Finance & Law

By Linda Toga, Esq.

THE FACTS: After my mother’s death, my father met a woman, Mary, who was his partner for many years. They lived in my father’s house, which has a value in excess of $3 million. In his will my father left the house to Mary. He also named Mary as the beneficiary of his life insurance policy, which has a death benefit in excess of $2 million. He left his residuary estate to me and my sister. However, the will states that any estate taxes that may be owed are to come out of his residuary estate. My concern is that paying the estate taxes will likely deplete the residuary estate, leaving my sister and me with nothing.

THE QUESTION: Is there some way we can compel Mary to pay the estate tax from the funds she is receiving? It does not seem fair that we may be paying the taxes on the assets which she will be enjoying.

THE ANSWER: Since your father clearly intended for you and your sister to be beneficiaries of his estate, it appears that he may not have understood which of his assets would be considered in calculating his estate’s tax liability.

If, for example, your father and Mary were married at the time of his death, the value of the assets passing to Mary would be excluded from the value of the estate used to calculate the estate tax liability. That is because there is an unlimited marital deduction that applies when determining whether or not federal or New York state estate tax is due.

It is possible that your father believed the exclusion would apply based upon the fact that he and Mary were living together as husband and wife. Unfortunately for you and your sister, the taxing authorities do not see it that way.

Another possibility is that your father assumed that the death benefit from his life insurance policy would not be included in his gross estate for estate tax purposes. That is a common misconception that often leads to an unexpected tax liability.

Estate taxes are calculated based upon the value of all the assets owned or controlled by an individual at the time of death. Since your father could have changed the beneficiary listed on his life insurance policy up until the time of his death, he had “control” over the $2 million death benefit. For that reason, the value of the death benefit is included in his estate for purposes of calculating the estate tax owed.

It is noteworthy that some people actually buy life insurance so that the death benefit can be used to cover the estate taxes that may be assessed against their estates. By doing so, the decedent provides his beneficiaries with liquid assets that can be used to pay any estate taxes that are assessed against the estate. This, in turn, eliminates the possibility that the beneficiaries may need to sell estate assets just to pay the estate tax.

Even if your father was aware of how the estate tax would be calculated, he may not have realized that his will dictated that all of the taxes be paid from his residuary estate. If that fact had been explained to your father, he may have chosen to apportion the estate tax liability between all of the beneficiaries of his estate.

By apportioning the taxes that were due, Mary would be responsible for the taxes attributed to the value of the house, for example. That would have certainly decreased the amount of taxes being paid from the residuary estate earmarked for you and your sister.

In light of the fact that your father’s will does not provide for the apportionment of the estate, the full tax liability will be paid from the residuary estate unless Mary is willing to pay some or all of the estate tax assessed against your father’s estate. If she is not willing, there is nothing the executor of the estate can do but pay the taxes in accordance with the provisions of the will.

The amount of the estate tax due from your father’s estate will depend on when your father died since the exclusion amount on both the federal and New York state estate tax has been increasing annually for a number of years.

Since April, 2017, the exclusion amount for both federal and New York state estate tax exceeds $5.2 million. Even without apportionment, there is a chance that no estate tax will be due unless the value of your father’s estate exceeds the current exclusion amounts. If it does not, the full amount of the residuary estate will pass to you and your sister without any tax liability.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate, estate administration, litigation, wills, trusts, small business services and real estate from her East Setauket office.

A common concern is that after paying premiums on a long-term care policy for years, it will never be accessed for care. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

With the ever-changing health care landscape both federally and on a state level, and the aging of the baby boomers, it may be time to take a second look at long-term care insurance. Historically, New York State residents have had the opportunity to receive long-term care benefits through the Medicaid program.

New York has been one of the most generous states in providing care for disabled and aged residents. But you do not have to be a health care expert to see that state and federal budgets are threatening to curtail Medicaid benefits, and many current programs cannot be relied upon to provide the same amount of care that they have in the past.

To battle these changes, a proper estate plan should provide an arsenal to protect against catastrophic health care costs. It is often advisable to consider all available resources when putting together a long-term care estate plan.

We do not have a crystal ball that will show the future of Medicaid or what the needs of each individual will be. But we do know that the baby boomers represent a critical mass of individuals moving toward unprecedented longevity.

In addition, we know that a large percentage of these individuals living longer will likely need care. Further, while many baby boomers and their relatives traditionally cared for aging parents, the economics facing future generations shows that third-party caregivers will be the norm, not the exception.

For clients facing these looming questions of who will provide care, where will the care be provided and how will it be paid for, long-term care insurance is one possible solution. Prudent estate planning may require putting together a team of professionals to help make decisions to protect your assets and autonomy, regardless of what the future holds. This team may include an elder law attorney, financial advisor and an insurance professional. Working together, they can provide you with options for protecting assets to avail yourself of public benefits, preserving and growing assets and purchasing insurance products that make sense in your plan.

Long-term care insurance can often pay for home care assistance or the cost of a nursing facility. If you start accessing your long-term care benefit while living at home and then transition into a nursing facility, the proper planning could make a huge difference in the amount paid toward the cost of care.

Also, many individuals do estate/elder law planning by creating irrevocable trusts, which commences the five-year look-back period for Medicaid nursing home care. They purchase long-term care insurance to cover the initial five-syear period.

Some clients find themselves in a position where they have high income and therefore fear that they will never qualify for Medicaid. Some have income that exceeds the lower Medicaid rate charged by the facility. This leaves them in the dubious position of not qualifying for Medicaid and therefore forced to pay the higher private pay rate.

Needless to say, current daily rates for nursing home care can be financially ruinous. Fortunately, there is a federal law that states that if an individual is eligible for Medicaid but for the fact that their monthly income exceeds the Medicaid rate at the nursing facility, the facility must allow that individual to pay privately at the Medicaid rate. This offers a large savings in the cost of nursing care; and, in the final analysis, the individual is never a Medicaid recipient.

The income of the individual can include Social Security payments, pensions, distributions from retirement assets, payouts on a long-term care policy, etc. With proper long-term care planning, the assets could be protected in an irrevocable Medicaid asset protection trust while the income is being used to pay for the facility.

While many will need long-term care in their lifetime, not everyone will require prolonged care. A common concern is that after paying premiums on a long-term care policy for years, it will never be accessed for care. It’s the age-old problem of paying for insurance that they hope they will never use. This creates a mental bias against insurance to pay for that kind of care.

Individuals prefer to believe that they will never need long-term care. For those with this concern, there are new policies commonly referred to as “hybrid policies.” These are life insurance policies with a long-term care rider attached. In this way, you can access the policy to cover the cost of care while living, but heirs can receive a death benefit if it is not used up. Some polices also allow the insured to cancel the policy and receive their investment back at any time.

The bottom line is that the landscape is ever changing, the assumptions we relied upon have changed, and if you plan on living long, you need to live and plan smarter. Maybe it’s time to reconsider long-term care insurance. If you can qualify medically and you can afford it, it may be just another necessary tool in your arsenal of weapons for “aging in place” and with autonomy. It may not be for everyone but it could be right for you. Take a second look.

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

By Linda Toga

THE FACTS: My house and most of my liquid assets are held in an irrevocable trust that I funded over five years ago. I am fortunate in that my income is sufficient to for me to live comfortably without using my savings.

THE QUESTION: If I do need to move into a nursing home down the road, how will Medicaid deal with my income when it comes to determining if I am eligible for benefits?

THE ANSWER: Since Medicaid is a needs-based program, your eligibility will be based on the value of your available assets, meaning assets that are not in your trust, and your income. Even if your assets are very limited, if your income is sufficient to cover the cost of a nursing home, you will not be eligible for assistance.

However, because there are some sources of income that are exempt under the Medicaid rules, determining eligibility is more involved than simply applying the same monthly income level across the board.

Medicaid looks at all of the income you receive, at the source of that income and at your medical expenses to determine your Net Available Monthly Income or NAMI. If your monthly medical expenses equal or exceed your NAMI, Medicaid will deem you “income eligible.”

In general, Medicaid will consider income from stocks and bonds, IRAs and other qualified plans, pensions and trusts when making a determination as to whether you are eligible to receive benefits.

Medicaid will not, however, include in your NAMI income from German and Austrian reparation plans, Nazi persecution funds, state crime victims’ assistance funds, Seneca Nation Settlement Act Funds, special payments to American Indians or payments from federal volunteer programs.

Medicaid also exempts funds received from a reverse mortgage as long as you use the funds during the month you receive them.

If you are single, you will be allowed to keep all the exempt income you may receive plus an additional $50/month in nonexempt income and funds to cover the cost of your supplemental medical insurance premiums.

If you are a veteran, you get to keep $90/month plus exempt income and the cost of supplemental medical insurance. NAMI in excess of $50 (or $90 for veterans) plus the cost of insurance premiums must be paid to the nursing home.

If you are married and your spouse is well and continues to live in the community (the “community spouse”), the amount of income you may keep is the same as for an unmarried individual. However, your spouse, as the community spouse, is allowed a monthly income of close to $3,000 to help cover living expenses. If your spouse’s income is too large, Medicaid will apply a percentage of his or her excess income to the cost of your care in the nursing home.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate, estate administration, litigation, wills, trusts, small business services and real estate from her East Setauket office.

Suffolk County Executive Steve Bellone, on right, gets signatures from residents in support of the Community Protection Act outside Stop & Shop in Miller Place. Photo from County Executive Bellone's office

By Kevin Redding

In light of recent court rulings and pending lawsuits in favor of sex offenders, Suffolk County Executive Steve Bellone (D) is urging the New York State Legislature to follow in the county’s footsteps and get tough on sex criminals by passing legislation that gives the county authorization to uphold its strict laws against them.

On Feb. 11, Bellone and Legislator Sarah Anker (D-Mount Sinai) spoke with parents and residents in Miller Place about supporting and protecting the rules within the Suffolk County Community Protection Act — a private-public partnership law developed by Bellone, victims’ rights advocates like Parents for Megan’s Law and law enforcement agencies. It ensures sex offender registration and compliance, and protects residents and their children against sexual violence — much to the dismay of local sex offenders, who have been suing the county to try to put a stop to the act.

Suffolk County Executive Steve Bellone and Legislator Sarah Anker talk to residents about the Community Protection Act. Photo from County Executive Bellone’s office

“We’re encouraging people to go on to our Facebook page and sign the online petition,” Bellone said. “We want to get as many signatures as we can to communicate to our partners in the state that this is a priority that we pass legislation that makes it clear Suffolk County has the right to continue doing what it’s doing to protect our community against sex offenders.”

While the county executive said Suffolk representative have been supportive of the law, which was put in place four years ago, he wanted to make sure they’re armed with grassroots support to convince state colleagues they have a substantial evidence to prove it’s popularity and show it’s the right thing to do.

Since it was enacted in 2013, the Community Protection Act has been the nation’s strictest sex offender enforcement, monitoring and verification program, cracking down on all three levels of offenders when it comes to their proximity to a school facility or child-friendly area, and reducing sex offender recidivism in Suffolk County by 81 percent. Ninety-eight percent of Level 2 and more than 94 percent of Level 3 registrants are in compliance with photograph requirements, what Bellone said is a significant increase from before the law took effect.

Through its partnership with Parents for Megan’s Law, the county has conducted more than 10,000 in-person home verification visits for all levels of sex offenders, by sending retired law enforcement to verify sex offenders’ work and home addresses and make sure their registry is accurate and up to date. More than 300 sex offenders have also been removed from social media under the law.

According to the Suffolk County Police Department, the act is a critical piece of legislation.

“The program has been incredibly successful, which is why sex offenders don’t like it.”

—Steve Bellone

“The numbers don’t lie, there’s a lot of hard evidence and data that shows this act has done precisely what it was designed to do: monitor sex offenders and make sure they’re not doing anything they’re not supposed to be doing,” Deputy Commissioner Justin Meyers said. “To date, I have never met a single resident in this county who didn’t support [it].”

Besides the sex offenders themselves, that is.

The act has made Suffolk County one of the more difficult places for registered sex offenders to live and, since its inception, Suffolk sex offenders have deemed its strict level of monitoring unconstitutional, arguing, and overall winning their cases in court that local law is not allowed to be stricter than the state law.

In 2015, the state Court of Appeals decided to repeal local residency restriction laws for sex offenders, claiming local governments “could not impose their own rules on where sex offenders live.”

In the prospective state legislation, Bellone hopes to close the sex offender loophole that would allow high-level sex offenders to be able to legally move into a home at close proximity to a school.

“The program has been incredibly successful, which is why sex offenders don’t like it,” Bellone said. “This is what we need to do to make sure we’re doing everything we can to protect kids and families in our community. As a father of three young kids, this is very personal to me and I think that while we’ve tried to make government more efficient and reduce costs here, this is an example of the kind of thing government should absolutely be spending resources on.”

Suffolk County Executive Steve Bellone, on right, with a community member who signed his petition urging state lawmakers to uphold the Community Protection Act. Photo from County Executive Bellone’s office

To conduct all the monitoring and fund educational resources offered to the community by Parents for Megan’s Law — teaching parents what to look out for and how to prevent their children from becoming victims — costs roughly $1 million a year, according to Bellone.

In addition to the residential restriction, Bellone is calling on the state to authorize the county to verify the residency and job sites of registered sex offenders, authorize local municipalities to keep a surveillance on homeless sex offenders, who represent less than 4 percent of the offender population in Suffolk County, and require them to call their local police department each night to confirm where they’re staying, and require an affirmative obligation of all sex offenders to cooperate and confirm information required as part of their sex offender designation.

“If people really knew this issue, I couldn’t see how they would oppose the Community Protection Act, because sex offenders are not a common criminal; there’s something fundamentally and psychologically wrong with somebody who commits sexual crime and we as a society have to understand that,” said St. James resident Peter , who held a “Protect Children” rally in the area last years. “Residents should know that the sexual abuse of children is out of control.”

According to the Centers for Disease Control and Prevention, one in four girls are abused and one in six boys will be sexually abused before they turn 18.

“It is imperative that we, not only as a community, but as a state, make efforts to further ensure the safety of our children from sexual predators,” Anker said. “We must do everything in our power to ensure that this law is upheld and that’s why I’ve joined [Bellone] in calling on the New York State Legislature to consider an amendment to grant the county the ability to uphold it.”

To sign the petition, visit

Wills kept in a safe deposit box are not obtainable to an executor without a court order.

By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: I am trying to help my elderly parents organize their affairs. They want things to be as simple as possible for me when it comes time to handle their estates. My parents have wills and other advanced directives in place.

THE QUESTIONS: Other than their wills, are there other documents or any types of information that they should collect and organize now to make the administration of their estates easier?

THE ANSWER: You are lucky to have parents who seem to appreciate the fact that administering an estate is not necessarily easy and who are anxious to have everything in place. Having wills will certainly help you with respect to distributing your parents’ assets after they pass. However, distributing assets is often one of the last things that an executor must do.

Long before distributions are made it will be necessary to make funeral arrangements, contact life insurance carriers and banking and investment institutions, gain access to your parents’ safe deposit box, cancel credit card accounts, as well as all online accounts that your parents may have and locate documents relating to any real estate they may own or lease, to name a few.

While many of these things can be done before your parents’ wills are admitted to probate, you will not be able to marshal assets, close bank accounts or sell property until you are issued letters testamentary by the Surrogate’s Court. If your parents keep their wills in a safe deposit box, you will not be able to even get the will without a court order.

Although not exhaustive, the following is a list of the types of documents and some of the information that your parents may want to put together to facilitate your handling of their estates:

1. Deeds to burial plots

2. Documents relating to any preplanned or prepaid funeral arrangements, including military discharge papers if either parent was in the armed forces and wishes to be buried in a military cemetery or have an honor guard

3. Wills and any codicils to the wills and a list of the addresses of all of the people named in the will and/or codicil.

4. Trust instruments that name your parents as grantors, trustees and/or beneficiaries

5. Life insurance policies, including the beneficiary designation forms

6. Annuities

7. Bank statements and pins for use in ATMs

8. A list of bills that are automatically paid from their bank accounts or charged to their credit card accounts

9. Brokerage statements

10. Statements relating to IRAs, 401(k)s or any similar plans, including the beneficiary designation forms

11. Documents relating to pensions and/or deferred compensation plans

12. Deeds, leases and documents relating to time share properties

13. Loan documents, including mortgages, reverse mortgages, home equity lines, lines of credit (whether your parents are the lenders or the borrowers)

14. Credit card statements

15. Keys to safe deposit boxes and the combination to any safe they may use

16. Pins, security codes and passwords for online accounts, social media accounts and email accounts

17. Account numbers and log-ins for frequent flyer and other rewards programs

18. The names and contact information for their financial advisor, brokerage account manager, insurance agent, accountant and attorney

If your parents are able to gather these documents and provide the information set forth above, handling their estates once they pass should not be overly burdensome. The burden can be further reduced by retaining an attorney with experience in the areas of probate and estate administration. Doing so will ensure that the process goes smoothly and will give you the opportunity to deal with your loss without having to think about what needs to be done.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate and estate administration, real estate, small business service and litigation from her East Setauket office.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

For many, the question of how to best care for our aging loved ones becomes a reality sooner than we think. Most people, when given the option, would prefer to age in place, remain in their homes for as long as possible receiving the care services they need in a familiar setting surrounded by family. For many, the Community-Based Long-Term Care Program, commonly referred to as Community Medicaid, makes that an affordable and therefore viable option.

Oftentimes we meet with families who are under the impression that they will not qualify for these services through the Medicaid program due to their income and assets. In most cases, that is not the case. Although an applicant for Community Medicaid must meet the necessary income and assets levels, it is important to note that there is no “look back” for Community Medicaid. What this means is that for most people, with minimal planning, 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.

An individual who is applying for Medicaid Home Care may have no more than $14,850 in nonretirement liquid assets. Retirement assets will not be counted as a resource so long as the applicant is receiving monthly distributions from the account. An irrevocable prepaid burial fund is also an exempt resource. The primary residence is an exempt asset during the lifetime of the Medicaid recipient; however, if the applicant owns a home, it is advisable to consider additional estate planning to ensure that the home will be protected once the Medicaid recipient passes away.

With respect to income, a single applicant for Medicaid is permitted to keep $825 per month in income plus a $20 disregard. However, if the applicant has income that exceeds that $845 threshold, a pooled income trust can be established to preserve the applicant’s excess income and direct it to a fund where it can be used to pay his or her household bills.

These pooled trusts are created by not-for-profit agencies and are a terrific way for persons to take advantage of the many services available through Medicaid Home Care while still preserving their income for use in meeting their monthly expenses.

Functionally, the way that these trusts work is that the applicant sends a check to the fund monthly for that amount that exceeds the allowable limit. Together with the check, the applicant submits household bills equal to the amount sent to the trust fund. The trust deducts a small monthly fee for servicing these payments and then, on behalf of the applicant, pays those household bills.

As you can see, this process allows the applicant to continue relying on his monthly income to pay his bills and, at the same time, reduce his countable income amount to the amount that is permitted under the Medicaid rules. An individual who is looking for coverage for the cost of a home health aide must be able to show that they require assistance with their activities of daily living. Some examples of activities of daily living include dressing, bathing, toileting, ambulating and feeding. In fact, where the need is established, the Medicaid program can provide care for up to 24 hours per day, seven days per week.

The Community-Based Medicaid Program is an invaluable program for many seniors who wish to age in place but are unable to do so without some level of assistance.

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

By Linda Toga

THE FACTS: My father died recently. He had a will in which he named my brother as executor. My brother and I have not spoken to each other in a number of years. I am concerned that he will close out my father’s accounts and sell his house and keep all the money even though I am named as a half beneficiary under the will. He seems to be under the impression that since he is the named executor, he can do these things simply by presenting the will.

QUESTION: Is that true?

THE ANSWER: Absolutely not! Although your brother is named in your father’s will as the executor of his estate, the surrogate’s court in the county in which your father resided at the time of his death must admit the will to probate and issue letters testamentary to your brother before he can take any action with respect to your father’s assets.

In other words, he must establish to the court’s satisfaction that the will is valid before he is able to act as executor. He cannot assume the responsibilities of executor without the court’s explicit approval. The complexity, cost and time involved in having a will admitted to probate will vary with the number of beneficiaries named in the will, as well as the number of heirs to the estate, the ease with which the attorney assisting the named executor can locate the beneficiaries and heirs, how cooperative those people may be with the attorney in moving forward, the value of the estate and whether anyone contests the admission of the will to probate, among other factors.

While the probate process can be straightforward and relatively inexpensive, there are numerous issues that can arise in the probate process that are best handled by an experienced estate attorney. Some of the most common issues with probate are not being able to locate individuals who are entitled to notice and dealing with individuals who contest the validity of the will. Fortunately, the percentage of cases where a will is contested and ultimately not admitted to probate is small. However, if there are objections filed to the probate of a will, the probate process can drag on for quite some time, significantly increasing the expenses of the estate.

If you and your brother are the only beneficiaries named in the will and your father’s only children, and you do not have a basis for contesting the will, the probate process should be relatively straightforward. Once the court issues letters testamentary to your brother, he can sell the house and close your father’s bank accounts. However, he cannot simply keep the money for himself since he has a legal obligation to carry out the wishes set forth in your father’s will.

In your case, he would be required to distribute to you assets valued at half of the value of the estate after accounting for your father’s legitimate debts, funeral and estate administration expenses, commissions and estate taxes. If you suspect that he has not done so, you should demand that he account for all of the estate assets so you can see the value of the marshaled assets and the expenses incurred by the estate. If you are not satisfied with the accounting he provides, or have reason to believe that he breached his fiduciary duty to you as a beneficiary, you can ask that his letters testamentary be revoked.

Since this process can get quite involved, if it comes to that, you should seek the advice of an attorney with expertise in the areas of estate administration and litigation.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate and estate administration, real estate, small business service and litigation from her East Setauket office.

By Nancy Burner, ESQ.

In terrorem is a term derived from Latin that translates to “in fear.” An in terrorem provision in a decedent’s last will and testament “threatens” that if a beneficiary challenges the will then the challenging beneficiary will be disinherited (or given a specified dollar amount) instead of inheriting the full gift provided for in the will.

Nancy Burner, ESQ
Nancy Burner, ESQ

An in terrorem clause is intended to discourage beneficiaries from contesting the will after the testator’s death. New York State law recognizes in terrorem clauses; however, they are strictly construed. An example of an in terrorem clause might read as follows: “If any person shall at any time commence a proceeding to have this will set aside or declared invalid or to contest any part or all of the provisions included in this will they shall forfeit any interest in my estate.”

There are, however, some limits on in terrorem clauses in the interest of preventing fraud, undue influence, or gross injustice. These statutory “safe harbor provisions” allow a beneficiary to inquire into the circumstances surrounding the drafting of a will without risking forfeiture of any bequest. Since, as discussed above, New York State courts strictly construe in terrorem clauses, these safe harbor challenges are a means by which a beneficiary can evaluate the risk of contesting the will. In relevant part, the statute provides for the preliminary examination of (i) the testator’s witnesses, (ii) the person who prepared the will, (iii) the nominated executors and (iv) the proponents in a probate proceeding.

These persons “may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument.” If the beneficiary challenges the will and the will is found to be invalid due to lack of mental capacity, undue influence or failure to have the will properly executed, then the in terrorem clause also fails. It is important to note that a beneficiary may present a petition to the court, prior to the will being admitted to probate and before formal objections have been filed, seeking a determination as to the construction or effect of the in terrorem clause of the will. The basic principle of construction is that the decedent’s intent, as expressed from a reading of the relevant provision of the will under the circumstances under which it was drawn, is to be given effect by the courts.

Keep in mind that simply having an in terrorem clause in your will may not be enough to dissuade beneficiaries from potentially challenging your will. Theoretically, however, for an in terrorem clause to have any weight at all, a beneficiary under a will must be left a substantial amount to incentivize their compliance with the will. An in terrorem clause may have no effect on a beneficiary who was not left anything under a will as they risk losing nothing by challenging the will. While in terrorem clauses may be effective in minimizing a will contest, for some it holds no power. It is important to discuss your estate plan and your wishes regarding the ultimate disposition of your assets with an experienced estate attorney to determine the proper provisions to include in your will.

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

By Nancy Burner, Esq.

In December 2014 the federal government passed a law known as the Achieving a Better Life Experience Act, also known as the ABLE Act. This law allows family members of a disabled person to create an account that is exempt from federal income tax to be used for certain “qualified expenses” related to the person’s disability. This act is created under the same provisions of the tax code as 529 plans for college savings although they have different rules governing the plans.

Unlike the college savings plans, the beneficiary of the New York ABLE Act accounts must have been deemed disabled prior to 26 years old. If a beneficiary is entitled to Supplemental Security Income (SSI) or Social Security Disability Income (SSDI), they are automatically eligible. However, if they are not entitled to these sources of income, there are other methods of proving disability that will establish eligibility. The account can be created by any person, and the owner can be the beneficiary or their parent, legal guardian or representative of that beneficiary.

However, it is important to note that there is a maximum contribution of $14,000 annually, the federal gift tax exemption amount. Each beneficiary can only have one ABLE account created for their benefit. This could create an unintended tax liability if there is no coordination among the persons that wish to contribute to the account. ABLE accounts are meant to supplement the government benefits that a disabled person is receiving. In New York, ABLE account funds are not counted as a resource at all for Medicaid eligibility for the disable beneficiary of the account. For an individual who is receiving SSI, the account is not considered a resource as long as it is below $100,000.

The benefit of having an account like this is that the disabled individual can access the account on their own without requesting a distribution from a trustee as they would have to do with a supplemental needs trust. The accounts can be used to pay for “qualified expenses,” including but not limited to education, transportation, training, legal fees, etc. The expense must be one that is related to the person’s disability and provides them with a resource that will improve their health, independence or quality of life. If the funds are misappropriated to an expense that does not fall into this category, there is a 10 percent penalty and the full amount of the nonqualified expense will be deemed an available asset for Medicaid or SSI eligibility purposes.

Upon the death of the account beneficiary, there is a payback to the Medicaid program for services rendered. This payback includes services to the beneficiary starting on the date the account was created. If a beneficiary received services for 20 years before the account was created, there is no payback to Medicaid for the prior 20 years of services.

The ABLE Act provides a new and creative vehicle for disabled persons to have access to additional assets while maintaining their government benefits. However, these accounts are, in most cases, a supplement to traditional planning for persons with disabilities. If a beneficiary has multiple persons that wish to leave assets to them that may exceed $14,000 per year in contributions or $100,000 in total, a supplemental needs trust will be more beneficial than the ABLE account. Money that is contributed to a disabled person from a third party can go into a trust that does not require payback to the Medicaid program. If funds are given outright to the disabled person who subsequently places it into a trust, this is considered a first-party supplemental needs trust and it also requires a payback to Medicaid.

New York State signed the ABLE Act into law in December 2015. However, these accounts are not yet available to New York State residents. While the state says they may be available at the end of 2016, there is no set date for the program launch.

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

By Linda Toga

THE FACTS: I have three young children and want to be sure that they will be taken care of in the event my husband and I die before they are adults. I understand that I can appoint guardians for my children in my will but I am having a great deal of difficulty deciding who to name.

THE QUESTION: Do you have any suggestions as to the things I should consider when naming guardians for my minor children?

THE ANSWER: It is not surprising that you are having difficulty deciding who would best stand in your shoes in the event you and your spouse die before your children are adults. As an experienced estate planning attorney and the mother of two wonderful children, I know that the decision with which you are struggling is the most difficult estate planning decision faced by most parents. It is hard to think about not being there for your children and even harder to picture someone else taking your place.

However, if both you and your spouse die while your children are minors, the appointment in your will of a guardian for your children will likely prove to be the most important appointment you make. It is one that requires a great deal of thought and soul searching. Although people have different priorities when it comes to how their children will be raised, every parent wants their children to be loved, to be safe and to be able to reach their potential. Whether these goals will be achieved undoubtedly depends in large part upon the parenting skills of the children’s parents and guardians.

When considering who you would like to step into a parental role with your children, you should give thought to the following:

• Is the person married or single? If married, do you want to name both spouses as co-guardians? What happens in the event of death or divorce?

• Does the person have children? Do you approve of the person’s parenting skills as applied to his own children?

• Is the person’s house/apartment large enough to accommodate your children? If not, is the person willing to relocate?

• Is the person’s lifestyle “child friendly,” i.e., does he travel extensively or for long periods of time or work irregular hours, and if so, who will be there in his absence to care for your children?

• How old is the person and how is the person’s health?

• Is the person financially stable and can the person afford to include your children in his life?

• Does the person share your values, i.e., does the person place the same importance on education, religion, community etc. that you do?

• Does the person get along well with your children and your extended family?

• Would placement with the person require your children to move from your current community and possibly away from other family members?

While this list is not exhaustive, it gives you a good starting point for considering who to name as guardian of your children. Many people choose family members as guardians. However, the fact that someone is related by blood does not necessarily mean that that person will be able to raise your children as you would. Your parents may be very loving but are they physically able to take on the challenge of young children?

Your siblings may share some of your values; but, perhaps they are less focused on education than you are, or are reckless with money. Your experiences growing up and your family dynamics will certainly influence your thinking when it comes to naming a guardian. It is absolutely critical to talk to the person you plan on naming as guardian so that you can discuss your concerns and your wishes and confirm that the person is willing to take on the huge responsibility that comes with being a guardian.

Ask the person how he would handle certain situations that may arise, how he feels about issues that are important to you and about how having to care for your children will impact his life. Make sure the potential guardian understands what is involved in being named guardian of your children and urge him to be honest and candid when responding to your questions.

If you decide that you have the perfect person to serve as guardian but are concerned about the adverse financial consequences of that person raising three more children, you can make arrangements in your will to provide the guardian with financial support. Similarly, if a potential guardian meets your criteria but lives in a small apartment, in your will you can include provisions that would allow the guardian to move into your home to care for your children or you can provide other appropriate housing. In your will you can also state your wishes with respect to how your children will be raised.

You can instruct your guardian to seek input from your family before making important decisions about your children’s futures and you can set forth the values that you would most like to see instilled in them. As if choosing a guardian is not difficult enough, in your will you should name both a guardian and a successor guardian. If something should happen to the named guardian, it is better if you, as opposed to the courts, name the person that will continue caring for your children. This is one of the things that is simply too important to leave to chance.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate and estate administration, real estate, small business service and litigation from her East Setauket office.