Authors Posts by Nancy Burner Esq., CELA

Nancy Burner Esq., CELA

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Concerns about accessing long-term care in the community is something we often discuss with our clients. How will they access the care? Who will pay for it? Is the care reliable? Can I safely and affordably age in place? 

The positive news is that there are many options for care in the community. We are fortunate to live in an area where care is accessible, reliable and affordable. Many of our clients are surprised to learn that Community Medicaid is a way to access care in the community. 

Unlike Chronic Medicaid, which requires a five-year financial look back as a prerequisite for eligibility, Community Medicaid does not have any look back. This means that with some relatively simple planning (in most cases) the financial eligibility requirements can be met with little to no waiting time.

It is important to note there are strict asset and income limitations for applicants for Community Medicaid. An applicant is permitted to have $15,150 in liquid nonretirement assets in his or her name (in New York for 2018). They can have an unlimited amount of qualified (retirement) accounts in their names so long as they are taking the required distribution as set out by the local Medicaid program. 

The primary residence is also an exempt resource, provided the Medicaid recipient remains in the home. It is advisable for all Medicaid recipients to do some estate planning with their home to ensure that it will remain protected should a need arise for care in a facility. Additionally, such planning can ensure that the home is protected from potential estate recovery after the death of the applicant. The applicant is also permitted to have an irrevocable prepaid prearranged funeral account.

With respect to income a single Medicaid applicant is permitted to retain $862 in monthly income. Any income amount over this allowance is considered “excess income.” The good news is that all of the Medicaid applicant’s excess income can be redirected into a pooled income trust, which is a type of special needs trust established and managed by nonprofit organizations for the benefit of disabled beneficiaries. The excess income transferred into a pooled trust can be used to pay the Medicaid applicant’s monthly household and personal expenses.

As you can see, with some relatively straightforward planning most people can qualify for Community Medicaid benefits. Once you have applied and been accepted under the Community Medicaid program, you can access a variety of services that will help you to remain in the community. 

For most of our clients the greatest benefit is the availability of a care provider who can come into their home and provide assistance with activities of daily living such as dressing, bathing, light housekeeping and meal preparation. 

Community Medicaid will also cover the cost of certain approved assisted living facilities and some adult day care programs. The availability and accessibility of care in the community is oftentimes far more available than most of our clients think. 

The community-based Medicaid program is invaluable for many seniors who wish to age at home but are unable to do so without some level of care and certain supplies the cost of which would be otherwise too expensive to sustain on their own. With some careful planning aging in place is certainly a viable option for most clients we meet.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

The first question that must be answered is whether you are determined a resident of New York. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

We have seen many clients considered “snowbirds,” those who maintain a residence in New York but travel down south during our harsh winters. For our snowbird clients who want to create estate planning documents and plan for possible care needed in the future, it is important to determine if you should see an attorney in New York or elsewhere. 

The first question that must be answered is whether you are determined a resident of New York or of the other state you are visiting. Some factors to determine residency include the amount of time spent in each state, your mailing address, which state your driver’s license is held, where your car is registered, where you are registered to vote and where you file your income taxes.

Once you determine which state is your primary residence, there are other considerations to be examined regarding your estate plan. Snowbirds should consider where they plan on living in the future and where they think they will likely receive care. There may be a possibility that you move down south upon retirement but you plan to move back to New York to be with family members when you are in need of assistance. Since most clients do not have a plan set in stone, they should have estate planning documents, which may include Medicaid asset protection, that would cover them in either state.

Because the laws governing estate planning and Medicaid benefits differ from state to state, it is advisable that you have your documents reviewed by an attorney in both states to ensure that they comply with the laws in both places. For example, there is an additional signature required on a last will and testament in Florida that is not required in New York. Complying with Florida law when executing a last will and testament will not invalidate the document if it is probated in New York. This will avoid any issues or delay in administration if your will is probated in Florida. 

Additional examples of differences in the law are for powers of attorney and advance directives, including health care proxy and living will documents. Since these are state-specific laws, they often have different terminology that can be confusing when moving between locations. 

For a health care proxy in New York the person named to make your medical decisions is called your “agent.” In Florida the term for the agent acting as your health care proxy is a “surrogate.” In Florida the term used under the law to name the default agent appointed is “proxy.” This could cause unnecessary confusion and should be addressed by your estate planning attorney. 

The language and powers listed in your power of attorney will also differ by state. This becomes especially important when your agent is assisting in long-term care planning. You should make sure that your power of attorney includes all of the possible powers your agent may need should you need long-term care whether it is by privately paying or applying for Medicaid to cover your care costs. This may include: the power to prepare, sign and amend a trust agreement; allow for transfers of assets to your agent; and enter into contracts for caregivers or home health care services. 

For our snowbird clients it is important to consider where you are likely to receive care in the future. We recommend that you have your estate planning documents reviewed by an elder law and estate planning attorney in New York and your warm winter destination. 

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, ESQ.

Nancy Burner, Esq.

Gifting and Medicaid planning is commonly misunderstood. We often see clients who believe that the gifting rules for Medicaid are the same as the IRS gifting regulations. 

The IRS allows a person to give up to $15,000 per person annually without penalty. Under the code, all gifts made in any given year are subject to a gift tax. However, the first $15,000 gifted to each individual in any given year is exempted from the gift tax, and for that reason, for many individuals, gifting during their lifetime is a way to distribute wealth and reduce their taxable estate at death. Medicaid is not the same.  

Oftentimes, seniors and their children believe that this same exemption holds true for Medicaid eligibility, and that gifting this amount of money away annually will not affect them should they need to apply for Medicaid benefits in the future. 

Medicaid requires that all Medicaid applicants account for all gifts and transfers made in the five years prior to applying for Institutional Medicaid. These gifts are totaled, and for each approximately $13,053 that was gifted, one month of Medicaid ineligibility is imposed. It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home rather than on the day that the gift was made.  

For example, if someone has approximately $180,000 in his or her name and gift annually $15,000 to each of four children, the $180,000 would be gone in approximately three years. Under the IRS code, no gift tax return would need to be filed and no tax would be owed. If at the end of those three years the individual then needed Medicaid, those gifts would be considered transfers “not for value” and would have made him or her ineligible for Medicaid benefits for approximately 13 months.  

In other words, the individual would need to privately pay for the nursing home care for the first 13 months before Medicaid would kick in and contribute to the cost of care. 

The amount the individual would pay on a monthly basis would depend on the private monthly cost of care at the nursing facility. If the nursing facility costs $17,000 per month, the individual would need to pay that amount for 13 months totaling approximately $221,000.  

What makes this even more difficult for some families is that an inability to give the money back or help mom or dad pay for her or his care is not taken into consideration, causing many families great hardship. It is important for families who have done this sort of gifting to know that there are still options available to them.  

An elder law attorney who concentrates his or her practice on Medicaid and estate planning can help you to optimize your chances of qualifying for Medicaid while still preserving the greatest amount of assets.      

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. 

By naming a trustee to decide the amount of distributions to be taken, the account holder can rest assured that the IRA savings won’t be squandered. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

One of the most misunderstood planning strategies is that retirement funds, such as 401(k)s, 403(b)s, traditional individual retirement accounts (IRAs) and Roth IRAs, should not name a trust as designated beneficiary. My clients are often advised by their financial adviser to name individuals and not trusts, even minor or disabled beneficiaries. That could be the most expensive mistake made by a retirement account holder and one I often see. The IRA retirement trust is the answer.

First, clients are concerned about protecting their beneficiaries from claims of creditors: that is, divorcing spouses, judgment creditors and Medicaid if the beneficiary needs long-term care.  

While IRA accounts are protected from creditors of the original account holder and surviving spouse, the same is not true for inherited IRAs. The Supreme Court of the United States has ruled that when someone other than the spouse inherits an IRA, the account is subject to beneficiary’s creditors. Thus, if parents want to protect their child, they can name a trust as the beneficiary of the account, instead of naming the child directly. Correctly written, the trust can allow the trustee to use the beneficiary’s life expectancy, commonly referred to as a “stretch IRA.” 

Under federal tax law, designating an individual as the beneficiary of a retirement account results in tax efficiencies by allowing the beneficiary to take the benefits over their life expectancy based upon the beneficiary’s age at the time of the owner’s death and the use of an IRS actuarial table. 

Each year the beneficiary of the IRA must take a minimum distribution from the inherited IRA and must pay income tax on the distribution. The balance of the IRA continues to grow tax deferred, only distributions are taxable. Therefore, a young beneficiary will be able to defer the tax longer (commonly known as “stretch”) and enjoy exponential growth. In the case of a Roth IRA, the account holder has already paid the tax, so the beneficiary can continue to have tax-free growth, not tax deferred, over his or her life expectancy.

In order to use the trust beneficiary’s life expectancy, the trust must meet the following criteria: 

The trust must be valid under state law; the trust must be irrevocable by the time of the account holder’s death; the trust beneficiaries must be identifiable within the trust document; the retirement beneficiary custodian, issuer, administrator or trustee must be provided with a copy of the trust document by Oct. 31 of the year after the year of the retirement owner’s death and there must be an agreement to that information in the event it is ever changed; and all the “counted” beneficiaries of the trust are “individuals.”

Typically, trusts that satisfy the above criteria will qualify for the stretch. The trusts are drafted as either a conduit trust or an accumulations trust. 

The simplest trust is a conduit trust, which allows the trustee to decide on the amount and timing of any and all distributions from the trust. However, any distributions taken must be paid immediately to the beneficiary — who must be an individual. The trust can be drafted to give the trustee the power to take only minimum distributions or distributions more than the minimum.  

The second type of trust is a qualified accumulation trust. This trust permits the trustee to accumulate annual minimum required distributions in the trust after the distributions are received from the inherited retirement benefit and is used for beneficiaries that have existing creditor problems to protect the annual distributions from a creditor’s reach. 

If the payment were to be paid to the beneficiary outright, the creditor would be able to take the distribution. This type of trust is also used for a supplemental needs trust for a disabled individual. Since most supplemental needs trusts are intended to protect government benefits, it is imperative that the distributions be permitted to accumulate in the trust.  

Under New York law, for example, the beneficiary (other than supplemental needs beneficiary) can be her own trustee with the power to make distributions to herself for an ascertainable standard of health, education, maintenance and support without subjecting the trust to claims of her creditors. In cases where the beneficiary is unable to act as trustee, because of lack of maturity, irresponsibility or disability, someone else can be named as trustee. Importantly, the trustee will be the “gatekeeper” and take minimum distributions and exercise discretion to take even more from the IRA if needed and permitted by the trust terms.  

By naming a trustee to decide the amount of distributions to be taken, the account holder can rest assured that the IRA savings won’t be squandered. Beneficiaries that are not financially savvy can create tax problems by taking distributions without considering the income tax consequences. Not only will the distributions be taxable, the distribution may put the beneficiary in a higher tax bracket for all their income. 

Retirement funds are often the largest assets in a decedent’s estate and usually given the least amount of consideration. Consideration should be given to naming a retirement trust as the designated beneficiary.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. 

A comprehensive estate plan will ensure the appropriate needs and goals are met. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Young adults may have the misconceived notion that estate planning is only necessary for certain people, such as individuals of a high net worth or those who are aging. However, there are certain documents that everyone should consider, including the youngest generation of millennials. Having such a plan in place can avoid costly court proceedings as well as plan for your family should you become incapacitated or upon your death. 

An estate plan for a millennial would likely include a health care proxy, living will, power of attorney and a last will and testament.

First, anyone over the age of 18 should have advanced directives including a health care proxy and power of attorney. A health care proxy is a document that states who will make your medical decisions if a doctor deems you unable to make them for yourself. 

Many people assume that either their spouse or parent is entitled to take on this responsibility should they lose their mental capacity. This is not entirely incorrect. New York State has the Family Health Care Decisions Act that establishes the authority of a patient’s family member or close friend to make health care decisions when the patient did not leave prior instructions. 

However, this is only in effect when you are in a hospital or a nursing facility. Therefore, without an agent named on your health care proxy there is no one with authority to make decisions outside of these settings. Additionally, the person who would have authority under this law may not be the one you would have ultimately chosen to make such decisions. By naming someone in advance, you will avoid these potential issues. 

You may also wish to execute a living will. This document specifically addresses treatments or procedures you may want or want to withhold in relation to end of life care.

The next document you should execute is a comprehensive durable power of attorney. This is a document that allows your named agents to make financial decisions on your behalf and assist in taking care of your daily financial obligations. A power of attorney is practical should you become incapacitated or unable to handle your bank accounts or assets at any time. 

Should you not have these advanced directives in place and become incapacitated, your loved one may have to commence a guardianship proceeding to have the authority to make these decisions. Guardianship proceedings can be costly and time consuming for all involved. Additionally, it may involve family members in the court proceeding that you did not intend to include in your daily affairs.

Finally, when executing a last will and testament, you can designate your beneficiaries, the specific items or amounts you will leave them and how they will receive your assets. These designations are especially important for individuals with minor or disabled beneficiaries. If your beneficiaries include minors or disabled individuals, an attorney can draft your last will and testament to make sure they receive their share in an appropriate trust and that a specific person or entity is named to manage the assets on their behalf. Additionally, you can name whom you would like to act as the guardian for your children within your will.

Regardless of your age, a comprehensive estate plan will ensure the appropriate needs and goals are met for you and your family during your lifetime and upon your death.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. 

Creating an estate plan can give you the peace of mind you need. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Planning for the future can sometimes be difficult. Creating an estate plan can give you the peace of mind you need, while also making it easier for your loved ones to handle your affairs when you die. We often find that while our clients understand the basics of certain estate planning documents, they are often surprised to see that many of these documents are multifaceted and serve multiple purposes.

A last will and testament is a legal document memorializing your wishes on how you, the testator or creator of the will, want your estate to be distributed after you die. If you die without a will, your assets will be distributed according to state statute, also known as the laws of intestacy.  

For example, in New York State, if you die with a surviving spouse and children, your spouse will receive the first $50,000 of your estate and then one-half of the balance. The remainder will be distributed equally among your children. This is not ideal for someone who wants all their assets to go to their surviving spouse.   

Instead of being bound by the laws of intestacy, one can create a will that specifies to whom they want their assets to go and how they want their assets to be distributed. Under the scenario above, a will would allow the testator to distribute their assets to their surviving spouse. Only if the spouse predeceases the testator should the assets be distributed to their children.

The will has functions other than just listing the distribution of assets upon death. For parents with young children, a will allows a guardian to be named for minor children. Also, if there are beneficiaries that are minors or incapacitated, the will can provide that the assets be distributed in trusts on behalf of those beneficiaries. 

Many clients will choose to leave assets to beneficiaries in trusts in other circumstances, such as for creditor protection or to delay the age by which they can have full access to the funds. 

A will can also create a supplemental needs trust for beneficiaries who currently receive, or may be in need of, means-tested government benefits.  

Another advantage of executing a will is that it allows the creator to waive any bond that the executor would otherwise have to pay in order to administer the estate. A bond is often required by the court to protect the interests of the distributees and beneficiaries of one’s estate.  

Depending on the size of the estate, the bond may have a large annual premium that will be paid out of the assets of the estate. A will can also provide for the decedent’s wishes regarding funeral arrangements and cremation.

It is important to have a will even for individuals who hold all accounts jointly with another person. While the joint assets will go directly to the co-owner, the terms of the will can be used to administer any assets that are held outside of the joint accounts. An estate account will have to be opened to cash any checks delivered after death that are made payable to the decedent, including tax refunds or a return of other funds. Having a will ensures that these funds are distributed to the appropriate persons.  

Creating a last will and testament can help avoid many of the pitfalls that occur when a person dies without any estate plan in place. We strongly recommend seeking a trust and estates and elder law professional to help determine the right estate plan for you.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

The final budget left spousal refusal intact. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

On March 31, the New York State Legislature and Gov. Andrew Cuomo (D) finalized the budget for the 2019 fiscal year. In January, the governor’s office set forth a budget proposal. Using that as a jumping-off point, the Legislature and the executive started a negotiation process that resulted in the budget beginning the fiscal year on April 1, 2018.

Elder law attorneys across the state watch the budget proposal and negotiations closely to see what, if any, impact there will be on the Medicaid program. Many elderly and disabled individuals in the state rely on the Medicaid program to cover their costs of long-term care. The budget proposals often suggest changes to eligibility as well as to the methods by which care is provided.

One item that was in the governor’s original proposal, but eventually left out of the final budget, was the elimination of spousal refusal. Spousal refusal is the method by which a spouse in need of care can enroll in the Medicaid program while the healthy spouse can maintain assets in their own name to support their own needs. The final budget left spousal refusal intact. This is a tremendous benefit to the spouses of Medicaid recipients.

The budget did include a change in the way the Medicaid program will be administered to long-term nursing facility residents. Until the budget was enacted, long-term patients in a nursing facility were enrolled in a managed long-term care plan. These plans receive a flat rate from the state for each enrollee regardless of whether the enrollee is receiving a small amount of in-home care, round-the-clock care in the home or nursing facility services. 

The new rule is that a patient that has been in a nursing facility for three months will be disenrolled from the managed long-term care plan and their services will be paid directly to the facility from the Medicaid program. The stated purpose for this change is to eliminate any duplication of care coordination services. The concern from the governor’s office was that both the facility and the plan were providing this same service.

Another change to the Medicaid program will impact managed long-term care plan participants who want to switch plans. Prior to the new budget, there were no restrictions on such changes. The new budget states that a plan participant can change plans within the first 90 days after enrollment without cause. However, after the first 90 days, the participant can only change plans once in every 12-month period. Any additional changes after the first 90 days must be for cause. Good cause is listed to include, but is not limited to, issues relating to quality of care and access to providers.

The managed long-term care plans will also be affected by the budget provision that will limit the number of licensed home care agencies with whom a plan can have a contract. As stated above, each plan receives a set rate from the state for each enrollee. That plan then has to contract with an agency to provide the aide in the home for a Community Medicaid recipient. 

Until now, a plan was not limited on the number of agencies with which it could hold a contract. As of Oct. 1, 2018, a plan can only hold a contract with one agency for every 75 members it enrolls, and on Oct. 1, 2019, it will be one contract per 100 members.

These budget provisions adjust the ever-changing landscape of the long-term care Medicaid program. The direct impact of these changes on consumers is not yet known. The stated purpose of the managed long-term care program is to streamline the care provided to the aging and disabled population of New York state. Advocates in this area continue to work with the governor and Legislature to make Medicaid long-term care benefits available to all New York residents who require such assistance. Stay tuned.      

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

This is a question we receive often. Navigating the maze of healthcare coverage can be confusing.nFor starters, a brief overview of the programs will help to demystify and clear some of the confusion. Medicare is a federal government program first implemented in 1965 as part of the Social Security program to provide health coverage to persons 65 or older and in some cases younger so long as they can show a qualifying disability.

Coverage through Medicare is broken down into sections, Part A is considered hospital insurance and covers inpatient hospital care, rehabilitation in a skilled nursing facility, hospice services, lab tests surgery and home health care. There is no premium for Part A provided you or your spouse have worked at least forty quarters and paid into the program.

It is important to note that the coverage for skilled nursing is limited to the first twenty days in full and then there will be a co-pay of $167.50 per day for days twenty-one through one hundred. A person must continue to qualify based on their skilled need throughout the hundred-day period for Medicare to continue cover. There is no guarantee that a person will receive all hundred days of coverage. Custodial care and extended stays will not be covered by Medicare.

Part B covers doctors and other health care providers’ services and outpatient care. The monthly premium for Part B is typically $134.00 but can vary depending on the person’s income. Part D provides cover with respect to prescription drugs. This is a stand-alone drug plan that can assist in reducing prescription drug costs. Finally, Medicare Part C, is also known as the Medicare Advantage which are optional plans offered by Medicare-approved private companies which replace Medicare Part A and B.

Unlike Medicare, Medicaid is a means tested program and is state specific. Medicaid can provide coverage for a personal care aide at home through the Community Medicaid program or can also cover an extended custodial stay at a skilled nursing facility through the Chronic Medicaid program. In order to be financially eligible to receive services at home, an applicant for Community Medicaid cannot have liquid non-retirement assets in excess of $15,150.00.

Also exempt is an irrevocable pre-paid burial, retirement assets in an unlimited amount so long as the applicant is receiving monthly distributions and the primary residence. With respect to income, an applicant for Medicaid is permitted to keep $837.00 per month in income plus a $20.00 disregard. However, where the applicant has income which exceeds $862.00 threshold, a Pooled Income Trust can be established to preserve the applicant’s excess income.

Even though there is a resource limit of $15,150.00, there is no “look back” for Community Medicaid. In other words, both the income and asset requirements can be met with a minimal waiting period allowing families to mitigate the cost of caring for their loved ones at home.

With respect to coverage in a nursing facility, Chronic Medicaid can cover an extended custodial stay at a nursing facility. In New York, an applicant applying for Chronic Medicaid will be required to provide a sixty-month lookback with respect to all financial records, including bank statements and tax returns. Unlike Community Medicaid, an applicant for Chronic Medicaid will be penalized for any monies transferred out of the applicant’s name during the sixty-month lookback except for transfers to exempt individuals, including to but not limited to spouse or disabled child. If your loved one requires long term nursing home placement, it is imperative to consult and Elder Law attorney in your area to discuss how to preserve the maximum amount of assets.

Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses. Understanding the difference and what each program covers will allow you to be an advocate for yourself or a loved one.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

The TCJA enacts a number of important tax changes. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

The Tax Cuts and Jobs Act increased the federal estate tax exclusion amount from $5 million to $10 million indexed for inflation for decedents dying in years 2018 to 2025. This amount is indexed for inflation back to 2011. The exact amount of the exclusion amount is not yet known for 2018. However, it is estimated to be $11.18 million. This means that an individual can leave $11.18 million and a married couple can leave $22.36 million dollars to their heirs or beneficiaries without paying any federal estate tax.

This also means that an individual or married couple can gift this same amount during their lifetime and not incur a federal gift tax. The rate for the federal estate and gift tax remains at 40 percent.

The doubling of the basic exclusion also means that the generation-skipping transfer tax (GST) exclusion is doubled to match the basic exclusion amount of $11.18 million for an individual and $22.36 million for a married couple.

The sunsetting of the doubled basic exclusion amount after 2025 raises the prospect of exclusions decreasing in 2026. Taxpayers with estates over $11.18 million will want to discuss with their estate planning attorneys the potential for making transfers to take advantage of the larger exclusion amount before the anticipated sunset.

The act does not make changes to the rules regarding step-up basis at death. That means that when you die, your heirs’ cost basis in the assets you leave them are reset to the value at your date of death.

The portability election, which allows a surviving spouse to use his or her deceased spouse’s unused federal estate and gift tax exemption, is unchanged. This means a married couple can use the full $20 million exemption (indexed for inflation). To make a portability election, a federal estate tax return must be timely filed by the executor of the deceased spouse’s estate.

In 2018, the annual gift tax exclusion has increased to $15,000. This means that an individual can give away $15,000 to any person in a calendar year ($30,000 for a married couple) without having to file a federal gift tax return.

Despite the significantly larger federal estate tax exclusion amount, New York State’s estate tax exemption for 2018 remains at $5.25 million. New York State still does not recognize portability.

With the current New York State estate tax law as enacted in 2014, there is a limited three-year look-back period for gifts made between April 1, 2014, and Jan. 1, 2019. This means that if a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the New York estate tax.

The following gifts are excluded from the three-year look-back: (1) gifts made when the decedent was not a New York resident; (2) gifts made by a New York resident before April 1, 2014; (3) gifts made by a New York resident on or after Jan. 1, 2019; and (4) gifts that are otherwise includible in the decedent’s estate under another provision of the federal estate tax law (that is, such gifts aren’t taxed twice).

Under the act’s provisions, most taxpayers will never pay a federal estate tax. Even with the enlarged exemption, however, there are many reasons to engage in estate planning. Those reasons include long-term care planning, tax basis planning and planning to protect your beneficiaries once they inherit the wealth.

In addition, since New York State has a separate estate tax regime with a significantly lower exclusion than that of the federal regime, it is still critical to do estate tax planning if you and/or your spouse have an estate that is potentially taxable under the New York State law.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

Accountings are part of the administration of an estate, regardless of whether the decedent died with a will or intestate.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

There are many steps and layers associated with the administration of an estate. Ultimately, for most estates, the goal is to distribute the assets to the respective beneficiaries named in the decedent’s will or are intestate heirs pursuant to the laws of intestacy. As part of this administration process, and prior to making any final distributions, the beneficiaries of the estate are entitled to receive and review an accounting prepared and provided by the fiduciary for the estate.

One of the fiduciary duties the executor or administrator is tasked with is to marshal the assets of the estate. The administrator reports to the beneficiary the assets of the estate; the income collected during the pendency of the administration; the expenses, debts and claims that were paid on behalf of the estate; and the amount and value of funds that ultimately remain on hand to be distributed to the beneficiaries.

The function of the accounting is to provide a clear and concise review, in proper reportable form, of all of the estate receipts and expenditures of the estate so that the beneficiary fully understands exactly why he or she is receiving a certain sum of money. As discussed above, once the accounting is approved, the ultimate distribution is made in accordance with the terms of the probated will or as provided by the laws of intestacy.

Once provided with the accounting from the fiduciary, the beneficiaries of the estate generally have questions regarding the transactions of the fiduciary. It is important that the fiduciary respond and address any concerns the beneficiary may have regarding the administration of the estate.

After explanation and substantive discussions, most accountings are approved by the beneficiaries and the estate fiduciary can proceed to the next and likely final step of making final distributions.

Conversely, beneficiaries also have the legal right to object to the accounting provided by the fiduciary. Once this occurs, there are provisions in the Surrogate’s Court Procedure Act (SCPA) and other statutes that provide a means by which the beneficiaries can investigate any questions they have about the administration of the estate.

Specifically, SCPA 2211 entitled, “Voluntary account; proceedings thereupon” allows a party to take oral testimony of a fiduciary to examine all of the papers relating to the accounting. These papers include, but are not limited to, bank statements, brokerage statements, deeds, tax returns, financial records, bills and receipts. Following the completion of the SCPA 2211 examination, a decision can then be made by the beneficiaries as to whether to file formal objections to the accounting.

The Surrogate’s Court in New York generally encourages interested parties to resolve their disputes, including any accounting contests, without extensive court intervention, proceedings or a trial as these proceedings can be costly and time consuming.

Accountings are part of the administration of an estate, regardless of whether the decedent died with a will or intestate. Accordingly, whether you are the fiduciary or a beneficiary, it is important to consult with an experienced estate administration attorney to assist and guide you through the accounting process.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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