New York Estate Planning & Elder Law Blog

What is a Qualified Personal Residence Trust?

Published on: September 9, 2017 | by Ettinger Law Firm

When planning their estate, many individuals consider setting up some form of trust to avoid family squabbles over assets, particularly the home. To achieve the goal of a smooth transition of assets and maintaining family harmony, most folks choose to set up some form of trust to avoid probate and reduce the amount of time and money executors need to spend in court.

Although many may not realize the significant wealth they have accumulated over the course of their life, the reality can quickly set it when it comes time to pay estate or gift taxes when passing on a home to heirs. After decades of skyrocketing real estate prices, home that were once purchased for several thousand dollars may now be worth millions, depending on the condition of the home and location.

One way for highly wealthy people to pass on their home with as little tax liability to heirs as possible is the creation of a qualified personal residence trust. Just like any type of estate plan, there are benefits and drawbacks to consider and it is strongly advised individuals consult with an experienced estate planning attorney to draw up trusts and wills.

Estate Planning for Your Pets

Published on: September 8, 2017 | by Ettinger Law Firm

For many people, pets are more than just entertainment. They can easily become part of your family, making memories more special and providing endless enjoyment for their human companions. Given the important role pets play in our lives, it is important to consider them when engaging in estate planning. This is especially true when an individual has a less traditional pet or a pet with special needs that may require extensive care were the pet’s human companion to pass. There are several ways to ensure that your pet or pets are taken care of should something happen to you.

Pet Provisions

While we may view pets as being a member of the family, the law sees them as property. Therefore, it is important to make sure that you include specific provisions in your Will that name the person or persons that will be responsible for caring for your pet. You will also have the opportunity to set aside funds for pet care in your Will. It is important to be specific about whom should inherit your pet as well as what assets you ill bequeath them, if any. It is also a good idea to discuss pet care with the person you have in mind prior to naming them in your Will to determine whether or not they are in a position to adequately care for your pet.

Do Not Forget Yourself in Your Estate Plan

Published on: September 6, 2017 | by Ettinger Law Firm

For the most part, most of your comprehensive estate planning is aimed at making sure other people are taken care of after your death. However, providing for others is not the only goal of estate planning in today’s world. As we begin to live longer lives, we must also take our own potential needs into consideration when designing an estate plan. Recently, Forbes ran an article that pointed out many people make a huge mistake when engaging in estate planning: they forget to plan for their own well-being. In other words, an important part of your estate plan is making sure you put mechanisms in place to address scenarios where you may become seriously ill or disabled, or for circumstances where you may require long-term care. The following important documents should be part of everyone’s estate plan.

Advanced Health Care Directive

An advanced health care directive allows you to nominate an individual that can make decisions about your healthcare should you become incapacitated or otherwise unable to make such decisions on your own. The amount of leeway given to this nominee depends on how you structure the directive, which means that you can make it as narrow or as broad as you would like. These work in tandem with living wills, which can be used to explain the type of medical treatment you do and do not want to receive in certain circumstances. Together, these forms can help spare family members and other loved ones from making difficult decisions that may be contrary to your wishes because they enable you to clearly convey your views on medical care.

Using Portability to Get the Most Out of your Estate Tax Exemptions

Published on: September 5, 2017 | by Ettinger Law Firm

One of the most common estate planning goals for high net worth married couples is to reduce their estate’s tax liability by taking full advantage of state and federal estate tax exemptions. The 2012 Tax Relief, Unemployment Reauthorization, and Job Creation Act (TRA) gave couples much more leeway to plan for their state through the portability of a deceased spouse’s unused estate tax exemption.

In 2017, the estate and gift tax exemption will be $5.49 million dollars for an individual, and just under $11 million for married couples, thanks to the 2012 Act. While there are a number of ways to properly implement the portability of estate and gift tax exemptions, one of the more common ways is to create a family trust where the assets of the first spouse to pass away will be placed in under the individual’s own gift and estate exemptions.

Without portability, couples can end up leaving millions of dollars in assets subject to taxation because of improper planning. Two of the most common reasons couples fail to properly use take advantage of gift and estate tax exemptions are unbalanced asset ownership or an inefficient estate plan.

Medicaid and Estate Planning

Published on: September 3, 2017 | by Ettinger Law Firm

For a long time, Medicaid has had the reputation of being a program that provides insurance and other benefits to poorer individuals throughout the United States. In some ways, recent contentious debates have deepened that image. However, a recent article from Business Insider points out that this is simply not true. In fact, Medicaid often plays a crucial role in estate planning for those in nursing homes or in need of various other forms of long-term care.

Medicaid and Long-Term Care

The article notes that the average price of long-term care options for senior citizens have risen approximately 19 percent since 2011. That is far greater than the amount of social security or pension increases that accompany the increase in these costs. Given that people are living longer lives and that the cost of long-term care is constantly on the rise, this should not be surprising. According to the article, about 28 percent of Medicaid funds are used to finance long-term care costs.

Know the Law: What is a Durable Power of Attorney?

Published on: September 2, 2017 | by Ettinger Law Firm

An important consideration in anyone’s estate plan is to consider appointing a trusted individual to make important health and financial decisions in any case where the testator may be incapacitated and unable to act in their best interest. One way to do this is to create a durable power of attorney in a living will which names another person as an agent or an “attorney in fact” to decide whether or not to continue with life support treatment and other important medical decisions.

In New York, Pub. Health Law §2980, et seq. Health Care Agent and Proxies details the powers of the attorney in fact, the legal requirements to create such an arrangement, when the agreement may be revoked, and the state to state applicability of the durable power of attorney. Specifically, the law allows the attorney in fact to make “Any decision to consent or refuse consent of any treatment, service, or procedure to diagnose or treat an individual’s physical or mental condition.”

Health Law §2980 requires individuals to fill out Standard Form §2981 and name a competent adult to the position. Additionally, the form must be signed in front of two witnesses and indicate the principal wishes his or her agent be able to make healthcare decisions and that this authority begin when an attending physician decides to a medical degree of certainty the principle cannot act on behalf of himself or herself.

Creating a Succession Plan for Your Business

Published on: August 30, 2017 | by Ettinger Law Firm

If you are in sole proprietorship of your business, you have a number of options to hand over your company when it comes time to retirement or pass away unexpectedly. If you do not have partners in your business, you are generally within your right to hand over the entire company to any person you may see fit to do and avoid estate taxes up to a point if you plan ahead of time.

One option to hand over a business to another and avoid some state and federal gift taxes is to gradually gift over percentages to the benefactor overtime before you pass away. If you do die before the entire transfer is complete, the heir may be on the hook for exorbitant estate/gift taxes. Currently, the estate tax exemption is $5.49 million over the life of one individual and up to $11.98 million for couples.

If you do have partners and you would like to retire or sell you your stake in the company, you may consider writing a buy-sell agreement into the language of your partnership agreement. These buy-sell agreements may be mandatory with the full understanding you intend to sell of your stake in the company to another or they may allow only the right of first refusal for the partner to buy the stake or pass and allow an other interested party to buy in.

Tips for Choosing the Right Executor or Trustee

Published on: August 30, 2017 | by Ettinger Law Firm

Whether you are choosing an executor for your Last Will and Testament or a trustee for a trust you have established, it is clearly important to make the right decision. You want to choose someone trustworthy, responsible, and capable of carrying out the responsibilities being entrusted to them. That is often easier said than done, but the following tips adapted from the American Association of Retired Persons might be able to provide some guidance.

You Do Not Need an Expert

We all have a natural desire to want to work with the best when it comes to important matters. While experience in trusts and estates is beneficial, it is not required to properly and responsibly execute the duties associated with being an executor or trustee. Common sense can provide a solid foundation to perform these duties, and you may prefer a more intimate relationship with the person you are naming than you might get with a professional. In some situations, it may be best to choose a corporate trustee from an institution like a bank. However, many individuals can avoid doing this by selecting a reasonable person – which will also help you avoid the professional fee that may be associated with these services.

Treasury Department Announces End to myRA Retirement Savings Accounts

Published on: August 26, 2017 | by Ettinger Law Firm

Saving for retirement just became more difficult for thousands of Americans relying on the Treasury Department’s myRa retirement savings account as the agency recently announced it would wind down the program. In a statement released on the Treasury Department’s website, the agency said the $70 million in costs since 2014 became too costly to the taxpayer and could no longer justify the program’s expense.

“The myRA program was created to help low to middle income earners start saving for retirement. Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program. Fortunately, ample private sector solutions exist, which resulted in less appeal for myRA. We will be phasing out the myRA program over the coming months. We will be communicating frequently with participants to help facilitate a smooth transition to other investment opportunities,” said Jovita Carranza, U.S. Treasurer.

The myRA program functioned as a Roth IRA account with no fees, minimum balance, and non-deductable to help middle and lower income Americans without access to employer sponsored retirement plans like a 401(k) plan and save for their retirement. Participants under 50-years old could contribute up to $5,000 to their account every year while those 50 years and older could contribute up to $6,500.

Micro-Living and Your Estate Plan

Published on: August 26, 2017 | by Ettinger Law Firm

Among the many new trends emerging in a variety of places around the world is the idea of micro-living. The idea behind micro-living is to minimize the space you live in and consequently minimize associated costs, and potentially your impact on the environment. However, it is the reduction in cost that is most appealing to many people. Retirees are no exception to this, and a recent article from CNBC indicates that micro-living is becoming increasingly popular among elderly individuals looking to remain independent while minimizing their responsibilities and maximizing their savings potential.

Benefits of Micro-Living

Affectionately referred to in the article as “granny pods,” micro homes for senior citizens are typically several hundred square feet. This makes them small enough to fit in the backyards of most homes. These “granny pods” have all of the comforts of a normal home, just on a smaller scale. They allow senior citizens to maintain a sense of independence without having to actually move in with family or friends. This can be a welcome relief for both elderly individuals as well as their families that may not necessarily be looking to live together full-time. These micro homes typically have a bathroom, bedroom, kitchen, and potentially several other rooms depending on the size and experience you are looking for. They can be built to minimize obstacles that could be hazardous to older individuals, such as being built with flat floors to minimize the potential to trip or with modified showers to enable safer hygiene.