Maurice Kassimir & Associates, P.C.

We are pleased to announce a new location for our vocation

We are pleased to announce a new location!

Effective January 1^st, 2015

Our new Address will be

1375 Broadway, 23rd Fl.
New York, NY 10018

Tel: 212.944.1377

email: lawyers@mkpclaw.com
website: www.mkpclaw.com

We Look Forward To Your Visit.

New York State Estate Tax Changes:
How to Potentially Save Millions in New York Estate Taxes

Effective April 1, 2014, New York State substantially changed its rules regarding estate taxes. The biggest changes concern the size of the estate tax exemption and how the estate tax is calculated. For most, New York State estate taxes have been reduced. For some, New York State estates taxes remain very high. The rules are quite complicated. However, with proper planning, significant New York estate taxes can be saved or eliminated for those who would otherwise be subject to estate taxes.

NEW LAW

Prior to April 1, 2014, the New York State estate tax exemption was only $1 million. The estate of a New York resident whose New York taxable estate was greater than $1 million had to pay an estate tax to New York on the taxable amount over $1 million. However, as of April 1, 2014, there have been incremental increases in the New York State estate tax exemption which will continue until January 1, 2019, at which point the New York State estate tax exemption will “catch up” to the federal exemption. The federal exemption is $5,430,000 in 2015, and under current law, is indexed for inflation each year. The following chart summarizes the scheduled increases in the New York State estate tax exemption:

Date of Death	New York Exemption Amount
4/1/14-3/31/15	$2,062,500
4/1/15-3/31/16	$3,125,000
4/1/16-3/31/17	$4,187,500
4/1/17-12/31/18	$5,250,000
On or after 1/1/19	Same as Federal Exemption

The rising New York State estate tax exemption sounds great at first, but along with the increase came a new and bizarre way of calculating the estate’s tax base. If the New York taxable estate is greater than 5% of the exemption amount, the tax is calculated on the entire amount of the taxable estate rather than only the amount over the exemption. This rule is terrible for New York residents whose estates exceed the New York State exemption by more than 5%

While we cannot know exactly how indexing will impact the exemption by 2019, we will assume for purposes of this discussion that it will reach $6 million by 2019. Therefore, a New York taxable estate of $6 million would result in no New York or federal estate tax. However, if a New York taxable estate exceeds the exemption by more than 5% of the exemption (or $300,000), a New York estate tax will be payable. As an example, a New York taxable estate of $6.5 million would generate a New York State estate tax of $574,000 (or approximately 8.83%). However, compared to paying no tax on $6 million, the marginal tax rate on the additional $500,000 is a whopping 114.8%! In this example, every dollar over the assumed exemption results in a tax of almost $1.15.

PROPER PLANNING IS VITAL FOR MARRIED COUPLES

For married couples, it is particularly critical that the New York exemption is not wasted at the death of the first spouse. While federal law allows a transfer of the unused exemption to the surviving spouse under the doctrine of portability, New York law does not have an equivalent statute. Therefore, the first spouse’s New York exemption will be lost if not used at the first death. As a result, if a couple with a $12 million estate leaves everything to the surviving spouse, no federal or New York estate tax would be payable at the first death (due to the unlimited marital deduction), but a New York State estate tax would be payable at the second death of $1,386,800 (on the entire $12 million). With proper planning, this outcome could be avoided.

IMPLEMENTATION OF PLAN

The first step is to ensure that that each spouse separately owns at least the New York State exemption amount. This may involve separating jointly held assets and/or transferring assets from one spouse to the other. In addition, both spouses must have properly drafted Wills providing for an exemption trust at the first death for the available New York State estate tax exemption. The surviving spouse can retain access to the assets in the exemption trust by being a beneficiary of the trust. This strategy will allow for the maximum amount to be held in the exemption trust at the death of the first spouse regardless of which spouse passes away first. Therefore, if the first spouse to die has a taxable estate of $6 million and the surviving spouse also has a taxable estate of $6 million, all estate tax can be eliminated! This is a much better result than the example above.

CONCLUSION

It is very important that all available estate planning tools be utilized to maximize tax savings in light of the current law. This advice is particularly important for New York State residents and those nonresidents with significant real property located within New York. Although the new rules in New York can be detrimental to taxpayers, with proper planning they can be used to your advantage. The suggestions made in this article may not be appropriate for you, but other planning strategies may achieve similar results

To: High Net Worth Clients Date: March 1, 2008

Subject: Estate Planning – Grantor Retained Annuity Trusts (GRATs)

The recent turmoil in the markets is not necessarily all bad news. Certain estate planning vehicles have become particularly attractive in today’s market because they outperform when interest rates are low and allow you to remove undervalued or appreciating assets from your estate. This will occur once the stock market reverses recent trends. One particularly effective vehicle is the Grantor Retained Annuity Trust (“GRAT”). A GRAT is an effective planning strategy for transferring your assets to your children at a substantially discounted gift tax cost. With estate tax rates for New York residents of 55%, the GRAT can be a very important planning tool. A GRAT is an ideal vehicle for transferring equities and other assets out of your estate that currently have appreciation potential in excess of 3.6% per annum. In a GRAT, the grantor (trust creator) contributes assets to the trust and receives a fixed annuity for a specified term of years. The assets remaining in the GRAT at the end of the term will pass estate and gift tax-free to the trust beneficiaries.

Example:

The following chart is an illustration of the benefits of a GRAT with a 5-year term. The calculation assumes 10%, 15% and 20% annual rates of return. The calculation assumes an initial contribution to the GRAT of $1 million in equities or other appreciating assets. Note that other assets such as stock in a closely held business could have excellent results.

Assumed Growth Rate	Required Annual Annuity Payment Retained by Grantor	Amount Removed from Estate After 5 Years
10%	$222,109	$254,515
15%	$222,109	$513,817
20%	$222,109	$835,477

This chart reflects how much property would be removed from your estate on a $1 million transfer after only five years. The amount removed from the estate will continue to grow after the 5-year term as the trust assets continue to appreciate in value. As an example, if $500,000 was removed after five years and it continues to appreciate at 10%, in 30 years the amount removed from the estate will be nearly $9 million (assuming the grantor pays all income taxes). Enhanced planning can result if multiple GRATs are created with different types of assets (for example, a separate GRAT for a long-term cap fund, short term value fund, international fund, hedge fund, etc.). Also, the term of the GRAT can be as low as 2 years.

In addition, because a GRAT is treated as a grantor trust for income tax purposes, the grantor will pay all the tax on the income generated by the trust assets, meaning that the trust principal in the trust will continue to grow outside of the grantor’s estate without any reduction for income tax payments. Over time, this will result in very significant estate tax savings.

Please contact us to discuss whether creating a GRAT is appropriate for you.

Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding federal tax penalties that the Internal Revenue Service may attempt to impose.

Individuals who embark on an estate plan can benefit from establishing trusts. There are many different types of trusts that can be created to accomplish different objectives. Creating a trust can provide advantages during your lifetime and to your heirs after your death. When you set up a trust, you (the grantor) transfer assets to a separate legal entity that holds your assets and disburses them according to your objectives. Because you determine who will serve as trustee, certain trusts let you continue to maintain control over your assets even after you have transferred them to the trust. Which type or types of trusts you decide to implement are dependent on your particular facts.

Trusts can accomplish many important estate-planning goals. They can ensure the sound management of your assets after your death; they can protect your property from creditors; they can minimize or reduce probate; they can guarantee that your estate passes to your heirs exactly as you wish; they can provide funding for multiple generations; they can fulfill your charitable goals and provide income tax benefits, and most importantly, they can reduce estate taxes.

Different types of trusts are designed to accomplish a variety of lifetime and after-death objectives. Some of these include Living Trusts, Charitable Lead or Remainder Trusts, Qualified Terminable Interest Trusts, Credit Shelter Trusts, Qualified Personal Residence Trusts, Marital Deduction Trusts, Generation Skipping Trusts, Grantor Retained Annuity Trusts, Intentionally Defective Grantor Trusts, Dynasty Trusts, Supplemental Needs Trusts, Insurance Trusts , and the list continues.

Depending on your family situation, your wealth, your health, and your age, a plan can be implemented which utilizes a combination of these trusts to best integrate your lifetime and testamentary objectives and minimize estate taxes.

Questions?

If you have any questions regarding this matter or any other estate planning techniques, please contact a Maurice Kassimir & Associates, P.C. Trusts & Estates attorney or e-mail us: mkassimir@mkpclaw.com.

A Living Trust is an alternative to a traditional Will. Both a Will and Living Trust direct how your probate assets[1] will be distributed upon your death. They may be revised at any time prior to your death. The provisions of the Living Trust will also govern your assets during your lifetime. You will be the sole beneficiary of the trust during that time, and the Trustee may be you alone and/or someone else you select. A Living Trust can be revoked.

Since your assets, whether disposed of under a Will or Living Trust, will still be subject to estate taxes, there is no death tax benefit to utilizing one over the other. However, there are significant differences between the two which may make one a preferred alternative.

If you:

1. Want to avoid the costs and delays of probate;
2. Have concerns about a Will contest;
3. Have tangible property or realty in other states;
4. Have privacy concerns; and/or
5. Are concerned about the smooth transition of your estate upon your death and/or incapacity;

then a Living Trust would be the correct choice for you as it will more favorably address these issues.

However, to ensure you reap the complete benefits of this planning, it is important that you transfer all of your probate assets to the trust during your lifetime. This is the most time consuming and costly aspect of Living Trust planning. It is as if you are probating your estate while you are alive. If any of these assets are omitted from the trust, probate will most likely be necessary. Therefore, it is often customary to prepare a simple “pour-over” Will in conjunction with the Living Trust that directs all excluded assets be added to the Living Trust at your death. If the issues delineated above are not of particular concern to you or you are averse to transferring all of your assets to a lifetime trust now (such transfers can be time consuming and costly), an all encompassing Will would be appropriate for you. Typically, we only recommend a Living Trust if the client is concerned about disability within a few years or sooner

Questions?

[1] Probate assets are assets held in your own name. Excluded from the probate estate are joint accounts, retirement accounts with beneficiaries other than the estate, and insurance policies where the estate is not the beneficiary.

Most insureds maintain life insurance policies to replace lost earnings, maintain their family’s standard of living and perhaps provide liquidity for estate taxes in the event of their death. Typically, however, little or no consideration is given to policy ownership and beneficiary designations. If no designation is made at all, the proceeds will be paid to the insured’s estate. If the insured’s Will directs the proceeds to a surviving spouse, estate tax will not be imposed on the proceeds. But if the insured has no Will, or if there is no surviving spouse, there may be an immediate federal estate tax of up to 46% on the value of the proceeds.

Many insureds will have thought to designate their spouse as the primary beneficiary and their children as contingent beneficiaries of their policies. As stated above, proceeds paid to a surviving spouse will not be subject to estate tax. But if the spouse predeceases the insured or they die in a common accident, an unfortunate result occurs. Insurance proceeds which may be urgently needed by the insured’s children (particularly if they are minors) will be fully exposed to federal and state estate tax, meaning that the survivors may receive less than one-half of the proceeds; a disastrous result.

Insureds who are competently advised by their attorneys (or their insurance agents) upon purchasing insurance policies will likely be told to create an irrevocable life insurance trust (an “ILIT”) to serve as the owner and beneficiary of the policy. If the policy is purchased directly by the ILIT, and provided the insured retains no “incidents of ownership” with respect to the policy (which include the right to borrow from the policy or change the beneficiary), the proceeds of the policy will not be included in the insured’s estate for estate tax purposes and will therefore not be subject to estate tax, provided the trust is correctly administered.

The disadvantage of using an ILIT as a policy owner lies simply in the fact that an ILIT, by its terms, must be irrevocable. The insured will not be able to directly access the cash surrender value of the policy. Moreover, the trust terms cannot change even if family circumstances do. However, a considerable amount of flexibility can be built into an ILIT to anticipate changes.

For example, if the insured and his/her spouse later divorce, the insured would probably not want his spouse to be a beneficiary of the ILIT. Therefore, the trust terms may specify that the spouse shall only be a beneficiary after the death of the insured in the event that he or she was “married to and living with the insured as husband and wife at the time of the insured’s death.”

Or should the insured’s child have a disability or exhibit extreme bad judgment and irresponsibility regarding his or her choices in life, the Trustees may be given the power to retain trust income and principal and spend it for the child’s benefit, instead of paying out the principal and income directly to the child upon attaining a certain age.

The ownership status and beneficiary designations for all your life insurance policies (including group policies provided by McKinsey & Company) should be reviewed as soon as possible to ensure that they meet with your family’s needs and are structured in the most tax effective way possible.

Questions?

If you have any questions regarding this matter, insurance planning or any other estate planning techniques, please contact a Maurice Kassimir & Associates, P.C. Trusts & Estates attorney or e-mail us: sklawyers@skpclaw.com.

A disclaimer Will is a useful estate planning tool which provides flexibility while estate tax laws remain in flux. Typically married couples want the surviving spouse to have as much wealth as he or she needs throughout his or her lifetime. Most Wills direct the appointed Executor to administer the terms of the Will, terms which are set in stone. Often the Will instructs the funding of a bypass (or credit shelter trust) before giving the balance to the surviving spouse. The bypass trust is funded with the maximum available estate tax exemption (currently $3.5 million). The terms of the trust are usually for the benefit of the surviving spouse and/or children to be paid ultimately to the children upon the surviving spouse’s death.

A disclaimer Will does not force the creation of a bypass trust. Rather, it leaves the entire estate to the spouse but gives the spouse a disclaimer right allowing the surviving spouse to elect to transfer all or a portion of the available estate tax exemption to fund the bypass trust after the death of the first spouse should it makes sense at that time. Upon the death of the first spouse, the surviving spouse has 9 months to disclaim a portion of the estate.

Rising lifetime exemptions mean that traditional Wills which create mandatory bypass trusts are not necessarily what the testator would have wanted. Currently, the estate tax exemption is $3.5 million dollars (it used to be only $600,000). Suppose a husband dies with an estate worth $2.5 million dollars. Under a traditional Will as described in the first paragraph, the entire estate would be held in trust for his wife during her lifetime and she would receive nothing outright. The husband believed the trust would be funded with $600,000 (the exemption when the Will was drafted), and that his wife would receive $1.9 million. A disclaimer Will allows the surviving spouse to decide how much of the exemption he or she wants to use at the time of the first spouse’s death. This is often more practical than forcing the full exemption. Assuming rising estate tax exemptions, forcing the use of the bypass trust may not be what the decedent would have wanted.

A disclaimer is also a flexible way to maneuver around the state estate tax. Many states have de-coupled from the federal estate tax system, and impose a separate estate tax. For example, New York’s exemption remains at $1,000,000. This means that using the entire federal exemption of $3.5 million will result in a New York estate tax of over $200,000 on the additional $2.5 million of federal exemption. If the spouse decides to use only $1,000,000 of exemption, the state estate tax can be avoided.

Whether a disclaimer Will is right for you depends on your individual facts and circumstances.

Questions?

Generally, if you give someone money or property during your lifetime, you may be subject to federal gift tax. However, most gifts are not subject to the gift tax. For instance, you can give up to the annual exclusion amount ($13,000 in 2006) to as many individuals as you like, every year, without making a taxable gift, and without the recipients owing an income tax on the gifts. And you can make up to $1,000,000 in taxable gifts above the annual exclusion, total, in your lifetime, before you start owing any federal gift tax (state lifetime exemptions may be lower). Implementing a variety of estate planning techniques can leverage the $1,000,000 exemption. Embarking on a regular gift-giving program can be a very effective way to transfer substantial assets out of your estate, free from gift and estate taxes, to your children or other loved ones. This technique of estate tax planning can drastically reduce your taxable estate, thereby reducing your estate tax liability.

Another basic gifting strategy to reduce your estate is through direct payments of tuition or medical expenses. Direct payments of tuition or medical expenses for another person (regardless whether that other person is related to you) is not a gift for gift tax purposes. Each person has an unlimited exclusion for qualified education and medical expenses. In order to qualify for this exclusion, payments must be made to the school or medical provider directly — not to the person that will be receiving the education or medical benefits.

The following example illustrates this point:

Karen wants to help her sister’s daughter attend medical school. Karen sends the school $30,000 for a year’s tuition. She also sends her niece $13,000 to help with books, supplies and rent. Due to the value of Karen’s gift to her niece falling within the annual exclusion, neither payment is reportable for gift tax purposes. If she had sent her sister $43,000 directly and her sister had paid the school, Karen would have made a taxable gift in the amount of $30,000 ($43,000 less annual exclusion of $13,000) which would have reduced her $1,000,000 lifetime exclusion by $30,000.

If your children and/or grandchildren are incurring tuition and medical costs, you can pay these expenses directly without incurring any gift tax obligation. Over time, this can result in a meaningful reduction of your estate, while helping the people you love.

Questions?

Under federal gift tax laws, each individual is currently permitted to gift up to $13,000 in cash or other assets to as many donees as desired each calendar year without any gift tax consequences. In addition, if the individual is married, husband and wife may jointly gift $26,000 to each donee. These gifts are often referred to as “annual exclusion gifts” are in addition to the individual’s $1 million lifetime gift tax exemption. However, unlike the gift tax exemption which may be used at anytime during an individual’s lifetime (or if not used can be utilized via the estate tax exemption at death), annual exclusion gifts can only be used in the applicable calendar year. Thus, if the annual exclusions for a particular year are not used, they will be wasted.

Annual exclusion gifts can be made to donees either outright or in trust. If the gifts are in trust they may be made for the benefit of one or several donees. An annual exclusion trust for one donee is often made under Internal Revenue Code 2503(c), which requires that the donee have a right to terminate the trust assets at age 21. In the alternative, an annual exclusion trust (or “Crummey Trust”) can be established for the benefit of one or several donees without the 2503(c) termination right as long as each donee (for a period of time) has a right of withdrawal over contributions made to the trust. Such withdrawal right is referred to as a “Crummey” power and allows the individual to greatly leverage his (and his spouse’s) annual exclusion gifts by contributing all available annual exclusion gifts to one trust. As an example, if a husband and wife have 4 kids and 8 grandchildren (i.e. 12 donees), they can make tax-free gifts of $312,000 each year to an irrevocable trust with Crummey powers.

As with all lifetime gifts, the main benefit of such planning is the ability to remove the gifted asset from the individual’s estate. At the minimum, this means the value of the asset will not be subject to estate tax at the individual’s death. In addition, since the asset is out of the estate, any appreciation inures to the benefit of the donee free of estate tax. If the same asset had remained in the individual’s estate, it’s current value and future appreciation would be subject to estate tax prior to distribution to the donee. As an example, a father can gift an asset valued at $26,000 to his daughter in 2009 with no tax consequences. Thus, the daughter will receive the full $26,000 value. However, if the father were to instead leave the asset to his daughter under his Will in 2009, the daughter would only receive $13,000, as the asset would be reduced by an approximate 50% estate tax. This result becomes more substantial with an appreciating asset.

Therefore, it is very important that these gifts are appropriately planned for and factored into every estate plan, from the most basic to the most complicated. Overtime, making regular annual exclusion gifts can greatly reduce your taxable estate.

Questions?

This amount was historically $10,000, but has been indexed for inflation since 1998.

Everyone born into this world dies. It is also quite true that you will take nothing with you. Certainly, you are much beloved by your family and that your eventual passing will cause them great grief. Should you not wish to augment their grief further, and perhaps turn it into feelings of resentment and recrimination, you must execute a Will before your death. If you do not do so, the division of your assets will be determined by the laws of the state in which you reside (which cleverly presume to know your mind).

Let’s use a concrete example. You have not implemented any estate planning during your lifetime. You have no Will and your gross estate is worth $10 million. Your spouse, if you are married, will be entitled to one-half of your estate if you are a resident of New York. Your children will be entitled to the remainder. Your spouse may not appreciate this. Furthermore, if he or she is less grief-stricken than you might wish, your spouse may decide to bestow that $5 million on a new spouse who is considerably less worthy than you might have expected. If your current spouse is the spouse of a second marriage and you have children from a prior marriage, it is likely that your children from the prior marriage will never see a penny of this money. Your children will not appreciate this. There may also be a struggle as to how the respective shares are funded. And as you have left no instructions as to who will manage your estate (an executor would have been appointed in your non-existent Will), it may be years before these important issue are resolved and anyone sees any of your assets.

Additionally, a state and federal marital deduction will be available to protect the value of the property passing to your spouse from estate taxes. But the value of the property passing to your children will not. Your children may be delighted to hear that they will immediately receive one-half of your estate, but they will be less delighted when Uncle Sam and Governor Paterson present them with bills for estate taxes in the amount of $2,500,000, leaving them with a paltry $2,500,000. This is not a tragedy, but you might have done much better for all concerned.

With even minimum estate planning and a Will, here is how these results change: After making annual exclusion gifts to your children during your lifetime ($13,000/yr per child, or $26,000/yr per child if you are married), you might specify in your Will that your children (in trust, if they are minors) will immediately be entitled to property in the amount of the estate tax exemption amount, which is currently $3.5 million, upon which no tax will be imposed. You might make additional gifts of property to your children outside your Will (beyond the $3.5 million exemption amount) through life insurance proceeds from an insurance trust you created during your lifetime. The insurance trust will be structured in such a way as to prevent the imposition of estate tax on the proceeds. In this way, these amounts passing to your children will not be reduced due to the imposition of estate taxes. Your spouse will receive the remainder of your estate in a lifetime trust created under your Will from which he or she will be entitled to all income for life, annually. The trust will ensure that on the death of your spouse, the remaining trust property will be distributed to your children. Guardians will be appointed and trusts can be created in your Will for minor children (those under the age of 18) so that their persons and property are properly cared for until they reach whatever age or ages you determine.

If your spouse does not survive you, failure to appoint Guardians may result in a custody battle between your and your deceased spouse’s families who may both want to raise the children. Property can also continue in trust for the benefit of your children if they later prove to be less responsible than you would like, preserving their assets and providing creditor protection.

If all members of your immediate family die in a common disaster, the “ultimate disposition” clause of your Will may determine how your property is to be distributed (siblings, friends, charities, etc.) rather than leaving the determination to state statute.

Survivorship life insurance may be purchased (in trust) to provide for estate taxes at your spouse’s death, to once again protect the property passing to your children from estate tax. Fiduciaries of your own choosing will be appointed to manage your estate and the property held in trust for your spouse and children. Does this sound any better? It should.

If you are willing to do nothing more than sign a Will and are married at the time of your death, you can at least ensure that there will be no imposition of estate taxes until the death of your spouse.

Unless causing additional grief and strife among your family members is the goal of your estate planning (or lack thereof), please attend to these important matters now so that your family members will appreciate your thoughtfulness and consideration later.

Questions?

Plan Today, Save Tomorrow

If you are looking for the very best legal advice in estate and succession planning, or estate and trust administration, contact the law firm of Maurice Kassimir & Associates, P.C.

(212) 944-1377

Providing sophisticated estate planning to insure the accumulation, preservation and transfer of wealth for clients in the New York Metro area.

Contact Us

Let's talk about your needs and how we can help

New York Wealth Transfer Attorneys Providing Customized Estate Planning to Optimize Results in Passing More Assets Down The Generations:

People with significant wealth face potential estate tax rates in excess of 50% when attempting to pass wealth to their children and potentially 100% when passing assets grandchildren. The attorneys of Maurice Kassimir & Associates, P.C. are adept at transferring wealth with the least possible estate tax consequences.

Some of the tools Maurice Kassimir & Associates, P.C.’s lawyer use to maximize wealth transfer include grantor retained annuity trusts (GRAT’s) and intentionally defective grantor trusts (IDGT’s).

With a GRAT, an individual (the grantor) contributes property to a trust and retains an annuity for a term of years. After the retained term ends, the property in the GRAT passes to the children, free of gift and estate tax. The grantor may leverage the gift by retaining responsibility for reporting and paying income tax on any income generated by the GRAT assets.

An IDGT is an irrevocable trust usually created for the benefit of the grantor’s spouse, and/or children and grandchildren. The trust is structured so that the trust assets will not be included in the grantor’s estate. This is typically accomplished by transferring assets to the IDGT via a gift, loan or sale.

Similar to the GRAT, the IDGT is drafted so that the grantor is still treated as the owner of the trust for income tax purposes. Hence it is “defective” for income tax purposes. Because the grantor is paying the income taxes on any income generated by the trust, the trust assets can grow at an accelerated pace, leaving substantially more assets in the trust to pass on to the grantor’s heirs. The income tax paid by the grantor with other assets is not an additional gift for gift tax purposes.

A IDGT can achieve excellent wealth preservation results. Here is an example of one such Maurice Kassimir & Associates, P.C. success story:

The client owned a very successful family business in which three of his children were involved. Maurice Kassimir & Associates, P.C. arranged a recapitalization of the business so that the voting stock represented one percent of the company’s equity and the non-voting stock represented 99 percent of the equity. The 99 percent interest was then sold to an IDGT set up for the benefit of the children.

The full value of the company was $12 million, but under law the non voting stock could be valued at $8 million because of discounts for the lack of control and minority interest. Because the client received an $8 million note in exchange for the sale of the stock, the value of the business was then capped at $8 million. All income and appreciation of the business after the date of sale is not part of the parent’s estate. Only the $8 million note would potentially be included in the taxable estate. The note would be paid down from profits of the business.

Similarly, had the non-voting stock been gifted to a GRAT in which the grantor retained the right to receive an annuity of approximately $1 million per year for a ten(10) year period, all the non-voting stock would be removed from the estate at zero tax cost. The annuity would be paid from profits of the business.

Up to Date With Changes in the Laws Affecting Estate Planning. . .

Family limited partnerships (FLPs) have been useful for estate planning purposes, but are vulnerable to IRS scrutiny if not constructed for a legitimate business purpose. The attorneys at Maurice Kassimir & Associates, P.C. are always current on the latest legal developments and tax rulings affecting estate-planning devices, and can advise you to navigate through changing conditions.

The attorneys at Maurice Kassimir & Associates, P.C. are adept at figuring out creative ways within the structure of the tax laws to help preserve wealth for your family members. Contact them for sophisticated state of the art planning to preserve your wealth.

New York City Attorneys Providing Prudent Counsel in Retirement Planning:

An essential element of retirement planning involves pensions, an area which many small business owners neglect. The attorneys at Maurice Kassimir & Associates, P.C. work with pension actuaries to help you design and implement a pension plan that suits your needs.

For small businesses, pension plans can be devised with keeping employee goals in mind, while others are designed with a focus primarily on the personal interests of the business owner. Maurice Kassimir & Associates, P.C. can analyze your plan and have it altered it based on your specific wishes.

Consider the following example:

A 47-year old physician, had a medical practice with a retirement plan being funded with $70,000 per year. $28,000 was allocated to the doctor and the rest allocated to his employees. The doctor wanted to modify the focus of the plan to fulfill his personal interests. Maurice Kassimir & Associates, P.C. worked with actuaries to design a new defined benefit plan which increased annual contributions to $218,000. $205,000 was allocated to the doctor (instead of $28,000), and $13,000 to the employees (instead of $42,000). In addition, the doctor was able to purchase through the defined benefit plan using pre-tax dollars a $7.1 million permanent life insurance policy with an annual premium of $47,000.

Maurice Kassimir & Associates, P.C. attorneys are adept at using pre-tax qualified plan money and IRAs to purchase life insurance.

Grantor Retained Annuity Trusts and charitable remainder trusts are often excellent tools to provide income during retirement years. GRAT’s can build value which can inure to the benefit of a person’s descendents. Charitable remainder trusts can also provide retirement income and fulfill charitable goals.

The attorneys at Maurice Kassimir & Associates, P.C. know how to find creative solutions to your retirement planning questions, and then provide the proper follow-through to implement the solutions. Contact them now to see how they can meet your retirement and estate ate planning goals.

New York Asset Protection Attorneys with Experience and Knowledge to Achieve Results with Sophisticated Estate Planning Techniques in Asset Protection:

Asset protection is an important part of estate planning. The ultimate goal is to maximize the value of assets, while preventing access by unauthorized or undesirable persons.

In theory, someone can bring you to court for whatever reason. Asset protection is the art of creating enough hurdles against potential litigants so that it makes sense for them to settle at cents on the dollar, rather than pursuing litigation. Some of the legal hurdles the attorneys at Maurice Kassimir & Associates, P.C. can facilitate for asset protection include:

Transferring assets to a spouse or a trust
Lifetime gifts
Setting up a family limited partnership where a general partner has discretion to limit distributions of partnership income and assets
Setting up a domestic trust in certain states, where, even though a grantor is potential beneficiary of the trust, the trust assets are still protected from creditors
Using life insurance as an asset protection vehicle (money infused into insurance and retirement plans are harder for litigants to reach)
“Indirect prenuptials” can be used to protect assets from the spouses of children.

Without Going Off-shore. . .

The attorneys at Maurice Kassimir & Associates, P.C. have found that their clients prefer not to go “off shore” to protect assets. The firm feels that the client’s goals in asset protection can be accomplished with on-shore vehicles such as family limited partnerships, life insurance, retirement plans, and the appropriate use of trusts, such as GRATs (Grantor Retained Annuity Trusts) and IDGTs (Intentionally Defective Grantor Trusts).

Using offshore trustees does not always provide the comfort level that most Maurice Kassimir & Associates, P.C. clients desire. Moving the domicile of trusts to other states in the U.S. can save state and local taxes and often proves to be a valuable asset protection strategy.

Our attorneys specialize in discovering creative solutions to your particular estate planning and asset protection problems, and implement them accordingly. Contact them now to see how they can meet your estate planning goals.

New York Succession Planning Attorneys with the Experience and Savvy to do Sophisticated Work in Creative Planning Solutions to Solve Unique Problems:

An important consideration in estate planning is to direct your assets and wealth to the person or persons (or entity or entities) you choose, while minimizing the amount the government takes in estate taxes. Who will be your successor in controlling your wealth? The attorneys at Maurice Kassimir & Associates, P.C. are masters of designing and implementing a variety of techniques and strategies that will make your wishes come true, before and after you pass on.

What can you do if your child is getting married and does not want to ask his or her fiancée for a pre-nuptial agreement?

Consider the following example, where the lawyers at Maurice Kassimir & Associates, P.C. found a solution:

The Maurice Kassimir & Associates, P.C. estate-planning client had worked long and hard to build closely held family businesses. In addition to the businesses, the client owned real estate and substantial liquid assets. The client’s child announced he was getting married. He was encouraged to have his fiancée to sign a prenuptial agreement that would limit her rights to family assets in the event of a divorce. The son declined to seek a “ pre-nup.”

The client wanted to keep family wealth in the bloodlines, and away from the future spouse. The attorneys at Maurice Kassimir & Associates, P.C. set up an indirect prenuptial agreement. This was accomplished by creating trusts in which to place family assets, with a flexible distribution plan for the benefit of the son. A friend of the family was appointed as trustee. In this way, his son can enjoy the benefit of the assets without exposing the trust assets to being lost or dissipated, if the son’s marriage were to end in divorce.

Maurice Kassimir & Associates, P.C.’s philosophy generally is to promote family harmony through equalization of assets to heirs. This reduces the chance of hurt feelings, family squabbles, as well as unwanted and expensive litigation.

There are occasions when a client wishes to transfer wealth upon death, not to his or her children–who may already be well situated– but to charity. The following is an example of an efficient method to transfer wealth to charity, while serving the couple’s needs while they were still alive.

A company executive had 80 percent of his net worth in his company’s publicly traded stock. He was 60 years old, but not yet ready to retire. Maurice Kassimir & Associates, P.C. created a charitable remainder trust for the client. The trust was funded with a portion of the client’s publicly traded stock, which was sold in order to diversify the trust assets. The sale of the stock did not result in immediate income taxation due to the structure of the CRT.

The husband and wife retained an annuity for their joint lives, and benefited from an increase in cash flow and a diversification of assets. The trust provided that at the end of the second to die, the remainder of the assets would be transferred to the couple’s favorite charity without any estate tax consequences. The annuities received were taxed like ordinary income, but the couple also received an income tax deduction at the time the trust was created for the present-day value of the assets designated for charity.

The attorneys at Maurice Kassimir & Associates, P.C. know how to find creative solutions to your particular estate planning problems, and provide the proper follow-through to implement the solutions. Contact them now to see how they can meet your estate planning goals.

New York Attorneys Meeting Client Needs in Trust and Estate Aministration:

Click here to fill out our estate planning questionnaire.

Perceptive and creative solutions are the hallmarks of Maurice Kassimir & Associates, P.C.’s attorneys in the area of trust and estate administration.

Our lawyers are adept at dealing with situations in which trust beneficiaries are dissatisfied with a trustee’s administration of trust assets. Consider the following example of how the law firm’s attorneys succeeded in remedying such a situation.

Maurice Kassimir & Associates, P.C.’s clients were beneficiaries of a trust who were dissatisfied with a trustee that wanted to diversify a trust’s portfolio from a concentration in real estate holdings. The trustee was a major bank. The beneficiaries were comfortable with maintaining the real estate in the trust, and preferred that the trust not diversify its assets with stocks and bonds. Maurice Kassimir & Associates, P.C.’s lawyers made a credible argument that the trust documents permitted a heavy concentration in real estate, and worked with litigation counsel to convince the trustee to resign. A new trustee was appointed that continues to fulfill the beneficiary’s desire to maintain the real estate holdings.

Attention to detail can help trust administrators preserve and distribute assets efficiently. The timing of distributions to trust beneficiaries can be important for tax purposes. Maurice Kassimir & Associates, P.C. attorneys also know how to change the domicile of a trust to take advantage of certain benefits some states offer in the area of state and local income taxation.

Our attorneys assist estate administrators and trustees in marshalling and distributing estate assets in a cost-efficient manner to preserve them for intended beneficiaries, rather than the government, or dissipated in unnecessary and expensive litigation.

Our lawyers can help you with their attention to detail to effectuate cost effective estate and trust administration that preserves assets. Contact them now to see how they can assist with your estate administration or trust administration problem.

New York City Attorneys providing sophisticated estate plans using life insurance:

The attorneys at Maurice Kassimir & Associates, P.C. use insurance not only for traditional purposes, but also as a tool in an estate plan to preserve and direct distribution of assets.

Helping clients maximize insurance benefits. . .

The firm’s lawyers also analyze policies to make sure their clients are getting the maximum benefit they deserve from their insurance policies. For example:

Maurice Kassimir & Associates, P.C. attorneys reviewed a new client’s already existing life-insurance policy, and realized he had bought an extremely high-commission product in which the commission actually exceeded the first-year premium. At the time the policy was purchased, the same insurance company had another available product with a substantially lower commission. Maurice Kassimir & Associates, P.C. negotiated an agreement with the insurance company to infuse an additional $200,000 of cash value into the policy to make up for the disparity.

Another client was paying $170,000 per year in annual life insurance premiums. An insurance analysis discovered this premium was far in excess of the market. A tax free 1035 exchange resulted in a new policy for the same death benefit with guaranteed premiums of less than half of the previous premium ($80,000).

Recommendations regarding life insurance is not a cookie-cutting operation at Maurice Kassimir & Associates, P.C.. It is a matter of finding solutions that best meet the needs of an individual client. For some people, an inexpensive term life insurance policy best fits their needs. Other clients require permanent life insurance.

Using Insurance Trusts to Preserve Assets. . .

Maurice Kassimir & Associates, P.C. knows how to maximize the benefits of life insurance. A life insurance trust can be a helpful tool in this regard.

Life insurance benefits are includable in a taxable estate if the insured is the owner of the policy or retains any material control over the policy. But if the insured gives up his right to control the policy, which is instead owned by a trust, the benefits can flow to his children, without the imposition of any estate tax.

Advising on Private Placement Insurance

A typical permanent life-insurance policy will often generate a return of 5 or 6 percent per year (assuming normal life expectancy). However, private placement variable insurance policies can generate more growth if the insurance funds are invested more aggressively, for example, in mutual funds or hedge funds. The cash value of the insurance policy can grow at a faster rate, and is not subject to annual income tax.

The attorneys at Maurice Kassimir & Associates, P.C. can find creative solutions to your particular insurance and estate planning problems, and implement them accordingly. Contact them to see how they can meet your estate planning goals.

Skilled New York Lawyers Assisting Clients with Charitable Contributions

Few things offer as much fulfillment as giving to a worthy cause. Including donations to charitable organizations in your succession planning can require careful preparation in order to make the most of your contributions.

Maurice Kassimir & Associates, P.C., provide assistance to clients who wish to leave part or all of their wealth to charity:

Donating Outright – A client can make outright donations of assets to a charity during their life or after their death. They can also take advantage of income and estate tax savings.
Designation as a Beneficiary – Naming a charity the beneficiary on a life insurance policy allows clients to include the policy’s value in their estate. More favorable tax advantages may be possible by also naming the charity as a policy owner.
Charitable Lead Trusts – Also called charitable income trusts, this irrevocable trust allows a designated charity to receive interest income, while the remainder returns to the client or their designated beneficiary.
Charitable Remainder Trusts – This trust allows individuals to benefit from the trust by receiving an annuity during their lifetimes, and to transfer trust assets to a charity after the death of the surviving spouse.
Private Foundations – Clients can set up their own charitable foundation that qualifies as a charitable organization under Section 501(c)(3) of the Internal Revenue Code. They receive a full income tax deduction for the fair value of assets contributed to the foundation. Timing gifts during high income tax years offers even greater saving advantages.
Donor Advisor Funds – Contributions can be made to this type of foundation which will administer the donations for a fee. Although clients lose some control over management of the funds, they save the headaches associated with running a foundation.

Charitable Giving

Contributing to a charity can help a worthy cause and serve non-monetary family interests as well. For example:

An elderly client’s spouse died of lung cancer and they wished to donate a portion of their wealth to cancer research. They also wanted to actively engage their children in charitable giving. Maurice Kassimir & Associates, P.C. discovered the client had about $2 million in an IRA account that would have been subject to taxation at approximately 80 percent upon death. We helped the client place the IRA money into a private foundation exempt from income or estate taxes, created for the benefit of the American Cancer Society. The client was able to optimize the impact of their donation and create a vehicle for charitable giving by their children in the fight against cancer.

Whether it involves a straight donation or contributions to a charitable remainder trust, the skilled attorneys at Maurice Kassimir & Associates, P.C., take pride in helping clients make thoughtful, informed wealth transfer decisions.

Contact Maurice Kassimir & Associates, P.C., for advice from a charitable planning lawyer tailored to your estate planning goals.

New York City Lawyers Offering Assistance with Shareholder Agreements

Multiple shareholders in a closely held business have special concerns regarding management, ownership, and the transfer of ownership. Shareholder agreements, also called buy/sell or partnership agreements are a critical business tool that can help avoid or minimize potential conflicts between owners.

When clients contact Maurice Kassimir & Associates, P.C., we can provide assistance drafting shareholder agreements that explicitly define how their interests in a closely held business are addressed while they are alive, and at the event of their death.

Providing legal advice for disputes and ownership transfers due to:

Shareholder deaths
Departure or retirement
Unexpected disability
Employee/owner terminations
Divorce or legal separation
Individual bankruptcy

Shareholder agreements involving such sensitive business planning matters also include tax concerns and family issues that are unique to each closely held business. The experienced attorneys at Maurice Kassimir & Associates, P.C. take pride in helping clients define succession strategies that satisfy the desired outcome for each shareholder. We study the unique fact patterns to ensure that the agreement is drafted properly.

When an owner’s interest in a family business is passed on, the tax consequences can be significant. Estate, gift, and inheritance taxes can be half, or more, of the value of an owner’s portion. Tax issues can also make it difficult for ownership to pass to the new shareholder. Our lawyers recognize the complex issues involved in these transitions and are skilled at helping family business owners address them effectively. In addition, a family’s dynamics can affect business plans and the transition of ownership. Maurice Kassimir & Associates, P.C. provide shareholders with the legal tools to deal with the human factor that can impact a shareholder agreement.

For thorough legal assistance with shareholder agreements designed to help your closely held business continue its success from generation to generation, contact Maurice Kassimir & Associates, P.C., today. We are available to conveniently serve clients in the entire New York Metro area, including Nassau and Suffolk County on Long Island, southern Connecticut, and the northern New Jersey area.

Charities and Foundations

There are several ways that a person may leave wealth to charity, including the following:

The surviving spouse can donate assets outright to a charity during life or after death, and enjoy income and estate tax savings.
A private foundation can be set up that qualifies as a charitable organization under Section 501(c)(3) of the Internal Revenue Code, allowing a full income tax deduction for the fair value of assets contributed to the foundation.(It is usually wise to time the gift with a high income tax year).
The gift may be made to a Donor Advised Fund, which will administer the charitable donation for a fee.The individual loses some control over the management of the funds, but saves the headaches associated with running a foundation.
Creating a Charitable Remainder Trust, which allows individuals to benefit from the trust by receiving an annuity during their life times, and to transfer the assets in the trust to charity after the death of the surviving spouse.

Charitable giving can accomplish helping a worthy cause and serving non-monetary family interests as well. Consider the following example.

An elderly women’s spouse had died of lung cancer. She wanted to donate some of her wealth to fighting cancer. She also wanted to involve her children in charitable giving. Maurice Kassimir & Associates, P.C. discovered that the woman had about $2 million in an IRA account, which would have been subject to approximately 80 percent taxation upon her death. Instead, the money in the IRA was left to a private foundation created for the benefit of the American Cancer Society that was not subject to income or estate tax. The woman was able to optimize the impact of her charitable giving, and create a vehicle for her children to be involved in the fight against cancer.

Contact the attorneys at Maurice Kassimir & Associates, P.C., for creative advice that helps you meet your estate planning goals, and allows you to maximize the impact of your charitable giving.