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Suffolk County, NY Estate Planning and Elder Law Blog

Monday, August 22, 2016

Gifting for Grandparents

In my practice as an Elder Law attorney, clients often inquire about the benefits of gifting to reduce taxes or to qualify for Medicaid. As a senior with the unexpected need for long term care in the future, the consequences of gifting may have unexpected results.

 It is a common myth that everyone should be gifting monies during their life to avoid taxation later. Currently, a person can give away during life or die with $5.45 million before any Federal estate tax is due. For married couples, this means that so long as your estate is less than $10.9 million, Federal estate taxes are not a problem. For New York State estate tax, the current exemption is $4.1875 million and is currently slated to reach the Federal estate tax exemption by 2019.

 While it is true that there are gifting estate plans which can reduce estate taxes, any gift that exceeds the annual gift exclusion must be reported on a gift tax return during the decedent’s life and is deducted from their lifetime exemption. In 2016, that exclusion is $14,000.00. However, while gifting may be good if the goal is to reduce estate tax, it can be detrimental if the donor needs Medicaid to cover the cost of long term care within 5 years of any gifts.

 It is important to remember that the $14,000 only refers to the annual gift tax exclusion under the Internal Revenue Code. The Medicaid rules and regulations are different. In New York, Medicaid requires that all applicants and their spouses account for transfers made in the five years prior to applying for Institutional Medicaid.  These gifts are totaled, and for each $12,633.00 that was gifted, one month of Medicaid ineligibility is imposed for Long Island applicants. It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home and is “otherwise eligible for Medicaid” rather than on the day that the gift was made. 


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Friday, August 19, 2016

What is Probate?


Q: What is probate?   

A:    When a person dies and leaves a Will, and there are assets in the Decedent’s individual name that do not pass by operation of law, there is a legal process that takes place that is called probate.

Before the Decedent’s Will has any legal effect, it must be admitted to probate by the Surrogate’s Court located in the county in which the Decedent died.  In other words, the Surrogate’s Court must make a determination that the Decedent’s Will is valid. 

In order for a Will to be valid in New York, it must be signed in the presence of at least two witnesses and each witness must sign in the presence of the other.  The person making the Will (sometimes called the testator) must be competent to do so of his or her own free will, and not under any duress or undue influence.
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Monday, August 15, 2016

Do I Need a Health Care Proxy

Q: Do I need a health care proxy?  Could my husband make medical decisions for me if I couldn’t make them for myself?

A:  It is a good idea to have a health care proxy.  A health care proxy is a document signed by you with two witnesses that names agents to make medical decisions for you if a doctor says that you do not have the mental capacity to make those decisions for yourself.  You can only name one agent to act at a time, but you can designate successor agents who will act if the first person named becomes unavailable or unwilling to act.  It is very important that your health care proxy states that your agent knows your wishes regarding artificial nutrition and hydration so that they may make end of life decisions on your behalf. 

If you do not have a health care proxy, under New York the Family Health Care Decisions Act which states who will be your surrogate decision maker if you are in a facility, meaning a nursing home or hospital.  This means that if you are at a regular doctor’s appointment or have hospice visiting your home, there would not be any person legally authorized to make your medical decisions.  Also, what if you husband is unavailable or unwilling to act because of his own illness or death?  Assuming your parents are deceased, the default in the law is for your children to act.  What if you have more than one child and they do not agree on a course of treatment?  Signing a health care proxy makes it clear who you choose to make your decisions and it states that you have shared your wishes with your agent regarding artificial nutrition, hydration, and other end of life treatments.  It also clearly lists the addresses and phone numbers for the agents you have named, making them easy to find in an emergency. 


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Friday, August 5, 2016

Update Your Simple Will

Question: My parents are currently in their 80s and still have their Last Will and Testaments which were prepared 40 years ago. The Wills say that everything goes to the surviving spouse and then to their children if the spouse is deceased. Are these Wills still valid? Are there any updates which should be made?

Answer: Your parents’ Wills are still valid, however, they should consider updating them to take advantage of some new planning techniques. One of the most important provisions which all Wills should incorporate is a trigger “Supplemental Needs Trust.” This is a trust for the benefit of beneficiary who is disabled in order to preserve the inheritance so that the disabled beneficiary can continue to receive their Medicaid or SSI benefits.  The trustee can use the trust assets to provide for the needs of the beneficiary which will supplement, but not supplant, their government benefits. We use the term “trigger” because Wills can be drafted so that the trust only becomes effective if, after the testator’s demise, a beneficiary is disabled and in need of this type of trust. If no beneficiary is disabled, the trust will not be triggered.

A Supplemental Needs Trust can be an enormous benefit to a disabled person who, as a result of their inheritance, would otherwise lose any means-based government benefits they were receiving. This includes spouses who may be receiving Medicaid to cover the cost of long term care. For instance, if assets pass through a Will directly to a surviving spouse who is in a nursing home and receiving Medicaid, that spouse will be ineligible for Medicaid because of the receipt of this inheritance from their spouse. However, if a spouse inherits assets in a Supplemental Needs Trust, they will not become ineligible as a result of that inheritance. Moreover, so long as the Supplemental Needs Trust is created through the spouse’s Will, as opposed to through a living trust, there is no five year look back on the inheritance to the surviving spouse on Medicaid.


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Friday, July 29, 2016

Spousal Refusal

Question: My husband may soon need a Nursing Home.  I have been told that if he needs to go to a Nursing Home, we will have to spend down all of our assets before he can be eligible for Medicaid benefits, is this true?

Answer:  No, you will not have to spend all of your assets.  Because Medicaid is a need based program, certain income and asset requirements must be met in order to be eligible.  Generally speaking, an applicant for Nursing Home care in New York may have non-retirement liquid assets in the amount of $14,850.00, retirement assets in any amount so long as he is taking a monthly distribution as calculated by the local Medicaid agency and an irrevocable prepaid burial account in any amount.  Moreover, any income received in excess of $50.00 per month must be contributed to the cost of care.  The good news is that in New York, there are certain exemptions to the eligibility requirements where the individual requiring a nursing home has a spouse still residing in the community who depends on the joint income and assets to pay expenses.  For that reason, the Medicaid program allows certain spousal allowances.  Specifically, if there is a spouse living in the community, that spouse is entitled to keep up to $2,980.50 (2016 figure) in combined income after payments of medical premiums.  What this means is that where you have a married couple and one spouse requires Nursing Home care, the community spouse can keep his or her income and as much of the institutionalized spouses income to bring them up to $2,980.50.  In addition, although the applicant is permitted to have no more than $14,850.00 in his name at the time of application (not including certain exempt retirement accounts, and an irrevocable pre-paid burial) the community spouse is permitted to keep $119,220.00 in liquid assets plus a the primary residence with a value up to $828,000.  However, under New York Law, the community spouse also has the option of signing a “spousal refusal” and, so long as that document is timely filed with the application, the Medicaid agency will determine eligibility for the institutionalized spouse without considering the assets or income of the community spouse. 


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Thursday, July 28, 2016

Nancy Burner, Esq. Announced as 2016 Brava Award Winner


SmartCEO selected Nancy Burner, Esq. as a 2016 Brava Award winner. The Brava Awards celebrate the distinguished achievements of 40 of Long Island’s top women business leaders. The 2016 Brava Award winners collectively generate more than $10.39 billion in annual revenue and employs 8,149 individuals.
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Monday, July 25, 2016

Updating Your Estate Planning Documents

Consider this scenario:  An individual executes a will in 1995. The Will leaves all of his personal property (household furnishings and other personal effects), to his friend who is also the named Executor. The rest of his estate he leaves to his two sisters. When he died in 2012, his two sisters had predeceased him. There were no other individuals named as beneficiaries of the Will.  The Executor brought a petition requesting that the Court construe the decedent’s will so that she would inherit the entire estate as the only living beneficiary in the will. The Executor stated that the decedent intended to change his will to name her as the sole beneficiary, but he died before he signed the new Will.  There was also an unwitnessed handwritten writing which left his entire estate to the Executor.    

                The Court held that the testator's intent to give his residuary estate to his two sisters was unambiguous. Having failed to anticipate, at the time that the will was executed, that his two sisters would predecease him, the Court was not allowed to find that that the decedent intended a gift of the residuary estate to his friend, the Executor.  The Court held that there were limitations on its ability to rewrite the decedent’s will to accomplish the outcome sought by the Executor.  Since the Executor was only named as the beneficiary of personal effects, she could not inherit the rest of his estate.  This is because the sisters predeceased him and they had no children, the Will failed to name a contingent beneficiary.  The result was that the individuals who would have inherited had he died without a Will, would inherit.  In the case at had he had a distant cousin, (that he never intended to leave anything), that was entitled to inherit all of his residuary estate.  If the decedent had no other known relatives, his residuary estate would have escheated to New York State at the conclusion of the administration of the estate.


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Friday, July 22, 2016

Joint Accounts Are Not Protected

Question: Someone told me to avoid probate, so I have added my two children as joint owners on my accounts or put them “in trust for” my children. Does this protect my assets from Medicaid too?

Answer: No, it does not. Adding a joint owner on bank accounts does not protect them for Medicaid purposes and neither does designating them as a beneficiary. “In trust for” accounts are a misnomer. When an account states that it is “in trust for” someone it does not mean that there is a trust created for the benefit of that person. Rather, it simply refers to a designation of who will inherit the asset when the account owner is deceased.

You are correct that adding co-owners or beneficiary designations does avoid probate. Probate is the court process whereby a Will is filed and validated by the Surrogate’s Court. As part of this process, all those individuals who would inherit had you never written a Will are entitled to notice of the probate proceeding and must consent to the admittance of your Will before assets can be distributed. If they do not consent to the probate of the Will, and/or if they file objections, it will cause unnecessary delay and cost to the estate. Accordingly, if you are disinheriting a natural heir, avoiding probate is a priority. However, if you are not disinheriting heirs, probate is not a problem. Moreover, while you can name children as beneficiaries on bank accounts, you are not able to do so for real property. If you own real property, you would still have to go through probate in order for your beneficiaries to inherit same. 


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Friday, July 15, 2016

Contesting a Will


Q: If I specifically disinherit my child in my Will, does he or she still have the right to contest my Will?

A: There are certain individuals who have the right to contest your Will even if they are specifically disinherited, whether or not they are named as a beneficiary under your Will or if they were left with a disproportionate share of your estate.  A disinherited child has the right to challenge or contest your Will because, if you died without a Will, your child would receive a share of your estate through the laws of intestacy. 

A disinherited child is required to receive notice that your Will is being offered for probate in the Surrogate’s Court by the Executor named in your Will.  One form of such notice is called a “Waiver of Process; Consent to Probate”.  The Executor is required to obtain a signed Waiver from your disinherited child.
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Friday, July 8, 2016

Trusts and Chronic Medicaid

Question:   My father is about to enter a nursing facility.  He may have to spenddown some of his money in order to qualify for Medicaid.  I was told that he could pre-pay his own funeral and he may be able to pay for his children’s funeral as well.  Is this true?

Answer:    Yes, a pre-need funeral trust allows an applicant for Medicaid to set aside money to fully fund the funeral services of their choice before their funds are exhausted down to necessary eligibility levels.  Chronic Medicaid is a program that will pay for all or part of a Nursing Home.  In order to be financially eligible for Chronic Medicaid, the applicant can have no more than $14,850.00 in liquid non-qualified assets, an unlimited amount of retirement assets so long as the applicant is taking a monthly required distribution and an irrevocable pre-paid funeral trust.

If the applicant exceeds $14,850.00 in liquid assets, there are certain planning mechanisms that can be used in order to qualify the applicant for Chronic Medicaid benefits.  One of those mechanisms is establishing an irrevocable pre-need funeral.  New York State Law mandates that pre-need burial trusts for applicants or recipients of Medicaid be irrevocable.  This means that the prearrangement may not be canceled prior to death nor can funds be refunded if the actual funeral costs are less than then funded agreement.  Thereby, an individual with a revocable agreement would have to convert it to an irrevocable agreement if they were to require Medicaid in the future.  The Medicaid applicant is also permitted to set up pre-needs for a spouse, minor and adult children, stepchildren, brothers, sisters, parents and the spouses of these persons.   


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Wednesday, July 6, 2016

Can I Resign or Decline Being an Executor?

Question:  My sister recently passed away and I just found out that I was named executor of her Will.   I am really busy with my job and family and really do not want to serve.  Can I decline or resign from being executor?

Answer:  Just because you are nominated as executor of a Will does not mean that you must serve.  You can renounce your rights as executor and decline to act by simply signing and having notarized a Renunciation of Nominated Executor form and filing it with the Surrogate’s Court in the county in which your sister resided.  If the Will nominates a successor executor, that individual would then have the right to seek to probate your sister’s Will. If the first named executor predeceased your sister and you were named as the successor, then one of the beneficiaries of your sister’s will may petition the Court for the probate of the Will. The proceeding where someone not named in the Will petitions the Court for the probate of a Will is called an Administration c.t.a., this is Latin for with Administration with the will annexed.

            If an executor who has already been appointed by the Court wishes to resign, he/she must file a petition with the Court seeking permission to resign.  In the petition for permission to resign as executor, the petitioner must demonstrate “good cause”, and the decision of whether the executor will be permitted to resign rests with the Court.  The Court will evaluate whether the executor’s request to resign is in the best interests of the estate.  If the executor is unable to establish that the resignation is in the best interests of the estate, the Court may deny the request.  In addition, in certain circumstances, the court may also charge the resigning executor with the fees associated with the resignation proceeding if they find that the resignation is not for “good cause”. An example of this would be if an executor is resigning because he/she cannot get along with a co-fiduciary.


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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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