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New York Elder Law and Elder Care

 

Elder law is about more than money. When viewed properly, elder law is about two major things. First, ensuring that your personal wishes—financial, medical, and legal—are carried out; and second, understanding that elder law is a family matter affecting an intricate web of individual relationships.

What elder law is NOT is simply drafting a will, or filing for Medicaid, or any of the other individual concerns that far too many families attack piecemeal, only considering them when they become of immediate concern. While crisis-motivated legal action is usually more costly, appropriate professional planning can be extremely liberating.

Knowing that your potential long-term care needs have already been addressed frees you and your family from needless worry. An experienced New York elder law attorney can present your options and ensure that the proper plan is in place, ensuring that your family doesn’t suffer a financial crisis stemming from a lack of preparation for long-term care.

Wills are important, of course. Ensuring that your assets are disbursed according to your wishes is a vital component of elder law. But a truly diligent New York elder law attorney understands the necessity for proper estate planning—ensuring that the estate you’ve worked so hard to build stays in the hands of those you’ve loved and designated to enjoy it, rather than being chipped away by taxes or family litigation. A solidly constructed, comprehensive estate plan can save tax, court, and attorney costs for you and your family.

Attorneys at Littman Krooks use a variety of tools to care for you, your estate, and your family. Some things spring immediately to mind: Wills, Legacy Planning, Advance Health Care Directives. Other aspects of elder law include:

Contact the team of experienced New York elder law attorneys at Littman Krooks today to schedule a thorough consultation concerning your family’s needs.

 

 

Elder Law Planning After ATRA: An Interview with Bernard A. Krooks

(This article was written by Richard L. Moshman and featured in the February 2013 issue of The Estate Analyst)

“This is the perfect storm for elder law planning.”

— Attorney Bernard A. Krooks

Interview with Bernard A. Krooks

Q: Are we entering the golden age of Elder Law planning, now that the Federal transfer tax is not going to impact the vast majority of estates?
A: I’ve done this for 28 years, and we have just hit the tip of the iceberg. For many years, elder law was the stepchild of estate planning that never got much attention. Now there are a number of major law firms that are dropping their estate practices. Last year, there were less than 4,000 estate tax returns that were subject to Federal estate taxation. And there were more than 3,000 planners at the Heckerling conference. That works out to a little more than one client apiece…and none to all the other planners throughout the United States.

Q: The statistic being noted recently is that there are 10,000 Americans turning 65 years of age every day. And if they aren’t paying estate taxes, they need other types of planning.
A: There is clearly a shift towards the non-tax aspects of financial planning. It is just harder to earn a living doing estate planning without elder law. It is the perfect storm for elder law planning. Our nation is an aging society with people living longer, and they are demanding different services.

Q: Will estate planning attorneys simply switch their focus to elder law, assuming, of course, that they get training and take the time to become competent in elder law issues?
A: Consumers have to be very careful of estate lawyers moving outside their area and dabbling in elder law. They would be best served by a certified elder law attorney. The National Elder Law Foundation is the only entity certifying elder lawyers in the United States. A current list of certified elder law counsel can be found on the NELF website (nelf.org). There are currently less than 500 certified elder law attorneys in the entire country.

Q: Some taxpayers who made large lifetime gifts during the latter part of 2012 in anticipation of the “fiscal cliff” are now having misgivings, and some professionals are offering up various ways to “reboot” trusts. How do you feel about utilizing approaches such as “decanting” trusts?
A: It’s nice to get another bite at the apple! Decanting assets from a trust offers a nice solution where it is permitted by the trust and/or applicable state statutes. New York has a good decanting statute, and several states have followed New York’s example. But it can’t just be assumed that it is always an applicable option.

Q: Is the impact on trust income enough to warrant remedies to address existing trusts, such as decanting assets or swapping out assets?
A: It can be, depending on the size of the trust. With a top rate of 39.6% applicable to trust income exceeding $11,950 for 2013 (plus the 3.8% Medicare tax), many existing trusts may need to be adjusted.

Q: Trusts already had a steep progressive rate schedule, but did we just reach a tipping point in how trusts are utilized in estate planning as a result of ATRA? Going forward, will you feature trusts in estate plans the way you have in the recent past, or will you apply a revised set of thresholds before advising clients to use trusts?
A: It depends on the context, but, in general, ILITs [irrevocable life insurance trusts] have become questionable unless the estate is large enough—closer to $5 or $10 million. There is a shift in emphasis with less use of credit shelter trusts due to portability. Although sophisticated estate planners know better, clients see bypass trusts as unnecessary because they can elect to rely on the portability of the first spouse’s unused exemption. Clients just don’t want to spend money on sophisticated planning without clear benefits.

Q: What about the use of credit shelter trusts in those states that still have their own transfer taxes, such as New York (with an estate tax that applies after an exemption of $1 million) or New Jersey (with an estate tax that commences after an exemption of $675,000)?
A: Use of credit shelter trusts to take advantage of smaller, state-level exemptions is still useful for spouses. For New York, after an exemption of $1 million, there is a potential tax of up to 16%. Preserving a spouse’s state exemption has value, and many clients are looking at this option. These trusts also provide significant asset protection value.

Q: For wealthier estates with married couples, does the permanence of the portability provision mean the end of the QTIP trust and a shift to “I-love-you trusts?”
A: No, not if you are in a second marriage. For spouses who remarry, the QTIP still is relevant for protecting the disposition of assets and also protecting assets from creditors.

Q: A lot of existing wills contain QTIP trust structures. Should planners approach these trusts with the mindset that they may still have some merit, or should they assume that these are now to be presumptively less desirable?
A: The evaluation needs to be case by case, based on the issues of each situation. However, a given QTIP should not be presumed to be worthless or less desirable.

Q: How can existing trusts be adjusted to reduce the impact of higher taxes?
A: Flexibility can be incorporated into a grantor’s current trusts by providing the trustee with the power to substitute property of equal value. Utilizing powers of appointment can also be useful.

Q: You’ve mentioned income-only trusts as a very favorable option.
A: Income-only trusts can be very useful. They are grantor trusts, and the asset is includable in the estate under Section 2036 and qualifies for a basis adjustment with a step up for heirs under Section 1014. In addition, the grantor retains an income stream to live on; the income is taxed at the grantor’s income tax rates, which will be lower than applicable rates for the trust. The assets in the trust are protected from the creditors of the trust beneficiaries and, if a domestic asset protection trust (DAPT) is used, from the grantor’s creditors as well.

Q: What are the most relevant questions or issues that you are now fielding as a result of ATRA?
A: After my Heckerling presentation, many of the professionals attending the session approached me with questions about their own parents. So, even though it was a high-quality audience with planning backgrounds, they all had families and wanted to confirm how to handle their own situations.

Q: With some quasi-stability in the transfer tax universe, should Congress keep its hands in its pockets for a while, or are there some remaining items that you’d like them to tweak?
A: Congress should leave everyone alone! Every time they touch something, they seem to make it worse. We need tax simplification, not tax complication.

(This article was written by Richard L. Moshman and featured in the February 2013 issue of The Estate Analyst).