Our attorneys possess an in-depth knowledge of the legal, tax and personal issues that often accompany putting together a sound and workable estate plan. We render advice with respect to traditional and sophisticated estate planning and have prepared wills and other wealth transfer documents appropriate for individuals with varying family circumstances.

     In light of ever-changing developments in the laws regarding wealth and taxes, we assist clients from one end of the spectrum who want generation skipping trusts to those on the other end who need advice in order to qualify for Medicaid assistance. We understand all aspects of estate planning, from transferring the closely-held business to the next generation, to planned giving with an emphasis on minimizing estate, gift and income taxes. Our experience in drafting wills, various types of trusts, health care proxies, living wills and powers of attorney ensures that our clients' wishes are carried out. 

     We work closely with tax and investment advisors to structure appropriate and tax effective arrangements for the ownership of business interests and transmission of wealth to subsequent generations.  We also advise, when appropriate, on the most efficient use of funding with life insurance. The firm advises clients regarding the use and ramifications of the following:

• unlimited marital deduction;
• the use of lifetime gifts to reduce the taxable estate, establishment of QTIP, credit equivalent, life insurance, and other trusts designed to transmit property;
• family limited partnerships and limited liability companies;
• generation skipping transfer tax;
• charitable giving; and
• post-mortem estate planning.

     Estate planning is a process by which a person designs a strategy and prepares documents to transfer the assets accumulated during a lifetime of work and savings to intended beneficiaries. Proper planning will insure that your assets are passed onto loved ones with a minimum of taxation.

     Keeping your last will and testament and other related documents up to date is a basic planning step important for individuals at any level of wealth. There are also various circumstances for which more sophisticated estate planning is required such as, Medicaid planning, charitable giving, providing for the needs of minors or disabled family members and ensuring the continued success of the family business.

Why do I need a Will?

     A common misconception is that wills are only for the rich. This is ot true. A will is an essential part of any estate plan and is necessary to transfer your assets upon your death. A more sophisticated will is extremely useful to establish trusts for minors, spouses, in the case of divorce, and for incapacitated persons so that assets do not pass directly to them. If you die without a will, state law controls the disposition of your property and settling an estate without a will is often more troublesome, costly and time consuming.

     A Durable Power of Attorney is a document that allows you to appoint one or more persons to make your business and financial decisions. This document can be crucial in the event you should become incapacitated. Upon incapacity, the person you appoint can even be authorized to protect your assets through proper Medicaid planning.

     A Health Care Proxy is a document that allows you to appoint someone to make decision regarding your health if you are unable to do so yourself. It is important to choose someone who is familiar with your healthcare wishes, rather than letting these important decisions be made by medical professionals.

     While a Health Care Proxy is the accepted document used to make health care decisions in New York, the Living Will is the accepted document used in many other states. Essentially, the Living Will provides more detailed information about what procedures you want or do not want in the event of your  incapacity. In addition, in case your Health Care Proxy's decisions are challenged, the language in the Living Will can also be used as clear and convincing evidence of your wishes in a New York court.

     A Living Trust is an agreement that you make with someone you trust called a trustee. The trust is set up during your lifetime and you transfer most or all of your assets into it. You have the right to receive the income from the trust assets and you may withdraw a portion or all of the principal of the trust whenever you wish. A trust can accomplish a number of things. It allows a trustee to manage your trust assets upon incapacity, it enables the trust assets to pass automatically to the trust beneficiaries without the need for a probate proceeding and in some cases, a trust can be used to protect your assets in the event you need Medicaid to pay for long term care.

     The answer to this question depends on a number of factors. The first factor is the value of the assets that you own or may own including any real estate, cash, securities, business interests, anticipated inheritances and/or lawsuit recoveries and gifts made to persons other than your spouse which exceed the annual gift exclusion amount of $13,000 per person.

     The second factor relates to the individuals who receive your  assets. Generally, spouses can leave all of their assets outright to each other through the use of the unlimited marital deduction. However, by doing this, the second spouse may end up with a taxable estate. As of January 1, 2009, you can pass $3,500,000 of assets to persons other than your spouse without incurring federal estate tax. This is called the unified credit and is increasing as follows:

2006..........$2,000,000

2009..........$3,500,000

2010..........Repealed

2011..........$1,000,000

     It should be noted that as of January 1, 2009, New York's credit is $1,000,000.  In many instance, depending on the size of your estate, even though you are not subject to a federal estate tax, you may be subject to a New York estate tax. It should also be noted that although the federal estate tax will be repealed in the year 2010, there is a sunset provision in the law which brings the estate tax credit back to $1,000,000 in the year 2011. Because of the uncertainty of the law, estate planning to reduce your taxable estate is still highly encouraged.

     Your taxable estate can be reduced through a number of gifting techniques. As stated above, as of January 1, 2009, you and your spouse can each pass $3,500,000 of assets to persons other than each other, without incurring federal gift tax and $1,000,000 without incurring New York State gift tax.

     In addition, during your lifetime, you and your spouse can each give away $13,000 per person each year to as many people you want to without filing a gift tax return. Where minors are involved, this amount can be paid to a trust for a minor which meets certain conditions. You can also make payments directly to providers of medical services and higher education providers for tuition (not room and board) and such payments do not consume your annual exclusion or the unified credit.

What are my options for protecting my home and assets if I need to apply for Medicaid?  

      As of April 1, 2008, in order to qualify for Medicaid in a nursing home, you can have a maximum of $13,050 worth of assets in your name and certain other assets like an irrevocable prepaid funeral plan.  In order to qualify for Medicaid, many people attempt to protect their assets by transferring them to family members.

     The biggest asset most people try to protect is their house. An outright transfer to family members is usually not suggested because you lose all control and there are capital gains consequences to your family. A better option may be to deed the house to family members with a retained life estate for yourself. This gives you the right to live in the house for the rest of your life and continue to receive all STAR and senior citizens exemptions. Upon your death, the house passes automatically to the beneficiaries and they do not have to pay capital gains tax when they sell the house at your death. This is not suggested if you want the option of selling the house while you are alive.  

     A good option, which affords maximum flexibility, is to transfer the house to an irrevocable trust. An irrevocable trust is an agreement between you and a trusted person who acts as trustee to take care of your assets. Such a trust can give you the right to live in the house for the rest of your life and continue to receive all STAR and senior citizens exemptions. At your direction, the trustee can sell the house and purchase another house for you. You would be entitled to all the income from the trust depending on how it is drafted.

How does the Deficit Reduction Act of 2005 affect my Medicaid planning options?  

     The recent enactment of the Deficit Reduction Act of 2005 (DRA) presents new challenges in Medicaid planning because it (A) extends the "look back period" and (B) changes the starting time for the "penalty period". 

     Prior to the enactment of DRA, only transfers made in the previous three (3) years were considered in determining an applicant's Medicaid eligibility.  However, DRA provides that transfers made in the past five (5) years will now be reviewed.  Also previously, the penalty period began to run on the first day of the month following a completed transfer of property.  Now it does not begin until the individual enters a nursing home AND is otherwise eligible for Medicaid (has no more than $13,500 in assets).  Prior to DRA, if an individual did early planning, he or she could transfer assets and simply wait out the penalty period.  This is no longer possible.  The extended look back period also creates longer periods of ineligibility. 

     Due to these recent changes in the law it is essential to discuss your estate planning options with a knowledgeable Elder Law attorney first before you make any transfers of property. The best time to do Medicaid planning is when you are well. Planning in a crisis situation does not always allow for complete protection of your assets.