My Mothers Estate
To Whom This May Concern, I just spoke with Glenda at Ed Slotts firm. After reading his book titled “The Retirement Savings Time Bomb”
I had a few questions that hopefully you can answer and put to rest my uncertainty.
1. My MOTHER IS ALIVE and she made me the sole BENEFICIARY of HER WILL which includes her house (worth about 165k)
and about 400k in investments. These investments are NOT PART of a 401k, 403b, IRA, ROTH IRA. She never worked a day in
her life but when her HUSBAND passed 10 years she decided to make out a will. These investments are basically a few bond funds and several large CD’s.
2. My Mother lives in Upstate New York (Newburgh). I reside in Florida. I read some horrifying stories of how the State of NY and the FEDs could legally
eat up up to 60 percent of a parents portfolio. Specifically a lady named Ann on pages 19-21 (chapter 1/ The Crime of the Century).
Now granted this lady’s retirement was in her school district’s 403 B.
My mother doesn’t have any of those retirement plans.
3. At this time, the TOTAL of my mothers assets are house plus investments (total of around 565k; this figure includes the value of her home). Will the State of New York or the Fed’s get their hands on any of that.
4. What is the ESTATE TAX EXEMPTION for the State of New York?
5. If my mother Estate is well below that figure am I safe?
I look forward to your response in the near future.
Informingly Yours, James
Permalink Submitted by Bruce Steiner on Wed, 2012-08-08 16:51
Most of the alleged horror stories are made up by people trying to sell insurance, annuities, living trusts, bridges, or timeshares. (Insurance, annuities, living trusts, bridges and timeshares are, of course, appropriate in some cases, but not in every case.)
The Federal estate tax exempt amount is $5,120,000 this year. It is scheduled to revert to $1 million in 2013. The Administration has proposed to make it permanent at $3.5 million. No one knows what Congress will do, but the likelihood it will be under $1 million is remote.
The New York estate tax exempt amount is $1 million. However, even if her estate grows to more than $1 million, the top New York estate tax rate (on estates over about $10 million) is 16%. The New York tax on an estate of $1.5 million is $33,200, which is about 2% of the estate.
If your estate, including your inheritance, is likely to be more than the estate tax exempt amount, your mother might want to provide for you in a flexible trust that you can effectively control, rather than outright. This will keep your inheritance out of your estate for estate tax purposes, and will better protect it against potential creditors, including spouses.
Permalink Submitted by James Petry on Wed, 2012-08-08 22:30
So what would be my estate tax on inheritance if her net worth remains the same?
It seems that she is well below the limit.
My mother had an attorney drawn up her will. Is a will sufficient to stay clear of potential snafus? James
Permalink Submitted by Bruce Steiner on Wed, 2012-08-08 22:41
Under current law, and the law as scheduled to be in effect in the future, there would be no estate tax if her estate is under $1 million.
Whether her Will makes sense depends on what is says. Ideally she would leave her estate to you in a trust that you would control. The trustees could distribute any or all of the trust assets to you or your children or grandchildren for any reason. You would have the power, both during your lifetime and by your Will, to give or leave the trust assets to anyone you want (other than yourself or your estate or creditors). You would be a trustee, together with whomever you want. You would have the power to remove and replace your co-trustee (provided the replacement trustee is not a close relative or subordinate employee). The power to remove and replace your co-trustee is what gives you effective control.
This is what virtually all of our clients do. I haven’t seen your mother’s Will, so I don’t know if it does this. If not, she should consider revising it to do so. If she signed her Will before 1995, it won’t, since you couldn’t give someone this degree of control before then.
She might also consider giving you a power of attorney so you can act for her during her lifetime if need be.
Permalink Submitted by James Petry on Wed, 2012-08-08 22:56
If I sent you a copy of my mothers will would you let me know if you see any potential problems? James
Permalink Submitted by Bruce Steiner on Thu, 2012-08-09 01:31
Yes. Also send a copy of her husband’s Will if he created any trusts for her benefit in his Will.
Permalink Submitted by James Petry on Thu, 2012-08-09 03:42
My stepdad didn’t have a will. He was disabled the last 10 years of his life. My mother had to basically be his caretaker until the very end
when she had to put him into a nursing home. They were together for over 30 years. My mother basically lives on social security, as well as,
dividends & interest.
James
Permalink Submitted by Bruce Steiner on Thu, 2012-08-09 14:45
Then just send a copy of her Will.
Permalink Submitted by James Petry on Fri, 2012-08-10 03:00
Could you give me an exact mailing address, as well as your full name?
Do you work in Ed Slott’s office?
James
Permalink Submitted by Alan Spross on Fri, 2012-08-10 03:44
James,
This is best handled by private message. If you click on the User Control panel, you can then send a private message to bsteiner and he can reply privately. Phone numbers and addresses will then be kept out of the public forum.
bsteiner is an estate attorney and is not an employee of Ed Slott. He is licensed to practice in both NY and FL.
Permalink Submitted by James Petry on Fri, 2012-08-10 03:55
I did what you said. I hit control panel and when i did a search for bsteiner it did not come up.
could you let me know step by step to get a message to bsteiner?
james