Not all donations are eligible tax deductions. In order to be eligible for a charitable contribution tax deduction, the recipient charity must be duly qualified by the Internal Revenue Service (IRS). This means that gifts to needy relatives, friends, neighbors, and any other person or group who lacks tax-exempt status as determined by the U.S. Treasury, are not tax-deductible as a charitable contribution.

Qualified Charitable Organizations

Qualified charitable organizations include those operated exclusively for religious, charitable, scientific, literary or educational purposes, or the prevention of cruelty to animals or children, or the development of amateur sports.

Nonprofit veterans’ organizations, cemetery and burial companies, fraternal lodge groups, and certain legal corporations can also qualify. Even federal, state and local governments can be considered qualified charitable organizations if the money donated to them is earmarked for charitable causes.

To receive the status from the IRS, qualified charitable organizations must meet requirements under section 501(c)(3) of the Internal Revenue Code (IRC). None of the earnings of the organization can go toward any private shareholder or individuals, and it may not seek to influence legislation as a substantial part of its actions.

Charitable Organization versus Tax-Exempt Organization

It is important to note that qualified charitable organizations differ from strictly tax-exempt organizations, which do not have to be for a charitable purpose yet are not required to pay taxes. All duly qualified charitable organizations are tax-exempt, but not all tax-exempt organizations are duly qualified charitable organizations.

For example, a trade association or business league are both tax-exempt organizations, but contributions to those organizations are not eligible for a charitable contribution.

Case Study

David makes the following donations in 2019:

  • $2,500 to a friend’s GoFundMe Personal Campaign
  • $5,000 to the National Rifle Association (NRA)
  • $7,500 to a local church
  • $1,000 to a local animal shelter

Assuming David itemizes his deductions on “Schedule A”, he can deduct the donations to the local church and animal shelter as charitable contributions, but not $2,500 to the GoFundMe Personal Campaign and the $5,000 to the NRA.

Although donations that are made to a GoFundMe Certified Charity campaign are guaranteed by the company to be tax-deductible, a GoFundMe Personal Campaign is generally considered to be a personal gift that does not qualify as tax-deductible charitable contribution.

The donation made to the NRA is not tax-deductible as a charitable contribution because the NRA is a civic association organized under IRC 501(c)(4). Like section 501(c)(3) organizations (duly qualified charities), section 501(c)(4) organizations are tax-exempt for federal income tax purpose, however, Section 501(c)(4) organizations may engage in lobbying so long as it pertains to the organization’s mission. This means that the donation is not tax-deductible to the donor.

Tax-Exempt Organizations

Another common type of organizations that may be tax-exempt, but are not necessarily qualified charitable organizations are business leagues or Chambers of Commerce, which are organized under section 501(c)(6).

The IRS website offers a Tax-Exempt Organization Search that allows you to confirm the tax-exempt status as well as review the deductibility code and annual 990 tax filings. This can help confirm that donation you are considering making to the charity will be eligible for a charitable contribution tax deduction.

In order to get the potential tax benefits of a charitable contribution of money or property, you must file an IRS Form 1040 and itemize your deductions on “Schedule A.”

If you do not file an IRS Form 1040 then there is no reason to take a charitable contribution as a deduction since you likely do not earn enough taxable income to require filing a return.

Itemize Your Deductions

Since it is required that you itemize your deductions in order to take advantage of the charitable contribution tax deduction, you should consider weighing the costs and benefits of itemizing your deductions vs. taking the standard deduction before making charitable contributions. If your standard deduction is more than the total of your itemized deductions than it might be worth taking the standard deduction instead of itemizing your deductions.

Common Tax Deductions

The most common tax deductions that must be itemized on “Schedule A” in order to be taken are as follows:

  • Mortgage interest deduction
  • Deduction for state and local taxes paid (SALT capped at $10,000)
  • Medical expense deduction
  • Charitable contributions

Case Study

Tom and Christine are a married couple who file joint income tax returns and typically donate $3,500 each year to their church (a qualified charity). They are eligible for a $24,400 standard deduction in 2019.

Their itemized deductions are as follows:

  • Mortgage interest deduction – $10,000
  • State income tax deduction – $6,000*
  • Local property tax deduction – $11,000*
  • Charitable contribution – $3,500

Total itemized deductions $23,500

*SALT capped at $10,000

In this case, it makes more sense for them to take the standard deduction of $24,400 instead of taking $23,500 in itemized deductions.

Assuming they want to continue making annual charitable contributions of $3,500 for reasons other than the tax benefits, Tom and Christine could always skip a year and make double the charitable contributions the next year, or consider making one charitable contribution of $3,500 in early January and make another charitable contribution of $3,500 at the end of December. The idea is to increase the charitable contribution in a given year to $7,000 so that they can realize the benefit of itemizing their deductions (27,000 instead of $23,500).

For most people deciding whether to donate to a charity isn’t usually motivated by the potential tax deduction. But, knowing the rules and limitations could help make the most of your charitable giving.

A Medicaid plan can be presented to the guardianship court either before a guardian has been appointed or after, depending on when the need for a Medicaid plan arises.

Medicaid Planning at the Onset of the Guardianship Proceeding

If the need for a Medicaid plan is apparent at the onset of the guardianship proceeding, then the petitioner can request authority to do Medicaid planning and asset protection and include the Medicaid eligibility plan in the petition. The petition should not only include the proposed plan, but the reasons why it is necessary to help the incapacitated person and is consistent with his or her known wishes.

The petition for guardian of the personal needs and property management should also clearly establish the validity of the plan and explain that at no time will the alleged incapacitated person be left without assets or Medicaid to meet his/her medical needs. The petition should also specifically request the authorities that will be necessary to implement the Medicaid plan and allow the guardian to gather the information and documentation necessary to apply for Medicaid.

If possible and when appropriate, the petitioner’s attorney should discuss any issues with the Medicaid plan that might impact the alleged incapacitated person’s testamentary scheme with the interested parties to attain consent before submitting the petition.

Medicaid Planning After the Guardian is Appointed

If the need for a Medicaid plan does not arise until after the guardian is appointed, then the guardian for the property management will need to petition the court to expand the guardian’s powers to include the additional powers needed to implement the Medicaid plan.

In some cases, it may be necessary for the guardian to first get the court’s approval to retain an experienced elder law attorney to establish a Medicaid plan. The elder law attorney could prepare a memorandum to the court explaining the Medicaid plan, which would be included as an exhibit to the petition to approve the plan. Likewise, the elder law attorney should be available to appear before the court to testify or explain the benefits of the Medicaid plan and provide a recommendation to the court.

Regardless of the substance of the Medicaid plan or the manner in which it is presented to the court, it is clear that Medicaid planning has become more innovative than simple asset transfers and requires the guidance of an experienced Elder Law attorney who can help avoid pitfalls and mistakes along the way. It will be the responsibility of the guardian, with help from the elder law attorney, to present a sound basis for the Medicaid plan and to educate the court on the necessity and validity of the plan.

For many individuals who have capacity or who have executed a durable power of attorney with sufficient authorities granted to their agents, the ability to engage in a well-thought-out Medicaid plan is a given.

Beginning with a Court Proceeding

However, in situations where an individual has lost capacity and does not have a sufficient durable power of attorney in place, then the process of becoming Medicaid eligible and obtaining Medicaid coverage for his or her long-term care needs begins with a court proceeding.

If someone you love needs long-term care but no longer has the capacity to engage in Medicaid planning and does not have a sufficient durable power of attorney, then there is both a need for a guardianship and Medicaid planning.

There may also be a situation where a guardianship has already been established and a guardian of the personal needs and property management has been appointed, but the need for long-term care planning is now relevant, then the guardian may need to petition the court to expand his or her powers to engage in Medicaid planning and apply for Medicaid.

What to Do First

Someone who is either petitioning the court for a guardianship or an existing guardian who is now considering helping his or her ward become Medicaid eligible should seek the guidance of an Elder Law attorney who has experience in both Medicaid planning and guardianship.

Medicaid Planning

Medicaid planning can include transferring assets to appropriate persons so that the incapacitated person’s assets are not unnecessarily expended on long-term care. Examples of Medicaid planning authorized by the Court include spousal transfers of all assets; transfers to a child with disabilities; exempt transfers of residences to a live-in caregiver-child; non-exempt transfers to family; and signing renunciations and disclaimers of inheritances that can affect an incapacitated person’s ongoing Medicaid eligibility.

As a fiduciary, the guardian must act in the best interest of the incapacitated person. The guardian is also held to a standard of care and has a duty of loyalty that prohibits self-dealing and requires prudent judgment in the management of the guardianship estate. The very notion of a Medicaid plan that intentionally divests a significant portion of the incapacitated person’s assets may appear to be a violation of these fiduciary responsibilities. This is especially true when the guardian seeks to make gifts of the incapacitated person’s assets to a third party or to the guardian himself.

How to Obtain the Court’s Approval

To obtain the court’s approval of the Medicaid plan, the guardian (or the person who is petitioning for guardianship) must show, among other things, that the proposed gifts will not adversely affect the living conditions of the incapacitated person and would be consistent with past preferences of the incapacitated person. If there is no evidence of past preferences, then the guardian must show that a competent reasonable individual in the position of the incapacitated person would be likely to perform similar acts under the circumstances.

The guardian and/or petitioner should be aware that courts often approach Medicaid planning involving non-exempt transfers with caution. Similarly suspect may be cases in which the donees are charities or individuals who do not qualify as natural objects of the bounty. In the case of a Medicaid plan involving charitable gifting, courts have approved such a plan when the guardian has been able to successfully show evidence of a pattern of gifting or the incapacitated person consented to the charitable gifting.

Even in situations where the Medicaid plan calls for a transfer of assets that are exempt from transfer penalties, the guardian may need to show that the transfer does not contradict the incapacitated person’s previous testamentary plan, intestate inheritance, or an established trust arrangement.

Transfer of Assets Example

An example of such transfer could be a case where the guardian is seeking to transfer the incapacitated person’s home to only one sibling who has lived with the incapacitated person for many years and has an equity interest in the home. If the incapacitated person bequeaths his or her interest in the home to two siblings in his Last Will and Testament, or absent a testamentary instrument, the laws of intestacy dictate that both siblings inherit equally, then the Medicaid plan could disrupt the estate plan or interfere with an intestate inheritance.

In a case such as this, the guardian and/or petitioner should argue that utilizing the exemption is the only way to preserve the entire value of the house if the incapacitated person will need to apply for Medicaid. Furthermore, the guardian and/or petitioner should explain to the court that there will be transfer penalties if the title is given to the other sibling.

The main idea is that the Medicaid eligibility plan must be well-thought-out, in the best interest of the incapacitated person, and be consistent with the known wishes or testamentary scheme of the incapacitated person.

There is a significant amount of mystery and misunderstanding about the differences between Original Medicare and Medicare Advantage that can be harmful when seniors and individuals who are eligible for Medicare consider what plan is best for them.

medicare

What is Medicare?

Medicare is a federal government health insurance program that gives you health care if you are 65 years old or older, are under 65 years old and receive Social Security Disability Insurance (SSDI) for 24 months due to a severe disability, begin receiving SSDI due to ALS/Lou Gehrigs’s Disease, or have End-Stage Renal Disease (ESRD), no matter your income.

You can receive health coverage directly through the federal government (Original Medicare) or administered through a private company (Medicare Advantage).

Original Medicare

If you have Original Medicare, which consists of Part A and Part B, the government pays directly for the health care services you receive.

If you enroll in Original Medicare, then:

  • You will receive a red, white, and blue Medicare card to show to your providers.
  • Most doctors in the country take your insurance.
  • You can see a specialist without prior authorization.
  • Medicare limits how much you can be charged if you visit participating and non-participating providers. However, it does not limit how much you can be charged if you visit providers who opt-out of Medicare.
  • You are responsible for Original Medicare cost-sharing, which may include premiums, deductibles, and coinsurances.
  • You are eligible to enroll in a Medigap policy, which can help reduce your out-of-pocket cost.

Original Medicare does not include prescription drug benefit (Part D), which is only offered through private companies. You should consider signing up for a separate Part D plan for coverage for your prescription drug needs.

Medicare Advantage

Medicare Advantage is also known as Medicare private health plan or Part C. Medicare Advantage plans contract with the federal government and are paid a fixed amount per person to provide Medicare benefits.

The common types of Medicare Advantage Plans:

  • Health Maintenance Organizations (HMOs)
  • Preferred Provider Organizations (PPOs)
  • Private Fee-For-Service (PFFS)
  • Special Needs Plans (SNPs)
  • Provider Sponsored Organizations (PSOs)
  • Medical Savings Accounts (MSAs)

If you are enrolled in a Medicare Advantage Plan, you will receive the same benefits offered by Original Medicare. You should note that your Medicare Advantage Plan may apply different rules, costs, and restrictions, which can affect how and when you receive care. They may also offer certain benefits that Medicare does not cover, such as dental and vision care, caregiver counseling and training, and certain in-home support like housekeeping. It is important that you check with a plan directly to learn what benefits it covers since not all Medicare Advantage Plans cover additional benefits.

All Medicare Advantage Plans must include a limit on your out-of-pocket expenses for Part A and B services. Also, although plans cannot charge higher copayments or coinsurances than Original Medicare for certain services, like chemotherapy and dialysis, they can charge higher cost-sharing for other services.

Medicare Advantage Plans may have different:

  • Networks of providers
  • Coverage rules
  • Premiums (in addition to the Part B premium)
  • Cost-sharing for covered services

Like Original Medicare, Medicare Advantage does not include the prescription drug benefit (Part D). However, many Medicare Advantage Plans include prescription drug coverage (Part D). If you join an MSA plan or a PFFS plan without drug coverage, you can enroll in a stand-alone Part D plan.

As Elder Law attorneys we advise our clients to execute durable powers of attorney in order to ensure that someone they trust is authorized to manage their property in the event that they no longer have the capacity to do so. In the absence of a durable power of attorney, or if the durable power of attorney does not provide sufficient powers and direction to an agent, it may be necessary to apply to the court to appoint a guardian.

Disadvantages and Advantages

A guardianship proceeding has many disadvantages, such as expense, delay, and loss of privacy. However, it also has the many advantages, one of which could be to have the court appoint a trusted and qualified person to engage in Medicaid planning, as well as apply for and obtain Medicaid coverage for an Incapacitated Person who has needed long term care.

Long-term Care

In many cases, the loss of capacity coincides with an individual’s need for long-term care. In these cases, the guardianship is not only a means to have someone appointed to manage the personal needs and property of an incapacitated person but also to secure a method of payment for long-term care for that person.

Medicaid Payment Option

Unless the incapacitated person has sufficient resources to pay for long-term care, Medicaid may be the most viable payment option to meet his or her long-term care needs. If the incapacitated person does not have sufficient resources to pay for long-term care, but has enough resources to be considered ineligible for Medicaid (2019 Medicaid Benefits), then the guardian will need to seek guidance from an experienced Elder Law Attorney who can help them establish a Medicaid plan and have said plan approved by the court.

Medicaid Planning

Guardianship court’s in New York have consistently permitted Medicaid planning by the guardian on behalf of the incapacitated person, but the petition to approve the powers necessary to establish and execute a Medicaid eligibility plan must be well-thought-out and presented appropriately.

Two Strategic Issues – Substance and Manner

The two main strategic issues with a Medicaid plan in the guardianship context are 1) the substance of Medicaid plan that will be presented to the court, and 2) the manner in which the Medicaid plan is presented to the court.

The substance of a Medicaid plan presented to the court will depend in large part on the type of Medicaid that the applicant will need. For instance, Medicaid plan for an applicant who is seeking Medicaid Home Care to provide services in the community will be very different from a plan for an applicant who is seeking Medicaid long-term care in a skilled nursing facility. Although there is no 60-month lookback period when applying for Medicaid Home Care, the guardian should consider the possibility that the incapacitated person may need long-term care in a skilled nursing facility within 60 months of executing the Medicaid plan. So, careful consideration of all the possibilities must be made by the guardian and his or her Elder Law Attorney.

Furthermore, the substance of the Medicaid plan will also rely heavily on the facts and circumstances of the case, such as what assets and income are involved, the possibility of an exempt transfer, as well as family dynamics.

The manner in which the plan is presented to the court for approval depends on at what point in the process the Medicaid plan will be presented to the court. There may also be a strategic reason to petition the court for guardianship purposes of qualifying for Medicaid.

Get Help

Regardless of the facts and circumstances or the timing of when the guardianship and Medicaid planning comes into play, it is important to seek the guidance of an experienced Elder Law attorney who can guide you through not only the guardianship proceeding but the Medicaid plan.

In New York, if an individual passes away without a Last Will and Testament, or if the Last Will and Testament is determined to be invalid, then the decedent’s assets will be subject to the laws of intestacy. Any assets held in the decedent’s name alone, without any beneficiary designations, joint owners with rights of survivorship, or not held in trust, are considered assets of your estate and must be distributed in accordance with laws of intestacy in New York.

Under the laws of intestacy only the decedent’s heirs-at-law, known as the “distributees” have the right to inherit your estate assets.

A decedent’s distributees are determined in the following order:

  1. Spouse and children.
    • If a decedent leaves a spouse and children, the spouse and children are considered distributees.
    • If there is only a spouse and no children, the spouse is the sole distributee.
    • If there are children and no spouse, the children are the distributees.
  2. Parents
  3. Siblings and issue of pre-deceased siblings, if any (nieces and nephews)
    • Note: “Issue” refers to lineal descendants, such as children, grandchildren, great-grandchildren.
  4. Grandparents and issue of predeceased grandparents (1st cousins)
  5. Great-grandparents and issue of predeceased great-grandparents (1st cousins once removed)

If a decedent is survived by close family members, such as a surviving spouse, children, grandchildren, parents, or siblings, determining the distributes is fairly straight forward. However, when a decedent is survived only by more remote relatives, it can be more complicated and require a Kinship Proceeding in the Surrogate’s Court of the county in which the decedent resides.

When is a Kinship Proceeding Required?

Kinship Proceedings may be required in a number of instances, for example:

  1. If there are multiple people claiming the right to act as fiduciary (also known as the “administrator”) of the decedent’s estate, and the Court needs to know how these people are legally related to the decedent to determine who has a right to act as administrator.
  2. When it is not clear who is a distributee.
  3. When closest living relative to a decedent is a cousin or more distant next of kin
  4. If a county official, called the “Public Administrator,” is in charge of administering the estate, and is required to account and distribute assets. Before the Public Administrator can settle its account and close the estate, the court must determine who are the rightful distributees of the decedent.

How Does a Kinship Proceeding Work?

The people who claim to be distributees are called “alleged heirs” or “claimants”. The alleged heirs have a legal burden to prove in the proceeding that they are actually distributes and have a right to inherit. The court will appoint a Guardian Ad Litem who is responsible for representing the interest of the unknown heirs.

What is a Kinship Hearing?

The Kinship Proceeding will result in a Kinship Hearing. The Kinship Hearing is essentially a small trial. Although the Surrogate’s Court in each county will have their own specific requirements, the same rules of evidence and procedure that are followed during a trial in New York are followed in a Kinship Hearing.

The Kinship Hearing is generally more informal than a trial, and the parties sometimes stipulate to have the case held before an Attorney Referee, instead of the Judge. Or, the Judge may simply “refer” the case to a Referee on its own initiative.

When the hearing is completed the Referee will issue a report which will be provided to the Surrogate Judge for her consideration. Although the Surrogate Judge usually agrees with the Referee’s findings and confirms, it has full discretion to reject or accept the report wholly or in part, modify the report, or to require a new hearing.

Do You Need An Attorney?

In a Kinship proceeding, an experienced kinship attorney is needed to help present witness testimony and documentary evidence to the Court at the hearing. The Court will require specific information regarding the decedent’s maternal and paternal sides of the family. It may be necessary for many generations of family members to be researched and evidence such as birth certificates, marriage certificates, death certificates, census records, etc. will need to be gathered and submitted into evidence.

It is common for an experienced attorney to recommend that the alleged heirs hire a professional genealogist to perform research, investigate, write a report, and testify at the Hearing. The evidence and testimony provided by a professional genealogist can often be the key to a successful outcome. A well-thought-out and accurate Family Tree is also important to help prove the kinship and close the classes of distributees.

Given the complexity of the hearing and the very technical rules of evidence in a kinship proceeding, it is important to work with an experienced attorney.

It is that time of year again – Fall Open Enrollment for Medicare.

 

Fall Open Enrollment, also referred to as the Annual Coordinated Election Period, runs from October 15 through December 7. During this period you can join a new Medicare Advantage Plan or stand-alone prescription drug plan (Part D) for the following year. You can also change your Original Medicare with or without a Part D plan and Medicare Advantage for the following year.

 

This is also the time you can enroll in Part D for the first time if you did not enroll during your initial Enrollment Period. Unless you have had other creditable coverage, you may have to pay a premium penalty if you enroll during the Fall Open Enrollment.

 

Here are some helpful things to know about Fall Open Enrollment:

 

Important dates

  • Fall Open Enrollment occurs each year from October 15 to December 7
  • Any changes you make during Fall Open Enrollment will take effect January 1

Review and revise your health and drug coverage where appropriate

  • Fall Open Enrollment is an important time to review your current Medicare health and drug coverage. If you are not happy with your coverage for next year, then you should make changes during Fall Open Enrollment.
  • Should you have Original Medicare, then you should research your Medicare costs for the upcoming year.
  • If you have a Medicare Advantage Plan or Part D plan, you should review your “Annual Notice of Change (ANOC)” and/or “Evidence of Coverage (EOC)” from your plan for any changes in costs, benefits, and/or rules for the upcoming year.

Shop around

  • Even if you are happy with your current Medicare coverage, you should still investigate other Medicare options in your area.
  • Check to see if there is another plan in your area that will offer better health and/or drug coverage at a more affordable cost.
  • If you shop among Part D plans each year you could find a plan that covers the drugs you take with fewer restrictions and/or lower prices.

Medicare Advantage Plans can also be changed during the Medicare Advantage Open Enrollment Period (MA OEP)

  • The MA OEP occurs each year from January 1 through March 3
  • The changes made to Medicare Advantage Plans during the MA OEP take effect on the first of the month following the month you enroll.
  • During the MA OEP, you can switch from one Medicare Advantage Plan to another, or switch from Medicare Advantage Plan to Original Medicare with or without a Part D prescription drug plan.

Fall Open Enrollment vs. Open Enrollment for the State or Federal Marketplaces

  • The federal Marketplaces (a/k/a Exchanges) offer annual open enrollment periods for uninsured and underinsured Americans.
  • The enrollment period for the federal Marketplaces may overlap with Fall Open Enrollment.
  • The Marketplaces are not intended for people who either currently have Medicare or who are eligible for Medicare

Find help

  • There are a number of tools available to navigate through the maze that is Medicare Open Enrollment
  • Medicare’s Plan Finder tool is helpful to find Part D plans, as it compares plans based on the drugs you need, the pharmacy you use, and the cost of your drugs.
  • Call 1-800-MEDICARE if you are interested in joining a Medicare Advantage Plan.
  • Subscribe to the Russo Law Group Blog for updated information about Medicare throughout the year.

The answer to the question “Are gifts made during my lifetime includible in my estate for estate tax purposes?” depends on several factors.

 

Federal

For purposes of the Federal Estate Tax, yes, any taxable gifts you make during your lifetime are includible in your estate. However, this does not necessarily mean that those gifts will ultimately result in an estate tax liability.

In 2019, the basic Federal Estate and Gift Tax exclusion amount for an individual is $11,400,000. This means that any taxable gifts you make during your lifetime that exceeds the annual exclusion for gifts ($15,000 for 2019) will reduce the exclusion amount.

For example, if you die in 2019 owning assets that total $4,000,000 and you gifted $6,000,000 during your lifetime then the combined total of gifted assets and current assets (i.e., $10,000,000) will be under the $11,400,000 basic Federal Estate and Gift Tax exclusion and there will not be any federal tax liability owed.

You should speak with an estate administration attorney who is well versed with tax law to determine if it will be necessary or beneficial to file a Federal Estate Tax return (IRS Form 706), even if there is no tax liability owed.

 

New York State

There is no gift tax in New York State, however certain taxable gifts made by New York residents within three (3) years of death up through December 31, 2025 will be subject to a “clawback” provision of the New York Tax Law. This means that those taxable gifts will be included in the decedent’s taxable estate.

As of January 1, 2019, the New York estate tax exclusion is $5,740,000, which means that if you own assets worth less than $5,740,000 then there is no estate tax liability or a need to file a New York State Estate Tax return (NYS Form ET-706).

If you have made certain taxable gifts within three years of your death, then those gifts are considered part of the estate for estate tax purposes.

For example, if you die in 2019 owning assets that total $4,000,000 and you made taxable gifts of $6,000,000 in 2017, then you will have a taxable estate of $10,000,000 which will result in New York State Estate Tax liability.

 

It is important to speak with an experienced Estate Planning attorney who can advise on strategies to reduce and sometimes even eliminate estate tax liability before making significant gifts of your assets.

Sometimes when a loved one passes away, an individual who believes he or she inherited assets from the decedent will be told at a bank or financial institution that they will need “Letters Testamentary” in order to collect those assets. The question most people have at that point is “What are Letters Testamentary?”

 

Letters Testamentary is the name for a document issued by the Surrogate’s Court that permits the Executor of an Estate to act on behalf of the estate of a person who died with a Will. The person who is nominated as the Executor under the Will has no authority to act until the Will is probated by the Surrogate’s Court and Letters Testamentary are issued by the court.

 

In order to obtain Letters Testamentary, an interested party (typically the nominated executor under the Will) will need to petition the Surrogate’s Court and provide pertinent information regarding the decedent, relevant parties (i.e., the spouse, children, etc.) and the decedent’s assets.

 

Letters Testamentary can provide the Executor (or Co-Executors) with full authorities allowed under the terms of the Will and the law, or they can be restricted at the court’s discretion. Typically if the court grants “full” Letters Testamentary, the Executor will be authorized to handle all the affairs of the estate pursuant to the terms of the Will.

 

The Executor will be able to use the Letters Testamentary to handle the affairs of the estate, such as obtain a necessary tax identification number for the Estate, collect estate assets, establish estate bank or brokerage accounts, retitle or sell property, pay for administrative expenses, pay debts and liabilities of the decedent subject to the terms of the Will, and distribute the assets of the estate to the beneficiaries according to the Will, among other things.

 

Although Letters Testamentary will allow you to handle the affairs of the estate, you will not be able to use the Letters Testamentary to collect assets that passed by operation of law outside of the estate. A common example of this is when a decedent had a bank account that was held jointly with rights of survivorship with another person, the funds in that account automatically pass to the surviving joint owner (regardless of what the Will states) and therefore the Executor will not have authority to collect those assets despite having the Letters Testamentary issued to him/her.

The short, but perhaps not so obvious answer to the question “Who has the right to determine what happens to my body when I die?” is, YOU – provided you planned ahead of time.

 

We advise many of our clients about the benefits of planning ahead for the disposition of their remains. Under New York State law you can designate in writing that a specific individual, as well as successors, will have the right to control the disposition of your remains. This will allow you to select someone you trust to carry out your wishes. The writing must substantially conform to a statutory form and must be signed and dated by you and the agent, and it must be properly witnessed.

 

If you do not have a written instrument that designates a particular agent to control the disposition of your remains, then only those individuals who have priority under the law can determine what to do with your remains. Absent the written instrument, the priority under the law is as follows:

 

  1. Your surviving spouse;
  2. Your surviving domestic partner;
  3. Any of your surviving children 18 years old or older;
  4. A guardian appointed pursuant to Article 17A of the Surrogate’s Court Procedure Act, or Article 81 of the Mental Hygiene Law;
  5. Any person 18 years of age or older who would be entitled to share in your estate under the laws of intestacy (i.e. your heirs) with the person closest in relationship having the highest priority;
  6. A duly appointed fiduciary of your estate;
  7. A close friend or relative who is familiar with your wishes related to the disposition of your remains
  8. A chief fiscal officer of a county or public administrator duly appointed

 

Although the statute provides a framework of individuals who can control the disposition of your remains, the individuals listed may not be the best person suited to make the decision about the disposition of your remains.

 

Another common planning strategy to help you ensure your wishes are honored after your death is to preplan and prepay your funeral. The difference between a “preplan” and a “prepaid” funeral is that you can “preplan” your funeral without paying now if the funeral home agrees to it. Once you’ve selected a funeral home, you can discuss your wishes with the funeral director who will keep the plan on file until it is needed. You will have to make arrangements for the payment of the funeral after your death.

 

You can also prepay the funeral. For this option, you can either enter into an agreement with the funeral home, and the money will be held in the name of the funeral home as trustee for you. Or, you can deposit the money in a bank account for the benefit of the funeral home.

 

No matter what your wishes may be, it is important that you have a plan in place to ensure they are honored, and you have designated the right individuals to carry them out.

The practical answer to the question “Do I need a death certificate to probate a will?” is yes. In a practical sense, the Surrogate’s Court generally requires a death certificate in order to probate a Will, as it needs the certificate to prove that the Testator is deceased, and that the court has jurisdiction over the matter, among other things.

 

It may seem obvious, but the death certificate is one of the most important documents in an estate proceeding, and without it, there will be significant roadblocks to probating the Will or obtaining Letters of Administration (when the decedent dies without a Last Will and Testament).

 

The need for a death certificate can oftentimes cause delay in commencing an estate proceeding such as an Administration Proceeding or a Probate Proceeding. Usually, if there is a funeral home handling the disposition of remains of the decedent, the funeral home obtains certified copies of the death certificate and will provide them as requested. It is prudent to obtain a number of death certificates from the funeral home as they will be needed for the estate proceeding, the estate administration, and/or to collect assets that passed by operation of law from financial institutions.

 

Another option to obtain death certificates is to order them through the New York State Department of Health, or if the decedent was a New York City resident, the New York City Department of Vital Records. Only certain individuals are eligible to obtain a death certificate copy, such as a spouse, parent, child or sibling of the deceased, or other persons who have documented a lawful right or claim, documented medical need, or have a New York State Court Order directing the release of the death certificate to them.

 

Sometimes, even when a petitioner has a death certificate, there may be issues with the information contained in the death certificate that can also create issues. For example, there could be a typographical error or incorrect information about the decedent on the death certificate. These types of errors can occur due to an inadvertent error when the information about the decedent was being transmitted or transcribed, or if the person providing the information about the decedent gives inaccurate information.

 

These types of issues will need to be addressed either in the form of a corrected death certificate or, if it is acceptable to the court, an affidavit addressing and explaining the issue.

 

In other cases, where the decedent, who was a New York domiciliary, dies out of state, the court may require an affidavit confirming that the decedent was a New York domiciliary and explaining why the decedent was out of state. This happens typically when the decedent was a “snowbird” and spends part of the year in another state.

 

No matter what issues you may be presented with, it is important to have guidance from an experienced law firm when commencing an estate proceeding.

The new federal tax law entitled, “An Act To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” which is commonly referred to as the Tax Cuts and Jobs Act of 2017 (hereinafter “TCJA of 2017”), has left many people questioning the amount of the Federal Estate and Gift Tax Exclusion.

The new law basically doubles the federal estate and gift tax exclusion for estates of decedents dying and gifts made after December 31, 2017 and before January 1, 2026, to $11,000,000 (or $22,000,000 for a married couple), subject to inflation. Generally, this means that an individual can transfer up to $11,000,000 in a lifetime and at death combined without incurring a federal estate or gift tax.

Prior to the new law, the federal estate and lifetime gift tax exclusion was $5,490,000 for an individual dying in 2017 and $10,980,000 for a married couple.

Currently, the New York State Estate Tax exemption is $5,250,000 until December 31, 2018, when it is set to coincide with the federal exemption by January 2019. It is unclear whether the New York State Estate Tax exemption will increase in January 2019 to meet the new federal estate and gift tax exclusion given the significant increase in the federal exemption.

If you have any questions about these new tax figures please contact us.

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.

 

If the nominated Executor in your Last Will and Testament dies, then you should meet with an experienced estate planning attorney to review and possibly update your will to account for the loss. If you do not update your Will, then, upon your death, the court could appoint the successor executor(s) that are nominated in your will.

If you did not nominate a successor executor, or if the successor executor is not able or willing to serve as executor, then the court could appoint a fiduciary known as an “Administrator c.t.a.”.

The Administrator c.t.a. acts like an executor in that once appointed he or she is responsible for marshalling the estate assets, paying the administrative expenses and debts of the estate and administering the estate assets pursuant to the terms of the will.

New York State law states when Letters of Administration c.t.a. are issued by the appropriate Surrogate’s Court and to whom they can be issued.

According to the law, the persons who can be appointed include

  1. The sole beneficiary of the estate;
  2. A residuary beneficiary of the estate; or
  3. Other person(s) who are interested in the estate.

If the Court cannot appoint someone who is otherwise eligible to act as fiduciary, then it will then appoint the Public Administrator of the county where the decedent resided. The Public Administrator is a government official in each county who administers estates when there are no other authorized persons available to do so.

Even though the law clearly states the priority of who could serve as Administrator c.t.a., it is common for situations to arise where the pending appointment of an Administrator c.t.a. results in estate litigation in the Surrogate’s Court.

It is important to continuously update your estate plan to ensure that your wishes are honored and potential estate litigation is avoided.

We recommend that our clients meet with our experienced attorneys to review their estate plan upon the passing of an individual named in their will or trust.

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.

 

In the simplest terms, a Grantor Trust is a trust that authorizes a grantor (the person who set up the trust) to retain certain powers with respect to the property transferred to the trust and the trust administration.  These powers can include the power to revoke, amend, or terminate the trust, and the power to control some or all of the property in the trust in some way.

The grantor will report items of income, deduction, and credit associated with the trust property on his or her own individual income tax return because the trust is not an independent taxpayer.

A grantor trust can either have its own Tax Identification Number or use the Social Security Number of the grantor.

When the trust uses the social security number of the grantor, then the grantor will usually report the income, deductions and credits associated with the trust property on his or her individual income tax return.

If the trust has its own Tax Identification Number, then the trustee should file a fiduciary income tax return on the IRS Form 1041.

There is an attachment to the form where the trustee would report information about the grantor as well as the income, deductions and credits associated with the trust property. The trustee will give this information to the grantor to report on his or her own individual income tax return.

While grantor trusts are important parts of many strategies used in estate planning, they are complicated. It’s vital for everyone to understand the distinctions between grantor and non-grantor trusts in order to make informed decisions while establishing their estate plan.

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.