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By Britt Burner, Esq.

Britt Burner Esq.

For disabled individuals, it can be difficult to navigate public benefits, especially when you have assets or income that exceed the allowable limits. Two commonly used vehicles to manage assets are Achieving a Better Life Experience (“ABLE”) accounts and Supplemental Needs Trusts (SNTs).

In September 2017, New York State passed a law authorizing ABLE accounts for disabled individuals in accordance with the federal law. ABLE accounts allow for money to be saved by someone receiving public benefits, such as SSI, without affecting eligibility.

To qualify for an ABLE account, the beneficiary must be diagnosed with a significant disability before age 26. Contributions can be made to the account by the beneficiary, friends, family members, or 529 college savings account rollover, but the total annual contribution cannot exceed a certain limit, which is pegged to the gift tax exemption. This amount is $18,000 in 2024 and is subject to change year by year. Employed beneficiaries may deposit an additional amount up to the Federal Poverty Line for a one-person household, but only if they are not contributing to a retirement savings account in that year. The 2024 Federal Poverty line amount is $14,580 in the continental US. 

However, ABLE account balances are limited. Under the SSI program, the first $100,000 in the account is disregarded as a resource. Any amount above that is counted as a resource. The SSI resource limit is $2,000. If you exceed this, SSI payments will stop until the resources are below the allowable limit. 

A disabled person may spend their ABLE account funds on “qualified disability expenses,” which are expenses and basic costs of living that are intended to maintain and improve their quality of life. These qualified expenses include but are not limited to education; health and wellness; groceries; housing; transportation; legal fees; assistive technology; personal support services; funeral/burial expenses, etc. 

Depending on the amount of money the recipient of benefits has and the anticipation of future funds, either from earnings or inheritance, it may be prudent to consider creating an SNT (supplemental needs trust) in addition to the ABLE account. 

Like the ABLE account, SNTs allow people with disabilities to save money without affecting their eligibility for public benefits such as SSI. There are two main types of SNTs. A first-party trust is self-funded by the beneficiary of the trust. To create a first-party SNT, the beneficiary must be younger than 65 years old. New funds may not be deposited into this SNT after the beneficiary turns 65. A third-party trust is funded by someone else, such as a parent or grandparent. There are no limits to the amount that can be contributed into either of these trusts per year, and there is no limit to the total asset balances in the trust. 

A trustee will be designated to control the assets in the trust and oversee the management and disbursement of its funds. SNTs allow the beneficiary to use the funds for expenses not paid for by public benefits. Such expenses can include clothes, entertainment, educational and recreational expenses, and transportation. SNTs may not be used for everyday expenses such as groceries. 

While SNTs do not have contribution or balance limits as ABLE accounts do, they have more complicated rules for what the funds can be used for. A qualifying individual does not need to choose between the two accounts. An SNT can be established for purchases and expenses not covered by public benefits, and an ABLE account can be set up for basic cost of living expenses and everyday expenses. 

Navigating the placement of funds while qualifying for government benefits can be complicated. However, with proper planning, the use of the funds can be maximized to the individual while also receiving the benefit of public assistance.

Britt Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Robert Cannon, Esq.

Robert Cannon, Esq.

Consider this scenario: a 75-year-old woman, Jane, began to exhibit signs of cognitive decline last year. She is widowed and has one child. Moreover, her financial advisor contacted a relative to advise that Jane was making unusual withdrawals and that there is a concern that she may be the subject of financial exploitation. The relative no longer believes she can take care of her financial affairs and is concerned that she is not looking after her personal needs. 

As a first step, the family tried to talk to her last year about meeting with an estate planning attorney, but she refused to do so. There are no known advance directives in place and her condition has deteriorated significantly. In addition, Jane has a 40-year-old son with Down syndrome who is entirely reliant upon her. What can be done?

First step is to determine if Jane has the capacity to sign advance directives including a health care proxy and power of attorney. If this is not possible because she has deteriorated to the extent of being unable to handle her affairs or appoint someone to do so, the family may need to explore the commencement of a Mental Hygiene Law Article 81 proceeding seeking the appointment of a guardian of the person and property of Jane.

The commencement of the proceeding involves filing a verified petition with the Supreme Court of the county in which she resides outlining the reasons why it is believed that she does not understand or appreciate the extent of her limitations and that she is likely to suffer harm if a guardian is not appointed for her. The appointment of a guardian in MHL Article 81 proceedings is based on functional limitations and not on medical diagnoses.

In light of the financial advisors concerns regarding potential financial exploitation, at the outset of the proceeding, it may be prudent to request that the Court appoint a Temporary Guardian to immediately take steps to secure Jane’s finances and prevent any further abuse.

The Court will set a hearing date and all interested persons will have to be notified, including Jane’s son and her living siblings. The Court will appoint a Court Evaluator to conduct an investigation, which will include meeting Jane in person, speaking with other friends and family members, and investigating her finances. In limited circumstances it may be appropriate for the Court Evaluator to request the permission of the Court to review medical records. The Court may appoint an attorney to represent Jane. The Petitioner would be required to testify at the hearing along with any other witnesses that will help demonstrate to the Court Jane’s need for a guardian. The Court Evaluator will also testify as to their findings and recommendations.

If appointed, the permanent guardian will step into your Jane’s shoes. The petitioner can request to serve as guardian or it can be a third party. The Court can tailor the powers granted to the guardian to meet Jane’s individual needs and can appoint a guardian of the person, a guardian of the property, or both. There are various safeguards in place to ensure that once a guardian is appointed, Jane will be protected, including the requirement that the guardian obtain a bond and file annual reports with the Court.

Once Jane is squared away, the family members will need to turn their attention to Jane’s son. The first inquiry should be if Jane or anyone else was ever appointed as her son’s guardian. If not, we must consider the possibility of commencing a SCPA 17-A guardianship proceeding in the Surrogate’s Court of the County in which he resides. Unlike MHL Article 81, the appointment of a guardian in a SCPA 17-A proceeding is driven by medical diagnoses. 

As part of the application, a licensed physician and licensed psychologist with a PhD are required to submit Affirmations certifying that Jane’s son is intellectually or developmentally disabled. A guardian appointed in this manner is granted broad decision- making authority over financial and medical matters.

As you can see, seeking guardianship for an adult in New York can be quite nuanced. Whether it be through the Mental Hygiene Law Article 81 or SCPA Article 17-A, it is possible to provide for the needs of these vulnerable adults.

Robert Cannon, Esq. is a senior associate attorney at Burner Prudenti Law, P.C focusing his practice areas on Elder Law and Guardianships. Burner Prudenti Law, P.C. serves clients from Manhattan to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

The United States Supreme Court recently issued a landmark decision in the case of Connelly vs. IRS. This ruling has significant implications for buy-sell agreements and corporate redemptions. The Court’s decision addresses key issues related to the tax treatment and enforceability of these agreements, which are critical for estate planning, business succession, and corporate governance. 

For estate tax planning, the importance of this case is that it affirms that the death benefit of life insurance is an asset that raises the value of the business. In particular, it indicates that the value of the business will include the insurance proceeds that the company holds on the life of the shareholder, even though those payments have to be made to the estate of the shareholder in order to re-purchase the deceased shareholders interest in the corporation.  The liability to purchase shares from the estate cannot be applied to reduce the fair market value of the business for estate tax purposes.

Traditionally, in a redemption buy-sell agreement, the company will own a life insurance policy on the life of shareholders to be used to buy out the decedent’s shares held by the estate.  This ensures that the remaining business owner(s) can stay in control and run the business without being partners with the estate of the deceased owner. In Connelly, two brothers were shareholders of a business. They had a buy-sell agreement backed by life insurance owned by the company. One brother died and the business was valued without the death benefit of the life insurance. The taxpayer’s estate argued that business valuation which included the value of the insurance proceeds should be reduced by the obligation to purchase the shares of the decedent.  

The IRS disagreed and the Supreme Court affirmed that, regardless of the fact that they had the obligation to buy the shares back from the decedent’s estate, the value of the business, for tax purposes was the full valuation plus the insurance proceeds that were realized at the decedent’s death. That inclusion could significantly increase the value of the estate and, in many instances, will increase the amount of estate tax due. 

Among other things, the Supreme Court also affirmed in this decision that the valuation method stipulated in buy-sell agreements will generally be respected for tax purposes, provided it meets certain criteria. This includes the necessity for the valuation to be conducted in good faith, and it must reflect fair market value. 

The decision underscored the importance of having clear, well-drafted buy-sell agreements. The Court emphasized that these agreements must be binding and enforceable under state law to ensure their effectiveness for tax purposes. It highlighted the necessity for proper documentation and adherence to tax regulations to avoid adverse tax consequences. 

The Supreme Court’s decision in Connelly vs. IRS provides clarity on the tax treatment and enforceability of buy-sell agreements and corporate redemptions. By proactively addressing these changes, we can ensure compliance and optimize the tax outcomes for business owners. 

Business owners must maintain meticulous documentation supporting the valuation and terms of buy-sell agreements and corporate redemptions to substantiate tax positions. In light of this decision, it is crucial to engage with an attorney to review, and potentially revise, existing buy-sell agreements and corporate redemption plans to ensure compliance with the clarified standards. 

Nancy Burner, Esq. is the Founding Partner of Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Brit Burner, Esq.

Brit Burner, Esq.

Estate planning is often a family affair. While clients may come to us worried about their future, they are also worried about the future of those they will leave behind when they die. It may be a child, niece, or nephew who has had a run of bad luck, a string of bad relationships, or one that makes bad business decisions. 

Even clients who are leaving assets to children with good marriages and seemingly no debt have concerns that one of these negative situations may arise in the future for one of their beneficiaries, and then what? 

When concern about a beneficiary is top of mind, clients are often interested in hearing about the options available for leaving assets behind in a Trust for the benefit of one or multiple beneficiaries. These can be called by several names but we regularly use the term “descendants trust.” This type of trust gives creditor protection to beneficiaries, protecting their inheritance from dissipation in the event of a divorce, bad business decisions, general creditors, or any other creditors. A descendants trust can be drafted to avoid additional estate taxes at the beneficiary’s subsequent death, thereby preserving wealth for another generation. 

A descendants trust can be created for each beneficiary to protect their inheritance. These trusts are created by the client’s last will and testament or living trust, and the creating document lists the specific rules of each trust.

One of the first decisions to make is who should serve as trustee. The trustee is responsible for investing and reinvesting assets held by the trust. This can include assets invested in the market, cash, or real estate. To assist clients in making the decision of who should serve as trustee, we ask if we are trying to protect the beneficiary from themself or from others. If the beneficiary is the problem, we will recommend a family member, friend, or corporate entity serve as trustee. For concerns about creditors, divorcing spouses or other outside entities, we may recommend that the beneficiary can serve as their own trustee. 

The particular circumstances of the situation will help dictate this choice. If a close family member or the beneficiary serve as trustee, they are deemed to be “interested” rather than “independent. 

In determining allocations of principal from the trust, an interested trustee is restricted to distribution only for health, education, maintenance, and support. If there is an independent trustee, then assets can be paid for any reason at the discretion of the trustee. 

For distributions of income, a descendants trust can provide that any income generated from an asset in the trust shall be paid out to the beneficiary, although the income can also be directed to remain in the trust and distributions can be made upon the discretion of the trustee. However, the trustee must keep in mind that income that remains in the descendants trust will be taxed to the trust at its own tax rate, usually higher than that of the individual beneficiary. 

Beyond the known concerns for a beneficiary, there may be a concern for future need for Medicaid or other government benefits. The descendants trust is a good solution because it can have supplemental needs language that allows a beneficiary to maintain or apply for government benefits while maintaining trust assets to be preserved, should this become necessary. 

While some clients may feel that their assets are such that their children will not need government benefits, there are many wonderful programs for the disabled that can only be accessed by government benefit programs. This provision may or may not be applicable to future heirs and is prudent to include. The future is unknown and with the proper planning, you be sure your beneficiaries and the money you leave for them is well protected.

Britt Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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When planning for your estate, consider your goals. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

While there are very good reasons for creating a trust, the TYPE of trust is of great consequence and depends upon many facts and circumstances. No one should create and fund a trust unless they understand the reason — the problem (or problems) they are trying to solve. This article is intended as a simplified “primer” on the most common trusts used in estate planning. It is not exhaustive by any means but certainly provides a framework for designing an estate plan.

First, what is a living trust? A living trust is a document executed by you as the grantor or creator during your lifetime, as opposed to a testamentary trust that is created at your death. It is a free-standing document that sets forth how your trust assets should be managed during your lifetime and distributed at your death. 

One of the most common living trusts is the Revocable Trust. This document is meant to obviate the need for probate by titling all assets in the name of the trust. If properly drafted and funded, this trust will alleviate delays, make the administration of your assets seamless and significantly reduce the legal fees costs incurred on the settling of  your estate after you die. 

Typically, you would be the Grantor and Trustee of your own revocable trust. In the trust document you would name successor Trustees to act in the event of your incapacity or death. The revocable trust uses your Social Security number and is not a separate taxable entity.  

Another common trust is the irrevocable Medicaid qualifying trust. This trust will also avoid probate and has the added benefit of protecting assets should you require long term care in a nursing home or care at home through the Medicaid program. This trust is often funded with your home, as well as other assets. You would not be the Trustee of this trust, but you would name one or more of your beneficiaries or any other trusted individual  to act on behalf of the trust. Even if your home is transferred to this trust, you will still pay all the expenses of maintaining the home and have exclusive use and occupancy. 

You would also enjoy all the tax benefits like star exemptions, capital gains exemption upon the sale of your primary residence and your heirs would still obtain a step up in basis at your death. All income earned by the trust can be paid to you or accumulated in the trust, but will still be taxable to you at your individual rate.  

Often clients do not realize that life insurance proceeds are taxable in their estates. With the federal exemption likely to be cut in half by January 1, 2026, keeping the value of life insurance proceeds out of your taxable estate is a number one priority for many. A well drafted irrevocable life insurance trust (ILIT) will avoid such taxation. If the life insurance trust purchases the policy, then the life insurance will be completely outside your taxable estate. If you already own the policy and then transfer it to your insurance trust, you must survive the transfer by three years. 

With the prospect of the federal estate tax exemption being drastically reduced, many clients are opting to create spousal limited access trusts (SLAT). The SLAT could be used to transfer a significant amount of wealth out of your estate while the exemption is high. A SLAT is an irrevocable trust created by one spouse for the benefit of the other during his or her lifetime. The SLAT can provide income and principal distributions for the benefit of the non-grantor spouse and descendants, with the spouse being primary. The spouse can serve as a Trustee. 

Furthermore, assets in the SLAT are protected from the spouse’s creditors and not included in the spouse’s taxable estate. 

When planning for your estate, consider your goals. Do you have  taxable estate or are you worried about the cost of nursing home care? The solution should address those issues.  

Nancy Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Hon. A. Gail Prudenti, Esq.

Hon. A. Gail Prudenti, Esq.

After working most of your life and finally paying off your mortgage, the last thing you want is to see the assets you’ve accumulated through years of diligence fall into the government’s hands because you required long-term care either at home or in a nursing home. There is a way — a perfectly legal and legitimate way — to shield those assets and protect your children’s inheritance. But there’s really no time to lose. One of the ways in which we protect assets is by creating a Medicaid Asset Protection Trust (MAPT).

With a MAPT, you can protect your assets from the cost of long-term care. But there is a hitch: The trust must be created sixty (60) months before nursing home care is necessary. Currently, in New York, there is no lookback for transfers made before you apply for home care or Community Medicaid. At the writing of this article, we are unsure if a lookback will ever be implemented in the homecare setting. To be safe, planning early is imperative and the key to asset protection and preservation.

Let’s back up a second. Nursing home care is extremely expensive (very roughly $15,000 a month) and few people can afford to pay this amount over the long haul. Ultimately, they will rely on the Medicaid benefits to which they are entitled. In fact, approximately 72% of all nursing home costs in New York are covered by Medicaid. That means if you are in a nursing home paying privately, you are in the minority.

Under the 2024 Medicaid resource allowance, the application can have $30,182.00. If you have assets that exceed that amount, there could be a spenddown. If you do nothing, you could lose your home and investment assets. If you establish a MAPT — and stay out of a nursing home for sixty (60) months — those assets are out of the government’s reach and will be there for your benefit and ultimately, your beneficiaries.

In addition to the resource allowance, a Medicaid recipient can have retirements accounts in an unlimited amount (provided those accounts are set up for a specific monthly distribution), an irrevocable pre-paid burial, and a car. At death, there will be recovery for the benefits paid by Medicaid during the recipient’s life. This recovery can be avoided if assets avoid probate by having a joint owner, beneficiary, or are held in a MAPT when the recipient passes.

Although situations differ, what happens most often is an aging person or couple, as part of sound estate planning, will consult with an elder law or trust/ estate lawyer to weigh the benefits and drawbacks and determine if a MAPT makes sense and which assets should go into the trust. The trust funding is a crucial part of this process as is choosing a trustee. Often, the trustee is an adult child or other relative or friend who you can trust to follow your wishes.

What happens if your house is in a trust, and you decide to move? No problem. The trustee can sell the house and then the proceeds can be used to buy another home or simply invested to pay you income from the trust. 

Similarly, if you put your stock investments in the trust, the trustee can buy and sell securities in the trust. The new home and the new stock stays in the trust. The grantor of the trust keeps all the income, and the principal is protected.

Trusts can be legally complicated, and if you do decide to investigate a MAPT, it’d be wise to consult with an attorney who specializes in that area of law and keeps a close watch on statutory changes that may affect the operation of the trust. Mistakes and oversights can have devastating unintended consequences. It may be difficult or impossible — and it will certainly be expensive — to revise a trust. Better to get it nailed down just right from the start.

Hon. Gail Prudenti, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice on Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

There is a common misconception about estate taxes when a decedent dies. At the outset it is important to know that the New York State exemption in 2024 is $6,940,000. The federal exemption for 2024 is $13,610,000. Therefore, if your estate is under these amounts, then there is no tax due. Often clients are anxious to make annual gifts with the mistaken belief that their heirs will pay a tax at their death. First, any amounts to spouses are tax free. Any amount under the above thresholds is also tax free. Nevertheless, for estates over the exemption amounts, either the New York or federal, additional planning is necessary. The balance of this article is for estates that exceed these threshold amounts.

But before we consider those taxes, let’s be clear about what comprises your taxable estate. All assets that you own at your death are counted towards your taxable estate, including IRA’s, annuities, bank accounts, real estate, life insurance owned by you or for which you have the power to change the beneficiary.

In New York, estates valued below this threshold amount ($6.94 million) will not incur any tax. For any estate that is over the threshold by no more than 5%, the estate is only taxed on the overage. However, for any estate valued at more than 5% over the threshold amount, ($7.287 million) the entire estate is taxed and there is no exemption available.

To illustrate: For decedents dying in 2024, consider an estate valued at $6.0 million. This is under the threshold amount and no tax is due. For an estate valued at $7.1 million, which is $160,000 over the threshold amount, there will be a tax for the $160,000 overage, to wit: the taxable estate is $397,444. However, for an estate valued at $7.3 million ($13,000 over the 5%), the value of the estate is above the threshold by more than 5% and the estate tax rises sharply, to wit: the taxable estate is $678,000. This commonly known as the “cliff.”

Estate tax planning for NY residents is often focused on keeping assets under this

cliff. There are several techniques that can be used to avoid the cliff. For instance, each individual can make tax free annual gifts in the sum of $18,000 per person in 2024. Annual gifts can be utilized during lifetime to bring the value of an estate under the cliff, and maybe even under the threshold.

However, in an instance where the decedent dies and the estate is over the threshold, we often use a provision in the Will or Trust to reduce the taxable estate with gifts to charities. This is a savings provision that provides for a charity to receive any amounts disclaimed by the beneficiaries. By adding that type of clause, the beneficiaries have up to 9 months after the decedent’s death to file a qualified disclaimer, renouncing any such overage and having the disclaimed amount pass to the named charity. The beneficiaries can disclaim any amount necessary to bring the estate under the threshold and reduce the estate tax to zero.

Another technique is to make a large gift more than 3 years prior to death. Since New York State does not have a gift tax, only an estate tax, this works quite well. Take the example of an individual with $8.94 million in assets, which is $2.0 million over then threshold. If she transfers the $2.0 million to her heirs directly or to a properly drawn trust for heirs, and survives the gift by three years, then she still has a full New York State exemption. The lifetime gift is essentially transferred estate tax free. If she dies before the three years, the gift will come back into the estate for the purposes of calculating the estate tax.

This same technique would not work for federal estate tax purposes, because any lifetime gift over the annual gift amount does reduce the lifetime applicable credit. This year the applicable credit amount is $13.61 million. This amount is indexed for inflation and will increase again in 2025. However, in 2026 the credit amount will be reduced as the law that created it will “sunset”. Most experts believe the federal exemption will be approximately $6.5-$7.0 million as of January 1, 2026. For clients with estates over that amount, it is necessary to plan early and reduce their taxable estates before the federal applicable credit is reduced. This is usually done with sophisticated trust planning which moves assets “over the tax fence” and uses the credit before they lose it.

Nancy Burner, Esq. is the Founding Partner of Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Establishing a clear and thorough estate plan is essential for artists to maintain control over their artwork and preserve their legacy. An artist’s estate not only includes physical art, but a bundle of intellectual property rights, including copyrights. Additionally many artists have art collections that include others artists’ works as well as their own. The artist’s own art work is generally treated differently than their art collection, but both can be hard to value at death.

Generally speaking, at death one can dispose of these assets either through a Last Will and Testament or a Living Trust. With either document, an artist can specify not only who is to inherit a particular work of art, such as a family member or art gallery, but how the artwork is to be managed. For example, the artist can specify the proper storage and handling, appraisal, and insurance for the art work. Professional art appraisers and dealers can be hired to find buyers or exhibit the art to a wider audience. If doing so, it is important to set aside some estate assets to pay for the upkeep and handling of the art. If the Executor or Trustee is left to handle the art without any monetary resources, the plan will not work.

The main difference between a Will and a Trust is that a Will must be validated through Surrogates Court in a probate proceeding. Probate takes several months, sometimes years, for the nominated Executor to be officially appointed and imbued with the authority to collect the decedent’s assets, pay off any debts, and distribute the property to the beneficiaries according to the terms of the Will. 

A Living Trust, in contrast, is a separate legal entity created during one’s life to avoid the probate process. Provided the art work and intellectual property are transferred into the trust during life, the trust assets will pass free from court interference at death, avoiding the costs and delay of probate.

Avoiding probate is often appealing for artists because artwork and copyrights are particularly difficult to categorize and value in a probate petition. In addition, using a trust ensures privacy whereas a Will becomes public information when it goes through the courts. 

Further, a trust created during life can have provisions regarding incapacity, ensuring that precious pieces of art are properly cared for by the successor trustee in the event the artist can no longer maintain the works. Finally, some pieces of art cannot sit for the years it may take to go through the probate process.

The main advantage of a Living Trust is that it is not subject to continuing court oversight. If someone creates a trust for their art in their Will, any changes must go through the courts. For example, any change to the trustee would require court approval. Not so if the art trust was created in a Living Trust. A Living Trust can allow the beneficiaries to remove and replace a trustee without court interference. This is particularly important in artist estates where the Trustee is a professional instead of a family member. Many famous artist’s estate were mishandled by so-called trusted advisors. Avoiding the costs of litigation is reason enough to create a trust for artwork – especially if the artist is well- known.

An experienced estate planning attorney can help create an effective strategy for the artwork in your estate, ensuring your collection ends up in the right hands after death. Artwork can simply pass outright to beneficiaries if there is no substantial resale market. But, if the artist had established sales throughout their life, creating a trust or foundation at death to hold the art is the better route. As with any estate, the goal is to minimize in- fighting. Since art is so personal and cannot be easily divided, it is even more important to bequeath your works of art in a way that does not cause conflict.

Nancy Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Nancy Burner Esq.

Nancy Burner, Esq.

A Durable Power of Attorney is a statutory form that enables the principal (the creator of the power of attorney) to empower a trusted individual, as acting agent, to manage the finances and property during the principal’s lifetime. Having a Durable Power of Attorney in place is incredibly important, especially later in life if the principal lacks legal capacity. Even if incapacitated, the appointed agent will still be able to use the document to access bank accounts, sign checks, pay bills, and carry out any essential estate planning.

Durable Powers of Attorney in New York are governed by Title 15 of New York General Obligations Law. The statute enumerates several categories of powers that may be granted to an agent: (A) real estate transactions, (B) chattel and goods transactions, (C) bond, share, and commodity transactions, (D) banking transactions, (E) business operating transactions, (F) insurance transactions, (G) estate transactions, (H) claims and litigation, (I) personal and family maintenance, (J) government benefits, (K) financial matters related to health care, (L) retirement benefits, (M) tax matters, and (N) all other matters.

These transactions are further defined in GOL Sections 5-1502A through 5-1502N (and thus aren’t spelled out in the Power of Attorney form itself), but certain powers relating to these various transactions are limited unless expressly stated otherwise in the “Modifications” section of the form. For example, Section 5-1502D provides that the authority over “banking transactions” allows the agent to modify, terminate and make deposits to and withdrawals from any deposit account, but with respect to joint accounts, the agent cannot add a new joint owner or delete a joint owner unless such authority is expressly granted. 

In addition, as to insurance transactions, Section 5-1502F provides that the agent may not change the beneficiary designations unless the Durable Power of Attorney specifically states otherwise, and under Section 5-1502L an agent similarly cannot change the designation of beneficiaries of any retirement accounts unless this authority is expressly granted. Further, Section 5-1502K gives the agent authority over health care financial matters, benefit entitlements, and payment obligations, but this authority does not include the authority to make health care decisions for the principal — this authority can only be granted by a valid Health Care Proxy.

GOL Section 5-1513 sets forth particular requirements regarding the authority of an agent over gifting transactions. If the principal grants the agent authority relating to personal and family maintenance (Section (I) of the form mentioned above), the agent may make gifts that the principal customarily made to individuals, including the agent, and charitable organizations, not exceeding $5,000 in any one calendar year. In order to authorize the agent to make gifts in excess of the $5,000 annual limit, the principal must expressly grant that authorization in a separate Modifications section, including whether the agent has the authority to make gifts to himself or herself. 

While gifting is a significant power that should not be given lightly, it can be critically important in certain situations, such as Medicaid planning, where assets need to be transferred out of the principal’s name in order to meet the eligibility requirements. In order to qualify for Medicaid coverage for homecare or nursing home care in New York in 2024, an individual applicant cannot have more than $30,182 in assets. And if the applicant lacks the capacity to make the necessary asset transfers, without a Durable Power of Attorney with gifting authority, the only alternative would be for a legal guardian to be appointed by the court which is costly and time- consuming.

An experienced estate planning attorney can help explain the advantages of having a Durable Power of Attorney and prepare certain important modifications to the statutory form to better accomplish your estate planning objectives.

Nancy Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

For the charitably inclined, there is always a question of how to be most efficiently leave money to charities in your estate plan. Charitable giving ranges from simple small monetary amounts to more complicated charitable trusts. No matter the option, there are potential income tax and estate tax implications to consider.

Leaving a specific bequest in your ill or Trust is one common type of charitable gift. You leave a set amount to a charity of your choosing at the time of your death. For those that want to cap the amount that given to charity, this is a good option. These specific bequests are paid out first, off the top of the estate. Thus, if you only have $100,000 in your estate and leave specific bequests totaling $100,000, there will not be any assets left to the residuary beneficiaries. Usually, the residuary portion of an estate is the largest. But not always and especially not if you do not correctly allocate your assets.

Residuary beneficiaries are those that receive a percentage or fractional distribution of the “rest, residue, and remainder” of your estate. Take the example above, if your total estate assets equal $300,000, then after the $100,000 charitable bequests, your residuary beneficiaries receive the remaining $200,000. A charity can also be one of your residuary beneficiaries, in which case the charity would receive a fractional share of your choosing. 

In certain circumstances, it is beneficial to include a “disclaimer to charity.” You would add a provision in your Will or Trust directing that any “disclaimed” amount of your estate goes to charity. This is done for estate tax planning purposes. If your estate is more than 105% over the New York State estate tax exemption amount ($6.11 million in 2022), you then “fall off the cliff.” This means that your estate will receive no exemption and the entire estate taxed from dollar one. However, if your Will or Trust has a disclaimer provision, any amount that a beneficiary rejects goes to the charities that you listed.  That gift to charity serves to reduce your taxable estate, moving it back under “the cliff” and saving a great deal in taxes. This is an especially useful tactic for those with estates that are on the cusp of the exemption amount.

Another method of charitable giving is gifting tax-deferred retirement assets. While you are still living, you can gift from your retirement account up to $100,000 per year as a qualified charitable distribution. Making the gift directly to the charity removes the required minimum distribution from your taxable income. There are some pitfalls to avoid.  Not all plans qualify for this type of distribution, not all charities are considered “qualified,” you cannot receive a benefit in exchange for the distribution (ex. a ticket to a charity concert), and you must gift the funds directly from the retirement account to the charity.

In addition to charitable gifting from a retirement account during your lifetime, you can list charities as  after-death beneficiaries of your accounts. If you have a mixture of individuals and charities as beneficiaries, you may want to leave the retirement assets to the charities. This saves your individual beneficiaries from paying income tax on distributions. Especially in light of the SECURE Act, which requires that most beneficiaries of retirement account withdraw all the funds within ten years. The income tax consequences for such beneficiaries may be steep if there is a large retirement account. 

While there are several charitable giving options, each person will need to navigate a solution that suits them best. An experienced estate planning attorney will take into account the size of the estate, potential tax liabilities, how much you want to leave to charity, and your other beneficiaries. With proper planning, you can ensure your gifts go as far as possible to benefit the charities that you hold dear.

Nancy Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

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