New York Trusts & Estates

Is a Surviving Spouse Liable for a Deceased Spouses’ Loan? In White Plains, New York

There are a few factors that go determine whether or not a surviving spouse has to pay back a debt. Don’t do anything, until you understand the entire picture.

First, let’s make this clear: you don’t want your family to remember you as the person who left your surviving spouse burdened with a debt that she didn’t know about until after you died. Unfortunately, this does happen. However, the surviving spouse does not always share the debt.

nj.com’s recent article, “My husband died. Must I pay his loan?” explains that whether a deceased spouse's debt becomes the responsibility of the surviving spouse, depends on several factors.

Let’s say that you’re 67, and your husband passes away suddenly. What if he decided last year that he wanted to explore the open road and took out a $50,000 loan, in his name only, to buy a Class A recreational vehicle (RV) with beechwood cabinets and custom sea glass interiors that sleeps five. You didn’t want it and you can’t afford it. What do you do?

There’s usually spousal liability for debts incurred by the non-debtor spouse only for necessary goods and services, like medical expenses. Therefore, a Class A RV with beechwood cabinets and custom sea glass interiors that sleeps five hardly qualifies. However, the surviving spouse’s options depend on the contracts executed by the late husband and the discussions that his widow is now having with the bank.

Any assets in the name of decedent—like the Class A RV with beechwood cabinets, etc.—or paid into the deceased spouse's estate, would have to be liquidated and used to pay creditors in the order of priority, as determined by state statute

In New Jersey, the law says the funeral director must be paid before any other creditor, followed in order of priority by the other costs of administering the estate, like the court and attorney fees, the office of the public guardian for elderly adults, taxes, medical expenses, judgments and then all other claims.

Any life insurance or retirement funds that are paid directly to a beneficiary, and not paid to the estate of the decedent, do not have to be used to pay the decedent's debts and expenses, unless the beneficiary is required to pay the debt, as a result of being a spouse obligated to pay for necessaries, a co-signer or obligor or for similar reasons.

If, however, the estate has no assets and cannot pay all outstanding claims, claims within the same priority level must be paid pro rata.

Each situation is different, so the surviving spouse should speak with an experienced estate planning attorney, who is familiar with the laws of the state.

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Senator McCain’s Estate and His Legacy in Yorktown Heights, New York

Some believe that Meghan McCain and her siblings will follow their father’s legacy of service. Questions about the estate he left behind are mostly known, as his family’s holdings were revealed by the opposition when he ran for the presidency.

The challenge about John McCain is less about his estate, than it is filling the void created by his absence in Washington.

Wealth Advisor reports in its recent article, “Tradition, Money, Dynasty: Can Meghan Keep the McCain Legacy Alive?” that there are several family trusts passing Cindy’s family property down from her parents to the McCain descendants. Those trusts hold the houses, her family beer business and various assets that are worth close to $200 million.

McCain’s side of the family legacy is much less complicated. He looks to have amassed $15 million on his own or in marital property.

It will be a rather small inheritance for his heirs, compared to what they’ll inherit from Cindy. However, the big issue may be identifying those heirs who will take up his social agenda.

The four McCain children are going to be as comfortable as they need or want to be. It’s more than likely that they’re sharing in the income from their grandmother’s trust already, and one day they’ll also inherit Cindy’s wealth.

With that money in the future, the Senator’s kids are free to do whatever they want with their lives. Meghan is a television personality and a professional “next-generation Republican.” She’s female, she’s educated, telegenic and just like her father, she’s not afraid to claim a “maverick” position every once in a while.

Talk with your estate planning attorney about these two issues: your estate plan, and the legacy you’d like to leave behind. The two should complement each other.

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When the Diagnosis is Alzheimer’s, What Should You Do? in Yorktown Heights, New York

People who receive a diagnosis of Alzheimer’s disease, an incurable type of dementia, are overwhelmed by hopelessness. But two authors want to change that.

The authors of a new book, “Better Living With Dementia,” say it’s time to break the “cycle of despair” that accompanies an Alzheimer’s diagnosis. The Washington Post discussed this new perspective with the well-credentialed authors in a recent article, “Learning To Live Well With Dementia.”

Author Laura Gitlin is dean of the College of Nursing and Health Professions at Drexel University and Chair of the Department of Health and Human Services advisory council on Alzheimer’s Research, Care and Human Services. Her co-author is Nancy Hodgson, the Anthony Buividas endowed term chair in gerontology at the University of Pennsylvania.

These leading experts on care for people with cognitive impairment, say that while there’s no cure for Alzheimer’s, there are many things that can be done to make life better for people with dementia and their caregivers.

At a minimum, people newly diagnosed with dementia should consult with the Alzheimer’s Association, the Lewy Body Dementia Association, the Association for Frontotemporal Degeneration and the government’s website, alzheimers.gov. These are all great sources of information and potential assistance. Individuals and families should also get referrals to elder law attorneys, financial planners, adult day centers, respite services, caregiver support services and other resources.

About 70% of people with Alzheimer’s and other types of dementia live at home. Few professionals ask about patients’ living conditions, even though these environments play a major role in shaping people’s safety and well-being. It’s not uncommon for professionals to fail to let patients know what to expect as dementia progresses. This can fosters isolation, which worsens their sense of despair.

Even small steps could help improve quality of life. For example, give focused attention to the home setting itself. Hire an occupational therapist, ideally with expertise in dementia, to do a home assessment and recommend modifications. It’s also important to know what to expect. Individuals with dementia and their caregivers will find their needs changing as their illness progresses.

Initially, the most critical need may be getting a reliable diagnosis and understanding more about the type of dementia identified by your physician. A new study by Johns Hopkins University reports that 60% of people with dementia haven’t been diagnosed or aren’t aware of their diagnosis.

Further, depression and anxiety may need to be addressed, because people can struggle with the reality of a diagnosis, withdraw from work or social activities and worry about the future. Looking for ways to keep people engaged with meaningful activities can become a challenge.

In the final stage, severe dementia, people need sensory stimulation, like enjoyable music or a fragrant bouquet of flowers. Addressing distress, discomfort and pain are the big care challenges.

The challenge for family members and caregivers is to let dementia patients know that they belong and are surrounded with warmth and affection, at every stage of the disease. Even if they cannot acknowledge the presence of family and friends, their company is important.

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Don’t Make This Common Estate Planning Gaffe: Check Your Beneficiary Designations  in White Plains, New York

When was the last time you even remembered which of your accounts have beneficiary designations? If you don’t remember, it’s time to check them.

Life insurance, IRAs, bank accounts and investment portfolios all have beneficiary designations.

Investopedia says that outdated beneficiary designations can cause problems in its article, “The Importance of Updating Retirement Account Beneficiaries.” There have been many cases of retirement account owners who have been divorced and remarried, but failed to update their beneficiary designations.

If you forget, you may find that your designated beneficiary isn’t who you want it to be. That can frequently be the case in the event of a divorce, remarriage or if new children or grandchildren were welcomed to the family since your retirement plan account was started. If you named a charity as your beneficiary years ago, it may no longer exist.

It is good if you are reviewing your estate plan regularly. However, remember that retirement accounts aren’t part of your estate and aren’t governed by the provisions of your will, so it is important to keep these retirement documents updated.

Retirement account beneficiary designations are often neglected: they don’t get the attention they need!

Failing to update beneficiary designations can be very frustrating for the family. They’re the ones who will need to go to court to get a legal determination of the true beneficiary. The judge’s decision may not be what the deceased would have wished.

There can also be an issue, if some children are named as beneficiaries, but the document isn't updated to include those who were born after the initial designation. That’s why you should update your beneficiary designation right after any change in family status—and review it periodically, so they never are out-of-date or incorrect.  You should always have a contingency beneficiary.

Another option is to draft customized beneficiary designations to address "what-if" situations.

If you don’t name a beneficiary, the beneficiary may be determined by federal or state law, or by the plan document that governs your retirement accounts. For qualified plans like profit-sharing plans, 401(k)s, and money purchase pension plans, federal regulations automatically designate the spouse of the account owner as the beneficiary. The spouse has to approve of any other designation, and this must be in writing and notarized. If the retirement account owner is single, her estate may be the default beneficiary.

An IRA plan's documents also provide a default designation, if the designated beneficiary predeceases the IRA owner. The default options vary among IRA custodians and trustees. While the default options rid any administrative responsibilities from account owners, they may not reflect their preferences. As a result, account owners should review the plan document and be certain that they update their beneficiary designations regularly.

Many IRA plan documents have default beneficiary options, so if you designate two people as your beneficiaries and one predeceases you, the share that belonged to the deceased beneficiary automatically goes to the surviving beneficiary. If you have a customized designation, you can instruct how that portion would be distributed, instead of having it default to the surviving beneficiary.

When you sit down with a qualified estate planning attorney, make a complete inventory of your assets and include the names of your beneficiaries and contingency beneficiaries. Don’t leave this detail out, or you’ll risk creating a real problem for your family.

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Need Something Else to Worry About? Try Long-Term Care in Yorktown Heights, New York

The statistics aren’t encouraging. About three quarters of Americans are likely to need long-term care, but very few are ready for the costs.

A recent article from Think Advisor paints a dismal picture of Americans who are just not preparing themselves for the inevitable facts of aging. The article, “Now You Can Add Long-Term Care to Death and Taxes,” says this may be one of the biggest disconnects in the USA: the gap between how many Americans will need long-term care versus what people actually think they’ll need.

Just 46% think they’ll need it, according to a new study that surveyed 2,000 people to see how prepared Americans were for the realities of long-term care.

Another misconception is the out-of-pocket cost of long-term care. The study found that the actual out-of-pocket cost of long-term care is more than $47,000.  However, many Americans think it’s about half that, $25,350.

In addition, $47,000 is the low end of the scale for the yearly cost per stay. While some assisted living costs may be $45,000, semi-private nursing homes are closer to $85,000. Private nursing home care is $97,455, according to the study, which was conducted by Digital Third Coast. The study was made up of 57.7% males and 42.3% females, while 56% were age 35 and younger, 33% were 36 to 55 years old and 11% were 56 and older.

Can you believe that 64% have nothing saved for long-term care, and 67% can’t contribute to a parent’s long-term care? The study found that Americans intend to save about $657 per month for long-term care.

Another issue between reality and perception, is the age that people think they’ll be when they need any sort of long-term care. Most study participants say it’s 79 years old.  However, it’s actually 73 years old, according to the study. Women will require long-term care on average for 3.7 years, and men will need it for about 2.2 years.

People in our country also have worries about putting relatives in long-term care, the study found. For example, 73% are concerned about physical/sexual mental abuse. About 41% said the cost was more than anticipated, and 48% hadn’t expected to put loved ones in long-term care. Only 33% actually have had discussions with family about when care is necessary.

One thing we do know is what we want when it comes to long-term care. We want quality of care, but we also want low costs, and we want facilities that are not too far from family members.

We just don’t want to think about how that’s going to be paid for.

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Opioid Epidemic Now Impacting Estate Planning in White Plains, New York

Estate planning often serves as a reflection of a family’s experiences. In this instance, estate planning is used to protect the family and individuals with substance abuse problems.

Estate planning attorneys hear all kinds of stories about bizarre family dynamics and difficult relatives. However, the national opioid epidemic is relatively new to the estate planning world. Sadly, it is likely here to stay.

The Pittsburgh Tribune-Review’s recent article, “Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues,” reports that the American Family Survey, commissioned annually by the Deseret News and conducted by YouGov, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally are the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017.

The opioid epidemic has led some attorneys to get creative and establish what are being called “opioid trusts.” Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.

Estate-planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those.  However, the so-called opioid trust is somewhat different.

Parents may be paying for the child’s basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely?

With an opioid trust, there’s no support to the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.

The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money.  However, you can give them other, in-kind benefits, like the use of a car—but not the title to the car.

Naming a trustee can be challenging in this kind of situation. This is a situation where a professional trustee, rather than a family member, may be a better choice. Achieva, a Pittsburgh-based organization, handles standard trust disbursements and has a team of social workers and counselors who work with trust beneficiaries.

An estate planning attorney will be able to help your family distribute assets through an estate plan that protects the family from the impact of addiction.

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Generational Divide Between Musicians Now and Then in Yorktown Heights, New York

Maybe people who went into the music in the past, led with their hearts and souls, like Aretha, but the difference in income is astronomical.

As singers and actors from prior generations die and we learn about their business lives, there’s a huge disparity between their earnings and that of today’s artists. Stars from the past, beloved and working into their later years, continue to pass away with estates that wouldn’t be deemed sufficient for a CEO to change jobs today.

Wealth Advisor says in its new article, “Aretha Franklin’s Estate Almost Criminally Undervalued Even At $80 Million,” that description now fits Aretha Franklin, the Queen of Soul.

She sold 75 million records and is credited as a songwriter on hundreds of albums by other artists. However, even the most generous estimates of her career earnings are no more than $80 million.

Compare her to Taylor Swift. She started at about the same age, has been working one fifth as long and the same calculations say she’s worth more than $300 million.

The mega stars in Aretha’s imperial period didn’t earn as much as they do today. Management was often aggressive and took a huge chunk of every dollar earned from the artists’ record sales, concerts, merchandising and media appearances.

Aretha also didn’t do herself any favors, by allowing her husband to manage her early career. When they divorced, he took a lot of her lifetime earnings with him. A raw deal or not, it was the way the industry worked at the time. As a result, paying alimony meant she had to keep working for her ex.

That may be why Taylor Swift hasn’t gotten married. Despite a finely crafted prenuptial agreement and trusts to protect her money, a wrong decision could cost her hundreds of millions of dollars.

The music industry has changed dramatically. Traditional revenue sources never really grew much bigger than they were in the 1960s. Some, like selling the actual music, tanked and have yet to revive. Today’s music icons, like Taylor Swift, thrive because they manage their own tours and take in ticket income rather than record sales. Many own their own publishing outlets, and that maximizes their percentage of every song they sell. That’s not how it worked in Aretha’s day.

 However, Aretha died with money in the bank. Her children will inherit considerable sums. She most likely gave huge amounts to charity and did it in the most tax-efficient way her advisers could find.

Just like Prince, it’s safe to say that sales of her recordings will take a leap, anything as yet unreleased will be repackaged and her name and image will start being monetized. As a brand and a legend, she will be enjoyed by new generations of music lovers. Her family will benefit, and her fans will grow in number.

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Special Needs Families Need Strong Financial Planning  in Yorktown Heights, New York

The cost of raising a child with special needs is easily twice that of an average child, and college costs are higher as well.

Families with special needs children need to plan their child’s future carefully in many regards, and financial concerns are, by necessity, a big part of planning. While the average cost of raising a child from birth to 18 is about $250,000, according to The American College of Financial Services, the cost to raise a child with special needs can easily be twice that amount. One of the challenges is preparing for the special needs child when its time to attend college.

WTNH’s recent article, “Financial planning for families with children with special needs,” advises that working with a team of different professionals can help parents manage both the financial and non-financial aspects of providing care. Here are some of the key roles:

Caregiver. Working with a caregiver can help manage the challenges of providing care and addressing everyday responsibilities. The cost will be commensurate with the level of care required, so determining the need will be important to creating a budget.

Estate Planning Attorney. A lawyer who specializes in estate planning can help create a special needs trust to shield assets for a beneficiary with special needs, while preserving her ability to qualify for government programs. An updated will and living will with the names of a guardian and trustee will also be crucial to be sure that care is provided for in accordance with your wishes. A letter of intent can also be a helpful document for caregivers. It’s not a legally binding document, but it can provide important information like medical history, family history, information about your child’s preferences, and your wishes for the type of care they should receive.

Accountant. As a provider of care to a child or dependent with special needs, you may qualify for tax deductions for medical expenses, tax credits and tax-advantaged accounts. For individuals disabled before the age of 26, a 529A account can provide tax-free growth and use of the money to improve health and quality of life.

Financial Advisor. A financial advisor, who specializes in working with families that have special needs children or dependents, can provide specific recommendations on how to fund and protect accounts for disabled dependents.

Parents are advised to investigate any kind of benefits and support offered by the federal government, like Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Depending on their employer, they may have access to flextime or child care cost reimbursement, as well as disability and life insurance. Don’t overlook local resources, since some counties and states have a host of programs available.

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When Was the Last Time You Reviewed Beneficiary Designations? In White Plains, New York

Talk about a train wreck waiting to happen: beneficiary designations from three or four decades ago can really create a problem for your heirs—or those you thought were your heirs.

Most people fill out beneficiary forms when they start a new job, open an investment account and open bank accounts. Then they forget about those forms—often for decades. Those people named as beneficiaries way back when, are now their heirs—whether they want them to be or not.

Wealth Advisor’s recent article, “Designated Survivor: Beneficiary Designations Can Make–or Break–Your Estate Plan,” reminds us that beneficiary designations override the terms of your will or trust. To avoid any unintended consequences, it’s very important to review your designations with your estate planning attorney. Think about the following:

Children. Many people name their children as beneficiaries on their accounts and other assets, without knowing the consequences of this choice. If a minor inherits an asset in this way, a guardianship proceeding will likely be required to appoint a guardian to receive and manage the inherited assets on behalf of any minor child. The court proceedings are costly and time-consuming. In many states, the court will place restrictions on how and when the money can be used for the beneficiary during the guardianship. When you designate a person with disabilities as a beneficiary, it may impact his or her ability to qualify for public benefits. These issues can be avoided by naming a trust as the beneficiary.

Major Life Changes. We all experience changes. They can include major changes like birth, death, marriage, divorce, a new home, or a job change. However, people frequently neglect to look at their estate plans and beneficiary designations, when these events occur. Coordinating your beneficiary designations with your estate plan, can eliminate the need to update your beneficiary designations with each life change. At the very least, it will give you with some guidance on the types of situations that should cause you to conduct a review and to update these forms.

Trusts. You may have, or want, a revocable trust in your estate plan. This will give you additional privacy, flexible administration and important protections for your beneficiaries. Beneficiary designations are an ideal way to transfer your assets into your trust and to leverage the benefits of trust planning, without impacting the ownership of assets during your lifetime.

Retirement Accounts. When it comes to selecting beneficiaries for income tax deferred assets, like IRAs or 401(k)s, it’s usually a spouse who is named as the primary beneficiary. This maximizes the income tax deferrals and other administrative privileges provided to surviving spouses. Deciding on the contingent beneficiary is a little harder, because there are income tax and other considerations that should be evaluated when making this decision.

The best way to preclude problems, is to review all of the accounts that have a beneficiary designation to ensure that they still reflect your wishes. Doing so will save your heirs a great deal of time and stress and eliminate any surprises. Talk with your estate planning attorney to ensure that all of your assets will transfer to the heirs you want, not the ones you forgot about years ago.

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What are Pastors Doing about Estate Planning? In Yorktown Heights, New York

You might think that pastors, who lead congregations in occasions of birth and death, would be a little more aware than the rest of us of the events of life, and by extension, the need for an estate plan. However, a recent survey shows otherwise.

A survey of Southern Baptist pastors conducted for the Southern Baptist Foundation has revealed that more than half of them don’t have the estate basics, including a will, trust, living will, electronic will, legacy story or durable power of attorney with health care directives.”

In its recent article on the survey, The Baptist Press reports, “Young or old, many pastors lack a will, survey finds,” that 74% of the pastors surveyed think estate planning should be considered part of a person's complete financial stewardship.

However, executives at LifeWay Research say the survey shows a lack of awareness about estate planning and the laws which may be factors in pastors not having a plan in place. Procrastinating is common, but failing to have an estate plan in place can have a devastating impact on an estate.

Of course, basic estate planning saves a lot of trouble for family and loved ones. However, in addition, taxes can be minimized and assets protected.

According to the survey, pastors age 18-44 are the least likely to have a will (31%) or a durable power of attorney with health care directives (14%). Only about half of those pastors closest to retirement (age 55-64 and 65-plus) have a will (54% for both groups). Likewise, few of those closest to retirement (age 55-64 and 65-plus) have a health care durable power of attorney (25% for both groups).

It’s a bit of a surprise that so many pastors don’t have a plan for their families and property after their death, especially those that should be most likely to be thinking about this issue—the ones with young families. They seem to be the least prepared.

About 64% of the clergy surveyed, agree with a statement that the court decides who will care for a child, if the last parent dies without a will; 16% percent disagree, with 21% saying they didn’t know. When asked about assets, the survey showed that 48% of pastors said that if someone dies without a will, their family decides what happens with the assets of the deceased; 33% disagree, and 19% "don't know."

However, both with property and children, it’s the court that decides what happens to them, if there’s no will.

The survey reflects the data from more than 1,100 completed surveys that were conducted, both by mail and online, this past spring.

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