Finance & Law

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The Facts: I have two dogs that I consider part of my family. I want to be sure they are cared for after I die. Someone suggested that I include a Pet Trust in my Will

The Question: Do you think this is a good approach?

The Answer: Yes, I do. However, in addition to the Pet Trust, which will not exist until after your Will is admitted to probate, it is important to make temporary arrangements for the care of your dogs that can be in place immediately upon your death.

When thinking about the provisions to include in the Pet Trust, you must not only consider who will care for your dogs, but also whether the appointed caregiver has the resources to cover the costs associated with pet ownership. Even if money is not an issue, you need to confirm in advance that the caregiver’s living arrangements are suitable for the dogs. As much as a potential caregiver may want to care for your pets, some apartment buildings and residential communities do not permit residents to own pets. If the caregiver of choice lives in such a community, or lives in a setting that is not large enough for the dogs, it is best to name someone else to adopt your pets after your death.

Once you have settled on a caregiver, you should consider including in your Pet Trust a description of the care you want your pets to receive. For example, if your dogs are groomed once a month, have an annual check-up by the vet and have their teeth cleaned three times a year, this schedule can be set forth in the trust. You can also name the groomer and vet that have taken care of your dogs in the past so that the caregiver can continue to use people with whom your dogs are familiar. Alternatively, you can prepare a letter to the caregiver in which you provide the caregiver with this information.

While the purpose of the Pet Trust is to insure that your dogs will be cared for after you die, it can also serve as a vehicle for providing your caregiver with instructions with respect to the handling your dogs’ remains after they die. This information is important and useful to the caregiver who will certainly want to honor your wishes.

In addition to setting forth in the Pet Trust provision of you Will the name of the caregiver and the type of care you wish your dogs to receive, both during their lives and after their deaths, you will need to allocate a certain amount of money to the trustee of the Pet Trust. The job of the trustee is to distribute the funds to the caregiver as needed to be used for the benefit of your dogs. Some people name the caregiver as the trustee but, you may have different people in those roles if you wish.

A final decision that you will have to make in connection with the Pet Trust is what happens to any of the funds left in the trust after your dogs pass away. Many people who have a Pet Trust direct that any money left in the trust after the death of the pet goes to the caregiver. Another popular arrangement is for the money to be donated to an organization that cares for abandoned and/or abused animals.

In light of the number of issues to be considered when creating a Pet Trust, and the fact that it will be part of your Will, you should discuss your ideas and concerns with an experienced estate planning attorney. That is the best way to insure that your dogs will be cared for in accordance with your wishes.

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


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By Linda M. Toga, Esq.

The Facts: My father has decided to gift his house to me and my brother and to retain a life estate for himself. This is part of his Medicaid planning.

The Question: What are the advantages and disadvantages of making this transfer?

The Answer: The advantages of putting the house in your names now is that it starts the clock running for purposes of Medicaid benefits that will cover nursing home care. As long as five years pass between when the house is transferred and when your father applies for Medicaid, the full value of the house will have no bearing on your father’s eligibility for benefits. In addition, by retaining a life estate in the house, your father will continue to be eligible for real property tax exemptions such as Enhanced Star and veterans exemptions that he may now enjoy. It is important to note that the life estate has a value which will be taken into consideration when he applies for Medicaid. However, the life estate should not cause him to be ineligible to receive benefits.

The disadvantages of transferring the house to you and your brother outweigh the advantages. First, if the house is sold during your father’s life, he is entitled to receive the value of his life estate. While the life estate itself is not considered an available resource for Medicaid purposes, the cash that he receives from the sale of his life estate will be deemed an available resource which may make him ineligible for benefits.

Second, if you and your brother are gifted the house now, your basis in the house for capital gains tax purposes will be the same as your father’s basis. If, on the other hand, you are not gifted the house now but you inherit the house upon your father’s death, you will get a step up in basis. Assuming your father has owned the house for a long time, getting the step up in basis upon his death will likely avoid significant capital gains taxes when you and your brother sell the house.

Third, if you and your brother own the house, your creditors will be able to attach liens and/or judgments to the property. This will not necessarily decrease the value of the property but, those liens and judgments will have to be paid when the house is sold, regardless of whether that is before or after your father’s death. If your father needs to apply for Medicaid in three years, for example, your father will be ineligible for Medicaid for a period of time based upon the value of the gifted house. If you have to sell the house to cover your father’s expenses during the penalty period, the amount of money you and your brother will have to pay those expenses will be decreased by the amount of any judgments and liens that had to be paid off at the time of the sale.

Clearly, the disadvantages of gifting the house now are significant, and individual circumstances and goals may require differing approaches. There are also other options available to your father. For example, rather than transferring the house to you and your brother now, your father can transfer the property into an irrevocable trust. The trust can provide that the house passes to you and your brother when your father dies. While using a trust will not avoid the five year Medicaid look-back period, it will protect the property from your creditors and result in you and your brother getting a step up in basis upon your father’s death.

In light of the number of issues to be considered, it would be important to discuss this matter with an experienced elder law attorney and/or financial/tax advisor before deciding which option is the best one for your father.

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

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By Linda M. Toga, Esq.

The Facts: My mother died recently. She and my brother, who is my only sibling, had not spoken to each other in over a decade. In her Will, my mother disinherited my brother. On the beneficiary designation form for her IRA, my mother named my father, who predeceased my mother, as the sole beneficiary. She did not name any contingent beneficiaries.

The Question: Under the circumstances, is my brother entitled to a share of the IRA despite the provisions of the Will?

The Answer: How the funds in an IRA are distributed upon the death of the account holder is governed by the beneficiary designation form associated with the account. If there are no living beneficiaries named, the funds in the IRA effectively become an estate asset and they will be distributed in same manner as the rest of the decedent’s estate. If the decedent died with a Will, the terms of the Will will dictate how the funds are distributed. If the decedent died intestate (without a Will), the intestacy statute that dictates who inherits a decedent’s assets will control.

Since your father was the only beneficiary named on the beneficiary designation form, and he predeceased your mother, the funds in the IRA are now estate assets. If your mother had died without a Will, your brother would be entitled to one-half of your mother’s entire estate, including the funds that had been in the IRA. However, since your mother had a Will, the terms of the Will control. That means that your brother is not entitled to any of the estate assets.

Interestingly, if your mother had named you and your brother as contingent beneficiaries on her IRA, your brother would be entitled to a share of the funds in the IRA despite the fact that he was explicitly disinherited in your mother’s Will. This fact highlights the importance of considering all of your assets when engaging in estate planning, including but not limited to jointly held property and accounts, retirement plans and life insurance policies, so that your estate plan is comprehensive and consistent. Inconsistencies could result in a costly will contest.

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

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By Linda M. Toga, Esq.

The Facts: My sister died recently. In her Will she left 50% of her estate to friends and 50% of her estate to a charity. I feel she should have left her estate to her family.

The Question: As her sibling, can I contest the probate of her Will?

The Answer: Whether you can contest the probate of your sister’s will depends on whether you have “standing.” For purposes of this article, standing is defined as a legally protectable right or interest in your sister’s estate. The law provides that an individual has standing to contest the probate of a Will if that individual would inherit from the estate if the person who died had died without a Will. In other words, you can contest your sister’s Will if you would inherit from her estate if she had died intestate.

To determine if you have standing to raise objections to the probate of the Will, you need to look at the relationships between your sister and the people who survived your sister. You then need to look at the intestacy statute. If your sister was survived by a spouse, children/grandchildren (known as her “issue”) or a parent, the intestacy statute provides that they would be in line ahead of you to inherit her estate. As a result, you would not have standing to contest her Will. However, if your sister was not survived by a spouse, issue or a parent, you and your siblings and/or the children of any predeceased siblings would be in line to inherit her estate. Under those circumstances, you would have standing to contest the probate of your sister’s Will. If you were successful, your sister’s estate would be divided between you and your siblings and/or their issue in accordance with the intestacy statute.

Even if you have standing to contest your sister’s Will, you must have valid grounds for objecting to its probate. While space limitations preclude me from going into detail about what constitutes valid grounds for contesting a Will, suffice to say that the fact that you may feel that your sister should have left her estate to her family does not constitute grounds for a Will contest.

If you believe a Will contest is in order, I suggest you consult an attorney with experience in estate administration who can advise you as to the legal grounds necessary for contesting a Will and assist you in your efforts to overturn your sister’s Will.

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

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By Linda M. Toga, Esq.

It is that time of year when many people make vacation plans that involve flying or driving long distances or engaging in activities that are risker than their day to day activities. Whatever their vacation plans may include, being in a different environment, coupled with the risks associated with travel and the possibility that something could go very wrong, often provide the needed impetus for people to think about and address their estate planning needs. The urgency to complete a comprehensive estate plan prior to heading to the airport, interstate or cruise ship is even more pronounced if the people who are leaving on vacation have young children.

Since there is no “one size fits all” when it comes to estate planning, the process is not something that should be rushed or taken lightly. While I have prepared and supervised the execution of a client’s Will, healthcare proxy, power of attorney and living will hours before he left on a trip and within 24 hours of first meeting with the client to discuss his needs and goals, I do not suggest that approach. Instead, before vacation plans are made, I suggest that everyone who does not have an estate plan in place or who does not have a plan that reflects his/her current situation and goals, consult with an attorney experienced in estate planning.

There are many things that need to be considered when developing an estate plan, including but not limited to, whether it is best to create a trust or a Will, whether estate tax will be an issue, how and when assets are to be distributed and to whom, and who will serve as executor, trustee and/or guardian. In addition to thinking about what will happen upon death, people engaging in estate planning should think about who will have the authority to make healthcare decisions and handle financial transactions on their behalf while they are still alive should the need arise.

The decisions that go into creating an estate plan are often difficult and emotions can run high. Since the individuals who serve as executors, trustees, guardians and agents assume a great deal of responsibility, it is important to discuss your plans with these people in advance. Coming up with a plan that meets your needs and accomplishes your goal takes time, which brings me back to the fact that the process should not be done as you pack your bags for vacation. Before booking a trip, schedule an estate planning consultation. The peace of mind that comes from knowing your affairs are in order will make your vacation that much more enjoyable.

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

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By Linda M. Toga, Esq.

The Facts: I bought my boyhood home from my parents when they moved into a 55 and over community. The house was built by my parents in the 1980’s. Despite the fact that the driveway is in the same location now as it was when the house was first built, my neighbor brought over a new survey that suggests that my driveway crosses over his property. He is demanding that I sign a document that states that I do not claim to own the land over which my driveway passes.

The Question: What should I do?

The Answer: What you should do will depend on a number of factors but, the one thing you should not do without consulting an attorney is to sign the document he presented to you. Who actually owns the disputed strip of land and who has the right to use that land will depend on the circumstances surrounding the construction of the driveway in its current location and how the disputed property has been used since the driveway was constructed.

If the driveway was initially positioned on the disputed strip of land based upon your parents’ belief that the land was actually part of their property, and if your family’s use of the land has been continuous since the driveway was constructed, you may have a valid ownership interest in the disputed strip of land. You can commence an adverse possession action in state court and ask a judge to make a determination as to whether the facts support your claim that the land over which your driveway passes is, in fact, yours. If you the judge rules in your favor in the action, you will be declared the rightful owner of the property.

However, even if you do not prevail in the adverse possession action, a court may decide that the long time use by your family of the disputed land justifies the creation of an easement in your favor. In that case, you would not be deemed the owner of the disputed land but, you would have the right to use the driveway in its current location and your neighbor would not be allowed to interfere with that use. Since the easement would run with both your property and your neighbor’s property, the rights and obligations inherent in an easement would apply to all future owners.

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

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By Linda M. Toga, Esq.

The Facts: I heard that the New York’s estate tax laws changed and that the value of an estate that can pass estate tax-free was increased.

The Question: Is that true? If so, what is the current NYS estate tax exemption?

The Answer: Fortunately for New Yorkers, the tax laws have changed and the tax exemption or so called “exclusion amount” was increased significantly for the first time in many years. As of April 1, 2014, individuals whose estates would have been subject to state estate tax if the value of assets passing to a non-spouse exceeded $1,000,000, can now pass on assets valued at up to $2,062,500 estate tax-free to any beneficiary. The new laws did not change the unlimited marital deduction so individuals can still pass all of their assets to a surviving spouse estate tax-free, regardless of their value. Since New York recognizes same-sex marriages, same-sex couples can take advantage of the unlimited marital deduction on both their New York and their Federal estate tax returns.

Not only has the NYS exclusion amount increased significantly as a result of the new law, but it will continue to increase at a rate of $1,062,500 per year until 2017 when it will be $5,250,000. Another increase will take effect on January 1, 2019 at which time the NYS exemption amount will equal the Federal exemption amount.

Many New Yorkers are under the impression that the new tax laws will have no effect on their estates. However, since estate tax liability is calculated based upon the value of assets owned by or controlled by a person at the time of death, even the estates of people of relatively modest means often incurred a tax liability under the old laws. That is because the estate tax calculation starts with the value of a person’s gross taxable estate and is not limited to the value of the assets that pass under a person’s Will. Rather, the value of assets such as jointly held property and bank accounts, life insurance proceeds and funds held in an IRA or 401(k), for example, are also part of a person’s gross taxable estate and may be taken into consideration when calculating an estate’s tax liability. If the gross value of an estate exceeds the exclusion amount, an estate tax return must be filed even if allowable estate tax deductions reduce the net value of the estate below the exemption amount and no tax is due.

While New Yorkers should welcome the new tax laws, they are complex and it is advisable to seek professional assistance when dealing with estate tax questions.

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

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By Linda M. Toga, Esq.

The Facts: When I got married in 2000 my wife named me as the beneficiary on her life insurance policy. We were divorced two years ago. Our divorce settlement provides that my ex-spouse is required to continue paying her life insurance premiums and is prohibited from removing me as the beneficiary. I was told that our divorce automatically voids the beneficiary designation on her policy.

The Questions: Is that true? If so, what can I do to protect my right to receive the life insurance proceeds?

The Answer: In 2008 the law in New York changed so that a divorce does sever and/or negate the rights of an ex-spouse to bequests made in a will, appointments made in healthcare proxies and powers of attorney and beneficiary designations made on life insurance policies, to name a few. However, the law provides that the ex-spouse will retain rights and benefits in certain circumstances despite the divorce if there is a controlling document that states as much. If, in fact, your divorce settlement is deemed a controlling document, it is likely that the terms of your settlement will trump the statute. However, unless the insurance company is aware of the term of your divorce, they could very well pay the life insurance benefits to the contingent beneficiary named on your ex-spouses policy or to her estate. To avoid this outcome, you should contact an attorney who can protect your rights and enforce the terms of your divorce settlement.

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

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By Linda M. Toga, Esq.

The Facts: My mother recently died. In her Will she left her entire estate to me. If I had died before my mother, her estate would have passed to my children in equal shares. I would like my inheritance from my mother to pass to my children.

The Question: Is there a way I can accomplish that? If so, what is involved?

The Answer: You can certainly arrange for your inheritance under your mother’s Will to pass directly to your children by renouncing or disclaiming your interest in your mother’s estate. To do so you must use a qualified disclaimer.

How it Works: A qualified disclaimer is a writing in which you identify the assets you do not wish to receive. In this case, you would indicate that you are renouncing your interest in all assets passing under your mother’s Will. The disclaimer does not have any effect on assets such as jointly held property in which your mother may have had an interest or assets that pass according to a beneficiary designation form such as IRAs and life insurance.

The disclaimer must be delivered to the executor of the estate and filed with the surrogate’s court that issued letters testamentary to the executor.

Since your mother’s Will names your children as the contingent beneficiaries in the event you predeceased her, disclaiming your interest in her estate will result in her entire probate estate passing directly to your children. However, if other contingent beneficiaries had been named, your share of the estate would pass to the individuals named in the Will and not your children. That is because a beneficiary who renounces their interest in an estate cannot choose who will receive the disclaimed probate assets. This is true not only when there is a Will, but also when a person who is in line to inherit from an estate where the decedent died without a Will wishes to renounce that inheritance. Where there is no Will, the intestacy statute which dictates which family members are entitled to a share of an estate will govern how assets in the estate are distributed if someone renounces.

Beyond disclaiming your inheritance, there are other strategies that may be used to accomplish your stated goal of having your children receive the assets in your mother’s estate. As with all estate issues, it is important to consult with an attorney with experience in estate administration before filing a disclaimer to make sure the filing will not result in any unintended consequences.

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

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By Linda M. Toga, Esq.

We all know that time flies by and that important things are sometimes put on the back burner as we rush around taking care of our day to day responsibilities. We have also all heard heartbreaking stories about people who had every intention of revising their estate plans but, failed to take the necessary steps while they were able to do so. The end result of not having an up-to-date estate plan that reflects their wishes and addresses all of the relevant issues facing their loved ones is sometimes devastating.

To avoid the stress, expense and emotional turmoil that their loved ones could face if they unexpectedly died without revising their estate plans to reflect changed circumstances, I urge my clients to periodically review their estate planning documents. Questions they should ask themselves include whether their named beneficiaries are, in fact, the people they want to inherit their assets. Relationships change, people die, marry and/or divorce, and fortunes come and go. Any one of these events could be the basis for making changes to an estate plan.

For example, if a client’s married son died prematurely without having children of his own, the client may want that son’s share of her estate to pass to her other children. However, if the client was very fond of the son’s wife, she may want her son’s inheritance to pass to the son’s widow. Unless she addressed this contingency when she initially had her Will prepared, the son’s wife will not be in line inherit anything from the client’s estate. Clearly, the death of a child is the sort of life changing event that should prompt a client to review her estate plan. A review and revision may also be appropriate upon the death or incapacity of the individuals who are named as executors, guardians and/or trustees in estate planning documents.

In addition to considering the factors named above, clients should ask themselves the following questions. Are any of their beneficiaries currently receiving government benefits that may be adversely impacted by an inheritance? Since signing their Wills, have any of their beneficiaries died leaving minor issue who may not be responsible enough to handle an inheritance? Do any of their beneficiaries currently have problems with drugs, alcohol or gambling? Have the tax laws changed in such a way that they should consider estate tax avoidance strategies? If the answer to any of these questions is “yes,” I recommend that my clients revise their estate plans to reflect the new reality.

Fortunately, there are ways to protect the inheritance of beneficiaries who are minors, as well as beneficiaries who suffer from disabilities, have drug or alcohol problems or who have creditors knocking on their doors. In addition, provisions can be included in Wills that create trusts designed to insure that the estate is not faced with unnecessary estate taxes and that beneficiaries do not suffer adverse effects from an inheritance. If warranted, planning can also insure a stream of income for a beneficiary who may not be in a position to handle his own finances or provide a mechanism through which a beneficiary may enjoy the exclusive use of an asset without the tax liability that may be associated with its ownership.

Even though revising an estate plan may be as simple as naming a new executor in a Will, certain formalities must be observed for the revisions to be effective and enforceable. Courts generally will not give effect to handwritten changes made to a Will and in some cases, such changes may actually result in the court refusing to admit the Will to probate. Since the result of not having an estate plan that is up-to-date, or having documents that have been improperly altered may be devastating to loved ones, revisions to an estate plan should only be made with the assistance of an experienced estate planning attorney.

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