Question: I heard that there were changes to the STAR property tax relief program. Will I be affected? Does it matter that my house has been transferred into an Irrevocable Trust?

Answer: It depends. The Basic STAR program is available for primary residences where the resident owners’ and spouses’ annual income is less than $500,000.00. Enhanced STAR provides an increased benefit for the primary residences of senior citizens (aged 65 and older) with annual income less than $84,550.00. The STAR program provides a tax break for those who qualify. Typically, if you qualify for the STAR program, you will see the discount indicated on your tax bill. The Department of Taxation and Finance has released changes in how certain homeowners will apply for STAR and how they will receive their STAR benefit.

For homeowners that purchased their home between May 1, 2015 and August 1, 2015, the homeowner may need to register to receive the STAR credit if the home was purchased after the 2015 STAR application deadline (March 1, 2015 in Suffolk County) or the homeowner did not apply for the STAR exemption. For homeowners that purchase their home after August 1, 2015, the homeowner will need to register for the STAR credit. For anyone else, no action is required and the homeowner will continue to receive the STAR exemption. If the homeowner falls into either category where they need to apply for the STAR credit, the way the homeowner receives the benefit will change. Instead of seeing a deduction on their tax bill, the homeowner will pay the tax bill in full and then receive a refund check in the mail.

It is important to understand that if your house has been transferred into an Irrevocable Trust and you receive a check in the name of the Trust, you cannot deposit this check into your personal bank account. The check must be deposited into an account in the name of the Trust by the Trustee. Some examples of checks that may come payable to the Trust would be a property tax freeze credit or dividends from investments accounts. This is why it is a good idea to open up a bank account in the name of the Trust soon after the Trust is fully executed. This way if you receive any checks in the name of the Trust, your Trustee will be able to easily endorse and deposit the check into the established Trust bank account.

If you have any questions regarding your Irrevocable Trust or estate planning documents, you should consult an expert in your area.