Suffolk County, NY Estate Planning and Elder Law Blog
Friday, October 21, 2016
Question: I want to change the beneficiary of my retirement account and life insurance policy to my minor grandchildren, but I am afraid they are too young to manage such a large sum of money. What is the best way I can have my grandchildren benefit from these funds while ensuring that the money be spent responsibly?
Answer: You can absolutely designate minor children to receive money under retirement accounts and life insurance policies. However, you NEVER want to designate that the child receive those monies outright. In other words, you would not simply fill out the child’s name and information, like you would an adult beneficiary. This is because minors may not own property.
If you were to leave these accounts directly to the child, upon your demise, an adult would have to petition the court to become a property management guardian. This is the case even if the child has living parent(s). Once appointed, the guardian could collect the funds and hold then hold them in a savings account for the child until they reach the age of 18. Once the child turns 18, the funds must be turned over to them.
Clearly, designating a minor beneficiary on any account has devastating consequences. Aside from the cost and delay of a court proceeding, the guardian has no power to invest the monies or take distributions from retirement accounts. Rather, all funds must be cashed in and put into a savings account, representing a potential loss of tens of thousands of dollars had the monies been invested or, in the case of retirement accounts, stretched and taken over the child’s lifetime.Read more . . .
Monday, October 17, 2016
In December 2014 the federal government passed a law known as the ABLE Act. This law allows family members of a disabled person to create an account that is exempt from federal income tax to be used for certain “qualified expenses” related to the person’s disability. This Act is created under the same provisions of the tax code as 529 plans for college savings although they have different rules governing the plans.
Unlike the college savings plans, the beneficiary of the NY ABLE Act accounts must have been deemed disabled prior to 26 years old. If a beneficiary is entitled to Supplemental Security Income (SSI) or Social Security Disability Income (SSDI), they are automatically eligible but if they are not entitled to these sources of income, there are other methods of proving disability that will establish eligibility. The account can be created by any person and the owner can be the beneficiary or their parent, legal guardian, or representative of that beneficiary.. However, it is important to note that there is a maximum contribution of $14,000 annually, the Federal gift tax exemption amount. Each beneficiary can only have one ABLE account created for their benefit. This could create an unintended tax liability if there is no coordination amongst the persons that wish to contribute to the account.
ABLE Accounts are meant to supplement the government benefits that a disabled person is receiving. In New York, ABLE account funds are not counted as a resource at all for Medicaid eligibility for the disable beneficiary of the account. For an individual who is receiving SSI, the account is not considered a resource as long as it is below $100,000. The benefit of having an account like this is that the disabled individual can access the account on their own without requesting a distribution from a trustee as they would have to do with a supplemental needs trust. The accounts can be used to pay for “qualified expenses,” including but not limited to education, transportation, training, legal fees, etc. The expense must be one that is related to the person’s disability and provide them with a resource that will improve their health, independence, or quality of life. If the funds are misappropriated to an expense that does not fall into this category there is a 10% penalty and the full amount of the non-qualified expense will be deemed an available asset for Medicaid or SSI eligibility purposes.Read more . . .
Monday, October 17, 2016
Q: My mom gets $2,000 income that is made up of her social security, a small pension, and monthly distributions from her retirement account. Does she have too much income to qualify for home care services through the Medicaid program?
A: No, your mom can stay in her home, receive services, and use her income to help pay her other expenses. With some exceptions, the regulations state that a person receiving home care services through Medicaid can have $845 per month in income. Any monthly income over that amount is considered excess income and must be “spent down.” Your mom can either spend her excess income on monthly medical expenses, give the excess income to the Medicaid provider, or she can place it into a pooled income trust.
For your mom, the best option to make sure she gets maximum use of her income will likely be to use the pooled income trust. This is an account that is administered by a charity that has been certified by New York State. The pooled income trust is a type of supplemental needs trust which means that the money can only be used for mom’s benefit and it can be used to pay any expenses that are not otherwise covered by her government benefits. There is an administrative fee that is paid to the trust, each trust has its own fee structure. Some trusts have an annual fee while others have monthly fees. Read more . . .
Friday, October 7, 2016
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 “HIPPA,” or the Health Insurance Privacy and Portability 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.
In order for your agent to deal with Medicare or another health insurance company, even a properly drafted Health Care Proxy is typically not enough. In many circumstances, a Durable Power of Attorney is required in order for a third person to speak with these companies on your behalf. A validly executed Power of Attorney will allow you, the Principal, to designate an Agent to act on your behalf and virtually step into your shoes with respect to all of your matters. Read more . . .
Wednesday, October 5, 2016
We are pleased to announce that Nancy Burner, Esq. has been selected to the 2016 New York Super Laywers list for a ninth year. Additionally, Britt Burner, Esq. and Robin Daleo Burner, Esq. have been honored as Super Lawyers Rising Stars for the second year in a row.
Read more . . .
Monday, October 3, 2016
Q: What is an Executor?
A: The Executor of an Estate is the individual named by the Decedent in his or her Last Will and Testament to act on behalf of the Estate. The Executor is entrusted with the responsibility of making sure the Decedent’s last wishes are carried out with regard to the disposition of the Decedent’s property, assets and possessions.
Serving as the Executor of an Estate can be an honor, however executorial duties can be substantial and intricate. Although New York State law does not require an Executor to be an attorney or other legal or financial expert, it does require than every Executor fulfill their duties with the utmost honesty and diligence. The phrase assigned to this level of care is "fiduciary duty”.
An Executor owes a fiduciary duty to the Estate’s beneficiaries and is obligated to carry out the Will according to its terms and to act with scrupulous good faith and honesty. The Executor must manage the estate assets capably, and address all issues that may arise during the course of the estate’s administration.
The Executor will be required to perform duties which will depend upon, and be specific to, the respective estate. Some of these duties may include: probating the Decedent’s Will, marshalling the Decedent’s assets, managing the Decedent’s property, keeping accurate records with regard to the administration of the Decedent’s assets, paying all valid claims of the Decedent’s creditors, filing the applicable estate tax returns, preparing an estate accounting and making distributions to the Estate’s beneficiaries. Read more . . .
Monday, September 26, 2016
Q: If I don't need money from my IRA, do I have to take distributions?
A: Yes, if you are over 70 ½ years old you must take an annual distribution from your retirement accounts. This distribution is called your required minimum distribution ("RMD"). The dollar amount of the RMD is determined by the value of your retirement accounts and your life expectancy as it is determined by the IRS based on your age. For the most part, you can take the RMD for all the accounts from just one account rather than take from each account. However, this is not the case for 403(b) accounts. While you add the 403(b) account balance together with your other accounts to figure out your RMD total for the year, you cannot take the 403(b) RMD from any other account. Similarly, you cannot take extra from the 403(b) to satisfy the distribution requirements for traditional IRA accounts.
For your retirement accounts that have been growing tax-deferred, the RMD will be counted and taxed as income each year. You must take your first distribution before the April 1 that follows the date on which you turn 70 ½. An additional distribution must be taken before the close of that calendar year. Since a client may be in a position of having two taxable distributions in one year, planning can be done with a financial professional to minimize tax consequences. Penalties for not taking the RMD in a timely manner can be 50% of the RMD amount. However, the IRS has discretion regarding the imposition of this penalty and can take individual circumstances into account. Read more . . .
Monday, September 19, 2016
It is not unusual for a client to contact me and ask to review their estate plan. This may be precipitated by a recent diagnosis or simply by the passage of time. I have a checklist that I use when reviewing an estate plan if they have a taxable estate. Under Federal Law, a taxable estate in 2016 is any estate over $5.45 million and in New York State, any estate over $4,187,500.
Read more . . .
Friday, September 16, 2016
Question: My mom fell in her home and is being discharge from the hospital tomorrow. A friend told me that Medicare will pay for Nursing Home Care, is this true?
Answer: Long Term Nursing Home care is not part of the Medicare program. However, where a person, like your Mom is being discharged from the hospital to a skilled nursing facility for the purpose of receiving skilled or rehabilitative services, the stay will be covered under Medicare Part A so long as certain pre-requisites are met. The prior hospitalization must be for at least three consecutive days, excluding the day of discharge, and the admission to the facility must be within thirty days of the date of the hospital discharge. It is important to inquire from hospital staff whether the patient was admitted to the hospital or was merely under “observation” because observation status days do not count towards the three day minimum. It is also necessary that the patient require either skilled nursing or rehabilitative care on a daily basis, and that the care being provided can only be provided in a skilled nursing facility. Coverage for rehabilitation services under Medicare Part A is limited and is intended to be short-term coverage for acute conditions with the goal of improving that condition through rehabilitation and administration of skilled nursing care. The first 20 days in the rehabilitation facility are covered in full by Medicare. For days 21-100, there is a co-pay of $157.50 per day. Some Medigap/Supplemental co-insurance policies will cover all or part of the co-pay. Note that Medicare does not always provide 100 days of rehabilitation, it will pay “up to” 100 days. Read more . . .
Monday, September 12, 2016
Q: My cousin told me that he and his wife used an online service to prepare their wills. He said it was much less expensive than going to an attorney to have a will prepared. My wife and I need to prepare our estate planning documents. We are planning on disinheriting one of our children, and are hesitant to have wills prepared by an online service. Can you give me some advice?
A: In my career, I have seen some do-it-yourself estate planning blunders. One of the most memorable is an estate where the testatrix wrote her own will on a legal pad. The terms of this will gave the decedent’s entire estate to her boyfriend of over twenty years. This will was executed in the hospital in the presence of two nurses. At trial, both nurses testified that they knew that the document for which they were acting as witnesses was a will, despite the fact that the testatrix never stated that the document was her will. Both witnesses were clear in their testimony that the testator never declared the document to be her will, despite the title of the document clearly stating that the document was her will.
After a trial on the matter, the court held that testimony of the witnesses did not support due execution. This was because there was no publication of the instrument offered for probate as the testator never declared to the witnesses that the instrument was his will.
In New York, for a Last Will and Testament to be considered valid the following formalities must be followed in its execution: (1) The instrument must be signed at the end by the testator; (2) The testator must sign the instrument in the presence of the attesting witnesses; (3) The testator must declare to the attesting witnesses that the instrument is his or her will; and (4) There must be at least two attesting witnesses.
Read more . . .
Friday, September 2, 2016
Question: My mother is widowed and living alone. She would benefit from some assistance with her daily activities. She rents an apartment and only has a small amount of money in savings. I have heard that Community Medicaid will cover this type of care so long as the recipient is under the income and asset limit. Her monthly income is $2,000.00 and uses every penny for her monthly expenses. Does her income disqualify her for home care Medicaid benefits?
Answer: No, your mother’s high income does not automatically disqualify her from receiving Community Medicaid. With careful planning and the use of a Pooled Income Trust many elderly persons are able to age in place, get the homecare services and preserve their monthly income for payment of household expenses. In order for a person to be financially eligible for Community Medicaid s/he must not exceed certain income and resource thresholds. For 2016, a Community Medicaid applicant is permitted to keep $825.00 plus a $20.00 disregard (totaling $845.00) of his/her income. Typically, Medicaid would be entitled to any income received by an applicant in excess of this amount. In your mother’s case, her monthly income would be over the Medicaid threshold by $1,155.00 ($2,000.00 - $845.00). For many individuals like your mother who rely on her entire income to live, turning over this “excess” income would leave her impoverished. The good news is that in New York, individuals who are otherwise eligible for Medicaid have another option. New York permits an applicant to deposit his/her excess income into a trust referred to as a “pooled trust.” These pooled trusts are created by not-for-profit agencies and are a terrific way for individuals to take advantage of the numerous services available through Community Medicaid while preserving their monthly income. Read more . . .
Nancy Burner & Associates, P.C. has offices in Setauket, Westhampton Beach, and Manhattan New York.