New York Trusts & Estates

Inheritance Tax, Estate Tax and What You or Your Heirs May Pay in Yorktown Heights, New York.

People worry about paying the federal estate tax, but what they should really pay attention to is their state’s inheritance and estate taxes.

There are many tax laws in the United States, and they vary by state. If you are addressing your estate plan or settling an estate, Financial Buzz in, “Inheritance Taxes May Await You,” advises you to be aware that there’s a difference between an inheritance tax and an estate tax.

The decedent’s estate pays the estate tax. However, the inheritance tax comes from the beneficiary. When a person dies, either, both or neither taxes can be a factor.

Estate Taxes. This tax is on the right to make a property transfer when a person dies. The IRS states that estates worth valued below $5.49 million don’t need to pay federal estate taxes. This exemption is for each person, and a married couple can double the exemption to make it $10.98 million. Estates above the threshold, are taxed at a rate up to 40%.

Inheritance Tax. Several states like Iowa, Pennsylvania, Kentucky, New Jersey, Maryland and Nebraska tax individuals who inherit assets from others. There’s a wide variety between states on asset types and the size of the estate. The children and spouse of the decedent typically don’t have to pay any tax.  However, in New Jersey and Maryland, there’s both an inheritance tax and an estate tax.  As a result, the estate must pay both the state and the IRS.  The beneficiaries must pay the state again.

Capital Gains Tax and Income Tax. For federal taxes, inheritance isn’t regarded as income. There isn’t any requirement to report this.  However, certain inheritances could lead to income, which would be taxable. A capital gains tax is imposed on the profit. Ask your estate planning attorney, because each state has different rules on this.

To minimize estate taxes, meet with an experienced estate planning attorney. It should be one who practices in your state. This can be a complex area, but a good professional will be able to help.

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Legendary Comedian’s Will is An Open Book: What We Know Now about Jerry Lewis in New City, New York

 With a screen persona that was always wacky, unpredictable, and in his heyday, considered ground-breaking, we now see the private side of Jerry Lewis, because his will is a public document.

It’s no laughing matter. Because he left behind a will, the world knows that funnyman Jerry Lewis, who died at age 91 with an estate worth about $50 million, made some very deliberate decisions with regard to his children. As a result, reports Forbes in the article “Jerry Lewis Disinherited 5 of His Kids, And Here's Why We Know,” some family issues that we might never have known about, are now very public.

Specifically, we know that one of the provisions in Lewis' will states:

“I have intentionally excluded GARY LEWIS, RONALD LEWIS, ANTHONY JOSEPH LEWIS, CHRISTOPHER JOSEPH LEWIS, SCOTT ANTHONY LEWIS and JOSEPH CHRISTOPHER LEWIS and their descendants as beneficiaries of my estate, it being my intention that they shall receive no benefits hereunder.”

Jerry used the word "intentionally" intentionally. It’s clear what he was doing. If a will is vague or hard to interpret, ascertaining the testator’s intent can be a challenge. However, Lewis was crystal clear that he wanted to disinherit the six children he named in the will. To top it off, he made certain that his intentions are clear by adding "and their descendants."

The couple’s sixth child, Joseph, died of a drug overdose in 2009. Lewis and his first wife were married for 36 years. Gary, one of their children, went on to become a successful musician.

Lewis makes no mention of why he decided to disinherit all the children from his first marriage. Legally, it doesn't matter. He had the right to distribute his assets the way he wanted.

Lewis’s estate will be passed to his widow, SanDee Pitnick. Next in line to inherit his fortune, should something happen to his wife, is his 25-year-old adopted daughter Danielle. He named his wife as his personal representative.

Lewis is believed to have left behind some real money in the form of his intellectual property. Jerry owned almost all of his most famous films outright, including 'Cinderfella,' 'The Nutty Professor' and 'Hardly Working.'

It would not have been that difficult for Lewis to keep his private life private. An estate planning attorney could have helped him create a trust, or multiple trusts, to reduce or even eliminate estate taxes, spare his family the cost and time of the probate process and avoid the public’s learning about his decisions regarding his adult children.

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Many Moving Parts Means You Need a Plan for Income in Yorktown Heights, New York.

It takes a combination of investments, insurance and savvy risk management to build a truly diversified retirement income plan. A handful of mutual funds, even if they are top-notch, are just the start.

Many Americans are counting on Social Security benefits to fund their retirement, according to a recent article in Kiplinger, “Plot a Smoother Retirement Journey with a Written Income Plan.”  However, relying solely on Social Security or even Social Security with income from a few IRAs, is only part of a retirement income strategy. You have to protect your income, with some insurance and a lot of diversification, and you need a written plan. It makes a difference!

Some workers are lucky to have a pension as an additional layer of support. However, an employer pension has become almost non-existent in the past few decades. As a result, many retirees will have to fill the income gap from other sources—such as their own savings and investments—and the money earned on those investments or through post-retirement employment.

This means you need to be smart with your portfolio. It’s critical to your long-term financial security. The way you manage those assets may determine how you’re going to live in the next three to four decades. Therefore, pre-retirees and retirees should have a detailed, written income plan.

An income plan is like a jigsaw puzzle—with many pieces that should fit together to give you the lifestyle you want. This will include your savings, Social Security, pensions, real estate, 401(k)s, and IRAs. The shape and size of each of these puzzle pieces will be based on several factors, including the following:

• The age you plan to retire;
• Your overall net after-tax income goal;
• The size of your overall retirement portfolio;
• Your tax situation now and in the future; and
• Your legacy goals.

A solid income plan can help you to really optimize each piece of your puzzle. That can mean leveraging your investments for liquidity and growth, insurance for income and principal protection and alternative investments for diversification, as well as maximizing your Social Security benefits. Speaking of Social Security, you’ll get higher benefits by waiting as long as possible to claim them. You can choose to retire as early as age 62, but if you do, it can mean a reduction of as much as 30%. If you wait, you can receive your largest benefit by retiring at age 70.

Here are some steps to take that can help you with your retirement math problem:

1. Inventory your expenses;
2. Make a list of your income sources;
3. Compare your estimated essential expenses with your predictable income sources from Step 2;
4. Create your plan and allocate assets to accomplish your essential expenses; and
5. Protect against the unknown and be ready to update your plan, when needed.

Creating an income plan with the help of a trusted financial advisor and an estate planning attorney may give you a reality check and change how you prepare for retirement. Ideally, this is something you do when retirement is still far enough away, so that you can make the necessary changes in your estate planning.

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Meteoric Rise of Long Term Care Costs Expected to Continue in New City, New York

The news is not encouraging: long term care and long term care insurance are going up, according to this national study. Your best strategy: plan ahead.

For patients and caregivers, the cost of long-term care is high, with no decrease in sight. That also applies to the cost of long-term care insurance and the costs that caregivers pay, often out of their own pockets, as they strive to balance care for a loved one with taking care of their own families.

ThinkAdvisor’s recent article, “15 Most Expensive States for Long-Term Care: 2017,” says that this year’s version of Genworth Financial’s annual study on the cost of care nationwide is not reassuring. The cost of nursing home care is on the rise, as well as the cost of care provided at home, for adult day care and assisted living facilities. Costs have increased steadily, and for those licensed homemakers—those who provide what the study calls “hands-on personal care” for patients still in their homes—are jumping the fastest, increasing 6.17% in the past year. With most seniors wanting to stay in their homes, that will impact many people very hard.

Less-skilled “homemaker care,” such as cooking, cleaning and running errands has also risen, at 4.75% since last year. However, both types of homemaker assistance are at the low end on the price scale: $21 for homemaker care, and $22 for licensed homemaker care.

Elsewhere, adult day care increased by 2.94% since last year, to a national median rate of $70 per day. Assisted living facilities now average a median monthly rate of $3,750, which is an increase of 3.36% from last year, and nursing homes increased 5.50% for a private room. That’s a median daily rate of $267.

When caregivers sacrifice their own financial well-being to care for their family members, they can spend on average of $10,000 out of their own pockets for expenses. This can be for household expenses, personal items or transportation services, as well as paying for informal caregivers or LTC facilities.

Approximately 62% of caregivers are paying for these expenses out of their own retirement funds, and 45% have experienced a drop in their basic quality of living because of it. In addition, 38% have decreased the amount they put into savings and retirement to meet the costs of care.

Caregivers pay with dollars and cents and their hearts. According to the study, nearly a third of those questioned said that their role as a caregiver has taken a toll on their relationship with the person they are taking care of. They also have the pressure at work from being frequently absent and/or late and not able to handle a full work load, due to their “second job” as a caregiver. Nearly half of those surveyed say they lost a third of their income.

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Imprisoned Son Files Lawsuit against Father’s Wife, Claims They Never Legally Wed in Yorktown Heights, New York.

A prisoner in a Mississippi prison filed a lawsuit against a woman who he claims is not his father’s wife, even though she bears his father’s last name and they lived together for 60 years.

Thomas Ellis, currently serving a 45-year prison sentence, filed a lawsuit against Maria Ellis, saying that she was never legally married to his father and, therefore, has no right to collect his Social Security benefits now that he has passed. Whether or not they were legally married (which family members say they were), would 60 years of co-habitation make them common law husband and wife in Mississippi?

The Clarion-Ledger’s recent article asks, “Is common-law marriage legal in Mississippi?” According to the article, Maria Ellis was listed in Cleveland “Doc” Ellis’ obituary in 2015 as his wife of 60 years. A family member also said the couple was legally married in the 1990s and that Thomas Ellis was probably in jail and didn’t know the couple got married.

Ellis filed the handwritten lawsuit himself.  He claims that his father’s first and only wife was Carrie Ellis, who died in 1985. His father separated in 1954 from Carrie Ellis, but they never divorced.

Doc Ellis and Maria Ellis lived together from 1955 until his death in 2015 at the age of 88. The big question is whether the couple’s relationship was under the purview of the abolished common-law marriage law in Mississippi or whether they were they legally married.

Mississippi abolished its common- law marriage statute in 1956 and it hasn't been recognized in the state for some time. An unmarried person living with another, now isn’t entitled to the other person’s benefits, property, or any assets.

Common-law marriage is thought to result when two people live together without going through the official process of obtaining a marriage license. They are married by a minister or another person authorized to conduct a marriage.

One retired Chancery Judge contends that if a common law marriage was established before common-law marriage was abolished as a legal marriage contract, it would be recognized as legal at any point thereafter.

However, the judge said the issue is whether a common-law marriage was established in the case, before it was no longer legal.

Despite the fact that a federal judge dismissed the lawsuit a month ago, it was dismissed “without prejudice,” meaning that there was likely a procedural error, and the lawsuit could potentially be filed again.

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Living Trusts and Trustees: What You Need to Know Yorktown Heights, New York

For living trusts, the person or people who set them up are usually named the initial trustees, but after that, there needs to be a successor trustee. Think carefully about who you would want to take on these responsibilities.

When the first spouse dies, the surviving spouse usually becomes the sole trustee, according to the article, “Women on Money and Mindset: Estate planning: choosing a trustee,” in The (Riverside CA) Press-Enterprise. When the second spouse dies, the trust passes to a successor trustee or trustees. Most people name an adult child, trusted friend or a family member who they trust. You can also name a bank or a professional fiduciary.

Children: Married couples often will name their oldest child as the successor trustee or they name all their children to act as co-trustees. This can work if there’s never been a divorce; there is only one child; she lives close; she doesn’t work and all the assets are investment accounts.  However, most adult children will have full-time jobs. Adding the job of trustee can be a strain because it’s time-consuming and technical. The administrative burden of taking care of your final business can be overwhelming.

Friends: Acting as trustee is a big large favor to ask.  Therefore, if you’re going to ask a non-family member, set up a provision in your trust to pay them reasonable trustee fees.

Professional fiduciary: A professional acts as a trustee,  which they do on a regular basis. They know what to do and are required by law to have the best interests of the beneficiaries of the trust as their top priority.

Banks: Banks like to act as trustees, especially if a big part of your trust is held in financial assets managed by that bank. They will charge higher fees than professional fiduciaries, and they’ll have some rigid internal rules to follow. If your beneficiaries may fight, or if they’re all out of state, a financial institution or a professional fiduciary is a wise choice.

The successor trustees named in your document should be notified and given a copy of your trust document. These successor trustees can always say no, so carefully consider naming the next in line.

A bank is a good backup. If you fail to name more than one person, and he or she can’t or won’t serve, your trust may have a court-appointed trustee.

As with all estate planning matters, include your children and significant family members in discussions. Tell the individuals you want to serve as trustees what their responsibilities will and be sure they are willing to take on these tasks. Have them meet with your estate planning attorney. This will make things less stressful, when they need to step into this role.

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Estate Planning, Retirement Planning, Disability, Elder Care, Charitable Giving

Senator McCain’s Diagnosis Fuels Maverick Approach in New city, New York

When you know you don’t have a lot of time left, your focus shifts—and that is being seen right now as John McCain discards any concern about political capital and has directed his attention to fighting for what he believes in.

John McCain, diagnosed with a brain tumor, is more concerned now with building a legacy and protecting what truly matters to him, according to Wealth Advisor’s recent article, “Nothing To Lose: Shock McCain "No" Is Unmistakable Legacy Call.” He is facing what we all will eventually come to grips with.

Estate planning usually centers on the assumption that death will comes as a shock, which can motivate young people to get their plans together. In those situations, an estate plan can be a disaster plan as well as a succession plan.  However, for someone like John McCain, things are much more certain. Knowing about how much time you have left, can help you to prioritize the way you spend your remaining days.

Many encourage those with a terminal illness to take it easy, but that’s just practicing for the grave.

While frequently health fails fast, some have the energy to achieve their last personal and professional goals. Staying involved may extend your energy and your life. This is also the time to execute a succession plan, when you can still be in a consultative role and ensure a smooth transfer.

McCain can put his efforts into his office, because his family life is settled. He seems to be at peace with his children. In addition, his personal financial situation is settled. It’s his wife Cindy’s money. She’s the heiress. The Senator doesn’t need to chase last-minute arrangements the way many dying people do. He may have some personal ambitions left unfulfilled. Many people who receive a terminal diagnosis want to travel or start a foundation. That way they can be around to see their estate plan start becoming a reality.

Those who are truly sick individuals can spend down their assets more quickly, with confidence that their money won’t run out.

However, in general, retirement marks a statistical end in sight. It’s a time when many folks feel great and are ready to start the next chapter. It’s an opportune time to focus on what really matters to them.

What matters is different for different people. For some, it means becoming politically engaged, while for others it means travelling to places they’ve only dreamed of. For John McCain, ramping up his already maverick position and continuing to fight the good fight, is how he wants to spend his final months.

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Understanding Estate Planning Documents: Living Wills and Lasting Powers of Attorney Yorktown Heights, New York

While the names sound familiar, a Living Will is not the same as a Will, and a Lasting Power of Attorney is not the same as a Power of Attorney. You’ll want to know what these documents are, and what they can and cannot do for your estate plan.

A recent article in Wealth Advisor, “Living Will or Lasting Power of Attorney?” does a good job of explaining these two documents. The Living Will, which is also referred to as an Advance Decision or Advance Directive, is document that conveys your wishes regarding health and care needs, in the event that you no longer have mental capacity to convey those choices to those around you. The Lasting Power of Attorney delegates the power of making health and care decisions on your behalf to another individual, in the event that you don’t have the capacity to do so. They are similar but different, and it’s important to note that if you have them both, the order in which they are signed has an impact on which one is valid.

It is important that you speak with your estate planning attorney about your objectives for these documents, the amount of discretion you want your family and medical professionals to have, as well as the implications of creating both documents.

A Living Will can give you some peace of mind about your health and care needs. It can be especially important if you hold strong views about a health situation or if you have a life-limiting illness and want to be certain that your wishes are met. You can also state your views on life-sustaining treatment.

If I have a Living Will, why do I need a Lasting Power of Attorney? A Living Will can only record your wishes as to medical treatment.  However, a Lasting Power of Attorney records your wishes  about medical treatment, as well as your thoughts on other matters, like where you live and other general needs. Remember, however, that the Lasting Power of Attorney appoints your agent to make these decisions for you.

If your views about life-sustaining treatment change and/or there are material developments in health care opportunities, your valid Living Will is going to be executed. This is despite the fact that your views later change, if you didn’t change the document.

With a Lasting Power of Attorney, you can state your preferences to your agent. If your views change over time, then your agent will be able to decide if your wishes were based on past instructions or more recent developments.

Another thing to consider before having these documents finalized: who do you want to have control? The Living Will provides you with the opportunity to share your wishes for treatment and end-of-life care. The Lasting Power of Attorney gives a designated agent the power to make the decisions about life-sustaining treatment.

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The Big Mistake People Make About Medicare and Assisted Living in New City, New York

A large percentage of Americans require assisted living care at some point during their senior years. Their understanding of how that gets paid for is way off base. It’s a hard lesson to learn.

 Approximately one-third of Americans (34%) thought that Medicare would cover their nursing home costs, as reported in a survey from the Associated Press-NORC Center for Public Affairs Research. Another third, 27%, may have been a little smarter to say that they weren’t sure.

That’s not true, says WRAL’s recent post, “Expect Medicare to cover assisted living? Think again.” These results may correlate with the fact that only 37% of Americans think they’ll need any care in their later years, but in reality, about 70% will require this care.

Another survey by the AARP Policy Institute and the National Conference of State Legislatures found that 90% of people over 65 want to stay at home as long as possible—80% say they’ll live at home until they die.

Consider the cost: informal, independent caregivers can be $12-$18/hour. Trained and vetted Certified Nursing Assistants are at least $20-24+/hour, depending on the level of support needed. Round-the-clock agency care—even conservatively figuring a $20/hour rate—would cost approximately $14,400/month or $172,800/year.

Let’s now look at assisted living. Depending on geography, the cost for private-pay, month-to-month assisted living ranges from $2,500/month in a shared room to $7,500+/month in a private room. That’s about $30,000-$90,000/year. The average length of stay in assisted living is 28 months. Therefore, the total cost would be somewhere between $70,000 and $210,000.

The Centers for Disease Control and Prevention reports that 59% of all assisted living residents will eventually move to a skilled nursing facility. The average stay is 835 days. With four to five years of care, a family can spend $250,000 to $450,000 or more.

How much of this is covered by Medicare? About 12%, because Medicare covers only medical care costs.

Unfortunately, many families don’t plan ahead and only seek the help of an elder law attorney when the situation has already reached the level of a family crisis. A parent is suddenly unable to live independently, because of an injury or the sudden onset of an illness. They don’t know what resources might be available to help pay for care, or they are relying on proceeds from the sale of their parent’s home—but that can take months, and Mom or Dad need care right now.

By meeting with an elder law attorney long before these events occur and planning in advance for both good health and bad health, the parents and family will be prepared with resources in place, a plan for the short and long term and ensure that the parent or family member is able to receive the care they need, whether for a brief or extended period of time, while the spouse is able to maintain their lifestyle.

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Choosing an Executor to Avoid a Will Challenge in Yorktown Heights, New York

You’ll need an experienced estate planning attorney to discuss your family’s dynamics, so that the person you choose to be an executor is less likely to have a legal or emotional battle with other heirs.

Successful challenges to wills don’t happen often, according to an article from The Northwest Indiana Times, “Choosing an executor.”  However, they do happen, and often a challenge that succeeds is centered on something that occurs (or doesn’t occur) during the course of creating the will.

That’s all the more reason to use an experienced estate planning attorney to help you create your estate plan. It’s the common mistakes that cause the most trouble, especially when a person tries to save money and do it themselves. If you work with an attorney who focuses on wills and estates in your state, he or she will know when a law changes—and how it can impact your plans and objectives for your legacy.

The time to think about a possible will contest or challenge is in the initial planning process. If you and your attorney discuss your concerns from the start, he or she can plan around them and design tactics that can avoid or reduce the chances of a will contest.

It’s much simpler to tackle a problem now, than to try to solve it later after you’re not around. When working with your lawyer, the more information you offer, the more likely the problem can be addressed and avoided.

For example, if you are considering favoring a daughter who has taken care of you for many years but worry that the other children will be upset, discuss this with your estate planning attorney.

Your attorney may ask you to get a letter from your physician. That letter should confirm that, that in his or her medical opinion, you’re of sound mind and have the capacity to make your own decisions. Capacity is a common challenge to a will. A begrudged heir may claim you were not mentally capable of signing a will.

Your attorney may also record the will signing so there’s evidence that you weren't under another person’s influence or pressured into signing the will. Don’t be surprised if your attorney asks that the care-giving child isn’t at the signing, to lessen the concern of undue influence.

Some individuals will leave a person they intend to disinherit a dollar. That won't do anything, except cost your estate a dollar. Just because you left them a dollar, doesn't mean they can't challenge the will.

Some people also want to have a term in the will stating that anyone who challenges the will is disinherited.  However, that is not a 100% lock. This provision, known as an in terrorem clause, is unenforceable in many states.

The best way to prevent a problem from arising is by having very clear communication about the estate and your intentions with all members of the family, if possible. Experienced estate planning attorneys have seen all kinds of family situations.  As a result, they know how to handle different family dynamics during the planning stage and when settling estates. By addressing these issues with a pro-active stance, you can spare your family stress and strain.

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