New York Trusts & Estates

How a Living Trust Works in Yorktown Heights, New York

 

Planning for the end of your life is not an easy task, but doing so will make life easier for your loved ones, and isn’t that the most important thing? Putting major assets into a living trust might be another way to protect your heirs.

Understanding how a living trust works will help you decide whether or not it is a tool that can work for you. At its simplest, a living trust is a legal document that owns or holds title to your assets for your own benefit (with you as the trustee) while you are still living. If you should become disabled or die, it transfers these assets via your “successor trustee” to your heirs. These basics are among several useful points covered in a Fox News article, “Why Should I Put My Home in a Living Trust?”

Living trust versus a will. A living trust is similar to a will in that it’s a legal document that instructs how to distribute your possessions after your death. If you have a will when you pass away, your estate goes into probate where the court monitors the distribution of your estate. But if you set up a living trust while you're alive, you’ll work with an attorney to do the paperwork ahead of time and avoid court supervision of the most valuable items you own after you're gone

Whatever you place in the trust can be distributed in just weeks after you pass. Also, a living trust is private, not like a will, which is a public document.

A living trust is typically funded with your assets, such as your home. You also should put any vacation homes in different states in the trust to avoid separate probate proceedings in those states. To place property in a living trust, your estate planning attorney will draw up a new deed in the name of the trust and maintain a list of what's in the trust to make it easier for your successor trustee.

Revocable or an irrevocable trust. The creator of the trust also needs to opt for either a revocable or an irrevocable trust. A revocable trust is one that lets you change what property is in the trust—or even the very existence of the trust itself. This is good for someone who wants to stay in control over his or her assets, right up until the moment he or she can no longer mentally do so, at which point a designated trustee is ready to assume control.

You’ll want to speak with an experienced estate planning attorney to determine if an irrevocable trust is suitable for your situation. Once an irrevocable trust is created and assets are placed in the trust, they cannot be taken out. There are benefits to this kind of trust: assets are not included in your taxable estate.

An estate planning attorney will help you examine the pros and cons of different kinds of trusts.

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Keep Your Business “Transferable” by Protecting its Value in New City, New York

 

If your retirement plan includes the sale or transfer of your business, you better make sure it maintains or grows in value before you put it on the market.

Many family business owners have a hard time imaging their businesses running without them at the helm, but others are looking forward to transferring ownership when retirement or a new venture beckons. One aspect that needs to be addressed is to safeguard the value of the business.

Convenience Store News’ article, “How to Create a Transferable Family Business,” outlines several concepts that will motivate you to take the necessary actions to ensure your business will be transferable for the value you expect.

Get the Big Picture. You need to keep the business moving in today’s business environment. Define your vision for both the company and yourself, so you’ll have a core for meeting threats head-on. Without it, you may be trapped in your business or not get the value you anticipate when you exit. Be certain that you and your business are prepared for the future. Protect owner value and increase the likelihood of a successful transition to a new owner.

Start the Planning Process ASAP. Commit to an assessment and review planning process, and review your current strategic corporate and personal planning to reveal threats and identify opportunities. There are four steps:

1. Examine your personal and business goals and objectives.
2. Ascertain your level of financial and mental readiness.
3. Consider transfer options.
4. Review your financial, estate planning, and investment plan to be sure it’s aligned with your transition plan and family wealth plan.

Decide on Valuation Strategies. Determine how much money you’ll need to cash out. Understanding the value of your business and how it fits into your financial and estate planning is vitally important. Work with a business broker and find out what your business is really worth.

Look at Industry Trends. Evaluate the trends in your market to see what future owners may value in a company they purchase. Investigate the competitive position and comparable values in the industry and gather industry intelligence to help with your preparation for making decisions when the opportunities arise.

Calibrate Your Company’s Owner Dependence. The value you get for your business may be based upon the level of control you want to maintain. The less your company depends on you, the higher the value of the company.

Find and Keep Executive Talent. Talented managers can be a real value driver for your company. Look at your key executives rank in terms of skill and ability to operate the business. Be certain you have the best people on staff to help the business grow and motivate them through incentive-based compensation that is in sync with the company’s goals and succession plan.

Leadership and Collaboration. You don’t want to do this without the help of independent advisors who can help you, your family and your executive talent as you go through this process. By setting goals for the business, addressing key strategic issues and planning for the unexpected, you’re more likely to have a successful transition.

Include your estate planning attorney as this may be one of the larger assets and there are tax implications that must be planned for in advance of the sale.

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An Expiration Date for Estate Plans? in Yorktown Heights, New York

 

There’s no “use by” date on estate plans, but after several years, changes in laws and lives make most estate plans obsolete.

Even if you live in a bubble and absolutely nothing in your life has changed since the last time your estate plan was created, which is highly unlikely, it is still subject to changes that make it out-of-date.

As the Nevada Appeal’s article “Is your estate plan obsolete?” reminds us, the only thing that is constant is change, and likewise, your estate plan may need to be modified in light of some changes. There will also be changes in the tax codes, new regulations, and court decisions to note regarding their effect on your estate plan. Plus, think about all of those who will need to be involved with your estate, such as guardians, trustees, executors, and agents. Their lives and circumstances may have also changed.

Due to low interest rates and lower interest income, some estate plans now provide a surviving spouse with more than just income. If the spouse is left with only income, it might mean he or she doesn’t have sufficient money on which to live. Your estate planning documents instead might provide either a percentage of the total assets or a fixed dollar amount (possibly adjusted for inflation) to be paid from income, capital gains and/or principal, not just income.

A healthcare power of attorney might need to be reviewed for compliance with HIPAA, so your family or agent can to talk and work with your doctors on medical issues. In addition, a change in your life like marriage, divorce, or the death of a spouse are important changes that might make you want to alter your estate plan. Similarly, the change in the marital status of a child or other beneficiary might also mean you need to review your plan with your estate planning attorney.

Other changes that will impact your estate plan are changes in your own health or that of a family member. Perhaps your interests have changed and a charitable organization you once supported whole-heartedly is no longer central to your values. Or maybe there has been a change in the status of relatives you used to support. In other words, if there have been changes in your life, you’ll want to update your estate plan.

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Leaving Town? Before You Move to Another State, Consider These Costs and Expenses in New City, New York

 

Moving to a different state for a new job or because your current employer has asked you to make a move raises many questions. Here are some of the key facts you’ll want to pin down.

When you and your family are faced with a move to a new state for work, the biggest question on everyone’s mind will be where will the family live. But the house is only the start of the questions you’ll need to answer before making any final decisions. This recent article from Kiplinger’s, “5 Financial Matters to Consider When Moving to a New State,” points out factors that you might not have thought about when preparing for relocation.

Income Tax. Consider the state’s income tax structure. If you’re moving to a state with a higher income tax rate, if you have some advance notice, you may want to recognize some income before you move. Examples include income from capital gains in your portfolio or exercise of stock options. Some states have recapture rules you’ll need to know. If you’re moving to a state with a higher tax rate, your take-home paycheck may be lower than you anticipated. Do the calculations prior to signing your relocation and cost of living adjustment package. You may want to think about asking for a higher salary to keep up with your projected after-tax living expenses. Also, there are property and sales taxes which are usually higher in states that don't have an income tax.

Estate Plan. Update your will, as estate tax and probate laws will vary from state to state. If you own out-of-state property, like your former residence, that you want to keep or rent out, speak with an estate planning attorney about creating a revocable trust or a limited liability company to avoid taxes. Likewise, check your financial and healthcare powers of attorney—these are based on state statutes that are different in each state.

Cost of Living. A big factor in a relocation package from the company is quantifying how much more housing and recreation may cost. If you have children, be sure to look at the school system and whether you want your children enrolled in private school. Tuition can be a big budget item for any family, and if you've never had to pay it in the past, you’ll need to plan ahead. Education expenses may influence where you live in the new city or town, as well as the amount of house you buy and the mortgage payment. These cash flow issues need to be in sync with your lifestyle expenses to avoid throwing a wrench in your long-term financial plans.

Investments. Your investment strategy may also need a review. Some states exempt a portion of your capital gains from income tax, and dividends aren’t taxed in Nevada (a no income tax state).

Relocation can be exciting and nerve-wracking for everyone in the family. Going through these steps will help you determine the real cost of a move, and help you make informed decisions. Another important step: your estate plan will need to be revised to comply with the laws of your new home state. Ask your estate planning attorney for a referral to a qualified colleague.

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Nevada Gets Generous Grant from US Justice Department to Battle Elder Abuse in Yorktown Heights, New York

 

With the help of an almost-million dollar grant, Nevada’s Attorney General will launch training programs across the state to combat elder abuse.

A $925,000 grant from the US Justice Department was received by the Nevada Attorney General’s office to be used for a state-wide training program that will focus on improving how all levels of law enforcement and victim service providers protect the elderly against financial and physical abuse.

The Las Vegas Review-Journal detailed the award in its article, “Nevada attorney general’s office receives grant to prevent elder abuse.”

The plan is for three teams of trainers to be formed to serve Clark County, Washoe County and rural Nevada communities. A fourth team is also planned to serve the entire state. The team will consist of members from the Nevada Aging and Disability Service Division, the Inter-Tribal Council of Nevada, prosecutors, and members of law enforcement.

The teams will train law enforcement officers across the state, as well as judges, prosecutors, and victim service providers. The teams also will coordinate with the Nevada Network Against Domestic Violence.

The grant will be used to increase awareness about and improve the law enforcement response to abuse and exploitation of seniors throughout the state. Nevada Attorney General Adam Laxalt commented that his office will work closely with grant partners to help local jurisdictions address both victim safety and perpetrator accountability.

The competitive grant was awarded by the Justice Department’s office on violence against women.

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New Rules for Nursing Homes to Protect Patients In Yorktown Heights, New York

 

 

Long-awaited changes to basic rules for nursing homes will hopefully shed light on standard practices that have wronged residents and their families for decades.

Did you know that patients were required to sign arbitration agreements before they could be admitted to a nursing home? As explained in a Forbes article, “The End of Secrecy in Nursing Home Wrongdoing,” these agreements prevented families from suiting the nursing home in court if something occurred to a loved one, no matter how grave the offense. The family was required to go to arbitration, a process that is hidden from the public eye. The power of taking a nursing home to public trial in an open court, along with other important changes, has now been restored to patients.

Although no one wants to live in a nursing home, after surgery, serious illness, or an accident—or because a loved one requires nursing care 24/7—nursing homes are a necessary part of our health care system. They should be safe, comfortable places.

The new rules require nursing homes to properly train and staff their facilities, as well as protect vulnerable people from dangerous other residents who might harm someone if not carefully supervised by skilled staff. The facilities are required to spend the money to retain enough workers and train them on how to properly do the job.

The Federal Center for Medicare and Medicaid Services issued the revised rules, which impact more than 15,000 long-term care homes that accept Medicare and Medicaid across the U.S. Sadly, the worst nursing homes won’t realistically comply with the new rules; they didn’t follow the old ones. But to receive payment from Medicare and Medicaid, all nursing homes must adhere to better standards or they’ll lose money.

This is a victory for patients and families. While the change of rules aren’t an immediate guarantee of safety, the ability to file a lawsuit and hold the nursing home accountable in a public forum will certainly pressure facilities to provide better care. The risk of losing Medicare and Medicaid funds, along with the damage that a bad reputation can bring, should help elevate the standards of care for our most vulnerable citizens.

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Admitted or Under “Observation Status?” The Difference Could Break Your Budget, Fast in New City, New York

 

You bought all the right health insurance coverage when you retired, so you don’t worry too much when symptoms send you to the hospital. But if you aren’t admitted, costs could skyrocket.

These are the kinds of details that can derail retirement plans. Patients who are too sick to go home but not sick enough to be admitted enter a kind of Medicare purgatory known as “observation status.” The problem is, if you need follow-up care in a skilled nursing facility, it will be on your own dime.

As Money’s article “The Medicare Quirk That Can Cost You Thousands” explains, Medicare covers care in skilled nursing facilities, but only for patients who are first admitted to a hospital for three consecutive days.

Hospitals have applied this status to avoid costly penalties from Medicare for improper admissions. The number of Medicare patients classified as under observation has skyrocketed and has created pushback from Medicare enrollees and advocacy groups.

A new law, “the Notice Act,” requires hospitals to notify patients if they stay in the hospital more than 24 hours without being formally admitted. Patients will begin to get this notice beginning in January 2017. Moreover, hospitals will be required to inform patients verbally and in writing if they are on observation status for more than 24 hours.

The written notification is called the Medicare Outpatient Observation Notice (“MOON”), and also explains the cost implications of receiving hospital services as an outpatient.

The costs of observation status can impact any enrollee on traditional fee-for-service Medicare. The program typically covers up to a maximum of 100 days of care in a skilled nursing facility following a hospital admission. It will pay 100% for the first 20 days; patients are responsible for a daily $161 co-pay for the next 80 days. However, patients who leave the hospital for a nursing facility after an observation will pay the full cost out of pocket. And skilled nursing care costs are substantial and continue to rise.

Observation status also has an impact on the coverage of drug usage in the hospital. Medicare Part B would cover drug usage for the specific problem related to the hospitalization, subject to the Part B 20% co-pay. For routine drugs taken at home, the practices vary. Some hospitals let patients bring their own drugs from home, others don’t, and charge much more than you’d pay at your pharmacy.

Bipartisan legislation has been introduced in the U.S. House and Senate that would require time spent in observation to be counted towards meeting the three-day prior inpatient stay necessary to qualify for Medicare coverage, but it is not yet law. Until such time as that legislation becomes law, “observation status” is yet another worry for seniors needing emergency care.

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How a Taxable Investment Account Can Be Good for Your Retirement In Yorktown Heights, New York

 

 

We’ve been so inundated with the idea of tax-free investment accounts that the taxable investment account’s role in retirement planning is underutilized and overlooked.

If you’re like most Americans, you’ve got at least one and maybe a few retirement accounts. You like the tax benefits that come from having IRA's, 401k's, 403b's, 457b's and defined benefit plans. You know you’ll have to pay income taxes when you start taking distributions from them, except for the Roth accounts, but seeing those accounts grow makes you feel good. And if you have a Roth, you like knowing that even if you aren’t getting a deduction now, distributions will be tax free. But there are other kinds of investment accounts for retirement planning.

As Physician’s Money Digest says in “10 Reasons You Need a Taxable Investment Account,” taxable retirement accounts are ignored because we’re so focused on IRS-approved retirement accounts. But you might think about supplementing your savings with a taxable retirement account. This can be a regular, old-school investment portfolio that’s not linked to any government regulations and that you’re building for retirement.

Here are some of the benefits of a taxable retirement account:

1. You have complete freedom over investments;
2. You’ve got total flexibility over your account;
3. You can use your portfolio as collateral for a loan;
4. You don't have to start withdrawing your taxable account when you turn 70 1/2;
5. You have "basis" in your account, which means when you withdraw money, you pay taxes only on the growth;
6. You only pay a maximum tax rate of 20% on long-term capital gains and qualified dividends (from stock held for at least one year);
7. You can write off capital losses in the account;
8. You can use income from the account to offset an unused investment interest deduction;
9. Your heirs will enjoy a stepped-up basis if they inherit the account from you; and
10. Your heirs don't have to start taking withdrawals from the account when they inherit it from you.

But be aware that taxable accounts aren’t protected in the event of a lawsuit, and you get basis instead of a tax deduction. That should be examined in light of your goals and insurance protection.

So while your non-taxable accounts are your first priority when preparing for retirement, take a look at the possible role that taxable accounts may have in your retirement plan. There may be some gaps that a taxable account can fill, and depending on where your finances are, may be a useful tool in tax planning for short and long term goals.

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Don’t Bury Your Tax Returns, Use Them for Informed Financial Decisions in New City, New York

 

Most of us like to stash away our tax forms as soon as we file our taxes, but that’s a mistake.

When it comes to making financial decisions, you want to arm yourself with as much information as possible. One often overlooked source is your Form 1040, advises CNBC in “Use your tax return for more than paying taxes.” Sharing this document with your estate planning attorney will allow them to get a clearer picture of your situation as well.

Lines 1-5 (Filing status). If you need to check a different box for your filing status, you should review your estate plan. If you get married or divorced, you'll need to update your will and the beneficiaries for life insurance and retirement plans.

Line 6c (Dependents). An increase in the number of dependents is a good reason to update your estate plan. This might mean a change to your cash flow for college savings and insurance needs.

Line 7 (Wages, salaries, tips, etc.). Take a look at your W-2s to see if you're making the most of workplace benefits. For instance, employees can benefit from boosting pre-tax retirement contributions, and those with children may be missing the opportunity to contribute to a pre-tax account for dependent care expenses.

Line 11 (Alimony). This is considered earned income, so consider using some of it to bolster retirement savings by contributing to an IRA.

Line 12 (Business income). If your business has become more profitable, look at whether a sole proprietorship is still the best business structure. There may be significant tax and liability considerations that suit your growing company.

Line 13 (Capital gains). Your capital gains and the details on your Schedule D can say a lot about how you are investing. If the numbers are too high or too low, it could mean you need to reexamine whether the investments and diversification are appropriate for your age and acceptable risk levels. You may have some missed opportunities to offset capital gains with capital losses.

Line 17 (Rental real estate). If you're buying property, think about the best way to hold ownership.

Line 28 (Self-employed SEP, SIMPLE and more). If you're a Schedule C or F worker, a zero on line 28 may be a missed opportunity to increase your retirement savings.

Line 40 (Itemized deductions). By bunching deductible expenses, you may be able to alternate years of claiming the standard deduction and itemized deductions. This is used in some instances to avoid the alternative minimum tax every other year. There are also trends in charitable giving that may yield planning opportunities.

An estate planning attorney can help you identify further tax-savings opportunities.

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Will You Need a Will if the Estate Tax is Eliminated? In Yorktown Heights, New York

 

Regardless of which candidate becomes president and what changes are made in coming years, there will still be a need for estate planning, and that includes regular folks as well as the ultra-wealthy.

If the U.S. federal estate tax were to be eliminated, there will still be plenty for single family offices and estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Wills are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law. For the single family office, there will still be much to do.

Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI).

Private placement life insurance is a variable universal life insurance policy that provides cash value appreciation based on a segregated investment account and a life insurance benefit. PPLI is designed to maximize savings and minimize the death benefit.

The investment account typically uses tax-inefficient hedge fund strategies. PPLI can be especially useful as an element of more complicated tax strategies

With advances in technology and greater efficiencies, private placement life insurance is becoming more popular for more wealthy individuals.

People who operate single-family offices are also becoming more aware of the opportunities for PPLI as part of the financial portfolios of their clients. The use of PPLI may increase quickly and considerably if these families are no longer required to keep traditional life insurance policies purchased to pay estate taxes.

Whether or not the federal estate tax is eliminated entirely, or if a new estate tax structure is created hinges on the results of the November election. The only thing that is certain is that if changes are made, estate plans will need to be reviewed and revised.

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