Rogers & Tartaro Business Litigation Blog : New York and Connecticut Business Litigation Lawyer & Attorney : Rogers & Tartaro Law Firm : Commercial Litigation : Westchester County NY, Fairfield County CT

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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Connecticut has eliminated the “cliff” from its estate tax. The Danbury News-Times, along with other media and legal blogs, reports that this change to Connecticut’s estate tax law, along with other significant changes, will go into effect for decedents who die on January 1, 2010 or later.

The aforementioned “cliff” refers to the fact that under prior tax law, an estate of $2,000,000 was exempt from taxation. However, add one more dollar to that, and the entire $2,000,001 was taxed, resulting in a tax liability of $101,700. With the new law, estates of $3,500,000 or less will not be taxed. This is similar to the federal estate tax threshold (or at least this year it is).

Under current law, the federal estate tax will be abolished next year, only to come back in 2011 with a threshold of only $1,000,000. The expectation is that the federal estate tax will be modified. On the other hand, that expectation has existed for some 8-10 years.  A clear explanation of the status of the federal estate tax is provided by this recent Wall Street Journal article.

In New York, the state estate tax threshold is a mere $1,000,000. But, in either Connecticut or New York, the federal tax takes a far bigger bite, with a marginal rate up to 45%. That’s right, 45%.

Here’s some good more news for Connecticut: estate tax rates are now being reduced by 25 percent, with a new maximum rate of 12%. But the estate tax and a return will be due six months after date of death instead of the current nine months.

In all three jurisdictions, (federal, Connecticut and New York), your “estate” for tax purposes includes almost everything you own: property, IRA’s, 401(k)’s, pension plans, the proceeds of life insurance and “In Trust For” accounts.

And one more point of potential confusion, specifically with respect to life insurance: the fact that beneficiaries do not pay income tax on the proceeds does not mean that the estate won’t pay estate tax.  A substantial life insurance policy can be enough to "tip: an estate into a taxable bracket.

A final piece of advice: take care of yourself and your loved ones.

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Recently, the NY Labor and Employment Blog offered a description of changes to New York’s “mini-COBRA” law, along with other recently-passed employment legislation. The Governor’s Office notes that the legislation was passed so that New Yorkers can access the subsidy available under the Federal Stimulus Program.

We practice in New York, and health insurance coverage laws can be very confusing, so we offer a few comments that might be particularly helpful to both employers and employees.

First, a little background: Since the federal COBRA law covers only employers with 20 or more employees, some states have enacted similar laws to cover employers with 2-19 employees. By “cover” we mean, of course, that terminated employees (and some others) must be offered the opportunity to continue their health insurance coverage for a limited period, albeit without the employer subsidy (but now, for some, with a temporary federal “Stimulus” subsidy). Usually, the state laws mirror the federal law, although each state may have enacted one or two variations.

The New York amendment to its “mini-COBRA” law is one such variation. The amendment extends coverage from 18 months to 36 months following termination of employment. On the surface, this new extension to 36 months seems to cover all New York employers (and, thus, all terminated employees in New York). It does not.

As mentioned by The New York Labor and Employment Blog, New York’s law applies only to insured plans. Thus, New York’s law would not apply to the largest, self-insured employers. They continue to be covered only by the federal law, even in New York.

Although well-intended and undoubtedly of benefit to some individuals and their families, the New York provision may become a source of further confusion. Employers are required to provide notice to terminated employees in a detailed COBRA letter and with all the recent changes to COBRA, state and federal, it pays to review the letter carefully and to ask appropriate questions. 
 

The NY Labor and Employment Blog offers a detailed description of these changes, along with other recently passed legislation. 
 

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