What We Can Learn from Ed Koch About Your Estate Planning
Three-time New York City Mayor Ed Koch died on Feb. 1, leaving an estate estimated between $10-$11 million. And it’s a good thing that “Hizzoner” loved governing, because one-quarter of his estate will be going to the state and federal governments.
During his tenure as Mayor, Koch was famous for asking people on the street, “How’m I doin’?” He would have been better served to ask that same question to an Estate Planning Lawyer before he passed on.
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 read the details of exactly what Mayor Koch left behind and to who right here.
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, Uncle Sam will net a cool $1.45 million. New York State has an estate tax exemption of just $1 million, meaning it will receive $1.1 million from the estate, according to a Forbes article.
As Forbes notes, Koch could have made some savvy estate planning moves before he died by:
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. (And, would have protected those assets for generations upon generations. This was a big oversight.)
Making additional gifts up to $5.25 million right before he died could have significantly reduced his state tax bill, since New York does not have a gift tax. This would have saved his heirs an estimated $600,000.
And there’s more he could have done as well, but he either didn’t get good counsel or he didn’t heed it. Now, it’s too late. And, of course, it’s all public.
A Note from the Attorney, Stan Pierchoski:
The practice of law is a second career for me. After obtaining Master of Science degrees in both Nuclear and Mechanical Engineering, I worked in the Nuclear Power Industry for 15 years. Always having an interest in law, I attended and graduated from law school and founded the Pierchoski Law Firm in 2002 in Pulaski, TN. For several years I practiced as a criminal defense, trial attorney. After my parents passed I became interested in Trust and Estate Law and felt a strong calling to change my practice to the Estate Planning area.
For years I have been exclusively doing trust writing and wealth planning and have become proficient at it. Over the last several years my practice has evolved to serve all age groups including elders and Medicaid Planning. I am always open to your questions and am more than happy to chat with you about your concerns so give me a call or stop by my office. You’ll be glad you did!