September 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.

Learning the Hard Way

We all recently learned an Estate Planning lesson from the very unfortunate and untimely death of celebrity actor James Gandolfini (best known for his role in The Sopranos as Tony Soprano). This extraordinarily talented and successful man had a poorly prepared Estate Plan that exposed all Estate matters to the public because he used a traditional Last Will and Testament instead of a Revocable Living Trust. Because of a virtual complete lack of Estate Tax planning, more than fifty percent of his assets may end up paid to the IRS and the State of New York. With insufficient life insurance, the Estate will also be forced to liquidate assets to pay the taxes due nine months from the date of death.

Mr. Gandolfini's family, beyond the terrible grief of their loss, are now subjected to significant publicity concerning Estate Tax issues and decisions. Careful planning with an experienced Estate Planning attorney could have prevented this unfortunate result.

Unique Assets and Valuable Collectibles

Collecting is a popular passion for many people. We accumulate valuable collections based on our hobbies, investment strategies, and appreciation for the finer things in life. After years, or often a lifetime, of collecting, it's easy to accumulate a significantly valuable collection — and upon death, there can be distressing consequences if no planning is in place.

  1. Plan. Unique assets require unique planning. Do your heirs want your collections? Do they know who to contact to appraise the collection for Estate Taxation or sale? Do you want your valuable collection used as part of legacy planning, or as collateral for liquidity as an investment strategy? Are you charitably inclined? Consider how best to exclude the most value from your taxable estate.
  2. An Estate has nine months from the date of death to file and pay Estate Taxes. If the collection must be liquidated, the Estate could take a big hit, since proceeds could be significantly less than the asset's true worth if sold in a weak market. Consider insurance.
  3. Assess what you have, how you acquired each item, and what you paid for it. Keep records.
  4. Determine ownership and authenticity. The United States, according to the FBI, is the world's largest market for stolen art, so make sure your collection has documentation to establish authenticity and provenance.
  5. Insure your collection. Theft or damage can occur while you're alive and also after death while your estate is being administered, especially if your home sits unoccupied for a period after your death.
  6. Let your heirs know how or to whom they should turn for possible liquidation — keep a file of legitimate auction houses, appraisers, and dealers.

Schanker & Hochberg, P.C. Welcomes New Associate Attorney Melanie A. Schanker, Esq.

Estate Planning for the Small Business Owner

Small businesses — privately owned corporations, partnerships, or sole proprietorships commonly owned by more than one person — take hard work to grow, and special consideration should be paid to planning for disability, retirement, mental incapacity, and death.

Disability: What happens if you, as the owner, become disabled and can no longer perform your duties? Is disability insurance in place, and is there a plan for a possible buy-out by a partner?

Retirement (the "Exit Strategy"): What is the protocol for retirement? The most valuable asset you spend a lifetime building can be destroyed without an effective exit strategy.

Incapacity: Do you have a Durable General Power of Attorney in place so your interest in the business is represented by someone you designate upon incapacity?

Death: If your family inherits your share in the business, are they qualified to run it? Do they want it? Do they get along with your partners?

A "buy-sell" agreement is an excellent device to plan out these intricacies. It's a contract between co-owners providing direction for instances of disability, retirement, incapacity, and death, and defines how to arrive at a price should one owner wish to buy out the other — often a point of contention between parties. A plan minimizes unnecessary costs and inevitable frustrations.

Items to Be Aware of When Someone Dies

In addition to coping with the emotional stress of a close family member or friend's death, the practical responsibility of settling an Estate can be overwhelming. Here are some things to be aware of:

  1. If the deceased had an Estate Plan and you are named Executor or Trustee, contact the Estate Planning attorney who prepared the documents and locate the original Will. Initial consultations about Estate Administration or Probate are usually complimentary.
  2. Probate may be necessary to obtain the required authorization to distribute assets held in the deceased's name at time of death. An Estate Tax return is required to be filed with the State and the IRS if the taxable estate exceeds the applicable thresholds.
  3. Look for directions about bodily disposition, funeral arrangements, and burial preferences that may have been specified in the deceased's Estate Plan.
  4. Obtain duplicates of certified Death Certificates used to administer the Estate — usually 10–15 copies, with more available if needed.
  5. Some general notifications include: contacting the Post Office to forward mail (a death certificate is usually required); contacting the Social Security Administration to advise of the death and inquire about survivor benefits (note that Social Security will claw back the payment for the month the decedent passed away); contacting the Veterans Administration if the deceased was a veteran with a surviving spouse; contacting health, auto, and property/casualty insurance providers to stop coverage and obtain refunds of unused premiums; and locating and identifying the deceased's digital assets and online presence.

There is a tremendous amount of work potentially involved in settling someone's affairs, and organization is absolutely imperative. Schanker and Hochberg P.C. specializes in Estate Administration, Probate, and the preparation and filing of Estate Tax returns; professional guidance can prevent unnecessary delays, expenses, and negative legal implications.

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, ensuring correct planning is in place for incompetency issues, providing guidance on the best placement for long-term care, helping manage the affairs of someone who has become incompetent, Article 81 Guardianship Proceedings, and fine-tuning Estate Planning when a beneficiary has special needs or disabilities so they do not become ineligible for Federal benefits. Our consultations are comprehensive and personalized; there is a consultation fee for Elder Law evaluations and planning for individuals with disabilities.

Long-Term Care — The Cost of Care and the Aging Population

Most people plan to save enough for retirement, but is everyone prepared to pay for long-term care? This should be a significant concern, especially as the oldest baby boomers turn 67. Statistics show 40% of people past age 65 will need some type of nursing home care, with an average stay of nearly 2½ years. The average nursing home cost is $100,000 per year (on Long Island, closer to $144,000). Even those with adequate resources face the issue of depleting the legacy intended for the next generation. There are three main ways to pay for long-term care:

Long-Term Care Insurance. Advantages include flexibility in the details of your care (home, assisted living, or nursing home); hybrid products offering a death benefit if the coverage is not used; and possible tax savings through deductions for premiums paid. Disadvantages include cost, which depends on the age at which you purchase it, and the "use it or lose it" nature of traditional policies. Partnership policies, approved in most states including New York, Connecticut, New Jersey, and Florida, allow people who have accumulated too many assets to qualify for regular Medicaid to keep those assets while still qualifying for Medicaid coverage after their long-term care coverage is used.

Medicaid (note: Medicare does not pay for long-term care) has the advantage that the state pays, not you, but comes with inflexibility, mandatory annual recertification, and strict eligibility standards. In New York, resource levels for a married couple are currently $21,150 (exempting personal belongings, one vehicle, and a primary residence if occupied by the applicant), with income levels of $1,175 per month for a couple.

Private payment preserves assets for heirs if long-term care ultimately isn't needed, and offers flexibility in choosing your care, but carries the risk of running out of money if expenses run higher than planned. Using home equity via a reverse mortgage is one option, available to homeowners 62 or older who own their home outright or have a low mortgage balance, but it can be costly and must be repaid when the home is sold or no longer used as a primary residence.

The sooner you begin thinking about paying for long-term care, the more choices will be available down the road. It may be worth discussing with your life insurance advisor whether long-term care insurance is right for you compared to other available options.

Your Family Is Invited

One thing is certain — we all die, 100% of us. Yet the sad truth is that less than 50% of Americans actually plan for it. Estate planning is not just about yourself; it most often involves spouses, children, and others who play significant roles in your life, so it can be valuable for them to understand what they need to know in case of your passing. Whether or not you have an existing estate plan, we invite you to come to our office for a complimentary consultation to review your existing plan, or to review what would happen without one. Bring your family, friends, investment advisor, accountant, insurance advisor, or anyone else you'd like at the meeting.

Paralegal Perspective — Nikki Willard

I have been a senior drafting paralegal at Schanker and Hochberg for nine years, drafting many estate plan documents for many clients. One thing I've observed is that the best estate plans are those that are well thought out. Most people avoid thinking about their own deaths and how their estate should be distributed, and don't approach the subject until forced to by circumstances — going away on vacation, facing surgery, or serious health issues. When these decisions are made hastily, they may not be ideal for the client or their family. I encourage all clients to sit down with one of our attorneys and discuss their situation at length, to help develop a satisfactory estate plan in everyone's best interest.

Extensive Services at Schanker and Hochberg P.C.

  1. Complimentary Initial Consultations for Estate Planning, Probate, and Estate Administration (not for matters of Elder Law or Special Needs Planning)
  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: Melanie A. Schanker, Esq. Joins Schanker and Hochberg P.C.

Melanie Schanker, Esq. graduated from St. John's University School of Law in 2007, where she was editor of the Law Review, and earned her B.B.A. in 2004, majoring in Finance and Accounting at Emory University's Goizueta Business School.

Ms. Schanker is admitted to practice law in New York and New Jersey. Prior to joining Schanker & Hochberg P.C., she spent six years with The Ayco Company, a subsidiary of Goldman Sachs, delivering comprehensive wealth management for high-net-worth individuals and Fortune 500 executives, guiding clients in investment allocation, tax planning, insurance needs, employee benefits, and retirement planning, and regularly discussing Estate Planning issues on behalf of her Ayco clients.

Ms. Schanker joined Schanker & Hochberg P.C. in 2013, specializing in Estate Planning, Estate Administration, and Elder Law. She resides in Huntington, NY, and enjoys baking, yoga, and traveling.

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.