Elder law estate planning

Deciding if Now Is the Best Time for Family Gifting

Published on: November 26, 2020 | by Ettinger Law Firm

Due to not just the approaching US election but also continued economic uncertainty and a country that is dealing with the impact of the coronavirus pandemic, family gifting is likely not at the top of your list of goals. Despite its uncertainty, the current situation creates an opportunity for individuals with the appropriate types of assets to save on transfer taxes. This window of opportunity, however, will not last forever. The current $11.58 million per individual transfer tax exemption is scheduled to be reduced to $6 million on January 1, 2026. This decrease, however, could potentially be much sooner than 2026 based on who wins the US Presidential election. As a result, this article reviews some important factors that you should consider about making gifts that make the most of tax exemptions given the current state of these exemptions.

Trusts Are A Powerful Way to Transfer Assets

Passing gifts through trust allows a person to separate the timing of gifting from issues related to distribution. Additionally, placing assets in a trust also offers creditor protection which is not available if a person makes an outright gift to a beneficiary. If desired, a trust can give beneficiaries substantial control over assets consistent with those associated with enhanced creditor protection. Trusts can also be structured with transfers to them are viewed as gifts for either estate or gift tax purposes, which also allow the person transferring them to remain the owner of the property for income tax purposes. A person’s ability to pay income taxes on behalf of the trusts is then not classified as an additional gift.

2020 Medicaid Rates for Community and Nursing Home Medicaid in New York

Published on: August 28, 2020 | by Ettinger Law Firm

Medicaid is state and federal funding that pays for long-term care costs, either at home, called “Community Medicaid,” or in a nursing home, called “Institutional” or “Nursing Home Medicaid.” The Medicaid rates change every year for income and asset requirements to determine eligibility for benefits. Following are the 2020 New York rates.

A single applicant for Community Medicaid may keep up to $15,750 in assets and $875 in income. If the applicant’s income is greater than the limit, a “Pooled Income Trust” created by a non-profit organization may shelter the excess income to make the applicant eligible for community Medicaid.

A married applicant for Community Medicaid may keep up to $15,750 in assets and $875 in monthly income. The non-applicant spouse may keep their own income and keep up to $128,640 in assets. The rules are different if one spouse is enrolled in a Managed Long Term Care Plan. The applicant spouse may keep $409 of monthly income and the other spouse may keep $3,216 of monthly income. The healthy spouse may keep between $74,820 and $128,640 in assets. “Spousal Refusal” is another option that may help the healthy spouse keep more income and assets. A review of the couple’s income and assets helps determine which approach is more favorable.

How the New Rules Under the Secure Act Changes the Way People Will Inherit Money

Published on: May 12, 2020 | by Ettinger Law Firm

The Setting Every Community Up for Retirement Enhancement Act of 2019, Pub. L. 116–94, was signed into law by President Donald Trump on December 20, 2019, as part of the Further Consolidated Appropriations Act, 2020 (The Secure Act). Future beneficiaries of retirement accounts have different rules than current inheritors. What follows is a brief description of some of the ways the new rules under The Secure Act may impact your future beneficiaries.

The Secure Act changes the way people will inherit money — are you affected by the new rules?

The new rules do not treat all beneficiaries the same. Beneficiaries of qualified retirement accounts, such as individual retirement accounts and 401(k) plans, now must withdraw all of the money out of those accounts within 10 years, instead of over their lifetime as was previously allowed (commonly referred to as the “stretch IRA” provision). An IRA is an individual retirement account. There are no required minimum distributions within that time frame, but the account balance must be zero after the 10th year.

Save for Retirement and Pay-Off Your Student Loans

Published on: May 8, 2020 | by Ettinger Law Firm

The average student loan payment, according to credit.com, is $393 a month. That represents almost 20% of the monthly household income after taxes. During your prime working years, you may be tempted to postpone saving for retirement or maxing out your 401K contribution. If you’re on a federal income-based repayment plan, however, saving for retirement while paying off your student loans may actually reduce your monthly student loan payment.

Most federal repayment plans calculate your monthly payment based on your adjusted gross income (your net pay after deductions for taxes). The lower your net income take-home pay, the lower your monthly student loan payment may be. Not all federal repayment plans will result in a lower monthly payment. The eligible repayment plans include:

Revised Pay as You Earn Repayment Plan (REPAYE)

How Much Do You Think You Need for Retirement?

Published on: May 5, 2020 | by Ettinger Law Firm

In 2019, the U.S. Census Bureau, determined that the average national retirement age was between 63 and 64 for men and 62 for women. Most Americans agree that in retirement they’ll need saving to supplement Social Security benefits. Social Security alone will not get them through retirement. The current life expectancy for Americans is 78.93.

Social Security benefits accounts for close to 40% of your pre-retirement income. The average Social Security monthly benefit in 2018 was $1,409.91 a month, or about $16,919 a year. You will need savings to cover the other 60% through a combination of cash, 401k, and other retirement accounts for income. Schwab conducted a survey of its 401k plan participants and found that the participants themselves calculated they’ll need savings of $1.7 million on average to get through retirement.

To figure out how much money you’ll need to support yourself in retirement consider the following:

About 40 Million Americans to Experience a Drop to their FICO Score

Published on: May 2, 2020 | by Ettinger Law Firm

Millions of Americans are expected to experience a drop in their FICO score when the Fair Isaac Corporation, the company that invented the FICO score, modifies the methodology they use to determine a consumer’s FICO score. Beginning in the summer of 2020, lenders may opt to use the new methodology when assessing the creditworthiness of a consumer when extending credit and setting interest rates on mortgages and consumer loans, such as credit card or automobile loans.

Link between consumer behavior and your FICO score

Consumers with fair credit, growing debt, who take out personal loans to consolidate debt, or who are about to max out their credit cards are expected to see a negative impact to their FICO credit score. The Fair Isaac Corporation updates its scoring model every few years. The last time significant changes were implemented was in 2014, where it was thought that credit restrictions were lessoned. For individuals with little to no credit, utility payment histories, rental payment histories, and the elimination of civil judgments from individual’s credit histories, helped bolster their credit score.

Assisted Reproductive Technology and Estate Plans

Published on: April 27, 2020 | by Ettinger Law Firm

In-vitro fertilization, also known as IVF, has its origins in the 1890’s when the first known case of embryo transplantation occurred in rabbits in Great Britain. By 1973, scientists were able to transplant a human embryo into a woman. The first human IVF pregnancy occurred 47 years ago in Melbourne, Australia. In addition to IVF there are other assisted reproductive technologies, commonly called ART for short, that have changed human conception, such as artificial insemination and surrogacy that have made parenthood possible for people who are unable to reproduce naturally.

Significant changes are afoot in the area of estate planning of such families as more children are born from ART methods for reproduction. The Centers for Disease Control and Prevention (CDC) estimates that 1.8% of all infants born in the United States were aided by ART methods. In the context of estate planning, there are two main issues ART families should tackle. First, how parentage and descendants are defined for legal purposes, such as maintenance and inheritance. Second, is who controls the disposition of stored genetic material that has not been used.

Are all children descendants, legally speaking, of course?

Why Claiming Social Security Benefits at 62 May be Good for You

Published on: April 24, 2020 | by Ettinger Law Firm

The conventional wisdom is to wait and not claim Social Security benefits until you are over 66 (the full retirement age for individuals born between 1943 and 1954). Full retirement age is calculated by year of birth. To see what your full retirement age is click here, or review the website maintained by the Social Security Administration (www.ssa.gov). The reason choosing when to begin claiming Social Security benefits is a big decision that will impact the size of your monthly benefit amount or checks for the rest of your life. For example, if you have a full retirement age of 67 and wait until age 70 to begin claiming Social Security benefits, you’ll receive your full benefit amount plus an extra 24% each month for the rest of your life.

Delaying benefits however isn’t right for everyone, and it may make sense for you to claim your benefits as early as possible, or age 62, (the earliest retirement age for individuals born between 1943 and 1954). Again, to determine when you can claim your benefits, click here. Three reasons why claiming your retirement benefits through the Social Security program may be right for you are as follows:

Your retirement years are limited.

What did he do with all the money?

Published on: April 21, 2020 | by Ettinger Law Firm

After decades together, there are still couples who do not share information about their finances with each other. Some couples separate their money – mine, yours, and ours. They too often get caught in the same position, having very little knowledge about their spouse’s money.

The problem is compounded in household’s where one spouse worked outside the home. The stay at home spouse may not have a separate stockpile of money and investments and is wholly financially dependent on the other spouse. The working spouse in this scenario, usually manages the family’s bank accounts and makes the financial decisions. The non-working spouse trusts the information the working spouse provides and goes along with the plan.

Without a financial power of attorney, one spouse has no way of knowing what the other spouse has by way of cash, investments, life insurance policies, stocks and bonds, pensions, and retirement accounts. Unless, the accounts are held jointly, even if you are legally married, you will not receive financial information from any financial institution about your spouse’s accounts.

How much can you receive in divorce benefits?

Published on: April 15, 2020 | by Ettinger Law Firm

If you’re eligible for divorce benefits from the Social Security Administration (SSA), you can collect up to 50% of the amount your former spouse is eligible to receive by claiming your benefits at his or her full retirement age (FRA).

Your FRA is either 66, 66 plus a few months, or 67, depending on the year you were born. The earliest you can claim Social Security benefits is 62. If you claim benefits before your FRA, your Social Security benefits will be permanently reduced by as much as 30%. You can only receive your full Social Security benefit amount if you claim benefits at your FRA.

You cannot double dip