Winter 2016 Newsletter
Andrea Schanker | Jan 01 2016 10:06
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 30 years of experience in counseling clients for their Estate Planning needs.
Happy New Year!
Schanker and Hochberg P.C. wishes everyone a very happy and healthy new year. We want to thank our colleagues and clients for their continued support, referrals, and patronage. We take great pride in our work and our legal representation, and it is because of the many long-standing relationships we have established and maintained together that we have earned our esteemed reputation. We hope 2016 brings prosperity and great things.
2016: A New Year
Now that we are in a fresh new year, it is time to make sure your Estate Planning is in order:
- Can you locate your original Estate Planning documents?
- Can your Trustee(s), Power of Attorney, Health Care Proxy, and Executor access original documents when they may need them? Do they know who your attorney is?
- Are you up to date with your titling designations to avoid Probate?
- Is it time to consider additional gift strategies to mitigate the Estate Tax?
- Have your planning decisions changed?
Documents don't self-adjust to changed fiduciary designations or changed bequests, and handwritten notes are not effective. Take advantage of our complimentary annual review service or schedule an initial consultation.
Welcome to Nicholas Stratouly, Esq.
We are pleased to welcome Nicholas Stratouly, Esq., who is joining us as an Associate Attorney after being sworn into the practice of law in the State of New York. He brings exceptional ability, sensitivity, and a keen interest in the practice of law, and we know he will achieve great things.
Estate Taxation
2016 Federal Estate Tax Exemption: $5,450,000, with a 40% tax rate on amounts in excess. Portability preserves the exemption of a deceased spouse at this rate only if a properly completed Federal Estate Tax Return is prepared and filed.
2016 Annual Gift Tax Exclusion: $14,000 per donee (per person you gift to); $28,000 per married couple. These gifts do not count against your lifetime gift tax exemption ($5,450,000).
New York State Estate Tax Exclusion: April 1, 2015–April 1, 2016: $3,125,000. April 1, 2016–April 1, 2017: $4,187,500. April 1, 2017–January 1, 2019: $5,250,000.
January 1, 2019: The New York Estate Tax Exclusion rate is projected to match the Federal Estate Tax Exemption, projected to be approximately $5,900,000. However, the New York State Estate Tax will remain separate from the Federal Estate Tax, so you could be vulnerable to both a Federal and a State Estate Tax if your Estate exceeds the applicable thresholds.
New York State Estate Taxation: On amounts in excess of the New York State Estate Tax Exclusion, New York taxes at a top rate of 16%. The calculation has a tax "cliff" when the Estate's assets exceed 105% of the exclusion amount; if you "jump off the cliff," 100% of the Estate is taxable from dollar one. If you are within the 5% limit, the New York State Estate Tax only applies to the amount exceeding the threshold.
New York's Limited Gift Tax: For gifts made between April 1, 2014 and January 1, 2019, the value of the gift will be "clawed back" into the taxable Estate for Estate Tax purposes should you die within three years of making it.
New York does not offer portability of the Estate Tax Exclusion, meaning the only way to double the Estate Tax Exclusion between spouses is through specific provisions in your Wills or Revocable Living Trusts.
2016 New Jersey Estate Tax Exemption: $675,000 per person, with a top tax rate of 16%. New Jersey also imposes an inheritance tax on beneficiaries other than a surviving spouse and lineal descendants, of 15% of their inheritance, and does not offer portability of the Estate Tax Exemption.
It is imperative to review your Estate Tax Planning if you are vulnerable to either the State or Federal Estate Tax. Please call our office for your complimentary annual review meeting or to schedule an initial consultation.
Life insurance is subject to Estate Taxation if you are the owner. It is imperative to consider this as part of your Estate Tax evaluation, since it is quite simple to remove the value of life insurance from the taxable Estate. It's also important to have life, disability, and long-term care insurance policies reviewed periodically to ensure they are still performing optimally and providing adequate coverage.
The Not-So-Bon Voyage
As winter and spring vacation season approaches, many of us will visit extended family and friends or enjoy some relaxation somewhere new and exotic. Despite all the glories of travel, going to new places begs the grim question: if something grave happens to you while on vacation, will your health care directives be honored?
Fortunately for those who remain within the United States, the laws governing health care directives ("living wills") are fairly uniform, at least in 26 states and the District of Columbia, which have "full reciprocity" — meaning a health care directive validly executed elsewhere is valid within that jurisdiction.
Despite that uniformity, 24 states do not have streamlined reciprocity. Five of those 24 require the health care directive to be executed in conformance with their own laws ("inward reciprocity"), twelve grant limited reciprocity, and the remaining seven have either no explicit provisions for reciprocity or no explicit statutory authority for health care directives at all — meaning a directive may be entirely ignored.
The situation is even more uncertain for international travelers; most Western countries recognize foreign health care directives under the doctrine of "comity" (respect for another country's laws), but that determination is made case by case.
| Reciprocity | Jurisdictions |
|---|---|
| Full | AR, CA, DC, DE, FL, GA, HI, IL, LA, ME, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OR, OH, RI, SD, TN, WV, UT, VT |
| Inward | AK, ID, MN, MS, SC |
| Limited | AL, AZ, CO, CT, IA, MD, OK, PA, TX, VA, WI, WA |
| Unclear | IN, KS, KY, MA, MI, MO, WY |
Despite this patchwork of laws, good foresight can help avoid a potentially traumatic situation for you and your family should you be seriously injured while traveling in another jurisdiction. If you spend regular, recurring, or otherwise significant time in another jurisdiction, contact us to discuss planning to ensure your health care directives are honored wherever you may be.
Co-Op Ownership and Probate, "Oh My"
One of the primary goals in effective Estate Planning is avoiding Probate in the Surrogate's Court at time of death. Assets owned in an individual's name or as "tenants in common" require Letters Testamentary to be issued to the Estate's Executor, achieved only through a Probate proceeding. Probate is avoided when assets are titled in Trust, titled "joint with rights of survivorship," or have designated beneficiaries on record.
In real estate, there is a legal presumption that if spouses are listed on the deed, automatic rights of survivorship apply, and title passes to the surviving spouse by operation of law upon the first death, with no Probate required. Co-ops, however, are not considered real estate — they are technically stock ownership in a corporation. For co-ops purchased before 1996 in New York State, unless the stock certificate specifically states "with rights of survivorship," a Probate proceeding would be required before that share of the co-op could be transferred to anyone.
After 1996, the presumption of "joint with rights of survivorship" applies when two spouses are named on the stock certificate, even without an explicit designation on its face.
If you purchased your co-op prior to 1996, you may wish to have the stock certificate re-issued to designate rights of survivorship, or re-issue ownership to your Revocable Living Trust. The issue is more complicated if you also lack a Will; recall that under New York's intestacy rules, if you are married with children, $50,000 plus one-half of your assets automatically passes to your surviving spouse, with the remaining half to surviving children. Please contact us to discuss this further if you own a co-op purchased prior to 1996 in New York State.
Extensive Services at Schanker and Hochberg P.C.
- Complimentary Initial Consultations for Estate Planning, Probate, and Estate Administration (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
Schedule a complimentary appointment to review existing Estate Planning documents in our Long Island Office, our Manhattan Office at the Empire State Building, or our New Jersey office. Contact us at (631) 424-5400 or (212) 564-3307.
I Have an Estate Plan; Now What? Top Tips to Maintain Your Planning
- Make sure someone other than yourself (and your significant other) knows who to contact first. Most clients keep their original, signed Wills in our Will safes; if Probate is necessary, the original must be produced — a copy is not sufficient. Your Executor and/or Trustee should know who your Estate Planning attorney is and where to find your original Will.
- Keep a "critical information" list, including contact information for your Estate Planning attorney, accountant, financial advisor, and life insurance advisor, along with a list of your accounts, any safe deposit box, and any accounts you manage online, plus who to contact about selling art, antiques, or collectibles.
- Schedule a Family Meeting. Sit down with your Estate Planning attorney, your family, and those you have appointed as fiduciaries to discuss the responsibilities each may have when it comes time to act, whether as Trustee, Executor, Attorney-in-Fact, Health Care Agent, or Guardian.
- Review your Estate Plan regularly. We offer complimentary annual review meetings for our clients so your documents can be reviewed to ensure your decisions remain current.
- Consider writing a Letter of Intent to be kept with your original Will, directing where you wish specific personal items (jewelry, art, household items, memorabilia) to go.
- Discuss your intentions with anyone you name as Trustee. Trustees often have discretion under a Trust's terms to invade principal for a beneficiary's benefit, or to withhold distributions; a conversation helps them understand how you wish that discretion to be applied.
- Discuss your medical preferences with your Health Care Agent, and make sure that person knows who your primary care physician is and how to reach them.
Happy New Year!
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: Nicholas Stratouly, Esq. (Associate)
Nicholas Stratouly, Esq. received his Bachelor of Arts from Boston College and his Juris Doctor from St. John's University School of Law, graduating cum laude from Boston College and on the Dean's List at St. John's. He is admitted to practice before the Courts of the State of New York, and is a member of the New York State Bar Association, the Nassau County Bar Association, the LGBT Bar Association of Greater New York, the Young Professionals group of the Huntington Chamber of Commerce, and the Huntington Lawyers' Club.
While at St. John's, Mr. Stratouly was Executive Notes and Comments Editor for the Journal of Civil Rights and Economic Development, and his work has appeared on the Journal's website and in THE JURIST, an online legal forum. He resides in Old Brookville with his fiancé, Justin, a law student at St. John's.
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.