TRUSTS & ESTATES

We help clients maximize the value of their potential estate.
Our trusts & estates group works with high net worth individuals who want sophisticated advice regarding the management of their investments and the distribution of their estates. Our clients want to maximize the value of their potential estate and ensure that their wishes concerning distribution are heeded. Some clients have complicated family situations, others need to address both business and personal concerns, while others want to continue support for their favorite charities. Our clients know that they can count on us for experienced, efficient services at reasonable rates.

Estate planning
Our attorneys use an array of gifting techniques and tax planning strategies that can be creatively combined to implement our clients’ wishes. Sometimes we use charitable trusts to fulfill a family’s philanthropic goals and still retain an interest in the fund for children or grandchildren. Other times, we use techniques to shift the appreciation of assets to provide the next generation of the family with financial and asset growth free of transfer taxes.

Many of our clients want to fund college and post-graduate education for children and grandchildren. We offer a variety of options including trusts, gifts to minors accounts and Section 529 accounts, which all take advantage of income tax free or tax efficient investment, and growth opportunities with accompanying estate and gift tax savings.

Working with us, clients can expect advice that will lead to:

• Minimized estate, gift and generation skipping taxes
• The preservation of family wealth
• The successful transfer of closely-held businesses to younger generations
• Ways to incorporate insurance products into an estate plan
• The appropriate allocation, structure and supervision of investment portfolios for trusts and family accounts.

And, of course, we can monitor our client’s investment portfolios, and provide an evaluation of performance and suggestions on the allocation of assets among investment alternatives.

When necessary, we provide Tax Court representation concerning contested or controversial issues.

Estate administration
In some respects, estate administration is as important as estate planning. You want someone you know, who knows you, your goals and your personal philosophy to represent you and advise the executor of your estate or the trustee for your family members. This will help to ensure that your wishes are paramount in the implementation of the plans laid out in your will. You also want someone skilled in the administrative byways of the state’s probate and tax regimes so that wills can be processed and estates distributed as expeditiously as possible. Our experienced staff of attorneys and paralegals takes care of the details so your heirs can move forward as you would wish.

Charitable giving
Because we work with individuals who make charitable bequests and contributions and also serve on the boards of charitable institutions seeking funds, we understand both sides of the giving equation. We counsel clients on the best way to use planned giving techniques to further charitable goals, and we work with institutions to create pathways for raising money for endowments, scholarships or funding specific projects.

Representative cases

• A client moved permanently to Florida but kept a small rental apartment containing some furniture and personal effects in New York for occasional visits. We realized that when the client died, the State of New York would claim an estate tax in an amount far greater than the value of all the furnishings and personal effects in the apartment. To avoid such a situation, we created a New York limited liability company to which the client transferred all ownership of the furnishings and personal effects located in New York. As a result, at the time of his death, the client did not own any New York tangible personal property; he only owned an interest in a New York limited liability company, which is not subject to estate tax in New York.
• The client made a will in 1998 to dispose of his estate of $3,000,000. He made a bequest to the children of his first marriage in the amount equal to the current (at the time of death) dollar amount that could be excluded tax-free from federal estate tax at the time of his death (then $600,000). The balance of his estate was bequeathed to his wife. In 2001, the exclusion from estate tax was amended to increase over time from $1,000,000 to $3,500,000. So, if the client died in the year 2006, the bequest to the children under the formula in his will would be $2,000,000 leaving only $1,000,000 for his wife. Clearly, this was not what he intended when he made his will. We prepared a new will, which placed a maximum limitation on the bequest to his children based upon the size of his estate at the time of his death, but not greater than the available exclusion from estate tax.
• Our client was about to make a substantial investment in a business, which he believed would be very profitable and would appreciate significantly over time. He wanted his two adult children to receive the benefit of the appreciation. He could not make tax-free gifts of shares in the business to the children because he had previously made gifts to them up to the maximum allowable gift tax exclusion and did not want to pay a gift tax on any additional gifts. The client was advised to sell a minority interest in the business to each of his children on the installment sale basis. Each child received 49% of the shares in the company and gave our client an installment sale promissory note for 15 years. Interest only was payable on the note during the 15 years and the entire principal was payable at the maturity of the note (15 years after the sale).
       During the 15-year period, the business made distributions to each child in an amount sufficient to pay the annual interest. In addition, because the shares sold were not readily marketable, the price each child paid for his shares was discounted for "minority interest" and for "lack of marketability." In this case, the original investment made by the client for 100% of the business was $2,000,000. Each child was sold 49% or $980,000 of the face amount, but after discounts (determined by a qualified appraisal) were applied the actual sale price to each child was only $490,000, thereby conferring a significant benefit to the children free of transfer taxes.
• Our clients, a wealthy woman in her late 80's, and her three adult children, raised the question as to whether the mother’s estate would receive an estate tax charitable deduction if the children decided to donate all or a portion of their inheritance to charity after her death. Generally, when a beneficiary donates inherited funds to charity, no estate tax charitable deduction is allowed, meaning the inherited funds are subject to estate tax regardless of the fact that they are given to charity. The family’s objective was to find a way to let the children decide how much of their inheritance to give to charity, but still receive an estate tax charitable deduction.
       Our solution: We prepared a new Will for the mother leaving her estate to the three children, in equal shares. The Will further provided that if within nine months of her death, any of the children refused to receive ("disclaimed") any portion of their inheritance, the disclaimed portion would be paid to charity. Under current law, property passing to charity as a result of such a disclaimer qualifies for the estate tax charitable deduction.
       Result: When their mother died, each child had the opportunity to donate a portion of his inheritance to charity and also save substantial estate taxes. Charity ended up receiving several million dollars.