Long Island Estate Planning Attorneys & Elder Law Attorneys

All too often, when we review the estate plan of a new client, or are retained to assist in the administration of the estate of a decedent who was not our client, we find that the options which are available to protect the inheritance of a special needs beneficiary have not been properly implemented.


        Understandably, the parent of a child with special needs does not want that child’s future inheritance to reduce or interfere with governmental benefits the child is, or will be, receiving.  Do-it-yourself estate plans, or those which are prepared by uninformed attorneys, “disinherit” the disabled child by giving that child’s share of the estate to other children with the expectation that a healthy sibling will segregate the disabled child’s share and use it for the disabled child’s benefit.


        Unfortunately, this frequently doesn’t work.  What if the healthy child dies before the disabled child?  Where will the money intended for the disabled child go?  What if the healthy child’s marriage fails?  Will the divorcing spouse wind up with some of the money intended for the disabled child?  What if the healthy child falls into financial difficulties or has creditor problems?  All of these very real situations can jeopardize the assets intended to benefit the special needs child.


        In New York, one can provide for a disabled beneficiary by creating a Supplemental Needs Trust which is specifically intended to supplement but not replace the benefits provided by the government, to enhance the beneficiary’s quality of life.  By redirecting the disabled beneficiary’s inheritance to an SNT, ordinary testamentary goals can be achieved without any of the risks.  The healthy sibling can be named as a trustee without jeopardizing the plan.  The trustee’s death, divorce or creditor problems do not invalidate the trust or place the trust assets at risk.  A successor trustee can assume the responsibility of administering the trust if a trustee dies or cannot otherwise serve.  The assets in the trust are insulated from a trustee’s divorcing spouse or the trustee’s creditors.


        We can not overemphasize the importance of having your estate plans reviewed periodically by an attorney who is familiar with this type of planning.   While we can modify estate plans that do not meet your goals during your lifetime, there will unfortunately come a time when the plan can no longer be changed.  Do not let this happen to you.

One of our readers, Warren M., writes: “Traditional IRAs have required minimum distributions after reaching 70½ but not Roth IRAs. I have been told that Roth IRAs are also subject to required minimum distributions re Medicaid nursing home costs. They use a single table vs. IRS using the joint table? True or not?”

Beginning at age 70½, traditional IRA account owners are required to take annual minimum distributions based upon their life expectancy. The IRS has established various tables to determine the life expectancy of the account owner in order to calculate the minimum distribution. What was formerly the IRS table utilized by a married account owner is currently utilized by both single and married individuals. If a married individual has a much younger spouse/beneficiary, a different table may be utilized to calculate the annual required minimum distribution. In contrast, no distributions are required to be taken by the account owner of a Roth IRA.

Generally speaking, the value of the assets in either a traditional or Roth IRA are not utilized in determining eligibility for Medicaid benefits provided that the account is in “pay-out status.” Pay-out status means that yearly distributions are required to be taken from the account. For account owners of a traditional IRA, the account is in pay-out status upon reaching 70 ½ years of age. A Roth IRA, or a traditional IRA owned by someone who has not attained the age of 70 ½ years, can only be in pay-out status if the account is annuitized, meaning that distributions must be made from the account at least annually. In Nassau, Suffolk, New York City and many of the other counties in New York State, the local Medicaid office requires the utilization of a table created by the Social Security Administration (SSA), not the IRS, to determine the annual required minimum distribution for Medicaid applicants. The SSA table contains shorter life expectancies, resulting in larger annual distributions. There are some counties that will allow the IRS table to be utilized.

The distributions made from the retirement account are considered income in the year received and must be accounted for in determining Medicaid eligibility and budgeting. Additionally, distributions are considered taxable income in the year taken and could increase income tax liability for that year.

Our thanks to Warren M. for his question. Just a reminder: obtaining Medicaid benefits for those who are indigent may be a straightforward process. But obtaining benefits for those who have assets that they wish to protect can be a minefield that, if incorrectly handled, can result in significant financial problems and the delay or denial of benefits. It should be done with the assistance of an attorney who has a complete understanding of the Medicaid eligibility rules.

Pets are frequently overlooked in the aftermath of an accident or death. Sometimes pets are only discovered days after a tragedy. Several months ago, as an introduction to this important topic, we wrote an article about Pet Trusts, a legally enforceable method to provide for the care and maintenance of pets in the event of the owner’s disability and/or death. The response to our article was overwhelming! We discovered that many of our clients and friends had never considered what would happen to their pets if something unexpected happened to them.

What can you do to protect your pet’s future? While pet owners should certainly consider the care and maintenance of their pets when preparing their estate planning documents, certain important and simple steps can be taken right away.

First, identify emergency caregivers. A responsible friend or relative who has the key to your home should be given important information about your pets. Include feeding instructions and the name and contact information of your veterinarian. Neighbors should know how many pets you have and how to contact your emergency caregivers. Some pet owners carry cards in their wallets that identify their pets and list the emergency caregivers and their contact information.

Post a sign on all entrances to your home to alert emergency personnel, in case of fire or other home emergency, that pets are inside. Indicate the number and types of pets. On the inside of the doors, post a large, clear listing of the contact information for your emergency caregivers.

While these steps will help protect your pets temporarily, it is very important to include formal, written arrangements, that cover care and even ownership of your pets, as an integral part of your estate plan. To do this, you must select a permanent caregiver and, perhaps, an alternate. From time to time, reach out to those whom you have designated as caregivers to ensure that they remain ready and able to care for your pets. If circumstances change, your formal documents should provide for a contingency plan. With proper advance planning, “no-kill” shelters, pet sanctuaries and pet retirement homes can be given authority for perpetual care or the right to find a family to adopt your pets. Some programs require contributions. Almost all require advance enrollment.

The most reliable mechanism for providing for your pets is to create an enforceable trust in favor of a human beneficiary or caregiver and then require distributions from the trust to the caregiver to cover your pets’ expenses and, possibly, compensation to the caregiver. Provisions for pets should also be incorporated in your Power of Attorney and Last Will and Testament. The Power of Attorney can include specific instructions with respect to your pets in the event of your incapacity. It can also authorize the expenditure of your money, during your lifetime, for the care of your pets. While the instructions which you may have incorporated in your Last Will and Testament may be informative, remember that it is often weeks, months or longer before your Executor is empowered to act in accordance with those instructions.

If you want to ensure that your pets will be continually cared for, please call our Long Island estate planning attorneys at 516.747.3200 or make an appointment to talk about this important addition to your estate plan. Learn more about pet trusts here.


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More and more of our clients who are retired thought that they had planned well for the future only to find that rising medical costs, shrinking investment portfolios and other factors have caused them to incur debt.  “USA Today” recently reported that more seniors are in debt than ever before.  Most live on fixed incomes and have no way to pay off debt such as credit cards and home equity loans.  Sometimes the debt is incurred to cover deficits in the household budget.  In order to meet their financial obligations, seniors sometimes skimp on food or decline to take medications.  They pare down their lifestyles, pinch pennies and still don’t make ends meet.  Most have worked hard all their lives and managed their debt. They didn’t anticipate the most recent recession, the rising costs of health care and prescription drugs, or the possibility that they might outlive their savings.  The good news is that help is available for some of these individuals.


Reverse mortgages - A Home Equity Conversion Mortgage (HECM), or reverse mortgage, provides seniors with an opportunity to tap into their equity interest in their home without the obligation of repaying the loan in monthly installments.  Instead, the cash flow is reversed and the senior receives payments from the bank, hence the title “reverse mortgage.”  A reverse mortgage may provide a solution for seniors who have owned their homes for a long time and are “house rich but cash poor.”


Life settlements - Life insurance policies that have cash value can be sold under the right circumstances.  Often, the sales prices is significantly greater than the cash surrender value. Even some term life insurance policies which contain the option to convert coverage to permanent life insurance will qualify for a life settlement.


Government Programs - Seniors should not overlook government programs which subsidize the purchase of food and housing, help with medical expenses and provide tax credits. For veterans there is free health care, inexpensive prescription drugs and disability income. Area agencies on aging offer individual counseling, legal help and advice. 


For seniors living on a fixed income, dealing with debt can be an overwhelming burden. The advice of a knowledgeable elder law attorney can assist in easing this burden.

 

Tax season is over! Spring has sprung! It’s time to “review and renew.” It’s time for the annual Berwitz & DiTata LLP “Review and Renew” program. Each spring, we encourage our clients, friends and “would be” friends to focus on estate planning, refresh those resolutions and stop procrastinating.

 

If you have never created an estate plan, now is the time. Although estate planning is a topic that some people find difficult, we are dedicated to helping clients identify and implement their estate planning objectives with ease and efficiency. We believe that our success is founded on this fundamental commitment to communicate with our clients in a caring and responsive manner.
 
Those who have met with us in a one on one consultation know that we believe that everyone can benefit from estate planning regardless of personal income or net worth. Everyone has concerns regarding the future.

For instance:
     How can I avoid probate and the dissipation of my assets to estate taxes?
     How can I avoid losing control of my assets if I become disabled?
     How do I protect myself and my family from devastating nursing home costs?
     How can assets be transferred if a relative is already in a nursing home?
     How can I protect my minor children?

 

In designing strategies to effectuate our clients’ goals, we offer detailed advice and a high level of technical expertise. Now is the time to achieve estate planning peace of mind! Ask those questions, explore the options, get it done.

 

If you created your estate plan, or reviewed it last, more than 3 years ago, now is the time. Are your documents up to date? Have there been changes in the law or in your life that should now be considered? The documents that address the needs of a single person are frequently insufficient when he or she marries. If a couple has children, the appointment of a guardian should be a key factor in estate planning.

 

Those documents that were created when the kids were small may no longer reflect their parents’ wishes now that the kids have grown and flown. Indeed, once your child reaches the age of 18 years, he or she should have a valid and enforceable Health Care Proxy empowering you or another to make health care decisions. The “sandwich generation” is discovering that the joy and responsibility of raising children is all too frequently overshadowed by the illness of parents.

 

The need for estate planning takes on new meaning as one approaches retirement and, if illness threatens, timing becomes more critical. Lifetime changes affect estate planning. Even if we can’t imagine what changes in our lives could affect these important documents, an estate planning review is a vital element to ensuring that your wishes will be accomplished.

 

Because Berwitz & DiTata LLP understands the importance of keeping the plan current, we offer our clients a unique value-added component: a complimentary three year review. For those who have not yet retained our services, there is a nominal fee to review your plan. Let us help you realize your estate planning objectives.

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