New York Estate Planning & Elder Law Blog

Understanding “Portability” in Estate Planning

Published on: August 1, 2013 | by Ettinger Law Firm

The last major piece of federal tax legislation was the American Tax Relief Act (ATRA). It was signed by President Obama on January 1st of this year and was passed in order to avert to so-called fiscal cliff (we went over that cliff a few months later anyway). The tax rules made permanent in ATRA have significant effects on estate planning. One such issue relates to the concept of “portability.” A recent Forbes article provides a helpful primer of some of basic portability concepts.

The first question: what is portability?

Essentially, the principle of portability applies to the estate tax exclusion amounts between couples. Right now an individual has $5.25 million that is excluded from estate taxes. That means, as a couple, two individual have $10,5 million in exclusion available. But what often happens is that one spouse dies first and transfers most (perhaps all) of their assets to the surviving spouse. Transfers to a spouse are entirely exempt, and so there is no estate tax burden.

“Funeral Shopping” – The Basics

Published on: July 26, 2013 | by Ettinger Law Firm

Last week Forbes dove into a topic that families give little attention until the task is thrust upon them: picking burial and funeral vendors. For obvious reasons, most of us have little direct experience evaluating different options for quality or negotiating to receive the best value.

For starters, as the story points out, it is important to have a specific idea of what you want at the services before calling any funeral parlor director. That is because, without an idea ahead of time, you may be persuaded to purchase many different things that you do not truly need or want. Having detailed plans in place as part of a comprehensive estate plan ahead of time can help narrow the focus.

There is a lot of pressure in any sales situation, and it can be made worse when it comes to funeral services. When a certain item is offered by the funeral parlor, a family may feel as if not agreeing to the most expensive options reflects on the value of the one who passed away. Of course this is not true, but the pressure is there. Having one’s wishes laid one with clarity ahead of time takes away much of that burden from the surviving family.

Back to the Basics: Understanding Medicaid Asset Protection Trusts in New York

Published on: July 18, 2013 | by Ettinger Law Firm

The tremendous benefit of planning ahead for possible long-term care needs cannot be explained enough. The typical New York family is understandably most concerned about paying monthly bills, attending birthday parties, fixing up the house, and the thousand other activities that fill the day. Taking the time to think about serious illness, death, and inheritance often falls quite low on the priority list.

The motto, “I’ll cross that bridge when I get there” may work well for issues that cannot be dealt with ahead of time, but that is certainly not the case when it comes to long-term care and similar elder issues. Planning makes all the difference, not just for the senior, but also their family. That is why it is critical to fight the inertia and be prudent about planning.

The MAPT

Are “Stretch IRAs” Going to be Phased Out?

Published on: July 17, 2013 | by Ettinger Law Firm

Structuring an estate plan to account for taxes can be a complex task. While state and federal estate taxes make up the majority of discussion about taxation, there are other issues to consider. For example, there are ways to structure disbursement of various assets–insurance policies, retirement accounts, and more–so that Uncle Sam takes as small a bite as possible.

Adding to the complexity is the fact that laws frequently change which either open up more opportunities or take away previously available tax-saving options. For example, last week Forbes discussed a U.S. Senate vote that may eliminate a commonly-used tax strategy.

Stretch IRAs

Comptroller Claims New York Medicaid Still Rife with Waste

Published on: July 16, 2013 | by Ettinger Law Firm

News about potential fraud and waste within the New York Medicaid system keeps on coming. It seems as if every week there is a new allegations of practices which unnecessarily cost the state money in unnecessary Medicaid payments. With Governor Cuomo’s continued focus on rooting out problems with the system, we can likely expect even more information to come out regarding these issues in the next few months.

In fact, just last week the Capitol Confidential published a story discussing how the New York Comptroller, Tom DiNapoli, recently released two new audits which suggest widespread waste in the system.

One of those audits suggests that the NY Department of Health paid out more money for certain procedures than is allowed under current Medicaid rules. The administrative rules for Medicaid set specific maximum rates for certain procedures. Care providers—from nursing homes to hospitals–know those set rates. Those facilities do not necessarily get to set their own price.

Update: Gandolfini’s Estate Faces Huge Estate Tax Liability

Published on: July 15, 2013 | by Ettinger Law Firm

Last week we discussed the recently unearthed will of former Sopranos star James Gandolfini. The document was filed with a Manhattan court late last month, with the actor’s assets being left to a wide range of people including his two children, wife, sisters, and several friends. Those earlier reports noted that Gandolfini’s assets including life insurance, real estate in Italy, and more. All told he allegedly had more than $70 million in assets.

With fortunes of that size, estate taxes are obviously an immediate concern. There are both federal and state taxes that apply to inheritances. The rates for each are different and they take effect at different income levels. Federal estate taxes apply to non-exempt assets over $5.25 million with a top rate of 40%. Alternatively, New York’s separate tax kicks in at assets over $1 million with rates between 5% and 16%.

Considering there are two levels of taxation and rates that are not trivial, it is critical to account for these potential taxes in an estate plans. Attorneys working on these issues for local residents must be intimately aware of all legal options to guard against the largest tax bills.

Adoption to Avoid Taxes — When Marriage Is Not Open to Same Sex Couples

Published on: July 11, 2013 | by Ettinger Law Firm

The discrepancy in the law related to recognition of same sex unions may lead to some bizarre moves as part of an estate plan. That is particularly true when trying to avoid large tax burdens. For example, ABC News reported last week on a story out of Pennsylvania where a long-term couple decided to have one partner adopt the other to protect their long-term financial interests.

The couple has been together for four and a half decades. Yet, state law does not allow them to marry. As a result, even though they each planned to leave all of their assets to one another in the event of death, they would not be able to take advantage of inheritance tax exemptions for spouses.

One partner explained the situation regarding state inheritance taxes, “If we just live together and Gregory willed me his assets and property and anything else, I would be liable for a 15 percent tax on the value of the estate. By adoption, that decreases to 4 percent. It’s a huge difference.”

Federal Government Makes Push to Educate Public on Long-Term Care

Published on: July 10, 2013 | by Ettinger Law Firm

It is no secret that the federal budget (and many state budgets) are stretched thin as a result of rising healthcare costs. Medicare and Medicaid obligations make up a significant piece of the pie which has grown in recent years. In fact, the push to expand public healthcare options as part of the Affordable Care Act (Obamacare) was actually done in large part to save costs. That is because it offers the opportunity to provide more preventative care which may result in less expensive emergency services needing to be provided by the government.

It is for the same reason that the U.S. Department of Health and Human Services are working to educate the public on the reality of long-term care. The more preparation by community members, the better for residents themselves as well as public coffers. To help in this effort, the Department created a new website which provides a wide range of information covering different aspects of long-term care.

You can view the website here: www.longtermcare.gov

Estate Planning Tips from the Stars – James Gandolfini’s Will Filed in Manhattan

Published on: July 9, 2013 | by Ettinger Law Firm

Last month many in the entertainment world were shocked and saddened by the sudden death of New Yorker James Gandolfini at the age of 51. His passing from an apparent heart attack is a somber reminder that none of us know for sure what the future holds.

This week reports were released discussing some of the estate details. Gandolfini’s will was made public and filed with a court in Manhattan. Wills are public documents when filed with the court. The only way to keep these matters private is by using trusts and other devices which transfer property automatically without the need to go through the probate process–Gandolfini did make some arrangements outside of the will that are not known publicly.

Gandolfini Will

Long-Term Care Insurance — Essential for New York Women?

Published on: July 8, 2013 | by Ettinger Law Firm

Our NY estate planning lawyers frequently advise local residents that in virtually all cases the single best way to prepare for possible senior care needs is by purchasing long-term care insurance (LTCI). Unfortunately, the biggest barrier for most families in securing LTCI is cost. Depending on one’s age when purchasing the product, the premiums can be prohibitive. Gender also plays a role, as women may have higher rates because of their longer life expectancy. We reported last month on one large LTCI insurer, Genworth, making the decision to institute “differential pricing” to charge women more. Reports suggest there could anywhere from a 25% to 40% gender price gap.

Of course the trajectory of these insurance costs mirror the actual costs for nursing home stays or at-home caregivers. As the price of that care rises, so does the cost of LTCI insurance.

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