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Attorney At Law

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The TCJA enacts a number of important tax changes. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

The Tax Cuts and Jobs Act increased the federal estate tax exclusion amount from $5 million to $10 million indexed for inflation for decedents dying in years 2018 to 2025. This amount is indexed for inflation back to 2011. The exact amount of the exclusion amount is not yet known for 2018. However, it is estimated to be $11.18 million. This means that an individual can leave $11.18 million and a married couple can leave $22.36 million dollars to their heirs or beneficiaries without paying any federal estate tax.

This also means that an individual or married couple can gift this same amount during their lifetime and not incur a federal gift tax. The rate for the federal estate and gift tax remains at 40 percent.

The doubling of the basic exclusion also means that the generation-skipping transfer tax (GST) exclusion is doubled to match the basic exclusion amount of $11.18 million for an individual and $22.36 million for a married couple.

The sunsetting of the doubled basic exclusion amount after 2025 raises the prospect of exclusions decreasing in 2026. Taxpayers with estates over $11.18 million will want to discuss with their estate planning attorneys the potential for making transfers to take advantage of the larger exclusion amount before the anticipated sunset.

The act does not make changes to the rules regarding step-up basis at death. That means that when you die, your heirs’ cost basis in the assets you leave them are reset to the value at your date of death.

The portability election, which allows a surviving spouse to use his or her deceased spouse’s unused federal estate and gift tax exemption, is unchanged. This means a married couple can use the full $20 million exemption (indexed for inflation). To make a portability election, a federal estate tax return must be timely filed by the executor of the deceased spouse’s estate.

In 2018, the annual gift tax exclusion has increased to $15,000. This means that an individual can give away $15,000 to any person in a calendar year ($30,000 for a married couple) without having to file a federal gift tax return.

Despite the significantly larger federal estate tax exclusion amount, New York State’s estate tax exemption for 2018 remains at $5.25 million. New York State still does not recognize portability.

With the current New York State estate tax law as enacted in 2014, there is a limited three-year look-back period for gifts made between April 1, 2014, and Jan. 1, 2019. This means that if a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the New York estate tax.

The following gifts are excluded from the three-year look-back: (1) gifts made when the decedent was not a New York resident; (2) gifts made by a New York resident before April 1, 2014; (3) gifts made by a New York resident on or after Jan. 1, 2019; and (4) gifts that are otherwise includible in the decedent’s estate under another provision of the federal estate tax law (that is, such gifts aren’t taxed twice).

Under the act’s provisions, most taxpayers will never pay a federal estate tax. Even with the enlarged exemption, however, there are many reasons to engage in estate planning. Those reasons include long-term care planning, tax basis planning and planning to protect your beneficiaries once they inherit the wealth.

In addition, since New York State has a separate estate tax regime with a significantly lower exclusion than that of the federal regime, it is still critical to do estate tax planning if you and/or your spouse have an estate that is potentially taxable under the New York State law.

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

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Accountings are part of the administration of an estate, regardless of whether the decedent died with a will or intestate.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

There are many steps and layers associated with the administration of an estate. Ultimately, for most estates, the goal is to distribute the assets to the respective beneficiaries named in the decedent’s will or are intestate heirs pursuant to the laws of intestacy. As part of this administration process, and prior to making any final distributions, the beneficiaries of the estate are entitled to receive and review an accounting prepared and provided by the fiduciary for the estate.

One of the fiduciary duties the executor or administrator is tasked with is to marshal the assets of the estate. The administrator reports to the beneficiary the assets of the estate; the income collected during the pendency of the administration; the expenses, debts and claims that were paid on behalf of the estate; and the amount and value of funds that ultimately remain on hand to be distributed to the beneficiaries.

The function of the accounting is to provide a clear and concise review, in proper reportable form, of all of the estate receipts and expenditures of the estate so that the beneficiary fully understands exactly why he or she is receiving a certain sum of money. As discussed above, once the accounting is approved, the ultimate distribution is made in accordance with the terms of the probated will or as provided by the laws of intestacy.

Once provided with the accounting from the fiduciary, the beneficiaries of the estate generally have questions regarding the transactions of the fiduciary. It is important that the fiduciary respond and address any concerns the beneficiary may have regarding the administration of the estate.

After explanation and substantive discussions, most accountings are approved by the beneficiaries and the estate fiduciary can proceed to the next and likely final step of making final distributions.

Conversely, beneficiaries also have the legal right to object to the accounting provided by the fiduciary. Once this occurs, there are provisions in the Surrogate’s Court Procedure Act (SCPA) and other statutes that provide a means by which the beneficiaries can investigate any questions they have about the administration of the estate.

Specifically, SCPA 2211 entitled, “Voluntary account; proceedings thereupon” allows a party to take oral testimony of a fiduciary to examine all of the papers relating to the accounting. These papers include, but are not limited to, bank statements, brokerage statements, deeds, tax returns, financial records, bills and receipts. Following the completion of the SCPA 2211 examination, a decision can then be made by the beneficiaries as to whether to file formal objections to the accounting.

The Surrogate’s Court in New York generally encourages interested parties to resolve their disputes, including any accounting contests, without extensive court intervention, proceedings or a trial as these proceedings can be costly and time consuming.

Accountings are part of the administration of an estate, regardless of whether the decedent died with a will or intestate. Accordingly, whether you are the fiduciary or a beneficiary, it is important to consult with an experienced estate administration attorney to assist and guide you through the accounting process.

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

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There are many reasons why estate planning is important.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Regardless of your age, the creation and maintenance of a thorough estate plan is essential. An estate plan ensures that your needs, your family’s needs and financial goals are met during your lifetime and upon your death. A thorough and comprehensive plan should include a last will and testament, health care proxy, living will and power of attorney. For some clients the creation of a trust is also practical. Through the creation of a last will and testament and/or a trust, you can establish how your assets will be distributed upon your death.

Additionally, you can ensure that the financial needs of your children or disabled beneficiaries are met after you pass away by establishing trusts for their benefit. By creating a health care proxy, you can designate a succession of individuals to make health care decisions on your behalf, if and only if you are incapable of making them on your own. An estate plan would also include the creation of a power of attorney, through which you can designate someone to handle your financial matters in the event you become incapable of doing so.

Once you have taken the time to create your estate planning documents, you must properly store and protect these original documents. This is particularly important with regard to your power of attorney since many banks and financial institutions require the original signed document. Additionally, the executor of your last will and testament must file the original document with the Surrogate’s Court. It is important to remember to not remove the staples from your original last will and testament.

When deciding where to keep your documents, you should consider who will be acting as your agent, trustee or executor. It is important that you keep your documents in a place where your named agent can easily find and access them. It is not recommended to keep your documents in your safe deposit box. Banks have strict rules about who they allow to open and access safe deposit boxes. This is especially problematic should you become incapacitated or upon your death, since you may be the only one with access to the box.

While some people believe that having a jointly owned safe deposit box will solve this problem, banks have been known to freeze access to safe deposit boxes even when there is a joint owner. If the bank does not allow access, your agent will need a court order to open the box and locate the documents. The most accessible place to keep your documents is in your home or office. It is important that you tell the individuals you name as your agents where your documents are located. The best way to protect your documents from damage is to keep them in a fireproof and waterproof box. However, if you choose to use a safe, make sure that your trusted agents have the safe lock combination.

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

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Chronic Medicaid is the program that covers nursing home care.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

When someone enters a nursing facility, an application for Chronic Medicaid may be appropriate. The average cost of a nursing facility on Long Island is $15,000 per month. This type of cost would exhaust assets very quickly in most cases.

Chronic Medicaid is the program that covers nursing home care. Medicaid is a needs-based program, which means there are resource and income requirements that must be met.

For 2017, an individual applying for Chronic Medicaid can have no more than $14,850 in liquid nonqualified assets, an unlimited amount of retirement assets so long as the applicant is taking a monthly required distribution and an irrevocable prepaid funeral trust. The applicant may keep no more than $50 per month in income.

Chronic Medicaid has a five-year look-back. The look-back refers to the period of time that the Department of Social Services will review your assets and any transfers that you have made. To the extent that the applicant has made transfers or has too many assets in their name to qualify, they will be ineligible for Medicaid. If the applicant gifted or transferred money out of his or her name in order to qualify for Medicaid, the Department of Social Services will total the dollar amount of gifts and for each approximately $12,811 that was gifted, one month of Medicaid ineligibility is imposed.

For example, if an individual gifted away approximately $50,000 within the five-year time period, the Department of Social Services will impose a four-month penalty. It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home rather than on the day that the gift was made.

If the applicant entered the nursing home in September, the four-month penalty would run for September, October, November and December. Medicaid would pick up starting in January and the applicant would be responsible for the nursing home bill from September through December. If the applicant exceeds $14,850 in liquid assets, there are certain planning mechanisms that can be used in order to qualify the applicant for Chronic Medicaid benefits. One of those mechanisms is establishing an irrevocable pre-need funeral. New York State law mandates that pre-need burial trusts for applicants or recipients of Medicaid be irrevocable.

This means that the prearrangement may not be canceled prior to death nor can funds be refunded if the actual funeral costs are less than then funded agreement. Thereby, an individual with a revocable agreement would have to convert it to an irrevocable agreement if they were to require Medicaid in the future.

The Medicaid applicant is also permitted to set up pre-needs for a spouse, minor and adult children, stepchildren, brothers, sisters, parents and the spouses of these persons. The timing of when these pre-need funeral trusts are established can be crucial to the Medicaid application.

It is important to note aside from the irrevocable pre-need there are other exempt transfers that can be used to qualify an individual for Chronic Medicaid. Transfer of assets to a spouse in an unlimited amount, transfer of the primary residence to a caretaker child, transfer of assets to a disabled child and transfer of the primary residence to a sibling with an equity interest are exempt transfers used to qualify an individual for Chronic Medicaid. Even when there are no exempt transfers, there is last minute planning that can be accomplished that could save approximately half of the remaining assets.

It is crucial to consult an elder law attorney in your area as soon as possible in order to preserve the maximum amount of assets.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. For more information, call 631-941-3434 or visit www.burnerlaw.com.

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A trustee must put the interests of the trust beneficiaries before their own

By Nancy Burner, ESQ.

Nancy Burner, Esq.

If you have been named as a trustee of someone’s trust, you may be wondering what you are supposed to do. It is important that the trustee understand his or her duties and responsibilities. The most important thing to remember as a trustee is that the trust assets are not your assets. You are safeguarding them for the settlor and/or beneficiaries, who will receive them after the settlor dies.

As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust. As a fiduciary, you will be held to a very high standard. The trustee must read the trust document carefully, upon acting initially and when any questions arise. The trust is the road map and the trustee must follow its directions in administering the trust. A trustee should be aware that failing to abide by the terms of the trust document and mismanaging the assets can have serious financial repercussions for the trustee personally such as forfeiture of commissions and surcharge.

This very issue came up in the recent Suffolk County Surrogate’s Court case of Accounting Proceeding the Schweiger Family 2013 Irrevocable Trust decided on Sept. 7, 2017.

The subject trust stated that during the lifetime of the settlor, the trustees in their sole discretion may pay the net income to or for the benefit of the settlor’s beneficiaries or accumulate such income. With respect to principal, the trustees were given the discretion to pay so much of the principal to or for the benefit of the settlor’s beneficiaries. The trust did not require equal principal distributions and same may be made to any or all of the settlor’s beneficiaries.

Distributions made to any beneficiaries during the settlor’s lifetime shall be considered as advancements in determining the beneficiary’s respective share, unless waived by the remaining nonrecipient beneficiaries in writing. The trustees had no authority to pay principal to the settlor.

Despite the language in the trust document, the trustees made distributions to themselves and to individuals that were not beneficiaries, namely the settlor, their children/grandchildren and the spouse of one of the trustees.

In addition, the trustees indicated in their accounting that several of the distributions that were made to themselves as “per settlor’s request.”

After a review of the facts and the language of the trust document, the court held that even if the distributions to the trustees were at the settlor’s suggestion, those distributions were either impermissible gifts of trust assets by the settlor or distributions that the trustees should have assessed against their respective shares as advancements.

With respect to commissions, the court held that intentionally making distributions to individuals who were not beneficiaries of the trust is, in and of itself, a basis to deny commissions. Further, with respect to their self-dealing, either the trustees were in fact aware of the language regarding offsetting advance distributions and chose to disregard it or they were grossly negligent in their failure to seek professional advice to assist them in understanding the duties and responsibilities associated with being trustees. In the end, the trustees were surcharged approximately $230,000 for their self-dealing and failure to abide by the terms of the trust document.

The take away from all of this is that a trustee must follow the terms of the trust instrument and put the interests of the trust beneficiaries before their own. If this is not done the trustee is at risk of personal liability for any breach of duty in the form of denial of commissions or surcharge.

In addition, if you are the trustee of a Medicaid-qualifying irrevocable trust and fail to abide by the terms of the trust, not only do you run the risk of denial of commissions or surcharge, but you can also nullify any protections that the trust provides to the assets held by the trust. This would make all of the assets in the trust be considered an available resource when determining Medicaid eligibility for the settlor and could result in a denial of Medicaid benefits.

With a trustee’s personal liability at stake, it is advisable to retain an attorney to provide advice regarding the trustee’s fiduciary duties and obligations in administering a trust.

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

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There are many benefits to naming a minor as beneficiary of a tax-deffered retirement account.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Many of our clients have retirement assets held in a traditional IRA, 401K, 403(b) or other similar plan. It is important to periodically review the beneficiary designations on these types of plans. A review should confirm that the institution still has the proper designations on file, the clients’ wishes are being followed, the designations fit into the larger estate plan of the client and that the best interests of the beneficiaries are taken into account. This is of special concern if the beneficiaries are grandchildren or other minors.

There are certain benefits to leaving retirement assets to a minor who is a much younger beneficiary than the original account holder. When you leave retirement assets to a nonspouse, the beneficiary has the right to take it in an “inherited IRA.”

The beneficiary of an inherited IRA must start taking distributions the year after the death of the original account holder. These distributions are taken as a “stretch,” meaning they are determined by the life expectancy of the new IRA beneficiary. In that case, the account can grow tax deferred over a much longer life expectancy.

The rule of thumb is that the account will be worth approximately 30 times its value if distributions are taken over the life expectancy of a grandchild. For example, suppose you name your grandchild as beneficiary of an IRA account with a $100,000 balance. If your grandchild takes distributions based upon her life expectancy each year, then the account could be worth $3,000,000 over her lifetime. This is one of the great benefits of naming a minor as beneficiary of a tax-deferred retirement account.

The problem is that you cannot achieve the benefit of the stretch if you name a minor directly as the beneficiary of any account — you must name a trust for the benefit of the minor.

Since she is not an adult, the minor will be unable to take the distributions as required beginning the year after your death. The only way to access the account is for the court to appoint a guardian for the property of the child, usually the parent. First, this will be a costly and unnecessary proceeding. But the result is even worse.

The court will direct the guardian to distribute the entire IRA and pay the income tax. The income tax will be based upon the parents’ income if the child is under 14 years of age, also known as the “kiddie tax.”

In addition, the monies that are left after paying the income tax will be deposited in a bank account earning very little interest. If that isn’t bad enough, the account will be turned over to the child upon attaining the age of 18. This will obviously impact the child’s financial aid when he or she applies for college. This is a financial disaster. In addition to retirement accounts, you do not want to name minors directly as beneficiaries on IRA accounts, annuities, insurance policies, bank accounts or any other account. Any and all distributions for a minor should be distributed to a trust that is drafted for the benefit of the child.

The trust should be created as part of the estate plan, either through a last will and testament or in an inter vivos trust. Providing for the beneficiary’s share to go into a trust will ensure the benefits of inheriting a retirement asset are received.

The beneficiary can get the stretch on the account and the asset will not need to be held by the court. However, be certain that the trust you are naming for the benefit of the minor is drafted for the purpose of receiving retirement accounts; all trusts are not created equal in this respect. A trust must be properly drafted and meet certain requirements set by the IRS in order to accept the IRA distribution and receive the benefits described above.

Before naming a beneficiary on an account, one should check with the institution holding the account. Each plan has its own individual rules regarding the designation of beneficiaries. For example, the New York State Teacher’s Retirement system has certain benefits for which you can name a trust as beneficiary, while other benefits, including pensions, do not allow this type of beneficiary. Retirement savings can be the largest asset one leaves behind. Being sure it is properly designated can protect the best interests of your beneficiaries long after you are gone.

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

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Portrait of Elderly man lost in thought

By Nancy Burner, ESQ.

Nancy Burner, Esq.

Much of the estate planning discourse revolves around planning techniques for the married couple, whether it be for tax planning or asset protection planning. However, for seniors who have never married or for those whose spouse is deceased, what, if any, special considerations need to be made? This article will focus on some of the unique challenges that the unmarried senior may face.

For the single individual who is living with another person but is unmarried, planning should be done to specifically provide for that partner, if so desired. It is important to recognize that partners are not given rights to property the way spouses are. Even if a person has resided with another for decades, without proper estate planning, that partner will not be entitled to assets of the decedent. If the plan is to give property to a partner after death, one should make sure that they designate that partner as a joint owner or as a beneficiary.

Having a will that designates a partner as the beneficiary of the estate can also ensure that property passes to the partner. However, in order for the will to be carried out, it must go through probate.

In New York, the probate process includes notifying and obtaining the consent of the decedent’s heirs. For instance, if a single individual with no children dies, but the parents or siblings of that individual survive, consent must be obtained from those parents, or if deceased, the siblings.

If the family members do not consent, they have the opportunity to present objections to the will that leaves assets to the partner. If their objections are successful, the will is invalidated and the law of intestacy prevails, which assumes the deceased person would have wanted their estate to be distributed to their family members, and not their partner. If a potential conflict may arise between a partner and family members, planning to avoid probate should be a primary goal of the estate plan.

For the unmarried person who is “unattached” and does not have a close relationship with any relatives, avoidance of probate is likely also an important goal particularly if they are charitably inclined since consent of family members is still required even when the beneficiary of a will is a charity. In addition, singles who are living alone should consider planning techniques that will allow them to maximize their assets so that they can get long-term care.

Being cared for in old age is difficult enough when you have a spouse or partner to help you, but if you live alone, you’ll want to preserve assets and income to the fullest extent so that you can get the care you need. This may include looking into long-term care insurance or doing asset protection planning, or both!

What if a single person is living with a partner and is desirous of providing for that partner, but wishes for their estate to ultimately be distributed to other family members? It is very common that a widow or widower has a relationship with someone for whom they wish to provide but wants to ensure that their assets go to their children after both partners are deceased.

The best technique for implementing this kind of plan is to use a trust. Trusts can hold assets for the lifetime of the partner but distribute the assets to other family members after the partner’s death. Trusts also avoid probate so that potential contests are avoided. Depending on the type of trust utilized, trusts can also protect assets in case either partner needs Medicaid to pay for long-term care.

In addition to the foregoing considerations regarding leaving assets at death, it is equally important to remember that partners, friends or indeed family members do not have rights to make decisions without proper planning. An estate plan is not complete without comprehensive advance directives that allow loved ones to make health care and financial decisions for you if you are incapacitated.

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

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Portability refers to the ability of a surviving spouse to make use of a deceased spouse’s unused estate tax exclusion amount.

By Nancy Burner, ESQ.

The estate tax concept known as “portability” is permanent as a result of the enactment of the American Taxpayer Relief Act of 2012. Portability allows a surviving spouse to use a deceased spouse’s unused estate tax exclusion (up to $5.49 million in 2017).

For those dying after Dec. 31, 2011, if a first-to-die spouse has not fully used the federal estate tax exclusion, the unused portion called the Deceased Spousal Unused Exclusion Amount, or DSUE amount, can be transferred or “ported” to the surviving spouse.

Thereafter, for both gift and estate tax purposes, the surviving spouse’s exclusion is the sum of (1) his/her own exclusion (as such amount is inflation adjusted) plus (2) the first-to-die’s ported DSUE amount.

For example: Assume H and W are married, and H dies in 2017. H owns $3 million and W owns $9 million in assets. H has the potential of leaving up to $5.49 million free from federal estate tax to a bypass or credit shelter trust. This would avoid federal estate tax in both spouses’ estates.

However, because H only has $3 million in assets, he does not take full advantage of the entire $5.49 million exclusion. Prior to portability, $2.49 million of H’s exclusion would have been wasted. With portability, his remaining $2.49 million exclusion can be saved and passed to W ‘s estate, increasing the amount she can leave her beneficiaries free from federal estate tax. With a 40 percent federal estate tax rate, this would save W’s estate approximately $996,000 in federal estate tax.

With this plan, the estate would also avoid New York State Estate Tax at the husband’s death since the current exclusion is $5.25 million. The assets in this bypass trust would escape federal and New York estate taxation at W’s subsequent death.

In order for the surviving spouse to be able to use the unused exemption, the executor of the first-to-die’s estate must make an election on a timely filed estate tax return. A timely filed return is a return filed within nine months after death or within 15 months after obtaining an automatic extension of time to file from the IRS.

Normally a federal estate tax return is only due if the gross estate plus the amount of any taxable gifts exceeds the applicable exclusion amount (up to $5.49 million in 2017). However, in order to be able to elect portability, a federal estate tax return would have to be filed even if the value of the first-to-die’s estate was below the exclusion amount.

The problem occurs when the first spouse dies and no estate tax return was filed. In that event, the second-to-die spouse could not use the deceased spouse’s unused exemption. In the above example, the second spouse’s estate would have paid an additional $996,000 in federal estate tax if the election was not made. What if the first spouse dies, no estate tax return is filed, and no election was made on a timely basis? Does the surviving spouse lose the exemption?

In June 2017, the IRS issued Revenue Procedure 2017-34. The revenue procedure is a simplified method to be used to make a late portability election. The IRS is making this simplified method available for all eligible estates through Jan. 2, 2018. The IRS is also making the simplified method of this revenue procedure available after Jan. 2, 2018, to estates during the two-year period immediately following the decedent’s date of death.

To be eligible to use the simplified method under the revenue procedure the estate must meet the following criteria:

(1) The decedent: (a) was survived by a spouse; (b) died after Dec. 31, 2010; and (c) was a citizen or resident of the United States on the date of death.

(2) The executor was not required to file an estate tax return based on the value of the gross estate.

(3) The executor did not file an estate tax return within the time required.

(4) The executor either files a complete and properly prepared United States estate (and tax return) on or before the later of Jan. 2, 2018 or the second annual anniversary of the decedent’s date of death.

For those that had spouses pass away after Dec. 31, 2010, portability can be a valuable estate planning tool to save a significant amount of federal estate tax on the death of the second spouse.

If a surviving spouse has assets that are close in value to the current federal exclusion amount, it is important to examine the records of the deceased spouse to make sure that a portability election was made on a timely filed federal estate tax return. If no return was filed, and no estate tax return was required to be filed, based upon this IRS revenue procedure it’s still not too late to elect portability. The surviving spouse must act quickly as the deadline is fast approaching and 2018 will be here before we know it.

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

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Community Medicaid covers care at home, such as a home health aide to assist with daily activities.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

For most of us, if a time ever comes when we need assistance, the preferred option would be to remain at home and receive whatever care services we need in our familiar setting surrounded by family. For many, the Community-Based Long-Term Care Program, commonly referred to as Community Medicaid makes that an affordable and viable option.

Often we meet with families who are under the impression that they will not qualify for these services through the Medicaid program due to their income and assets. In most instances, that is not the case.

Although an applicant for Community Medicaid must meet the necessary income and assets levels, often with planning we are able to assist in making an individual eligible with little wait. An individual who is applying for home care Medicaid may have no more than $14,850 in nonretirement liquid assets. Retirement assets will not be counted as a resource so long as the applicant is receiving monthly distributions from the account. An irrevocable prepaid burial fund is also an exempt resource.

The primary residence is an exempt asset during the lifetime of the Medicaid recipient. However, if the applicant owns a home, it is advisable to consider additional estate planning to ensure that the home will be protected once the Medicaid recipient passes away.

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

It is important to note that there is no “look-back” for Community Medicaid. These pooled trusts are created by not-for-profit agencies and are a terrific way for persons to take advantage of the many services available through Community Medicaid while still preserving their income for use in meeting their monthly expenses.

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

This process allows the applicant to continue relying on his or her monthly income to pay his or her bills and, at the same time, reduce the countable income amount to the amount permitted under the Medicaid rules. Once an individual is financially approved by the local Department of Social Services for Community Medicaid, he or she must enroll with a Managed Long-Term Care agency. This is the agency that will coordinate care services for the Medicaid recipient.

The MLTC will send a nurse to the Medicaid recipient in order to evaluate and create a care plan. The evaluation will result in an award of hours to the Medicaid recipient for a home health aide to come to the home and assist the recipient with activities of daily of living.

The amount of hours can vary from a few hours per day where the needs are less all the way to live-in care. This award of hours depends solely on the needs of the Medicaid recipient. If the Medicaid recipient is satisfied with the care plan, he or she may choose to enroll with the MLTC. Otherwise, he or she can request another evaluation with a different MLTC. What this means is that for most people, with minimal planning, both the income and asset requirements can be met with a minimal waiting period, allowing families to mitigate the cost of caring for their loved ones at home.

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

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By Nancy Burner, ESQ.

Nancy Burner, Esq.

Most veterans are not aware of the wide range of benefits they may be entitled to under the United States Department of Veterans Affairs even if they did not directly retire from the military or suffer injuries in the line of duty.

For example, there is a benefit referred to as the improved pension through the Department of Veteran’s Affairs (VA), more commonly referred to as Aid and Attendance Pension (A&A). Assuming you meet the eligibility requirements, the VA permits payments to caregivers (including family members, but not spouses) for care provided to the veteran and/or the spouse.

This benefit is also commonly used for veterans and/or their surviving spouses who reside in an assisted living facility. This monthly benefit can be used along with income in order to prevent the depletion of assets for care services. There are three main requirements to qualifying for Aid and Attendance.

First, the claimant must have served at least 90 days active duty with one day served during wartime. There are specific wartime periods: World War II (Dec. 7, 1941 – Dec. 31, 1946); Korean conflict (June 27, 1950 – Jan. 31, 1955); Vietnam era (Feb. 28, 1961 – May 7, 1975, for veterans who served in the Republic of Vietnam during that period; otherwise Aug. 5, 1964 – May 7, 1975); or Persian Gulf War (Aug. 2, 1990 – through a future date to be set by law or presidential proclamation as well as current Iraq and Afghanistan war veterans). The claimant must have received a military discharge “other than dishonorable.”

Second, the claimant must be declared permanently and totally disabled. The definition for “permanently and total disability” is residing in a nursing home, total blindness, or so nearly blind or significantly disabled as to need or require the regular aid and attendance of another person to complete his or her daily activities. In most circumstances, if the claimant can show he or she requires assistance with at least two activities of daily living (e.g., bathing, dressing, ambulating), the disability requirement is satisfied.

Third and final, the claimant must meet the financial means test. Unfortunately, there is no set financial standard, which can make it very difficult to ascertain if the claimant qualifies for the benefit. As a general rule, the claimant should not have more than $50,000 to $80,000 in net worth excluding the home of the claimant.

Additionally, the claimant must make a showing that his or her monthly unreimbursed medical expenses exceed his or her monthly income. When making this determination, the claimant should add up all of his or her monthly medical costs, including but not limited to the cost of services provided by professional caregivers as well as family members and rent paid to an assisted living facility.

Once all three prongs are satisfied, the veterans and/or spouse can receive this pension. The maximum benefit available for a single veteran in 2017 is $1,794 per month. A widow of a veteran is eligible for a maximum benefit of $1,153 per month in 2017. A married veteran is eligible for $2,127 per month in 2017. A veteran couple is eligible for $2,841 per month in 2017.

It is imperative to understand that currently there is no look-back period for VA planning, which makes asset eligibility and planning possible in most cases. There is planning that can be done in order to qualify the veteran or the surviving spouse for this benefit.

The application process can be lengthy, but the claimant can always seek help from a local accredited VA attorney or through the United States Veteran’s Services Agency, Human Services Division. If the benefits are denied, applicants should be aware that the decision for these claims can be appealed by the veteran and/or the surviving spouse.

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

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