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2014 National Healthcare Decisions Day

Author: Linda Grear


April 12th, 2014

The 2014 National Healthcare Decisions Day is Wednesday, April 16, 2014.

Over 100 million American adults have not designated an agent to make medical decisions nor documented the type of medical care they desire. Although it is a difficult issue to address, it is important for all adults to consider who is best-suited to make medical decisions for them the event they become too ill to convey their wishes personally.

Family Health Care Decisions Act: On March 16, 2010, New York passed the Family Health Care Decisions Act. The FHCDA allows family members to make medical decisions, including decisions about the withholding or withdrawal of life-sustaining treatment, on behalf of patients who have lost their ability to make such decisions and have not prepared advance health care directives (such as a Health Care Proxy or Living Will) if the patient’s wishes can be shown by “clear and convincing evidence”.

Warning: The Family Health Care Decisions Act may give some a false sense of security and belief that written advance health care directives (Health Care Proxy or Living Wills) are not needed. That is not the case.

The legislation established a protocol for health care practitioners to determine whether a patient has decision-making capacity. When it is determined that a patient does not have decision-making capacity, the legislation requires the selection of a ‘surrogate’ from a list of individuals ranked in order of priority, including family members, domestic partners and close friends.

The FHCDA does not solve problems where individuals desire to make very specific medical decisions for themselves based upon their own personal, religious or moral beliefs. Additionally, in family disputes, there may still be issues. For example, if several siblings have differing opinions regarding medical care for a parent, there will be problems to address.

Without advanced written directives for medical care, family members are left in the precarious situation of trying to figure out what to do. The FHCDA clarifies a decision-making hierarchy that may be helpful in emergency situations; however, the FHCDA does not obviate the need for a Health Care Proxy and/or Living Will. Under the statute, the health care surrogate is obligated to make decisions based on clear and convincing evidence of the patient’s wishes. The best way for a patient to express his/her own wishes, avoid family conflicts and select one’s own health care agent is to have a written health care directive (Health Care Proxy and/or Living Will).

The failure to specifically designate an agent to carry out your wishes may create a bitter, lengthy legal battle among family members and doctors in an effort to determine what treatments you would want. If you wish to give someone the ability to refuse treatment on your behalf (such as ventilator assistance, feeding tubes or cardio-pulmonary resuscitation), it is important to leave a written document (Health Care Proxy and/or Living Will) giving an agent authority to refuse treatment on your behalf.

Health Care Proxy: A Health Care Proxy is a document which allows you to designate an agent to make health care decisions in the event you are unable to do so. Your health care agent should be a person you trust to be able to carry-out your wishes and deal with your physicians.

Living Will: A Living Will supplements the Health Care Proxy by allowing you to document your wishes concerning treatment under certain instances, such as a terminal illness, or in the event you are in a vegetative state where there is no reasonable likelihood of recovery.

Appointing a health care agent is a good idea even if you are not terminally ill. A health care agent can act on your behalf should you ever become temporarily impaired. For instance, if you are unconscious as a result of a general anesthesia or have become comatose because of an accident, your agent would be able to make any necessary health care decisions on your behalf and could also arrange for the payment of your health care costs.

You are to be commended if you had the foresight to execute a Health Care Proxy; however, be advised that privacy rules have been enacted which could have a serious impact on your designation. On April 13, 2003, the Health Insurance Portability and Accountability Act (commonly referred to as “HIPAA”) took effect. These HIPAA regulations apply to virtually every physician, dentist, nurse, and health care provider in the nation. The intention of the HIPAA legislation was to standardize the transmission of health care information and require providers to take “reasonable efforts to limit protected health information to the minimum necessary to accomplish the intended purpose of the use, disclosure or request.”

In other words, if your Health Care Proxy was executed prior to 2003 and disclosure of protected health information is necessary for your treatment, your agent could be denied access to your health or medical information, which would then have an impact upon your agent’s ability to provide care for you. Therefore, it is prudent that you complete a HIPAA authorization or execute an updated Health Care Proxy, which should include the appropriate HIPAA language to authorize your agent to make informed medical decisions as a result of having full access to protected health information.

If you have any questions about the above material, or wish to speak to an Elder Law/Estate Planning attorney, please contact HoganWillig, Attorneys at Law at (716)636-7600 or visit www.hoganwillig.com. HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

New NYS Estate Tax Law

Author: Linda Grear


April 3rd, 2014

On March 29, 2014, Gov. Andrew M. Cuomo and legislative leaders announced an agreement on New York State’s 2014-2015 budget which included several tax law changes.

As of April 1, 2014, the legislation made significant changes to the estate and gift tax law. First, there is an increase of the New York State estate tax exemption over a four year period to $5.9 Million, by the year 2019, so the NYS estate tax exemption will conform with the Federal estate tax exemption.

Before April 1, 2014, the amount an individual could leave at death without owing NYS estate tax was $1 Million and the decedent’s estate would only pay NYS estate tax (with up to 16% top rate) on assets above the $1 Million threshold.

As of April 1, 2014, the NYS estate tax exemption amount is $2,062,500, which will shield many more individuals from NYS estate taxes. However, if an individual dies with just 5% more than $2,062,500, there is a cliff taxing the decedent on the full value of the estate, not just the amount over the exemption amount. This is a significant change in the estate tax law.

Updated NYS estate tax exemption schedule:
For deaths as of April 1, 2014 and before April 1, 2015, the exemption is $2,062,500.
For deaths as of April 1, 2015 and before April 1, 2016, the exemption is $3,125,000.
For deaths as of April 1, 2016 and before April 1, 2017, the exemption is $4,187,500.
For deaths as of April 1, 2017 and before January 1, 2019, the exemption is $5,250,000.

Commencing January 1, 2019 and later, the NYS exemption amount will be linked to the Federal amount, which the IRS sets each year based on inflation adjustments (projected to be $5.9 Million in 2019). The top NYS estate tax rate remains at 16%.

In addition to the cliff, there are other problematic issues with the new law. There is no portability provision, such as under the Federal law, allowing a surviving spouse to use their predeceased spouse’s unused estate tax exemption to shelter twice as much.

Significantly, the new law includes a three-year look-back for taxable gifts for gifts made on or after April 1, 2014 and before Jan. 1, 2019 (those gifts are pulled back into your estate). The value of any taxable gifts made in the three years prior to death will increase the state estate tax due.

If you have any questions about the above material, or wish to speak to an Estate Planning attorney, please contact HoganWillig, Attorneys at Law at (716) 636-7600 or visit www.hoganwillig.com HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

Cuomo’s Estate Tax: Maybe New York Won’t Be One of the Worst Places to Die

Author: Leah Adamucci


March 22nd, 2014

Forbes has dubbed New York one of the worst places to die in 2014. The reason for the moniker is the estate tax which is a tax on your right to transfer property at your death. New York, along with only thirteen other states, still levies the tax. The state estate tax is in addition to the federal estate tax. The liability threshold in New York is $1 million dollars, whereas the federal threshold is $5 million – indexed for inflation to $5.34 million. In New York, the estate tax can be up to 16% of an individual’s taxable estate. To determine if an estate tax return is due in New York, the gross estate must be determined. The New York State Department of Taxation and Finance defines the gross estate to include all property that a person owned, had control over, or had an interest in on the date of his or her death. It is not just limited to what a person leaves, or bequests, in their will. It can include life insurance policies, half of the house one owned with their spouse, a stock portfolio and beyond.

At first blush, one may consider this threshold would not apply to them, perhaps believing that if annual income does not exceed $1 million their estate will be exempt. In actuality, individuals subject to the estate tax are not just the big annual wage earners, but those who have more than $1 million in assets, no matter the source. New York had 429,153 households with $1 million or more in 2013, that composes 5.79% of all households in New York State, the 12th largest share of any state. The report is based on liquid assets and does not include real property. The number is underestimated as real estate has risen in value over time owned. This is especially true in and around New York City where owning an apartment or home worth close to $1 million may only get you 900 square feet on the Upper West Side.

As a result, New York has seen its residents establish domicile, or permanent residence, in a state that has more favorable estate tax treatment. Florida is a perfect example of this, as Florida has no estate tax liability. Those that have often been referred to as ‘snowbirds’ not only avoid the harsh New York winters, they may also have another motivation for compiling significant time in states like Florida. An individual can avoid the inhospitable estate tax as well (provided the steps taken to change residence can withstand a New York State Department of Taxation and Finance tax audit).

New York State may be catching on. This year has seen a strong proposal from Governor Andrew Cuomo to raise the estate tax to match the federal threshold by the year 2019. There would still be an estate tax, just at a higher threshold and a lower percentage. Not only would it match the federal level of $5 million, indexed for inflation, the top tax rate would be reduced from 16% to 10%.

As one can imagine, this incites strong opinions from both sides of the fiscal coin. There are those who purport the only people who would benefit are the wealthiest 2% of New Yorkers, and others who say it would incentify New Yorkers to keep and invest their wealth in their home state. Although the outcome is difficult to predict, it is clear that raising the New York State threshold would permit New Yorkers to have more control over a greater value of their assets upon death in New York. Fear not if there is no Boca condo, for there are numerous estate planning techniques that can permit an individual to retain their assets for distribution to the people and things they value that do not include relocating to another state. However, a higher estate tax threshold in New York may serve to lessen the time one has to sit down and think around the problem by eliminating it.

Long Term Care Institutionalized Medicaid Planning Guidelines – 2014

Author: Linda Grear


March 17th, 2014

Medicaid is a joint federal-state Social Security program. The laws governing Medicaid vary depending on whether the applicant is single or married, receiving services in the community or in a nursing home, and under or over the age of 65. Disabled individuals of any age, and medically needy individuals over the age of 65 are eligible for Medicaid as long as they meet the financial criteria.

Eligibility
Medicaid allows an “institutionalized person” (meaning anyone confined to a nursing home or other facility) to retain only $14,550.00 in resources (“resource allowance”), $50.00 per month in income, plus retain life insurance with a face value of $1,500.00 or less, while qualifying for Medicaid benefits. The “resource allowance” includes all resources, including bank accounts, cash value of life insurance policies, savings bonds and investment accounts. The Medicaid applicant may also establish an “irrevocable trust” pre-need burial fund with a funeral home.

Community Spouse
In the event the Medicaid applicant is married and the spouse continues to live in the community, the spouse will be allowed to possess resources totaling $74,820.00, a house with an equity value up to $750,000.00 and a car of any value.

Any assets beyond the allowable limits must first be spent-down or applied towards the cost of the nursing home care before Medicaid will cover those costs. In addition, the community spouse may keep up to $2,931.00 per month income.

There are ways to protect the community spouse during the spend-down period. For example, there is no penalty period imposed on the transfer of assets to a spouse. Also, the couple is entitled to spend funds on anything for which they receive a fair market value prior to an application to Medicaid. Therefore, when there are excess resources, it is strongly recommended that the community spouse pay off any outstanding debts, make repairs and improvements to the home, update appliances, purchase a new car, prepay for burial arrangements, or even take a vacation.

There are also important planning considerations for the community spouse after Medicaid eligibility is established for the institutionalized spouse. This includes special attention to beneficiary designations and the way his/her assets are titled and planning ahead to address the possibility that the community spouse’s health may deteriorate and he/she may need long term care themselves.

If you have any questions about this article, or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York, with additional offices in Buffalo, Lancaster and Lockport

Estate Planning / Asset & Wealth Preservation

Author: Linda Grear


December 13th, 2013

As 2013 comes to a close, have you made your New Year’s resolution yet? For many of us, estate planning is something we realize we should do, but somehow manage to keep postponing. With this in mind, you consider what estate planning is really all about. In essence, estate planning is about managing and protecting your assets during your lifetime and controlling distribution following your death so you may leave a legacy for your loved ones.

Effective estate planning may reduce estate taxes, which will benefit you and your family financially. In the face of ever-changing tax and Medicaid laws, there is growing concern about how to best protect assets and secure them for future generations. Time pressures, as well as issues confronting our own mortality, make many of us reluctant to deal with these matters. However, in estate planning, timing can be critical.

Anticipating your potential estate tax liability is a great place to start planning. The estate exemption equivalent for New York State residents is currently $1 million. The first $1 million of assets are exempt from NYS estate tax and any amounts over $1 million will be subject to NYS estate tax. Estate taxes are due within nine months after the date of death. Therefore, advance planning is key to address the tax liability.

For the year 2014, the Federal estate tax exemption will be $5,340,000. Any assets over that threshold will be subject to Federal estate taxes.

Below is a brief overview of the various trusts and estate planning techniques that may potentially shield your assets from future estate tax liability.

Last Will and Testament with Disclaimer (credit shelter trust) provisions: This technique provides a married couple the opportunity to utilize the federal estate tax exemptions of each spouse while giving the surviving spouse the opportunity to elect how much he/she shall receive from the deceased spouse’s estate. Any assets disclaimed or renounced by the surviving spouse are held in trust for the benefit of the surviving spouse. The trust assets are distributed to the ultimate beneficiaries only upon the death of the surviving spouse. The use of a Disclaimer Will may result in significant estate tax savings.

Annual Gift Tax Exclusion: One of the simplest ways to reduce the size of your estate would be to begin making annual gift tax exclusion gifts. An annual exclusion from gift taxes applies to each person to whom you make a gift. In 2014, you will be able to gift up to $14,000 each to any number of individuals without those gifts being taxable.

Benefits:

  • Allows you an opportunity to reduce the size of your taxable estate.
  • No gift tax returns are required if the gifts are $14,000 or less each year.
  • You can make these gifts each year, thereby dramatically reducing the size of your estate.
  • Receipt of the gift is not taxable to the recipient (unless the item gifted was a tax-deferred asset).

Payment of Tuition and Medical Expenses: Tuition payments made directly to a medical or educational institution are not taxable gifts. The payment must be made directly to the medical or educational institution providing the services. Please note that the exclusion covers tuition payments but not books, supplies, board and dorm fees.

Benefits:

  • Allows you an opportunity to reduce the size of your taxable estate.
  • Allows you an opportunity to make additional gifts over and above the annual gift tax exclusion.
  • This unlimited exclusion can be used for all levels of education.
  • This exclusion is permitted for tuition expenses of full-time or part-time students.

Irrevocable Life Insurance Trust: A life insurance trust is a vehicle by which the grantor gifts money to the trust and the trust, in turn, buys a life insurance policy on the life of the grantor. When the grantor dies, the life insurance proceeds are paid to the trust and distributed to the beneficiaries designated within the trust. This is a good wealth replacement tool to offset projected estate taxes to be paid.

Benefits:

  • Provides a liquid pool of funds to pay estate taxes, which are due within nine months of date of death.
  • The value of the life insurance policy is not included in the grantor’s estate because it was not owned by the grantor.

Education/General Purpose Living Trust: This is a lifetime trust which allows a parent or grandparent to establish a trust to be used towards education, training and/or the general welfare of the beneficiary. A person can specify the purposes for which the assets are used, as well as utilize the $14,000 annual gift tax exclusion amount.

The above items are just of few of the available estate planning techniques. In estate planning, timing is critical for the proper protection of your assets to ensure security for future generations and starting sooner rather than later is most important. If you have any questions about the above material, or wish to speak to an attorney, please contact HoganWillig at (716)636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices in Buffalo, Lancaster and Lockport.

Elder Abuse: A FAQ for Attorneys

Author: Hogan Willig


June 14th, 2013

In recognition of World Elder Abuse Awareness Day, the Elder Abuse Committee of the Elder Law Section of the New York State Bar Association has created an FAQ about elder abuse tailored specifically for attorneys.Elder abuse is a widespread, growing problem and attorneys like you are effectively positioned to identify, address and remedy incidents of elder abuse within your pool of clients and potential clients.

The committee’s goal is to increase legal practitioners’ proactive and informed responses to elder abuse through substantive educational programming, resource creation and distribution, and community building.

What is elder abuse?

Elder abuse is an action or lack of appropriate actions, which causes harm, risk of harm, or distress to an individual 60 years or older and occurs:

  • within any relationship where there is an expectation of trust; or
  • when the targeted act is directed towards an elder person by virtue of age or disabilities.

Elder abuse can be intentional or unintentional, can take various forms, and includes but is not limited to emotional, physical, sexual or financial abuse, neglect and abandonment.

How do you know if your client is the victim of elder abuse?

Indicators of abuse you may encounter in your elderly clients include:

  • Social and physical isolation
    • Family members or caregivers restrict the older adult’s contact with others
    • Older adult is not given the opportunity to speak with others without the family member or caregiver present.
  • Unexplained injuries
  • Unkempt or dirty appearance
  • Agitation, trembling, confusion and/or disorientation
  • Confusion about finances and transactions
  • Emotional distress like crying and/or depression
  • Withdrawn or flat/unemotional affect

Should I raise the subject of elder abuse with my client?

Yes. Speak with the client alone, away from any friends or relatives who may have accompanied the client to your office. Attempt to make your client comfortable. Try to ensure that your client has the appropriate glasses, hearing aids or other assistance needed to participate fully in a conversation, as sensory impairments can often be a barrier to meaningful dialogue. Ask questions about the aspects of the client’s situation that are troubling to you, beginning with less invasive, less threatening topics and language. For example, you might consider using the term “mistreatment” instead of “abuse”; remember that your client may react with some degree of fear, shame or shock. Develop a plan for your client to contact you independently for follow up.

Are there certain types of documentary evidence that indicate financial abuse/exploitation?

Yes. Such evidence may include:

  • Activity deviating from usual banking patterns
  • Requests for additional ATM cards or first time use of ATM card
  • Opening a joint account, changing power of attorney, changing account beneficiary, or opening inappropriate investments
  • Sudden property transfers or changes to will or other estate planning documents
  • New authorized signers on signature cards
  • Mail redirected to a new address
  • Checks written out of numerical order
  • Flurry of bounced checks/overdraft fees or low balances
  • Large withdrawals from previously inactive accounts
  • A frivolous or baseless guardianship petition

Is anyone mandated to report elder abuse?

No. New York is one of only three states with NO mandatory reporting of elder abuse. All disclosure of abuse to the police or law enforcement, Adult Protective Services and other government agencies is strictly voluntary.

This fact speaks to the need for legal professionals and advocates to exercise proactive vigilance when they suspect elder abuse. Adult Protective Service officials are mandated to report to law enforcement if they have “reason to believe that a criminal offense has been committed” against any of their clients. See N.Y. Soc. Serv. Law, Art. 9B, §473(5).

Does disclosure of elder abuse to a third party violate attorney/client privilege?

It may not. If 1) the client is at risk of “substantial physical, financial or other harm,” 2) is unable to act in his own interest and 3) the attorney believes the client to have diminished capacity, Rule 1.14(b) of the New York Rules of Professional Conduct permits the attorney to take “reasonably necessary protective action.”

Furthermore, an attorney may always reveal confidential information gained during or related to the representation of a client to the extent he believes “reasonably necessary to prevent reasonably certain death or substantial bodily harm.”

What should I do if I suspect elder abuse?

If your client’s situation falls into one of the categories outlined in the previous answer, you may contact the police or Adult Protective Services. You can also contact the District Attorney’s office to inquire about a potential criminal prosecution. Many communities have programs that include supportive services for older adults, and a growing number in New York State have local elder abuse agencies that can assist in individual cases. Additionally, the Weinberg Center for Elder Abuse Prevention is always available as a resource for attorneys. While there is no universal method for addressing a situation of suspected elder abuse, an attorney is always under an ethical obligation not to perform services that will perpetuate a pattern of abuse. See 22 NYCRR Part 1200 §1.1(c)(2)(2009).

How prevalent is elder abuse?

According to Under the Radar: New York State Elder Abuse Prevalence Study, 14% of all older adults in New York State have experienced some form of elder abuse since turning 60. Yet, for every elder abuse incident documented by New York State government agencies, there are nearly 24 that go unreported. Nationwide, elder financial abuse results in a national annual financial loss to victims of $2.9 billion.

Why is elder abuse difficult to identify?

Because a pattern of abuse often includes physical and social isolation of victims and therefore usually takes place without witnesses, elder abuse often goes unnoticed. Moreover, some victims are unable to speak out due to dementia or other impairments, and may not be believed if they do. Moreover, many victims are reluctant to report abuse because they may:

  • Feel ashamed and embarrassed, particularly if a family member is the abuser
  • Be afraid that the abuser will get “in trouble”
  • Worry that they will be forced to live in a nursing home
  • Feel guilty or that they are to blame
  • Be in denial that abuse is occurring, or unaware that what is happening constitutes abuse or neglect
  • Be afraid that the abuse will get worse if they report it.

A publication of the Elder Abuse Committee of the Elder Law Section of the New York State Bar Association

For more information about the Elder Abuse Committee, please contact Joy Solomon, Esq. at jsolomon@hebrewhome.org

Everybody has a Will. But, perhaps you don’t know what yours says?

Author: Linda Grear


May 1st, 2013

“Everybody has a Will. But, perhaps you don’t know what yours says?”

In New York State, everybody has a plan to distribute assets after death. Without a written Will Last Will and Testament, your assets will pass-on by what is commonly referred to as “intestate distribution” or “intestacy.”

There are four ways to pass on property when you die:

  1. by operation of law – joint tenancy;
  2. by contract – beneficiary designation;
  3. by Last Will and Testament – written instructions; or
  4. by intestacy – statute determines how assets are distributed following death.

Intestate distribution is made to distributees, i.e. the nearest level of blood (including half-blood) relatives. Unless you change that distribution by leaving a valid Last Will and Testament document, your estate will pass as follows:

  1. Survived by spouse and issue (“issue” means children or next lineal descendents)
    • Spouse gets first $50,000 and ½ of the residue of the estate
    • Issue equally share the rest;
  2. Survived by spouse and no issue, then the spouse inherits all;
  3. Survived by issue but no spouse, the issue equally share the estate;
  4. No spouse or issue, then to your parents, then to siblings, then to nieces/nephews, etc… , and so on, all the way to first cousins once removed;
  5. If there are no family members beyond that, your estate will pass to the State of New York.

There are many other rules and nuances to intestate distribution that are beyond the scope of this short article, but, remember, if you do not leave a Last Will and Testament for yourself, total strangers could inherit your life’s savings.

With a Will, YOU decide who receives your property and in what proportions. Your may create a trust for children or family members with special needs. You may nominate guardians for your minor children. If you don’t make this decision for yourself, New York State law will make those decisions for you.

Wills are not costly or complicated if you have relatively simple needs and the cost is an investment that is well-worth the effort to ensure your wishes are honored. If you have any questions about this article, or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices in Buffalo, Lancaster and Lockport.

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