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Suffolk County, NY Estate Planning and Elder Law Blog

Monday, May 02, 2016

Agent Responsibilities under a Durable Power of Attorney

Question: I was recently named as an agent on my mother’s Durable Power of Attorney which included a “statutory gift rider.” What is this document and what responsibilities will I have?

Answer:  A Durable Power of Attorney is a document by which a principal, in this case your mother, can designate an agent to act on her behalf with respect to financial, business or legal matters.  In New York State, the agent is limited to the powers enumerated in the document and can only act pursuant to that authority. A Durable Power of Attorney is effective when signed and, contrary to popular belief, there is no requirement that your mother be incapacitated or unable to handle her own finances in order for the agent to have the power to act. In fact, the Durable Power of Attorney survives an individual’s incapacity, meaning that you will still be able to act for your mother even if she became incapacitated.

New York State amended its power of attorney statue in 2009 and 2010 and now includes a “statutory gift rider.” The “statutory gift rider” expands the traditional power of attorney by allowing you to make gifts on your mother’s behalf. A gift is defined as any transfer for less than fair consideration.  This is a vital tool should an emergent situation arise which requires Medicaid planning for your mother because it allows you as the agent to strategically move money out of your mother’s name in order to qualify for Medicaid. A well drafted Durable Power of Attorney will avoid the necessity of a guardianship proceeding in court later, should the principal become incapacitated.


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Friday, April 29, 2016

Community Medicaid v. Chronic Medicaid 2016

Question: My mom has been a recipient of Community Medicaid.  As her condition is deteriorating it is apparent that she will require long term care in a nursing facility.  I have heard that her Community Medicaid will pay for the nursing facility. Is that correct?

Answer: No, Community Medicaid will not pay for long term care in a nursing home.  Community Medicaid is the program that covers care at home; such has a personal care aide.  Chronic Medicaid is the program that covers nursing home care.  The requirements and application process for Community Medicaid and Chronic Medicaid are very different.  An individual is unable to receive both Community and Chronic Medicaid simultaneously so it is important to know the differences and make sure you have the correct Medicaid in effect.    

For 2016, an individual applying for Community Medicaid can have no more than $14,850.00, not including their home, in resources and no more than $845.00 per month in income.  Qualified funds such as IRAs or 401(K)s are exempt, but the applicant is required to take periodic distributions which are counted as income each month.  While these limitations may seem daunting, the good news about Community Medicaid is that there is no look-back period and the individual can opt to use a pooled trust to preserve any excess income above the $845.00.  That means someone looking to get care at home can transfer assets and set up a pooled trust in one month and be eligible for Community Medicaid in the following month.


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Friday, April 22, 2016

Power of Attorney on a Bank Account

Q:  I am listed as power of attorney on my mom’s bank account.  Will I be able to access this money after she dies to pay for the funeral?

A: No.  By law, a power of attorney document expires at the death of your mom, the “principal.”  You are the “agent” under the document and you only have the power to act on your mom’s behalf while she is still living.  Whether you have been named as an agent under a power of attorney from the bank or whether you have a general power of attorney executed with a lawyer, the power under  both documents terminates at your mother’s death.

If your mother wants you to have access to the account immediately after her death, you should discuss her intent.  Does she want you own the account at her death, then you should be named as joint owner on the account.  Upon mom’s death, the joint owner becomes the sole owner of the account with full rights to the assets.  Of course your mom must realize that any money in the account will go directly to the joint owner and will not pass on to any other beneficiaries that she may have named in her Last Will and Testament.   If she wants you to share the assets with other beneficiaries, then she may memorialize the fact that it is a convenience account.


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Thursday, April 21, 2016

Nancy Burner, Esq. and Robin Burner Daleo, Esq. are named as Hofstra's Outstanding Women in Law for 2016

Nancy Burner, Esq. and Robin Burner Daleo, Esq. have been selected by Hofstra University School of Law and the Center for Children, Families and the Law in partnership with Long Island Business News as Outstanding Women in Law for 2016. 

 

The Outstanding Women in Law distinction honors those who serve as role models for the next generation of women lawyers and judges. Today, women attorneys are represented in the highest echelons of the legal profession and the judiciary.


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Thursday, April 21, 2016

Nancy Burner, Esq. Honored by Ride for Life

Nancy Burner, Esq., founder and managing partner of Nancy Burner & Associates, P.C., was selected by the Event Committee of Ride for Life to be recognized in the Business Category at the 19th Annual Honoree Recognition Benefit on March 15, 2016 held at Villa Lombardi’s in Holbrook.

 

Each year, Ride for Life selects a handful of supporters as exemplary representatives who have made significant impacts to be honored at the benefit for their contributions to the fight against ALS.
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Monday, April 18, 2016

Community Medicaid Home Health Aide v. Medical Model Daycare

Question:  “I am considering applying for Community Medicaid for my father, but I am not sure if my mother will accept a home health aide into her home.  What, if anything, could Community Medicaid offer other than a home health aide?”

Answer:  The Community Based (Homecare) Medicaid program can offer alternatives to home health aides; however, you must know the requirements in order to enroll in the program.  Once approved for Community Medicaid, the individual may be enrolled in a Managed Long Term Care Company (MLTC).  The MLTC will be in charge of coordinating the recipient’s healthcare needs including, but not limited to, a home health care aide.

In order to enroll in a MLTC the recipient must either have a home health care aide or be enrolled in a Medical Model Daycare program.  If the family wants a home health care aide, the MLTC will determine the amount of hours per day and days per week that the individual is entitled to have the aide depending on the individual’s need.  The home health care aide can assist with all activities of daily living, including, but not limited to, bathing, grooming, toileting, ambulating, meal preparation, laundry and light housekeeping.  Medical Model Daycare programs offer a place for seniors to go during the day and then return home at night and will provide meals, rehabilitation, monitoring of health conditions and assist with personal hygiene.  Unlike Social Model Daycare, the individual must require assistance with activities of daily living to qualify for Medical Model Daycare.  Once the individual is approved for either a home health aide or Medical Model Daycare, the individual may be enrolled in a MLTC.


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Friday, April 15, 2016

Capacity to Sign a Power of Attorney

Question: My mother has just been diagnosed with Dementia.  It is in the early stages and she is still very lucid, can she still sign a Power of Attorney?

Answer:  It depends.  For starters, a Power of Attorney is the document which names a person or persons to handle your business and financial decisions. A Power of Attorney is valid when signed and permits the Agents named to step into your shoes and conduct all business and financial decision as if they were the Principal themselves.    For that reason, in order to make the decision to name a person as an agent to act on your behalf the law requires that you, as the principal, possess a certain level of capacity.  When a person is diagnosed with any cognitive deficit the concern of who will act for them if a time comes that they no longer can takes on significant importance. The capacity required to execute a Power of Attorney in New York is defined in the General Obligations Law as the ability to comprehend the act of executing and granting a Power of Attorney.  In other words, the person granting the Power of Attorney must understand the document they are signing as well as the provisions contained in the document.  A diagnosis of dementia does not necessarily result in an inability to execute legal documents.  


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Friday, April 08, 2016

Lost Will

Q: I recently executed my will and other estate planning documents. I want to keep it in a secure location; however I am concerned that I may store it in a place where my executor cannot find it.   What happens if the executor cannot find my will when I pass away?

A: Once a person takes the time and effort to prepare their estate planning documents it is important that the originals are stored in a safe and secure location. The documents should be stored in a place where they can be found and utilized should they be needed.

             There is a presumption under New York law that if the decedent’s will is known to have been in the decedent’s possession and cannot be located after his or her death that it was revoked. Unless the presumption can be overcome, the will’s terms are meaningless.  The presumption of revocation exists even if a copy of the will can be located.  The presumption can only be overcome if circumstances show that the will was not destroyed by the decedent such as in the case of a fire, natural disaster or other events that may have caused the unintended loss or destruction of the will.


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Wednesday, April 06, 2016

Should I Create an Irrevocable Trust If I Do Not Own a House?

Question: I do not own a home, but I am concerned about protecting my assets? Is it worth it to think about creating an Irrevocable Trust?

Answer: Yes.  As you know, an Irrevocable Trust, often referred to a Medicaid qualifying trust, is a trust that you create with the idea of protecting assets should a time come that you require long term care at home or in a nursing facility.  You as the Grantor, also referred to as the Creator or the Settlor, create and fund the trust with assets that you are looking to protect.  You must name someone other than yourself or your spouse as trustee to manage the assets that are held in the trust.  You will also name beneficiaries just as you would in a last will and testament to state who will receive the trust assets upon the death of you and your spouse.  Once you have transferred assets into a properly drafted Irrevocable Trust and they have been there for a period of five years, they will be considered unavailable if you need to apply for Medicaid to assist with the cost of your nursing home care.  The assets are deemed protected the month after funding the trust if you are applying for Medicaid to assist with the cost of at home care.  Oftentimes the trust is used primarily to protect the home and other assets are added to the trust as a secondary concern.  However, for many of our clients who do not own real property, the trust can be just as useful in protecting assets.  For example, most non-qualified (non-retirement) assets can be transferred into an Irrevocable trust, including brokerage accounts and non-qualified annuities.  In addition to the benefit of asset protection, the trust will also provide for orderly management of your assets during your lifetime as well as avoidance of probate at death.


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Wednesday, April 06, 2016

Tax Consequences of Creating a Medicaid Trust
The typical Medicaid trust is a grantor trust for income and estate tax purposes. The grantor trust rules came about after high earners tried to lower their income tax consequence by scattering their income to various trusts over which they maintained control. By spreading their income out, the earners were subject to the lower tax brackets since each trust was considered a separate entity, rather than all the income being taxed to one individual. Eventually, the IRS caught on to this technique and the grantor trust rules were born. The grantor rules state that if the grantor, that is, the creator of the trust, maintains certain “strings” of control over the trust, such as the right to principal or the right to change the beneficiaries, then all the income from said trusts must be reported on the grantor’s individual tax return. In addition, the IRS imposed compressed tax rates for trusts. For instance, in 2016 once the income of a trust exceeds $12,500.00, the trust is taxed at the highest tax bracket of 39.6%. An individual would have to earn $415,050 to reach that rate. Similarly, a trust can be a grantor trust for estate tax purposes. This would mean that despite the fact that the grantor transferred assets to an irrevocable trust during their life, if they retain certain rights under the terms of the trust, the assets are still includible in their estate for estate tax purposes.

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Monday, March 28, 2016

Grantor Trust Rules

Question: My mother has a Medicaid income-only trust and her house is owned by this trust.  She purchased the house in 1980 for $30,000. It's now worth $400,000. Does she lose the capital gains exemption of $250,000 if the trust sells the house now?  Will the trust pay capital gains if the house is sold after her death?  Does she get to keep her Star and Veteran’s real estate exemptions even though the house is in the trust? 

 

Answer: First, let me say that you should have an attorney review the trust.  Not all trusts are the same and the answer to your question depends upon what terms are contained in your trust.  When we draft a Medicaid trust, we include provisions that make it a “grantor trust” for income and estate tax purposes. Such a grantor trust would allow your mother to reside in the premises and pay all the maintenance and carrying charges, included but not limited to homeowner’s  insurance, utilities and real estate taxes.  As a result, she would still be entitled to the Veteran’s and Star exemptions that she would otherwise be entitled to if the property were in her sole name.  The trust could provide that all the income earned in the trust would be payable to her.  Alternatively, the trust could also allow the income to remain in the trust or be paid to her children or others.  Income would only be earned by the trust if the real property collected rents or there were other income producing assets like, but not limited to, stocks, bonds or bank accounts.  In addition, there could be a retained power to change the trustee or the retained power to change the ultimate beneficiaries through a limited power of appointment. A limited power of appointment is a power usually reserved to the grantor to change the beneficiaries of this otherwise irrevocable trust.  The exercise of the limited power is can be made in a separate lifetime document or in a last will & testament.  This gives the grantor control of who the beneficiaries will be and also one of the provisions which make the trust a grantor trust.  Grantor trust status would permit all trust income to be reported on your mother’s personal tax return.   Furthermore, she would still be entitled to the $250,000 capital gains exemption if the property is sold during her lifetime.


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Nancy Burner & Associates, P.C. has offices in Setauket, Westhampton Beach, and Manhattan New York.
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© 2014 Nancy Burner & Associates, P.C.
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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