Love, Taxes & Equality?
On June 24, 2011, New York Governor Andrew M. Cuomo signed the Marriage Equality Act (the “Act”); thereby granting same-sex couples the right to marry in New York. The Act confers the rights and benefits currently enjoyed by opposite-sex married couples under state law to same-sex married couples. The new law states simply: “A marriage that is otherwise valid shall be valid regardless of whether the parties to the marriage are of the same or different sex. … No application for a marriage license shall be denied on the ground that the parties are of the same, or a different,… Read more
Poisonous Estate Planning
Here is a case for making sure you choose the right spouse and friends in life. A New York State court recently held a widow and her two friends liable in connection with the production of a “sham” Will for the widow’s deceased husband and its admission to probate. The court’s decision illustrates a terrible family tragedy and the grave consequences of failing to follow the law by doing “favors” for friends or family. After the death of the widow’s husband in 2005, the widow convinced her two friends to witness a fake Will for the decedent backdated to 2003…. Read more
A person may commence various types of court proceedings in New York relating to his or her interest in an estate or trust. Sometimes a person is just trying to obtain information, and other times a person is looking to force a distribution, address certain actions taken or not taken by the fiduciary administering the estate or trust, or in extreme cases, have the fiduciary removed. In New York, the Surrogate’s Court may revoke the authority of an executor or administrator of an estate or a Trustee of a trust under certain circumstances. Such revocation of authority (the equivalent of… Read more
If It’s Broken, Fix It!
A recent amendment to New York law gives more Trustees the ability to fix, or otherwise change, the terms of a trust. Specifically, Governor Andrew M. Cuomo recently signed a bill amending Section 10-6.6(b) of the Estates, Powers and Trusts Law, commonly referred to as New York’s “decanting” statute. In this context, decanting is the process of a Trustee distributing trust property from one trust to another. Decanting is oftentimes used to change the terms governing an irrevocable trust by distributing trust property from a “broken” or antiquated trust to a newly-created trust with new and improved terms. New York… Read more
To Adeem or Not to Adeem… That Is the Question
Ademption is a legal term that describes what happens when specific property bequeathed under a Will is no longer in the decedent’s estate at the time of the death. Such property is considered adeemed, and the gift fails. For example, if a Will bequeaths the decedent’s car to a specific beneficiary, but the decedent does not own a car at the time of his death, the gift would be adeemed and the beneficiary would not receive the car. Because ademption is governed by state law, its application and enforceability vary from state to state. Common law generally holds that ademption… Read more
Guest Column: Legal and Tax Traps for Germans Owning Vacation Homes in Florida
Germans love to travel to the United States. Moreover, during the past two decades, an increasing number of Germans have acquired vacation homes in the sunshine state of Florida. However, many of them are not aware that by doing so they have to comply with two legal and tax systems: (i) Germany, as their home jurisdiction, and (ii) United States, as the country where they spend part of their time and own a substantial asset. Specifically, under both German and Florida conflicts of law rules, their ownership of Florida real property (i.e. a vacation home) is governed by the laws… Read more
Tax Alert: Non Resident Aliens U.S. Based Residences Are “QPRT”able
As U.S. real property faces unprecedented declines in value, many foreign investors have purchased vacation residences in the U.S. Non resident aliens (NRAs) owning U.S. residence need to be cognizant of the estate tax implications of such ownership and aware of the wealth transfer opportunities available to mitigate any U.S. estate taxes levied upon their deaths. One such planning opportunity, known as a Qualified Personal Residence Trust (“QPRT”), allows a NRA to exclude the value of a principal residence from inclusion within his or her U.S. taxable estate. The federal government imposes taxes on the estate of any deceased person… Read more
A Better Way to Give
Everyone has heard the proverb, “It is better to give than to receive.” Implicit in this age-old axiom is the notion that true charity is made without an expectation of reciprocation. One should give for the sake of giving and expect nothing in return. But what if you can give to charity and create the possibility of getting something in return? Then consider a Charitable Lead Annuity Trust (“CLAT”) as an option in your charitable planning. A donation to a CLAT is a better way to give to charity because it leaves open the possibility of passing some portion of… Read more
Using a CLAT to Fund a Family Foundation: A Legacy For Family Philanthropy
As discussed in another article in this newsletter, a CLAT is an efficient option for charitable giving. An additional benefit of a CLAT is that it can greatly enhance a family’s charitable goals by using it to fund a Private Family Foundation. A Private Family Foundation (“Family Foundation”) is a charitable foundation, organized as a nonprofit corporation or a charitable trust. The Family Foundation is called “private” because it is funded by one donor or a small number of donors, such as an individual or a family, as opposed to the general public. Using a CLAT to fund a Family… Read more
Help! Someone Hijacked My Foundation!
Imagine creating a private foundation which benefits your favorite charity. You carefully craft the purpose to maximize your impact. You set up metrics to measure your impact and have outside professionals at the ready to measure the impact’s quality. You, your attorney, your trusted financial advisor, and a member of a national charity sit on the board of directors for no compensation. The members of the board work well together until your death. After your death, the board appoints a representative of the charitable beneficiary to the board. A short time later, the people you appointed are off the board…. Read more
The Role (& Perils) of the Family Board of Directors
Trust & Estate attorneys advising wealthy families and their businesses are frequently asked by our clients what are the indelible characteristics to help it navigate tumultuous events, stay true to its family’s mission and thrive? Unfortunately, many families are sometimes intoxicated with the acronyms that promise to mitigate the pain of impending estate taxes at the expense of ignoring other important family and business planning issues. Similar to television commercial advertisements that sound too good to pass up, many affluent families become consumed with tax structures like FLPs, QPRTs, GRATs, CLATs and IDGTs, just to name a few. These indeed… Read more