Former New York City Mayor Ed Koch died February 1, 2013 leaving an estate with an estimated value of between $10 and $11 million. Since he was a public servant for a good part of his life, he may not be as concerned as most people would be to learn a much larger than necessary part of that fortune is going straight to the government.
In his will, Koch bequeathed most of his assets to blood relatives – a sister and her husband, a sister-in-law, and three nephews – as well as to his secretary and a charity. And because Mayor Koch used a Will and didn’t put his assets in Trust, it’s all public. In fact, you can readily learn the details of exactly what Mayor Koch left behind and to who online.
When the former Mayor died, the federal estate tax exemption was at $5.25 million, and since his estate is estimated at twice that amount, the federal government will receive $1.45 million. The State of New York has an estate tax exemption of just $1 million and, therefore, it will receive $1.1 million according to a Forbes article.
As Forbes notes, Koch could have taken advantage of several estate planning strategies prior to his death:
Creating a trust for the benefit of his nephews, who inherited the bulk of his estate, and their descendants. Up to $5.25 million that goes into a trust would have been exempt from generation-skipping transfer tax. This would have protected those assets for generations upon generations and was a huge oversight.
Making additional gifts up to $5.25 million before his death could have significantly reduced his state tax bill, since New York does not have a gift tax. This strategy alone could have saved his heirs an estimated $600,000.
There are other strategies he could have taken advantage of, but he either didn’t have good estate planning counsel or he didn’t listen to it. Now it’s too late and, of course, it’s all public.
If you would like to learn more about strategies to keep your money out of the government and the size of your assets totally private, call our office today to schedule a time to sit down and talk with an estate planning attorney. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.
