April 2015 Newsletter

2015 Estate Tax & Elder Law Changes

Federal Estate Tax Exemption:

Goes up to $5.43 million per individual ($10.86 million per couple due to portability)

New York State Estate Tax Exclusion (top rate of 16% tax on amounts in excess of 105% of the Exclusion amount):

April 1, 2015 and before April 1, 2016 $3,125,000
April 1, 2016 and before April 1, 2017 $4,187,500
April 1, 2017 and before January 1, 2019 $5,250,000
After January 1, 2019 $5,900,000 (projected)
(no portability so special planning must be done to preserve maximum exemption per married couple).

Medicaid Income and Resource Levels for 2015

• Income levels for one person: $825 for 2015 (was $809 for 2014)
• Income level for two people: $1,209 for 2015 (Was $1,192 for 2014)
• Resource level for one person household: $14,850 for 2015 (Was $14,550 for 2014)
• Resource level for household of two people: $21,750 for 2015 (Was $21,450 in 2014)
• Minimum monthly maintenance needs (income) allowance: $2,980.50 for 2015
  (Was $2,931 for 2014)
• Maximum community spouse resource allowance: $119,220 for 2015
  (Was $117,240 for 2014)

Schedule a complimentary
appointment to review existing
Estate Planning documents in our
Long Island Office,
our NEW Manhattan Office
at the Empire State Building at
350 Fifth Avenue, Suite 3130,
or our
New Jersey office.
Contact us at either
(631) 424-5400 or (212)564-3307.
Please see our website at
www.schankerandsch.wpengine.com
for our locations and directions.

Gifting Power in New York’s
Durable General Power of Attorney

New York State updated its statutory Power of Attorney form in 2010. One of the most significant changes is that the Principal now has to sign off on giving a gifting power to the Agent (versus the power auto,automatically being in the prior version of the form). This brings up an important decision for the client in whether the Agent should have this ‘gifting power.’ There are many reasons but two of which stand out as the most important:

1) Estate Tax:

The gifting power will allow the agent to give away assets in order to get the taxable Estate below the Federal and/or state estate tax exemption amounts so as to minimize or even eliminate Estate taxes at death. A prime example where this would be appropriate is if one is on his/her death bed with a taxable estate and lacks the competency to enter into legal transactions. Gifting is a legal transaction that requires competency to be valid. Gifting assets while alive is a way to save a significant amount of money from going to Uncle Sam upon death.

2) Medicaid Planning:

The gifting power will allow the agent to give away assets in order to qualify for Medicaid to pay for long term care expenses and perhaps be able to preserve some assets without having to spend down to the Medicaid limits.

Of course, you must trust your agent always as the Agent on the Power of Attorney is given trust with much responsibility and power.

Another Reason to Avoid Probate

We always remind clients of the many reasons why Probate should be avoided.

Probate is the process of proving the validity of a Will to the Court.

It creates unnecessary time delays, added costs, and lack of privacy. However, another important reason to avoid Probate is because it
causes your beneficiaries to be at the mercy of the Court at death when it comes to critical decisions. For example, the Court has been known to appoint a Guardian Ad Litem even in cases where there is a valid Power of Attorney to represent the interests of an incompetent in a Probate. The Guardian Ad Litem is an attorney chosen by the Court and the Estate is charged whatever the Attorneys’ fees are in fulfilling their Guardian Ad Litem role (on top of the administering attorneys’ fees).

Probate can be avoided if you plan your estate properly before you die. There are many ways to avoid probate while you are alive such as creating Revocable Trusts (and re-titling assets into them), changing the title of accounts, and making sure living beneficiaries are named on as many accounts as possible. If you are uncertain as to whether you are set up to avoid Probate at death, we recommend you meet with one of the attorneys at Schanker and Hochberg, P.C. to have a complimentary review of the titling of your assets. A few simple changes can make your Estate that much easier to administer.

Andrea Schanker, Esq.,
regularly delivers
presentations.
Pictured left, is the
Pre-Retirement Seminar,
held at CUNY’s Graduate
Center in midtown,
Manhattan, 2014.

Asset Protection*

Many of us are concerned about asset protection especially in this ‘day in age’ of our continually increasing litigious society. Asset protection involves techniques to protect assets of individuals and businesses from creditors and predators (predators are who we call potential future ex-spouses). This outline will address the most common ways to protect assets of which not everyone may be aware :

1) Life Insurance Trusts and Gifting Trusts – These are irrevocable trusts set up to house life insurance policies and/or gifted assets.
a. Advantages
i. Asset protection – protected from creditors and predators
ii. Gets assets out of your taxable Estate (so as to minimize estate taxes)
iii. Gives you control beyond the grave – you can set distribution ages/conditions
b. Disadvantages
i. Loss of control while alive (a trustee other than the person gifting the assets must be chosen to control the trust)
ii. Expense – cost to set up with attorney and file annual income tax returns

2) Exempt Assets – These are assets that are creditor/predator protected by the very nature of what type of asset they are.
Examples are:
a. Retirement Plans and IRAs
i. Inherited IRAs but anyone other than a spouse are unprotected.
ii. IRAs can be protected for non-spousal beneficiaries by creating a qualified Trust.
b. Primary Residence (State-law specific – may be very limited in some states )
c. Life Insurance (State specific)
d. Annuities (limited)

3) Limited Liability Companies and Family Limited Partnerships
a. Advantages
i. Asset Protection (particularly for businesses and income-producing real estate)
ii. Potential to get assets outside your taxable estate at a discount
b. Disadvantages
i. Expense – cost to set up with attorney and, in some cases, file annual income tax returns

Of course, this is just a broad overview and rules may vary state-by-state. Therefore, before taking any action you should consult with a
professional. You are more than welcome to set up a complimentary meeting with one of our attorneys so as to evaluate what may be the
best plan for your situation.

*Please note these items do not apply to “Super Creditors” (i.e. IRS, child support).

ALERTS AND UPDATES:
We prepare and distribute these to all of our clients when there are significant Estate and Gift Tax changes or changes of Law that could
impact our clients.

FLAT-FEES FOR ESTATE PLANNING:
This allows for us to truly get to know our clients and their families through unlimited phone calls, meetings, e-mails and correspondence
for the requisite work for which we are retained.

COMPLIMENTARY ANNUAL REVIEW MEETINGS:
Letters are sent out annually to each client inviting them to come in for an annual review meeting. This is an opportunity to determine if any changes are needed and appropriate.

COMPLIMENTARY FAMILY MEETINGS:
Letters are sent out annually to each client inviting them to come in for an annual review meeting. This is an opportunity to determine if any changes are needed and appropriate.

ASSET TRANSFERS:
Titling of assets is basic Estate Planning and if title is not correct, your original intent may be superseded. For example, if Mary titles
her savings account “Mary and Johnny” but her Will states that this account is to be divided equally among all of her children, she has just disinherited her other children because title on the account supersedes the Will (hopefully Johnny will share). Title and beneficiary designations must be carefully coordinated. Our staff coordinates this process for you.

These are some of our most valuable services offered to our clients. Please visit our website at www.schankerandsch.wpengine.com for more detail or contact us directly at (631) 424-5400.

Highlighted S&H Attorney:
R. Mark Hochberg, Esq. (Partner)

R. Mark Hochberg received a Bachelor’s degree in Economics from Rutgers University, a law degree from Brooklyn Law School and a graduate law degree with a concentration in estate planning and taxation from the University of Miami Law School. Mr. Hochberg is a member of the New York, New Jersey and Florida Bars and is
admitted to practice before the United States Tax Court and the Supreme Court of the United States.

Mr. Hochberg has lectured and written extensively on estate planning topics. He was an adjunct instructor at Adelphi University for a ten year period of time and he is a former columnist for Financial World Magazine, where he wrote a monthly column on a wide range of issues dealing with personal and estate planning. Mr. Hochberg has been interviewed in the New York Times and other prominent publications and has written articles for The Tax Advisor and The CPA Journal.

His patient and understanding manner is well-suited for the field he has chosen: “I enjoy working with and helping people. This area of the law is not detached and impersonal as some other specialties are. Estate planning is a cooperative process; it is not confrontational in nature.”

Mr. Hochberg resides in Plainview, New York with his wife, a financial consultant.
mark@schankerandsch.wpengine.com