New York Estate Planning & Elder Law Blog

The Santa Clause in Estate Planning — 2025

Published on: January 11, 2025 | by Ettinger Law Firm

The current New York estate tax exemption stands at $7.16 million while the Federal exemption is at $13.99 million. While the Federal government only taxes the amount over the Federal exemption, New York takes a different approach. Once you go more than 5% over the exemption amount in New York, they tax the whole estate! You’re “over the cliff”.

New York’s “fiscal cliff”, as it has been termed, leads to the absurd result that you would end up with less after taxes on a seven and a half million dollar estate than on a seven million dollar estate.

The “Santa Clause” is intended to avoid the tax “fiscal cliff” by providing that any amounts that would cause the fiscal cliff to be triggered are to be given to a qualified charity. This lowers the amount of the estate subject to estate tax to no more than the exemption amount.

Tax and Medicaid Law Changes for 2025

Published on: January 10, 2025 | by Ettinger Law Firm

For 2025, the exemptions for estate taxes rise to $7.16 million for New York estate taxes, and to $13.99 million for Federal estate taxes. The annual gift tax exclusion rises to $19,000. If your estate is, or may become, greater than the New York threshold, early intervention can avoid the hefty New York estate taxes, which start at over $600,000. Some of the techniques are (1) setting up two trusts, one for husband and one for wife, and using them to double the New York exemption, (2) gifting out so much of the estate so as to reduce it below the New York exemption, at least three years before the death of the donor, and (3) using the “Santa Clause” providing that the amount over the threshold be donated to a charity or charities of your choosing so as to reduce the estate to no more than the exemption.

For Medicaid, the house is an exempt asset so long as a spouse is residing there, up to $1.1 million of equity for 2025. Seeing as over 80% of nursing home residents do not have a spouse, it is better to plan ahead with a Medicaid Asset Protection Trust (MAPT) to get the five year look-back for nursing facility care. In that case, the house would be protected by the trust rather than the unreliable spousal exemption. Unless your other assets have been protected by the MAPT, an individual may keep about $31,500 and a spouse at home can keep up to about $158,000.

The often-delayed imposition of the new two and a half year look-back for home care, is not on the horizon for 2025. Currently there is no look-back for home-care and you do not have to worry about getting home care until you actually need it. Nevertheless, this may change in the future so the MAPT remains as an important as a tool to qualify you for home care as well as protecting your assets from a nursing home. Assets should be moved into the MAPT years ahead of time if you want to be able to afford to stay in your own home and get home health aides for assistance with the activities of daily living, should the need arise.

The New Corporate Transparency Act

Published on: December 26, 2024 | by Ettinger Law Firm

The Corporate Transparency Act came into being this year as part of the Anti-Money Laundering Act. This act is designed to combat terrorism, tax fraud and money-laundering.

Under the act, corporations and LLC’s are required to report who their “beneficial owners” are in a Beneficial Ownership Information Report (BOI report) to the Financial Crimes Enforcement network (FinCEN) on an annual basis.

New York has its own version called the New York LLC Transparency Act that takes effect in 2026, however the New York version only applies to LLC’s. The BOI report is due by January 13, 2025 for entities formed before 2024 and within 90 days of formation or registration for entities formed in 2024. For entities formed after 2025, the BOI report is required to be filed within 30 days.

Estate Planning Requires Confidence Building

Published on: December 18, 2024 | by Ettinger Law Firm

Many people are afraid to go and see a lawyer for estate planning. They may not want to look foolish, knowing so little about the subject. They may feel intimidated by the knowledge and authority of the attorney. Some are frightened about the cost or being taken advantage of. They may have had a bad previous experience with a lawyer, either in the same or in another field of law, and so on.

For this reason, we start with the premise that we must first build the client’s confidence. We do this by offering a free initial consultation where we explore the client’s social and financial issues. It’s often like chatting with someone in their living room. We like to get to know you and your overall situation. It’s a low-key, judgment-free zone. We park our egos at the door when we come in and endeavor to treat our clients as the peers and equals they are.

All the while, we are formulating the outline of an estate plan in our heads and passing along our thoughts and ideas to the client on an ongoing basis throughout the process. By the end of the first meeting, we have often formulated a tentative estate plan which we share with the client, also stating what the fees will be. We give the client a copy of our book “Ettinger Law Firm’s Guide to Protecting Your Future”, written in plain English, telling them which chapters apply to their situation and, for those who prefer to watch, share the link to our estate planning seminar on our website, trustlaw.com. The client is then invited to a second free consultation, two or three weeks later, to have all their questions answered, draft the estate plan and receive a written fee proposal. Unique among elder law estate planning firms, we do not ask our clients to sign any retainer agreement or to pay any fees up front.

Myths About Estate Planning

Published on: November 21, 2024 | by Ettinger Law Firm

The first myth to explore about estate planning is that you can do it yourself over the internet. This supposes that a trust is a generic legal document where you plug in names, addresses and amounts you want to give and then off you go! However, experienced estate planning lawyers will tell you the job is ninety percent social work and only ten percent legal.

Most of the time we spend with clients involves going over the social aspects of the estate plan. First, who should be in charge of your legal and financial decision-making in the event of death or disability? One person or more than one? Should they be required to act together or may they be permitted to act separately? How are the other family members going to feel about these choices? Who gets along with whom? What are my options and what do other people do and why? You need to be in a position to evaluate pros and cons and there’s no counselling on the internet.

Getting an estate plan from out-of-state is fraught with other pitfalls. Take the New York form of power of attorney, for example. In our experience, even trained lawyers often make major errors in drafting and executing the complex New York form of power of attorney. What chance does a lay person have to get it right?

Planning for Single Relative Living Alone

Published on: November 8, 2024 | by Ettinger Law Firm

If you have a son, daughter, sister, brother or parent living alone for whom you are responsible, and they unfortunately become incapacitated or die, apart from the emotional and medical burdens, you may have significant legal and financial troubles. A little planning in advance for these contingencies will go a long way in making any such dire situation much easier to handle.

If they rent, then make sure they notify their landlord, in writing, that you have their permission to access the apartment. Also get a key to their apartment or home or at least know where you can get one (such as from a neighbor).

A power of attorney will allow you to handle their legal and financial affairs during any period of disability. However, a power of attorney automatically ceases on death. Once someone dies, only the executor under the will may handle legal and financial affairs and it may take months and sometimes years to become appointed executor by the Surrogate’s Court. A properly created and funded living trust, on the other hand, gives you immediate control of their affairs upon death.

Home Care with Community Medicaid

Published on: October 30, 2024 | by Ettinger Law Firm

To qualify for community based Medicaid, meaning receiving medical care in the home, an individual cannot make more than $1,752 per month and a married couple cannot make more than $3,853.50 per month. Obviously, these minimal income standards make it very difficult to qualify for community Medicaid. However, applicants can “spend down” excess income to meet the Medicaid income requirement.

Also, an individual cannot own more than $31,175 in assets and a married couple cannot own more than $74,820 in assets. There are two ways to spend down income. First, the applicant can reduce the income by paying for caregiving and other medical expenses. Second, the income can be reduced through the use of a “pooled income trust” where participants deposit their funds in a general trust, each with their own sub-account within the pooled trust.

A pooled trust, which is available in all states, must be run by a non-profit organization, and exists for elderly and disabled individuals for the purpose of supplementing the participants’ needs beyond government benefits. In the case of people who may not qualify for community Medicaid because of excess income, the pooled trust can allow them to stay at home, also known as “aging in place.”

Leaving an IRA to a Trust

Published on: October 10, 2024 | by Ettinger Law Firm

An IRA may not be transferred to a trust without causing the whole IRA to be taxed. The “I” in IRA stands for “individual” — it must be owned by a single person. In practice, there is no need to transfer an IRA to a trust since IRA’s avoid probate by having a “designated beneficiary” and the principal of an IRA is exempt from being “spent down” for your long-term care needs. However, an IRA may be left to a trust. In other words you may name a trust as a designated beneficiary of an IRA.

There are many reasons why one would want to leave an IRA to a trust. The beneficiary may be a minor, they may be irresponsible, have substance or alcohol abuse issues, learning disabled, special needs, dominated by a spouse, facing divorce or bankruptcy, or you may simply want to control where the IRA money goes if your designated beneficiary dies before the IRA is completely distributed. Similarly an IRA is often left to the Inheritance Protection Trust to protect it from your child’s divorces or creditors and to keep the asset in the bloodline.

There are two types of trusts that may be named a beneficiary of an IRA — “conduit” trusts and “accumulation” trusts. A conduit trust simply acts as a conduit of the ten year payout under the SECURE Act. In other words, whatever is taken from the IRA must be distributed immediately to the trust beneficiary, the trust acting as a conduit only.

Elder Law Estate Planning Misconceptions

Published on: September 27, 2024 | by Ettinger Law Firm

One of the most common and devastating misconceptions about elder law estate planning is that it is too late to save money from nursing home costs. On the contrary, there are crisis planning tools that may save substantial assets from being spent on nursing home costs, even after the client has already entered the nursing home. Almost always, if there are assets left, much can be saved.

There are only three ways to pay for nursing home costs – your own assets, long-term care insurance (owned by less than five percent of the population), or Medicaid provided by the government.

Many people know about the “five-year look-back period” and assume nothing can be done without advance planning. The five-year look-back rule means that if you gave any gifts away within the last five years, when asking for Medicaid to pay for nursing home costs, the gift amount creates a penalty period, which results in a period of ineligibility for Medicaid coverage.

Taking Back Control with a Living Trust

Published on: August 23, 2024 | by Ettinger Law Firm

In the fall of 1990, some thirty-four years ago, your writer first heard of the proposition that if you set up a living trust your estate doesn’t have to go to court to settle – the so-called probate court proceeding for wills. Having spent the previous eleven years as a litigation attorney, and having faced numerous problems probating wills, this sounded too good to be true.

At the time, some of the best estate planning lawyers were in Florida. Perhaps you can guess why. In any event, off I went to Florida to train as an estate planning lawyer and, upon returning, closed the litigation practice and founded Ettinger Law Firm in April 1991, to keep people just like you, dear reader, out of probate court.

The reason I was so excited about the living trust, and continue to be so to this day, is the concept of taking back control from the courts and government and giving it back to you and your family. After all, who doesn’t want control over their affairs?