some powers that a trust protector may be given:

•    Remove and replace a trustee
•    Allow the trust to be amended due to changes in the law
•    Resolve disputes between trustees (if there is more than one) or between beneficiaries and the trustee(s)
•    Change distributions from the trust based on changes in the beneficiaries’ lives
•    Allow new beneficiaries to be added if there are additional descendants
•    Veto investment decisions

Whatever powers the trust protector has, you should be as specific as possible in the trust document. The more specific you are, the more likely your wishes will be carried out. An attorney can help you ensure that the trust protector does not have too much power.

Technically, anyone can serve as a trust protector; however, it is a good idea to appoint an independent third party rather than a family member or a beneficiary. A lawyer or accountant may be a good choice. There are also companies that provide trust protector services.

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Understanding Financial Elder Abuse

March 28th, 2010

Financial elder abuse is a serious problem for many senior citizens in the United States. Being able to recognize and report this kind of abuse will ensure the safety of your loved ones.

Elder abuse occurs when a victim is financially exploited, usually due to his or her diminished mental capacities. Financial elder abuse can take a number of different forms, including stealing money and other assets, forcing the elder to sell his or her property, and withholding money from the elder for daily living expenses. Taking an elder’s money and using it for purposes other than caring for him or improving his quality of life may also be financial abuse.

Abuse of this nature is a crime, and it is often committed by someone who is close to the victim– a family member, close friend, or even a service provider such as a doctor or therapist. Fraud, theft, forgery, extortion and the wrongful use of a Power of Attorney are other popular forms of financial abuse. This kind of exploitation may occur with or without the victim’s knowledge. Often, this kind of abuse may go unreported because of the elder’s inability to identify the situation, fear of the abuser, shame at the fact that he or she can’t control the situation, fear that he or she will not be believed, or a feeling that he or she is incapable of accurately describing the situation due to mental incapacitation.

Financial elder abuse also occurs when the victim is manipulated into signing legal documents, such as changing a Durable Power of Attorney, trust details, or Living Will. This practice commonly affects elders who have decreased mental capabilities, which makes it easier for them to be manipulated.

If you suspect this is happening to one of your elderly loved ones, there is something you can do to correct and even prevent it. Importantly, if the elder in question has any form of cognitive deficiency or he/she has been diagnosed with dementia, you can obtain a letter from the elder’s physician stating that the elder is no longer competent enough to handle finances. Without any medical or psychological evaluations of the elder, it is difficult to provide protection from financial abuse.

To prevent this kind of abuse, you may wish to consult an elder law attorney, who may be able to obtain permission from the court for an evaluation, even if the elder’s “agent,” does not wish to obtain such a test. An elder law attorney can help guide you through the process and help to secure your loved one’s health and happiness.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit Littmankrooks.com.

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Same Sex Couples and Retirement Planning

March 21st, 2010

A large number of same-sex couples will be entering retirement in the next few years, and many of them will face great challenges in planning for their financial futures. The majority of these problems will stem from their unmarried status. Unmarried couples are not guaranteed the automatic legal protections that take effect when one member of a married couple dies. In addition, unmarried couples lack many of the other advantages in planning for financial security in their retirement; these are advantages that most couples take for granted.

Same-sex couples are at a disadvantage when it comes to receiving 401(k) benefits. Same-sex surviving spouses, unlike the surviving spouse in a married union, cannot directly receive the balance of their deceased spouse’s 401(k) plans. Because they must begin making withdrawals on the balance right away, they face a higher tax rate than their married counterparts and experience the loss of accruing interest. In addition, a married person can transfer his or her deceased spouse’s 401(k) funds into an IRA without paying taxes, yet a gay or lesbian who inherits 401(k) funds may end up paying up to 70 percent of those funds in taxes and penalties.

Pension benefits also do not apply to same-sex couples in that way that they apply to married couples. If a worker passes away, most pension plans will pay survivor benefits solely to a legal spouse of the participant. As such, gay and lesbian partners are excluded from these pension benefits. Not receiving these benefits could cause significant financial problems for surviving same-sex spouses.

In order to better plan for their future, same-sex couples should consult with an attorney who specializes in estate planning.

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Federal Estate Tax Repealed for 2010

March 10th, 2010

The government recently eliminated the estate tax for the entire year of 2010. Effective January 1, no federal estate tax or generation-skipping taxes (GST) will be imposed upon individuals who pass away in 2010. Both federal estate taxes and GST taxes are to be reinstated in 2011, and there will be a $1 million exemption (for GST taxes) and a maximum federal tax rate of 55 percent. The million dollar exemption is less than the maximum exemption in 2009, which guaranteed a $3.5 million exemption. What this means is that there will be many more estates subject to estate tax in 2011.

While the current relief from estate taxes seems promising, the estates of those who pass away before the end of the year may not be given to their heirs free and clear. In fact, Congress may have the ability to reinstate estate taxes for this year and make them retroactive to January 1, 2010. If this happens, Congress may impose the rates from 2009 or they may increase these rates.

These changes in the estate tax law may significantly impact your estate planning documents. To learn more about how the change in estate tax affects you and your family, contact a lawyer who specializes in estate planning.

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Same Sex Couples and Retirement Planning

February 22nd, 2010

A large number of same-sex couples will be entering retirement in the next few years, and many of them will face great challenges in planning for their financial futures. The majority of these problems will stem from their unmarried status. Unmarried couples are not guaranteed the automatic legal protections that take effect when one member of a married couple dies. In addition, unmarried couples lack many of the other advantages in planning for financial security in their retirement; these are advantages that most couples take for granted.

Same-sex couples are at a disadvantage when it comes to receiving 401(k) benefits. Same-sex surviving spouses, unlike the surviving spouse in a married union, cannot directly receive the balance of their deceased spouse’s 401(k) plans. Because they must begin making withdrawals on the balance right away, they face a higher tax rate than their married counterparts and experience the loss of accruing interest. In addition, a married person can transfer his or her deceased spouse’s 401(k) funds into an IRA without paying taxes, yet a gay or lesbian who inherits 401(k) funds may end up paying up to 70 percent of those funds in taxes and penalties.

Pension benefits also do not apply to same-sex couples in that way that they apply to married couples. If a worker passes away, most pension plans will pay survivor benefits solely to a legal spouse of the participant. As such, gay and lesbian partners are excluded from these pension benefits. Not receiving these benefits could cause significant financial problems for surviving same-sex spouses.

In order to better plan for their future, same-sex couples should consult with an attorney who specializes in estate planning.

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Pros and Cons of Joint Accounts

February 8th, 2010

If you’re thinking that joint accounts are a foolproof way to escape probate and funnel dollars to loved ones as a sort of “poor man’s estate plan,” think again. Sometimes a joint account is an excellent option. But the instrument has its pitfalls as well, and if misused or entered into without caution, joint accounts can pose serious risks. Adding a loved one to a bank account may seem like a prudent action, but such actions can impact Medicaid planning or even make your account “fair game” for your loved one’s creditors.

There are viable alternatives to joint accounts. A consultation with your attorney practicing Elder Law may suggest a durable power of attorney or a well-considered trust instrument.

To learn more about New York Elder Law, NY Elder Law, New York Elder Care, NY Elder Care, or New York Estate Planning visit http://www.elderlawnewyork.com.

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Spicing Up Your Ethical Will

February 3rd, 2010

An ethical will can be anything from a letter to your children spiced with anecdotes or appropriate humor, to a novella length memoir chronicling your experiences in a manner uniquely your own.

While legal formalities which accompany wills, trusts, and other formal documents are, indeed, generally formal in nature, the ethical will can be more relaxed and can convey more of the author’s values.

In such a document, the writer’s personality survives to provide freshness and power to capture the life of a real person.

To learn more about New York Elder Law, NY Elder Law, New York Elder Care, NY Elder Care, or New York Estate Planning visit http://www.elderlawnewyork.com.

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