New York Estate Planning & Elder Law Blog

WHAT HAPPENS IF MY HEIRS OR BENEFICIARIES PASS AWAY AT THE SAME TIME AS ME?

Published on: March 4, 2016 | by Ettinger Law Firm

MODERN PROBLEM WITH ANCIENT ROOTS

New York is one of approximately 19 states, along with the District of Columbia and the Virgin Islands to specifically adopt the Uniform Simultaneous Death Act in some significant form or another. The law was drafted in 1940 and amended through the decades, last time in 1993. It was written by the Uniform Law Commission in an effort to provide uniformity and the accompanying benefits that uniformity provide across the 50 plus jurisdictions that exist in these United States. Of course each state is free to adopt the uniform act in its entirety, part of the law or just use it as a template to base a similar but different law on it.

New York adopted the Uniform Simultaneous Death Act, at least in part, early on in the early 1940s. By 1944 at least 24 states and the then Territory of Hawaii also adopted the Uniform Simultaneous Death Act. It was designed in large part to address the issue of when two or more people pass away in a common disaster, with no meaningful difference in the order of death. For example, if both father and son or husband and wife both pass away in a tragic automobile accident. Such tragedies were much more commonplace in previous decades with the rapid and significant increase in medical technology. Not surprisingly reports of how the law was resolve such legal technicalities goes back centuries, to at least 1784. Even ancient Roman law had presumptions in place to deal with such tragedies.

WHAT HAPPENS IN MY HEIR PASSES AWAY BEFORE ME?

Published on: March 2, 2016 | by Ettinger Law Firm

NEW YORK ANTI-LAPSE STATUTE

This blog previously discussed what happens if an heir passes away simultaneous with a testator and how the property that would otherwise go to the person who simultaneously passed away with testator ends up getting transferred. An obvious related question is what happens if an heir or beneficiary passes away prior to a testator? This blog also explored this issue in the past. It is now time to reexamine that issue in more detail and in light of the larger legal structure that the law provides for various contingencies that exist in the law regarding property passing via probate when some sort of mistake or event occurred that would otherwise leave the property unpassed to the next generation.

In both cases the law has default, fall back statutes to specifically address these sorts of scenarios. In the case of property or money left to an heir who predeceases a testator, if the property or money passes to siblings or children of the testator, New York’s anti-lapse statute controls and allows for that property or money to pass to that sibling or child’s heirs, almost as if the heir did not predecease the testator. If an heir passes away prior to distribution that bequest is considered to have “lapsed”. New York’s anti-lapse statute, as judged by its name, obviously prevents the lapse from occurring. In the absence of the anti-lapse statute, a bequest that fails to pass to the intended heir that heir predeceased the testator, the bequest becomes part of the larger estate, to be dealt with via other provisions in the will or otherwise dealt with through the application of the state’s intestacy statute. All states have anti-lapse statutes. In a sense the anti-lapse statute provides a substitute heir via statutory decree for the beneficiary who predeceased the testator.

PERSONAL INJURY AND MEDICAID: WHY WOULD STATE GET INVOLVED IN PERSONAL INJURY SETTLEMENT?

Published on: March 1, 2016 | by Ettinger Law Firm

It is a fortunate state of affairs that it is happening less and less, with the requirement for every American obtain health insurance under the Affordable Care Act (often called Obamacare), that some people do not have proper health insurance coverage for a catastrophic injury. It is still unfortunate that is happens often enough. As such, either a loved one or when you are well enough retain an attorney in a personal injury suit against the offending party or entity for your past pain and suffering, future anticipated pain and suffering and future medical bills.

Most personal injury attorneys know that any settlement or jury (or even judge if the matter proceeded to trial without a jury) award should earmark or indicate the amount of the award or settlement for your future medical expenses because the government will get involved and assert a lien over any financial award for medical expenses. This overall schema enables you to effectuate a meaningful change in your life, by satisfying the state’s obligation to recoup its medical costs and leaves some money to you to live at a level above the basic minimum that medicaid insures.

It must be asked, however, what of the cases where there is no designation of the settlement or verdict that speaks to the amount awarded for medical expenses and what is pain and suffering or other line awards. Both Congress and the Federal Supreme Court dealt with these issues. Congress enacted 42 U.S.C. § 1396p(a)(1) as part of the Social Security Act that prohibits the government from asserting a medicaid lien against the property of a medicaid recipient, except under certain clearly delineated circumstances. One of those delineated circumstances is when the state may seek recovery for “any medical assistance correctly paid”. The Supreme Court dealt with this issue in 2013, in the case of Wos v. E.M.A. when it ruled that a state may only asset a medicaid lien against that portion of a personal injury settlement or verdict that is specifically designated for medical expenses.

INHERITANCE RIGHTS OF ADOPTIVE CHILDREN

Published on: February 29, 2016 | by Ettinger Law Firm

NOT CUT OFF FROM BIOLOGICAL PARENTS IN EVERY CASE

It is not unheard of for adoptive children to seek out their biological parents and reestablish contact once they are old enough and understand the world much better. The drive to understand who your biological ancestors are, to know where they came from and their story is practically innate or inborn. This is a healthy endeavor as it helps to fill out and expand the adult child’s world view of who they are and may help to explain certain personality quarks. There are also legitimate medical reasons for the decision to reach out to the biological parents, so as to understand medical risks, family medical histories or perhaps even obtain a pool of possible bone marrow or organ donors in the unlikely event that something like that is needed. Those issues speak to the social and emotional issues that revolve around adoption. Legally, however, an adopted child is a veritable stranger to the biological parent in non-stepparent adoptions. Inheritance rights are created in the adoptive child vis-a-vis the adoptive parents. Inheritance rights via the biological parents are severed. The only way that a biological parent can pass property or money on to the child adopted out from them is to specifically include them in their will. A class gift to “all of my children” from a biological parent excludes from its scope children adopted out from them and includes any children that that person adopted.

WHAT HAPPENS WHEN ADOPTION LAW AND INHERITANCE LAWS COLLIDE

PRE-PAID FUNERAL S IN NEW YORK

Published on: February 26, 2016 | by Ettinger Law Firm

NEW YORK PROTECTIONS

Many people are leary about purchasing a pre-paid funeral. This blog discussed some of the issues common to prepaid funerals. In 2002, the American Association of Retired People (AARP) issued a consumer “scam alert” warning people to preplan but not prepay for their funerals. Indeed, often this is good advice. What really should be discussed and should be planned for and paid for is an irrevocable prepaid funeral fund.

It will not render a person ineligible for Medicaid, as Medicaid treats irrevocable trusts as an exempt asset. Some prepaid funeral plans incur account maintenance fees or various other unforeseen problems could result from prepaying for a funeral. It is important to note, however, that New York has some of the strongest consumer protection laws in place for prepaid funerals. Most specifically, the law requires that the money be put into an individual account – as opposed to an account for all of the individuals who prepay for their funeral through a particular funeral director or funeral home – that is both interest bearing and insured, which remains the property of the consumer. If the funds are in a revocable account, the consumer may request a full refund at any time. The funeral home or funeral director also ensures that the consumer receives a notice of what bank the funds are held in and as well as a statement of any interested earned.

THE GRAT – GRANTOR RETAINED ANNUITY TRUST – NOT JUST A TOOL FOR THE UBER WEALTHY

Published on: February 26, 2016 | by Ettinger Law Firm

Grantor retained annuity trust (GRATs) are tremendous tools not just for the ultra wealthy, such as Mark Zuckerberg and the other founders of facebook, it is an estate planning technique that allows for a trust grantor to avoid paying gift taxes on the assets that they place into the trust with the intention that they will pass that asset on to the next generation. They are ideal for any asset that will likely quickly appreciate in value and that will also pay a dividend. Most people automatically think of stocks, which makes sense, but it could also include real estate, patents, trademarks or other intellectual property or even a valuable piece of art or perhaps even valuable machinery or some other object that can be rented.

HOW IT WORKS

To create a GRAT, a person places their property into the trust and pays tax on the property at that time, with the lower value. The trust is structured such that during the life of the trust the grantor received an annuity payment from the corpus of the trust. If the grantor is alive at the end of the trust term, the beneficiary receives the property tax free. The grantor sets the term for a number of years for the GRAT to exist in advance. Basis is a tricky and can be a very beneficial advantage to use of the GRAT because the GRAT allows the grantor to substitute two different assets of the same value but different basis amounts at any time. Since the grantor paid from an annuity during the life of the trust, the grantor still enjoys largely the same benefits.

ADULT PROTECTIVE SERVICES VOLUNTARY DRAFT GUIDELINES

Published on: February 24, 2016 | by Ettinger Law Firm

UNIFORMITY OF LAWS

Many laws across the country are the result of non-profit civic minded legal entities. The American Legal Institute is perhaps the most well known of these groups. Not all laws are “laws” in the traditional sense. Some are written by these legal entities and the various states adopt them as compacts, which are in essence legal contracts between states as to how they will handle intra-state legal problems. For example, there is a drivers compact that enables one state to recognize and punish out of state drivers for driver under the influence infractions.

For example, New Jersey driver receives a driving under the influence infraction in New York. The worst thing that New York can do is to revoke that driver’s right to operate a vehicle in New York state. Indeed this does happen. In addition, under the driver’s compact, New York also forwards this conviction to New Jersey and New Jersey then punishes the driver in accordance with New Jersey law, thereby suspending his/her driving privileges. Congress has never weighed in on this issue because there was no need to. Almost every state partakes in the Driver’s compact. States also cooperate with the placement of foster children across state lines to relatives or family friends via a compact. Once again, Congress has not created any statutory framework for the states. At the current moment there is some general agreement between the states when it comes to the laws that deal with Adult Protective Services (“APS”). The key term is that there is “general agreement.”

GENERATION SKIPPING TRANSFER TAX

Published on: February 24, 2016 | by Ettinger Law Firm

CLOSING PERCEIVED LOOPHOLE

Congress created the generation skipping tax almost 40 years ago in 1976 and ushered in an age of increasing complexity for the tax code, always complicated and cumbersome, to fix a problem perceived at the time (and since) of avoiding taxable events by transferring assets to “several generations while avoiding the Federal Estate Tax” via use of trusts and other transfers of property rights. At the time, Congress saw how wealthy families were creating life estates in their kids, followed by a life estate in their grandkids and followed by a life estate of their great grandkids.

Life estates are not subject to federal estate tax. This meant that wealthy families who had the inclination to create these arrangements and the money to pay an attorney to do so avoided paying large amounts of taxes and smaller families and estates were paying more in taxes than wealthier ones. As such, Congress decided to tax any transfer of property or assets from an individual to another individual that is more than one generation away from the grantor, in the case of family members, or from one person to another who is at least 37 1/2 years younger than the grantor, in the case of nonfamily members. The tax applies even if the transfer is via a trust

UNDERSTANDING HEALTH SAVINGS ACCOUNTS

Published on: February 22, 2016 | by Ettinger Law Firm

GOOD FOR CERTAIN SUBSET OF POPULATION

A health savings account is another way to save your money, tax free, for an inevitable expense that everyone will have to face and deal with eventually. Unfortunately one of the variables of retirement is that you will never know how much you will spend on health care costs. At the same time, as the body ages health invariably declines with more visits to the family doctor or perhaps even more expensive specialists. To further add to the expense, modern medicine has added significantly to the life expectancy of the majority of people who do not meet some unfortunate trauma or accident.

This is often the result of more expensive treatments, more costly medicines and more diagnostic tests or procedures that occur more often. Often these treatments, medicines, tests and procedures are medically appropriate, so any money spent is money well spent. But as with anything in life, the question must be asked, from where did the money come from? Insurance does not cover all medicines, tests and procedures and even when it does, it does not one hundred percent of their costs. You can pay for better insurance plans, with the inevitable higher monthly premiums, which leads back to the original question of where does the money come from for these costs? A more sound approach to these unknown variable but inevitable costs is a health savings account. Health savings accounts are not for everyone, but for a sizable portion of the population they are a good fit.

NOT JUST ANOTHER CELEBRITY ESTATE

Published on: February 19, 2016 | by Ettinger Law Firm

ROBIN WILLIAMS UNIQUE ESTATE PLANNING GENIUS

This blog discussed some of the aspects of Robin Williams estate in the past. Mr. Williams will be remembered for a long time due to his many accomplishments, with a long, funny, inciteful and compassionate comedic wit. While it seems fairly certain that Mr. Williams mental state was brought on by a biological or, more accurately, a neurological condition that spawned a profound depression. Mr. Williams will also be remembered for his estate which was perhaps the first of many to come from actors, singers or other celebrities who have value in their likenesses or other unique personal attributes.

While Mr. Williams created a multi-tiered estate plan, he was sure to include the right to profit, or, more accurately, to curtail a person, company or entity from profiting from his likeness and publicity for 25 years following his death. In other words, movie studios, music producers or producers of Mr. Williams stand up comedy routine cannot take Mr. Williams image, voice or any other asset tied to his likeness or even his publicity and profit from it. While some pundits commented on the novelty of it and the breadth of the prohibition on his likeness and the length of time, it is not surprising that someone created such a blanket prohibition. Look at what the producers of Forrest Gump did with John Lennon or President Lyndon B, Johnson. To someone unaware of the times, they would be unaware that the producers of the movie morphed and cut and pasted the images and footage into the movie and could believe that Mr. Lennon or President Johnson personally appeared in the movie.