On the other hand, there are things that you can do to avoid conflict in your family after you are gone. The first step, and perhaps the most important one, is to make sure that you know your family – both the good and the bad. You can love all your children and grandchildren very much and still recognize that one or more of them have serious financial or addiction problems that might not make them good choices as a fiduciary. You can love your family and recognize that some of your children do not get along and will not work together well. You may have a child who means well but really doesn’t understand the realities of financial planning or managing wealth and who needs a trust to protect his or her interests. You can have a child who is great with money but oblivious to the emotional interactions within the family. Once you have identified potential problems within the family, discuss with your attorney how to draft your documents to manage or avoid the potential conflicts you can already see.
For instance, if you have children who do not get along and you have determined that trust planning for them meets your goals, you might avoid making the children trustees of each other’s trusts. That way they do not have to be in conflict with one another over distributions from the trust and can focus, instead, on their relationship as siblings. This may be particularly true in instances where a trust is created for only one child as a result of an addiction issue. Depending on the circumstances, a professional trustee may even make sense. A no contest clause could also make sense in appropriate circumstances, especially where you are making an uneven distribution of your estate, or you have one or two descendants who like to cause trouble.
The second step is to know your assets and the relative importance and value that each member of the family places on such assets. For instance, if you have a family farm, it may be very important to maintain the farm as such while others may see it as a development opportunity. If your goal is to maintain the property as a family farm, you will want to take steps to ensure that this asset is controlled by family members who think as you do. If you have other assets that you can use to equalize bequests to your family, it may make sense to give the farm to one child who wants to maintain the farm, while giving the liquid assets to another who has no interest in farming. If you have multiple family members who value the farm or really any business, it may make sense to create a family LLC for the farm that you can run as a family while you are alive. Nothing, and I mean nothing, will pass on your values and traditions like incorporating your family into your business while you are alive. By doing so, you pass on your passions, your business strategies, your values in ways that make them truly alive for the next generations.
A similar issue arises with respect to tangible personal property. It is not uncommon for family members to fight over the distribution of tangible personal property. While most families ultimately work this issue out themselves, if only because the cost of legal help rarely makes sense, it can cause tensions within the family that may take a long time to clear up. By knowing the importance that your family members place on particular items of tangible personal property, you can alleviate these tensions in many cases while you are alive. You can give the tangibles away to particular people during your lifetime. This can be done one-on-one or at a family party where the children take turns choosing items. If you are concerned that the children may fight over things, you can even sell them and take a personal vacation.
The third step is to communicate with your family. It is rarely a good idea to keep your estate plan a secret from your family members. If you have decided that only one of your children should be a fiduciary or only one needs a trust or you have made some other uneven distribution of your estate, let all of the children know. Explain, while you can, why you have made your choices as you have. Usually, the family understands your decisions and, even if they do not like the decisions, they are willing to accept your decisions on the matter. After all, it is your money and you can do with it what you like. Secrecy in the family, especially where one family member has been favored by an ailing parent and the other family members feel isolated from that parent, is a leading cause of conflict that ultimately ends up resolved in court. Not just because one child feels left out, but because the trust within the family has been broken. Once you are gone, the opportunity is lost.
The fourth step is to encourage your named fiduciary to seek qualified legal counsel in connection with the administration of your estate. Some problems can be easily resolved with careful guidance of the fiduciary through the administration of the estate. It can also reduce conflict within the family to have a dispassionate third party communicate with the beneficiaries, explain the process etc., so that the focus of any disappointment or anger may not rest on the child named to act your fiduciary.
Addressing potential conflicts within the family before death with your attorney cannot guarantee that conflicts will not arise. However, an experienced estate planner like the attorneys at the Hook Law Center, can offer individualized advice and assistance to reduce the conflict while you are alive and to minimize the conflict after your death.
Ask Kit Kat – Kitten Nursery
Hook Law Center: Kit Kat, what can you tell us about the special kitten nursery in NYC?
Kit Kat: Well, they are doing a wonderful job and performing a unique service to the feline population of New York City. Leave it to New York—a city of 8 million people also has an outsized population of kittens. Breeding season is April to November, and kittens proliferate. This particular nursery is located on the Upper East Side at East 91st Street and was opened in 2014, because the ASPCA needed some way to deal with the high number of kittens. It can handle up to 300 kittens at a time. Once they reach 8 weeks of age and are spayed, they are transitioned to one of the regular ASPCA locations.
It takes a horde of volunteers to handle these little darlings. They need individual attention to become accustomed to handling by humans. Some have come to the nursery as young as a day old. The volunteers act as surrogate mothers. They feed them individually with tiny bottles of formula. They mimic the mother cat’s grooming with the use of a toothbrush. The grooming act, in turn, stimulates the kitten to feed and take the bottle. The volunteers also rub the kittens’ tummies with warm water to get them to use the litter box. Bubbles are blown at them to foster their hunting skills.
In the nursery’s two-year existence, it has handled 3,500 kittens! Kitten euthanasias have declined by 20 percent, because the kittens are able to get the care they need at a critical time in their development. Kittens from the same litter stay together and are given names starting with the same letter of the alphabet. “Orion, Ozzy and Osbourne in one cage; Hallie, Hamlet and Hiro in the next.” It’s a great service to the feline population. Often the mother does as much as she can for her kittens, but if she has to move suddenly because she feels threatened, frequently a kitten or two get lost in the shuffle. Thank goodness this safety net is here to help! (Andy Newman, “Two Rooms, 300 Kittens,” The New York Times, New York Region, November 23, 2016)
Distribution of This Newsletter
Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.The post Intra-Family Conflict After Death – It’s Expensive first appeared on SEONewsWire.net.]]>
With Republicans soon to control the White House and Congress, we are dealing with a political circumstance not seen since 1928. The world (and the Republican Party) were much different then, and therefore it is difficult to anticipate how exactly this degree of control will be used. From an estate planning perspective, there are several policy proposals that have been discussed for many years that may have a chance of being implemented. Of primary importance to estate planners is the possibility of repealing the estate tax and its lesser-known sibling, the generation-skipping transfer tax. While most individuals lose little sleep over the estate and generation-skipping transfer tax (because they only impact those with estates exceeding $5.4 million dollars), the changes introduced may include the elimination (or reduction) in stepped-up basis at death, which will impact many more individuals.
So what is the “step-up” in basis at death? Under current law, appreciated assets held at death are “stepped-up” to their fair market value when received by beneficiary. For example, if Grandma paid $1 for stock in 1960 that is worth $100 at her death and leaves that stock to Grandchild, then Grandchild has $100 in basis in that same stock. So if Grandchild sells the stock for $100, no taxes are owed. This is contrasted with Grandma having to pay tax on a $99 gain if she sold the stock and gave the proceeds to Grandson or Grandchild having only $1 in basis if Grandma gifted the stock to Grandchild preceding her death (the latter treatment is known as “carry-over” basis). Essentially, the investment gain passes tax-free at death.
The basis “step-up” at death has two important features. First, it essentially “forgives” poor tax recordkeeping by Grandma. So, if Grandma did not remember whether she purchased the stock for $1 or $50, it does not matter because Grandchild’s basis is determined at Grandma’s death. Second, this treatment provides an incentive for Grandma to keep significantly appreciated assets (that is assets that are worth significantly more now than when purchased) until death, while using assets that are less appreciated for her regular needs. Discussing whether that is desirable is beyond the scope of this article. However, if the step-up in basis is reduced or eliminated, it will impact what assets Grandma draws on for retirement expenses, how Grandma chooses to invest her assets, and what tax records Grandma must retain in order to minimize taxes. It is unclear how such a change would be implemented, but the general thought is that basis “step up” may be kept in place for “smaller” estates, but as no legislation has been specifically proposed, this remains undetermined. You can prepare for this change by obtaining basis information on your assets, if you have neglected to retain it. The tax proposals before Congress should be discussed with your estate planning attorney to determine if your plan needs to be revised.
While the above tax changes are speculative, there is a newly implemented law in Virginia that impacts the estate plans of married individuals or those contemplating marriage. Virginia lawmakers changed the “elective share” rules, effective January 1, 2017. Now many of our readers are wondering, “What is an ‘Elective Share?’” In short an elective share is an amount a surviving spouse may, by statute, elect to take instead of the amount left under their deceased spouse’s estate plan. This prevents a spouse from being disinherited. The “share” is calculated from the “augmented estate” of the deceased spouse,
The “augmented estate” is essentially a statutorily defined pool of assets that can be used to satisfy the elective share. The old definition of ”augmented estate” did a poor job of reaching assets outside of probate (not under court supervision), which made it difficult for the surviving spouse to have their elective share claim satisfied, which in turn lead to disputes and litigation. The new law provides clarity with regard to non-probate transfers, trusts, and other modern estate planning tools. This means that it is much easier to determine what pool the elective share is being calculated from and how the assets in that pool are valued. Importantly, this also gives estate planners clear guidance on how trusts and other documents need to be drafted in order to have assets count towards an elective share claim. .
In addition to clearing up what is included in the augmented estate, the new statute also changes how the elective share is calculated. Under the former law, the elective share was either one half or one third of the augmented estate. Furthermore, the old law did not distinguish between marriages of 30 days or 30 years in determining the size of the elective share. In contrast, the new law increases the amount of the elective share based on the length of marriage, up to half of the “augmented estate.” For some, this change may mean that you could claim more under an elective share if your spouse passes; for others, your claim could be significantly less.
As Elder Law attorneys, we try to plan around statutory rules as much as possible. Statutes change and are determined by the legislature, not our clients. Accordingly, we use tools such as premarital agreements, trusts, waivers, among others to help our clients ensure that their assets pass in the manner they choose, not the legislators in Richmond. If you are concerned that the provisions you have made for your spouse are inadequate, or if you are contemplating a new marriage, you should meet with one of our attorneys to discuss your plan.
Ask Kit Kat – Therapy Cats
Hook Law Center: Kit Kat, what can you tell us about using cats for therapy with dementia patients?
Kit Kat: Well, this is not quite as it looks at first glance. We all know cats are wonderful creatures. However, what are being used for dementia patients and those with Alzheimer’s are actually robotic cats. They look, feel, and in many ways act like real cats. The people they interact with who have the aforementioned conditions don’t seem to realize they’re not completely real. And I guess that’s a good thing. No litter and no food to keep up with—it’s a win-win situation for staff and patients.
One of the places these therapy cats have been used is at the Memory Care unit of the Hebrew Home at Riverdale in the Bronx. The robotic cats come in the three colors: orange tabby, creamy white, and silver with white paws. They are made by Hasbro, the toymaker, and are called Joy for All Companion Pets. Each costs $99, not a bad price when you consider that they can blink their eyes when stroked on their heads and can roll on their backs. Residents at the Hebrew Home really enjoy them. More than that, the cats seem to have a calming effect. Sometimes when a resident is agitated over something, instead of perhaps giving them a tranquilizer as may have been done in the past, they are given a cat to interact with. Immediately, they calm down, as was the case with one resident who was in a panic over not being able to find her long-deceased parents. This woman now has her own personal robotic cat.
Kingsway Arms Nursing Center in Schenectady, NY has had a similar experience. Renee Markle, recreation director, tells about an anxious resident. ‘We provided her with the cat, and for a good 45 minutes she sat and petted the cat and spoke to it in French, which is her native language. It was a beautiful sight.’ One after another, the residents love interacting with them. Another resident at Hebrew Home, Justina LaCanfora, 97, talks to her robotic cat. ‘You’re my pussycat—do you love me?’ It blinked to answer. ‘See that? Do you love me?’ The cat blinked in response, and she was ecstatic.
Research may not yet have validated the therapeutic cats’ benefits, but staff attest to their efficacy. Hebrew Home started with a few cats, but they are planning on purchasing at least 25 more. It’s a small price to pay for the improved well-being of their residents. (Andy Newman, “Therapy Cats for Dementia Patients, Batteries Included,” The New York Times, NY Region, December 15, 2016)
Distribution of This Newsletter
Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.The post Do You Need to Revisit Your Estate Plan in 2017? The Answer is Probably “Yes.” first appeared on SEONewsWire.net.]]>