Wednesday, March 17, 2010

New York Recognizes State QTIP Election Despite Absence of Federal Estate Tax

Yesterday the New York State Department of Taxation and Finance announced that New York State will allow estates of decedents who die in 2010 to elect to take a marital deduction for Qualified Terminal Interest Property ("QTIP") even though no Federal Estate Tax return is required.

Traditionally, New York would only permit an estate to make a QTIP election if the estate was entitled to the election under Federal law. Since in 2010 there is no Federal estate tax, there has been speculation among New York estate planning attorneys whether New York would permit a state QTIP election even though the Federal QTIP election does not exist in 2010. Attorneys have been greatly concerned about this issue because the common estate tax planning provisions incorporated in wills and trusts are predicated upon the existence of the QTIP election. If a New York State QTIP election were not allowed in 2010, then the dispositions of many estates might have been significantly different than what was intended at the time the estate plan was created with the expectation that a State QTIP election would be available.

Fortunately, New York has taken a pragmatic approach to this issue that will surely prevent a lot of aggravation and heartache.

Friday, March 5, 2010

If You Want An Inhertiance, Be Nice To Your Parents!

It may seem rather obvious, but an article in Money Magazine cites research that shows that parents whose children call and visit them often tend to leave those children a larger share of the parents' assets.

While I don't disagree with this conclusion, my experience working with clients is that unless a child is significantly estranged from the parents, in most cases the parents will elect to leave equal shares for all the children. I do encourage parents to think long and hard about distributions among the children, and to not reflexively leave equal shares without taking all the facts and circumstances into account.

Monday, March 1, 2010

New Law -- Family Health Care Decisions Act

Despite the dysfunction in Albany, the Legislature recently passed the Family Health Care Decisions Act ("FHCDA") that will permit family members to make health-care decisions for incapacitated loved-ones even in the absence of a Living Will or Health Care Proxy.

The FHCDA -- which was first proposed back in 1993 -- establishes protocols for health care providers to determine whether a patient in a hospital or nursing home possesses decision-making capacity. If it is determined the patient does not have requisite capacity, then a "surrogate" decision maker will be selected from a list of persons in order of priority, including family members, domestic partners and close friends. This new law should help reduce the number of expensive and time-consuming Guardianship proceedings that has usually been required in these types of cases in the past.

Notwithstanding the passage of the FHCDA, it is still best to have in place a Living Will and Health Care Proxy so that your loved ones will have direct guidance from you regarding your specific health care preferences and instructions for end-of-life care.