New York Estate Planning & Elder Law Blog

The Estate Risks of Nuncupative Will Formation

Published on: December 3, 2018 | by Ettinger Law Firm

The release of Stormy Daniels’ memoir, Full Disclosure by St. Martin’s Press is a landmark case of a legal matter post the 2006 Lake Tahoe meeting with now President Donald Trump. The drama ensuing from the execution of a Non-Disclosure Agreement before the 2016 presidential election, has taught an inadvertent lesson about oral disposition of estates and the limited enforceability of nuncupative will formation within federal and state laws of probate.

Cohen’s Admission Under Oath

Paid $130,000 by Trump’s attorney, Michael Cohen, Daniels’s discusses the request for non-disclosure about the 2006 encounter with President Trump in her book. The final chapters focus on the federal court review of the details to the Non-Disclosure Agreement she argued were invalid – a claim disparate from the allegation that she felt intimidated by Cohen in her memoir. The story reported by the Wall Street Journal in January 2018, revealed the details of the federal court case, including Cohen’s admission to making the payment under oath. Further addressed in an interview on Anderson Cooper’s CBS broadcast television show 60 Minutes, Daniels’ expressed concern and fear about threats she claimed she received on the air.

Estate Planning for Entrepreneurs and Founders, Part 3: Advanced Wealth and Estate Transfer

Published on: December 1, 2018 | by Ettinger Law Firm

The final step in a three (3) part series, advanced wealth and estate transfer planning allows an estate owner to shelter assets from estate tax. Strategies to reduce taxation and other penalties that may otherwise be assigned to distributions after an estate holder’s death are a core element of any professional estate planning strategy. Sales to Intentionally Defective Grantor Trusts (IDIT Sale) and Grantor Retained Annuity Trusts (GRATs) and are two common estate planning techniques used for financial control estate assets designated for transfer.

Tax Sheltering Assets Before and After Death

Most asset transfers from an estate while an estate holder is still alive fall under federal Internal Revenue Service (“IRS”) gift tax rules. The IRS applies the same rates of taxation to both gift and estate reporting of assets. If the value of gifted property will likely increase between date of the gift and date of a decedent’s death, “discounting” (i.e. freezing) the value of an asset so that it does not appreciate will enable a beneficiary to avoid transfer taxation.

More Insurers Offering Medicare Advantage Plans to Help Seniors get Healthcare

Published on: November 24, 2018 | by Ettinger Law Firm

When open enrollment begins for Medicare, many seniors across the country will notice an expanded range of health care plan options, including those offered by private insurance companies through Medicare Advantage. With more Americans than ever considering and signing up for these Medicare alternatives, more insurance companies than usual are selling more Medicare Advantage plans for 2019, some offering lower or no premiums and improved benefits.

According to the Centers for Medicare and Medicaid Studies (CMS), an additional 14 new insurance companies will sell 3,700 plans for 2019, an estimated 600 more than offered to beneficiaries in 2018. CMS estimates that total enrollment for Medicare Advantage plans will grow to 23 million people in 2019, a 12 percent increase over the previous year and may grow to serve one-third of all Medicare enrollees in the next decade.

Medicare Advantage plans have been attractive to seniors due to the extra benefits these types of coverage options offer. Many of these private insurance plans can save seniors money because premiums, deductibles, and additional costs are lower than what beneficiaries pay with original Medicare offered by the federal government. One of the main downsides to Medicare Advantage Plans is that they require enrollees to seek care within a restricted network of health care providers.

QTIP Trust Protects the Interests of Inheriting Children from Preceding Marriages

Published on: November 19, 2018 | by Ettinger Law Firm

The formation of a Qualified Terminable Interest Property (“QTIP”) trust is a tax-exempt estate planning option that allows for an owner to elect distribution of estate assets to named beneficiaries, including children of a preceding marriage. In most cases, estate property assets transfer automatically to a surviving spouse under federal and New York estate law. The creator of a QTIP trust does not transfer any assets during their life. Most estate holders include a trust as part of their will, not as a separate entity. A safe estate planning option for parents interested in protecting the rights of children to their estate, the QTIP is one of the best estate planning tools for transferring property after death.

The Interests of Surviving Children

The circumstance of a second or third marriage as part of the consideration of an estate or trust formation is most usually relevant where there are surviving children of those unions.

Trusts and Estates Planning for Same-Sex Couples

Published on: November 15, 2018 | by Ettinger Law Firm

QTIP Trust Planning for Same-Sex Couples

When the United States Supreme Court struck down the Defense of Marriage Act (“DOMA”) in a 2013 ruling, estate planning opportunities for same-sex couples were broadly enhanced to include tax-exempt and tax-deferred asset protections. The landmark decision overturning the DOMA redefined the entire framework of estate related provisions formally reserved for the benefit of a marital union between a man and a woman. The modification of the Act has since had important impact on the financial, retirement, and estate planning of those families as result of a universal model of marital rights.

How DOMA Reversal Changed Estate Planning

What is the Best Trust for Special Needs Planning?

Published on: November 13, 2018 | by Ettinger Law Firm

Caring for a child with a disability creates challenges beyond our lifetime and often takes resources beyond what federal safety net programs can offer in order for our loved one to live the most comfortable and dignified life possible. While rules governing these federal programs place certain income restrictions on disabled persons to qualify, there are sanctioned trusts allowed specifically for special needs planning that allow for first party and third party benefits to supplement federal assistance.

In 2010, Congress passed the Achieving a Better Life Experience (ABLE) Act allowing beneficiaries to have up to $100,000 in a 529 special needs trust and retain Social Security Insurance benefits. Beneficiaries can also retain Medicaid coverage so long as the trust does not exceed the amount for a 529 college savings plan. The ABLE Act allows these trusts to be created so long as the beneficiary’s disability is established prior to the age of 26-years old.

Disabled persons can also create and fund their own first party special needs trusts through a (d)(4)(C). Funds for first party special needs trusts often come from sources such as a personal injury settlement, workers’ compensation award, or an inheritance left directly to the beneficiary. An amount equal to the annual federal gift tax exclusion (currently $15,000) can be deposited annually in the account while still maintaining the beneficiary’s eligibility for Medicaid and Supplemental Security Income

The Reinvestment Benefits of Viatical Settlement

Published on: November 11, 2018 | by Ettinger Law Firm

Viatical settlement has become a popular strategy for investors seeking immediate liquidity for end-of-life expenses. Distinct from other derivative products, viatical settlement also offers life insurance policy holders immediate cash for reinvestment without the extenuating contract obligations of other financial assets. Settlement transfers the title of a life insurance policy to a new buyer in exchange for a lump sum cash payment. Eligible insured can also avoid the hassle of collateral borrowing against the limit on a life insurance policy with viatical settlement, which affords an investor immediate cash in exchange for the full value of the policy.

Eligibility Requirements for Settlement

Life insurance policy holders in New York are eligible for life settlement depending on the terms and conditions of an agreement. An eligible policy can provide an investor with additional cash to offset finance medical or other important expenses. The seller and buyer must agree to any modification of a policy’s terms and conditions, such as obligation to premium payments assumed at time of origination. The full value of a life insurance policy must be determined prior to settlement. Distribution to named beneficiaries of a policy, or other condition to the sale of the policy value should be articulated before transfer. Unlike other key investments such as real estate, a life insurance policy settlement is a fast and efficient process for enhancing retirement liquidity.

Why a Life-care Policy is a Value-added Investment

Published on: November 9, 2018 | by Ettinger Law Firm

New York insurance laws allow for insurance providers to offer insured seniors life-care policy coverage. A specialized form of insurance coverage, a life-care policy indemnifies the holder for end-of-life care and treatment as part of an extended life services agreement. Distinct from a limited life insurance agreement, life-care coverage can be purchased as a separate policy. An option for estate planning clients, life-care can be written into an agreement as part of a comprehensive insurance policy. Combining life insurance with the added health and life expense benefits that may be required by an estate holder while still alive, life-care coverage protects valuable estate and trust assets in the interim. Insurance policies offering value-added, life-care coverage agreements:

1) Extended Life-care Policies

A comprehensive life-care policy will cover life insurance beneficiaries on death, as well as any life expenses a holder may have such as residential services, housing, treatment, and end-of-life costs. Some extended life-care policies also offer healthcare services agreements with unlimited access to medical providers at little to no difference in fee assignment. Extended life-care policies tend have a higher sign-on fees.

Calculating your Break Even Point with Social Security Benefits

Published on: November 5, 2018 | by Ettinger Law Firm

Figuring out the best time to claim Social Security benefits is an important part of retirement planning that can have long lasting impacts on the type of lifestyle individuals and their spouses can expect to enjoy in their Gold Years. Depending on when individuals decide to take their Social Security benefits, from the ages of 62 to 67, it can mean the difference of hundreds of dollars per month to thousands of dollars of the course of a lifetime.

While the conventional wisdom is to wait as long as possible to claim benefits, and hopefully reach maximum payouts, for many beneficiaries there comes a time known as the “break even point” when the amount of benefits claimed would be essentially the same regardless of the amount received per month. This happens because the program is designed to give individuals more or less the same payout over their projected lifetimes, known as “actuarial neutrality.”

Determining one’s break even point is a fairly straightforward process but should take into account certain other factors that may artificially inflate any projected payout, namely excluding cost of living adjustments. Including projected cost of living adjustments will only create artificially high numbers that may not end up being actual benefits received.

Federal Regulators Issue Warning About Risk of Cryptocurrencies Tied to Retirement Accounts

Published on: October 30, 2018 | by Ettinger Law Firm

The Securities and Exchange Commission (SEC) recently issued a warning to consumers about the risk associated with adding cryptocurrencies to so-called self-directed individual retirement accounts. These types of unregistered IRAs allow individuals to invest their nest eggs outside of the stock market and bond market and often incorporate holdings in real estate, private mortgages, precious metals, and more recently cryptocurrencies like bitcoin.

In an investor alert issued by the SEC, regulators warned that the agency has the power to oversee traditional IRA investments like stocks, bonds and mutual funds but lacks oversight of self directed IRAs. Although spokespersons for the SEC did not mention a specific scheme or incident to prompt the alert, the agency nonetheless felt it was important to issue the statement to warn consumers about the risks associated with the accounts.

The SEC also recently joined the Association of International Certified Professional Accountants in pointing out that this type of fraud associated with self directed IRAs can pose a unique opportunities for criminals to perpetrate elder abuse. With questions about the solvency of Social Security, rising health care costs, and other economic uncertainty may lead seniors and adults planning for retirement to consider these type of risky, self directed IRA accounts over traditional investment methods.