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Asset Protection Blog

Harris Campaign’s Estate Tax Proposal: What It Means for You

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By Asher Rubinstein & Lauren Schulman

Presidential candidate Kamala Harris proposed significant shifts in the estate tax system that could impact anyone with wealth to pass on to future generations. Understanding these proposed changes is essential for protecting your financial legacy for your family. This article explores the key aspects and implications of these proposed changes.

What are the Proposed Changes?

Lower Estate Tax Exemption: 

What is this? 

The estate tax exemption is the amount of wealth you can pass to your successors without paying federal estate taxes. This includes your home, investments, retirement accounts, and any other assets you may leave behind.

Current Posture:

As of 2024, the estate tax exemption is $13.61 million for individuals and $27.22 million for married couples. If your estate is below those amounts, you won’t owe any federal estate taxes.

Proposed Changes:

The Harris campaign is proposing to lower this to $3.5 million for individuals and $7 million for couples. Estates over those amounts would be taxed, which means more estates would be subject to federal estate taxes.

Higher Estate Tax Rates: 

What is this?

Estate tax rates determine how much of your taxable estate (the part that exceeds the exemption) is subject to federal tax. The rates increase as the value of your estate increases.

Current Posture: 

The current top estate tax rate is 40%. So, any amount over the exemption gets taxed at this rate for larger estates.

The proposed change:

Under the Harris campaign’s proposal, the top estate tax rate could rise significantly, with potential rates of 55%, 60%, or even 65% depending on the value of the estate. For example, an estate worth over $1 billion could face a 65% tax on the amount above the exemption. Estates valued at over $1 billion would also face an additional 10% surtax. This change would have a massive impact on larger estates, reducing the amount successors can inherit without strategic estate planning.

Gift Tax Adjustments: 

What it is? 

The gift tax limits how much you can give away to others, tax-free, during your lifetime. It’s designed to prevent people from dodging estate taxes by giving their assets away before they pass.

Current Posture:

Right now, you can give $18,000 per person, per year without triggering gift taxes, and there’s no limit on how many people you can gift to. 

The proposed change: 

The Harris campaign’s plan would lower the annual gift tax exclusion to $10,000 per person and cap your total annual gifting at $20,000. This would effectively prevent you from spreading your wealth to avoid taxes. The lifetime gift tax exemption would also shrink in line with the lower estate tax exemption, limiting your ability to give away large sums tax-free.

Grantor Trust Restrictions: 

What is this? 

Trusts, especially Grantor Retained Annuity Trusts (GRATs), are a popular way for wealthy individuals to transfer assets to their heirs while minimizing estate taxes. These trusts allow you to remove assets from your taxable estate and pass them to your heirs, often at reduced tax rates.

Current Posture: 

GRATs are widely used today because they allow individuals to pass appreciation on assets to beneficiaries with minimal tax consequences. They are a tried-and-true strategy for reducing taxable estates.

The proposed change:

The Harris campaign proposes placing new restrictions on GRATs and similar trusts, limiting their effectiveness and making it more difficult to shield assets from estate taxes. This means that wealthy families may need to explore other strategies to protect their legacies. If you rely on trusts as part of your estate plan, this change could force a rethinking of your approach

Business Ownership Transfers: 

What is this?

If you own a family business, transferring it to your successors without a big tax bill can be tricky. Current laws allow business owners to transfer ownership with certain valuation discounts that reduce the taxable value of the business.

Current Posture:

Business owners can currently take advantage of favorable valuation rules that allow them to transfer ownership at a lower tax cost, helping family-run businesses stay within the family without a massive tax burden.

The proposed change:

The Harris Campaign’s proposal may tighten the rules around valuation discounts, making it more difficult to transfer business ownership at a reduced tax cost. This could result in higher taxes on family businesses and make it more challenging to pass them on to the next generation without selling off assets to cover the tax bill.

Charitable Giving:

What is this?

Charitable donations have long been used as an effective way to reduce taxable estates. When you make donations to qualified charities, those amounts are generally excluded from your taxable estate.

Current Posture:

Charitable giving is a great way to support causes you care about while reducing the size of your estate, and trusts like Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLATs) help you balance your philanthropic goals with tax planning.

The proposed change:

Under the new rules, charitable giving could become even more attractive. The higher estate tax rates mean that giving to charity may offer even more tax benefits, as donations could help lower your estate’s overall tax burden. Strategic charitable giving will likely be an even more critical part of estate planning if these changes go into effect.

What is the Purpose of These Changes?

The Harris campaign views the estate tax system as a potential revenue source to address housing affordability. The proposed tax changes are tied to the American Housing and Economic Mobility Act of 2024 (the “Act”), which seeks to lower housing costs and improve access to affordable housing for Americans.  More specifically, the Act proposes a $40 billion fund aimed at increasing affordable housing options, expanding rent assistance programs, and incentivizing local governments to change zoning laws. Harris’s plan would use the revenue generated by these new tax laws to provide a significant portion of the funding for these initiatives.

These changes are also part of a broader effort to reduce income and wealth inequality in the U.S. However, many people question whether this is more of a redistribution of existing wealth rather than incentivizing creation of new wealth.  The reduction in the estate tax exemption and the increase in tax rates are designed to promote more contributions to public revenue from wealthier individuals. 

What is the Bottom Line? 

These proposed changes would drastically shift how people and estates are taxed, potentially bringing many more people into the estate tax system. Under current law, less than 0.2% of U.S. estates are subject to estate tax. However, with the exemption potentially dropping from $13.61 million to $3.5 million, many more individuals and families would find themselves liable for estate tax. While it’s easy to think this only impacts the super-wealthy, estates valued above $3.5 million could be affected—especially when considering the combined value of homes, retirement accounts, and investments.

Planning early is key. The best way to protect your assets and your family’s financial future is to act now.  Many valuable tax strategies and techniques are still legal and available. Proper planning under current law is essential.  When the law changes, it may be too late.

If you’d like to discuss how these proposed changes may affect your estate plan, contact our team of experienced estate planning attorneys. We’re here to help you navigate the evolving tax landscape and create a plan that benefits you and your family.

Asher Rubinstein shares insights on Private Banking vs. Family Offices

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Written By Benjamin Locke. Featuring Asher Rubinstein, Partner Gallet Dreyer & Berkey, LLP 

 

Choosing between a family office and private banking depends on your specific financial needs and preferences. Family offices provide highly personalized services and greater control, while private banking offers extensive resources and professional management. The right choice depends on the level of customization and complexity of your financial needs. 

Both options offer distinct benefits and cater to different needs. This article explores the differences between family offices and private banking, highlighting their unique advantages and disadvantages. 

Is Private Banking the same as a Family Office? 

No, private banking is not the same as a family office. Private banking provides personalized financial services such as investment advice, wealth management, and estate planning to high-net-worth individuals, while a family office is a more comprehensive entity that manages all aspects of a wealthy family’s financial and personal affairs, including investments, tax planning, philanthropy, and family governance. Essentially, a family office offers a broader range of services and is often tailored specifically to the needs of a single family.

What is a Family Office? 

A family office is a private wealth management firm established by a family to manage their financial affairs. It provides a range of services tailored to the specific needs of the family. Family offices are dedicated exclusively to serving one or multiple families, allowing them to focus on the specific goals and values of the family members. They offer a holistic approach to wealth management, encompassing everything from investment management to personal concierge services. 

Services provided by Family Offices 

  • Investment Management: Tailored investment strategies to meet the family’s financial goals. 
  • Tax Planning: Optimizing tax liabilities through strategic planning. 
  • Estate Planning: Ensuring wealth is transferred smoothly to the next generation. 
  • Philanthropy: Managing charitable giving and foundations 
  • Lifestyle Management: Handling non-financial needs such as travel and household management.

Types of Offices

Single-Family Office (SFO) The original family office set up for one individual or one family and its members. The staff is solely dedicated to preserving and growing the wealth. 

Multi-Family Office (MFO) Manages the wealth of multiple families. Preferred by high-net-worth individuals rather than ultrahigh-net-worth individuals. MFOs might have better connections to a global asset pool due to their history with other clients. 

Embedded Family Office (EFO) A more cost-effective option for HNWIs. The EFO is embedded in an existing enterprise, where the “staff” might not be solely dedicated to the owning family’s wealth management but are existing finance or tax compliance professionals handling family office responsibilities. 

Outsourced Family Office (OFO) A streamlined financial services and wealth management platform. It consists of a collection of lawyers, tax specialists, financial advisors, and others responsible for the client’s needs. Often, there is one point of contact who connects with all the other professionals, streamlining the process.

What is Private Banking? 

Private banking refers to personalized financial and banking services offered by financial institutions to high-net-worth individuals (HNWIs). These services are often provided by dedicated relationship managers. Private banking typically includes investment advice, wealth management, estate planning, and exclusive banking services. It aims to provide a one-stop solution for the financial needs of wealthy clients, leveraging the institution’s resources and expertise. 

Types of Private Banks 

Private banking caters to high-net-worth individuals (HNWIs) with specialized financial services and products. Different types of private banks offer distinct features and cater to various client needs. Here are some of the common types of private banks:

Services provided by Family Offices 

  • Wealth Management: Investment advice and portfolio management. 
  • Credit and Lending: Customized credit solutions and lending services. 
  • Estate Planning: Assistance with estate planning and wealth transfer. 
  • Tax Services: Comprehensive tax planning and advisory. 
  • Exclusive Banking Services: Access to exclusive banking products and services.

Types of Banks

Domestic Private Banks These banks operate within the country and provide personalized banking services to local high-net-worth clients. They offer a range of financial products, including investment management, estate planning, and customized lending solutions. 

Offshore Private Banks Located in financial havens like Switzerland, the Cayman Islands, and Luxembourg, offshore private banks provide banking services to clients who wish to benefit from favorable tax laws and enhanced privacy. These banks are ideal for clients looking to manage international wealth. 

Global Private Banks These banks have a worldwide presence and offer services to clients with global financial needs. They provide comprehensive wealth management solutions, including cross-border investments and international estate planning. Examples include HSBC Private Bank and JPMorgan Chase Private Bank. 

Retail-Linked Private Banks These are private banking divisions within larger retail banks. They offer personalized services to high-net-worth clients while leveraging the resources and infrastructure of the larger parent bank. Examples include Bank of America Private Bank and Citi Private Bank. 

Independent Private Banks These banks are not affiliated with larger banking institutions. They offer specialized services and a high degree of personal attention. Examples include Pictet & Cie and Julius Baer.

Family Offices v. Private Banking

Here is a list of the benefits and the drawbacks to consider.

Pros of Family Offices 

  • Customization: Family offices offer highly personalized services tailored to the unique needs of the family. They can provide bespoke investment strategies, tax planning, and estate planning. 
  • Control: Families have greater control over their investments and financial decisions. They can align their investments with their values and long-term goals. 
  • Privacy: Family offices maintain a high level of confidentiality, ensuring that the family’s financial matters remain private. 
  • Dedicated Resources: Family offices employ professionals who focus solely on the family’s financial and personal needs, providing a high level of dedicated service. 

Cons of Family Offices 

  • Cost: Setting up and maintaining a family office can be expensive. It requires significant financial resources to hire professionals and manage operations.
  • Complexity: Families have greater control over their investments and financial decisions. They can align their investments with their values and long-term goals. 

Pros of Private Banking 

  • Access to Resources: Private banks offer a wide range of financial products and services. Clients have access to the bank’s extensive resources and global reach. 
  • Professional Management: Clients benefit from the expertise of professional financial advisors and relationship managers who provide comprehensive wealth management services. 
  • Credit Solutions: Private banks provide customized credit solutions, including mortgages, loans, and lines of credit, tailored to the needs of HNWIs. 
  • Convenience: Clients enjoy the convenience of having all their financial services under one roof, including banking, investment management, and advisory services.

Cons of Private Banking 

  • Limited Customization: Private banks may offer less customization compared to family offices. Their services are often limited to the bank’s products and offerings. 
  • Potential Conflicts of Interest: Banks may have conflicts of interest when recommending products and services, as they may prioritize their products over others.

Should I choose to do private banking, setup a family office, or both?

Choosing between a family office and private banking depends on your specific financial needs and personal preferences. If you require highly personalized services, greater control over your investments, and confidentiality, a family office might be the better option. Family offices provide bespoke investment strategies, tax planning, and estate planning, tailored to the family’s unique needs and goals. On the other hand, if you seek a broad range of financial products, professional management, and the convenience of having all financial services under one roof, private banking may be more suitable. Private banks offer extensive resources, global reach, and customized credit solutions. Ultimately, the decision should be based on your financial situation, the level of service you desire, and the complexity of your financial needs.

FREQUENTLY ASKED QUESTIONS (FAQ)

WHAT ARE THE COSTS ASSOCIATED WITH SETTING UP A FAMILY OFFICE? 

Setting up a family office can be expensive, often requiring significant financial resources to hire professionals and manage operations. Costs can include salaries for dedicated staff such as accountants, financial advisors, and tax specialists, as well as expenses related to office space, technology, and legal fees. 

HOW DO PRIVATE BANKS ENSURE THE PRIVACY AND CONFIDENTIALITY OF THEIR CLIENTS? 

Private banks employ various measures to ensure the privacy and confidentiality of their clients, including secure communication channels, strict data protection policies, and confidentiality agreements. They also adhere to regulatory requirements related to data privacy and have robust cybersecurity measures in place to protect client information.

HOW DO PRIVATE BANKS ENSURE THE PRIVACY AND CONFIDENTIALITY OF THEIR CLIENTS? 

Private banks employ various measures to ensure the privacy and confidentiality of their clients, including secure communication channels, strict data protection policies, and confidentiality agreements. They also adhere to regulatory requirements related to data privacy and have robust cybersecurity measures in place to protect client information. 

CAN A FAMILY OFFICE MANAGE PHILANTHROPIC ACTIVITIES? 

Yes, family offices can manage philanthropic activities for their clients. This includes setting up and managing charitable foundations, developing philanthropic strategies, overseeing donations, and ensuring that the family’s charitable goals are met. They can also provide advice on tax-efficient giving and impact investing. 

WHAT IS THE MINIMUM ASSET THRESHOLD TO QUALIFY FOR PRIVATE BANKING SERVICES? 

The minimum asset threshold to qualify for private banking services varies by institution. It can range from $250,000 to over $2 million in investable assets. Some private banks may offer different service tiers based on the level of assets, with higher tiers providing more personalized and comprehensive services.

Key Takeaways 

  • Family offices offer highly personalized services and greater control, making them suitable for families with complex financial needs. 
  • Private banking provides access to extensive resources and professional management, offering convenience and a broad range of financial products. 
  • Both family offices and private banks have their own advantages and disadvantages, depending on the specific needs and financial situation of the client. 
  • The decision between a family office and private banking should be based on the level of customization required, the complexity of financial needs, and the desired control over investments.

These Are the Tax Breaks You Can Get When You Buy a House

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Written by Josephine Nesbit, U.S. News. Featuring Asher Rubinstein, Gallet Dreyer & Berkey, LLP.

The IRS has specific rules regarding how homebuyers qualify for certain tax credits. There are also credits that are only available to first-time buyers. 

Through 2025, taxpayers who itemize their tax deductions can claim a deduction on their federal tax return up to $10,000 each year for local property taxes paid, according to Rubinstein. “When the tax law changed in 2017, this was very controversial, because taxpayers previously had an unlimited deduction. The $10,000 limit is significant for taxpayers in high-tax states like New York and California.” Asher Rubinstein, Partner Gallet Dreyer & Berkey, LLP

Key Takeaways:

  • There are several tax breaks for homebuyers that can help make homeownership more affordable. 
  • Tax credits apply to the tax owed, while tax deductions reduce taxable income. 
  • Some tax benefits extend beyond the initial purchase of a home. 

One of the biggest benefits of homeownership is tax breaks. If you’re a homeowner, tax credits and deductions could save you thousands of dollars per year. But are there tax credits for buying a house? And what about deductions? To help you come next tax season, here are tax credits and deductions you can get when you buy a house, and additional tax breaks that come with homeownership.

What’s the Different Between Tax Credits and Deductions?

Both tax credits and deductions can help a homeowner save money on their tax bill, but they work differently. “Both lower one’s taxes, but a credit applies to the tax owed, while a deduction applies to one’s income that is subject to tax,” says Asher Rubinstein, partner and tax, asset protection and trusts and estates attorney at Gallet Dreyer & Berkey in New York City. “In other words, it’s a matter of timing and when the tax discount is applied.”

There are also refundable and nonrefundable tax credits. According to the IRS, if your tax bill is less than the refundable credit, then you get the difference back in your refund. 

Credits are typically much more valuable than deductions. “For example, someone with a $1,000 tax credit in the 20% tax bracket will see their tax bill reduced by $1,000. Someone with a $1,000 tax deduction will only see $200 in tax savings,” explains Eric Presogna, founder and CEO of One-Up Financial and a certified financial planner public accountant. 

Standard vs. Itemized Deductions

There are two types of deductions available to all taxpayers: standard deduction and itemized deduction. If you take the standard deduction, you reduce your taxable income by a set amount. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. “There is no need for the taxpayer to keep records of individual tax deductions if the taxpayer takes the standard deduction,” Rubinstein says. Itemized deductions are individual tax deductions that could potentially add up to more than the standard deduction. 

According to Presogna, homeowners should only take the standard deduction when they don’t have enough itemized deductions to exceed the standard. “With the SALT deduction (state, local, real estate taxes) currently limited to $10,000, a married couple would need more than $19,200 in mortgage interest, charitable donations and other qualifying deductions in order to warrant itemizing,” Presogna says. 

Are There Tax Credits for Buying a House?

The IRS has specific rules regarding how homebuyers qualify for certain tax credits. There are also credits that are only available to first-time buyers. You generally qualify as a firsttime homebuyer if you’re purchasing your first home. However, you may still qualify if you’ve not owned a home for three years prior to the date of purchasing the new home for which the credit is claimed, according to the IRS. That home must be your principal residence. 

One federal tax credit available to first-time buyers is through the Mortgage Credit Certificate (MCC) program. This program was designed to help lower-income families afford a home. The MCC program allows buyers to claim a dollar-for-dollar tax credit for a portion of the mortgage interest paid per year, up to $2,000. Eligible individuals must be first-time homebuyers, use the house as their primary residence and meet the program’s income and purchase price requirements. 

There may also be tax credits available through your state. These buyer programs vary from state to state. You can research what may be available in your local area or look through the U.S. Department of Housing and Urban Development’s directory of local homebuying programs. 

What is Tax Deducatable When Buying a House?

There are more tax deductions available to homebuyers and homeowners than there are tax credits, but Presogna says it depends on whether you itemize your deductions or take the standard deduction. Regarding homeownership, “If you have enough deductions to itemize, real estate taxes, home equity loan and mortgage interest are some of the larger deductible costs,” Presogna adds. 

Keep in mind that not everything is deductible. According to Rubinstein, most costs associated with homeownership do not qualify for any tax benefits, including cosmetic upgrades, homeowners insurance and your mortgage principal, to name a few. 

Here are Several Tax Deductions Buyers May Qualify for After Purchasing a Home:

First-time homebuyer savings account (FHSA). Some states offer tax benefits to first-time homebuyers to open an FHSA. This is a specific type of savings account that helps first-time buyers save up to $15,000 or $30,000 per year for a down payment, closing costs and other expenses related to their home purchase. You can deduct the annual savings from your state-taxable income, but limits vary by state. 

Mortgage interest deduction. This is a deduction for interest paid on mortgage debt, but you will need to itemize your deductions to qualify for this tax break. “Under current law, this applies to loans up to $750,000,” Rubinstein says. 

Property tax deduction. Through 2025, taxpayers who itemize their tax deductions can claim a deduction on their federal tax return up to $10,000 each year for local property taxes paid, according to Rubinstein. “When the tax law changed in 2017, this was very controversial, because taxpayers previously had an unlimited deduction,” he says. “The $10,000 limit is significant for taxpayers in high-tax states like New York and California.” 

Mortgage points deduction. Per IRS guidelines, mortgage points are fees paid to take out a mortgage. This also includes origination fees or discount points purchased in order to reduce the interest rate. 

Home office deduction. “If you’re a business owner or selfemployed and work from home, you may be entitled to a deduction for the portion of your home used for business,” Presogna says. However, Rubinstein warns that this is the most audited deduction due to the amount of taxpayers who try to claim this deduction. “The IRS has specific rules to follow. For instance, you can’t work from home for an employer. You have to use a dedicated room and you have to use it regularly. And there are square footage limitations,” Rubinstein explains. 

Additional Tax Benefits of Home Ownership

Many tax benefits extend beyond the initial purchase of a home. The IRS offers some tax benefits for certain capital improvements, such as renovating your home office, making energy-efficient improvements or making changes due to a medical condition. If you take out a home equity loan to buy, build or improve your home, you could qualify for the home equity loan interest deduction. The IRS would classify the interest you pay on the borrowed funds as home acquisition debt, which may be deductible. 

First-time homebuyers could also potentially qualify for a traditional or Roth IRA penalty waiver. If you meet IRS qualifications as a first-time buyer and take out $10,000 or less, you can use those funds toward a down payment without a 10% tax penalty if you close within 120 days. However, the actual withdrawal may still be considered taxable income. 

One of the biggest tax breaks for a homeowner is the exclusion of capital gains when they sell their home. Capital gains are the profit from the sale of the home. For married couples, the first $500,000 in capital gains are not subject to tax. For individuals, the first $250,000 in capital gains are not subject to tax. “However, the home has to be used as one’s personal residence for two out of the last five years in order to get this tax break,” Rubinstein says.

4 Things That Should Be in Your “Financial Love Letter” (aka Your Estate Plan)

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Written by Laura Bogart, GoBankingRates. Featuring Asher Rubinstein, Gallet Dreyer & Berkey, LLP.

When we think of love letters, we might imagine grand declarations of passion between partners, or maybe a parent’s expressions of pride and joy in the growth of a beloved child. Rarely do we think of a will and testament, information about trusts, advanced directives or healthcare proxies.

Yet providing this kind of detailed information about how to handle your estate is one of the most loving gestures you could offer your family. In a moving essay, writer Laura Wheatman Hill described the “financial love letter” her father drafted for her family. She talked candidly about the value of knowing exactly what he wants for his assets and within his healthcare directive.

“Even though it’s morbid to think about our dad dying, my sister and I discussed the letter and decided we are very happy that he put in the work to tell us exactly how he wants everything to play out,” Wheatman Hill wrote.

To help you understand the elements that should be in your own financial love letter, GOBankingRates talked to several estate planning experts.

A Proper Will and Revocable Living Trust

The foundational step of any estate plan is a proper will. If you should pass away without a will in place, you’ll have died “intestate.” According to Asher Rubinstein, partner with Gallet Dreyer & Berkey LLP, this means that the probate court will oversee your estate and decide who will receive your assets — a distribution that may not align with what you or your family wanted.

However, relying only on a will to share your assets automatically involves the courts and makes your will a public document. On top of the monetary costs and potential delays of dealing with a court, you’re exposing your family members to the prying eyes of anyone who accesses the court file.

“This, in effect, could be a roadmap to a family member inheriting significant assets. Most people would not want this information to be public,” said Rubinstein.

He explained that in addition to a will, a proper estate plan should include a revocable living trust. “After the person passes away, his or her trust has a continuing duration on its own. This trust should include the same inheritance provisions usually contained in the will,” he said. “Whereas the will has to go through probate and becomes a public document, the trust may bypass probate and remain private.”

Trusts also give the trustee immediate access to the assets in the trust, allowing them to share everything with the beneficiaries much more quickly — as opposed to waiting for a probate court to certify a trustee and approve their access.

Power of Attorney

Giving someone your power of attorney is the ultimate sign of trust, since you’re empowering them to manage your financial affairs if you’re unable to do so. Choosing someone you know will honor your wishes and making your wishes clear to them is an essential part of making sure that everything goes smoothly.

Healthcare Proxy

Having to suddenly decide what a loved one would want if they were incapacitated by illness or injury could feel emotionally devastating. This is part of why Wheatman Hill’s father included a clear advanced care directive in his letter.

“I’m not going to have to debate with my sister about whether he wants resuscitation or extended care if he is in a vegetative state or has reached the end stages of a degenerative condition — he told us. He also told me I get to use my best judgment about moving him to a facility near me if he needs care,” she wrote.

Ensuring that you have someone picked out who can fulfill all your wishes for advanced care or healthcare decisions is an essential part of estate planning. As Gregory L. Matalon, a partner with Capell Barnett Matalon & Schoenfeld LLP, explained, a healthcare proxy “allows an individual to determine who will act regarding healthcare matters when that person cannot. It also allows an individual to declare their wishes regarding medical intervention measures.”

Matalon shared that if you don’t draft a healthcare proxy and power of attorney, the court may appoint someone else to make these decisions for you and your family.

“The appointment of a guardian can be a costly process at an emotionally difficult time and may result in the appointment of a stranger to make these decisions, and not a trusted relative or friend,” he said. “And, without clear gifting provisions outlined in the power of attorney documents, a principal’s assets may be lost to long-term care expenses or estate taxes.”

Clear Communication and Easy-To-Find Documents

Having a sense of who you’d like to be in charge of your health and your assets, as well as what you’d like to distribute among your beneficiaries, is important. But it doesn’t do anyone any good if they don’t know where to find, or how to understand, your documents.

For David Johnston, CFP, managing partner at Amwell Ridge Wealth Management, clear communication is the foundation of good estate planning. You should have a method for ensuring that all of your accounts, belongings and interests can be easily identified.

“Without either a written plan — or a digital portal — outlining where everything is (and whom to call), family members are left to embark on a scavenger hunt with neither a map nor a list of what they are looking for,” he said.

New York wine crisis: FBI raid top shop, $1,000 bottles found stashed in Times Square TGI Fridays

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By Michael Kaplan featuring Asher Rubinstein

Big Apple wine lovers are enduring a sour season.

It’s been a rough year for people who spend big bucks on rare bottles and entrust them to New York City’s ritzy wine merchants for storing and proper aging.

First, in February, the venerable Sherry-Lehmann wines was raided by the FBI and exposed for bad practices that are alleged to have included the mishandling of bottles.

Potentially among them: two cases of 1982 Petrus Bordeaux, valued at $90,000.

Then Chelsea Wine Storage, a facility entrusted to hold millions of dollars worth of rare vintages, took heat with accusations of mishandling collectible bottles, being slow on delivery and quick to confiscate bottles from customers who owed storage fees — even when the valuations of the wine far exceeded the sum owed.

The twin calamities have sent shockwaves through the elite world of wine-collecting, a hobby which for most who practice it in the city requires high-quality storage — which may not come cheap.

As an oenophile put it to The Post, “They need to keep wine at the right temperature and humidity while keeping it away from light… And give you your wine when you want it.”

Attorney Asher Rubinstein told The Post: “Collectors are literally losing sleep over this.”

Among the worst of the claims: sources alleged that Chelsea Wine Storage, far from carefully tending to bottles which could become heirlooms, has thrown them under Times Square’s former TGI Fridays and has kept some in cardboard boxes.

They include bottles of 2011 Coche-Dury Meursault, a white Burgundy that sells for $1,200 per bottle, and a Domaine Faiveley Bâtard Montrachet worth $490 per bottle, according to inventories seen by The Post.

Since early November, a source told The Post, increasingly panicked customers requesting delivery of their vintages have found representatives of the wine company difficult to reach.

In one such situation, a storage customer with Chelsea Wine Storage was trying to retrieve a collection “of significant value,” Rubinstein told The Post.

“We worked with Chelsea to get the wine,” he said. “It took a constant stream of calls and emails over the course of around two months. [Rubinstein’s client] was proud to amass the collection and was rather stressed about not getting it back.”

Chelsea’s attorney did not return a request for comment.

While the owners of Chelsea have previously blamed it on staffing issues, Rubinstein, a wine collector himself (who does not have bottles with Chelsea) sees the problem going beyond someone being sore about waiting on a few prized bottles for the holidays.

“I think of this on the macro level,” the attorney said. “You are an investor and collect wine and amass thousands of cases.

“We’re talking about $500,000 collections, and you can’t get these guys on the phone. What if you had an equivalent amount of money at the bank and the bank stopped taking your calls? How would that be acceptable?”

The claims are not the first against Chelsea Wine & Storage, which quit Chelsea Market last year.

In 2018 it was sued by customer Michael Moriarty, who accused it of mishandling his collection of “around 1,200 bottles with a value of approximately $100,000 to $200,000.”

When Moriarty tried to get his goods, he was told that they were “disposed of due to non-payment of storage charges.”

According to the court documents, Moriarty owed some $7,000 in fees and offered to pay the money back. But, according to the complaint, “the offers were rebuffed.”

Moriarty alleged that the wine “was not, in fact, disposed of, but instead is on the shelves… for sale.”

Rubinstein, who represented Moriarty, told The Post, “Moriarty bought wine at an auction and the labels were inscribed with Moriarty’s son’s name in the early 2000s.

“He entrusted the wines to Chelsea and those bottles were found upstairs in Chelsea’s retail store. Somebody he knows saw them for sale. Chelsea just denied it.”

The case was settled in 2019. Chelsea’s attorney did not return a request for comment.

The demise of Sherry Lehmann has also spawned anger.

“I asked them to deliver my wine and it was rope-a-dope bulls–t,” a former customer who’s missing thousands of dollars in rare Bordeaux, fumed to The Post.

“I’m emotional about it because of the missing wine but also because I was ripped off financially.”

Sherry-Lehmann was founded by the bootlegger father of former owner Michael Aaron, and last headed up by Kris Green and Shyda Gilmer.

They are now being sued by at least one former customer. Gilmer and Green did not return calls for comment.

Even as he awaits a court date in May, the former customer said, “I’ve emotionally written it off. I don’t expect [the owners of Sherry-Lehmann] to show up in May for a civil hearing.

“It pisses me off that guys [have been accused of] stealing good wine, living good lives and drinking what does not belong to them.

“Sometimes I will be enjoying a glass of wine and thinking about my missing cases. I wish I had them and that that they were aging for the next 10 years.”

2023 Year-End Notes

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As the year comes to a close, we offer some planning tips to our clients, colleagues and friends of the firm regarding their assets, tax and estate concerns.

Foremost, there are some time-sensitive ways to save taxes that could result in much more money for your family.

Download the 2023 Year-End Notes

Aretha Franklin’s Estate Planning Deserves No Respect

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By Gregg Greenberg featuring Asher Rubinstein

First, it was the King of Rock and Roll’s family battling over the legitimacy of his daughter’s will. Now it’s the Queen of Soul’s kids clashing in a courtroom over handwritten wills found scattered around her house.

Seriously, and with all due R-E-S-P-E-C-T, will somebody explain why music’s royalty can’t pass down their estates without their heirs getting all shook up?

It’s barely been two months since a settlement was reached over the will and multimillion-dollar estate of Lisa Marie Presley, the late daughter of music legend Elvis Presley and his wife Priscilla. The settlement, for which terms were not disclosed, resolved a dispute Priscilla raised that challenged the validity of an amendment to Lisa Marie’s will.

Hot on the heels of the Presley family’s document drama, a similar quarrel is being decided this week in court regarding the last wishes of Aretha Franklin, who died from pancreatic cancer in August 2018.

Originally, it was thought the soul singer had left no will for her extensive estate, which included homes, cars, jewelry, and of course, fur coats. The lack of a will would have caused her property to be split evenly among her four sons.

But nine months later, handwritten wills were found in a cabinet and under a sofa cushion at her home in suburban Detroit. The discovery led to a schism among Franklin’s offspring, who took sides over which of the documents truly reflected her last testament.

The question will soon be decided by a six-person Michigan jury. Experts say, however, that it didn’t have to end up this way.

“Aretha was surrounded by lawyers throughout her career — when she made an album, when she toured, when she appeared in a movie — and while she hired an estate lawyer, the testimony showed that she did not finalize her will properly,” says Asher Rubinstein, partner at Gallet Dreyer & Berkey. “It looks, from her handwritten revisions and margin notes, that she wanted to make changes about beneficiaries and inheritance terms, but she passed away without properly finalizing and executing the document with witnesses, and now the court is left to determine the inheritance terms.”

Rubinstein says he’s seen many people over the years who knew they should create and store proper estate planning documents yet failed to do so. Even successful people who have accumulated significant assets put it off. People like Franklin, who had the talent and dedication to further her career but couldn’t properly deal with her own estate.

To a great extent, it’s a reluctance to come to terms with one’s own mortality, Rubinstein said.

“When someone avoids proper estate planning, or does it improperly or incompletely or with a lack of clarity such as Aretha’s handwritten changes, then the survivors, and the courts, are left wondering what the deceased person really wanted to happen with his or her assets,” he said. “Now you have an estate contest, including lawyers and a court which is left to decide what to do with an estate.”

Where There’s a Will

If an older or ill person is making a change to a will, how should the change be made to ensure that it won’t be challenged later?

Rubinstein says he recently faced a similar issue with a woman who, although not in Aretha’s range, did acquire significant assets during her life. She had four children, only one of whom visited her and took an active role in helping her with her business and her assets. As a result, she left a will that passed her assets to that one son. Rubinstein said he anticipated an estate challenge by the three children who were not named, so his team proceeded very carefully.

“Her will included an ‘in terrorem’ clause, whereby anyone contesting the will would be cut off. We also videotaped her executing the will, and on the video, she explained her reasons for the estate decisions that she made favoring one beneficiary over others,” he said. “The video showed that she thought and spoke clearly and understood her actions.”

In addition to her will, Rubinstein had her sign an affidavit in which she explained the situation and her reasons for the way she left her assets. Finally, he obtained a letter from her physician that explained that she was mentally and physically sound and healthy.

As to the best place to store a will so it does not end up under a couch cushion or hidden in a cabinet, Gregory L. Matalon, partner at Capell Barnett Matalon & Schoenfeld LLP, says his clients often leave their original wills with him and he marks them as such. The client then takes a marked copy of the will home with them. In his view, this helps the family know who has the original document when the individual dies. By keeping it with the attorney, a disgruntled beneficiary cannot tear it up after death.

“It also prevents the risk of loss in the home as clients may move over time. Some clients wish to put it in a home safe or in a bank safe deposit box. If it is in a home safe, obviously, that safe may need to be cracked once the person dies to obtain access to the contents. If it is in a bank safe, a Court petition may be needed to access the box. These options may waste valuable time,” says Matalon.

Don’t Say a Little Prayer, Type It

Each state has different laws regarding wills, with 16 states not allowing handwritten ones. In New York, for example, a valid will has to be typed, not handwritten, and changes must be typed as well.

“If someone were to take a proper will — typed, properly signed before witnesses and a notary — and make revisions or margin notes by hand, then that person may have inadvertently invalidated the original will because the handwritten notes demonstrate an intention to modify the terms of that original will,” Rubinstein said.

For this reason, when someone updates a will, it should not be done informally, such as by hand. People are hesitant to involve lawyers, overcomplicate matters and incur legal fees, but when dealing with something as important as a legacy, it should be done correctly, whether individuals are rock royalty or easy listeners.

“A good estate lawyer will make sure that the will, and subsequent changes and revisions, are done properly so that the terms are clear, the will remains valid, and your intentions are upheld,” Rubinstein said.

Supreme Court Holds IRS to Lower Offshore Account Penalties, But Proper Compliance is Still Essential

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Imagine the IRS discovering your “secret” offshore bank accounts.  Imagine further that instead of the IRS assessing a penalty of $10,000 for failing to file the “FBAR”, which is the proper banking disclosure form, the IRS hits you with $10,000 in penalties for each account.  In the case of a taxpayer named Bittner, who had 272 foreign accounts, the IRS assessed $2,720,000 in penalties, rather than $10,000 for failing to file the FBAR.  In Bittner v. United States, decided this week, the Supreme Court of the United States (SCOTUS) decided against the expansive position of the IRS.  While this is good news for U.S. taxpayers with offshore financial accounts, compliance with the various disclosure requirements is still crucial.

Individuals who own or control a foreign financial account are required to file the Report of Foreign Bank and Financial Accounts (“FBAR”), FinCEN Form 114, each year.  The reporting requirement applies to offshore bank and brokerage accounts, retirement accounts, etc. with an aggregate value of at least $10,000 during the calendar year.

Under The Bank Secrecy Act, the 1970 law that implemented the FBAR reporting regime, a $10,000 penalty applies to non-willful violations of the statute.  (Willful or intentional violations are punished much more severely, including a potential referral for criminal charges).  However, the statute is ambiguously worded and raises questions about how the penalty should be applied for multiple offshore accounts.  Does a person’s failure to file the FBAR constitute a single violation, punishable by one $10,000 penalty, or does a person commit a violation for each foreign financial account that is not disclosed on the FBAR, resulting in multiple $10,000 penalties?  Several U.S. circuit courts have reached differing conclusions over the past few years, and the issue reached the U.S. Supreme Court.

In Bittner v. United States, by a 5-4 ruling, the Court held that the $10,000 maximum penalty for the non-willful failure to file an FBAR is to be applied on a per-report basis, not a per-account basis.  The Court made its ruling based on several factors.  The first factor was the penalty provision itself.  Since the penalty provision did not explicitly address the number of accounts, the Court determined that Congress’ intent was to penalize each report not filed, rather than each account.  The second factor was the government’s intent in constructing the statute. The government included per account penalties in the statute from 1986 until 2004, when the statute was amended.  In the amended version of the statute, the government deliberately left out the language that specifically allowed for a per account penalty.  This demonstrated to the Court that the government changed its intent to only penalize per report violations by removing the per account language.

The third factor was Congress’ statement of purpose of the statute.  The purpose of the statute is to require reports or records that may assist the government in criminal investigations, tax investigations, intelligence and counterintelligence investigations.  Since the purpose of the statute did not indicate an intent to maximize penalties for every non-willful mistake, the Court decided that the statute should not be interpreted to include maximizing penalties for each non-willful account.  The fourth factor is that pursuant to the rule of lenity, the statute should be construed in favor of Bittner.  The rule of lenity states that statutes imposing penalties are to be construed strictly against the government and in favor of individuals.  Following the Court’s determination of the intent of Congress (the second factor discussed above), the Court ruled that the statute should be construed favorably to the taxpayer, whose position was that the penalty should apply on a per report, not a per account basis.

From 2007 to 2011, Bittner failed to file a FBAR for the 272 foreign accounts which he owned.  The government’s position was that the penalty should be for each account not reported, for a total of $2,720,000 in penalties.  Bittner’s position was that the penalty should apply to each FBAR form not filed, in his case for the five years between 2007 and 2011, totaling $50,000.  SCOTUS’ decision saved Bittner millions of dollars in penalties.  However, the open question is whether Congress will amend the penalty provision to reinclude the language for penalties on a per account basis?

Owning a foreign account is legal and appropriate in many circumstances – – maintaining foreign real estate, transacting with foreign business counterparties, providing money to family abroad – – but U.S. taxpayers must comply with the various reporting obligations, from the FBAR form to IRS Form 8938 (and potentially other IRS forms).  If you have any questions about offshore banking, foreign assets and IRS compliance, please contact Asher Rubinstein at ar@gdblaw.com.

Web3’s Influence On The World And What’s To Come

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By Shira Lazar
Featuring Asher Rubinstein, Partner Gallet Dreyer & Berkey, LLP


Recently interviewed on the Inside Web3 podcast by Shira Lazar, Partner Asher Rubinstein discusses the future of cryptocurrency, the most influential people in crypto right now, and what happens to your crypto funds after you die. It’s a given: The digital age is now. So how will you safeguard your digital legacy? Listen to this week’s show for Asher’s insight.

Listen To The Interview