December 2013 Newsletter

Welcome Back

Schanker and Hochberg P.C. is a premier Estate Planning law firm. We offer legal services for sophisticated Estate and Gift Tax planning, Decedent Estate Administration and Probate services, Business Succession Planning, Charitable Giving, Special Needs Planning for persons with disabilities, simple Will planning, and all aspects of Elder Law planning including Medicaid planning and applications.

Our website provides detailed information about our practice and the services we offer. It also is an excellent resource for articles of interest about Estate Planning and Estate and Gift Tax Laws. A copy of each newsletter will always be available on our website.

Estate Planning is so much more than just tax planning. There is a considerable decision-making process. Schanker and Hochberg P.C. has over 30 years of experience in counseling clients for their Estate Planning needs.

Extensive Services at Schanker and Hochberg P.C.

  1. Complimentary Initial Consultations
  2. Complimentary Annual Review meetings for existing clients
  3. Complimentary Family meetings for existing clients
  4. Tax alert services for existing clients

Thinking Ahead to the Year's End

For 2012, over 500,000 Federal Gift Tax returns were filed because of the risk that Congress would reduce the Lifetime Gift Tax Exemption from $5.12 million to $1 million. The exemption is now "permanent" (until Congress legislates otherwise) and indexed for inflation, so as of 2013, you have a $5.25 million (or $10.5 million for a married couple) Lifetime Gift Tax Exemption — an additional $130,000 (or $260,000 for a married couple) available for gifting. Consider making discounted or outright gifts.

Any gifts intended to qualify as made in 2013 must also be accepted, or the check cashed, in 2013 to be considered a complete gift. The IRA charitable rollover remained in effect for 2013, allowing direct distributions from an IRA to a charity (up to $100,000) to be excluded from gross income and count toward the required minimum distribution for individuals over 70.

If you haven't reviewed your Estate Planning documentation recently, now is a good time — review your fiduciaries, titling designations on assets, and beneficiary designations on retirement plans.

Elder Law and Planning for Individuals with Disabilities

Schanker and Hochberg P.C. has incorporated planning for issues in the aging community, such as:

  • Helping evaluate ways to pay for long-term care
  • Making sure the correct planning is in place in case of incompetency issues
  • Providing guidance on the best placement for an individual who needs long-term care
  • Helping identify the best course of action in managing the affairs of a person who has become incompetent to make decisions on their own
  • Article 81 Guardianship Proceedings (representing a mentally incapacitated person who doesn't have a Durable General Power of Attorney and/or Health Care Proxy)
  • Fine-tuning your Estate Planning when a beneficiary has special needs or disabilities, so they do not become ineligible for certain Federal benefits

Our consultations are comprehensive and provide a personalized, detailed evaluation of available options catered to the situation. There is a consultation fee for evaluations concerning Elder Law issues and planning for individuals with disabilities.

Noteworthy Developments

On June 26, 2013, the United States Supreme Court ruled that the Defense of Marriage Act (DOMA) is unconstitutional, meaning that in states where same-sex marriage is legal, federal laws providing benefits to married couples must also provide those benefits to same-sex married couples. This decision affects benefits such as COBRA, health insurance coverage, ERISA pension provisions mentioning spouses, and 401(k) plan provisions mentioning spouses. Notably, the unlimited marital deduction now applies for purposes of the Federal Estate Tax and Gift Tax.

New York had passed legislation earlier that year to discontinue a partial tax abatement for Co-Ops or Condos owned by a Trust instead of an individual; that legislation was subsequently amended to preserve the abatement for Co-Ops and Condos owned in Trusts, such as Revocable Trusts.

Paralegal Perspective — Amy Fiderer

I have been a paralegal at Schanker and Hochberg, P.C. for seven years, drafting Estate Planning documents under attorney supervision. One important document we prepare for clients is the Health Care Decisions Declaration, which has two parts: the Living Will and the Health Care Proxy.

The Living Will provides that, in the event you are comatose with no hope of recovery, you may be allowed to die with dignity. It is not a Do Not Resuscitate order ("DNR"), which tells medical professionals not to perform emergency CPR if you stop breathing or your heart stops, and which a person can elect even if death is not imminent. Our office does not prepare DNRs.

The Health Care Proxy names a person to act as your Agent and communicate with your doctors when you're unable to do so yourself. It's important to let your Agent know they've been nominated and to discuss your wishes with them.

Our office does not retain signed copies of your Health Care Decisions Declaration, but we prepare multiple originals for distribution to your primary Agent, alternate Agent, and primary care physician, and we also handle mailing the documents to the necessary parties, since agents will need the signed, original document to act on your behalf.

Effective Bystander CPR

Nearly 383,000 out-of-hospital sudden cardiac arrests occur annually. Effective bystander CPR and use of an AED (Automated External Defibrillator) can increase the chance of survival up to 90%. Schanker & Hochberg, P.C. is proud to announce recent CPR and AED training for staff, and has implemented a Public Access Defibrillation (PAD) program by purchasing an AED for the office.

Common Estate Planning Misconceptions

Procrastination: "I will never become incompetent, get sick, or die." According to a survey conducted by Harris Interactive for Martindale-Hubbell and lawyers.com, nearly 55% of all adult Americans do not have a Will. Reasons include not wanting to think about death or incapacity, not knowing who to approach about creating an Estate Plan, and mistakenly believing they don't have sufficient assets to justify the time and expense. Uncertainty about who to choose as fiduciaries can also lead to a kind of paralysis, leaving these decisions to strangers via a Surrogate's Court proceeding that can be costly and may result in someone you never intended — or worse, a Public Administrator — becoming fiduciary.

Preparing your own Estate Plan, or not consulting a specialist. Estate Planning is a highly specialized field with its own intricate laws and statutes. An experienced Estate Planning attorney counsels not only on the law but on the "human factor" — who should serve as fiduciaries, and at what ages and in what manner beneficiaries should receive distributions.

Incorrect or inappropriate beneficiary designations. Designations affect tax liability, the value of an asset after death, and its management. Life insurance, for example, is included in a decedent's net worth for Estate Tax purposes, but particular ownership and beneficiary designations can exclude the death benefit from the taxable estate entirely. Strategic beneficiary designations on qualified retirement benefits like 401(k)s and IRAs can similarly maximize value and allow the asset to become multigenerational.

"Estate Planning is only for the wealthy, and I won't be subject to an Estate Tax." The Federal Estate Tax Exemption is $5.25 million per person, and the New York Estate Tax Exemption is $1 million, an independent tax from the Federal Estate Tax. Even if an estate will never be taxable, the "human factor" — custodial decisions for minor or special needs children, and protections against spendthrift tendencies, creditors, and marital considerations — remains a reason to plan.

"The cost of Estate Planning isn't worth it." The Estate Tax is commonly referred to as a "voluntary tax," since so many available techniques can significantly minimize or even avoid it. Financial planning should always include an Estate Planning analysis.

"Probate is no big deal." Probate is the process of submitting a Will for Surrogate's Court review, requiring a Probate Petition and filing fee based on the Estate's value. Each statutory distributee must be notified and sign a written consent to the Executor's appointment. Probate is a public proceeding and incurs unnecessary expense in filing and legal fees. A Revocable Living Trust, commonly called a "Will Substitute," avoids probate for assets titled in it at the time of death.

"Once I've executed my Estate Planning documents, there's nothing more to do." An up-to-date asset inventory should be kept so your Estate's representatives don't have to search through papers to locate records or track down unknown beneficiaries or fiduciaries. Fiduciaries should know who they are and how to act. Signed documents are not complete on their own — Probate is only avoided by using a Revocable Living Trust when assets are already titled in the Trust at the time of death, beneficiary designations must be effectuated once documents are executed, and gifting strategies often require appraisals and assignments to enjoy available discounts.

Extensive Services at Schanker and Hochberg P.C.

  1. Complimentary Initial Consultations for Estate Planning, Probate, and Estate Administration matters
  2. Complimentary Annual Review meetings for existing clients
  3. Complimentary Family meetings for existing clients
  4. Tax alert services for existing clients

Our main office is housed in an elegantly restored Victorian structure in the heart of Huntington Village. Here, we welcome you and your family into a relaxing, warm setting where we will work together to improve your circumstances and achieve your goals. To better serve our clients and their families, we also have convenient office locations in Midtown Manhattan and New Jersey; we also offer our services to clientele in Florida.

Highlighted S&H Attorney: R. Mark Hochberg

R. Mark Hochberg received a Bachelor's degree in Economics from Rutgers University, a law degree from Brooklyn Law School, and a graduate law degree with a concentration in estate planning and taxation from the University of Miami Law School. Mr. Hochberg is a member of the New York, New Jersey, and Florida Bars and is admitted to practice before the United States Tax Court and the Supreme Court of the United States.

Mr. Hochberg has lectured and written extensively on estate planning topics. He was an adjunct instructor at Adelphi University for ten years and is a former columnist for Financial World Magazine. Mr. Hochberg resides in Plainview, New York, with his wife, a financial consultant, and his two daughters.

GENERAL DISCLAIMER: While we hope this newsletter provides useful information, please know that this newsletter does not predict or guarantee the outcome or result in any particular situation, and no attorney-client relationship exists or is established as a result of this newsletter or its receipt.