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New York Estate Planning & Elder Law Blog

Federal “Super Committee” May Target Gift Tax in Deficit Reduction Scheme

Published on: November 1, 2011 | by Ettinger Law Firm

The gift tax has implications in a variety of New York estate planning situations, from deciding the best way to provide aid to loved ones to conducting business succession planning. As with many other tax issues, timing is important because lawmakers at the federal and state level can change these rates. While the risk of rate changes always exists, there has been significant discussion as of late about a variety of potential changes involving the 12-member federal “Super Committee.” The Super Committee has been charged by Congress with reducing the federal deficit by $1.5 trillion over the next ten years. To do so, the group will have to enact a combination of spending reductions and tax changes. No matter what combination they ultimately decide upon, it is highly likely that their work will have effects on local residents crafting their New York estate plan.

For example, last week the Wall Street Journal’s Market Watch published a story explaining proposed changes to gift tax exclusions. The specific committee meetings are mostly private, so some of the recent thoughts on the committee’s actions are speculative. However, it is known that one of the President’s proposed recommendations to the committee includes reducing the estate, gift, and generation-skipping transfer tax thresholds. The proposal would reduce the tax-free gift threshold to its 2009 level of $1 million. Currently the tax-free threshold is supposed to stay at $5 million until the end of 2012. However, many are speculating that the committee may decide to return the exclusion back to $1 million a year early as a cost-saving measure.

The story’s author summarizes the changes by noting, “Overall tax planning and gift tax thresholds that are now available could be at risk for families…not much good can come from the committee’s recommendations from a wealth preservation perspective.” Clearly, the potential actions by this group may make it important for some local residents to take long-term financial actions now. Our New York estate planning attorneys urge all community members who may be affected by these changes to visit with a professional to either create a plan or update an existing one. Depending on the advice received, it may be prudent to accelerate planned lifetime gifts, review estate-tax funding mechanisms, or otherwise revise estate plans.

More Americans Financially Supporting Aging Parents

Published on: October 31, 2011 | by Ettinger Law Firm

Last week Reuters discussed the growing number of adult Americans who are financially supporting their senior parents. As the author quips, many of these residents have becomes the “Bank of Sons and Daughters” after the recent financial crisis decimated the savings of many elderly family members. According to MetLife‘s new National Health and Retirement Study, the percentage of adult children spending time and money on their parent’s care has tripled in the last decade and a half. This comes as no surprise to our New York elder law attorneys who know that rising long-term care costs, the economic downturn, and failure to plan ahead for senior care places many families in tough situations when a loved one ages and needs extra day-to-day care.

The MetLife data found that roughly a quarter of all adults are currently providing at least some financial assistance to their parents. A similar survey from Caring.com suggests that adult children may be providing even more support, as thirty two percent of respondents said they’ve spent at least $5,000 on their parents’ living expenses within the last year. A large majority of that group admitted that supporting their parents leads them to worry about their own long-term financial situation. As one researcher involved in the data collection explained, “There are just a ton of families where the second or third generation needs to help the first generation. People are asking, a lot, about how to do it.”

Not only does financially supporting aging parents often place stress on the finances of the adult children, but, if not done properly, it may actually be harmful to the senior. As each New York elder law attorney at our firm has explained to local residents, it is important to properly tailor financial gifts such that they don’t inadvertently disqualify the parent from government benefits. Certain programs are in place to help seniors receive the care they need even if they do not have the resources to purchase it. However, qualification for those programs, such as New York Medicaid, is based on need. If adult children do not take those qualifications into account, they may unknowingly complicate their parent’s program participation.

Baby Boomers Discuss Retirement and Long-Term Living Plans Amid Tough Economy

Published on: October 28, 2011 | by Ettinger Law Firm

It is no surprise that only 9% of Baby Boomers stated in a new Associated Press poll that they were “strongly convinced” that they would be able to live comfortably when they retired. With financial affairs in flux for many members of the 77-million strong Baby Boomer generation, many are beginning to reevaluate their retirement plans. Our New York elder law estate planning attorneys know that a growing number of local residents find themselves worrying about whether they will be able to live out their golden years in comfort.

One single 53-year old woman profiled in an Associated Press story on the Baby Boomer retirement situation explained that she once planned to retire at sixty and move to the beach. Those plans changed when her pension was eliminated five years ago, her personal investments tanked, and her home of 21 years lost half its value. Now she is not sure what her future holds, but she doesn’t expect to move any time soon. When asked about potentially moving when he retired, a 60-year old small business owner explained, “It just depends on what happens to the economy. I’d like to find someplace warmer and doesn’t have the high taxes, but we’ll just have to see.” Many local residents find themselves in the same situation.

The latest poll on the topic found that about 60% of Boomers had retirement plans, personal investments, and real estate that lost value in the latest recession. As a result, more than half of that group expects to delay their retirement. According to the research, 73% of respondents claimed that they will continue to do some work even after they retire. These delayed retirement plans have also led many Boomers to admit that they no longer expect to move out of their current home, and a majority claim that they plan to live out their golden years exactly where they are now. Other priorities for soon-to-be retirees include living near their children and being close to necessary medical care.

Economic Uncertainty Leads to Rise in Estate Planning Interest

Published on: October 27, 2011 | by Ettinger Law Firm

An article this week from West Fair Online explained how professionals working with residents on financial issues have seen a significant increase in demand for their services as of late. While there may be a tendency among some to become paralyzed when the economy is so volatile, many others view the instability as a time to act prudently and plan ahead as much as possible. The article reports what our New York estate planners have long known: the need to have an estate plan remains strong regardless of the circumstances.

Experts know that the need for prudent planning is perhaps even more important at times like these, when there tax and policy uncertainties at the local, state, and federal levels. One planner interviewed for the story explained how in turbulent financial times “the area’s residents should have a vested interest in knowing what the stakes are for their assets.” While those residents at the top income levels are often more aware of how the laws affect them, many middle class families have just as much to gain by using the legal tools available to plan their financial future and save taxes in the long-term.

Most observers have applauded the steady rise in estate planning awareness. However, there are still a few groups which continue to neglect their planning needs. For example, many local small business owners continue to miss out on opportunities to visit with a New York estate planning lawyer to take care of long-term financial goals. Of course, small business owners wear many hats. Rarely do they have time to accomplish everything on their “to do” list each day. Yet, many benefits have been reported by those who have carved out time to visit with financial professionals to protect assets, create a succession plan, and conduct similar tasks.

New Companion Service Provides New York Elder Care at Senior’s Own Home

Published on: October 26, 2011 | by Ettinger Law Firm

The aging of the population both in our state and throughout the country is leading many community members to re-think the best way to provide long-term care for seniors when they reach their golden years. In the past, options for seniors were few and far between. In most cases a senior lived on their own for as long as they could. When extra care was needed it was provided by a close relative if possible. If no relative was able to provide the care, or the senior’s needs were more than a relative could handle, then the individual ended up in a nursing home. Most seniors in our area were unable to pay for that nursing home care on their own, and so it was paid for by New York Medicaid programs. However, most of the seniors’ assets built up over a lifetime were lost to pay for the care or to qualify for Medicaid participation.

Recently, there has been an explosion in new options available to area seniors and their families, particularly for those families that take the time to visit with a New York elder law attorney to plan ahead for this stage in life. For example, many assisted-living facilities have been built which allow seniors to receive day-to-day aid from professionals while keeping much more independence than that found in traditional nursing homes. Other services are popping up which allow seniors to receive extra care without leaving their home at all.

For example, this week Bright Days Home Care, a new “senior companion” service announced that it was opening its doors to provide assistance for local residents. The New York elder care service provides companions to visit the homes of seniors on a particular schedule to provide any manner of aid necessary. This new service provides non-medical care, which may include anything from buying groceries and making dinner to cleaning the house and chatting with the senior about their day. In addition, the company’s founder explains that the at-home service also helps local families find other resources. She notes that they “are committed to ensuring that people are aware of the plethora of options that are available.”

Proposed Tax Policy Changes May Affect Future Options for Estate Planners

Published on: October 25, 2011 | by Ettinger Law Firm

Any time is a good one for local residents to conduct New York estate planning, because no one can say with certainty what tomorrow will bring. Having a plan in place provides the peace of mind of knowing that affairs will be handled no matter what the future holds. However, as reported this weekend in the New York Times, proposed federal tax changes should act as even more motivation to take advantage of planning options now which may not be available in the coming years.

National policymakers continue to disagree about budget deficit reduction strategies, with countless variations of tax increases and spending cuts proposed. No one can say with any confidence what may happen. However, experts continue to explain that it is always advisable to plan for what is known and not for what one speculates might happen. A variety of tax changes may go into effect next year or the following year, and so it may be advisable to take steps now to plan for their long-term financial affairs. A key part of that process for local residents involves visiting a New York estate planning lawyer to have a plan created or updated.

For example, observers note that it may be advantageous for those thinking of transferring ownership of a company or other property to adult children to do so in 2011 or 2012 while there is a $5 million exemption from gift taxes. At the current schedule by 2013 that exemption will drop to only $1 million and the tax rate itself is set to increase from 35% to 55%. As an experienced New York estate planning lawyer can explain, personal gifts may be an important part of reducing eventual estate taxes. Individuals can give up to $13,000 annually without tax to anyone, and couples can double that amount. One expert explained that a popular way that parents and grandparents can utilize the $13,000 annual exclusion is to set up a Roth I.R.A. for a student who has a side job. As long as the relative has some earned income, than an I.R.A. account may be opened for them.

New York Elder Center Opens for GLBT Seniors

Published on: October 24, 2011 | by Ettinger Law Firm

The New York elder law estate planning attorneys at our firm have worked for years with local GLBT residents on the unique issues that they face when planning for their long-term financial, social, and physical well being. Even though New York leveled the playing field this year by passing legislation which allowed same sex couples to marry, these families continue to face complexities in their planning because of inequalities at the federal level. Same sex couples still need to take special steps to ensure that their assets are protected and distributed according to their wishes.

Beyond estate planning needs, senior members of the GBLT community also continue to face unique challenges when planning for their long-term well being. The latest research reported in MetLife’s “Out and Aging Study” found that three out of four GLBT seniors lived alone. In addition, these seniors are much less likely to have children than their heterosexual counterparts. As a result they are often less likely to have relatives able to help care for them as they age. Of course, GLBT seniors encounter the same problems as they as age as the rest of the community, and so these demographic differences mean that they have a particular need to conduct New York elder care planning to ensure necessary resources will be available in their golden years.

Unfortunately, our New York elder law attorneys know that many GLBT seniors fail to properly plan for their long-term healthcare needs. Many elder care advocates recognize the unique vulnerabilities of these seniors and are working to help. In an effort to provide the necessary aid, this weekend local officials announced the opening of the nation’s first GLBT Senior Center. As explained in the New York Examiner, the Services and Advocacy for GLBT Elders Center (SAGE) is expected to open in January in Manhattan. GLBT seniors in all five New York City boroughs will be able to benefit from the facility. As Mayor Bloomberg noted during the announcement, “The needs of seniors have evolved since senior centers were created fifty years ago, and now is the time to re-envision the one-size-fits-all approach that has traditionally shaped many of our centers.”

New York Estate Planning Best Done Before Health Declines

Published on: October 21, 2011 | by Ettinger Law Firm

When it comes to New York estate planning, timing matters. While it is always better to conduct some long-term financial and well-being preparation than none, there is a large benefit to handling the planning while one is still capable. This means before a medical emergency strikes. Of course, it is also necessary to regularly update the plan so that it accounts for changes in life circumstances. On Wednesday, Forbes published an article that emphasizes the importance of planning before a serious medical or financial setback makes things more complicated. The article was part of a week-long series shared to promote National Estate Planning Awareness Week.

Our New York elder law estate planning attorneys help seniors every day who want to ensure that their long-term financial affairs are in order and to bring peace of mind by planning for end of life care. However, we are aware that a large segment of the population still has not taken the time to make necessary preparations. According to the National Association of Estate Planners & Councils, more than 120 million Americans have not created or properly updated their estate plans. While it remains tough for many residents to discuss these topics, there is far too much to gain to put off having conversations about long-term needs.

If you have an elder relative who has not yet crafted an estate plan or made preparations for long-term healthcare, it is often helpful to gently mention the benefit of the planning effort to them. Many residents wait too long to take action and fail to have any plan in place when they fall into poor health and need special care services. Having plans in place ahead of time, before a major illness, often means that the senior can preserve a much larger portion of their savings and can receive the best available long-term care that maximizes their quality of life.

State Takes Steps to Eliminate New York Medicaid Caseworkers

Published on: October 20, 2011 | by Ettinger Law Firm

Syracuse News reported this week on public concern over changes that are about to take effect within the New York Medicaid system. Per the planned alterations, many local residents with developmental disabilities will lose their caseworkers as that task is soon to be outsourced to non-profit agencies in the state. Currently, many of these residents receive assistance from a group of public employees known as Medicaid service coordinators. However, these residents have been instructed that by the end of this week they must select a non-profit to take over this function.

Many community members are concerned about the effect the changes will have on their vulnerable family members with disabilities who have grown familiar with their personal caseworkers over many years. The service coordinators function as advocates for program participants, developing relationships with the clients and helping their family find the services that they need. Many coordinators have helped families find appropriate educational opportunities, arrange for respite care, and have linked participants with employment programs. Our New York Medicaid attorneys are aware of the complications that are intrinsic in working through the Medicaid system, as we also devote our time helping local residents work within the system to protect their assets while receiving the resources that they need to get by each day.

Cost-cutting is the state’s motivation for changing the way the services are provided. The state spokesman for the Office for People with Developmental Disabilities reported that non-profit agencies already handle roughly eighty percent of Medicaid service coordination in the state. Nonprofit agencies explain that they are prepared to handle their expanded role. However, they also report that it may be difficult to complete the transition in a month–which is the goal of the administration. Even if the changes go through, there is a chance that families may be able to remain with the same service coordinator if that coordinator is hired by a nonprofit after leaving the state payroll. The program shift will allow the state to cut 300 service coordinators who had previously served about 10,000 local residents. Current service coordinators may try to approve an amended contract and submit it to the state in an effort to halt the layoffs. However, there is no guarantee that the privatization effort will be halted.

New York Estate Plan Lawyer Shares Value of Business Succession Plans

Published on: October 19, 2011 | by Ettinger Law Firm

Many local residents believe that crafting a New York estate plan only involves making of list of who will receive what at death and taking steps to ensure that taxes are saved in the process. While these issues are all important aspects of long-term planning, many others factors are also considered. Our New York estate planning lawyers tailor each plan uniquely to every new client, and no two community members are exactly the same. For example, many local families own and run businesses. It is incredibly important for these families to work on proper business succession planning when they consider their long-term preparations.

This weekend the Times Herald-Record published an article written by our New York estate planning attorney Bonnie Kraham, Esq, that explores the importance of business succession planning. Attorney Kraham explains how only a minority of family-owned business survive beyond the first generation. While 90% of all American businesses are family owned, 70% of them will end when the founding family member passes on. Only 15% of those current businesses will make it to a third generation. A large part of the declining rates and lack of longevity is the failure of many of these companies to have a business succession plan.

These plans take time, as the original entrepreneur should be around to help monitor the next generation for five to ten years while the process unfolds. A good rule of thumb is for the elder member to begin implementing the changes around the age of sixty. Of course the actual plan itself should be a collaborative process with input from the entrepreneur as well as the successors. There are many different variables to take into account, including the feelings, ambitions, and goals of all those involved. When done well the plan should also include input from a variety of professionals. Lawyers are necessary for the estate planning and agreement preparation, accountants should consider taxes, and financial advisors can determine the best investment strategies.