Blogs from 2024

Creating a trust as part of your estate plan could have many benefits. But those benefits can be completely missed if you don’t title your assets properly and they don’t end up in the trust! A crucial aspect of trust planning that cannot be overlooked is funding your trust.

Establishing a trust can have a variety of benefits. They may include avoiding probate, protecting assets, providing for a beneficiary with special needs, minimizing estate tax, or protecting an inheritance. However, while it is critical to include the right language in the trust document to achieve your objectives, it is equally critical to make sure the right assets end up in the trust.

We are currently assisting a lovely client through an estate administration process that could have been avoided. Her deceased mother had created a trust (with another law firm) but never followed through with properly funding her trust As a result, when our client sought our help to “administer the trust,” we found that upon review of the mother’s assets, there was nothing actually held in the trust.

If the trust had been properly funded, and the assets outside the trust had all been designated with named beneficiaries, the entire estate would have been readily available for distribution to the appropriate parties. Instead, our client did not have immediate access to her mother’s assets and had to petition the Surrogates Court to be appointed as the Estate Administrator, in order to collect and distribute the assets.

This court administration process caused legal expense and delay that could have been avoided. Additionally, by going through the court-supervised estate administration, the assets were now exposed to potential claims from creditors. If the mother had been receiving Medicaid benefits, the estate assets could have also been subject to Medicaid estate recovery, further reducing the inheritance for the intended beneficiaries. All of these issues could have been prevented if the mother’s trust had been properly funded during her lifetime.

A critical part of the estate planning process is not only creating the documents, but reviewing each asset and updating either the ownership or beneficiary designations to make sure the process is as smooth and economical as possible after lifetime.

Contact us to review your estate plan and ensure the smooth administration of your estate. We are happy to help you with this process.

The deadline for companies existing before 2024 have until the end of the year to get in compliance with their obligations under the Corporate Transparency Act.

The federal law, known as The Corporate Transparency Act, was enacted in 2021 and went into effect as of January 1, 2024. Many companies active in the United States are now required to report information disclosing the identity of the individuals that own and control the companies.

New companies have 90 days from the registration or creation date to file, while companies existing before January 1, 2024 have a deadline of January 1, 2025 to file their report.

“Reporting entities” include corporations, limited liability companies, and any other entity that is formed by filing a document with the secretary of state or other government office. There are certain entities that either do not fall under these categories, or are exempt from reporting.

A trust does not fall under the category of a “reporting entity”, however, if a trust is a shareholder of a corporation or a member of an LLC, there will be reporting requirements.

If you have business ownership, it is important to become familiar with this law and be sure that you are in compliance before the end of this year.

Read More Here

For most people, receiving an inheritance is something to celebrate. However, for a nursing home resident on Medicaid, an inheritance may not be such welcome news.

What Is Medicaid?

Medicaid is a public assistance health insurance program for people who have limited means. For many older adults, or individuals with disabilities, Medicaid often serves to help cover the expensive costs of long-term care.

Medicaid eligibility requirements for long term care come with extremely strict income and resource limits. Because Medicaid is a federal program that is run separately by each individual state, the income and resource limits varies by state, and more specifically, by each Medicaid program. In many states, an individual may not have more than $2,000 in their name to qualify for the program. Generally, New York State has a limit of $31,175 (for 2024).

When applying for Medicaid long-term care benefits, the review process goes beyond just examining an applicant’s current assets. Medicaid also scrutinizes the applicant’s financial transactions for a period leading up to their application date. This review, known as the “lookback period,” typically spans 60 months and is designed to prevent individuals from qualifying for benefits by giving away or transferring assets for less than fair market value.

Interestingly, while New York State has established a 30-month lookback period for community-based long-term care (such as home care services) in 2020, the lookback has not yet been implemented to date. If Medicaid uncovers any uncompensated transfers during the lookback period, they will assess a penalty, potentially affecting the applicant’s eligibility for benefits.

The Medicaid program’s strict asset limits can turn an inheritance into a double-edged sword for recipients. While seemingly a windfall, an inheritance can actually jeopardize a recipient’s Medicaid benefits, potentially disrupting their care. Even worse, without proper planning, the inheritance itself might be consumed by high care costs. To avoid these negative outcomes, it’s crucial to engage in careful planning. This ensures that an inheritance enhances the recipient’s quality of life rather than undermining their Medicaid-funded care or disappearing into medical expenses.

Inheritance Money is Income in the Month Received

An inheritance counts as income in the month you receive it. You or whoever is representing you will have to inform the state Medicaid agency about the inheritance. If you receive an inheritance and the amount puts you over the income limits for your state, you will not be eligible for Medicaid benefits for that month. If you can properly spend down the money from an inheritance in the same month that you receive it or make a transfer of the money that is exempt from a lookback penalty, you will be eligible for Medicaid again the following month.

Preserving Your Inheritance

An elder law attorney can identify and advise you on your options to preserve your inheritance. The attorney will determine the rules for your specific state program and identify whether any exceptions to the lookback are available to you that will allow you to preserve some or all of the inheritance. If there are no exceptions applicable to your situation, the attorney still can advise you on the proper way to spend down the inheritance to gain some benefit from the inheritance while minimizing the reduction of Medicaid benefits. Further, there may be additional strategies that the attorney can identify to help you for maximum preservation of the inheritance.

Advance Planning is Best, If Not Too Late

If you have a loved one that may be receiving Medicaid benefits when you die, even unexpectedly, it is best for your estate plan to direct their inheritance to a Medicaid compliant special needs trusts. This would allow your loved one to benefit from their inheritance without jeopardizing either their Medicaid or the inheritance. An elder law attorney can help you with your estate planning.

Conclusion

The Medicaid program is, in and of itself, quite complicated. With different rules in every state, and changing requirements from year to year makes the task of navigating Medicaid even more daunting. Trying to navigate this yourself can result in avoidable loss to your benefits or your inheritance. Seek guidance from an experienced elder law attorney.

We are happy to help you - call (516) 347-7356 today.

In estate planning, details are crucial. The seemingly innocent act of removing staples from a valid, properly executed will could lead to unintended and potentially catastrophic consequences. Let’s explore why an unstapled will might cause serious complications.

What Is Your Will Used For and How Do Your Wishes Go Into Effect?

A will is a vital legal document that serves several important purposes in estate planning. It specifies how you want your property, money, and other assets distributed after your death, names your beneficiaries, appoints an executor, and may designate a guardian for your surviving minor children.

However, a will doesn’t automatically take effect upon the testator’s death. The nominated executor must petition the Surrogate’s Court and follow the probate process to have the will “admitted to probate.” This means the executor must go through specific legal steps before they can act on the will’s terms. The Surrogate’s Court plays a crucial role in ensuring the will’s validity and accurate representation of the decedent’s wishes.

What Happens if Your Will is Unstapled?

While an unstapled will isn’t automatically invalid, it can invite challenges. The court may question the will’s authenticity, as they must verify that the complete document matches exactly what the deceased person signed. Concerns may arise about pages being swapped or removed. If the will appears damaged or torn, the court might interpret this as a sign of revocation.

More problematically, disinherited relatives could contest the will’s authenticity. If the will isn’t in the same intact, attached form as when it was signed, these relatives will have an easier time arguing for its invalidity. This situation can lead to significant issues, potentially delaying the probate process, causing unnecessary stress, wasting time, and incurring additional legal fees. In the worst-case scenario, the court might reject the will entirely.

Conclusion

The humble staple plays a surprisingly crucial role in maintaining your will’s integrity and validity. Keeping your will properly fastened and intact is more than just good organization—it’s a vital step in ensuring your final wishes are carried out as intended. This simple precaution can save your loved ones from unnecessary stress, legal battles, and potential loss of inheritance during an already difficult time.

Often, the drafting attorney will hold your original will for safekeeping. But if you have your original will in your own possession, you should consult with a legal professional to ensure your will is in proper order to withstand potential challenges. Remember, in estate planning, even the smallest details can have far-reaching consequences. By taking care to keep your will intact and properly stapled, you’re not just preserving a document—you’re protecting your legacy and your loved ones’ future. Don’t let a simple staple become the weak link in your carefully crafted estate plan.

As the costs of long-term care continue to rise, many couples find themselves grappling with how to protect their assets while still qualifying for Medicaid assistance. One strategy that sometimes comes up in these discussions is divorce. But is ending a marriage truly a good way to shield assets from Medicaid spend-down requirements? Let’s explore this complex and sensitive topic.

Understanding Medicaid Long-Term Care

Medicaid is often the last resort for covering expensive long-term care costs. To qualify, applicants must meet strict income and asset limits, which vary by state but are generally quite low. New York State allows a Medicaid applicant to retain up to $31,175 in non-exempt assets, but other states have a limit as low as $2,000. Without advance planning, these strict eligibility rules often require spending down assets during a crisis. Additionally, while New York and other states may allow “Spousal Refusal” enabling one spouse to obtain Medicaid benefits even if the other spouse has significant assets, Medicaid may still seek spousal contribution from the healthy spouse.

The “Medicaid Divorce Strategy”

The idea behind a “Medicaid divorce” is that by legally ending the marriage, the couple can allocate most of their assets to the healthy spouse, allowing the spouse needing care to qualify for Medicaid more easily. In theory, this could protect the couple’s life savings from being depleted by long-term care costs.

However, this strategy will not work. If a couple is divorced, leaving one spouse a “ward of the state”, namely, in need of Medicaid long term benefits, any distribution that is less than equitable for the Medicaid applicant spouse can be challenged. Medicaid can consider an agreement or divorce settlement granting the healthy spouse a greater share as a “transfer” resulting in a Medicaid penalty during the five-year “lookback,” and further, the healthy ex-spouse can be sued by the state (in place of the Medicaid applicant spouse) for monthly maintenance to be applied to the impoverished Medicaid recipient spouse.

In addition, divorce is not something to take lightly. Even if this strategy worked for Medicaid purposes, there are other significant risks and drawbacks, such as social security and other retirement benefits, the emotional toll which shouldn’t be underestimated, not to mention ethical considerations.

Alternative and Better Strategies

Instead of considering divorce, there are often better ways to protect assets while still qualifying for Medicaid:

1. Irrevocable Trusts: When properly structured and timed, these can protect assets from Medicaid spend-down.
2. Utilizing Medicaid-Exempt Transfers: Transferring assets to certain exempt individuals (like a spouse or a disabled child) or into specific types of trusts that are recognized by Medicaid rules. These transfers may not trigger penalties if done correctly and in compliance with state and federal regulations.
3. Other Strategic gifting done before the five-year look-back period (at least 5 years before you or your spouse need nursing home care), can preserve assets.
4. Spend-Down Strategies: Using countable assets for exempt purposes, like home improvements or paying off debt, can be beneficial.

Conclusion

While the idea of a “Medicaid divorce” might seem like a clever solution, it is not recommended as an asset protection strategy and there are better alternatives available.

If you’re concerned about protecting assets in the face of potential long-term care needs, it’s crucial to consult with an experienced elder law attorney. They can help you explore legal and ethical strategies that align with your specific situation and state laws. Remember, the goal is to find a solution that not only protects your financial well-being but also preserves your dignity and family relationships.

As your child prepares to embark on their college journey, there’s an important aspect of their transition to adulthood that often goes overlooked: estate planning. While it may seem premature to consider such matters for a young adult, having certain documents in place can provide crucial protection and peace of mind for both you and your child.

A Cautionary Tale

Consider the story of Megan, a 19-year-old sophomore at a university 500 miles from home. During her spring semester, Megan was involved in a serious car accident that left her in critical condition. Adding to the horror of Megan’s parents, Mark and Liz, they faced an additional unexpected challenge: they couldn’t access Megan’s medical information or make decisions about her care. Despite being her parents, they had no legal authority now that Megan was an adult. The hospital staff, bound by privacy laws, couldn’t disclose details about Megan’s condition or treatment.

As days turned into weeks, Mark and Liz struggled to manage Megan’s affairs. They couldn’t access her bank account to pay her rent or handle her student loan payments. They had no authority to communicate with the university about her academic status or financial aid. What should have been a time focused solely on Megan’s recovery became a stressful legal maze.

This difficult situation could have been avoided if Megan had the proper estate planning documents in place.

Essential Legal Documents

Let’s explore what these crucial documents are and why they’re so important for every college student.

1. Durable Power of Attorney
2. Health Care Proxy (Medical Power of Attorney)
3. HIPAA Authorization Form
4. Living Will (Advance Directive)
5. Last Will and Testament

Durable Power of Attorney

A Durable Power of Attorney (DPOA) is a crucial document that allows your college-age child to designate someone they trust to make financial and legal decisions on their behalf if they become incapacitated. This could be due to an accident, illness, or any situation where they’re unable to manage their affairs.

Why it’s important:

• Allows parents or a trusted individual to manage bank accounts, pay bills, or make other financial decisions if the student is unable to do so
• Enables the designated agent to interact with college administration regarding financial aid, housing, or academic matters if needed
• Provides a seamless way to handle unexpected situations relating to any of your child’s legal or financial matters without the need for court intervention

Without a DPOA, like Mark and Liz, parents might find themselves unable to access their child’s accounts or make necessary decisions, potentially leading to missed payments, academic issues, or other complications.

HIPAA Authorization Form

The Health Insurance Portability and Accountability Act (HIPAA) protects the privacy of medical information. A HIPAA Authorization Form allows your college student to specify who can access their medical records and discuss their health information with healthcare providers.

Why it’s important:

• Enables parents or other designated individuals to receive information about the student’s medical condition, treatment, and records
• Allows communication with healthcare providers, which is crucial in emergencies or for ongoing health management
• Facilitates coordination of care, especially if the student has pre-existing conditions or requires regular medical attention

Without this form, parents might be unable to obtain critical health information about their child, even in emergency situations. This can be particularly stressful when your child is away at college and you’re trying to assist from afar. If Megan had signed this before she left to college, Mark and Liz could have been updated by the doctors and provided with the details of Megan’s condition even before arriving at the hospital. A HIPAA Authorization ensures that parents can stay informed and involved in their child’s medical care when necessary.

Health Care Proxy

A Health Care Proxy, also known as a Medical Power of Attorney in some states, is a document that appoints someone to make medical decisions on behalf of your child if they’re unable to do so themselves. This is particularly important for college students who may be far from home and could face medical emergencies. Once your child turns 18, health care providers are not legally obligated and may in fact be prohibited from taking instructions from a parent regarding a child’s health care without proper authorization (either legal documentation previously completed by the adult-child or by court order).

Why it’s important:

• Allows the designated agent (often a parent) to make critical medical decisions if the student is incapacitated
• Ensures that healthcare providers have a clear point of contact for medical information and decisions
• Prevents potential delays in medical treatment due to uncertainty about who can make decisions

While many states, such as New York State, have default health care decision making laws giving immediate family members certain authority in an order of priority, it is still important to have a health care proxy, specifically to designate a specific person that may not have a higher priority than other less-preferred individuals. For example, in the instance of one parent raising the child and another parent less involved, it would be important to have a health care proxy naming the parent the child prefers to have more decision making authority.

Living Will

A Living Will, different than a Last Will and Testament, is a document that outlines a person’s wishes for end-of-life care. While it may seem unnecessary for a young adult, having this document in place ensures that your child’s wishes are clear in the unlikely event of a severe accident or illness. Some people choose not to sign this and rather to discuss their wishes with the agent they designate under their Health Care Proxy.

Why it’s important:

• Specifies preferences for life-sustaining treatments, pain management, and other medical interventions
• Reduces the burden on family members who might otherwise have to make difficult decisions without knowing the individual’s wishes
• Provides clear guidance to healthcare providers, potentially preventing conflicts or uncertainty in critical situations

Discussing and documenting these preferences can be a valuable exercise for young adults, encouraging them to think about their values and what quality of life means to them. It also provides an opportunity for important family conversations about healthcare decisions.

Last Will and Testament

While college students typically don’t have substantial assets, a basic Last Will and Testament can still be beneficial. This document outlines how a person’s assets should be distributed upon their death and can address other important matters.

Why it’s important:

• Specifies how personal belongings, savings, or any inherited assets should be distributed
• Provides a framework for handling digital assets (more on this in the next section)
• Helps prevent potential conflicts among family members or friends regarding the student’s possessions

Even if your child doesn’t have much more than a checking account, creating a will can be an educational experience, introducing them to important legal and financial concepts they’ll need to understand as they grow older. Further, it can become important in the event they had a sudden death that results in a post-mortem lawsuit.

In Conclusion

While it may feel uncomfortable to discuss these matters as your child heads off to college, having these essential estate planning documents in place can provide invaluable protection and peace of mind. They ensure that your child’s wishes are respected, their interests are protected, and that you can provide support when needed, even from a distance.

By taking these steps now, you’re not only protecting your child but also teaching them important lessons about responsibility, planning, and the legal aspects of adulthood.

Remember, the goal of estate planning for your college-bound child isn’t to dwell on worst-case scenarios, but to be prepared, allowing everyone to focus on the exciting journey ahead with confidence and security.

A common misconception is that a last will and testament avoids the probate process altogether. This is not the case. The reality is that a will must go through probate after someone’s passing for any assets remaining in their name, without a joint owner or beneficiary designation. However, having a properly drafted will in place makes the probate process significantly easier and more efficient for your loved ones. With a valid will, you control how your estate is distributed according to your wishes instead of state intestacy laws. You can name an executor to oversee the process, designate guardians for minor children, specify transfers of particular assets, and more. While a will does not avoid probate, it provides crucial instructions and legal powers that streamline things for your heirs and beneficiaries.

What is Probate?

Probate is the legal process that takes place after someone dies. It includes validating the deceased person’s will, identifying and appraising their assets, paying off any debts and taxes, and distributing the remaining assets to the rightful heirs or beneficiaries. The probate court oversees this process.

Even with a valid will in place, probate is generally still required. The key difference is that with a well-drafted will, the probate process tends to be shorter, easier, and less expensive compared to not having a will at all.

How a Will Helps with Probate

While a will doesn’t bypass probate, it does provide vital instructions for the probate court. Specifically, a will allows you to:

• Name an executor to oversee the estate and probate process
• Designate guardians for minor children
• Specify how assets should be distributed among heirs/beneficiaries
• Potentially minimize taxes and other costs through proper planning

Without a will, the court will appoint an administrator (which may or may not be a family member) to handle your estate. Your assets will also pass to your closest relatives as defined by state intestacy laws, rather than according to your own wishes.

By having a clear, legally-valid will in place, you provide crucial directions that can streamline and simplify the probate process. Your named executor can take the lead, assets can be transferred per your wishes with less court oversight, and the overall process is likely to be shorter and less costly.

While having a Last Will and Testament is crucial, there are additional estate planning strategies that can further streamline the distribution of your estate and potentially avoid the probate process.

The Takeaway

A will is an essential estate planning tool that makes the probate process easier on your loved ones after you’re gone – even though it doesn’t completely avoid probate. Working with an estate planning attorney can ensure your will is properly created to maximize its benefits.

If you’re looking to help out your grandchildren financially, or simply wish to be generous, you may be wondering how gifting money could affect your eligibility for Medicaid long-term care benefits down the road. The short answer is that gifting can make you ineligible for Medicaid for a period of time due to the program’s asset transfer rules. However, there are certain allowances and strategies to be aware of.

The Medicaid Look-Back Period

To receive Medicaid coverage for nursing home care, assisted living, or in-home care, there are strict limits on the amount of assets you can have. This is because Medicaid is a needs-based program intended for those with limited resources.

Any gifts or asset transfers made within a specified “look-back” period before applying for Medicaid can trigger a penalty period of ineligibility. The federal look-back is 60 months (5 years).

*Side note: Although Medicaid is a federal program, the rules in each state vary. While all states implement the 60 month look-back for nursing home Medicaid eligibility, and most for community based services (including home care and assisted living care) as well, historically, New York did not have a look-back for community-based services. In 2020, New York State enacted a 30 month look-back but has delayed implementation and as of this writing, there is no definite date of its implementation for community based services.

So if you gift cash to your grandchildren, that amount gets totaled along with any other assets you’ve transferred during the look-back. Medicaid then determines how long you’ll be ineligible based on the transfer amount.

For example, let’s say you gift $112,000 to your grandkids, and the Medicaid nursing home regional rate in your county is $14,000. Your ineligibility period, the “penalty period,” would be around 8 months ($112,000 / $14,000 per month). Medicaid will not seek the penalty from your grandchildren, but you will have to figure out a way to come up with paying the nursing home privately during the penalty period before Medicaid begins to cover your bill.

There is a misconception that gifts under the federal annual gift exclusion amount would not be penalized by Medicaid. For 2024, the amount of the federal annual gift tax exclusion amount is $18,000. For example, some people believe that if they give $54,000 to three grandchildren this year, it won’t affect their Medicaid eligibility. That is not true. The IRS federal gifting rules are very different than the Medicaid penalty rules. Read more here.

Careful Planning is Key

While gifting to grandkids can be penalized for Medicaid purposes, if it is your wish to continue gifting while protecting your assets for Medicaid eligibility, there are strategies that an elder law attorney can develop for you.

Getting advice from an experienced elder law attorney is highly recommended to understand the complex rules and protect your eligibility.

Reach out to us; we would love to help you.

Owning a home is a major investment, and unfortunately, property fraud is a real risk that homeowners need to guard against. Fraudulent transfers involve someone illegally transferring ownership of your property without your knowledge or consent. This can enable scammers to take out mortgages against your home, sell it, or commit other fraud.

There are companies that offer property monitoring services for a fee to alert you to any suspicious activity on your property’s records. However, many county governments provide similar alert systems that homeowners can sign up for directly at no cost.

For example, in New York State, Nassau County, Suffolk County and New York City provide free notification systems to alert homeowners about any recorded land record documents affecting their properties.

• Nassau County Property Fraud Alert Sign Up
• Suffolk County Homeowners WatchList “HOWL”
• New York City Notice of Recorded Document

These alert systems help keep homeowners informed about any activity on their property records and it the sign-up process is simple and quick.

While availability varies by location, many other county and municipal recorders’ offices provide similar automatic alert services related to property records. Check with your local county or town to see if they have a fraud alert system you can sign up for. It’s an easy, free way to stay informed and safeguard your home against fraudulent transfers.

Of course, signing up for alerts is just one precautionary step which shouldn’t preclude taking other protective measures to ensure that your property and title are secure.

Further, in addition to protecting your home from fraudulent activity, it’s important to protect your home equity from other threats that may especially affect elderly homeowners:

Long-Term Care Costs – Having to pay for extended nursing home care or in-home assistance can rapidly deplete a senior’s savings and home equity if proper planning, such as Medicaid planning, isn’t done.

Taxes – Elderly homeowners can face heavy tax burdens when selling or passing down their home due to capital gains, estate taxes, and other costs if done incorrectly.

Predatory Tactics – Unscrupulous lenders, relatives, caretakers or scam artists may use deceptive tactics to unlawfully gain control over a senior’s home title and assets.

While signing up for free county alerts is wise, a multi-layered approach combining proactive estate planning and asset protection steps is prudent to fully secure your home’s title and equity against the range of threats facing homeowners, and particularly elderly homeowners.