Suffolk County, NY Estate Planning and Elder Law Blog

Friday, April 21, 2017

Revocable and Irrevocable Trusts for Assisted Living

Question: About six years ago my parents signed two trusts: a revocable trust and an irrevocable trust.  They transferred about $150,000.00 into the revocable trust and their house into the irrevocable trust.   They sold their home about three years and deposited $400,000.00 into the irrevocable trust.  My dad passed away and my mom is at an assisted living.  I went to the bank and I was told that I do not have access to the revocable trust because I am not the Trustee but I am the Trustee of the irrevocable trust.  Can I use the money in the irrevocable trust to pay for the assisted living?

Answer: No, you cannot use the money in the irrevocable trust to pay for your mother’s assisted living.  In order for the irrevocable trust to be considered exempt for Medicaid purposes, it must provide that no principal distributions can be made to the grantor (your mother) or on the grantor’s behalf.  In other words, any distribution made from the irrevocable trust to your mother or directly to the assisted living would violate the terms of the trust.  Since the house was transferred to the irrevocable trust over five years ago, the money in the trust is protected in the event your mother requires care in a nursing facility.

Even though your mother is currently in assisted living, it is still important to keep the irrevocable trust in tack because she may need to be transferred to a nursing facility which would result at the rapid depletion of her assets.  The average nursing home stay is $15,000.00 per month.  The money in the irrevocable would be considered exempt if your mother needed to rely on Medicaid to pay for the nursing facility.

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Wednesday, April 12, 2017

Inventory of Assets

Answer:  The Inventory of Assets is a form that is required by the Surrogate’s Court.  The Inventory of Assets must be completed and furnished to the Court by the fiduciary of the estate.  Alternatively, at the request of the fiduciary, the attorney of record can also complete and provide the Court with the Inventory of Assets. 

The Inventory identifies and provides the Court with information regarding the following:

 

  • The total value of the assets of the estate that were owned by the decedent individually, or those assets which the decedent had a partial interest; and
  • The total value of the assets which were payable or transferrable to the decedent's estate.

     

    In addition, the Inventory further identifies, by either yes or no answer, whether the Decedent had any of the following:


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Friday, April 7, 2017

Comprehensive Power of Attorney

Q:  If my mom signed the Power of Attorney provided by the bank, does she need to sign any other Power of Attorney?

A:        This is a question I am often asked, since many if not all banks have their own Power of Attorney forms.  The short answer is yes, it is important that your mom sign a comprehensive Durable Power of Attorney in addition to the document provided by the bank.

A review of the purpose of this document will be helpful to understand why it is important to sign this advanced directive. A Durable Power of Attorney is a document that allows your named agents to make financial decisions on your behalf and assist in taking care of your daily financial obligations. A Power of Attorney will be practical should your mom become incapacitated or not be able to handle her accounts or assets at any time. Without a Power of Attorney, it may be necessary for you or one of your mother’s loved ones to petition the court to be appointed guardian of your mother in order to make decisions for her if she is incapacitated. The guardianship court process is expensive, time consuming, and invasive into your family affairs. This is why it is important that your mother name an agent under a Power of Attorney before any possible future disability or incapacity.

It is also imperative that the Power of Attorney your mother signs be a comprehensive document. While the Power of Attorney your mother signed with the bank could be valid, it may only allow the named agents to act with regard to that specific bank and often only on a specifically designated account at that bank. Additionally, changes in the law regulating Powers of Attorney mean that if a power is not specifically listed in the document itself that the agent does not have that power. In other words, a Power of Attorney is only as good as the powers listed within the document.


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Friday, April 7, 2017

End of Life Decisions

Q: My mother is getting older and I am nervous I will not know how to make the right medical decisions for her if the situation arises.  What can we do to prepare in case that happens?

 

A: There are several documents your mom can sign in advance that can assist you if a time should come when you need to make medical decisions for her, including end of life decisions.  A review of these documents will help you to understand the purpose of each.  They include:  a Health Care Proxy, Living Will, Do Not Resuscitate (DNR) and/or Do Not Intubate (DNI), and Medical Orders for Life-Sustaining Treatment (MOLST) form.  As Elder Law practitioners, we usually prepare a Living Will and Health Care Proxy for our clients to sign, although they need not be prepared by a lawyer.  The other documents listed are prepared under the supervision of a physician and are signed by that physician. 

A Health Care Proxy is a document in which your mom can name an individual to make her medical decisions if a doctor deems her unable to make these decisions for herself.  The health care proxy applies to all medical care except artificial hydration and feeding. Therefore, the proxy should indicate if the agent is permitted to refuse hydration or feeding.  While only one person can act as agent at a time, the Health Care Proxy can have a list of successor agents in case the initial agent is unable, unavailable or unwilling to act.

Many clients choose to sign a Living Will at the same time as signing a Health Care Proxy.  This is a document which evidences an individual’s wishes regarding medical care or life support to be administered in the event their condition is terminal. This document can be used to show your mom’s wishes if she is unable to communicate them for herself.  Some of the treatments that could be accepted or refused on the individual’s behalf include cardiac resuscitation, mechanical respiration, artificial nutrition and hydration, antibiotics, blood or blood products, kidney dialysis and surgery or invasive diagnostic tests.  


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Friday, March 31, 2017

Health Care Proxy

Question:  I recently signed a Health Care Proxy naming my daughter to make healthcare decisions for me.  Is she able to access my medical records and speak to Medicare and my supplemental health insurance company?

Answer: It depends on the information your health care agent is attempting to gather.  A Health Care Proxy is a document in which you designate an agent to make health care decisions for you in the event you are unable to make these decisions for yourself.  The Health Care Proxy often contains language allowing your healthcare agent to hire and fire physicians and health care professionals.  Federal regulations specifically “HIPAA,” or the Health Insurance Portability and Accountability Act, make it difficult for anyone, even a spouse, to obtain any medical information on your behalf absent a properly executed Health Care Proxy.  You must read the Health Care Proxy carefully and make sure the document gives your agent the ability to do exactly what you would like them to do, for example, have access to your medical records.  It is also important to note that signing a new Health Care Proxy will revoke the previous Health Care Proxy you may have signed in the past.  This is important when you take the time to establish a comprehensive Health Care Proxy and then go to the hospital and sign a very basic Health Care Proxy with the staff at the hospital which will revoke the comprehensive one you signed previously.

In addition to the Health Care Proxy, you can sign a HIPAA release form which would allow the individuals listed in your Health Care Proxy access to your medical records.  The Healthcare Proxy itself may give the same authority; however, the HIPAA release form is a very simple form which is easily recognizable by most hospitals and doctor offices.  This can simplify the process to get medical records instead of using the Healthcare Proxy. 


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Wednesday, March 29, 2017

New York State Tax Update

The New York State Estate Tax exclusion amount will be increasing again as of April 1, 2017 to $5,250,000. This is an increase from the $4,187,500 exclusion amount which has been in effect since April 1, 2016.  This exclusion amount will remain in effect until December 31, 2018.  On January 1, 2019, the basic exclusion amount will be indexed for inflation annually and will be equal to the federal exclusion amount. The federal exclusion amount will be issued by the IRS towards the end of 2018. The New York State and federal exclusion amount is estimated to be $5,900,000 in 2019. As of January 1, 2017, the federal estate tax exclusion is $5,490,000.

            An item still of concern to many is the “cliff" language contained in the law.  If the estate is valued between 100% and 105% of the exclusion amount, the amount over the exclusion will be taxed.  As of April 1, 2017, the 105% amount is $5,512,500.  However, once an estate exceeds the exclusion amount by more than 5%, not just the amount in excess of the exclusion amount is taxed, but, rather, the entire estate is subject to estate tax. Practically, this means that taxable estates greater than 105% of the exclusion amount receive no benefit from the exclusion amounts shown above and will pay the same tax that would have been paid under the prior estate tax law.

            New York repealed its gift tax in 2000.  This meant that as a New York resident, if you made lifetime gifts to friends or family members, the gift was not taxed or included in your New York gross estate for purposes of calculating your estate tax. With the estate tax law as enacted in 2014, there is a limited three year look back period for gifts made between April 1, 2014 and January 1, 2019. This means that if a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the New York estate tax. 


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Friday, March 24, 2017

Money Transfers and Medicaid Eligibility

Question: My mom has Alzheimer’s and has been living in my house for the past four years.  Shortly after she moved in, she gave me $60,000.00, worried that she might need to apply for Medicaid and would have too much money in her name.  It has been roughly three and an half years since she transferred the money to me.  During the four years, I did not take rent from her but from time to time I used the money that she gave me to pay for food and utilities.  I also used some of the money to pay mom’s credit card bills.  She fell two weeks ago, was hospitalized, and is now in a rehabilitation facility.  Her doctor thinks it would be best if we considered Nursing Home care for her.  I know that there can be a problem if Medicaid sees that she gave money away, but here I assume it will be all right because I used the money for her expenses, is that correct?

Answer: Unfortunately, it may not be.  As you are likely aware, when an individual requires long-term nursing home care and is looking to rely on Medicaid as a pay source, there is a five-year look-back.  What this means is that Medicaid, through the Department of Social Services will require full financial disclosure for the five years immedicably prior to entering the nursing home.  When the financial statements are reviewed, the presumption is that all cash withdrawals and all monies transferred are gifts, and accordingly, a penalty of one month will be assessed for each roughly $12,800.00 that is transferred.


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Friday, March 10, 2017

Giving Your Estate Plan a Spring Clean-Up

Question: Spring cleaning has me thinking I may need to update more than my window treatments. What changes should I be making to my estate plan?

Answer: Spring has sprung! Warmer temperatures and more daylight have a way of inspiring people to refresh their houses and cleanup their yards to make way for the summer season. Not unlike our homes and yards, your estate plan may be in need of a spring cleanup too! If it has been a few years since you have visited with your attorney, now is the perfect time to review your plan to ensure that your documents are up to date. Here are a few topics you may want to revisit:


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Monday, March 6, 2017

Avoiding Probate is Not a Panacea

Being hyper focused on avoiding probate can be an estate planning disaster.  First, what exactly is “probate”?   Probate is the legal process whereby a last will & testament is determined by the Court to be authentic and valid.  The Court will then “admit” the will to probate and issue “letters testamentary” to the Executor so that the Executor can carry out the decedent’s intentions in accordance with the last will and testament.  That usually involves paying all funeral bills, administrative expenses, debts, settling all claims, paying any specific bequests and paying out the balance to the named beneficiary or beneficiaries. 

Avoiding probate can be accomplished by creating a trust to hold your assets during your lifetime and then distributing the assets at your death in the same manner and sequence as an Executor would if your assets passed through probate.  Typically, this would be accomplished by creating a revocable trust and transferring all non-retirement assets to the trust during your lifetime, thereby avoiding probate at your death.  Retirement assets like 403B’s, IRA’s and non-qualified annuities are not transferred to revocable trusts as they have their own rules and should transfer after death by virtue of a beneficiary designation.  Retirement assets should not be subject to probate.  The designation of a beneficiary is vital to avoid costly income taxes if retirement assets name the estate or default to the estate.   The take away here is that you should make sure that you have named primary and contingent beneficiaries on your retirement assets.  If you name a trust for an individual, you must discuss that with a competent professional that can advise you if the trust can accept retirement assets without causing adverse income tax consequences.  Not all trusts are the same.

 


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Monday, March 6, 2017

Nancy Burner, Esq., Robin Burner Daleo, Esq. and Britt Burner, Esq. Named as Top Women Attorneys in New York

We're proud to announce that SuperLawyers have selected Nancy Burner, Robin Burner Daleo and Britt Burner as New York's Top Women Attorneys. 

The SuperLawyers "Top Women Attorneys" supplement will be published in the New York Times newspaper on Sunday, March 26, 2017. 


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Monday, March 6, 2017

Who is Responsible for an Estate’s Debts?

Question:  My father recently passed away.  He owes more than he has in assets. As his surviving child, am I responsible for his debt?

Answer:  Your father’s Estate is responsible to pay his creditors with the assets remaining in his estate. Creditors are paid in accordance with priorities established by New York State law.

  •  Administration and funeral expenses are the first to be paid.  Administration expenses include any legal fees and any costs associated with your father’s estate like probate fees, appraisals, etc.
  • Money owed to the government such as income taxes and estate taxes.
  • Payment of property taxes for real property he owed which accrued prior to your father’s death.  If there are not enough estate assets to pay this debt, then whatever estate assets are available would be used to pay off the debts in these categories.
  • Judgment creditors get paid next.  If your father was on Medicaid, the Department of Social Services has a priority for its claims. This means that the Department of Social Services gets paid before other judgment creditors.
  • Secured creditors such as a mortgage, home equity or car loan.
  • Unsecured creditors (such as credit cards and bills) are the last to be paid.

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12 Research Way, East Setauket, NY 11733 | Phone:631-941-3434
82 Main St., Westhampton Beach, NY 11978 | Phone: 631-288-5612
1115 Broadway , Suite 1100, New York, NY 10010 | Phone: 212-867-3520

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