USA – NEW YORK Trends and Developments Contributed by: John M. Teitler, Nancy A. Murphy and Constance E. Shields, Teitler & Teitler, LLP
reduce ambiguity and limit the potential for intra-fam- ily disputes. Some families opt to establish a private trust company (PTC) to institutionalise governance across genera- tions. A PTC allows family participation in decision- making while providing corporate continuity and regu- latory structure. By separating beneficial enjoyment from fiduciary administration, this model can preserve family involvement without compromising profession- al management. Pre-Nuptial Agreement as a Succession Planning Tool The best laid plans often go astray and an important estate and succession planning tool is a pre-nuptial agreement. Marriages can end in death or divorce, and individuals, families and trustees should consider and plan for both. The inheritance laws of most states do not permit a surviving spouse to be disinherited. For example, in New York, absent an agreement otherwise (such as a pre-nuptial agreement or spousal elective share waiver), the surviving spouse has the right to approxi- mately one-third of the deceased spouse’s net estate (and if the deceased spouse dies without a will, the surviving spouse has the right to approximately 50% of the deceased spouse’s intestate estate). Unlike most inheritance laws, in divorce, many states dif- ferentiate between marital property (or community property, such as in California) and separate property. While separate property often includes inheritances or gifts from family or distributions from a family trust, each state’s matrimonial laws have various permuta- tions regarding the treatment of such property. Most states, such as New York, permit parties to enter into a pre-nuptial agreement to define financial rights in the event of death or divorce, and a pre-nuptial agreement in conjunction with other estate planning mechanisms, such as a trust, can go a long way to maintaining generational wealth in accordance with the intended estate and succession plan.
Individuals, families, and trustees should consider both the inheritance and divorce laws in all relevant jurisdictions (foreign and domestic) and how such laws may impact the estate and succession plan. This has become increasingly important given various economic, employment, technological, and societal trends, including: • individuals residing in multiple jurisdictions around the world (and in residences owned by trusts); • the ongoing globalisation of technology in the workforce making physical location less relevant; • family members foregoing the traditional employ- ment trajectory to work for the family office; and • second marriages and blended families. While it may not be possible to align the laws of each jurisdiction, individuals and fiduciaries, together with estate planners and other professionals, should con- sider the impact of marriage on the estate plan.
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