Posts Tagged ‘financial planning’

It’s Time to Protect Your Family and Your Future – 2015 National Financial Literacy Month

Tuesday, April 14th, 2015

In support of the 2015 Improving Financial Awareness & Financial Literacy Campaign built around National Financial Literacy Month (April) and six month later during National Estate Planning Awareness Week (3rd week in October) the following estate planning article contains a very important message.

Over 50% of our adult population does not have a current or up-to-date estate plan to protect themselves and their family’s assets; that’s half your family, friends, and associates.

Estate planning is a financial process that can protect you and your family and is a very important component of your overall financial planning. Now is the perfect time to put your estate planning house in order. If you don’t have an up-to-date estate plan and you happen to get hurt or sick and cannot manage your financial affairs, the courts will have to appoint someone to manage them for you. The person they appoint might not be the one you would want to perform those tasks.

Without an estate plan, when you pass away, your affairs will be settled by default through a complex legal system called “probate.” The handling of your financial affairs can turn into a costly and frustrating ordeal for your family and heirs.

The crafting of a good estate plan starts with planning, followed by the proper drafting and signing of appropriate legal documents such as wills, trusts, buy-sell agreements, durable powers of attorney for asset management, and an advanced health-care directive or health-care power of attorney. Having these documents in place saves you and your family a lot of money and time at a very difficult and emotional time. 5-2-Graphic-EPArticle
Your estate planning should also address the coordination of the way you hold title to your various assets, your beneficiary selections, and the possible transfer of certain assets while you are alive.

Regardless of the extent of your net worth, estate planning is important for everyone. Complex strategies may be used by wealthy people to reduce death taxes and costs. Others may only require a simple will and/or trust to pass on property to their heirs and provide for minor children.

Even if a simple will is all you require, an estate plan is an essential part of your financial planning. Everybody will need it someday. The time to address or update your estate plan is now.

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Picking Up the Tab

Wednesday, January 2nd, 2013

This article was featured in the Westchester County Business Journal (November 27, 2012). For a link back to this article,  click here.

BY Bernard A. Krooks, Esq., Littman Krooks LLP

Baby boomers could soon face their own fiscal cliff, as state governments consider the implications of “filial responsibility” claims making their way through court systems. Although seldom enforced, statutes holding adult children responsible for their parents’ bills are on the books in about 30 states. A Pennsylvania man was recently told to pay $93,000 for his mother’s nursing home care.

Filial responsibility laws have been around since colonial times, but with the advent of Social Security, Medicare and Medicaid, most states stopped enforcing them. Now that the national dialogue is increasingly focused on the role that entitlements should play in balancing the budget, that could change.

New York has no filial responsibility law at this time, but consider the numbers: According to AARP, nearly three-quarters of the $13.4 billion spent each year in New York for nursing home care is primarily paid by Medicaid, a program that’s jointly funded with federal and state dollars.

With the largest generation in U.S. history approaching retirement, costs stand to balloon. Gov. Andrew Cuomo has already been aggressive in his efforts to rein in Medicaid costs. Shifting responsibility from a controversial, publicly funded benefit to family members could prove attractive.

Filial responsibility laws usually involve situations in which a parent has unpaid medical bills or has relied on government support. States have been known to garnish wages, assign property liens and report unpaid debt to credit agencies. In some places, it’s possible to serve jail time.

Enforcement has typically involved situations in which the adult child was somehow responsible for the parent’s impoverishment, perhaps by defrauding them. Not so in the Pennsylvania case. So adult children who may have had absolutely no control over their parents’ financial decisions could suddenly be faced with whopping bills.

These are particularly stressful economic times for boomers, faced with tuition debt, shrinking retirement investments and recession-hobbled careers. Although courts have typically not forced adult offspring into poverty, the result can still be devastating. The son hit with his mom’s $93,000 bill had an $85,000 yearly income.

Given longer life spans, traditional preparations for retirement may be insufficient. In many cases, the younger generation has assumed that mom or dad could just move in with them, if necessary. At worst, they figured that Medicaid would handle nursing home expenses. But the elder care landscape may be changing in ways that are difficult to predict, and potential liability argues for increased involvement by adult children in their parents’ financial planning.

Because elderly parents can be stubborn about sharing money details, it may be helpful to frame such discussions in terms of the arrangements that middle-aged “kids” are making for their own golden years. And long-term care insurance should certainly play a part in the conversation. If parents don’t already have a policy, run the numbers.

Depending on their age, high premiums may mean that it’s more cost-effective to self-insure. In either case, money should be allocated to cover care that may not be handled by either Medicare or Medicaid. It may be advisable for adult children to help out with premium payments now to avoid more expense later on. If acquiring a long-term care policy is practical, sorting through the options can be confusing. So it’s wise to seek advice from a certified elder law attorney, who can explain the various options and riders available to you in these insurance policies.

It appears that many of the filial responsibility suits underway in Pennsylvania – given current program guidelines – are aimed at prodding offspring to file Medicaid applications on behalf of their parents. So establishing and maintaining eligibility for the government benefits that are currently available are other important considerations. Again, the process can be complex and legal advice can avert costly mistakes.

It’s not easy to watch parents age, and most adult children want to do everything possible to ensure their security. No one can predict what will happen in New York state regarding filial responsibility statutes, but candid family discussions and contingency planning could avoid having to make painful, crisis-driven choices in the future.

Bernard A. Krooks is managing partner of the law firm Littman Krooks L.L.P. (, with offices in White Plains, Manhattan and Fishkill. He is a certified elder law attorney and past president of both the National Academy of Elder Law Attorneys and the Estate Planning Council of Westchester County.

Impending Changes Would Make Estate and Gift Taxes Apply to Many More Americans

Wednesday, December 26th, 2012

The rules governing taxes on gifts and estates are set for major changes at the end of the year unless Congress steps in.

The taxes, which currently concern mainly the very wealthy, will soon ensnare far more people if scheduled reductions in exemptions are allowed to go through. The exemption level for each tax is currently $5.12 million and is set to plunge to $1 million.

The lifetime exemption on gift taxes is also scheduled to make an identical drop.

The impending changes have prompted a frenzy of activity among wealthy Americans eager to make gifts and create trusts under current law, filling the calendars of estate planning attorneys and financial planners nationwide.

The estate tax rate is also scheduled to increase from a current top rate of 35 percent to a new top rate of 55 percent.

According to Congress’ Joint Committee on Taxation, the change in estate tax exemptions would make approximately 55,000 estates subject to the tax next year, compared to fewer than 4,000 estates under current law.

President Obama’s budget proposal of February 2012 called for an estate tax exemption level of $3.5 million and a top rate of 45 percent. It did not contain a recommendation for gifting exclusions.

Estate and gift taxes are not the only ones scheduled to change. The tax exemption for generation-skipping transfers and trusts would likewise drop from its current $5 million to $1 million under current law. In addition, trusts of this type currently can shelter assets from taxation for an unlimited number of generations, but President Obama has proposed limiting the effect to 90 years.

Most experts predict that Congress will not resolve the matter before the end of the calendar year, but any compromise reached in 2013 could be retroactively applied to January 1.

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