By Jason Stern
Thanks to the most recent tax reform bill shoved through Congress, the Federal Estate Tax does not normally apply to most estates. In fact, as of January 1, 2018, the estates of married individuals valued at $22 million dollars or less will not have any estate tax liability at the federal level. I say usually because there may be some exceptions depending on when the first spouse passed away which may subject the estate to the prior estate laws in effect at that time. But as a NYC estate lawyer, I hearken back to a much darker period not too long ago which subjected any and all NY estates above $600,000.00 to both New York State and federal estate tax liability sometimes exceeding 65%. That was a mind blowing 65 cents of each estate dollar going to either New York State or the federal government.
Historically, individuals with $1 million dollars or more in their estates were considered wealthy. And historically, the estate tax liability on such estate assets could easily exceed 65%. And historically, such individuals fortunate enough to possess such wealth would enlist the services of a costly NYC estate lawyer to set up an elaborate trust to avoid incurring these NYS and federal estate tax liabilities when the time came. Unfortunately for many NYC estate lawyers this last round of tax reform rendered their valuable services somewhat defunct in all but the rarest of cases. The rarest of cases meaning instances where NYC estates exceed eight figures.
And as a NYC estate lawyer I can tell you, Aretha Franklin’s Estate is one of those cases. Aretha, easily one of the most talented entertainers of our time, passed away on August 16, 2018. Aretha, survived by her four children Clarence, Edward, Ted and Kecalf, also left behind $80 million dollars. What Aretha Franklin did not leave behind was any will or ostensible estate planning. While Aretha’s home state of Michigan, true to form she was a resident of the Motor City, has no State Estate Tax of their own, her intestate estate (when there is no will) will be subject to the ghastly 40% Federal Estate Tax. As such, of Aretha Franklin’s $80-million-dollar fortune, approximately $32,000,000.00 stands to be lost to the federal government notwithstanding additional interest and penalties. As a NYC estate lawyer I am shocked at the punitive award the Franklin Estate will now have to pay over to Uncle Sam who just became an honorary distributee of the Franklin Family Estate.
This is a perfect reason why everyone should at least consult with a NYC estate lawyer to determine whether or not their estates will be complicated by not having a valid attorney drafted will. Truth be told, in Aretha’s case, a simple will alone would not have done much. What Aretha Franklin needed was to employ some serious estate tax avoidance strategies. In the State of New York, as of April 1, 2019, the NYS Estate Tax Exemption amounts are set to mirror those of the federal levels, $22 million dollars. But having an executor appointed in your valid NYC attorney drafted will is never a bad thing either. Aretha’s family is going to become familiar with just how difficult it is to become the fiduciary of an intestate estate exceeding $80 million dollars. The next thing they will learn about is interest and penalties on any and all estate tax moneys owed to the federal government not paid within seven months of appointment of a fiduciary.
The only tragedy worse than a death, is a death that creates an economic hardship on loved ones. Should you or a loved one wish to speak with a NYC estate lawyer about planning their estate, feel free to call us at (718) 261-2444 to speak with an experienced estate lawyer for a free consultation. Our offices have been successfully probating NYC estates and drafting wills for New Yorkers in the Counties of New York, Queens, Kings, Nassau, Suffolk, Bronx, Richmond, Westchester, Orange, Rockland and Dutchess for years.
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