New York Estate Planning & Elder Law Blog

According to a recent report by CNBC, Medicare Part B premiums are expected to rise for millions of seniors across the country in 2018, putting even more financial strain on elders trying to enjoy their golden years while living on fixed incomes. The increased costs means many seniors should prepare to pay more for their doctors visits and outpatient care.

An estimated 70 percent of Medicare Part B enrollees paying lower monthly premiums due to the “hold harmless” rule will likely see their monthly premiums jump from $25 to $134, over the average of $109 per month in 2017. The hold harmless provision is a legal clause that prevents an individual’s premiums from rising more than their Social Security cost of living adjustment for that year.

The extra amount enrollees pay will go towards paying the full amount of the $134 Part B premium and fortunately, for an estimated 28 percent of those individuals, they will still pay below that capped amount. Even higher income earners, those making $85,000 or more, will remain unchanged with rates varying from $187.50 to $428.60.

In the first part of this post, we covered the initial basics in setting up a trust. Determining your purpose for creating the trust is certainly one of the most important steps, as are determining which individuals will be involved in the trust and how you want to go about establishing the trust. However, once the initial legwork is done, you need to focus on making sure that your trust will be able to fulfill the goals you have established it for. Working with an experienced estate planning attorney is an important part of making sure your trust continues to comply with changing laws and continues to retain value so as to meet the goals you have established for it.

Funding Your Trust

Once you have created a living trust, you need to appropriately fund it. One of the basic reasons many people have for establishing a living trust is so that the assets they want to place into it can avoid probate. To that end, it is important to make sure you have properly transferred the correct assets into the trust. Real estate assets are often one of the most important assets for a trust, but you will also want to consider the benefits of transferring your personal assets into the trust as well depending on what your ultimate goals are. Transferring assets to fund the trust can be as simple as changing title to some assets while other can involve a much more complex process.

It is no secret that we live in an increasingly globalized world. That means it is becoming more and more common for individuals to find themselves abroad for any number of reasons that may include work, family, retirement, or even simply a desire to travel extensively. Whatever the reason for being abroad, United States citizens that are abroad for an extended period of time are likely to acquire some kind of property. In fact, for many individuals the affordable nature of assets abroad is one of the most appealing reasons for going abroad. But what happens to those assets when they are transferred in a comprehensive estate plan? A recent article from the New Jersey Law Journal highlights the fact that international estate planning can be difficult, but an experienced estate planning attorney can make a big difference.

The IRS and Foreign Asset Trusts

One of the most important things to ensure is that any foreign trusts established by U.S. citizens abroad have been established for purposes other than avoiding U.S. taxes. When the individual that creates the trust passes on and it is time for those assets to be distributed to heirs, the IRS will look at the trust’s structure and purpose to determine whether the trust was created for a legitimate purpose or for the sole purpose of avoiding U.S. tax penalties.

An often-overlooked part of estate planning is social security. We often hear that social security is not enough for an individual to live on during retirement, especially given that people are living longer lives and often require additional medical care when reaching an advanced age. However, social security can actually be an important part of your retirement planning – and consequently an important part of your comprehensive estate plan. That means that social security survivor benefits could play a bigger role in your retirement and estate planning than you may have thought.

How do survivor benefits work?

Credits are an important part of determining what social security benefits a person is eligible for, if any. Workers earn credits through their individual earnings each year. The maximum number of credits a worker can earn in a year is four. You must attain a certain number of these credits over your lifetime in order to qualify for certain benefits. If you take a break from working for a number of years, your credits still remain on your social security record and you can begin accumulating them again once you return to the workforce.

A recent study by the UCLA Fielding School of Public Health suggests the number of Americans suffering from Alzheimer’s or other cognitive impairments could more than double by 2060. Currently, an estimated 6 million Americans suffer from the disease and if the study holds to be true, that number could increase to a staggering 15 million over the next few decades.

Published in The Journal of the Alzheimer’s Association, the study examined some of the largest reviews on the rates and progression of Alzheimer’s disease and dementia and applied a computer model that took into account the aging U.S. population. Of the 15 million Americans expected to suffer from cognitive impairments, 5.7 million are expected to have a mild condition while the remainder will likely be diagnosed with dementia due to Alzheimer’s, with 4 million requiring nursing home care.

In a statement to the UCLA Newsroom, the author of the study Ron Brookmeyer said, “There are about 47 million people in the U.S. today who have some evidence of preclinical Alzheimer’s, which means they have either a build-up of protein fragments called beta-amyloid or neurodegeneration of the brain but don’t yet have symptoms.”

According to a recent report by CNBC, over half of the revenue generated by the nation’s top five-insurance companies comes from federal government funds provided by Medicare and Medicaid., more than doubling since the Affordable Care Act (ACA) came into effect. Those insurers generated a combined $92.5 billion in revenue from CMS programs in 2010 compared to $213.1 billion in 2016.

Citing analysis from the journal Health Affairs, the article suggests lawmakers could improve the outlook for ACA healthcare exchanges by requiring companies that draw federal funds to offer plans through the ACA marketplace. Such a move could have promising outcomes, given the face that many insurance companies have pulled out of the ACA healthcare markets over increased operating costs.

UnitedHealthcare, Aetna, Anthem, Cigna and Humana reportedly draw 59 percent of their revenue from CMS programs while adding an estimated 23 million individuals to their plans over the same period. The same Health Affairs report also purports those five-major insurance companies have a combined 125 million members across the country and have been quite profitable since all Americans have been forced into buying health insurance coverage.

Estate planning can be a confusing topic, especially when considering it along with financial planning. It can be even more confusing given the current debate over tax cuts and how they will impact the economy if they are enacted. A recent article from MarketWatch.com paints a rather bleak picture of the cost of tax cuts for middle class families, especially when it comes to estate planning in the future. However, understanding how these tax cuts could impact your estate plan is an important first step in navigating the complexities they may bring with them.

Impact of Public Deficits

According to the article, the Congressional Budget Office is projecting increased deficits if we remain on our current course. If we factor in proposed tax cuts, those deficits are predicted to increase even more. When combined with the ever-increasing cost of health care, especially long-term health care at an advanced age, these deficits may make it harder for younger individuals to save for retirement. This is especially true if important social programs, like social security and Medicare, start to experience cuts or even begin to run dry. The increase in public deficits that many analysts predict will accompany the proposed tax cuts are likely to put increased pressure on these important supplemental income programs and the programs in turn are likely to experience significant cuts in addition to already predicted shortfalls

A U.S. District Court judge recently ruled that medical malpractice victimss receiving benefits from Medicare must pay back the federal government for medical care in cases where plaintiffs make a successful recovery in their claims. The victim’s wife brought the claim against the Center for Medicare and Medicaid Studies (CMS) in an attempt to block the agency’s action to collect on $171,537.04 in medical coverage paid out from the time of the victim’s diagnosis until his passing.

The case began in April 2007 when doctors diagnosed the victim with prostate cancer after initially failing to to so in a timely manner. From the time of the victim’s diagnosis until his passing in January 2012, Medicare conditionally paid the victim’s medical bills, which totaled $253,546.73.

In 2009, the victim and his wife filed a medical malpractice lawsuit in Cook County Circuit Court in Illinois against the victim’s primary care physician and urologist, arguing the defendant’s failed to make a timely diagnosis. After the victim’s passing, his wife became the administrator of his estate and continued the lawsuit on his behalf to recover for their damages under the Illinois Survival Act.

Estate planning is sometimes thought of as something older, more established individuals engage in when they have kids to worry about and significant assets to protect. While it is never too early to start thinking about comprehensive estate planning, it is also important to be aware of and avoid some very common financial mistakes that can occur at any age and end up significantly impacting your estate plan and the assets you are able to leave behind to your heirs. Recently, The Huffington Post ran an article discussing some of these common financial missteps. Some of them are included below, and being aware of them can help make sure you understand their significance and can take steps to avoid them. This is not an exhaustive list, but an experienced estate planning attorney can work with you in making sure that your finances are moving in the right direction in order to support the estate planning objectives you have set for yourself.

Breaking Your Budget

Vacations and treating yourself are fine ways to enjoy your hard-earned money. However, it is important to make sure you incorporate these things are part of a well-balanced budget so that you don’t completely drain your savings and find yourself in need of resources that are no longer there. Creating a safety net for emergencies is a good way to make sure you can handle unexpected expenses that could appear out of the blue. You may be hit with medical bills, a family emergency, car repairs, or even loss of a job. Planning ahead will help you navigate these obstacles much more successfully.

For both practical and philanthropic reasons, charitable giving can be an important part of your estate planning strategy. However, it is important to approach charitable giving in estate planning in a responsible manner to make sure that you are getting the most out of it while being sure your objectives for charitable giving are being met.

Keep Tax Consequences in Mind

Tax consequences can play a significant role in our decisions to give to charity on a yearly basis, so it is no surprised that they play a significant role in our decision as to how to distribute assets to charity on death. Donations to qualified charities are tax deductible up to 50 percent of your adjusted gross income, which means that giving a little extra to charity could help you and your family save on taxes when it comes to inheritances.