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Nancy Burner Esq.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

On January 1, 2020, as we entered another year without any idea of what was on the horizon, a new federal law took effect regarding retirement accounts. 

The SECURE Act, “Setting Every Community Up for Retirement Enhancement,” affects millions of Americans who have been saving through tax-deferred retirement plans with the biggest impact falling those set to inherit these plans. Now, two years later, SECURE is still a new concept for many clients who are unaware of the law or how it applies to their own situation.

One change is that the age at which a plan holder must take required minimum distributions (“RMDs”) was increased from 70 1⁄2 to 72. RMDs are taken annually, based on the full value of the account on December 31 of the prior year and the life expectancy of the plan holder. The delay to age 72 will result in a year and a half more of tax-deferred growth on the funds.

SECURE also created a $10,000 penalty-free withdrawal for someone giving birth to or adopting a child. The Act also expanded the ability for small business owners to offer retirement plan funding. However, the most drastic item in SECURE takes aim at the beneficiary of the plan after the death of the original plan holder.

Prior to SECURE, a non-spouse designated beneficiary had the option of converting the plan to an inherited IRA and taking a RMD based upon their own life expectancy. The beneficiary could take more than the RMD if needed, realizing that each distribution is taxable income. 

Consider a 90-year-old with an IRS life expectancy of 12.2 years who names a 65-year-old child as designated beneficiary. A 65-year-old has an IRS life expectancy of 22.9 years. That beneficiary could previously “stretch” the distributions over their life expectancy and allow those funds to grow tax-deferred for many more years. With SECURE, this stretch is lost for the majority of beneficiaries. SECURE prescribes a mandatory 10-year payout for a designated beneficiary. Being forced to liquidate in the 10 years will result in the payment of more income taxes than if the beneficiary had the 22.9-year payout.

The SECURE Act carved out limited exceptions to this 10-year payout rule. These five categories of designated beneficiaries include a spouse, minor child of the plan holder, chronically ill person, disabled person, or a person not more than 10 years younger than the plan holder.

If you have retirement assets, this change serves as a trigger to have your plan reviewed by your estate planning attorney and financial advisor. This review is especially important where an estate plan includes a trust as the beneficiary of a retirement account. The terms of the trust may need to be adjusted from being a conduit trust to an accumulation trust. 

A conduit trust forces all distributions out to the beneficiary, whereas an accumulation trust allows the distributions to remain protected in the trust. Other clients may decide to leave tax-deferred retirement assets to charities rather than individuals. Still others may rearrange allocations to make IRAs payable to a person not less than 10 years younger than them, such as a sibling, thereby focusing on saving other types of assets for beneficiaries otherwise forced to take a 10-year taxable payout.

Many Americans have spent their working lives contributing to tax-deferred plans with the idea that it will give them a stream of income in retirement, and pass on to their beneficiaries as a stream of income. While SECURE may not alter the plan for some, the impact of SECURE should be considered by all. Stay tuned for future updates because there are already whisperings about SECURE 2.0 which, among other things, may raise the age at which RMDs are required.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Couples who are both U.S. citizens receive the benefit of the unlimited marital deduction on federal estate and gift taxes. The idea is that the surviving spouse pays any estate tax at their death.

In contrast, transfers from a U.S. citizen to a non-citizen spouse do not enjoy this benefit. The IRS figures they may return home to their own countries and avoid U.S. estates taxes at their death. Instead, lifetime transfers to non-citizen spouse are only tax-free up to the annual exclusion amount –$159,000.00 in 2021.

Remember, with the current high federal estate tax exemption, a U.S. citizen can gift up to $11.7 million dollars during their lifetime or at their death to anyone, including a non-citizen spouse. But, for high net worth international couples or those planning for when the estate tax exemption is lowered, a Qualified Domestic Trust (“QDOT”) is as an exception to this rule.

A QDOT allows the marital deduction for property passing to a non-citizen surviving spouse. It does not avoid estate tax, just defers it until the surviving spouse’s death. The overall purpose is to ensure that the IRS will eventually be able to tax property for which a marital deduction is claimed.

The requirement that the surviving spouse place property in a QDOT ensures that if the marital deduction is allowed, the property will still ultimately be subject to death tax.

A QDOT, like a qualified terminable interest property trust (“QTIP”), mandates that all income be paid to the surviving spouse and that no other person have an interest in the trust during their lifetime. However, QDOTs have additional requirements and limitations, such as:

• At least one Trustee must be a domestic corporation or a U.S. citizen.

• The trust must be subject to and administered under the laws of a particular state or the District of Columbia.

• Property placed in the QDOT must pass from the decedent to the surviving spouse in a form that would have qualified for the marital deduction if the surviving spouse was a U.S. citizen.

• The trustee must have the right to withhold the estate tax and pay it to the IRS.

The IRS imposes different security requirements depending on if the assets in the trust exceed $2 million dollars, whether the trustee is a U.S. Bank, and what percentage of the trust property is located within the United States. These requirements ensure the IRS get its due on the surviving spouse’s death.

A QDOT can even be set up after the U.S. Citizen spouse passes away. A trust created for the spouse which fails to meet all of the requirements can be amended to qualify as a QDOT. Additionally, under certain circumstances, an executor can, with the permission of the surviving spouse, make an irrevocable election to a QDOT.

A QDOT would not be needed if the surviving spouse becomes a U.S. citizen before the deceased spouse’s estate tax return is filed. This is usually nine months from date of death, but can be extended six months. Multinational spouses should seek out an experienced estate planning attorney, as the rules are complex and always changing.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

QUESTION: I recently heard about the concept of an ABLE account. Is this something that I should explore for my disabled child?

ANSWER: There are several planning techniques that you can take advantage of to protect assets on behalf of your child with special needs. ABLE accounts are tax-advantaged savings and investment accounts for disabled individuals. ABLE accounts were created under the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014, known as the ABLE Act. The Act recognizes that living with a disability can be costly. 

Before exploring ABLE accounts, it is important to understand the different options available when planning for a disabled child’s future. At the outset, Supplemental Needs Trusts, also known as Special Needs Trusts (“SNT”), are often used to protect assets for disabled individuals.  Assets and income in an SNT can be used for a disabled individual’s benefit without disqualifying them for benefits.  A properly drafted SNT enhances the quality of life of a person with disabilities without interfering with any government benefits, such as Supplemental Security Income, Medicaid, FAFSA, HUD and SNAP/food stamp benefits.

Generally speaking, there are two categories of Supplemental Needs Trusts: a First-Party SNT and a Third-Party SNT. A First-Party SNT protects assets that belong to the disabled individual (e.g., a personal injury award). A Third-Party SNT is funded for the benefit of the disabled person using the assets of someone other than the disabled individual (e.g., an inheritance from a parent). An important difference between the two trusts is the distribution of assets upon the death of the disabled person. Specifically, a First-Party SNTs must pay back any monies paid by Medicaid during the disabled person’s lifetime. In contrast, a Third-Party SNT does not have to pay back Medicaid.

The creation of an ABLE account is an important step forward for special needs planning. An ABLE Account can be used on its own or in conjunction with a Supplemental Needs Trust. To be eligible for an ABLE account, a person must have a qualifying disability that was present before the age of 26, with one of the following: 

◆ Classified as blind (as defined in the Social Security Act);

◆ Entitled to Supplemental Security Income or Social Security Disability Insurance because of the disability; 

◆ Have a disability that is included on the Social Security Administration’s List of Compassionate Allowances Conditions; or

◆ Have a written diagnosis from a licensed physician documenting a medically determinable physical or mental impairment which results in marked and severe functional limitations, that can be expected to last for at least a year or can cause death.

An ABLE account can be created by the disabled individual, parent, guardian, or power of attorney. ABLE accounts provide a simple, tax advantaged way to save and pay for disabled individuals’ qualified expenses without jeopardizing eligibility for critical government benefits. Some examples of qualified expenses include housing, transportation, education, assistive technology, and legal fees. If the ABLE account is used for non-qualified expenses, the individuals do not lose eligibility. Instead, the earnings portion of the withdrawal is treated as income and is subject to federal and state taxes, as well as a 10% federal tax penalty.

Importantly, total annual contributions to ABLE accounts cannot exceed the federal annual gift tax exclusion ($15,000 in the year 2021). Up to a certain amount, the money in an ABLE account will not interfere with Supplemental Security Income (“SSI”) or Medicaid benefits. However, there are limitations for individuals receiving SSI. Specifically, when an ABLE account balance over $100,000 exceeds the SSI resource limit (on its own or combined with other resources), the SSI payments are suspended. SSI resumes when the countable resources are again below the allowable limit. Medicaid benefits remain unaffected. 

Similar to the above mentioned First-Party SNT, when an ABLE account beneficiary dies, there is a payback to Medicaid for Medicaid-related expenses. This payback exists regardless of who made contributions to the ABLE account.

Creating and funding an ABLE account can provide a disabled person with a sense of autonomy, while preserving government benefits.  Questions about setting up and managing an SNT, or an ABLE account, should be directed to an experienced estate planning attorney who practices special needs planning.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

The removal of a Trustee is not easy. It takes more than a disagreement or general mistrust of the fiduciary to have him or her removed. General unresponsiveness is not a ground for removal.

Surrogate’s Court Procedure Act § 719 lists several grounds for the removal of a trustee. Reasons include that the trustee:

• cannot be served due to absconding or concealment;

• neglects or refuses to obey a Court order;

• is judicially committed, convicted of a felony or declared an incapacitated person; or

• commingles or deposits money in an account other than one authorized to do business with the trust.

Most of the time issues with trustees are not so straightforward. Unresponsiveness is certainly a problem for the beneficiary, but not enough on its own to warrant removal by the court. Courts are generally hesitant to remove trustees since removal is essentially a judicial nullification of the trustmaker’s choice. Courts take the position that removal of a trustee is a drastic remedy and not every breach of duty rises to the level necessary to warrant removal.

There are generally two procedures for the removal of a trustee. The preferred way is to follow the instructions provided in the trust for removal. The trust document may provide that the beneficiaries can remove the trustee by unanimous or majority vote for any reason or for due cause. If the trust was created in a Will, called a testamentary trust, removal still must go through the Surrogates Court. If an intervivos trust, there is no need to go through the courts so long as the procedure for trustee removal laid out in the trust is followed.

If the trust document is silent on the removal of a trustee or requires court intervention to remove a trustee, a party must petition the Surrogate’s Court for removal of the trustee. To petition the Surrogate’s Court for removal of a trustee, you must have legal standing. Typically, co-trustees and beneficiaries of the trust have legal standing. The court will remove a trustee if the bad acts are proven. However, it is often an expensive and lengthy process that involves the exercise of discretion by a court generally hesitant to remove a chosen trustee. The court is under no obligation to remove the trustee.

In the case of unresponsiveness, the court intervention could be enough to prod the trustee. If an unresponsive trustee has demonstrated animosity toward the beneficiary that results in unreasonable refusal to distribute assets or has a conflict of interest, the court may remove the trustee. The court could also refuse to remove a trustee, but find that distributions are reasonable and order the trustee to make distributions to the beneficiaries through a court mediated settlement. Trustees cannot simply ignore their fiduciary duty.

Removal of a trustee should only be undertaken if it can be proven that the assets of the trust are in danger under the trustee’s control. Mere speculation, distrust or unresponsiveness will not be enough to remove a trustee. If you are dealing with an unresponsive trustee and suspect that the trustee is mismanaging the trust or not fulfilling their duties, you should contact an attorney that specializes in estate litigation to review your options.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Medicaid will pay the long-term care needs for individuals who meet certain income and asset criteria. This means that Medicaid will pay the high cost of home care or nursing home care for seniors. 

Since Medicaid is a means tested program, many people believe that they cannot access benefits. This common misconception results in people failing to plan ahead and spending down most of their assets before realizing their mistake. Yet, even with little planning, families can preserve funds by moving assets out of the Medicaid applicant’s name.  

While everyone’s situation is different, the one irreplaceable document every senior needs is a durable power of attorney. 

A durable power of attorney allows an agent to step into the applicant’s shoes as a fiduciary. A comprehensive power of attorney allows the agent to transfer assets, gain eligibility and apply for Medicaid. This is crucial if the applicant has become incapacitated — or cannot easily meet with an attorney. Without giving an agent the authority to do this planning, optimal asset protection may not be possible.

Community Medicaid covers home care needs in the home. There is currently no lookback period for Community Medicaid. This means an applicant can transfer assets one month and apply for Medicaid benefits the following month. 

In contrast, with Chronic Medicaid — which covers nursing home care — there is a 5-year lookback. Thus, an applicant is penalized for transfers made for less than fair market value or “gifted” within the 5 years immediately before institutionalization. But, there are certain exempt transfers that can be made within the 5-year lookback period which make an applicant immediately eligible for Chronic Medicaid. 

Exempt transfers include transferring an unlimited amount of money to a spouse or disabled child. To effectuate these  transfers, the Medicaid applicant must either complete the paperwork or have a valid power of attorney allowing another to do so. 

Often, the Medicaid applicant does not have capacity to transfer the assets or complete the application.  The agent under a power of attorney can do this emergency planning and preserve assets even in the eleventh hour. The only alternative when there is no power of attorney and the applicant has no capacity, is applying to the court for guardianship.

When protecting income in the Community Medicaid setting, a pooled income trust is typically required. An applicant for Community Medicaid has an income limit of $904.00 per month, plus the cost of  health insurance premiums. Individuals with income that exceeds this level must contribute the excess income to their cost of long term care each month. 

This can be avoided with the establishment of a pooled income trust. If the Medicaid applicant does not have capacity, an agent through a power of attorney will need to establish a pooled income trust on their behalf. The power of attorney must specifically grant the agent the authority to establish trusts. Without such a power, the excess income cannot be preserved.

Finally, the actual Medicaid application and corresponding paperwork needs the Medicaid applicant’s signature. If the applicant is unable to sign the paperwork, an agent under a power of attorney may sign the paperwork on their behalf. Additionally, numerous financial documents must be submitted (i.e. proof of income, tax returns, bank statements). Gathering this information from specific institutions requires a power of attorney granting such authority. 

A valid and comprehensive power of attorney is an integral part of any estate plan, especially when dealing with Medicaid eligibility. The power of attorney is used in every step of the process and proves to be invaluable in preserving assets and income.

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

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By Nancy Burner Esq.

Nancy Burner, Esq.

The Consumer Directed Personal Assistance Program (CDPAP) allows Medicaid long term care recipients to choose their own home care attendant, including family members, rather than hiring an aide from a home care agency.

Under the standard Medicaid process, after Medicaid approval, the recipient undergoes an assessment with a Managed Long-Term Care plan (MLTC). The assessment determines the number of hours of care Medicaid will provide. After the assessment process, the Medicaid recipient signs up with a home care agency that is under contract with the preferred MLTC. The agency sends the aides to provide the care and Medicaid covers the cost.

Home Care aides are limited to assisting patients with activities of daily living (ADLs), which include but are not limited to walking, cooking, light housekeeping, bathing, and toileting. But, aides cannot perform “skilled tasks” such as administering medication or assisting with insulin injections. The aide can give certain cues, such as placing the medication in front of the patient indicating it is time to administer.

While many of our clients enrolled with an MLTC and home care agency are happy with the care provided, this is not the case for everyone. Some patients need an aide who performs skilled tasks. This is especially true for patients who live alone. Other patients already have a caregiver that they prefer to use instead of a home care aide they do not know.

CDPAP allows almost any individual to act as a paid caregiver, except for a legally responsible relative, such a spouse or guardian. A child, for example, who takes care of his or her parent can get paid under CDPAP. There is no prerequisite to get certified as a home health aide or a registered nurse. Training occurs at the home and the aide is not restricted to solely assisting with ADLs- but can also assist with skilled tasks.

It is important to note that under CDPAP, an aide is an independent contractor, not an employee of the agency. The patient is thus responsible for hiring the aides, scheduling the care, and ensuring the plan is carried out. Additionally, the patient cannot take advantage of some of the benefits an agency provides, such as sending in backup care if the current aide is sick or if an emergency arises.

Navigating Medicaid’s various programs can be confusing. It is important to discuss your options with an elder law attorney who has extensive Medicaid long term care experience. This way you get the best care that matches your specific needs.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

As of June 13, 2021, New York State has an amended Power of Attorney (“POA”) statute and a new statutory document to go along with it!  

On December 15, 2020, Governor Andrew M. Cuomo signed a bill into law that amended the New York State General Obligations Law as it relates to powers of attorney. A POA is a document by which an individual grants authority to another to engage in certain financial and business transactions on their behalf. The one granting authority is termed “Principal” and the person they are authorizing to act is the “Agent.” 

While the POA originated as a document to facilitate business transactions, it has been coopted over time by estate planning and elder law attorneys as an important tool for handling the affairs of a Principal with diminishing mental or physical capacity to handle their own affairs. In these situations, the Agent should be given the specific powers to handle banking transactions, retirement account transactions, sign contracts on behalf of an individual, and the list goes on.

The most visible change in the 2021 enactment is the elimination of the Statutory Gifts Rider; an attachment to the POA that allowed for various shifts of assets out of a person’s individual name. While it will still be necessary to list out the specific powers being granted relating to gifting, it will no longer be in a separate document but rather, will be incorporated into the POA document itself.

Another big difference will be the requirement that the Principal’s signature be witnessed by a notary and two witnesses (one of which can be the same individual that is serving as the notary). The witness requirement existed with the 2010 law, but only for Principal’s conferring gifting authority. The second witness was put added to the statute to give extra protection to a Principal that may be the subject of elder abuse or undue influence.  

The new statute also incorporates provisions to allow for someone to sign on behalf of a Principal that lacks the physical ability to sign. As an example, I have a client diagnosed with Parkinson’s Disease who has lost the use of her hands. With the new law, she can now direct someone to sign the document for her. She must still be present at the signing and be able to demonstrate her mental capacity to execute the document, but she will not have to worry that she can no longer sign her name.  

For anyone that has already seen an attorney and completed their estate planning the question becomes, do I need to sign a new POA? The answer will be different for each person. 

Any POA that was valid at the time it was executed will remain in effect but if the document is outdated or does not include all the powers that may be necessary down the road, it may be prudent to sign a new one. However, a change in law such as this is the perfect reminder to make an appointment with an estate planning attorney to have your entire plan reviewed, including your power of attorney.  

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

There is no such thing as a honeymooner’s will, but maybe there should be. Once the honeymoon is over, the dress put away, and every conceivable photograph posted to social media, it is time to start considering the legal implications of getting married. 

There may be a name change, joint bank accounts and IRA beneficiary change forms. Most newly married couples fail to check estate planning off their lists because they consider themselves too young to worry about such things.

The uncertainty of the pandemic has caused almost everyone in the world — no matter what age — to consider their own mortality. A recently married couple needs to ensure that their newly entwined life includes each other in a legal sense, as well as in a practical sense, in that they need to know each other’s preferences under worst case scenarios. Most couples do not need more than a basic estate plan, consisting of Advance Directives and a Last Will and Testament.

Life & Death Decisions

Everyone eighteen years of age or older needs advanced directives: Living Will, Health Care Proxy and Power of Attorney. A Living Will allows someone to specify if they want to be kept alive by artificial means if they are in a vegetative state with no reasonable expectation of recovery. A Health Care Proxy allows a person to choose who will make medical decisions in case that person cannot do so. In New York State, only one agent can act under a health care proxy at a time, which avoids confusion and tearful showdowns. A Power of Attorney is a powerful document that allows the principal to name one or more people to handle a wide range of financial matters in case of incapacity.

Dying Without a Will

If a married person dies without a Will in New York State and has no children, the spouse inherits all the assets. This may not necessarily be what the newlywed couple wants — especially regarding heirlooms, ancestral real estate, or a closely-held business. What about real property that one spouse borrowed money to buy with the oral promise to pay back a parent or sibling? Nobody should ever rely on a spouse’s promise to carry out “informal” instructions after death – this rarely happens and creates family tension.

If married with children, the spouse receives the first $50,000 of assets plus 50% of the remaining assets; the other half goes to any minor or adult children. Since minors cannot receive assets outright, this creates a complicated Surrogates Court scenario. If the children are adults from a previous marriage – this automatic allotment may not be ideal. Remember, the intestacy statute is a default blunt instrument and leaves no room for nuance.

Finally, there are practical considerations to dying with a Will versus without, that affect loved ones and make a painful process worse. A Will can dispense with the need for a bond, ensures family members that they are provided for, and avoids unnecessary delays in transferring wealth.

An experienced estate planning attorney will be able to provide invaluable guidance on related issues as well, such as whether you need life insurance, business succession planning, and the best way to designate beneficiaries on retirement accounts. A couple should also explore the option of establishing a living trust to avoid probate, which is necessary when someone owns income producing property, a small business, or property out of state. Estate planning may not seem very romantic, but discussing life and death issues is the best way to plan for the long life ahead of you!

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

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The IRS and the New York State Dept. of Taxation and Finance have extended the due date for personal income tax returns and related payments to May 17, 2021 due to the continued impact of COVID-19. METRO photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

In 2017, the Tax Cuts and Jobs Act increased the federal estate tax exclusion amount for decedents dying in years 2018 to 2025. The exclusion amount for 2021 is $11.7 million. This means that an individual can leave $11.7 million, and a married couple can leave $23.4 million dollars to their heirs or beneficiaries without paying any federal estate tax. This is a good thing because the federal estate tax rate is 40 percent.

Despite the large Federal Estate Tax exclusion amount, New York State’s estate tax exemption for 2021 is $5.93 million. Prior to April 1, 2014, the New York State estate tax exemption was $1 million, and many estates had to file New York State estate tax returns and pay New York State estate tax.

With the current exemptions, there would technically be no requirement to file either a New York State or federal estate tax return and no tax would be due. However, the inquiry does not end there. For example, if one spouse survived, and has approximately $5 million dollars in assets, it is recommended that he/she file a federal estate tax return to elect “portability” to capture the deceased spouse’s unused $11.7 million-dollar federal exemption. This would be necessary in the event of the living spouse’s assets appreciating over time and/or the federal estate tax exclusion decreasing leaving him/her with assets valued over the federal exclusion at the time of his/her death.

For those dying after December 31, 2010, 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 in the year if death, plus (2) the first-to-die’s ported DSUE amount.

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 fifteen 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 gift exceeds the applicable exclusion amount (up to $11.7 million in 2021). 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. 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 made this procedure applicable to estates during the two-year period immediately following the decedent’s date of death. This gives you 24 months to file rather than 15 months.

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 December 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; and

(4) The executor either files a complete and properly prepared United States Estate (and Tax Return) on or before the second annual anniversary of the decedent’s date of death.

If more than two years has elapsed since the date of death but all other criteria of Revenue Procedure 2017-34 were met, then the Executor would have to request a Private Letter Ruling from the IRS to obtain an extension of time elect portability and file a federal estate tax return.

For those that had spouses pass away after December 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 may not be too late to elect portability.

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

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By Nancy Burner, Esq.

Nancy Burner, Esq.

When a co-owner of real property passes away, what happens next depends on how the co- owners took title to the property. 

Upon the death of a co-owner, it is necessary to review the last deed of record to make this determination. There are three ways to own property in New York as co-owners: tenants in common, joint tenants with rights of survivorship or tenants by the entirety.

Only married couples who were married at the time they took title to the property can own property as tenants by the entirety — a type of ownership that provides certain protections. If the property is owned as joint tenants with rights of survivorship or as tenants by the entirety, the deceased owner’s interest passes automatically to the surviving co-owner by operation of law. 

Generally, it is not necessary to have a new deed prepared removing the deceased co-owner. When the surviving owner sells the property in the future, the deceased co-owner’s interest can be disposed of by providing his or her death certificate to the title company. If the surviving owner decides to transfer the property during life for no consideration, such as to a trust for estate planning purposes, a notation on the deed should be made by the attorney who prepares it. Upon future sale, the death certificate will still need to be provided to the title company to prove that the survivor is the legal owner of the property.

If, however, the property is owned as tenants in common or if the deceased spouse was the sole owner of the property, the deceased owner’s interest does not pass by operation of law upon death. Instead, the deceased owner’s interest passes according to his or her Last Will and Testament or according to New York Law if the decedent died without a will.

While New York law technically provides that real property vests in the decedent’s heirs as of the date of death and can be transferred or sold by those heirs, the heirs may have issues with the title company insuring the transaction, especially within two years from the date of death. 

It is typically best to have an Executor or Administrator appointed to transfer or sell the property from the estate. However, in order for a fiduciary to be appointed, a probate or administration proceeding will be necessary in Surrogate’s Court.

It is important to note that if the deed is silent as to whether co-owners took title as tenants in common or joint tenants with rights of survivorship, the default is tenants in common. If the deed is silent but the co-owners were married at the time they took title, then it creates a tenancy by the entirety.

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

 

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