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By Nancy Burner, Esq.

In New York State, any individual over the age of 18 may designate an individual to make medical decisions on his/her behalf by signing a health care proxy and designating a health care agent.  

The health care agent is only authorized to act if your doctors determine you can no longer make your own medical decisions. By signing this document and designating an agent, you avoid any confusion or issues when it comes time for your family to make a medical decision on your behalf as your family and the doctors already know who you want to make those decisions. 

A valid health care proxy will allow your health care agent to make medical decisions for you if you cannot with any health care professional, not only decisions while you are in a hospital or nursing home.   

Additionally, when signing a health care proxy, it is also very important to sign a second document, called a living will, which states your preferences as they relate to life-sustaining treatment (medical treatments/procedures that, if not provided, will result in the patient’s death). Examples of life-sustaining treatments include cardiac pulmonary resuscitation (CPR), a feeding tube and ventilator.    

A living will is important because, although your health care agent can make most medical decisions on your behalf, a health care agent must know your wishes as they relate to life-sustaining treatment in order to make those specific decisions on your behalf. A correctly executed living will is “proof positive” of your wishes as they relate to life-sustaining treatment and cannot be questioned by other family members who may disagree. 

If you do not have a health care proxy and are admitted to a hospital or nursing home, the Family Health Care Decisions Act enacted by New York State will determine who can make medical decisions on your behalf. This act provides a hierarchical list of people who may make your medical decisions if your doctors determine that you lack the capacity to make your own medical decisions.   

The list is: court-appointed guardian, spouse/domestic partner, a child who is over 18 years old, a parent, a sibling or a close friend. The issue many people may encounter is that most people have more than one child who can act as the person who will make their health care decisions. In this situation, the doctors would have to specify one of the children to make the decisions, which can cause tension and disagreement among the children. Further, the Family Health Care Decisions Act is only applicable to decisions while a patient is in the hospital or a nursing home. Once a patient is discharged, the person designated to make the medical decisions no longer has authority to do so.  

In order to be certain the person you want is empowered to make your medical decisions, a health care proxy is the preferable option. It is also wise to sign a living will so your health care agent knows your specific wishes as they relate to life-sustaining treatment. It is best to consult with an estate planning attorney who can advise you on all your options and ensure your documents are valid.

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

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: I am one of four children. My siblings are Joe, Bill and Mary. My mother died last month. About 15 years ago, she went to her attorney and had a will prepared in which she named me as executor.

Rather than divide her estate equally between her four children, my mother essentially disinherited my brother Joe and divided her estate equally between me, Bill and Mary. At the time she executed her will, the reason my mother gave for her decision to leave Joe out was that he ignored her and was never around when she needed help.

About 10 years ago, Joe moved to a house within a mile of my mother’s house and started spending time with her. He has encouraged his children to visit their grandmother and my mother and Joe’s wife and children have actually vacationed together. Since he lived closer to my mother than any of her other children, Joe became the one my mother relied upon whenever she needed assistance of any kind.

Over the years, Joe and my mother developed a very special relationship. I don’t know why my mother never revised her will but I am convinced, based upon her relationship with Joe and things that she told me, that she would want him to receive a share of his estate.

THE QUESTION: As the named executor, am I able to divide my mother’s estate into four equal shares so that Joe receives one-fourth of the estate? I feel terrible leaving him out but Mary and Bill are adamant that I must follow the instructions set forth in my mother’s will. Are they correct?

THE ANSWER: Unfortunately for Joe, Bill and Mary are correct. As executor, it is your responsibility to marshal your mother’s assets and to distribute them in accordance with the terms of her will. As much as you may want to include Joe, and as convinced as you may be that that is what you mother may have wanted at the time of her death, you do not have any discretion with respect to the distribution of your mother’s assets.

If you unilaterally decide to pass part of the estate to Joe, Bill and Mary will be well within their rights to ask the court to remove you as executor. They could also ask that the judge surcharge you so that you would be personally responsible for the funds that were diverted to Joe.

The only way you can pass a share of the estate to Joe is if Bill and Mary agree that Joe should share in the estate. If everyone is in agreement, it is simply a matter of you, Bill and Mary each transferring a portion of your inheritance to Joe. If Bill and Mary do not want to share, you can always give Joe some or all of what you are entitled to under the will. As long as Bill and Mary receive what they are entitled to under the will, they will not have a basis for objecting.

It is unfortunate that your mother did not review her will and revise it once her relationship with Joe improved. If she had gone back to her attorney, it would have been relatively easy for the attorney to prepare a new will for your mother in which all of her children were named as equal beneficiaries, or to prepare a codicil to her will that would have the same end result.

It is important that people understand that estate planning is not the sort of thing that is done once and forgotten. Wills and other estate planning documents should be reviewed periodically and changed to reflect changed circumstances. If your mother had revised her will or had a new will prepared that took into consideration her improved relationship with Joe, you would not be in the position you are now of trying to make things right.

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of estate planning, estate administration, real estate, marital agreements and litigation from her East Setauket office. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

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.

Many boomers plan on using their assets to make their golden years golden.

By Linda M. toga, Esq.

Linda M. Toga, Esq.

THE FACTS: My husband and I are in our sixties and have three grown children. All were given the same opportunities growing up, but they did not all take advantage of those opportunities or make wise decisions about their futures. Our two daughters are financially secure and doing very well. Our son, however, has struggled and we expect will continue to struggle to make ends meet his entire life.

My husband and I have accumulated significant assets over the years. We have been generous to our children and have made an effort to treat them all the same despite the differences in their financial well-being.

Despite this fact, my son seems to be under the impression that because he needs more, he is entitled to more. He has made comments on a number of occasions suggesting that since we have the means to make his life easier, we should do so. It is clear that he expects that we will be leaving him a sizable inheritance, perhaps even more than we leave our daughters.

We are bothered by these comments for a number of reasons, not the least of which is that my husband and I are planning on using our hard earned money to travel and, if needed, to cover our health care costs. While we fully expect that all of our children will inherit some money from us, I do not believe that we will be leaving any of them substantial assets.

THE QUESTION: How do we make this clear to our son who seems to think he will see a windfall when we die?

THE ANSWER: You and your husband are not alone in having accumulated significant assets that you hope to spend on yourselves. Many boomers benefited by parents who were conservative savers and cautious spenders. Consequently, these parents often accumulated more wealth than they spent and passed that wealth on to their boomer children.

The boomers, on the other hand, may not have been such conscientious savers. Even if they were, they are finding that they are living longer, may need more money for health care and often believe that they need not leave substantial assets to their children since they did so much for them during their lives.

Like you and your husband, many boomers plan on using their assets to make their golden years golden. That is your right. You earned it. You can spend it. However, if you do not want your son to be surprised or resentful when he does not inherit the kind of money he may expect will be coming his way, the best thing to do is to tell him outright.

Perhaps you can share with him the choices you made over the years that resulted in having a significant nest egg. Then tell him how you hope to spend your hard earned money on yourselves while you enjoy a long and healthy life.

You may discover that the comments he has made about a large inheritance were made in jest and that he isn’t really counting on a windfall. That would be the best scenario.

Even if he expresses disappointment and/or anger, you and your husband should feel better about the fact that you were open and honest with him. He can ignore what you say or he can use what you tell him to better plan for his future. In either case, having the conversation will ensure that when you and your husband pass away, he is not blindsided.

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of elder law, estate administration and estate planning, real estate, marital agreements and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Being hyperfocused on avoiding probate can be an estate planning disaster. First, what exactly is “probate”? Probate is the legal process whereby a last will and testament is determined by the court to be authentic and valid. The court will then “admit” the will to probate and issue “letters testamentary” to the executor so that the executor can carry out the decedent’s intentions in accordance with the last will and testament.

That usually involves paying all funeral bills, administrative expenses, debts, settling all claims, paying any specific bequests and paying out the balance to the named beneficiary or beneficiaries. Avoiding probate can be accomplished by creating a trust to hold your assets during your lifetime and then distributing the assets at your death in the same manner and sequence as an executor would if your assets passed through probate.

Typically, this would be accomplished by creating a revocable trust and transferring all nonretirement assets to the trust during your lifetime, thereby avoiding probate at your death. Retirement assets like 403Bs, IRAs and nonqualified annuities are not transferred to revocable trusts as they have their own rules and should transfer after death by virtue of a beneficiary designation.

Retirement assets should not be subject to probate. The designation of a beneficiary is vital to avoid costly income taxes if retirement assets name the estate or default to the estate. The takeaway here is that you should make sure that you have named primary and contingent beneficiaries on your retirement assets.

If you name a trust for an individual, you must discuss that with a competent professional that can advise you if the trust can accept retirement assets without causing adverse income tax consequences. Not all trusts are the same.

Avoiding probate can be a disaster if it is not done as part of a comprehensive plan, even for the smallest estate. For example, consider this case: Decedent dies with two bank accounts, each naming her grandchildren on the account. This is called a Totten trust account. Those accounts each have $25,000. She has a small IRA of $50,000 that also names the grandchildren as beneficiaries. She owns no real estate. Sounds simple, right?

The problem is that the grandchildren are not 18 years of age. The parents cannot collect the money for the children because they are not guardians of the property for their minor children. Before the money can be collected, the parents must commence a proceeding in Surrogates Court to be appointed guardians of the property for each child. After time, money and expenses, and assuming the parents are appointed, they can collect the money as guardian and open a bank account for each child, to be turned over to them at age 18. The IRA would have to be liquidated, it could not remain an IRA and the income taxes will have to be paid on the distribution.

I do not know of a worse scenario for most 18-year-old children to inherit $50,000 when they may be applying for college and seeking financial aid, or worse, when deciding not to go to college and are free to squander it however they want.

If the grandparent had created an estate plan that created trusts for the benefit of the grandchild, then the trusts could have been named as the beneficiaries of the accounts and the entire debacle could have been avoided. The point is that while there are cases where naming individuals as beneficiaries is entirely appropriate, there are also times that naming a trust as beneficiary is the less costly option, and neither should be done without a plan in mind.

When clients have a large amount of assets and large retirement plans, the result can be even more disastrous. Consider the case where a $500,000 IRA names a child as a direct beneficiary. If a properly drawn trust for the benefit of the child was named as beneficiary, there would be no guardianship proceeding and the entire IRA could be preserved and payments spread out over the child’s life expectancy, amounting to millions of dollars in benefits to that child over their lifetime. If payable directly to the child, there will be guardianship fees and the $500,000 will likely be cashed in, income taxes paid and the balance put in a bank account accruing little interest and payable on the 18th birthday of the beneficiary.

The concern is that individuals are encouraged to avoid probate by merely naming beneficiaries but with no understanding of the consequences. At a time when the largest growing segment of the population is over 90, it does not take long to figure out that the likely beneficiaries will be in their 60s, 70s or older when they inherit an asset.

Thought must be given to protecting those beneficiaries from creditors, divorcing spouses (one out of two marriages end in divorce) and the catastrophic costs of long-term care. Whether the estate is large or small, most decedents want to protect their heirs. A well-drafted beneficiary trust can accomplish that goal.

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

By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: My mother’s will provides that her house will be sold and the proceeds divided equally between me and my brother. However, because she was concerned about needing long-term care, a few years ago she signed a deed transferring the house to my brother and retaining a life estate in her favor.

THE QUESTION: Am I likely to see any of the proceeds when the house is sold?

THE ANSWER: Unfortunately, if your mother has already passed away, it is unlikely that you will get anything when the house is sold unless your brother is willing to essentially gift you one-half of the proceeds. That is because a will only controls the distribution of assets that are owned by the decedent at the time of her death.

Here, your mother does not have an ownership interest in the house but simply a right to live in the house until her death. When she dies, that right dies with her. As such, the provision in the will pertaining to the division of the proceeds from the sale of the house will be ignored.

If you mother is still alive, competent and sorry that she transferred the house to your brother, she can remedy the situation in a number of ways. She can, of course, revise her will so that you receive a larger portion than your brother of other assets that may be passing under her will. She can also change the beneficiary on her nonprobate assets like IRAs, 401(k)s and/or life insurance. Neither of these strategies require your brother’s cooperation, but they will only work if your mother has assets worth about one-half of the value of the house.

If your brother is cooperative, your mother’ assets are limited and she is not already receiving needs-based government benefits, your mother and brother can sign a new deed either adding you as a co-owner or transferring the house back to your mother. The will would then control. This solution will require the preparation of a new deed and transfer of documents and the filing/recording of the deed but will not require your mother to change her beneficiary forms or her will.

If transferring the house again will put your mother’s benefits at risk, she and your brother can sign a written agreement in which (1) your mother states that it was not her intent in transferring the house to “gift” it to your brother and (2) your brother states that when he sells the house, he will split the net proceeds 50/50 with you.

If the agreement provides that you are an intended beneficiary of the agreement between your mother and your brother, and specifically states that it is binding upon the heirs, successors, assigns and executors of the parties signing the agreement, you will have an enforceable legal right to one-half of the proceeds.

It is important that any agreement that may be signed by your mother and brother pertaining to the house include the “heirs, successors, assigns and executors” language since, without that language, the agreement, like your mother’s life estate, will die with your mother.

Because there are so many issues to consider when deciding if and how to insure that you receive a share of the proceeds from the sale of her house, your mother should discuss this matter with an experienced estate planning attorney. The attorney can explain the pros and cons of each option that may be available to your mother so that she can make an informed decision. Only then can she be sure that her actions will not adversely impact her down the road and that her wishes will be honored.

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.

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.

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