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Welcome
Helping our clients protect their families, their businesses and
their future As experienced NYC commercial attorneys, who have witnessed
several US economic cycles, we recommend that our clients shift
their focus from transactional work to wealth preservation, wealth
management and estate planning. What better time to personally slow
down, take stock of one’s personal and family assets and plan
for one’s future and that of one’s family? Each individual
and each family has unique assets and unique estate planning needs.
Some have legacy businesses, where business succession issues predominate.
Some have real estate or art and collectibles that have special
asset management requirements. Others are LGBT partnerships or second
or third marriages. Some clients have children or adults with special
needs. And, as we all get older, we may have special needs as well,
which create risk management and planning opportunities. At Schneider,
Pfahl & Rahme, LLP, we are a small, boutique firm, but we try
to work with the best special counsel in each field of law, whether
it be tax, securities, labor, intellectual property, matrimonial,
immigration, litigation or creditor’s rights law, to help
our clients fulfill their business, personal and estate planning
needs.
We launch this newsletter series in that spirit, to help educate
our clients and friends and, in the future, to showcase some of
our special counsel.
Background: A person who fails to make a will before
death dies intestate, and their heirs (or a Public Administrator)
must file for administration of their estate. This can be a very
costly, slow and public process. The Decedent’s property is
distributed according the statutory rules of priority. The Administrator
of the estate may be a strange person, a bank, or even the Public
Administrator, not designated in advance by the Decedent.
Most estate planning in NY involves certain basic tools or documents,
which help clients, meet their unique personal needs. These documents
are as follows: (1) a Power of Attorney; (2) a Health Care Proxy;
(3) a Living Will; (4) a Living Trust; (5) A Last Will and Testament
and (6) an Inheritance Trust.
The purposes of each of these “tools” are as follows:
1) Power of Attorney
This document allows the person, people or entities selected as
attorney in fact to handle the legal affairs of the Principal. These
can be full or limited, durable or non-durable. (Note: A durable
power, when properly drafted, can avoid costly guardianships, conservatorships
or even probate.) There are important new rules concerning Power
of Attorneys in NYS that take effect September 1, 2009. These rules,
which will have serious impact on the daily lives of many attorneys
and clients, will be summarized in our next newsletter.
2) Health Care Proxy
This document is an advance directive whereby an agent is designated
to speak on your behalf and make medical decisions in the event
that you are unable to make them yourself.
3) Living Will
This document is an advance directive that indicates how to comfort
you and/or what treatment to use during a serious illness, including
withdrawal of artificial life support systems, in the event you
are unable to speak at the time (can be used to guide your Health
Care Proxy on what treatment you wish).
4) Living Trust
This document is a contract between a living Grantor/ Settlor and
a Trustee to manage assets for the benefit of designated Beneficiaries,
including the Grantor (can be revocable or irrevocable and/ or charitable
remainder, ancillary, standby, management, Medicaid, etc.); Can
be used to avoid probate and its costs (i.e. filing and administering
a will); can also help preserve privacy of the Grantor/Settlor since
there is no public filing requirement.
5) Last Will and Testament
This document is a declaration of how a person (Testator/trix) wants
to dispose of his or her real and personal assets after his or her
death, who he or she wants to administer the estate (Executor/trix),
and what powers and privileges he or she wish to give them. A will
can be simple or pour over (i.e. pouring over into a “Testamentary
Trust”). In NY, a will can, but need not, be filed prior to
death. A competent person can change his or her will at any time,
absent a contract restricting his or her rights. Upon death, it
must be filed as part of the probate proceeding. When the Testator/trix
owns out of state property, ancillary probate proceedings may also
be required.
6) Inheritance/Testamentary Trust
This document is a springing contract established in a Will, whereby
assets pass upon the death of the Grantor/Settlor into a Trust to
be managed by a Trustee for the benefit of designated Beneficiaries
for specified purposes. (Examples include By-Pass/Credit-Shelter,
Marital Deduction, Generation Skipping, Q-Tip, Irrevocable Life
Insurance, and “Crummy” Trusts).
DEATH AND TAXES:
One goal of estate planning is to legally reduce the federal and
state Gift and Estate Taxes that an individual and/or couple pays
upon passing. This can be achieved in many ways, but essentially
involves gifting a portion of the taxable estate to designated beneficiaries,
including a spouse, children, grandchildren and/or charities, which
freezes the value of transferred and/or appreciated assets as of
the date of the gift or transfer and uses up the annual gift tax
exclusion. This annual exclusion was recently increased in 2009
from $12,000 to $13,000 per beneficiary/ spouse (i.e. a couple can
now gift up to $26,000 per year to an unlimited number of individuals).
Beginning in 2002 and continuing through 2009, the top federal estate
and gift tax rates were reduced. Those tax reductions are currently
scheduled to sunset and future Estates of more than $1 million (equivalent
exemption) may be subject to Federal estate taxes at the 55% rate,
beginning in 2011. A future newsletter will address new estate and
gift tax issues and our special counsels are available to answer
questions, upon request.
THE POWER OF ATTORNEY
As mentioned above, one of the simplest tools of estate planning
is the Power of Attorney. The tool is often used in commercial law
as well, for purposes of doing business transactions through a fiduciary
agent or “attorneyin- fact”. The designated attorney-in-fact
need not be an attorney at law, in fact, it is usually a spouse
or trusted family member of the Principal. They, nevertheless, have
certain fiduciary duties as agent for their appointing Principal.
For many years, NYS has approved a statutory, or uniform, short
form Power, which is recognized as the required standard by people
in the commercial world throughout New York. The Principal must
sign the document before a notary public. There must also be an
affidavit signed by the attorney-in-fact when the Power of Attorney
is used, stating that the Principal is alive and has not revoked
the Power. The power continues until revoked, affirmatively by the
principal or by operation of law through death of disability of
the Principal. New York and many other jurisdictions have recognized
a Durable Power of Attorney for several years. The Durable Power
did not become void based on the intervening disability of the Principal.
This was a step forward in developing the Power as an estate planning
tool, but created some problems when unscrupulous agents abused
their designated powers after the Principal became disabled.
The NYS Legislature attempted to rectify these and other problems
by authorizing a new statutory short form Power.
Under new NYS legislation (Chapter 644, see: "http://www.titlelawnewyork.com/Chapter644"
www.titlelaw-newyork.com/
Chapter644), there will be a new Statutory Short Form Power
(“SSF”), required beginning September 1, 2009, for all
transactions in New York. This form varies considerably from the
prior form, The Durable Power. Our next newsletter will summarize
these important changes.
Please call us, or email us, if you have any n or if you have a
legal subject you would like us to cover in a future issue of this
newsletter. My favorite Trusts and Estates Professor at Emory Law
School said, “You can check out anytime you want, but you
can never leave.” But he also said, “By the inch it’s
a cinch. By the yard it’s hard.” Please start planning
now and save your loved ones (and your counsel) problems later on.
Daniel H. Schneider, Esq. Schneider, Pfahl & Rahme,
LLP 2 Park Avenue, 19th Fl. New York, N.Y. 10016 Tel. (212) 629-7744
Fax. (646) 514-0297 Mobile (845) 616-6909
New EMail: DanSchneiderEsq@gmail.com
Website: www.schneiderpfahl.com
This publication is distributed with the understanding that
the author, publisher and distributor are not rendering legal, accounting
or other professional advice or opinions on specific facts or matters,
and, accordingly, assume no liability whatsoever in connection with
its use.
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