New York Estate Planning & Elder Law Blog

WHAT DOCUMENTS TO KEEP AND WHAT TO SHRED

Published on: May 27, 2016 | by Ettinger Law Firm

SPRING CLEANING TIME MEANS CLEARING OLD PAPERWORK

With tax day over and the need to collect and forward any number of financial and tax documents to the government and with the coming of spring, it is time to turn to spring cleaning. The question should be asked, what paperwork can I throw out, should I throw out and what paperwork should I keep. To be accurate, you should never throw out any financial paperwork, you should shred or incinerate such documents. It is inevitable that in any such endeavor, you will come across documents that matter for purposes of your estate planning, such as wills, trusts and the various financial documents that speak to your estate planning. In any event, you should rely on a system to help you collate these important documents for future use.

You should keep certain original documents in an easily accessible but safe place, such as a fire proof safe or perhaps even a safety deposit box. Things such as birth certificates or adoption paperwork, licenses and passports, marriage certificates, judgments of divorce, military discharge papers and social security cards. Other documents do not necessarily need to be kept as an original, they should be regularly review, at least bi-annually, if not more often. Documents such as a will, trust or other testamentary documentation will be kept by your attorney or law firm, but it still always best to maintain a copy or, better still, several copies on hand.

HOW TO HELP YOUR EXECUTOR

Published on: May 24, 2016 | by Ettinger Law Firm

CHOOSING THE RIGHT PERSON AND STEPS TO TAKE

As noted in a previous blog, being an executor of an estate can be a thankless job. There are ways, however, that can allow you to make the job and life of an executor easier and less painful. It is a job that carries with it much responsibility, so taking a few proactive steps may help to save the executor a lot of heartache. One of the first steps you need to do, even before helping a named individual is to name the individual. In other words, pick the right person; in fact it is even better to pick a few individuals as successors in the event that the executor passes away before you or is otherwise unable to serve as the executor of your estate. Even better is to pick two people who will serve as co-executors; if you do this, you must make someone the primary person who shall serve and who has the final authority to make whatever decision needs to be made in the event that there is a disagreement.

It is important to keep in mind that the person you chose is going to in charge of your assets that you amassed throughout your life. All other things being equal, it is best to have someone who lives local and in the same state as you. Few things in life provide such a stark choice. It may be more important to you and the heirs, however, that you pick someone who is familiar with you, your wishes and your assets, even if they live further away or in a different jurisdiction. If you choose a professional, such as an attorney, it is important to keep in mind that there will be costs associated with this. If you permit and allocate a specific payment structure into the will or testamentary trust, it may not matter, since even a family friend or relative may also be entitled to a fee. Finally, it is best to speak with that person in advance to ensure that they understand that they are being named as the executor of your estate and that they will do so.

DYNASTY TRUST REEXAMINED

Published on: May 21, 2016 | by Ettinger Law Firm

VERY SIMPLE CONCEPT

This blog examined the dynasty trust in the past but it is time to reexamine certain aspects of the dynasty trust. The dynasty trust is a trust designed primarily to avoid the generation skipping transfer tax when a person wants to leave money to their grandchildren or great grandchildren (or even generations beyond that). Before getting into the nuts and bolts of what a dynasty trust is, it is best to outline some of the basic tax issues inherent in the generation skipping transfer tax.

Grandfather wants to leave an asset to his son, with the intention that he will leave it to his son and for him to leave it to his son and so on. Just to make the dollar figures simple, let us assume that it worth $10 million. For further simplicity, let us also assume that grandfather’s estate already went through the federal (and state) estate tax exemption. That means that son has to pay the current top estate tax rate of 40%, which means that the asset is no longer worth $10 million. Instead it is only worth $6 million. For further simplicity, father’s estate also passed through all of his estate tax exemption, so instead of the asset being worth $6 million when it passes to the grandson, it is now worth $3.6 million in light of the 40% estate tax. And the process goes on and on.

NON-PROFIT REPRESENTATIVE PAYEES FOR DISABLED

Published on: May 19, 2016 | by Ettinger Law Firm

GROWING NEED

More ten million elderly Americans rely exclusively on their Social Security pension as their sole means of support. Approximately 90 percent of senior citizens receive some sort of income from Social Security and approximately half of those relied on Social Security for at least half of their monthly income. It keeps approximately 35 percent of elderly Americans from dipping below the federal poverty line. To say that Social Security is vital to this population is an understatement. Included within that population are a subset of individuals who do not directly receive their income from the Social Security Administration but instead rely on a representative payee to manage their money and pay their bills.

The incidence of Alzheimer’s disease and other related cognitive impairments increases with age and with people living longer, there will naturally be an increase in such conditions and thus a greater need for more Social Security representative payees. The Social Security Administration’s own Inspector General estimated in 2010 that at least one million elderly Americans over the age of 85 need a representative payee but did not have one. Within this group there is concern that there are de facto representative payee who were not formally approved or vetted by the Social Security Administration and could be perpetuating financial abuse of the beneficiary. Of the existing pool of representative payees, approximately three out of four are family members.

ALZHEIMER’S ASSOCIATION RELEASES 2O16 REPORT

Published on: May 17, 2016 | by Ettinger Law Firm

STAGGERING FIGURES

The Alzheimer’s Association recently released its 2016 Alzheimer’s facts and figures report earlier this month with a long list of many facts and figures, as the reports name implies. While the Alzheimer’s Association produces and publishes its report yearly, the 2016 report highlights the personal financial impact that the disease has on family caregivers. Most specifically, the report helps to show the amazing costs that are shouldered by American families in caring for patients with not just Alzheimer’s but dementia and those with general cognitive delays. In New York alone there are estimated to be 390,000 Alzheimer patients. The Alzheimer’s Association also estimates that there will be approximately 460,000 patients by 2025, an increase of approximately 20%. Overall, 4.7 million Americans are diagnosed with Alzheimer’s. That number is expected to triple by 2050. The emotional impact is already high, yet there is hope. Dr. Samuel Cohen gave a TED talk in late 2015 outlining breakthroughs that could spell a cure for the disease, which would in turn mean that the above numbers would indeed need to be revised.

As for the caregivers, there are approximately 16 million of you in the country who give your time and energy for your loved ones without any financial recompense. You give 18 billion hours of unpaid care for your parents, grandparents and other family members. National Public Radio (NPR) produced a report on the financial impact to individuals and families on March 30, 2016 which showed that the average caretaker used their own financial resources to help their loved ones with Alzheimer’s. The average cost was around $400 per month ($4,800 per year), although some spent up to $10,000 per year to help their relatives with Alzheimer’s. Oftentimes, the caretaker had to make choices between of certain necessities, for example, between food and medical care. As if the financial hit was not enough, it often necessitated that the caretaker reduce their own working hours to care for their loved ones with Alzheimer’s, thereby reducing their income even further. Many caretakers had to sell their own personal belongings to help make ends meet. Some were even reduced to basic poverty levels.

AMERICAN BANKERS ASSOCIATION – SAFE BANKING FOR SENIORS

Published on: May 16, 2016 | by Ettinger Law Firm

LARGE NEED TO REDUCE AND PREVENT FINANCIAL EXPLOITATION

The American Bankers Association is looking to serve a large market that is only getting larger by the day. At the same time, they are working to shore up the larger financial markets in a larger effort to prevent financial fraud perpetrated against seniors. As one banker noted during a speech on the topic, the banking community responded to the need to protect those with diminished ability to discern the difference between a real deal being sold by a legitimate vendor and a scam by predators. In February, 2016 it launched the Safe Banking for Seniors program, with various state bankers association across the nation rolling out their own version modeled on the American Bankers Association.

As of the inception of the program, 30 states joined in to help usher in the program. The New York Bankers Association is not one of the 30 states and does not currently such a program. Nevertheless, it is gaining popularity across the nation and many states bankers associations are seeing the utility and popularity of such a program. Furthermore, the program is not restricted to states bankers associations, individual banks, regional banks and bank chains can join in the program. As the American Bankers Association notes, 30% of the population of the country will be 60 or older by 2025. The Consumer Finance Protection Bureau and the American Bankers Association both note that $2.9 billion per year is lost to fraud perpetrated against elder Americans. Some estimates are as high as $36 billion per year, with only one in 43 cases of financial fraud against an elderly American properly documented and reported. The primary program is designed for banks and bankers associations, which will in turn filter down to individual elderly bank customers.

DIGITAL ACCOUNTS AND PLANNING

Published on: May 13, 2016 | by Ettinger Law Firm

COMMON PROBLEM

There is much talk lately of how to deal with email, facebook, twitter accounts, et cetera of people who pass away. For those of us who have friends or family who passed away and see their facebook account send a reminder to all of their friends on their birthday or some other event, it is nothing short of strange, even ery to see their former friend live into perpetuity in the digital realm. Many people use it as an opportunity to post memories and give a public shout out to the living that their friend or family is still alive in their heart. Others find the matter to be a painful memory.

Facebook instituted a policy whereby a legacy contact can delete your account or transition the account to a memorialized account, whereby your name will be changed to a remembered account (more properly a “remembering account“). Currently, New York does not allow an executor, or anyone else for that matter, to access the emails, online drives and various other digital accounts owned by a person after they pass away. If it was private while the person was alive, shouldn’t it be alive after they pass away? Yet, this is a rapidly evolving area of the law, with private corporations creating their own rules in the absence of legislative pronouncements to the contrary. In the 2012-2013 legislative session, Representative M. Kearns introduced a bill that would address the issue of access to such accounts by an executor.

ANOTHER CELEBRITY PASSES WITHOUT A WILL

Published on: May 11, 2016 | by Ettinger Law Firm

PRINCE APPARENTLY DID NOT HAVE A WILL

The world learned recently that Prince joined the long list of celebrities who passed away intestate or without a will. Some of the names on the list are surprising, others not so. The Honorable Salvatore Phillip “Sonny” Bono, Michael Jackson, Howard Hughes, Abraham Lincoln, Pablo Picasso, Martin Luther King are all grouped together with such musical greats as Jimmy Hendrix, Curt Kobain and Amy Winehouse. Pablo Picasso’s estate was valued at approximately $30 million upon his passing in 1973 and is now valued at several billion dollars and took several years to sort out.

If a will does not surface, which seems likely, the local probate Court will follow Minnesota’s intestacy laws to divvy up at his estate which is initially estimated at at least $100 million and very well likely be worth several hundreds of millions of dollars. While Prince was no doubt a creative genius on par with others who were considered truly great, his creativity did not go into the realm of financial planning, as a will is the most basic of all legal documents. No doubt he could have afforded the most well paid team of lawyers to easily and without much interference value his estate and develop a legal strategy to help prevent public drama which could cost millions in legal fees as well as untold emotional costs to his family members and very well may cause an irreparable rift in family relations. Prince and the other above celebrities, however, are in the majority, as the American Bar Association estimates that approximately 55% of Americans pass away without a will. Forbes estimates that the number may be as high as approximately two out of three Americans.

MEDICAID TRANSFER AFTER ADMISSION TO A RETIREMENT COMMUNITY

Published on: May 10, 2016 | by Ettinger Law Firm

THOROUGH PLANNING NEEDED IN ADVANCE

This blog has discussed the necessity of proper and thorough planning to ensure a smooth transition into a continuing care retirement community. This requires, among other things, that a person properly and legally transfer all of their assets, or a substantial portion of their assets that is, to people or entities that would enable them to be eligible for Medicaid. As many people know, there is a look back period where the state examines all transfers of assets or money over a certain period of time for purposes of Medicaid eligibility purposes.

If during that time a person transferred any aset for less than full market value or did not transfer the assets to a proper investment vehicle that is otherwise exempt from Medicaid assets, the Medicaid applicant will likely be denied for financial reasons. In other words Medicaid will claim that the applicant has too many assets or their income is too high to qualify. Some examples of a Medicaid exempt transfer is the purchase of a graveyard plot, prepayment for funeral services or the purchase of a short term Medicaid annuity. An interesting case from November, 2015 out of Broome County, entitled Good Shepherd Village at Endwell v. Peter Yezzi shows the many problems that can result when people start their Medicaid planning after admission to a continuing care retirement community.

NEW YORK’S INTESTACY LAWS

Published on: May 9, 2016 | by Ettinger Law Firm

As was outlined in the most recent blog posting, if you compare the costs and benefits of creating a will now versus passing away intestate, there is no doubt that the benefit is huge and the cost is small. It is thus high time to explore New York’s intestacy laws in detail. It is important to note that intestacy laws are important not only because they instruct a probate Judge on how the estate must be divided but it also tells the probate Court what is not permitted as well as what is neither required nor prohibited; in other words the parties can agree to certain final dispositions. The specific statute that defines intestacy and the outlines the specific requirements that a Court must adhere to is found at New York Estates, Powers and Trusts Law (EPTL) Section 4-1.1.

Family Law and intestacy laws are one of the few areas of the law that recognizes and codifies a different treatment of the sexes, insofar EPTL Section 4-1.2 requires that a child conceived outside of marriage (so called and grossly titled “illegitimate” children) must have an acknowledgement of paternity by their father or a finding by a Court that the children in issue are indeed the children of the deceased man before those children can inherit as a child of the deceased. Not so with mothers, since, except in the case of children mistakenly switched following birth, there is no doubt that children are the issue of their mother.

The technical legal term when a person passes intestate is that their estate is administered and a person who passes with a will, called testate, has their will probated. Within the universe of individuals who are material to the probate Court are children, spouses and siblings. Adopted children at treated the same as biological children although unadopted stepchildren are not considered children as far as the intestacy law is concerned. New York has adoption proceedings and recognizes adult adoptions to legally redefine this relationship. Divorced spouses are immaterial, although separated spouse are still considered spouses as far as the law is concerned.