New York Estate Planning & Elder Law Blog

IRS Sets Higher Estate and Gift Tax Limits for 2019

Published on: January 17, 2019 | by Ettinger Law Firm

The Internal Revenue Service (IRS) recently announced the official estate and gift tax limits for 2019 will increase over the previous year from $11.18 million in 2018 to $11.4 million in 2019 which means married couples can now leave up to $22.8 million in assets to heirs without paying taxes. While the estate and gift tax has increased over last year, the annual gift exclusion amount (the amount in gifts that may be given each year without tax) remains at $15,000 for individuals and $30,000 for couples.

Recent tax reform legislation has not only decreased corporate and income taxes but also greatly expanded the estate and gift tax threshold from previously long-standing levels. For many years, the estate and gift tax limits held firm at a base of $5 million per individual with adjustments for inflation but the 2017 tax reforms passed effectively doubled that until 2024 when the provisions expire. As a result, the number of estates subject to such federal taxes has fallen to less than 2,000 in 2018 from almost 5,000 in 2013.

In order for married couples to take advantage of the full $22.8 million in estate and gift tax exemptions, they will need to utilize a concept called portability. Essentially, this allows one spouse to leave his or her unused estate tax exemption to the surviving spouse and to do you must elect it on the estate tax return of the first spouse to die, even when no tax is due. If the portability option is not exercised, the surviving spouse may be left with a hefty federal tax bill.

Understanding the Law: What are the rules for Medicaid eligibility?

Published on: January 15, 2019 | by Ettinger Law Firm

With the skyrocketing costs of medical care and nursing homes, few people can afford to pay out of pocket costs to live in a long term care facility in their later years and most will eventually need to qualify for Medicaid to do so. Medicaid has essentially become the default funding source for for nursing home care and the long-term care insurance of the middle class in the United States.

Sources estimate that up to two-thirds of nursing home patients are covered by Medicaid, which was created to act as a safety net to the country’s poorest citizens. The definition of who qualifies as poor under Medicaid varies from state to state. In New York, individuals may only have up to $15,150 “countable assets” such as cash, stocks, bonds, investments, vacation homes, and savings and checking accounts to qualify for institutional or nursing home care. The spouse of the individual applying for Medicaid is allowed to have $123,600 in assets.

Certain assets are not counted towards these eligibility requirements. Some of the most important exemptions are the individual’s personal possessions like clothing and furniture, a single motor vehicle used for transportation, and the individual’s principal residence as long as he or she intends to return there at some point. For those over income an asset limits, New York does offer a variety of programs to help individuals qualify for Medicaid benefits.

Where Do I Start? Basics to Include in your Estate Plan

Published on: January 14, 2019 | by Ettinger Law Firm

Every single person, regardless of how large or modest they may feel their assets are, needs to have a well thought out estate plan that covers three very basic planning instruments that will serve your best interests. Those three planning instruments include a durable power of attorney, a health care proxy, and a last will and testament. Each of these will cover an important aspect of our lives and our family’s lives after we pass away and should be taken very seriously, regardless of what you believe your financial or lifestyle limitations may be.

First, your estate plan will need a durable power of attorney allows you to designate another person to manage your property and/or finances during your life in the event your are unable to do so for yourself. This authority should be vested in a trusted individual you can trust and be sure will act solely in your best interest should the time come that you will need to rely on another for some type of guardianship.

Next you will need to create a health care proxy, which is essentially a form of a power of attorney that deals solely with health care decisions. This durable power of attorney allows you to appoint another person to direct your medical care and make important end of life decisions should you be incapacitated. In New York, this health care proxy should will need a medical directive (also known as an advance directive) providing guidance to your health care agent.

Yes, You Need One: Reasons for A Last will and Testament

Published on: January 11, 2019 | by Ettinger Law Firm

Having a last will and testament is something that every single person needs to have, regardless of how substantial or modest they feel their estate may be. This because a last will and testament does much more than spell out who receives what part of an estate. A last will and testament can and should go on to set out contingencies for many practical scenarios and life events that the average person can find himself or herself in.

First and foremost, a last will and testament allows individuals to direct portions of their estate to whomever they choose. When individuals pass away without a will it is known as intestacy and will be distributed according to the laws of the state where that person resides. Generally, this means that the deceased’s property will be distributed among his or her immediate family, regardless of what his or her final wishes would have been.

Once a person passes away, his or her estate will generally need to pass through probate court, known in New York as Surrogate’s Court. Without a last will and testament, this process can be more costly and time consuming than if the deceased had clearly expressed to the court his or her final wishes on how to divide the estate in question.

Overcoming Excuses for Not Having an Estate Plan

Published on: January 10, 2019 | by Ettinger Law Firm

Creating an estate plan is an important process every single person needs to undertake in his or her lifetime to ensure their final wishes are carried out and estate assets are distributed properly upon death. Despite this importance, many ordinary people still make excuses with one reason or another why they do not need an estate plan, last will and testament, or set up a health care directive.

One of the most common excuses people make for not having an estate plan is thinking that their estate is simply too small or they do not have assets that warrant that level of planning. Even if your estate is modest, you still need to create a living will or health care directive to help loved ones make health and financial decisions on your behalf in the instance you may be left incapacitated or otherwise unable to act for yourself.

Another common excuse is believing that having joint ownership of bank accounts with children is a proper mechanism to transfer wealth to upon passing away. The reality is that unless you are only leaving behind a single child, it is nearly impossible to separate accounts for more than one child equal. This can become even more difficult if you find yourself suddenly incapacitated or unable to manage these accounts yourself.

Common Estate Planning Mistakes (And How to Avoid Them)

Published on: January 7, 2019 | by Ettinger Law Firm

Planning your estate is an extremely important process and should be taken very seriously in order to avoid hassles or any extra delay that could come with passing your estate through probate or otherwise transferring assets to loved ones and friends. With proper planning and attention to detail, most folks can avoid some of the most common estate planning mistakes and avoid any costly and prolonged probate process.

One of the most common estate planning mistakes is adding a friend or younger family member’s name to a joint account as a matter of practicality to make accessing the deceased’s bank account after passing away to pay for funeral costs and other bills. While this may seem like a good idea to some, the reality is that this can create confusion over the deceased’s intentions and may complicate probate. A better alternative is to give a trusted individual power of attorney to make financial decisions if incapacitated and a prepay for funeral expenses.

Instead of leaving assets to heirs in a will outright, individuals should consider setting up a trust for these assets to pass onto upon the grantor’s death. This way the heir does not take on unwanted wealth to his or her name and complicate tax considerations or Medicaid planning. This can also shield the assets from creditors who may go after the wealth to recoup debts incurred by the heir.

Tips for Managing a Family Pot Trust in New York

Published on: January 4, 2019 | by Ettinger Law Firm

Family post trusts are a special type of trust that allow a trustee to allocate distributions among a class of beneficiaries and are often implemented because of the increased flexibility they offer regarding distributions. Unfortunately for trustees, administering these trusts is hardly straightforward and he or she will often have to manage delicate family situations and competing interests between beneficiaries. In situations where animosity exists among family members, these dynamics can create discordant expectations so clear guidance in the trust becomes a critical aspect.

While managing a family pot trust, the trustee (the individual tasked with administering the trust on behalf of beneficiaries) must keep in mind his or her fiduciary duty to the beneficiaries required under the law. This includes acting an impartial manner in order to treat beneficiaries in an equitable and equal manner in accordance with the conditions laid out in the terms of the trust. Essentially, the trustee of a family pot trust cannot favor one individual or class of beneficiary over another, unless specifically authorized by the trust.

To help make managing the trust easier, trustees should consider keeping a running total of all the distributions made to various beneficiaries, thus enabling him or her to know if all the beneficiaries are receiving benefits equal with the grantor’s wishes. Additionally, trustees should proactively communicate with beneficiaries in a direct manner to manage personalities and needs as well as financial duties under the trust. Such communications should also be documented as a hedge against any possible legal action taken by a beneficiaries who may feel slighted in some way.

Study Suggests Older Adults are Not Taking their Prescribed Antidepressants

Published on: January 1, 2019 | by Ettinger Law Firm

A recent report by Reuters suggests that many older adults are abstaining from taking their prescribed antidepressants or continuing to use them as directed by their doctors, that according to a Dutch study examined by the news outlet. If true, the study highlights mental health challenges facing millions of people around the world who may otherwise be willing to continue medication issued by a psychiatrist but balk at treatment from primary care doctors.

The study examined roughly 1,500 people who were at least 60 years old and diagnosed with depression in 2012 by primary care providers finding about 14 percent of patients with depression failed to take their antidepressants within two-weeks. For those patients who did take their medication on time, 15 percent missed taking doses 20 percent of the time and 37 percent overall ceased taking their antidepressants altogether within one year.

The study also found that many patients in the study tended to be more consistent with taking medication when these individuals were already used to taking daily medications for a variety of other chronic health issues. Those patients already on other medications were 11 percent less likely to fail at beginning antidepressant regimens and 13 percent less likely to take these same drugs on an inconsistent basis.

Authorities Warn about New Social Security Scam Calls Targeting the Elderly

Published on: December 28, 2018 | by Ettinger Law Firm

Authorities across the country are warning of new scams targeting elderly Social Security over the phone, where individuals claiming to be government representatives try to collect sensitive information under the guise of a computer glitch causing issues with benefits. The Social Security Administration has made it very clear that under no circumstances will it call or send emails to beneficiaries asking for personal information, such as Social Security numbers, dates of birth or other private information, and advises people to not respond to such messages.

Other scams include callers asserting that beneficiaries need to pay a fee to unlock their Social Security number because of criminal activity and will also need to confirm their Social Security number. The Federal Trade Commission recently confirmed an increase in this type of scam and beneficiaries should be on the lookout for this type of illicit activity.

The AARP Fraud Watch Network recently announced it has had more complaints to its helpline in the past few months from consumers targeted by Social Security impostors than the older IRS scams that harassed thousands, if not millions, of Americans since 2013. According to the office of the Treasury Inspector General for Tax Administration, those IRS scams stole more than $73.6 million from almost 15,000 victims over the past five years.

Consumer Financial Protection Bureau Guide on Managing Elder Financial Affairs

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

The Consumer Financial Protection Bureau (CFPB) recently released a set of helpful guides to help individuals manage the financial affairs of loved ones or others who are unable to do so and require a fiduciary to take of such matters. The guides cover multiple topics to help fiduciaries, including how to spot financial exploitation and avoid scams as well as a “Where to go for help” section with a list of relevant resources for more information.

One of the guides included is “Help for agents under a power of attorney” which lists the four basic duties that fiduciaries with a power of attorney need to keep in mind when managing the affairs of another. Those include to act only in the beneficiary’s interest, manage the beneficiary’s property and money carefully, keep the money and property of the beneficiary and fiduciary separate, and to keep good records of all transactions.

Another helpful guide included in the series is “Help for court-appointed guardians of property and conservators” which someone the court names to manage money and property for someone else whom the court has found cannot manage it alone. This can also apply to instances where a fiduciary is named to act in the interest of another person as a guardian, managing that person’s healthcare and other personal decisions. Other times, a court may be appointed to manage the governmental benefits of an individual and the CFPB also provides outlines for these responsibilities too.