Posted on January 28, 2010 by Beverley Rogers

Yes, Virginia, there is an Estate Tax

According to Investment News, Virginia became the first state to pass a law requiring that estates be treated as if it is still 2009 -- unless Congress acts first.

Why would Virginia do that? Many wills include formulas that are based on the existence of an estate tax. This article points out how the formulas can distort the intentions expressed in someone’s will - - to the extent of leaving one’s children nothing instead of $3.5 million.

Of course the issue does not apply at all to most estates because they are too small to be taxed in the first place. There was no tax on small estates in 2009, and there is none in 2010.

In our practice, for estates that might have been taxable, we have been using “disclaimer” provisions that allow a surviving spouse to decide whether tax-minimizing steps are necessary. The “disclaimer” technique is not a cure-all for an uncertain tax environment, but it works in many cases.

It would be better if Congress simply decided to end the uncertainty and pass some kind of estate tax law.

 


 
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Posted on October 2, 2009 by Beverley Rogers

It's a Dog's Life - (as far as estate planning goes)

Connecticut pets can rest easy now.

The Ridgefield Press reports that Governor Jodi Rell signed a law ensuring that animals will be properly cared for if their owners die.

The new pet law, An Act Concerning the Creation of a Trust for the Care of an Animal, requires that the owner designate a “trust protector;” someone whose sole duty is to act on behalf of the animal, ensuring that the pet receives the proper care. In other words, when you’re making arrangements for your children, make them for Fido and Fluffy, too.

Prior to the new law, which went into effect October 1, pet owners could set up trusts for their animals but those arrangements were considered honorary since animal beneficiaries could not enforce them.

The new law complements a standing Connecticut law which states that pets are personal property. This particular legislation actually created a bit of an issue for a divorcing Connecticut couple, according to A Connecticut Law Blog. The couple encountered substantial veterinary bills after seeking treatments for their ill pets. The court ordered that the husband and the wife equally divide the costs of medical treatment for dogs. After all, they were just part of the marital debt.

As pet owners ourselves, Bev and I support the new legislation. Providing for a pet is a matter of personal preference and values and there should be some comfort in knowing such provisions are enforceable and not academic exercises or empty words in a will. But, the more important issue is whether one has gotten around to having an estate plan at all to provide for the objects of one’s affection and bounty, human or not.

 

 

 

 

 

 

 

 
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Posted on September 23, 2009 by Angelo Tartaro

A Life Lesson From Charles Kuralt: Don't Put Off 'Till Tomorrow...

I used to enjoy watching Charles Kuralt on Sunday mornings. But a recent post in the Pennsylvania Fiduciary Litigation Blog shows his soothing voice and well written dialogues masked the real story in his personal life.

PFLB reports that when Mr. Kuralt died at age 62, his estate passed to his wife and his two daughters. However, after his death, it was discovered that Kuralt had a second, “secret” family for over 30 years. Kuralt’s will stated that his wife was the beneficiary of his estate, but before he passed away, Kuralt wrote a letter to his companion stating his desire to have her inherit the 90 acres of land he owned in Montana. A court found that the letter was considered a codicil, and was acceptable under Montana law.

 In New York, where Mr. Kuralt’s original will was probated (declared to be genuine by a court), a codicil must be executed with the same formalities as the original will- - you can’t just write a letter to amend your will. However, if Mr. Kuralt executed the codicil with the requisite formalities but the format just happened to be that of a letter, then it is truly a codicil in almost any state.

Interestingly, change the facts a little and the situation is not so unusual: a prior marriage and divorce . The estate plan would have to provide for the children from a prior marriage, a spouse and children from the second marriage. Conflicts abound.

There were also tax issues associated with the Montana land. Wills are often written with the provision that taxes are paid from the residuary estate. The taxes paid on the Montana property that went to his “secret family” came out of funds that were left to Mr. Kuralt’s known family. A complicated life requires a complicated plan, or inequities like this may ensue.


According to the PFLB report, Mr. Kuralt had other plans in mind but was suddenly stricken ill. This sad and unfortunate aspect of the story offers a valuable life lesson - - don’t put off your planning. Who knows what events may intervene?

 

 

 

 

 

 

 

 

 

 

 


 

 
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Posted on July 6, 2009 by Beverley Rogers

We Know Not What Tomorrow Will Bring: Estate Planning

The ubiquitous media coverage of Michael Jackson’s death last week mentioned the plight of his children and the state of his financial assets and woes. This unfortunate situation should serve as a reminder that careful estate planning is not just for the wealthy or Hollywood Elite. Taking care of your affairs now ensures that your loved ones are cared for in the manner you wish once you pass.

Many people believe their estate automatically passes onto the spouse, when in fact the spouse may actually receive less than intended.  In Connecticut and New York, the laws of "intestacy" (estates without a will) provide for fractional shares for the spouse if there are children.  By contrast, many married couples who write wills give all to the other and only at the death of both do assets pass to the children.  Without legal planning, how an estate will be distributed or who the administrator will be is determined by impersonal laws without considering individual circumstances..

Although there are no laws that require the assistance of an attorney in estate planning, we highly recommended  it. A "do-it-yourself" will or generic trust may actually be more expensive than consulting a lawyer. Generic forms often do not address the legal requirements of New York or Connecticut. They also will not take into account individual wishes. And then, of course, there may be tax issues that will need to be resolved.

The death of a loved one is always difficult, but with no estate plan, the loss can be compounded by family squabbles and feelings of betrayal -- not to mention an overwhelming amount of paperwork.

Visit some of our archived blog entries for more information.

Image:  Last will & testament of Alfred Nobels, dated November 27th, 1895.  Courtesy Wikimedia
 

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