Tags Posts tagged with "Linda Toga"

Linda Toga

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Linda Toga, Esq.

THE FACTS: I am a widow with modest assets and a small IRA. I have two grown children and two young grandchildren. My friends have been urging me to see an attorney about developing an estate plan.

THE QUESTION: Considering the size of my estate, is that really necessary? 

THE ANSWER: The short answer to your question is a resounding “Yes.” Estate planning is not just for the wealthy and is not limited to the preparation of a will. Estate planning touches on everything from wills, trusts and powers of attorney to health care proxies, living wills and spousal waivers. Even if you just want a will, there are countless issues that you should discuss with an experienced estate planning attorney to ensure that your will accurately reflects your wishes and takes into account your specific circumstances. 

The reason professional help is advisable is that, for the most part, people don’t know what they don’t know. In other words, a person can fill out a form will and sign it but, if she doesn’t know what questions to ask or what issues should be considered, she likely won’t know the adverse consequences of her uninformed choices. The end result is an estate plan that does not reflect the goals and wishes of the person, or worse, one that leads to protracted litigation. 

To avoid that, you should discuss with an attorney how your assets are titled and whether all of your assets will pass under your will. Assets that are jointly owned with someone else or that are subject to a beneficiary designation are nonprobate assets and will not pass under your will. How such assets are going to be distributed should be taken into consideration when developing an estate plan.  

You should also discuss with your attorney whether or not your probate assets will be passed in equal shares to your children. One question that needs to be addressed is whether you want your executor to take into consideration nonprobate assets that may pass to your children or loans that you may have given your children when determining the amount of their share. Another is how you want your estate to be divided in the event one of your children predeceases you. 

If you want the share allocated to a predeceased child to pass to his/her children, you should discuss with your attorney the option of including a trust in the will to protect the assets passing to the minor grandchildren.

Although both of your children would have equal rights to be named administrator of your estate if you were to die without a will, you should discuss with your attorney what is involved in the probate of your will and the administration of your estate. If your children do not both live locally, it may be burdensome to have them serve as co-executors. Or perhaps they don’t get along and naming a third party to handle your estate would be advantageous. Discussing these issues is an important part of developing even the most basic estate plan. 

As mentioned above, as part of your estate planning you should also discuss with an attorney the benefits of having a power of attorney, health care proxy and living will in place. Each of these documents plays an important role in an estate plan by either ensuring that your affairs are taken care of in the event you lack capacity or by making your wishes known with respect to medical treatment and end-of-life care.

Your attorney can advise you as to the duties and responsibilities of the agents named in a power of attorney and health care proxy. This will allow you to consider possible agents in light of the roles they would assume if named. Discussing this with your estate planning attorney will enable you to make informed choices. If you don’t engage in the process, you are essentially forfeiting the right to choose who will assist with the management of your assets while you are alive and who may be called upon to make life and death medical decisions on your behalf. When asked, most people admit that they want to be the one to choose. 

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.

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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.

The older you are when you buy a long-term insurance policy, the higher the premium. Stock photo

By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: I am in my late fifties and am thinking about purchasing a long-term care insurance policy. 

THE QUESTION: What are some of the factors I should consider before I purchase a policy?

THE ANSWER: Long-term care insurance can be very confusing and may not be the best option for some people. Although about 50 percent of people who reach the age of 65 will likely need long-term care during their lifetime, the best way to pay for that care depends on a number of factors, not the least of which is the size of your nest egg and how much of your savings are being used for your current living expenses. 

If you are not living off your savings, and those savings are significant, you may opt to private pay for your care if/when it is needed. If that is the route you decide to take, it would be wise to segregate the money you may need for long-term care from the funds you use for your daily living expenses. That way if you are admitted to a nursing home, the funds will be available to cover the cost of your care.

If you do not have significant savings or the income needed to cover the cost of long-term care, you may be eligible for Medicaid benefits. However, Medicaid is only available to those who can establish that they are “impoverished.” While Medicaid planning strategies may increase your chances of being eligible for government benefits, if you have made gifts or otherwise disposed of your assets through “uncompensated transfers,” you will likely be required to pay for your own care for a period of time before you become eligible.

If you purchase long-term care insurance, the benefits paid by the insurer could pay for your care during the penalty period. If you are still institutionalized at the end of your benefit period, Medicaid may pick up the tab.  

If you do not feel comfortable with the idea of private paying what could very well be in excess of $450 a day for your care, and do not believe you will be eligible for Medicaid, long-term care insurance may be an option for you. However, insurance is not cheap. Policies can run as much as $3,000 or more per year. The older you are when you buy a policy, the higher the premium. That being said, if you can afford the coverage, it may be the best way to go. 

When shopping for a policy, look at the daily benefit amount, the period for which benefits will be paid, the waiting period between when you file a claim and when benefits will begin and the type of coverage that is provided (home care, institutional care, care provided by family members, etc.). Since the cost of care is likely going to increase, you should buy a policy with an inflation rider. 

If you do not want to purchase a traditional long-term care policy, you can look into hybrid policies that combine life insurance with long-term care coverage. Unlike traditional policies that only pay benefits if you need long-term care, hybrid policies guarantee a death benefit regardless of whether you are institutionalized. In some cases it is easier to qualify for a hybrid policy than a traditional long-term care policy. However, you will pay more for a hybrid policy because of the flexibility it provides. 

When shopping for long-term care insurance, you should talk to an independent insurance agent who sells policies from more than one insurer. You should also discuss your options with an experienced estate planning attorney who can advise you as to whether long-term care insurance is the best option for you based upon your overall estate plan.

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

A new power of attorney should be prepared if the document you now have predates 2009. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: I signed a power of attorney many years ago in which I named my spouse as my agent and my son as my successor agent. My son passed away recently. 

THE QUESTION: Should I have a new power of attorney prepared?

THE ANSWER: If you did not name a successor agent to act in the event your son was unable to do so, you should have a new power of attorney prepared. You should also have a new power of attorney prepared if the document you now have predates 2009. That is because the New York State Legislature created a new power of attorney form that became effective on Sept. 1, 2009. Minor changes were made to that form in 2010. 

Based upon my own experience and that of my clients, it appears that the people and entities that your agent may have to deal with will be more comfortable if the power of attorney upon which they are relying was signed relatively recently. They are very reluctant to accept the old form, which often was a single legal-sized piece of paper printed on both sides. 

Although the law requires that, absent evidence of fraud or wrongdoing, properly drafted and executed powers of attorney must be honored regardless of the age of the document, I recommend that my clients update their powers of attorney periodically. By doing so they increase the likelihood that their agents will not be faced with situations where the person with whom the agent needs to transact business on the client’s behalf improperly refuses to honor the power of attorney based upon its age. 

If the power of attorney in which you named your son as a successor agent was signed before September 2009, you will be surprised to see that the current power of attorney form is much longer and more complex than what you signed. While the goal of the current power of attorney is still to allow the principal to grant an agent or agents authority to carry out certain types of transactions on the principal’s behalf, post-2009 powers of attorney include a number of safeguards to protect the principal. 

For example, the current power of attorney warns the principal about abuse by agents. In the current form, the principal is not only given the option to name an individual to monitor the activity of his/her agent, but the principal is also required to sign a power of attorney rider in the presence of two witnesses and a notary public if he/she wants to give his/her agent the authority to make gifts in excess of $500.  

In an effort to educate the public, the current power of attorney provides agents with information about the duty of care they owe the principal and requires that the agent sign the power of attorney before acting on the principal’s behalf. By signing the power of attorney, the agent acknowledges that he/she must act in the best interest of the principal.  

Although it addresses some of the concerns that attorneys and the public had with the pre-2009 power of attorney, in its basic form the current power of attorney does not give the principal the ability to delegate authority to perform many types of transactions that agents are likely to be called upon to perform. This is especially true when the agent is acting on behalf of an elderly principal. 

Experienced attorneys routinely modify the current form by adding an exhaustive list of additional transactions and activities that the principal may wish to delegate to his agent. To ensure that the new power of attorney you sign is tailored to your needs, I urge you to retain an attorney who practices in the area of estate planning to explain in detail the current power of attorney and the various types of transaction and activities you may want to delegate, and to prepare for you a new power of attorney that reflects your wishes. 

Linda M. Toga, Esq. provides personalized service and peace of mind to her clients in the areas of 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.

The best way to defray the cost of a college education is to open a 529 plan.

By Linda M. Toga, Esq.

THE FACTS: I would like to help defray the cost of college for my grandson, Joe. My daughter and son-in-law are not in a position to pay full tuition, room and board. I don’t want them or Joe to borrow for his education.

THE QUESTION: What is the best way to help out without hurting Joe’s chances of receiving needs-based financial aid?

THE ANSWER: Although there are a number of ways to defray the cost of Joe’s education, including giving him money, giving money to your daughter and son-in-law or paying the college directly, for many people the best way to assist with college expenses is to set up a Section 529 College Savings Plan (a “529 plan”) with Joe as the beneficiary. Your various options are discussed below.

If you want to simply gift money to Joe for his education, you can give him up to $14,000 per year without incurring any gift tax. However, when the college reviews his financial aid application and determines how much Joe should contribute toward his education, they will take any gifts you have given him into consideration. Since students are expected to contribute approximately 20 percent of their savings to their education, the more you give to Joe directly, the less aid he will receive.

If you decide to give money for Joe’s college expenses directly to your daughter and son-in-law, you can gift each of them $14,000 for a total of $28,000 per year. Clearly you can make a larger annual contribution to Joe’s education this way; but, like the funds gifted to Joe, the funds you gift to your daughter and son-in-law will be taken into consideration when calculating any financial aid that may be awarded to Joe. The negative impact of gifting funds to his parents rather than to Joe will be less than the impact of gifts made directly to Joe because his parents are only expected to contribute about 6 percent of their assets to his education.

Paying the college Joe attends directly is an option that avoids any potential gift tax issues on gifts exceeding the $14,000 annual limit. Paying the college directly would allow you to make larger contributions annually to his education; but, this method is not recommended since the money paid directly to the college will be considered as income to Joe. Like gifts to Joe, payments to the college will adversely impact the amount of aid Joe may receive.

In my opinion, the best way to defray the cost of Joe’s college education is to open a 529 plan. Many states, including New York, offer such plans that allow for tax exempt growth on investments so long as distributions from the accounts are used to pay qualified college expenses. Contributions to a 529 plan are subject to gift tax; but, the law allows contributions up to $70,000 to be made in one year as long as the person funding the plan files a gift tax return and applies the contribution over a five-year period.

If you open a 529 plan, you could decide how the funds in the account will be invested and to change the beneficiary in the event Joe decides not to attend college. You could also remove funds from the account for noncollege expenses although such a withdrawal will result in a penalty and tax liability.

Although the income on the investments in the plan will be considered Joe’s income, increasing the amount he will be expected to contribute to his education, it is only assessed at 50 percent as opposed to other income that is assessed at 100 percent so the negative impact is greatly reduced.

In some states you can avoid the negative impact of increasing Joe’s income if you transfer the 529 plan to your daughter before Joe applies for aid. Unfortunately, this option is not available in New York where transfers are prohibited unless the account owner dies or there is a court order. For this reason, it may make more sense if you simply contribute funds to a 529 plan opened by your daughter.

Regardless of the method you decide to use to defray the cost of Joe’s education, it is worth noting that gifts made to Joe or his parents after January of Joe’s junior year of college should not have any impact on his ability to get financial aid. That is because by then Joe will have already filed his aid application for his senior year.

Before you make a decision about how to help Joe and his parents pay for his college education, you should not only look at all the options available to you but you should discuss with an estate planning attorney how Joe’s college education should be addressed in your estate plan. You don’t want your estate plan to jeopardize whatever steps you may take during your lifetime to benefit Joe.

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of estate planning and administration, real estate, marital agreements and litigation out of her Setauket office.

A credit shelter trust is a marital trust that allows you to a voice having the same property taxed twice.

By Linda Toga

Linda Toga

THE FACTS: I had my will prepared years ago. The estate tax exclusion amount at the time was considerably less than it is now, so my will contains a provision that directs my executor to create a credit shelter trust to avoid estate taxes. The trust provision mandates that the credit shelter trust be funded with assets equal in value to the estate tax exemption amount in effect at the time of my death.

THE QUESTION: A friend told me the credit shelter trust language that is currently included in my will could result in only a small part of my estate, if any, passing directly to my wife. Is he correct?

THE ANSWER: Without knowing the size of your estate, it is impossible to say how much of your estate might pass directly to your spouse upon your death. That being said, your friend is correct.

Credit shelter trusts are designed to avoid estate tax, but tax avoidance is generally not an issue when the first spouse dies because the surviving spouse is most often the beneficiary of the deceased spouse’s estate.

Regardless of the value of the assets that pass to a surviving spouse as sole beneficiary, there will be no estate tax liability on the first death because both the federal and New York State tax codes include an unlimited marital deduction. That means the assets passing to the surviving spouse pass estate tax free.

In contrast, the value of assets passing to a nonspouse may trigger estate tax. That is why estate tax can become a problem when the surviving spouse dies. If the value of the surviving spouse’s estate exceeds the applicable estate tax exemption amount then in effect, estate tax will be due. This year the federal estate tax exemption is currently at $5.49 million and the New York State exclusion amount is currently at $5.25 million.

If your will directs that assets equal in value to the current estate tax exemption amount go into the credit shelter trust, over $5.2 million of your probate estate must be used to fund the trust. The actual dollar amount will depend on whether your will references the federal or the New York State exemption/exclusion amount. If the value of your assets does not exceed the exemption amount, the only assets passing directly to your spouse will be jointly held assets and assets on which she is a named beneficiary. Assets that are used to fund the trust will be available to your spouse under certain conditions. She will not have unfettered access to those funds.

Credit shelter trusts were very popular with my clients when the estate tax exclusion amounts were significantly smaller. In 2008, for example, when the federal estate tax exemption was $2 million, clients with estates valued at $3 to $4 million felt comfortable funding a credit shelter trust since the surviving spouse would still receive $1 to $2 million outright. However, since the exclusion amount has increased at a much faster rate than the value of most people’s estates, the language in many credit shelter trusts has become a problem.

One way to address the problem is to have a new will prepared that does not direct your executor to create a credit shelter trust. However, if you are concerned about estate tax liability, another option is to have a new will prepared that includes language limiting the value of the assets that must be used to fund a credit shelter trust. That way you can be sure that there are sufficient assets passing to your spouse outright.

A third option is to include a discretionary marital trust in your will, rather than a credit shelter trust. A disclaimer trust, for example, can be used by married couples to avoid estate taxes and has the advantage of allowing the surviving spouse to decide how much money will go into the trust. If the surviving spouse feels comfortable doing so, she can have the trust funded with assets equal in value to the applicable exclusion amount. However, she can also decide to fund the trust with a lesser amount or to not to fund the trust at all.

The surviving spouse has nine months to decide whether it makes sense taxwise to fund the trust. Because of the flexibility offered by disclaimer trusts, and the ability to essentially do post-mortem planning, many people whose estates are valued at over the exclusion amount find disclaimer trusts a good option. To figure out what would be best for you, you should discuss your situation with an experienced estate planning attorney.

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.

Make sure your attorney includes a 'common disaster' provision in your will.

By Linda Toga

THE FACTS: My father and sister perished in a plane crash under circumstances making it impossible to determine the order of death. My sister is survived by her spouse, Joe, and two children. My father’s will leaves his entire estate in equal shares to me and my sister, per stirpes. He was under the impression that his assets would pass to his grandchildren if anything happened to my sister. He was quite adamant that he did not want his assets to pass to Joe. My father’s will also includes a provision stating that if he and a beneficiary die in a common disaster, he would be deemed to have predeceased the beneficiary. My sister’s will leaves everything to Joe.

THE QUESTION: Joe claims that one-half of my father’s estate now passes to him through my sister’s estate and not to my sister’s children because my sister is deemed to have survived my father. Is that correct?

THE ANSWER: Unfortunately with respect to your father’s wishes, the answer is “yes.” As much as your father may have wanted his assets to pass to his grandchildren, as a result of the inclusion of the common disaster provision in his will, Joe will effectively inherit half of your father’s estate along with any assets your sister owned at the time of her death.

HOW IT WORKS: The provision in your father’s will concerning dying in a common disaster with a beneficiary controls here even though it appears to undermine your father’s wishes. Pursuant to that provision, your sister is deemed to have survived your father. That means that half of his assets will pass to your sister’s estate as if she were alive. The assets will then be distributed in accordance with her will. Since your sister’s will leaves everything to Joe, Joe will, in fact, be the beneficiary of the assets passing from your father’s estate to your sister’s estate.

The common disaster provision is one that is often ignored or misunderstood by clients. However, not giving the possible impact of the provision serious consideration when engaging in estate planning is a mistake that can clearly lead to unintended consequences.

If your father wanted to be sure that his assets would not end up in Joe’s hands, the order of death set forth in the common disaster provision of his will should have been reversed. In other words, the common disaster provision in his will should have stated that in the event he died along with a beneficiary under circumstances that made it impossible to determine the order of death, he would be deemed to have survived the beneficiary.

Under that scenario, your sister would be deemed to have predeceased your father. This, in turn, would trigger the per stirpes language in the will that basically provides that if a named beneficiary predeceases the testator, the share of the estate allocated to the predeceased beneficiary will pass to that beneficiary’s children.

The end result of having your father survive your sister would be that the share of your father’s estate allocated to your sister would not be distributed to her estate but would have passed directly to her children.

Since your father’s assets would not have been included in your sister’s estate, they would not be distributed to Joe. Your sister’s wishes as to the distribution of her estate to Joe would be honored since he would still inherit the assets that were owned by your sister at the time of her death. At the same time, your father’s wish that his grandchildren be the beneficiaries of his estate would have been fulfilled.

Issues like the one created by the competing provisions in your father’s will highlight the need to work with an experienced estate planning attorney and illustrate the importance of asking questions to ensure that you understand fully the implications and consequences of every provision in your will.

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.

By Linda Toga

THE FACTS: My elderly aunt never married and is living alone. During my recent visits with her, it has become evident that she cannot continue to live independently. She is not bathing regularly, there does not appear to be much food in the house, some of the food is past its prime and the mail is piling up. The last time I was there, my aunt told me that she “helped” out one of my cousins who had called saying he was in jail and needed money to make bail. Apparently my aunt was the target of a scam. Clearly she needs someone to handle her finances. Unfortunately, there are no family members in a position to take care of my aunt and she never signed a power of attorney or health care proxy.

THE QUESTIONS: Is commencing a guardianship proceeding a good idea? What happens if there are no family members or friends who can serve as guardian?

THE ANSWER: Although every situation is different, from what you have told me, commencing a guardianship proceeding is not only a good idea but the best way to proceed. Generally the appointment of a guardian is appropriate when it appears that a person is likely to suffer harm because she cannot provide for her personal and property needs and cannot understand and appreciate the nature of her functional limitations. Your aunt will likely suffer harm if she continues to ignore her personal needs. The fact that she was an easy target for a scam artist and that she is not dealing with her mail suggest strongly that she does not understand her own limitations.

HOW IT WORKS: Although not all people who need a guardian need assistance with personal care and property management, it appears that your aunt does need a guardian of her person and her property. A guardian of her person may have the authority to make decisions about your aunt’s living arrangements, medical treatment and procedures and day-to-day decisions about her care. A guardian of her property may make decisions about her assets, may handle her finances and may, with court approval, apply for government benefits or engage in estate planning on your aunt’s behalf.

A guardianship proceeding is commenced by filing a petition with the court seeking the appointment of the guardian. The petition is filed along with an Order to Show Cause (OSC) that essentially advises your aunt, as well as other interested parties, that a hearing will take place before a judge to determine if your aunt lacks the capacity such that the appointment of a guardian is appropriate.

In the petition you will need to provide evidence of your aunt’s limitations and examples of things she has done or things she fails to do that could result in harm. The court needs to know about your aunt’s living situation, her medical conditions and medications she may be taking, her assets and income, among other things.

If there is someone who is willing to serve as guardian, the court should be provided with that person’s contact information and an explanation as to why he/she may be the right person to care for your aunt. If the petition does not identify a potential guardian, and the court determines that a guardian is needed, one will be appointed from a list of trained individuals.

Once the proper paperwork has been filed with the court and served upon all interested parties, the court will set the date for the hearing and will appoint a court evaluator who acts as the eyes and ears of the court. The court may also appoint an attorney to represent your aunt in the proceeding.

The court evaluator will meet with your aunt to evaluate her ability to make decisions about her personal care and financial affairs. The evaluator may also speak to you and other family members, health care providers and others in an effort to learn more about your aunt’s situation. The evaluator will then prepare a report for the court that includes the evaluator’s recommendation with respect to the appointment of a guardian and his/her opinion as to whether your aunt should be present for the hearing to be conducted by the court.

After hearing testimony from you, the court evaluator, your aunt and other interested parties with personal knowledge of your aunt’s situation, the court will decide if the appointment of a guardian is appropriate. If your aunt is found to be incapacitated and a guardian is appointed, the court will explicitly state what types of decisions can be made by the guardian. The guardian will be required to complete a guardian training course and, depending on the value of your aunt’s assets, may be required to post a bond. In addition to visiting your aunt at least four times a year and making decisions on your aunt’s behalf, the guardian will be required to file annual reports detailing all financial activity and updating the court on your aunt’s condition.

Although the time between filing the petition and the hearing is supposed to be about one month, delays are common and, even after the hearing is completed, there is considerable time and effort required before the appointed guardian is actually in place and authorized to serve.

In addition to the time and effort associated with a guardianship proceeding, there are significant costs involved in having a guardian appointed, including payment to the court evaluator and any court-appointed attorney. In your aunt’s case, these costs may have been avoided if your aunt had engaged in estate planning and had a properly drafted power of attorney and health care proxy and/or trust in place. If you decide to pursue the appointment of a guardian for your aunt, be sure to retain an attorney with experience in the guardianship part so that the process will be handled properly and expeditiously.

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.

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.

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