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Schanker and Hochberg P.C. is a premier Estate Planning law firm. We offer legal services for sophisticated Estate and Gift Tax planning, Decedent Estate Administration and Probate services, Business Succession Planning, Charitable Giving, Special Needs Planning for persons with disabilities, simple Will planning, and all aspects of Elder Law planning including Medicaid planning and applications. Our website, www.schankerhochberg.com, provides detailed information about our practice and the services we offer. It also is an excellent resource for articles of interest about Estate Planning and Estate and Gift Tax Laws. A copy of each newsletter will always be available on our website.

Estate Planning is so much more than just tax planning. There is a considerable decision-making process. Schanker and Hochberg P.C. has over 30 years of experience in counseling clients for their Estate Planning needs.

As always, we encourage feedback from our readers. If there are any topics you wish for us to specifically address or elaborate on, please email me at: andrea@schankerhochberg.com.

Don’t Leave Your Estate Plan to Chance

Dying without a Will is also known as dying “intestate” where your assets go to your closest relatives under state “intestate succession” laws. So, who gets what in this situation?

Please refer to the following chart:

NEW YORK If you die with: Here’s what happens:
Children but no spouse Children inherit everything
Spouse but no descendants Spouse inherits everything
Spouse and descendants Spouse inherits the first $50,000 of your intestate property, plus 1/2 of the balance. Descendants inherit everything else
Parents but no spouse or descendants Parents inherit everything
Siblings but no spouse, descendants or parents Siblings inherit everything equally

New Jersey and Florida are not exactly the same as New York but they are similar when it comes to the rules affecting distribution of assets without a Will.

Did you know…that if you die without a will in New York, your siblings (including half blood-related siblings) are treated the same? This may be the outcome you would like or perhaps not. This is only one of the many reasons it is important to have a Will – so you (and not the State) can control who gets what. Other critical reasons to have an Estate Plan no matter what your net worth:

  • Designate Guardians for children under the age of majority
  • Get your property to your beneficiaries quickly
  • Minimize expenses
  • Ease the strain on your family
  • Plan for incapacity
  • Make sure your business continues smoothly
  • Reduce taxes on your estate
    And the list goes on…

Naturally, preparing for death is not a high priority but it is a reality we will all face eventually. If death suddenly comes tomorrow, would you be confident that your planning encompasses your intentions? If you or someone you know would like to schedule a complimentary consultation with us regarding their estate plan please call us at 631-424-5400.


 
Schedule a complimentary appointment to review
existing Estate Planning documents in our
Long Island Office, Manhattan Office, or our
New Jersey office. Contact us at either
(631) 424-5400 or (212)564-3307. Please see our
website at www.schankerhochberg.com
for our locations and directions.

 

New York State Estate Tax Alert – Revisit, Review, Revise

NEW YORK
New York State no longer has a traditional ‘Estate Tax Exemption.’ As of April 1, 2014, there is an ‘exclusion’ amount of $2,062,500 which is scheduled to increase each year by approximately $1 million until 2017 when the exclusion amount will be $5.25 million. As of January 1, 2019 the exclusion amount will match the Federal Exemption that year going forward.


 

For date of death as of: New York State exclusion amount
April 1, 2014 and before April 1, 2015 $2,062,500
April 1, 2015 and before April 1, 2016 $3,125,000
April 1, 2016 and before April 1, 2017 $4,187,500
April 1, 2017 and before January 1, 2019 $5,250,000
After January 1, 2019 (projected) $5,900,000

 


The most significant change in the law is that for estates in excess of 105% of the ‘exclusion amount’ there will be a New York State Estate Tax based on the entire gross estate. This is becoming known as the ‘New York Estate Tax Cliff.’ For example, assume you die on July 1, 2014 with an Estate valued at $2.17 million. The exclusion amount is $2,062,500 but the value of your Estate (in this example) is in excess of the 105% threshold, so the entire $2.17 million is taxed. There is no exclusion, or any exemption applied. The formula to calculate the actual tax is complicated but the result is actually a higher tax impact than if this same Estate were subject to the prior New York exemption of $1 million. The top tax rate remains 16%. And if you are a married couple and one spouse does not use the exemption upon the first death then it is lost forever (unlike the Federal Estate Tax rules which permits the surviving

spouse to elect to essentially inherit the deceased spouse’s unused exemption upon the second death).

Lifetime ‘gifts’ made within three (3) years of death:
The value of any gifts made on or after April 1, 2014 and before January 1, 2019 (while the donor was a New York resident) will be ‘clawed’ back into the value of the gross Estate for New York State Estate Tax purposes.

Generation-Skipping Transfer Tax:
New York has repealed the Generation Skipping Transfer Tax.

The New York Estate Tax versus the Federal Estate Tax:
The rules are vastly different. Many people have assumed New York has changed its rules to correlate to the Federal Estate Tax program but this is incorrect. Among many important differences, New York continues to offer no ‘portability’ of any unused exclusion amount (there is no longer an exemption) after the first spouse dies.

NEW JERSEY
New Jersey has both a State Estate Tax and an Inheritance Tax. The New Jersey State Estate Tax exemption is $675,000 (with a proposal to increase the threshold to $1 million). An ‘inheritance tax’ imposes a graduated tax ranging from 11%-16% on the transfer of assets to certain beneficiaries (for example, brother or sister, mother or father, cousins). Most notably, if married after 2007 then the surviving spouse will also be vulnerable to the inheritance tax.

FLORIDA
There is no State Estate Tax in Florida. However, you must have established legal domicile in the State of Florida in order to enjoy this treatment.

It is important to review your existing Estate Tax planning to ensure that no unintended estate taxes are caused by recent changes to the Federal and New York State Estate Tax rules.

Meet Ana Rodriguez, Paralegal

Ana Rodriguez is one of our three Paralegals. Her exclusive responsibilities include the coordination of ‘asset transfers’ as part of the Estate Planning or Estate Administration process. Asset transfers may be for an array of purposes, including avoiding Probate, protecting assets from creditors and potential liabilities, or for the purpose of settling an Estate. Ana dedicates her time to collecting asset information and being the intermediary to get the appropriate documentation signed so that title is correctly changed. We have an intricate protocol to ensure that we remind our clients of any missing information we require in order to

get this work done. Only after several unresponsive instances will Ana finally close the matter.

Ana is the person who follows-up with the appropriate financial institutions, real estate contacts, prepares all necessary paperwork and coordinates that it is signed and submitted; she is your agent. It truly is a special service that we provide for our clients and we are proud to be able to offer it because it is a plain fact that asset titling must be customized carefully with each client’s Estate Plan.

Recent United States Supreme Court Decision Effecting IRAs and Retirement Assets

On June 12, 2014, the United States Supreme Court, in a landmark case with far-reaching implications, ruled that inherited IRA accounts are no longer creditor-protected in a bankruptcy proceeding. Frequently, IRA owners designate their spouse to be the beneficiary when they die. Almost always, children or grandchildren are then named as contingent beneficiaries. In light of this decision, doing so imposes the risk that these ‘inherited’ IRA’s are vulnerable to the claims of creditors.

IRA’s are ‘Individual Retirement Accounts’ that allow individuals to direct pretax income,

up to specific annual limits, toward investments that can grow tax-deferred. Due to the tax advantages of IRAs they often accumulate the most growth and are the last asset to be spent during one’s lifetime. Thus, they often become one of the largest assets people have at time of death.

Since IRAs offer protection from the claims of creditors while the owner is alive, most people assume inherited IRAs will be protected from the claims of their children’s creditors as well. (An inherited IRA is an IRA acquired by a non-spousal beneficiary of a deceased IRA owner.) However, The Supreme Court’s recent ruling states otherwise. Therefore, it is more important now than ever to consider establishing an IRA trust to be the beneficiary as opposed to naming an individual(s) as an outright beneficiary. Trusts can help protect

these assets from existing or potential creditors of beneficiaries. Further, the trust vehicle can ensure ongoing management and control over ultimate disposition, while allowing flexibility in distributing assets among individual beneficiaries.

Action Recommended

Everyone who has beneficiaries or contingent beneficiaries as someone other than their spouse should consider trusts as beneficiaries. Never name a minor or a person with disabilities as an outright beneficiary. It is important to schedule a meeting or phone call with an attorney to discuss whether a trust is appropriate in light of this recent landmark opinion by the Supreme Court. Schanker and Hochberg, P.C. offers these meetings on a no-fee basis. You can reach us at 631-424-5400.

Families and Business: Blood May Be Thicker Than Water, But Can It Hold A Business Together? By Ari-Zev Anolic Ph.D.

Families that have successful businesses can be fortunate indeed. Parents can pass a business that they worked hard to build, and the wealth, skills and pride that go with it, to their children. They may also be honoring the legacy of past generations that founded a successful business. Siblings can work as a team together, and with parents and perhaps extended family, reaping the benefits of the efforts of prior generations and improving and building upon it. This can be true not just of businesses, but legal and medical practices that include multi-generations as well.

Often, such good fortune comes at a price. There are many significant hurdles and obstacles to running and passing on a successful family business. Only one–in-four family businesses make it to a second generation. Even considering the over fifty percent, six-year, failure rate of small to medium businesses, this indicates that family business must deal with unique issues and dynamics to remain successful.

Family relationships are based on powerful emotional forces. When these emotional forces are expressed in the activities of families in business they can undermine both the business and the family. Frequent outbursts of suppressed emotions, constant bickering, repeated

arguments over the same issues drain the business and the family of vital energy and drive. Conflicts often come with the territory in family businesses. They cannot be avoided or ignored. However, they can be managed.

Combining love and work makes family business enormously complex. Families and businesses are vastly different systems with different, values and rules. Addressing these potential tension-producing factors requires family members to work together as a family to talk about differences, and face conflicts openly and constructively. These skills and practices can be developed while also focusing on making the family’s business roles and practices as effective and rational as possible.

Overcoming the hurdles and obstacles that family business can present does not have to wait until there are unbearable tensions or dysfunction. Taking a proactive approach, through good planning and professional support can reap great benefits. There is no one approach. In my work with families and family businesses, I recognize that each family is unique, and each business has its own demands. I create a process for each family based on their distinctive needs. This work requires that I call upon my experiences as a psychologist, strategic planner, business owner and financial investor. It is equally important to work with additional professional support as needed, as I have with Schanker and Hochberg P.C., utilizing their expertise in succession and estate planning strategies.

The ultimate objective is for family members to be able to work effectively together as a team to produce a good living and enjoy the good fortune that family businesses can bestow.

Ari-Zev Anolic, Ph.D., president of PsyEd Solutions Ltd, provides psychological and educational services to individuals, families and organizations. He is a licensed psychologist, certified strategic planner, real estate developer and partner in a real estate brokerage and management company.

Schanker and Hochberg, P.C. is a Premier Estate Planning Law Firm

After nearly four decades in practice, we continue to strive for excellence on behalf of our clients. From being extremely hands-on with the philosophy that we are our client’s trusted counsel, we are able to form and maintain a long-term relationship with our clients. The following sets forth several valuable services we offer:

COMPLIMENTARY INITIAL CONSULTATION: This meeting is so we can become acquainted and perform a comprehensive review of your objections, concerns, any existing planning you may have in place. We establish what planning, if any, is recommended and customize a proposal for you to consider.

WRITTEN SUMMARY FOLLOWING ALL MEETINGS

QUARTERLY NEWSLETTERS

ALERTS AND UPDATES: We prepare and distribute these to all of our clients when there are significant Estate and Gift Tax changes or changes of Law that could impact our clients.

FLAT-FEES FOR ESTATE PLANNING:
This allows for us to truly get to know our clients and their families through unlimited phone calls, meetings, e-mails and correspondence for the requisite work for which we are retained.

COMPLIMENTARY ANNUAL REVIEW MEETINGS:
Letters are sent out annually to each client inviting them to come in for an annual review meeting. This is an opportunity to determine if any changes are needed and appropriate.

COMPLIMENTARY FAMILY MEETINGS:
Letters are sent out annually to each client inviting them to come in for an annual review meeting. This is an opportunity to determine if any changes are needed and appropriate.

ASSET TRANSFERS:
Titling of assets is basic Estate Planning and if title is not correct, your original intent may be superseded. For example, if Mary titles her savings account “Mary and Johnny” but her Will states that this account is to be divided equally among all of her children, she has just disinherited her other children because title on the account supersedes the Will (hopefully Johnny will share). Title and beneficiary designations must be carefully coordinated. Our staff coordinates this process for you.

These are some of our most valuable services offered to our clients. Please visit our website at www.schankerhochberg.com for more detail or contact us directly at (631) 424-5400.

Extensive Services at Schanker and Hochberg P.C.

  1. Complimentary Initial Consultations for Estate Planning, Probate and Estate Administration matters
  2. Complimentary Annual Review meetings for existing clients
  3. Complimentary Family meetings for existing clients
  4. Tax alert services for existing clients

Our main office is housed in an elegantly restored Victorian structure in the heart of Huntington Village. Here, we welcome you and your family into a relaxing, warm setting where we will work together to improve your circumstances and achieve your goals.

To better serve our clients and their families, we also have convenient office locations in Midtown Manhattan and New Jersey; we also offer our services to clientele in Florida.

GENERAL DISCLAIMER: While we hope this newsletter provides useful information, please know that this newsletter does not predict or guarantee the outcome or result in any particular situation and no attorney-client relationship exists or is established as a result of this newsletter or its receipt.

© Copyright 2014, SCHANKER AND HOCHBERG, P.C. All rights reserved. All materials, content and forms contained in this newsletter are the intellectual property of SCHANKER AND HOCHBERG, P.C. and may not be copied, reproduced, distributed or displayed without SCHANKER AND HOCHBERG, P.C.’s express written permission.

Highlighted S&H Attorney:
Steven Schanker, Esq. (Partner)

Steven Schanker received a Bachelor of Arts degree from the University of Rochester and his Juris Doctorate from St. John’s University School of Law. He is admitted to practice before the Courts of the State of New York, the Eastern and Southern Districts of the U.S. District Courts, and the Supreme Court of the United States of America.

His knowledge and competence have earned him widespread respect amongst his peers and colleagues. A very relaxed and personable manner has enabled him to build long, gratifying and rewarding relationships with his clients.

Mr. Schanker is an accomplished public speaker and has lectured in front of both lay and professional audiences on an national basis. He has been retained and continues to be retained by several large financial institutions, including life insurance companies and stock brokerage firms. He is an active member of the Society of Chartered Life Underwriters Speakers Bureau, the Estate Tax Planning Council of Long Island, a speaker at “Top of the Table,” a former adjunct professor at Adelphi University on Long Island, and a quoted author, including articles in Forbes and Fortune magazines.

Mr. Schanker resides in Huntington, with his wife, Carol, who is an accomplished artist.
sms@schankerhochberg.com