December 2016 Newsletter
Andrea Schanker | Dec 01 2016 04:06
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 40 years of experience in counseling clients for their Estate Planning needs.
As always, we encourage feedback from our readers. If there are any topics you wish for us to specifically address or elaborate on, please reach out to us.
The Future of the Federal Estate Tax
There is much speculation about what the future of the Federal Estate Tax will be. President-Elect Trump has made public statements supporting a full repeal of the current Federal Estate Tax, and the Republican party has long favored such a repeal. Our advice, after being in practice for nearly four decades, is that there is no such thing as a crystal ball.
The fact of the matter is that, today, there is only speculation. Estate Tax planning and general Estate Planning must be crafted based on current circumstances. Historical data shows that there has been a Federal Estate Tax for 99 out of the past 100 years, and every repeal attempt has been unsuccessful. The New York Times recently reported that in the last year, 4,918 Federal Estate Tax returns collected approximately $17 billion in Estate Tax — real revenue for the government that will be considered in whatever repeal or reformation may occur.
It is our strong recommendation to regularly review your Estate Plan to ensure it complies with current rules and circumstances. As soon as any legislation is put into effect, we will be contacting our clients to advise accordingly.
"If You Fail to Plan, You Are Planning to Fail"
Benjamin Franklin could not have spoken truer words in terms of Estate Planning.
A consultation with a qualified and experienced Estate Planning Attorney can identify a myriad of red flags triggering expensive, time-consuming, and frustrating legal requirements to right the unintended wrongs caused by lack of planning.
Lack of planning necessitates Guardianship Proceedings, even when there is a well spouse or a custodial biological parent of a special-needs child, or of a minor inheriting assets from an estate. Assets become frozen and unavailable for paying bills, purchasing groceries, obtaining basic life needs, or handling emergencies. In most cases, access to Guardianship funds is subject to Court approval, and the Court-appointed Guardian must account to the Court annually. Guardianship proceedings are most commonly triggered when you do not have a comprehensive and statutorily compliant Power of Attorney, or when a minor inherits assets outright. Do not name a minor as a beneficiary on any accounts or assets without consulting an Estate Planning Attorney.
You should also consider planning for a possible prolonged need for a higher level of health care, whether at home or in a nursing home, including assessing the financial reality of paying for such care. There are generally only three ways to pay: private pay, long-term care insurance, or Medicaid. Medicaid is not an entitlement, and eligibility rules are strict and complicated. Planning to qualify for Medicaid requires a specialized attorney with real experience; problems most often arise when clients transfer assets without qualified guidance, inadvertently disinheriting family members or creating unintended negative tax consequences.
Estate Planning and Elder Law Planning is more than planning for the disposition of wealth and assets — it is creating a plan to protect assets, prepare for significant medical costs, and plan for incapacity and/or disability. Please schedule your annual review if you are an existing client, or a complimentary initial consultation if you are not yet a client.
California, Here We Come!
Schanker and Hochberg, P.C. is pleased to announce it is expanding its practice area. Our associate attorney, Nick Stratouly, was recently admitted to practice law in California. Schanker and Hochberg, P.C. can now prepare estate planning documents and handle estate administration and other legal matters in New York, New Jersey, Florida, and California.
Cover Your (Digital) Ass-ets!
As part of a carefully crafted estate plan, most people want to ensure their assets, especially sentimental ones, go to the proper beneficiary. Unfortunately, one important asset — digital property — is often overlooked; that's a critical mistake in this modern age where technological assets (social media memories, photo albums, and connections) often hold as much "value" to each of us as any other sentimental item.
Until September 2016, there was no applicable New York law concerning disposition of digital property upon death or incapacity. Online service providers were frequently reluctant to release information to a person's fiduciary (Executor, Trustee, or Agent under a Power of Attorney), citing privacy protection. In September 2016, the New York State Legislature revised the Estates, Powers and Trusts Law to include specific provisions for digital property.
The new law, Article 13-A of the Estates, Powers and Trusts Law, sets up a clear framework for how individuals, while alive, can make provisions for access to and disposition of digital property upon incapacity or death. Most useful is an "online tool" — a release form prepared by the online service provider — that lets you specify how the provider is to dispose of your digital property upon incapacity or death.
If you fail to utilize an online tool, or the provider doesn't offer one, the statute sets forth an alternative procedure involving granting certain rights and powers to your fiduciary in your Will, Trust, or Power of Attorney. The most important right under the statute is clear consent to access by your fiduciary; using either an online tool or a Will, Trust, or Power of Attorney will explicitly override the service provider's terms-of-service agreement, which is often used to stonewall a fiduciary's access.
Finally, the new statute creates a procedure for closing digital accounts after death; there have been many instances where social media and service providers prevented a grieving family from closing such accounts. Article 13-A remedies that situation and helps protect families during their time of grief.
Given the drastic change in applicable law and the importance of digital property in the modern age, it is crucially important that your documents be updated to include the procedures and directives set forth under Article 13-A. If you are concerned that your documents are not up to date, contact Schanker and Hochberg, P.C. to discuss the necessary changes needed to ensure your digital assets are properly disposed of and managed upon your death or incapacity.
Extensive Services Include
- Complimentary Initial Consultations for Estate Planning, Probate, and Estate Administration matters (not for matters of Elder Law or Special Needs Planning)
- Complimentary Annual Review meetings for existing clients
- Complimentary Family meetings for existing clients
- Tax alert services for existing clients
Tax Alert for New Jersey Residents — New Jersey Repeals Its Estate Tax as of 2018
An important new tax development will have a major impact for New Jersey residents. New Jersey currently has the lowest threshold for state estate taxation in the country, at $675,000 per person. Governor Christie has signed legislation repealing the New Jersey State Estate Tax entirely.
The $675,000 exemption remained in effect until December 31, 2016. In 2017, the New Jersey Estate Tax Exemption increased to $2,000,000 per person. As of January 1, 2018, the New Jersey Estate Tax will be repealed entirely. However, New Jersey will still impose an Inheritance Tax on beneficiaries other than a surviving spouse and lineal descendants (children and grandchildren), of up to 15% of their inheritance.
All New Jersey residents should review their Estate Planning documents in light of this major change. Trusts established specifically to exempt assets from the New Jersey Estate Tax will no longer be necessary. Please contact us for a complimentary appointment to review your documents in light of this change.
Moving? Check Your Will!
As part of what has become a series in our prior newsletters, we have written about inter-jurisdictional issues that may arise with living wills, health care proxies, and powers of attorney — all critical lifetime documents. But what about one of the most critical death-related documents, the Last Will and Testament? If you execute a Will in New York, for instance, but later move to Florida, will your Will be honored there?
Thankfully, all fifty states and the District of Columbia recognize the validity of Wills executed outside the state or jurisdiction, provided the Will was executed according to the formalities of the jurisdiction of execution. That doesn't end the inquiry, though; there are other issues implicated when a Will conforms to the law of one state but not another.
For instance, certain provisions valid in a Will executed in one state may not be recognized in another. One such provision is a "no contest" or "in terrorem" clause, used to deter a Will contest after death. Such clauses are valid in New York (with exceptions), but not recognized in Florida and should be removed from documents there.
Certain states also have different rules of construction for interpreting a Will, which can apply differently depending on whether the Will was executed within or outside the pertinent state, and whether the testator declared which state's law should apply. If you execute a New York Will declaring that New York law should apply and later move to Florida, a Florida court would then have to apply and interpret New York law, even though it may not be well versed in it.
Failing to update your Will upon moving to a new state can also lead to tax issues. While only a handful of states (including New York) have state estate or inheritance taxes, planning built for one state's tax could add unnecessary administrative expense elsewhere — or worse, the reverse: moving to a state with an estate tax without updating your planning could create a large, unnecessary tax liability for your loved ones.
Finally, different states have different property laws governing disposition upon death, and these need to be accounted for in your Will, lest your loved ones face a construction proceeding upon your death. Foresight can help avoid a potentially costly situation caused by discrepancies among state laws governing Wills. If you have changed your residence since you last executed your Will, it is crucial that you contact us to discuss additional planning to ensure your Will conforms to the laws of your new home state.
Callaghan Parente LLP — "Of-Counsel" for Advanced Medicaid and Elder Law Planning
Schanker and Hochberg P.C. has recently established a relationship with the Law Offices of Callaghan Parente LLP to further expand our Elder Law and Medicaid services. Elder Law issues are prominent and ever-expanding as our aging population continues to grow. Callaghan Parente LLP brings extensive experience and resources for advanced Elder Law and Medicaid needs. Although we remain two independent law firms, we maintain a close, ongoing relationship to maximize our legal expertise for the benefit of all of our clients.
Extensive Services at Schanker and Hochberg P.C.
Schedule a complimentary appointment to review existing Estate Planning documents in our Long Island Office, our Manhattan Office, or our New Jersey office. Contact us at our main telephone number, (631) 424-5400.
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, where he wrote a monthly column on personal and estate planning. Mr. Hochberg has been interviewed by the New York Times and other prominent publications, and has written articles for The Tax Advisor and The CPA Journal.
His patient and understanding manner is well-suited for the field he has chosen: estate planning is a cooperative rather than confrontational process. Mr. Hochberg resides in Plainview, New York, with his wife, a financial consultant.
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 and California.
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.