Estate Planning and Probate

Through Estate Planning, Tax Planning, Asset Protection and Estate Administration we help clients achieve financial security in areas of estate, gift and tax planning. We provide family business succession planning and estate and trust administration. We also represent clients in disputes arising out of the administration of estates and trusts.

More than one document or mechanism is typically used in preparing wills, trusts or complex estates. A few examples of the many strategies available are:

Common Estate Planning Terms and Tools Include the:

Will – Which is a written instrument signed by a competent person before two witnesses transferring property upon death and outlining other instructions such as burial arrangements.

Waiver of Right of Election – Where a spouse waives the right to challenge the Will.

Special or Supplemental Needs Trust – This is a trust for a disabled person that supplements benefits from public assistance (Medicaid, etc.)

Executor – Is the individual who collects the property under a Will.

Trustee – Is the individual who manages the property.

Guardian – This person takes care of the interests of children or incapacitated persons.

Taxable Estate – These include those assets owned by an individual, which may be subject to estate or gift taxes.

Trust – Is a writing signed by a person creating the trust (Grantor) and persons holding property (Trustee) for the benefit of another (Beneficiary) and properly witnessed or notarized.

Credit Shelter or By-Pass Trust – Is a trust within a Will that preserves the estate tax exemption of a deceased, for the benefit of the children or other beneficiaries. 

Qualified Terminable Interest Trust (QTIP) – Is a trust within a Will (usually used in a second marriage) that provides for payments to a spouse during his/her lifetime with property distributed to the children, (usually children of the first marriage).

Qualified Personal Residence Trust – Is a tax saving trust in which a grantor transfers their home but lives there until the Trust ends.

Defective Grantor Trust – This trust removes property from the taxable estate (for gift tax purposes) but income and losses are taxed to the grantor.

Dynasty Trust – This trust can exist for multiple generations.

Family Limited Partnership – This entity combines some of the advantages of holding property as a corporation with advantages of owning property in a family partnership. A Family Limited Partnership is sometimes used as a vehicle for gifting that can reduce estate taxes.

Limited Liability Company – This company allows for the fragmented transfer of property (often at a discount for tax purposes) while combining the attributes of a partnership and a corporation.

Property Discounting Techniques – These methods are used to revalue property interests based upon a retention of authority or transfer of minority interest.

Grantor Retained Annuity Trust (GRAT) – Is a Trust that provides periodic distributions to a Grantor funding the trust. The amount the beneficiary receives are reduced by the distributions.

Irrevocable Life Insurance Trust – This involves placing an insurance policy in a trust, thus removing it from the taxable estate.

Private Annuity – This is an agreement between family members to give property or money in exchange for set payments over the lifetime of the Grantor. The fair market value exchange is not subject to estate and gift taxes.

Marketability/Minority Discounts – This involves a reduction in value, for gift and estate tax purposes, based upon a minority ownership, lack of control and the inability to turn the property into cash quickly.

Durable Power of Attorney – Is a Power of Attorney that survives competence, a power of attorney does not survive death.

Life Estate – Is a right to use property during a lifetime.

Installment Note – Is a promissory note used to sell property, typically selling property to an Intentionally Defective Grantor Trust for the benefit of children and grandchildren. The trust can pay the note to the Seller from the earning on the property. Since this would be an Intentionally Defective Grantor Trust there would be no income tax due on the sale because, for income tax purposes, the transaction is treated as a sale back to the Grantor/Seller.

Self Canceling Installment Note – This is a promissory note (as above) with a self canceling premium. By adding a premium (higher payments) under the Installment Note, a balance due under the installment note can be canceled if the recipient were to pass away before the note is fully paid.

Trusts to Eliminate Generation Skipping Tax – Is a trust created for grandchildren utilizing the annual gift exclusions.

Charitable Estate Planning Devices

Charitable Leads Trust – Is a trust that provides tax advantages and provides for the value of property donated to be distributed to a charity, and after a period of time, the remainder of fair market value is paid to a non charitable beneficiary.

Charitable Remainderman Trust – Is a trust that provides tax advantages and specifies that a fixed dollar amount is to be paid non charitable beneficiaries and the remainder of the fair market gets distributed to a charity. 

Estate Probate

Probate is the process of submitting a Will to the Court in order that property may be distributed. In the event there is a no Will an Administrator is appointed to oversee the distribution of property pursuant to the laws of New York State.

A Sample Case involving the Enforcement of a Will: With respect to Probate Proceedings, our office has litigated a number of Will disputes and Will construction/interpretation issues. One such case involved a father leaving a child a nominal amount from a multi-million dollar estate. The claim by one adult child was that his father was unduly influenced by the other adult child. Our office represented the Estate and our staff testified as to the deceased testator’s competence and intentions. As a result the objecting child’s claim was withdrawn and the Will was probated. New York Surrogate’s Court State of New York Queens County Index No. 1689-203

A Sample Case Involving the Administration of an Estate: When a person dies without a Will (intestate), there is an estate administration whereby the property is distributed to the closest relative, as determined by statute. In one case, after our client (the decedent’s wife) received the entire multi-million dollar estate because no Will was found, the decedent’s son from a previous marriage produced a Will years later purportedly leaving the entire estate to the son. The son claimed that our client was aware of the existence of the Will. During the course of the litigation, and after our firm commenced proceedings to defeat the son’s claims as the Beneficiary under the Will, the matter was settled for a nominal sum of less than 1% of the Estate, and our client retained all of her late husband’s property. New York Surrogate’s Court State of New York Queens County Index No. File # 5594-87/A

Tax Planning

Our office assists clients at various levels of tax planning. Most of the Estate Planning work involves the reduction of federal and state taxes. In addition, we assist clients with personal as well as, real estate planning. This includes like-kind (1031 tax free) exchanges of real estate. In addition to tax planning we also defend clients in tax cases involving the IRS, New York State, New York City and local governments. 

A Sample Case Involving Federal Tax: We have successfully appealed an IRS Federal Tax determination assessed penalties on lifetime gifts made by a decedent. In this instance, our client transferred real estate interests during his lifetime and incorrect values were set by his previous attorney and accountant. It was our position that the decedent relied in good faith on the advice of his then attorney and accountant, and penalties should be waived. We successfully obtained a decision at the IRS Administrative/Appellate level waiving several hundred thousand dollars in penalties against the estate. See In Re the Estate of G. Federal Tax Appeals.

A Sample Case Involving State Tax: One case that may be relevant is our representation of a business owner as the result of a New York State Sales tax determination. We believe this case is relevant because after the matter was finally adjudicated, the applicable law at issue was modified with respect to notices given to certain tax payers. In this instance a business owner received by certified mail a tax notice which he signed for but did not answer or respond to, this resulted in a tax warrant. A review of the file indicated that, although our client received the tax notice the notice was technically defective due to a spelling error. It was our position that, although our client signed the certified mail, the tax warrant must get vacated because there was a spelling error in the address. The Appellate Division agreed with our position. Although the Court of Appeals reversed the Appellate Division decision, by the time the reversal was entered, the statute of limitations expired for claims that could be made by the IRS to enforce related federal taxes. After the Appellate Division decision in our favor the tax statute was changed to address this issue. See 68 N.Y. 2d 891, 501 N.E. 2d 583, 508 N.Y.2d 934.

A Sample Case Involving New York City Tax: When accountants fail to file the necessary tax reports, the outcomes can be devastating. In one instance an accountant failed to file New York City taxes for a Manhattan hotel for several years. The result was a petition by the taxing authority to dissolve the corporation and a demand for over $2,000,000 in back taxes, interest and penalties. Our office filed for a hearing. At a pre-hearing conference we worked out an arrangement in which, the tax auditors in conjunction with our office, agreed to adjust the tax claims. In addition, the auditors agreed to file reconstructed returns in order to reinstate our client’s corporation retroactively. In this case our client paid less than 10% of the amount originally claimed to be due in back taxes. Since the matter was settled prior to hearing there is no index number.