Suffolk County, NY Estate Planning and Elder Law Blog
Friday, December 20, 2013
Question: My parents created an irrevocable trust some years ago, I am the trustee. At the time that they signed the trust, they transferred their home into the trust. I’m not sure if their other assets were transferred into the trust at that time. How do I know if they are in the trust and if they are not, is it too late to protect them?
Answer: Those are all terrific questions. As you know, Irrevocable Trusts can be used to protect assets in the event that either or both of your parents require long-term care in a Nursing Facility. Nursing Care on Long Island can cost anywhere from $10,000.00 to $14,000.00 for a regular bed. A special medical bed can cost up to $18,000.00 to $20,000.00 per month. Rightfully so, this is an important consideration for many of our clients. For starters, the best way to determine whether and asset has been transferred into the trust is to check the titling of the account. Once a transfer has been completed, the bank statements will name the trust or you as the trustee as owner as opposed to your parents individually. If you are unsure of the title, you can contact the financial institution where the assets are held to confirm that the trust is the owner. To answer your second question, it is not too late to seek to protect any assets which were either inadvertently or purposefully kept out of the trust at the initial funding stage. As you are likely aware, there is currently a five year look back when applying for Chronic Medicaid. What this means is that assets transferred into a trust need to be there for five years in order to be considered unavailable for the purpose of qualifying for Medicaid. Should you decide to transfer additional assets into your trust at this time, that transfer will not disrupt the protection that you likely already have on the home, it will simply begin a new “look-back” period for this new transfer. Assuming five more years pass, you will have protected these assets as well. In the event that five years does not pass and either of your parents need nursing home care, additional planning will have to be done to attempt to protect all or a portion of those assets. If you have created a trust, it is important that you check to ensure that all of the assets you wish to protect have been transferred into the trust. Periodic review of your Estate planning documents and financial statements with your attorney or financial professional can ensure that the plan you intended is in place and that your assets are protected should a time come when you need care.
By: Nancy Burner & Robin Burner Daleo
Friday, December 20, 2013
Article 81 Guardianship
Question: My father is a widower and was recently diagnosed dementia. I am worried he is becoming incapable of taking care of himself. He never executed a health care proxy or a power of attorney. Can he sign them now? If not, what options do I have to get him the care that he needs?
Answer: Just because your father has a diagnosis of dementia, does not necessary mean he is unable to execute the advance directives he needs to designate you to take care of his personal and financial needs.
The capacity that your father would need to sign these documents differs depending on what document he is signing. For instance, the level of capacity your father needs to sign a health care proxy is very low. He only need know who you are and that he would like you to make medical decisions for you. The law presumes that a health care proxy is valid unless evidence is introduced to support its invalidity. The law requires a higher capacity level for a durable power of attorney. To execute a valid durable power of attorney, your father would need to know who you are but also have a thorough understanding of what he was signing and the implications thereof. While analyzing capacity may seem easy, it can be a tricky task. Therefore, the decision of whether or not your father has the requisite capacity should be made by an attorney who has experience in Elder Law.
Unfortunately, if your father’s dementia has progressed to a point where it is too late for him to execute advance directives the only option is to make an application to the court in the county in which your father resides to be appointed as guardian of his person and property, pursuant to Article 81 of the Mental Hygiene Law. This involves filing of a petition with the court in support of your position that your father is incapacitated, does not fully understand or appreciate his lack of capacity and, therefore, is likely to suffer harm if you are not appointed as guardian to protect him.
Once the petition is filed, the Court will set a date for the hearing and notify all interested parties such as your father’s other children, if any, and his siblings, if living. Those parties would have the opportunity to come to Court and object to the proceeding, or to allege why someone else should be appointed as guardian. The Court will also appoint a Court Evaluator, usually a local attorney experienced in this field, who will visit with your father and interview you, your siblings, and any other interested parties. The Court Evaluator can review the finances, if relevant to the case, and can even review medical records, under certain circumstances. At the hearing, the Court Evaluator will present a written report and will testify as to his or her findings of fact and recommendations. Ultimately, after hearing all the evidence, the Court will determine if a guardian is needed, what powers the guardian will have and if you are the right person to act as the guardian.
Once a guardian is appointed, that person will have to undergo court-directed training to become certified. In addition, a guardian will have to maintain financial records and may be called upon to submit an accounting. In some cases, the Court will require that the guardian obtain a bond equivalent to the incapacitated person’s assets.
Regrettably, your father’s situation is a sad reminder of the importance of having advance directives in place. While certainly not the easiest method to helping your father, a guardianship proceeding is probably your only solution at this point. Seek the advice of an Elder Law attorney specializing in Article 81 Guardianship Proceedings in your area to learn more about commencing an action.
By Nancy Burner and Kimberly Trueman
Friday, December 13, 2013
Anti Lapse Statue
Q: My father has a Will that was drafted about 15 years ago. It was prepared after my mother died. It names my brother and I as the only beneficiaries. My brother passed away last year leaving three children. If my father passes away without executing a new Will, what happens to the bequest that was left to my brother?
A: There is a general rule that you cannot make a gift to a deceased person. The exception to this rule is contained in the New York State Estates Powers and Trusts Law section 3-3.3 and is known as the anti-lapse statute. The New York anti-lapse statute is designed to prevent the lapse of bequests made to certain groups of people. It creates an inference that the decedent intended to benefit the children of a predeceased child or sibling. However, the statute is inapplicable when the Will provides evidence of a contrary intent. The anti-lapse statute only applies to children or siblings of the decedent. It does not apply to other relatives or persons not related to the decedent.
If your father were to pass away without executing a new Will and the bequest was simply to you and your brother without any survivorship language, then the one-half of the estate that was left to your brother would pass to his three surviving children. They would share your brother’s one-half interest.
The anti-lapse statute also applies to a person who leaves a bequest in their Will to their brother or sister and that sibling predeceases them. In this situation, because of the anti-lapse statute, the bequest to the predeceased sibling would pass to their children, unless the Will provides evidence of a contrary intent or named a contingent beneficiary if that sibling predeceased the decedent.
There is often confusion when one of the beneficiaries of a Will predeceases the decedent. One way to avoid this confusion is to see an estate planning attorney to review and update your Will when a beneficiary passes away. Another way to avoid confusion is to include specific survivorship language as well as contingent beneficiaries in your Will. This will help to eliminate any confusion in the probate process as to who is entitled to a bequest if a beneficiary predeceases.
By: Nancy Burner, Esq. & Kera Reed, Esq.
Monday, December 09, 2013
Question: My mother created a trust some years ago naming myself as the beneficiary. Now that she has passed away, my Aunt, the Trustee, is in the process of terminating the trust and distributing the assets. Specifically, my mother’s trust states that I shall receive my inheritance in further trust, and that I get distributions at certain ages. For example, the Trustee would distribute 25% of the trust assets to me at age 25, 50% at age 30 and the remainder at age 35. Currently, I am 24. Due to some creditor problems, I would prefer that the Trustee not be required to make lump sum distributions, but rather that this money remain protected for years to come. Is there a way to accomplish this?
Answer: Yes, there is. Under Estate, Power & Trust Law Section 10-6.6, Trustees of trusts with unfavorable terms may exercise a power of appointment to transfer assets from the unfavorable irrevocable trust that could not otherwise be revoked to a new trust with preferred terms. This process is known more informally as “decanting.”
Trustees who wish to decant are subject to several limitations depending on their authority to invade the original trust and are also subject to notice requirements. The law divides trusts into two sets: 1.) where the trustee has unlimited discretion to invade the trust assets in favor of one or more beneficiaries or 2.) where the trustee has some limits on their discretion to invade the trust assets, such as the trustee may only invade for health, education, maintenance and support. In either circumstance, the trustee is permitted to decant trust assets to a new trust with better terms. The difference is that where the trustee has unlimited discretion to invade trust assets, the trustee may exercise his right to decant trust assets to a new trust for the benefit of a class of consisting of any one or more of the existing trusts’ beneficiaries, even if it means that a beneficiary is excluded from the new trust. Contrast with when a trustee only has limited discretion to invade trust assets. In that case, the trustee may decant the trust assets to a new trust but the beneficiaries of the old trust and new trust must be the same.
In terms of notice requirements, the law states that the trustee must provide written notice of his intent to decant and copies of the old and new trusts to interested parties, meaning the creator of the old trust, anyone with an interest in the old trust, and anyone with the right to change the trustee. The trustee is free to move assets to the new trust 30 days after these documents are served on the interested parties.
In your case, decanting would permit the trustee of you current trust to transfer assets to a new trust that did not provide for distribution at ages. Since you have not yet reached the age of the first distribution, your right to the trust assets has not vested. Accordingly, if you decant to a new trust before 30 days prior to reaching age 25, 100% of your inheritance can remain protected from your creditors.
Decanting is a fairly new and complicated aspect of estate planning. Be sure to consult with an attorney experienced in this form of trust planning before making any changes to your existing trust.
Monday, November 25, 2013
How to Ensure Your Wish That Your Organ Donation Wishes are Honored
From some, the desire to donate their organs when they pass away is an important component of their estate plan. For others, the thought of organ donation can be chilling. Regardless of your personal preference, it is important to take steps to ensure that your wishes are followed through after you are gone.
One way to delineate your wish to donate your organs is to write a living will. While a living will is usually a document which expresses the principal’s desire that they would not want to be kept alive on machines should they have an incurable illness. However, you can also include your wishes regarding organ donation in the living will document. Provided they have the capacity to sign a legal document, a living will can be created and/or modified at any time so long as it is signed by the principal before two impartial witnesses.
Once you have signed a living will detailing your wishes, the question becomes, who is responsible for ensuring that those wishes are followed through? Often clients ask if this document is registered somewhere or if it should be given to their physicians. The answer is that while the living will is a statement of your wishes, your health care agent is the one who actually makes the decision. In New York, health care agents are designated by creating a health care proxy which is similarly signed by the principal before two impartial witnesses.
In addition to the living will, you can also elect to be an organ donor using your driver’s license. If you do not have a driver’s license you can create an organ donor card stating your wishes. Such a card must be signed by the donor and should be carried on the person. An individual may also execute a document appointing an agent to control the disposition of his or her remains. The person designated as agent to control the remains can be given authority to consent to organ or tissue donation. However, a health care agent would have priority.
A problem arises when the agent you have chosen does not agree with your wishes to donate your organs and may refrain from honoring those wishes. By the time the living will is discovered, it is often too late. Accordingly, in addition to having an organ donation provision in your living will, those who are desirous of same should complete a Life Organ and Tissue Donor Registration Enrollment Form with the Donate Life Registry. This online registry keeps a record of those that have filed their consent to the procurement of organs and tissues. When a patient is close to brain death, or when ventilator support is being withdrawn, or when the patient passes away, the procurement agency is notified. This registry is accessible to every hospital thought out the United States. The registrant can register directly, or can complete an organ donation form when he or she registers to vote in New York. The Board of Elections will then provide the donor’s name and identifying information to the Department of Health for enrollment in the Donate Life Registry.
Unlike the living will which relies on an agent to act on your behalf to carry out your wishes, those who register with the New York State Donate Life Registry can take comfort in knowing that when the time comes, their family members will be informed of their registration but their permission is not required to proceed with the donation.
Moreover, registering as a Life Organ and Tissue Donor does not compromise the level of care the registrant receives. Registering with the registry is a good way to avoid involving an agent or family member who may not agree with your choice, as well as eliminates the need to locate drivers’ license, living will or other valid documentation of donation.
By Nancy Burner, Esq.
Wednesday, November 20, 2013
Transfer of a Motor Vehicle
Q: My husband recently passed away. Just about all of our assets were held jointly except for one car, which was titled in my husband’s name only. What do I have to do to retitle the car into my name?
A: A little known but important property right for surviving family members is known as exempt property, and is found in the New York Estates, Powers and Trust Law. Exempt property is property that passes automatically to a surviving spouse or children under the age of 21, regardless of the laws of intestate succession or the terms of a will.
For a car to be considered exempt property, and pass automatically to the surviving spouse or children under age 21, it must be valued at less than $25,000.00. If the car is the only asset titled in your husband’s sole name, there will be no need for an estate proceeding in the Surrogate’s Court to transfer title to the car. The procedure to transfer the title and registration to the surviving spouse or children under age 21 is quite simple and the Department of Motor Vehicles (DMV) requires only one form in addition to the standard forms to change the title and registration. The required form is the MV 349.1 and it must be submitted to the DMV with an original death certificate.
If there is no surviving spouse or children under age 21, the car is valued at less than $25,000.00 and there is no executor or administrator appointed by the Surrogate’s Court then the DMV allows the nearest surviving relative to transfer the title and registration of the car. The form to accomplish the transfer is the MV 349 and it must be submitted to the DMV with an original death certificate.
If the car is valued over $25,000.00, then an executor or administrator must be appointed by the Surrogate’s Court to transfer the title and registration of the car. However, once an executor of administrator is appointed, the surviving spouse or children under age 21 may acquire the car from the executor or administrator of the estate by payment to the estate of the amount by which the value of the motor vehicle exceeds $25,000.00.
Before you attempt to transfer the title to the car on your own, it is always a good idea to consult with an attorney experienced in estate administration matters to be sure that there are not any additional issues with the estate that need to be addressed.
By: Nancy Burner, Esq. & Kera Reed, Esq.
Wednesday, November 20, 2013
Supplemental Needs Trust
Question: What is the difference between a First-Party and a Third-Party Supplemental Needs Trust?
Answer: A Supplemental Needs Trust (SNT) is a trust created to hold assets for the benefit of a disabled individual. Assets held in properly drafted SNT can be used to enhance the quality of life of a person with disabilities without interfering with any government benefits that individual may be receiving or may be entitled to, such as Supplemental Security income and/or benefits received through the Medicaid program. These benefits are crucial for disabled individuals and it is paramount to protect these benefits so that care and benefits can continue without interruption. Generally speaking, there are two categories of Supplemental Needs Trust, a First-Party Supplemental Needs Trust and a Third-Party Supplemental Needs Trust.
A First-Party Supplemental Needs Trust protects assets which originally belonged to the disabled individual. For example, where you have an individual who suffers a disability as a result of an accident and he or she receives a personal injury award as a result of a lawsuit, the recovery (minus any Medicaid lien for medical services rendered as a result of the accident) can be placed in a First-Party Supplemental Needs Trust without any loss in benefits. When the disabled individual dies, any outstanding Medicaid lien is repaid before any monies are paid to the remainder beneficiaries named in the trust. It is important to note that funeral expenses can be prepaid during the disabled beneficiary’s lifetime, however, one the beneficiary dies, the funeral cannot be paid unless the Medicaid lien is satisfied in full.
In contrast, a Third-Party Supplemental Needs Trust is a trust funded for the benefit of a disabled person using the funds of someone other than the disabled individual. These trusts can be created during the lifetime of the third party or upon their death. A crucial distinction between the First-Party and the Third-Party Trust is that the Third-Party Trust does not have to payback Medicaid.
In the past, individuals with disabilities were frequently disinherited and forced into poverty in order to maintain crucial government benefits, this is no longer the case. Planning which implements Supplemental Needs provisions can ensure that government benefits are protected, despite the individual having the benefit of the trust fund. When properly implemented these trusts provide an enriched and enhanced quality of life for those with disabilities.
-By Nancy Burner, Esq. and Robin Burner Daleo, Esq.
Wednesday, November 06, 2013
Ownership of Real Property by a Decedent
Question: My father recently passed away, he owns several homes in Suffolk County. How do I determine how these properties are owned and how these properties are to be transferred as a result of his death?
Answer: An Executor or Administrator who is handling an estate that owns real property faces many issues. First, they must determine the ownership of the property. Real estate can be held in many different ways such as tenancy by the entirety between spouses, joint tenancy with rights of survivorship, or tenancy in common among several people. The manner in which real property is owned will determine the extent to which the decedent's estate has an interest in such property. There are a number of overlapping responsibilities that flow from the determination of ownership.
If your father’s owns one of the properties with his spouse as tenants by the entirety, upon his death, full ownership in the property passes to his surviving spouse and no portion would be part of the probate or intestate estate. However, one-half of the value of the property would need to be included on your father’s estate tax return (if a return must be filed). For decedent that passes away in in 2013, if the estate is valued at over $1,000,000.00 then the estate must file a New York State Estate Tax Return and if the estate is valued at over $5,250,000.00 then the estate must also file a Federal Estate Tax Return. The Executor or Administrator has a responsibility to prepare and file the estate tax return and pay any estate taxes that may be owed.
If one of your father’s other properties was owned along with others as tenants in common only your father’s share of ownership would be part of his probate or intestate estate and be includable as part of his estate for estate tax purposes. As Executor or Administrator of the estate you would be responsible for transferring your father’s interest in accordance with the terms of his will or in accordance with the laws of intestacy if he left no will.
However, if your father owned property as a joint tenant with rights of survivorship with a person who was not a spouse such as a child, then upon his death, the entire property interest would pass to the surviving joint owner. However, the entire value of the property would be includable in your father’s estate for estate tax purposes unless it can be shown that the survivor contributed monetarily towards the property such as payment of part of the purchase price.
Determining the title of real property can be a complicated issue. It is best to consult with an attorney experienced in estate administration matters when faced with issues regarding the titling and distribution of real property upon the passing of the owner.
By: Nancy Burner, Esq. & Kera Reed, Esq.
Wednesday, October 30, 2013
Question: My mother lives at home alone. My father was a World War II Veteran, he passed away last year. Mom needs some help at home, but is hesitant to have a stranger in the home. My sister is currently out of work and is willing to help. I’ve heard that my mother may be eligible for a benefit through the Veteran’s Administration to pay for a caregiver at home as a result of my father’s veteran status. Can a family member provide and be reimbursed for this care?
Answer: The benefit that you are referring to is the improved Pension through the Department of Veteran’s Affairs (VA), more commonly referred to as Aid and Attendance Pension, and the answer to your question is yes. Assuming that all other eligibility requirements are met, the VA permits payments to family members for care provided. In order to be eligible for Aid and Attendance, the claimant must have served at least 90 days active duty with one day being served during wartime, must have received a military discharge “other than dishonorable” and must be disabled. For VA purposes, an individual who is over age 65 is presumptively disabled. There must be a showing that the claimant is in need of the aid and assistance of another individual to complete his or her daily activities. With respect to the means test, the claimant must have nominal assets; this can be the tricky part as there is no set limit, typically the claimant should not have more than $40,000.00 - $80,000.00 in net worth excluding the primary residence. Further, the claimant must show that his monthly un-reimbursed medical expenses exceed his monthly income. When considering this equation, care services provided by a family member are included as “un reimbursed monthly medical expenses” and can oftentimes make the difference as to whether the applicant qualifies for this benefit. It is important to note that for the purposes of VA planning, there is no look back period which makes planning and asset eligibility possible in most cases. Assuming that all criteria are met, the Veteran or surviving spouse can be reimbursed for monies paid to family members for care giving services. The maximum benefit available under Aid and Attendance is $2,053.00 per month for a married Veteran, $1,732.00 for a single veteran and $1,113.00 for the widow of a Veteran. While qualifying for this benefit is relatively easy for most once they have reached the point that they require some level of care, it is important to be aware of the many other benefits that are available to Veterans and their surviving spouses. Many Veterans today are entitled to benefits which they are not receiving, these benefits range from reimbursement for medical and prescription costs, to monthly pensions for both service and non-service connected disabilities. It is important to contact the Veterans Administration or consult with an attorney who is accredited through the Department of Veteran’s Affairs and make sure that your father is receiving all that he has earned.
Nancy Burner, Esq. and Robin Burner Daleo, Esq.
Wednesday, October 30, 2013
The Medicare Program
The Medicare Program
Medicare is an entitlement program jointly administered by the Federal and State Governments to provide health care coverage to seniors ages 65 and older who are United States citizens, or lawful resident aliens who have resided in the United States for five years or more, and disabled individuals who are under 65 and receiving social security disability. Unlike Medicaid, there are no asset or income restrictions to receive Medicare. Once an individual turns 65, or becomes disabled and receives social security disability, that individual is eligible for enrollment in the Medicare program.
Medicare consists of four parts. Part A covers hospital care. Part B covers outpatient medical services. Medicare recipients can choose between “traditional Medicare” meaning the open-network single payer health care plan, wherein the recipient receives Part A and Part B coverage, or “Medicare Part C” which is a network plan wherein the federal government pays for private health coverage. “Medicare Part C” commonly referred to as the Medicare Advantage plan. Finally, Part D covers outpatient prescription drugs exclusively through private plans or through Medicare Advantage plans that provide prescription drug coverage.
Individuals who receive monthly Social Security or Railroad Retirement benefits are automatically enrolled in Medicare Part A and no action need be taken to enroll. However, those who are 65 and therefore eligible to enroll, but are not eligible for Social Security benefits, such as federal government employees, will have to enroll for Part A at their local Social Security office within six months of their 65th birthday.
Part A coverage is available at no cost to any person who meets the age or disability eligibility requirements and has paid Medicare taxes as part of their FICA deductions for at least forty quarters. If the person has worked less than forty quarters, Part A is available for a premium. In 2013, that monthly premium is $441.00 for those with less than thirty quarters or no work history at all, and $243.00 for those who have worked less than forty but more than thirty quarters.
Part B coverage is available to all individuals who are eligible for Part A coverage. All those who are eligible for Medicare Part A benefits will be automatically enrolled for Part B coverage unless coverage is specifically declined. Unlike Part A, Part B requires the individual to pay a monthly premium regardless of work history. The premium is based on yearly income. For example, for a married couple making $170,000 or less, the premium in 2013 is $104.90. If the individual receives a monthly Social Security check or Railroad Retirement Benefit check, the monthly premium is automatically deducted from same. All other recipients receive quarterly invoices for their Part B coverage.
An individual can dis-enroll from Part B at any time and may then re-enroll during the annual enrollment period each year. However, if an individual fails to enroll, or dis-enrolls and fails to re-enroll in Part B coverage within 12 months, there will be a penalty of 10% of the monthly premium for each year the person could have been enrolled. There is an exception for those who are over 65, working and covered by an employer group health plan. If that individual chooses not to enroll in Part B at age 65, they may wait until the first month following their retirement, without being penalized.
Part C allows participants to opt out of traditional Part A and Part B coverage and choose a private health insurance company to provide their health care coverage for them in lieu of traditional Medicare coverage. While there are many different plans Part C plans available, this article will examine one of the most popular plans, known as a health maintenance organization or “HMO.” The initial attraction to HMOs is that they offer many services that traditional Medicare would not cover, including routine medical care, dental care, prescription drugs, eyeglasses, and hearing aids. However, the disadvantage to HMOs is that the cost of the monthly premium may exceed the traditional premium plus a MediGap policy. Moreover, HMO participants are limited to the insurance company’s provider list. Therefore, the freedom to choose your doctor or other medical professionals may be restricted.
Finally, Part D coverage is distinct from the other Medicare components and allows an individual to choose a prescription drug plan that best suits them. Depending on that individual’s income, there may be a subsidy available to help cover the cost of their chosen drug plan. Currently, potential enrollees can log on to medicare.gov/find-a-plan and input their current list of prescription drugs along with their preferred pharmacy, and the website will generate a list of matching programs available to you.
October 15, 2013-December 7, 2013 is open enrollment period wherein recipients can make changes to their Part C or Part D plans for the upcoming year. During this period, recipients can change from traditional Medicare to Part C, change from Part C to traditional Medicare, which from one Part C plan to another, join a prescription drug plan, switch from one drug plan to another or drop your drug plan completely.
Navigating the Medicare program is confusing and wrought with deadlines and penalties. If you are approaching age 65 or already on Medicare but unhappy with some aspect of your coverage, contact an Elder Law attorney in your area to learn more.
By Nancy Burner, Esq. and Kim Trueman, Esq.
Friday, October 25, 2013
Taxation of a Decedent
Q: My mother recently passed away, and I was appointed as Executor of her estate. I know that I have to file tax returns, but am not sure what returns need to be filed and when the returns are due. Could you explain it to me?
A: You are correct that tax returns will have to be filed; the types of returns and when they are required to be filed are explained in greater detail below:
1. The Individual’s Income Tax Return
The first step is to file the decedent's income tax return for the year of his or her death. This return includes income earned by the decedent from January 1 through the date of death. The return is due by April 15 in the year after the decedent died. For example, if your mother died in 2013, her income tax return would be due by April 15, 2014. The return can be filed by itself, or joint with a surviving spouse.
2. The Estate’s Income Tax Return
You may also have to file a return for the estate's income. When a person dies, any income generated by assets that pass through their probate estate that exceeds $600 is taxed. The probate estate consists of assets that are held in the decedent’s sole name without a joint holder or named beneficiary. The estate's first income tax year begins immediately after death. The tax year can end on December 31 or the estate can operate on a fiscal year (e.g. April 1, 2013-March 31, 2014). It must be filed by April 15, 2014 for a December 31, 2013 year end or the 15th day of the fourth month after end of the fiscal year.
If the annual gross income of the estate is below $600, a return is not required to be filed. A tax return is also not required if all the decedent's income-producing assets pass directly to the surviving spouse or other designated joint holders or beneficiaries.
3. The Estate Tax Return
If the total value of all assets in the estate are worth less than $5.25 million (for a person who dies in 2013) no estate tax is due to the IRS and a federal estate tax return is not required.
The New York State estate tax threshold, however, is currently $1 million. An estate tax return will have to be filed with the New York State Department of Taxation and Finance and estate tax may be due if all assets in the estate are valued at or above $1 million. There is no New York State estate tax for an estate valued at less than $1 million.
If the estate is subject to federal and/or New York State estate tax, the return must be filed and the tax must be paid within nine months of the date of death. The estate is granted a six month extension to file, however, an estimated tax payment must be made within nine months. If the return is not timely filed and the tax is not paid with in the nine months, the estate is subject to interest and penalties for the late filing and/or payment.
Figuring out what tax returns to file and when they are due can be complicated. It is not advisable to try to figure this out on your own. It is best to work with your estate administration attorney and accountant to make sure that you are timely filing any returns that may due and paying any tax that may be owed.
By: Nancy Burner, Esq. & Kera Reed, Esq.
Nancy Burner & Associates, P.C. has offices in Setauket & Westhampton Beach, New York.