New York Estate Planning & Elder Law Blog

With all of the discussion surrounding repealing the estate tax and other significant tax reforms, it can be difficult to understand exactly how these proposed changes might affect your estate. For most people in the United States, the estate tax is not a concern. That is because you need an individual estate worth $5.49 million or more before the tax will even apply. However, there are still a number of other concerns to keep in mind in order to make the most informed decisions about your estate plan because there are a number of other factors that could impact the overall value of your estate. A recent article from Financial-Planning.com helps put some of these risks into perspective.

Intestacy

One of the biggest risks to assets in an estate is dying without an estate plan in place to protect them. While your estate may not be subject to the federal estate tax, it could be subject to significant state-level taxes and those penalties can take a large chunk of your assets if you do not have an estate plan in place. Intestate succession will also determine the percentage of your assets that will be distributed to the heirs covered by your state’s intestate succession statute. This may not be in line with how you want your assets to be distributed, so making sure that you have a valid and up-to-date estate plan is the first step in avoiding any hidden financial risks that could impact your assets.

It is a common misconception that estate planning is only a concern for those individuals with sizeable estates. This is simply not true. Everyone can benefit from comprehensive estate planning, even individuals with average or small estates. A recent article from CNBC reminds us of the importance of having a Will regardless of our overall financial situation, age, or other factors that may lead us to believe a Will is not necessary.

Engaging in Estate Planning

As the article points out, even a checking account and a car present a reason for having a Will regardless of any other assets that might exist. The law requires that title to that vehicle must be changed to whomever the new owner is and there must be someone to distribute the assets in your checking account. Absent a Will, you risk losing a great deal of assets to the state either by default because of failure to nominate an heir or because of the legal costs involved in the probate process where those assets will end up.

Regardless of the size of your estate, comprehensive estate planning can help you make the most of the assets you have worked hard to build. It is important to make sure that you take a thorough approach to estate planning in order to preserve as many assets as possible, and also to make sure that you make dealing with a loss as easy on your family members and friends as possible. One of the most common ways to do that is to include funeral arrangement and instructions for the disposition of your remains. There are a number of approaches to doing this, and ultimately the terms you set forth will be unique to you and your family’s wants and needs. However, a recent article from the National Law Review provides some helpful information about this aspect of estate planning.

Pre-Death Arrangements

Most states allow you to iron out many of the details of your funeral arrangements and the disposition of your remains ahead of time. In many cases, these are integral pieces of a comprehensive estate plan. You can dictate whether you wish to be buried or cremated; specify the location of your burial; specify any memorialization; and even designate one individual to make sure your funeral arrangements and the disposition of your remains are conducted in the way you have chosen. Depending on the state you live in, nominating an individual to carry out your particular wishes gives them priority over other individuals that would otherwise potentially have the right to make these decisions for you. This can be helpful because, no matter how carefully you plan, it is impossible to predict all of the circumstances that could arise and you will want someone that you trust in the position to determine the best course of action. More and more, these types of arrangements are becoming commonplace alongside powers of attorney and healthcare directives. In many ways, completing this type of directive can be just as important – and it will likely help your family avoid additional stress and grief during a difficult time.

Debt is an all-too-common part of our everyday life. In fact, Marketwatch.com lists American personal debt – including homes, student loans, and auto loans – at approximately two billion dollars. This figure does not include credit card debt. However, as daunting as debt may seem, making sure to consider your debt when determining how best to engage in comprehensive estate planning is an important part of your debt management strategy.

Understanding Your Debt

One of the first things to consider when approaching debt and estate planning is whether your debt will become someone else’s responsibility when you die. An article from NerdWallet.com helps shed some light on what happens to various types of debt after the individual responsible for that debt passes away. Some common examples of debt and what may happen to that debt include:

In the wake of rising drug prices over years for Medicare patients, federal officials appear ready to finally take some kind of action to help with out of pocket costs many seniors and disabled persons struggle with. Recently, federal officials have begun to explore the possibility of achieving lower drug prices by getting some of the same discounts insurers and pharmacy benefit managers (PBM) that administer Medicare’s Part D drug program already get for themselves.

Supporters of the idea hope the approach could reduce the overall price tag of prescription drugs and save Medicare the cost of making up the gap. Under the plan, the Center for Medicaid and Medicare Studies (CMS) would apply those fees that PBMs and insurers pay and apply those to what enrollees pay for their prescriptions.

Unlike the health insurers and PBMs able to negotiate with manufacturers willing to pay discounts so their products land a spot on a health plan’s list of approved drugs, CMS cannot haggle on drug prices. The restrictions have long been criticized by critics and supporters of how CMS is currently administered. Advocates for the pharmacy industry have also criticized the current drug price exchange which allows PBMs and insurers to recoup their benefits from pharmacies at a later date.

Long-term medical care is expensive, and there is no indication that trend will reverse itself anytime soon. That means you need to be proactive in considering the implications of long-term medical care costs when approaching comprehensive estate planning. Many people find themselves falling short of the funds needed to pay for increasingly costly long-term care but still having too many assets to qualify for Medicaid funds to help cover those costs. A recent article from Marketwatch.com provides some information on Medicaid trusts, estate planning tools that can help you navigate the high cost of long-term care insurance while still holding onto important assets you want to pass to your heirs.

Medicaid “Look-Back” Rules

One of the reasons that you should start planning for long-term care costs as soon as possible is the existence of Medicaid “look-back” rules. These rules mean that even if you are able to prove your eligibility for Medicaid today, you will still be required to have been eligible for each of the past five (5) years, too (some states have a shorter requirement, but it is important to check with your state’s Medicaid office to find out). If you find yourself in a situation where you are facing heightened medical costs, especially from unanticipated long-term care needs, you will not simply be able to transfer assets somewhere else to qualify. The earlier you start planning, the more secure you can be in your ability to qualify for potentially necessary Medicaid funds when it comes to your long-term care plans.

Lawyers for AARP recently took the unprecedented step of filing a lawsuit against a California nursing home chain claiming the defendant violates the civil rights of patients by evicting them without due cause. The group filed their suit on behalf of an 83-year old woman with alzheimers who became separated from her 90-year old husband after the nursing home claimed they could no longer care for her needs.

According to the lawsuit, the defendant sent the plaintiff to a hospital for a psychiatric evaluation after staff claimed he became combative and threw plastic tableware. After the hospital could find nothing wrong with her apart from her preexisting condition, the nursing home refused to take the plaintiff back in. Even after the plaintiff’s daughter won a hearing in front of the California Department of Health Care Services concerning the matter, the nursing home still refused to readmit the plaintiff.

Under state and federal nursing home regulations, patients are entitled to several rights. For the most part, nursing homes need to give residents 30-days notice if they intend to evict a resident and must hold their bed for at least a week should the resident enter the hospital. According to AARP lawyers, the plaintiff was not afforded either of these protections by the nursing home.

According to the Congressional Budget Office (CBO), the proposed GOP tax bill would strip an estimated $136 billion from mandatory spending in 2018, including $25 billion in Medicare cuts if Congress does not find away to offset the cuts. Under the so-called pay-go law, Medicare can only be cut a maximum of 4 percent per year, which in this case equals the $25 billion in proposed spending reductions.

“Without enacting subsequent legislation to either offset that deficit increase, waive the recordation of the bill’s impact on the scorecard, or otherwise mitigate or eliminate the requirements of the [pay-go] law, OMB would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion,” the CBO recently wrote.

Republicans in both houses of Congress are working quickly to pass their budgets ahead of the new year, especially with the looming threat of sequestration and impending House and Senate races coming next year. The proposed GOP tax bill has been incredibly unpopular with Democrats who argue the mandatory budget cuts would severely harm programs like Social Security and Medicare.