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Estate Planning for the Blended Family

Preparing a will and estate plan for a blended family can be complicated, and strain family relations. These days, many families include children, stepchildren, former spouses and in-laws. The number of remarriages has been steadily rising over the past few decades. By some accounts, in 2013, 40 percent of marriages included at least one spouse who had previously been married, and in 20 percent of remarriages, both spouses had previously been married. Such situations require estate planning with clearly understood goals. The biggest issue in blended families is typically, “where will my money go when I die?” In many cases, remarried couples want to ensure that the surviving spouse will be appropriately cared for upon the death of their partner—with the children from their previous marriages becoming the ultimate beneficiaries of the assets their parents brought to the marriage.  The challenge comes from designing a plan that will keep all

College Expenses – How Courts Interpret Divorce Agreements

One of the most important aspects of a divorce settlement is the drafting of a settlement agreement.  The parties may come to an agreement, in general terms, about how much child support will be paid, and what a visitation schedule will be.  However, unless an agreement is very carefully drafted, there can be future disagreements, and expensive litigation. A case before the Appellate Division in New York recently illustrated the point.  In Matter of Apjohn v. Lubinski, 2014 Westlaw 641870 (3d Dept. Feb. 20, 2014), the parties disagreed as to what the father was required to pay for their son’s college expenses.  Their 1994 divorce agreement said that the father was to pay “an amount not to exceed half of the cost of tuition, room and board at a SUNY college or university,” and that the child was required to apply to “the said college or university” for all possible

NYS Estate Tax Changes: The Good News, and the Bad News

As of April 1st New York state doubled its estate tax exemption – the amount you can leave your heirs without paying state estate tax – and it is set to rise gradually through 2019 to eventually match the federal exemption, projected by then to be $5.9 million.  That will make estate tax planning much easier for many people, but there are still big traps in the new law to watch out for. One such trap in New York is a new “cliff,” so called because if it is triggered you fall into NY’s estate tax abyss. Until April 1, 2014 the amount an individual could leave to their heirs (other than a spouse) without owing NYS estate tax was $1 million.  Your estate would then pay NYS estate tax (to a 16% top rate) on the value of your assets which exceed $1 million.  As of April 1, 2014 the

Gov. Cuomo Proposes Changes to NYS Estate Tax

New York is one of only fourteen states that tax estates. That means in addition to the federal estate tax, a New York estate could be paying another 9% – 16% to Albany – a fact that some believe is leading to a migration from New York to other states. Governor Andrew Cuomo’s new budget proposes several major changes to New York’s estate tax. First some background: The federal estate tax applies to people who have an estate of $5.34 million or more, and they typically pay a rate of 40%. So the federal system has a big exemption, but a high tax rate. New York’s system affects many more taxpayers because the personal exemption of $1 million is so much lower, notwithstanding the lower 9% – 16% rate. When Governor Cuomo highlighted this issue at his recent press conference, he made a series of proposals to bring the New

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