Tuesday, August 23, 2011

Obama Favors "Compromise" Position on Future of Federal Estate Tax

In response to a question during a recent public event in an Illinois farm community about the impact of the federal estate tax on family farms , President Obama reiterated his position that a "fair" federal estate tax exemption would look something like the $3.5 per person exemption that existed in 2009.  The President stated that he did not favor a return to the "2001 level" which provided only a $1 million per person exemption, but that a $3.5 million exemption -- or a $7 million combined exemption for a married couple -- "would exempt most - almost all family farms and nevertheless would still hit folks like Warren Buffett and make sure that he is able to pay what he wants to pay in terms of passing on something not only to his family, but also to the country that has blessed him so much."

To read  more on this issue, click here.

Monday, August 8, 2011

When Failing To Do Any Estate Planning REALLY Hurts

Last Friday afternoon I had the good fortune of playing golf on a glorious day with members of a local accounting firm. When I stopped into the office on Saturday  to check my messages and mail (with son and dog in tow), I had a rather desperate voice mail from a woman who was calling on behalf of her aunt.  When I returned the call, this young woman -- I'll call her "Anna" -- explained  that her aunt "Susan" had lived with a man for 33 years who passed away last week, but they had never gotten married and Anna's "uncle Ralph" never executed a will.  Anna said that the couple had attempted to get married but Ralph's condition deteriorated too quickly to permit the wedding to take place.

Anna was understandably concerned for her aunt's well-being, and she asked me what rights Susan has under New York law regarding Ralph's estate.  I asked Anna how Ralph and Susan's assets were titled, hoping that most of their assets were titled as joint tenants with rights of survivorship.  Unfortunately, Ralph has a number of assets in his name only, including the house where he and Susan had lived for many years.

I told Anna that New York, unlike many states, does not recognize "common law" marriage, except in the limited circumstance where a couple represented themselves to be husband and wife in another state that does recognize common law marriage.  About 20-years ago I was involved in just such a case, where a couple in a long-term relationship had traveled to Pennsylvania and registered in a hotel as "Mr. and Mrs. Robert Jones."  Since Pennsylvania does recognize common law marriage, we were able to convince the Sullivan County Surrogate that "Mrs. Jones" was entitled to spousal rights under New York law.  I explained to Anna that unless her Aunt Susan were to be able to present similar proof, she would be entitled to none of Ralph's assets.  Under such a scenario, all of Ralph's assets would pass to Ralph's children (who are not Susan's) children. 

Since Anna told me that Susan does not get along with Ralph's children, I had the sad duty to inform her that Susan might be at risk for being evicted from the home that she has lived in for many years.  To avoid such a result, Susan might be able to show that she contributed to the expenses and maintenance of the home for during her residency, and thus in fact has a reasonable claim to an equity interest in the home.

Unfortunately, all of Susan's options fall under the guise of "hopefully" or "maybe".  All of this could have been avoided had Ralph executed even a rudimentary estate plan consisting of a simple will that designated Susan as the beneficiary of the bulk of his estate, especially the home.