New York Estate Planning & Elder Law Blog

A Quick Guide to Spousal Lifetime Access Trusts

Published on: November 30, 2020 | by Ettinger Law Firm

While the coronavirus pandemic has left many people uncertain about what the future holds, now might be an excellent time to take advantage of a historically low tax environment. Although it is unclear how long rates created by the Tax Cuts and Jobs Act of 2017 will remain low, remember that many provisions of this Act will automatically expire in 2026 provided Congress does not act to prolong them. With the matter of how these regulations will be handled uncertain, whoever wins the US election in several weeks will likely play a role in influencing the outcome of these regulations.

Due to uncertainty about how long the Tax Cuts and Jobs Act will remain in place, many people are taking advantage of both the high lifetime gift as well as estate tax exemptions to pass on assets to loved ones. Although there are many ways that high exemptions can be utilized, one of the best ways to make the most of these exemptions is through the use of a Spousal Lifetime Access Trust.

The Role of Spousal Lifetime Access Trusts

3 Ways to Transfer Property to a Special Needs Trust

Published on: November 27, 2020 | by Ettinger Law Firm

Special needs trusts perform the valuable role of keeping a person eligible for government benefits like Medicaid and Supplemental Security Income (SSI) while also paying for services in addition to what the government can offer. If you make the decision to establish a special needs trust for a loved one, many assets will likely be placed in the trust only after you pass away. To transfer these assets, there are several commonly used methods including living trusts, will, and other types of beneficiary designations. This article reviews several of the estate planning tools most commonly used to transfer property to a special needs trust.

# 1 – Beneficiary

Many different types of financial accounts including retirement plans like 401(ks) and IRAs, life insurance, and securities allow a person to assign a beneficiary of the assets. This beneficiary then receives the funds following the owner’s death. By assigning a special needs trust as a beneficiary, it is possible to pass on an asset without subjecting it to probate. Remember, you must list the special needs trust rather than your special needs loved one as the beneficiary. If you list your loved one as a beneficiary, this could end up jeopardizing their receipt of Medicaid or SSI.

Deciding if Now Is the Best Time for Family Gifting

Published on: November 26, 2020 | by Ettinger Law Firm

Due to not just the approaching US election but also continued economic uncertainty and a country that is dealing with the impact of the coronavirus pandemic, family gifting is likely not at the top of your list of goals. Despite its uncertainty, the current situation creates an opportunity for individuals with the appropriate types of assets to save on transfer taxes. This window of opportunity, however, will not last forever. The current $11.58 million per individual transfer tax exemption is scheduled to be reduced to $6 million on January 1, 2026. This decrease, however, could potentially be much sooner than 2026 based on who wins the US Presidential election. As a result, this article reviews some important factors that you should consider about making gifts that make the most of tax exemptions given the current state of these exemptions.

Trusts Are A Powerful Way to Transfer Assets

Passing gifts through trust allows a person to separate the timing of gifting from issues related to distribution. Additionally, placing assets in a trust also offers creditor protection which is not available if a person makes an outright gift to a beneficiary. If desired, a trust can give beneficiaries substantial control over assets consistent with those associated with enhanced creditor protection. Trusts can also be structured with transfers to them are viewed as gifts for either estate or gift tax purposes, which also allow the person transferring them to remain the owner of the property for income tax purposes. A person’s ability to pay income taxes on behalf of the trusts is then not classified as an additional gift.

What’s the Difference Between Power of Attorney and a Guardianship?

Published on: November 25, 2020 | by Ettinger Law Firm

The field of estate planning involves various types of documents. While some of these documents have long-recognized roles, people have less exposure to others and are more uncertain about the role they can play in estate plans. One commonly asked question is what the difference is between power of attorney and guardianship forms. While these documents can function similarly in some situations, they are vastly different in others. As a result, this article considers the relationship between guardianship and power of attorney documents.

The Role of Guardianship

Guardianship refers to a legal relationship established where a court assigns a person the legal right to make decisions for another individual who cannot make these choices on their own. Most times, the family member, friend, or other individual seeking guardianship files a petition in Probate Court in the county where the “ward” lives. A medical examination by a physician is often required to establish this person’s condition. If it is decided that the individual can meet essential requirements involving health or safety, the court will appoint a guardian to make decisions for this individual. Additional details about the guardianship system in New York can be found in Article 81 of the state’s Mental Hygiene Law.

Making the Most of Estate Planning Opportunities

Published on: November 21, 2020 | by Ettinger Law Firm

While it would be nice if it were, estate planning is not a once and done process. Instead, it is important to routinely review the terms of your estate plan to make sure that it is capable of achieving your goals. Reviewing estate planning documents is particularly important nowadays, during a time of low-interest rates and high exemptions which are likely to change in the not-so-distant future.

Fortunately, it is possible to create estate planning strategies that allow assets to be transferred in a way that makes the most of these terms. If you are interested in making the most of your estate plan and positioning your loved ones in the best possible manner after you pass away, you should continue reading because this article reviews some important strategies that will likely have a significant influence on your estate.

# 1 – Exemptions Are At An All-Time High

Utilizing Estate Plan to Establish Your Legacy

Published on: November 19, 2020 | by Ettinger Law Firm

Estate planning is vital if you want to leave a lasting legacy to your loved ones. Despite its importance, a survey by Caring.com, however, revealed that the number of adults in the United States than ever before are engaging in estate planning. The study found a 25% decrease in the number of individuals that have wills or similar documents since 2017. Remember, estate plans are not made for the creator, but instead are created for the benefit of your loved ones and among other advantages can avoid placing your family members and friends in the difficult position of making healthcare decisions for you in case you end up incapacitated. In the hopes of getting you started on writing an estate plan today, this article reviews 5 fast facts to remember about estate planning.

# 1 – Estate Planning Is for Everyone

Estate planning exists to protect both the creator as well as loved ones in case of incapacity or death. Despite what some people think, estate planning is not only for the wealthy. If you own any type of assets or are interested in having a say in the type of healthcare that you receive if you become incapacitated, estate planning is worth utilizing. While estate planning can be utilized to make decisions about the healthcare you receive and who will receive your assets, many people overlook estate planning because it can be difficult to face your mortality, particularly during a global pandemic.

Safe Ways to Spend Assets So You Still Qualify for Medicaid

Published on: November 17, 2020 | by Ettinger Law Firm

It’s an unfortunate reality that many people who apply for Medicaid end up discovering that they have too many assets to qualify for the program. Instead of being available to everyone, Medicaid is classified as a “needs-based” program and a successful applicant must be determined to have insufficient assets before the program will “kick in” and provide assistance.

The process of reducing a person’s assets to qualify for Medicaid is also known as “spend-down”. Like many estate planning processes, many misconceptions exist about the “spend-down” process. For example, rather than only medical care, there are various things that a person can spend on without disrupting qualification for Medicaid.

Allowable Spend-Down Categories

Protecting Assets With Caregiver Agreements

Published on: November 15, 2020 | by Ettinger Law Firm

Family members as caregivers overwhelmingly provide for elderly and disabled loved ones at home. Although a labor of love, taking care of ailing loved ones also has a market value, meaning that caretakers may be paid as a way to protect assets.

Through the use of a Caregiver Agreement, also known as a Personal Services Contract, the disabled or elderly person may transfer money to family members as compensation rather than as a gift. Gifts to family members made in the last five years before applying for Medicaid to pay for nursing home costs disqualify the applicant from receiving Medicaid for a certain period of time, known as a “penalty period.”

For example, mom depends on daughter Janice for her care. If mom gifts $100,000 to Janice, then goes into a nursing home in the next five years and applies for Medicaid, the gift to Janice will result in about a ten month penalty period. Janice will have to give the $100,000 back to mom to pay nursing home costs during the penalty period, or mom will have to use other resources to pay.

Business Succession Planning

Published on: September 30, 2020 | by Ettinger Law Firm

While ninety percent of American businesses are family owned, only about thirty percent of them continue to the next generation. Half of those again make it to the third generation. The most common reason: lack of a business succession plan.

There are many reasons owners fail to plan. In addition to confronting the issues of age and mortality, the business owner also faces potentially giving up his or her life’s work – often a venture started, nurtured and grown by him or her over many years.

Business succession planning should start while the entrepreneur is young enough to spend time monitoring the next generation, be it family or otherwise. Around the age of sixty should allow enough time, say five to ten years, for the process to begin and develop.

The Four Basic Protections of Elder Law Estate Planning

Published on: August 28, 2020 | by Ettinger Law Firm

Elder Law Estate Planning is an area of law that helps us maintain control of our lives and assets in four basic areas.

First, Elder Law is planning for disability which includes naming people who will make decisions for us if we become incapacitated. You choose the people who will act on your behalf and thereby avoid the government taking over your life in a “guardianship proceeding.” Wills do not provide for disability because they are plans for death. Living trusts, on the other hand, name trustees who manage trust affairs during incapacity. Other necessary disability planning documents include a Power of Attorney that names people who make financial and legal decisions, a Health Care Proxy that names people who will make medical decisions and a Living Will that expresses end of life decisions such as resuscitation.

Second, another protection of Elder Law is asset protection planning from the costs of long-term care. Plan A to protect assets from long-term care and nursing home costs is to buy long-term care insurance. If you do not have long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT) that protects trust assets from nursing home costs paid for by Medicaid after the assets are in the trust for five years. The MAPT protects assets from home care costs paid for by Medicaid after the assets are in the trust for two and a half years.