Transcript - Jules Haas Episode 1

This transcript was exported on Aug 26, 2020 - view latest version here.

Speaker 1:

Welcome to Financial Poise Presents a production of Financial Poise Webinars, in which we take a deep dive into a specific topic by interviewing a single trusted advisor, or expert on that topic.

Carrie Miller:

My name is Carrie Miller and I'm the Managing Editor of Financial Poise. With us today is Jules Martin Haas. Jules Hass is an experienced trust and estates attorney with vast experience in helping clients with their estate planning and helping their heirs and beneficiaries upon his clients passing.

Jules Martin Haas:

Thank you very much, Carrie, and I'm very pleased to be presenting today, New York Estate Planning Made Easy. I want to initially thank Financial Poise for the time and effort and expertise that all of the folks involved exhibited to put this presentation together.

Jules Martin Haas:

As you say, Carrie, I'm a New York attorney. The information that I'm going to be presenting today will basically be a related to a New York law, so to speak. It may be applicable, generally to other states, other locations outside of New York. If you are outside of the New York jurisdiction, you should consult with your professional advisor in that location, with respect to any of the issues that we're going to discuss today.

Jules Martin Haas:

So let's get started. So we're going to have some initial considerations and you'll see on your screen that we have a slide number one, and basically when we talk about estate planning, well, what does that mean? Well, it means different things to different people. When you say estate planning, some people say, "Well, that means I need to prepare my will." Other people say, "Well, it means that I need to worry about estate taxes and estate planning's really only for rich people." Other people start thinking about powers of attorney, healthcare proxies, those types of documents.

Jules Martin Haas:

But the fact of the matter is estate planning really encompasses all of those things and much more. Your estate plan, simply by definition, is really organizing your assets to be distributed at the time of death. And in order to do that, the first consideration is what are your assets? And if you take a look at slide number one, you'll see that there's a list of different assets, all of which, probably a very familiar to you, but assets really are divided into two main categories. And those categories are personal property and real estate.

Jules Martin Haas:

And while it sort of seems to be all lumped together, it's important to think about them, at least in their categories for purposes of your plan. So let's take a look personal property. And we have very familiar items there, bank accounts, brokerage accounts, bonds, stocks, automobiles, jewelry, those types of things. And those are all things that everyone's pretty familiar with. But you'll see, we also have listed in there, shares in a cooperative apartment. And again, this is a New York type of asset. Although, there are cooperative apartments throughout the United States.

Jules Martin Haas:

But it's listed there because of the fact that in New York, when you have a cooperative apartment, even though you live there and you own it, and it feels like your home, like your house, in reality, what you own are shares of stock in a corporation, the cooperative corporation. And on the New York law, this is personal property, it's not real estate. And it's important to make that distinction, because the fact is that a cooperative corporation, the corporation has a right to make decisions as to who will own the stock in the corporation. So when you're making a disposition in your will, or some other way in your estate, you need to take that into account.

Jules Martin Haas:

So here's an example. You write a will and you say, "Give my cooperative apartment located at so and so." And when you do that, you may think that you're giving the cooperative apartment to that person, but in fact, the co-op corporation has to approve that person, if that person is going to live in that cooperative apartment. They have to go through an approval process. And very often co-op corporation may not approve that person. So what happens in most instances, here in New York, when you are making a bequest of an interest in a cooperative apartment, the person's getting the interest, but they're really not going to live there and they're not going to use it as a home. Ultimately, they're going to have to sell it. But again, it's important to understand that, because if you say, "Well, I'm going to give my cooperative apartment to so and so", thinking that they're just going to move in, that's not going to happen, because you have to consider the nature of that asset.

Jules Martin Haas:

So let's move on and let's talk about some other types of assets. Again, you see, we have assets listed as real estate. Well, again, these are things that are fairly common, easy to understand. We have a personal residence, a person may own a building, commercial property, vacant land. Again, , you have to understand what it is that you own. But again, we have something listed here called condominium apartment. And again, this is just another example, because here in New York people own co-op apartments, but they also own condominium apartments. But a condominium apartment is different than a cooperative apartment, because it's actually real estate.

Jules Martin Haas:

When you transfer a condominium apartment, you're actually transferring it through a deed. And in most condominium apartment situations, the condominium cannot prevent you from transferring that ownership to someone and to have that person actually live and own that unit, that apartment. So that's how it differs from a co-op apartment. It's actually transferred by a deed. Now, sometimes in New York, there are condominiums that have more restrictions, but for the most part, you can issue a deed. That person owns it, just like a house. So the point that you should take away from all of this is that when you sit down to start to do your plan, you need to start to think about, "What are my assets, what are the issues that I have that may arise with respect to the various assets?"

Jules Martin Haas:

Now, if we take a further look at a slide number one, you'll see our third category is applicable estate laws. And this is important, because you need to understand in the first instance, what law, meaning what law, or what state, what jurisdiction is going to control your state. And that's very important, because the laws of the individual estate are going to impact your estate in different ways. So for instance, in New York you may be subject to an estate tax. Whereas in Florida, there's no estate tax. And the determination as to what state law is going to control your estate is really based on a concept we call domicile. You may have heard of that term it's a legal term of art, so to speak.

Jules Martin Haas:

And domicile is different than residence. You can have a lot of different residences. You can live in New York. You can have a house in New York, a house in California, house in Florida, all over the place. But there's only one domiciles and domicile is going to be your main home, your primary home. It's usually the place where you file state income taxes, where you have a driver's license, those types of things. And in most cases, it's easy to figure out where your domicile is. Some cases though, it's not so easy. A person may spend an even amount of time in one jurisdiction, or another. I see a lot of cases where people let's say live in New York and they say, "Well, I'm going to start spending more time in Florida."

Jules Martin Haas:

So they started going down there, more spending more time, and then they may do that just for a year or two, and then they pass away. So the question arises as to, well, where's their domicile? Were they still in New York? Were they in Florida? And the court will look at these various factors. The court will also look at the intent of the person as to where they were going to live. And the place a domicile is important, because it will affect state taxes, like I said. It may also affect other laws such as rights of election for surviving spouse. It may affect intestate distribution.

Jules Martin Haas:

So again, domicile is very important. When a client comes to me, one of the first things I ask is "Where is your home? Where is your legal home?" Most cases, it's not a problem, but when it is, if I feel a client is domiciled somewhere else, I will tell them to have their will, or their estate plan done in the location, or the state where they are domiciled."

Carrie Miller:

Okay. Thanks for that Jules. That was really informative. I'm curious. Can you answer a question for me? Do I have to know the value of my assets before I put together a will?

Jules Martin Haas:

It's a very good question, Carrie. And I'm going to give you a typical lawyer answer, which is yes and no. Obviously, when you sit down to do your estate plan, you should know the value of your assets, just so you can effectively create your plan. Certainly when you're making bequests and other provisions in your will and trying to benefit various individuals, you want to know what your assets are, so you can divvy up what you have in a way that you want.

Jules Martin Haas:

So for instance, if you're making specific requests and you're saying, "I could give $10,000 to person A, and 20,000 to person B, et cetera", you want to be certain that you have sufficient assets in order to do that. Certainly you're making those decisions today, and your will might not be effective, because you may not pass away for many, many years and your assets change. But at least with respect to what you own today and your best guess, as far as expectations, you have the ability to do that. Obviously you're not going to give away $10 million if you only have $10,000, that's not going to make sense in your will.

Jules Martin Haas:

Also, with respect to understanding a plan, if you have to worry about or consider any type of tax situation such as estate taxes. So for federal tax purposes today, you have to have an estate that's in excess of $11 million in order to worry about estate taxes, New York state, in an excess of $5 million to worry about estate taxes. So, if you're in those categories, it's something you need to think about in order to talk to your advisor and see if there's anything else you need to do with your plan.

Jules Martin Haas:

Just as an aside, between husband and wife there's an unlimited marital deduction, so you can give an unlimited amount, a billion dollars to each spouse without any tax consequence, although that wouldn't necessarily be the best plan. But again, it's something you should consider. On the other hand, you don't need to know exactly what your assets are. If I sit down with a client, I don't need to know your Citibank account has $10,358 and 19 cents, because obviously you're writing the will today. You're doing a plan today. It changes over time, your assets fluctuate. So you don't really need to know exactly, but you should have a good idea at least within a round about way as to what you're dealing with.

Speaker 1:

Thank you for attending this edition of Financial Poise Presents. Financial Poise has one mission, to provide reliable, plain English business, financial and legal education to individual investors and private business owners.

Jules Haas Episode 1 Revised (Completed 07/29/20)
Transcript by Rev.com