A Conversation With Jonathan Rikoon
By Rochelle Maruch Miller
In response to repeated requests from Agudath Israel of West Lawrence, of which he is an active member, Jonathan Rikoon will be presenting a seminar on “kosher” estate planning at the shul on Sunday morning, March 27. Mr. Rikoon is a member of the Vaad Hanhala, Agudath Israel of America, and has developed and maintained a halachic medical directive (halachic living will) for Agudath Israel of America. A trusts-and-estates lawyer for over 35 years, he is a partner at Loeb & Loeb and is the author of Essential Facts: Estate Planning and Family Wealth Transfers and Stocker and Rikoon on Drawing Wills and Trusts.
In this interview with the 5TJT, Mr. Rikoon discusses aspects of his upcoming seminar.
Rochelle Maruch Miller: What motivated you to present the kosher estate planning seminar?
Jonathan Rikoon: For a long time, I have been fascinated by the intersection of secular law, halachah, and tax planning. I believe that there is a crying need for additional basic information for our community about issues that arise when planning for what happens after an individual is no longer able to make his or her own decisions due to disability or death.
The halachic concepts routinely come up throughout the Talmud. Certain parshiyos in Chumash deal with inheritance. There have been detailed shiurim in our neighborhood dealing with just the halachic aspects of inheritance and wills, with some consideration of modern-day techniques to deal with those issues.
That is not nearly enough to set an individual’s mind at ease that his or her affairs are in order. Secular law has a completely different way of dealing with these issues, even if we were all experts at dealing with the intricate halachos. In addition, different ways of disposing of assets can have different, and costly, tax consequences. So not only are the halachic consequences critical, it is also critical that we understand what happens under local law and take into account emotional and family issues as well as any tax consequences of the decisions.
The administration of our shul has asked me to speak to the community about these topics. Our rav, Rabbi Moshe Brown, shlita, is well known as a talmid chacham and educator. His in-depth daf yomi shiur and weekly Zevachim and Yoma shiurim attract active participation not just from Far Rockaway but from the entire area, with some walking in on Shabbos from Bayswater and Lawrence. (When the shul’s founders approached Rabbi Brown to start the shul, he is the one who insisted that it be affiliated with Agudath Israel of America–a critical connection when it comes to this topic.) This seminar fits in nicely with the shul’s growing efforts to serve the community in various ways with shiurim by others, including the rav’s son, R’ Zev Brown, and other programs.
RMM: What are some of the unique aspects of the seminar?
JR: There are a number of basic questions that must be addressed to start the conversation. The answers to those questions will then probably lead to more questions, but ultimately to the outline of an estate plan. There are then a number of technical steps required to implement the plan, such as alternative means of accomplishing the goals, possibly running projections of alternatives (in a complex case) and, in all cases, the design and drafting of the various documents that should accomplish those results.
I expect to survey the broad landscape of the issues without too many fine details. Think of it as Estate Planning 101.
We start with the most fundamental questions: If you cannot make decisions about your finances or healthcare due to incapacity, who will make those decisions and what would you like those decisions to be? After your death, who should be in charge of making decisions that will affect your property and your family? What provisions should you make for spouse, children, grandchildren, charities? How do you encourage your heirs to conduct their lives in a way that will make you proud? How do you reduce the risk of conflict between family members, or between them and whoever is administering your estate? How do you minimize the tax and other costs of death and disposition of your assets?
Answering those questions should precede any halachic, legal, or tax analysis. Only once you have decided what should happen can you then turn to how to ensure that it does.
RMM: Why is it important for members of our community to attend the seminar?
JR: Someone heard the other day that I was speaking on this topic and quipped that he did not need to attend because he has no money. But that’s exactly one type of person who needs to be educated: so much of what we do in this kind of planning does not depend on wealth at all. Just to give you a few examples: a young married couple should think about who will raise their children (or future children) if there is a terrible tragedy and one or both of the young parents don’t survive, chas v’shalom. If they do not themselves agree on who will have custody (as a “guardian” for the minor), and put it in their wills, the result may be far from what they desire. In addition, a state-mandated inheritance could lead to all sorts of litigation or at least disputes among family members and, in the worst case, the government will get involved.
Similarly, a person of any age, wealthy or not, should decide in advance who will make healthcare decisions if he or she is incapacitated, and what guidance those decisions should have. You have an opportunity, with proper documents, to direct that health decisions be made in accordance with halachah. If you do not, once again there is the possibility of disputes among family members, and even life-threatening decisions that are contrary to da’as Torah being made by hospital ethics committees or perhaps relatives with a different value system than yours.
As a third example, an individual of modest means who nevertheless has some assets (a house, furniture, perhaps some jewelry, some money in the bank, retirement accounts, and so forth) risks having those assets inherited, if there is no will, under state rules. In addition, a state-mandated inheritance (in the absence of estate planning) will almost certainly be contrary to the halachah that governs inheritance (yerushah).
Finally, there are governmental assistance programs available for those who qualify, with intricate rules that may require the advice of a Medicaid planner or elder-law practitioner. These families can also benefit from guidance in obtaining the best services most appropriate for the disabled family member.
For those fortunate enough to have a large net worth, the tax consequences of inadequate estate planning can be enormous; the tax imposed at the death of a wealthy New York resident is roughly 50% of the estate. Planning for the wealthy can become complex and involve a host of tax and non-tax considerations well beyond the scope of this article, but I will try to at least identify some of those issues.
In the vast middle ground, for those who are financially comfortable but not super wealthy (with up to $5—10 million of assets), the most tax-efficient planning approach may be exactly the opposite of what the wealthiest should do. Thus, an analysis of just what the tax consequences will be for your heirs can lead to a more refined plan.
RMM: What is the halachic perspective on drafting a will?
JR: A will is simply a document that directs how one’s assets will be disbursed after death. In general, that has no legal recognition in halachah, although it is binding under secular law. Thus, if someone has a will which directs a disposition of his estate in a certain fashion, the secular courts will generally enforce that, while a beis din would award the assets quite differently based on the Torah system of inheritance (seder nachla). This means that the two legal systems are at odds, and that can lead to the beneficiaries fighting as well.
There are a number of techniques that have been used to permit recognition or enforcement of secular wills in halachah. There are several different halachic approaches to this and the poskim have not always agreed on how the different techniques work or even how they should be drafted. Nevertheless, an essential element of estate planning for those in our community is to try to reconcile the gap between law and halachah.
There is a more fundamental question in the Torah world which I will try to address a little bit as well: Not what one can do, but rather what one ought to do. There is guidance from our chachamim as to what is appropriate in disposing of your assets. For example, should one cut out a wayward child, or adopt an alternate approach that may be wiser from a Torah perspective and also accomplish a better result from the perspective of the secular legal system? Likewise, should one use technically valid means to avoid having any of one’s assets bequeathed to the Torah heirs under seder nachla, or should at least a portion of the estate be divided that way? Where does providing for charitable institutions fit in?
Finally, I know that some people stay away from this topic because they are superstitious. They make no plans for death or disability because they fear that making plans hastens the event. To the contrary, it is regarded as a valuable exercise both from a secular and a Jewish perspective to make sure that your affairs are in order.
RMM: What happens to one’s property and to his healthcare decisions when there is no will?
JR: With regard to healthcare, the answer is easy. Although the details are slightly different state by state, in New York if you do not designate a healthcare agent, then there is a list of individuals (starting with your closest relatives) who are authorized by state law to make healthcare decisions on your behalf. They are supposed to look out for your best interests and, under some circumstances, to take into account your expressed preferences. Note that “best interests” does not necessarily include your religious preferences. That is why it is critical to provide guidance which directs that whoever makes your medical decisions will honor your direction that decisions are being made in accordance with halachah. Forms endorsed by Agudath Israel of America and the RCA will accomplish this.
The absence of a medical directive has led to disputes among family members who had different ideas about how their incapacitated loved one should be treated. Similarly, we have seen an increase in the number of cases where, unfortunately, a relative will arrange for cremation before others can intervene, or sometimes even after others intervened but the advance paperwork (for example, a non-halachic living will) was not prepared correctly. This is particularly frustrating because it is so simple to prepare the halachic medical directive and designation of a healthcare agent.
RMM: What is the most challenging aspect of being a trusts and estates lawyer?
JR: It can be a challenge to gently change the mind of a client (or, for that matter, an adversary) who has an overly elevated view of his own wisdom and knowledge. Sometimes I can see that a tax or business disaster is lurking around the next corner and I feel bad if I can’t get the client to see that and take corrective steps in time. By the same token, there are times when I have to change my mind when a client (or adversary) teaches me something I didn’t know, and that can be humbling.
It’s a challenge to keep up with a rapidly changing legal and tax landscape, with some of the changes dependent on an ever more uncertain political environment. Since I started practice, the estate and gift tax system has undergone close to a dozen major changes.
It is also frustrating to try to negotiate a favorable result for a client involved in a trust or estate dispute and for one reason or another the negotiations are unsuccessful and litigation breaks out. At that point we are looking at years of delay and tens or even hundreds of thousands of dollars in fees which might have been avoided if the parties had been a little bit more reasonable in the negotiation process. Sometimes the parties are so certain that they will win the litigation that they lose sight of the benefits of an out-of-court settlement, no matter how hard the lawyers try to make that clear.
Finally, you may remember that a few years ago you wrote in these pages about my trip to Ukraine for the U.S. Commission for the Preservation of America’s Heritage Abroad. I am sorry to report that the problems at the cemetery at Vinnitsa, which we discussed then, have still not been resolved. I have also been frustrated by commission dealings with ongoing problems with ancient Jewish cemeteries in Vilna and Zurich which have not yet produced assurances of peaceful repose for the thousands of Jews buried there over several centuries.
RMM: What do you find most rewarding?
JR: It is very satisfying to resolve family disputes without resorting to court, often by creative use of tax planning to provide additional funding for the family and to try to have everyone at the table be a little bit happier at the expense of the government tax collectors, all in a perfectly legitimate way.
It was also rewarding to represent the New York Public Library in defending its legacy from the legendary philanthropist Brooke Astor after actions by her son greatly reduced the amount available.
Also very satisfying is my work with Agudath Israel of America–such as successfully appealing to the Illinois Supreme Court to reverse a lower-court decision that had struck down the attempt of a grandfather to make sure that his grandchildren married within the Jewish religion in order to receive their inheritance (the case came to be labeled by a law professor: “Marry a Goy and You Get Bupkis”).
Agudah’s “living will” project has, over more than two decades, included initial design to comply with halachah, including a meeting with the Moetzes Gedolei HaTorah; making sure that it is legally effective in dozens of states, since this is an area governed by state rather than federal law; helping it gain acceptance across the spectrum of the frum world–from the modern to the chareidi; and educating the public about these issues.
RMM: What message would you like to convey to our readers?
JR: I think the general message is not to procrastinate and not to think that you are immune from dealing with some of these issues. In order to spare your loved ones unnecessary anguish, delays, disputes, and lost money, please face the planning issues head-on and make sure that you have appropriate documents and arrangements in place.
Agudath Israel invites the community to attend Kosher Estate Planning with Jonathan Rikoon, partner Loeb & Loeb LLP, on Sunday, March 27, 9:30—11:30 a.m. at 631 Lanett Avenue in Far Rockaway. Light breakfast will be served.