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Suffolk County, NY Estate Planning and Elder Law Blog

Wednesday, December 7, 2016

In Terrorem Clauses

In Terrorem is a term derived from Latin which translates to “in fear”.  An In Terrorem provision in a Decedent’s Last Will and Testament “threatens” that if a beneficiary challenges the Will then the challenging beneficiary will be disinherited (or given a specified dollar amount) instead of inheriting the full gift provided for in the Will.  An in terrorem clause is intended to discourage beneficiaries from contesting the Will after the testator’s death.  New York law recognizes in terrorem clauses, however, they are strictly construed.  

An example of an in terrorem clause might read as follows:

"If any person shall at any time commence a proceedings to have this Will set aside or declared invalid or to contest any part or all of the provisions included in this Will they shall forfeit any interest in my estate.


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Monday, December 5, 2016

Mortgages and Irrevocable Trusts

Question: Am I able to obtain a mortgage on my real property if it is owned by an irrevocable Medicaid trust? Can a bank demand that an existing mortgage be due in full if I transfer my property to an irrevocable Medicaid trust?

Answer: It depends on what kind of financing you are looking to obtain. Unfortunately, most banks will not offer traditional mortgages or home equity lines of credit against real property owned by an irrevocable trust. Luckily, in New York State an irrevocable Medicaid trust can be revoked, meaning you can remove a property you wish to mortgage from the irrevocable Medicaid trust so long as you obtain the consent of all those who are beneficially interested in the trust. This should always be done with the help of an attorney as the consent must comply with strict requirements.

Keep in mind that if you remove a property from an irrevocable Medicaid trust to obtain financing, and later transfer the property back to the irrevocable Medicaid trust, it will re-start the look-back period.


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Wednesday, November 23, 2016

Gifting and Medicaid

Question: My mother is widowed and is beginning to decline in health.  I have four siblings.  We know that in order to qualify for Medicaid, Mom cannot have more than a certain amount of assets in her name.  She rents a house, but has approximately $150,000.00 in various CD accounts.  A friend of hers told her that she can give up to $14,000.00 to each of us annually without penalty and still qualify for Medicaid if she needs it in the future, she would like to give these gifts before the year end so that she can gift again in 2017, is this advisable?

Answer: NO!  We often see clients who believed this to be true, and thinking that they were doing the prudent thing did exactly this sort of gifting, resulting in long periods of ineligibility when the time came to apply for Medicaid. To begin with, what your friend is likely referring to is the $14,000.00 gift exemption under the Internal Revenue Code.  Under the Code, all gifts made in any given year are subject to a gift tax.  However, the first $14,000.00 gifted to each individual in any given year is exempted from the gift tax, and for that reason, for many individuals, gifting during lifetime is a way to distribute wealth and reduce their taxable estate at death.

Oftentimes, seniors and their children believe that this same exemption holds true for Medicaid eligibility, and that gifting this amount of money away annually will not affect them should they need to apply for Medicaid benefits in the future. Medicaid requires that all Medicaid applicants account for all gifts and transfers made in the five years prior to applying for Institutional Medicaid.  These gifts are totaled, and for each approximately $12,633.00 that was gifted, one month of Medicaid ineligibility is imposed.  It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home rather than on the day that the gift was made. 


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Monday, November 21, 2016

Do I Need to Go to a Lawyer to Get a Power of Attorney?

Q:  Do I need to go to a lawyer to get a power of attorney?

A:  It is best practice to seek the counsel of a lawyer when executing a New York State Power of Attorney, especially when you expect the document to give another person the full ability to handle your financial affairs if you should become incapacitated.  The power of attorney document is valid when you sign it before a notary and it stays in effect upon incapacity.  Any power that you wish to give to another person to handle your affairs must be specifically stated in the document.

As lawyers, we see documents that have been downloaded from the internet and the result is often that they are ineffective.  New York State law regarding powers of attorney changed drastically in 2009 with a few corrections in 2010.  Any form signed after the changes must conform to the new laws and the new statutory form.  Many times the forms found on the internet are from before the updates in the law. 

Another problem with using a form downloaded from the internet is that it is not always as complete as it can be.  The current New York State form power of attorney has a section for certain modifications.  This is the only part of the statutory form that can be altered and it allows you to give your agent very specific powers over your affairs.  Without the guidance of a lawyer, it would be extremely difficult to anticipate the types of powers that your agent may need and even more difficult to properly draft them into the document.  In the field of elder law, powers are often added regarding retirement accounts, life insurance policies, health insurance billing, and applying for government benefits, including Medicaid, to help pay the costs of long term care. 


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Monday, November 14, 2016

Aging in Place

Question: My Mom is starting to require some assistance with her daily activities and I promised her that we would never send her to a Nursing Home, what are my options for care in the home?

Answer: For most of us, if a time ever came that we needed assistance, the preferred option would be to remain at home and receive whatever care services we needed in our familiar setting surrounded by family.  For many, the Community Based Long Term Care Program, commonly referred to as Community Medicaid makes that an affordable and therefore viable option. 

Oftentimes we meet with families who are under the impression that they will not qualify for these services through the Medicaid program due to their income and assets.  In most cases, that is not the case. Although an applicant for Community Medicaid must meet the necessary income and assets levels, oftentimes with planning we are able to assist in making an individual eligible with little wait.  An individual who is applying for homecare Medicaid may have no more than $14,850.00 in non-retirement liquid assets.  Retirement assets will not be counted as a resource so long as the applicant is receiving monthly distributions from the account.   An irrevocable pre-paid burial fund is also permitted as an exempt resource.  The primary residence is an exempt asset during the lifetime of the Medicaid recipient however, where the applicant owns a home it is advisable to consider additional estate planning to ensure that the home will be protected once the Medicaid recipient passes away. 


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Monday, November 14, 2016

Protecting Assets in the Context of a Guardianship Proceeding

While the best elder law and estate plan is to have a valid health care proxy naming agents and a valid durable power of attorney naming an agent to make financial decisions, not everyone has done the proper planning.  It is not uncommon for an elderly person to fall ill, be hospitalized and then need nursing home care with no time to plan.  If there are no advance directives in place, a guardianship proceeding under Article 81 of the Mental Hygiene Law may be required.  In an Article 81 proceeding the Court will making a finding that person is in need of a Guardian and has the ability to consent or the court will determine that the person lacks capacity to understand and consent.  In either case, a Guardian will be appointed to protect the person and/or property of the individual.  It is in this context that we often request that the Court will allow the Guardian the opportunity to formulate a Medicaid plan to protect assets, if possible. 

The court utilizes” the doctrine of substituted judgment” when permitting the Guardian to create a Medicaid plan.  There must be clear and convincing evidence that a competent, reasonable person in the position of the incapacitated person would adopt such a plan.  The approved Medicaid plan could include an exempt transfer of the family home to a spouse, minor, blind or disabled child, an adult sibling who resides in the home for at least one year and has an “ownership” interests in the property, or a caretaker child that has lived with the parent for 2 or more years and has cared for the parent. Assets, other than the homestead, could be transferred to a spouse or a disabled child.  The court has also approved Medicaid plans where there are transfers of assets that create periods of ineligibility provided there is a promissory note transaction or other assets, like Individual Retirement Accounts to pay for any period of ineligibility.  Of course this type of emergency planning is done all the time by competent individuals or their duly appointed agents.  In this case, the Court would be giving the Guardian the same powers if adequate proof is submitted on the application to approve a Medicaid plan.  Typically, the Court would not allow Guardians to this type of Medicaid planning, until a challenge was brought alleging that among other things, incapacitated persons were not afforded the same rights as people without disabilities.  In an important decision, the highest court in New York State, in the Matter of Shah, held:


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Friday, November 4, 2016

Aid and Attendance Pension

Question: Does the Veterans Administration provide any benefits to receive assistance at home?

 Answer: There is a benefit referred to as the improved Pension through the Department of Veteran’s Affairs (VA), more commonly referred to as Aid and Attendance Pension.  Assuming you meet the eligibility requirements, the VA permits payments to care givers (including family members, but not spouses) for care provided to the veteran and/or the spouse.  There are three main requirements to qualifying for Aid and Attendance. 

First, the claimant must have served at least 90 days active duty with one day served during wartime.  There are specific wartime periods: World War I (April 6, 1917 – November 11, 1918); World War II (December 7, 1941 – December 31, 1946); Korean conflict (June 27, 1950 – January 31, 1955); Vietnam era (February 28, 1961 – May 7, 1975 for Veterans who served in the Republic of Vietnam during that period; otherwise August 5, 1964 – May 7, 1975); or Gulf War (August 2, 1990 – through a future date to be set by law or Presidential Proclamation).  The claimant must have received a military discharge “other than dishonorable.” 

Second, the claimant must be declared permanently and totally disabled.  The definition for “permanently and total disability” is residing in a nursing home, total blindness, or so nearly blind or significantly disabled as to need or require the regular aid and attendance of another person to complete his or her daily activities.  In most circumstances, if the claimant can show he or she requires assistance


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Friday, October 28, 2016

Expectancy Interest in Transfer on Death Accounts

Q: My father is an assisted living facility and while going through some of his papers, I found that there is a bank account worth about $100,000 in his sole name that I am listed as a transfer on death (TOD) beneficiary. I have 3 other siblings that are not listed as beneficiary on this account. What are my rights as to this account?

A: The rule is that while your father is alive you only have an expectancy interest in this bank account. You have no present interest in this bank account and cannot withdraw funds for your personal use. If you are your father’s agent under his durable power of attorney you have the right to withdraw funds for solely for his use and benefit. The account is solely your father’s until his death and you have no personal right to the funds during his lifetime unless he makes a gift to you.

What this means is that if you remove funds from this bank account without your father’s permission or with your durable power of attorney before his death for your own personal use, you would destroy the expectancy interest. Destroying the expectancy interest essentially means cancelling the TOD designation on the account and losing your right to inherit the account at your father’s death.


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Friday, October 21, 2016

Gifting to Minors

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.


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Monday, October 17, 2016

ABLE Act

    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.


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Monday, October 17, 2016

Pooled Income Trusts

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. 


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Nancy Burner & Associates, P.C. has offices in Setauket, Westhampton Beach, and Manhattan New York.
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© 2016 Nancy Burner & Associates, P.C. | Copyright
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

Attorney Website Design by
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