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Estate Tax Planning – 2015

Author: Linda Grear

January 12th, 2015

As 2014 comes to an end, it is a good time to assess your estate plan. For many, estate planning is something they realize they should do, but they keep postponing. With the dawn of a new year, it is time to consider management and protection of assets during lifetime and controlling distribution following 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 laws, there is growing concern about how to best protect assets and secure them for future generations.

Anticipating your potential estate tax liability is a great place to start planning. The current estate exemption equivalent for New York State residents is $2,062,500. The first $2 Million of assets are exempt from NYS estate tax and any amounts over $2 Million will be subject to NYS estate tax. The New York State Estate Tax Exemption will be increasing to $3,125,000.00 for decedents dying after April 1, 2015.

For the year 2014, the Federal estate tax exemption will be $5,430,000.00 for decedents dying after January 1, 2015. Any assets over that threshold will be subject to Federal estate taxes.

Estate taxes are due within nine months after the date of death. Therefore, advance planning is key to addressing tax liability.

Below is a brief overview of the various estate planning techniques that may shield 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 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 2015, you will be able to gift up to $14,000 each to any number of individuals without those gifts being taxable.


  1. Allows you an opportunity to reduce the size of your taxable estate.
  2. No gift tax returns are required if the gifts are $14,000 or less each year.
  3. You can make these gifts each year, thereby dramatically reducing the size of your estate.
  4. 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.


  1. Allows you an opportunity to reduce the size of your taxable estate.
  2. Allows you an opportunity to make additional gifts over and above the annual gift tax exclusion.
  3. This unlimited exclusion can be used for all levels of education.
  4. 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.


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

These 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.

Grandparents Rearing Grandchildren

Author: Linda Grear

September 9th, 2014

Throughout history, grandparents and extended family have raised children; however, in our current society more and more grandparents are the primary caregivers to their grandchildren. In the United States, there are 2.4 million grandparents raising grandchildren. The idea of the two-parent family simply no longer reflects today’s modern families.

Reasons why grandparents rear grandchildren:

  • To reduce financial and emotional overloads of their own children or to help in transitional situations such as when a parent is sent overseas to work or for military service.
  • To shape the grandchild’s personal and cultural identity.
  • To prevent placement in a foster home.
  • To care for grandchild whose parents are incarcerated or have contracted illness.
  • To reduce grandchild’s contact with substance-abusing parents.
  • To curtail family crises, including physical and psychological abuse or neglect of children.

Rewards and drawbacks: Although there are great rewards for grandparents raising their grandchildren, such as the preservation of family history and values, the resolution of conflicts between parents and children, improved school behavior and social skills, and a life-long loving connection with grandchildren, there are also great challenges for these grandparent caretakers.

Some grandparents experience health problems due to caregiving demands, including depression, insomnia, back problems, and hypertension. Grandparent caretakers often find that they have little time to themselves because tight schedules can mean less time for other family members, friends and community activities. Additional household costs and expenses can become a financial hardship.

Get Legal Help

There are formal legal arrangements (legal guardianship, legal custody, or adoption) that will enable you to qualify for certain benefits and make decisions about your grandchild’s life. In New York, you will need legal custody or legal guardianship to enroll your grandchild in public school.

Get Support and Take Care of Yourself

It is important to seek help and support. A full database of support groups and services, for you and your grandkids, awaits you at AARP.org/grandparents. There you will find fact sheets for local support groups, legal assistance, public benefits, and state laws.

College Bound? Get Power of Attorney and Health Care Proxy for your student!

Author: Linda Grear

August 14th, 2014

If you have children getting ready for college, you should consider having them prepare Durable General Power of Attorney and Health Care Proxy documents.

From a practical perspective, you may be paying your child’s tuition and housing expenses, as well as covering him/her as a dependent on your health insurance; however, in the eyes of the law, a child is a legal adult at the age of 18 years and is entitled to privacy protections for financial and health care matters.

Under federal privacy rules (the Health Insurance Portability and Accountability Act known as “HIPAA”) medical providers such as doctors, nurses, and hospital staff cannot speak with you regarding an adult patient’s medical condition without the patient’s consent.  In other words, if your child gets sick and requires medical care, medical information cannot be disclosed to you, even though you are the parent, with proper legal authority.

In the event of a medical emergency, parents may want to assure that they have legal authority to get information from their child’s medical providers.  A Health Care Proxy is a legal document that allows a patient to designate an agent to make health care decisions in the event they are unable to speak for themselves.  Additionally, the document may contain a HIPAA authorization to allow doctors and medical providers to release medical information.

A Durable Power of Attorney is a legal document that appoints an agent to handle personal financial matters and obtain financial information.  There are situations where a Power of Attorney would be useful to collect financial aid or student loan checks payable to the student, handle issues related to financial assistance, and bill paying.  This may be particularly helpful if your student is studying abroad.  If your child runs into issues with his/her passport or the authorities in another country, you can have the authority to help.

Your child may be hesitant to give up privacy rights and may only want you to have access on a need-to-know basis. A family meeting to discuss the pros and cons may be helpful, but, ultimately your child’s decision.  Before your child heads off to college this Fall, sit down and create a plan for handling medical emergencies and other unexpected obstacles.  It will give both parent and child peace of mind.

If you have any questions about the above material, or wish to speak to 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.

Inherited IRAs: Within Creditors’ Reach

June 13th, 2014

The confusion surrounding the status of unspent IRAs that parents leave to their children has finally been cleared up, following a unanimous Supreme Court decision.  The Court ruled this week that inherited Individual Retirement Accounts (IRAs) are not shielded from creditors throughout bankruptcy proceedings.  Typically, bankruptcy law protects retirement assets from being eaten up by creditors after filing, but inherited IRAs differ because the money can be accessed before the new owner actually retires.

The initial case involved a couple in Wisconsin who filed for bankruptcy but wanted to preserve the $300,000 IRA inherited after the death of the wife’s mother.  Supreme Court Justice Sonia Sotomayor said that the status of an inherited IRA makes it less like retirement savings and more like a pool of money available to pay off creditors.  Without this distinction, there would be no way to prevent someone from using the entire balance of the inherited account “on a vacation home or a sports car immediately after her bankruptcy proceedings are complete.”  Therefore, following this decision, money in an inherited IRA may be used to pay off creditors during bankruptcy proceedings.

If you have questions related to IRAs or other estate planning issues, please contact the office of HoganWillig at (716) 636-7600.

Phone Scam Crooks Find New Ways to Target Elderly

Author: Hogan Willig

May 31st, 2014

Imposter fraud has become increasingly endemic in the U.S. in recent years. The term has been coined to describe a situation in which people pose as law enforcement agents, government officials, or even relatives in order to scam money from innocent people on the other end of the phone. The most targeted are the elderly due to the low-risk nature of the crime and the unfortunate fact that most incidents go unreported. Seniors often times feel embarrassed in situations in which they were taken advantage of, especially where they might feel some kind of cognitive loss. However, retirees are also prime targets because of their retirement savings and equity in their homes, as well as lottery/sweepstakes winners due to their newfound funds.

One of the newest scams surfacing preys upon the elderly and their civic duty. Targets are told that they have failed to show up for jury duty and will be arrested. To avoid arrest, the individual is told, they must pay money. It’s these kinds of scams, those which tap into fear, that end up being successful. Seniors understand that it is possible they could have forgotten an appointment and know that avoiding jury duty could potentially be punishable by law; thus the crook and his story become believable.

It is important to be aware of such scams so you don’t find yourself on the unlucky end of one of these schemes. Diligence in keeping up to date on the latest scams affecting citizens can help to avoid falling into the trap. Law enforcement agents stress that they never call and ask for personal financial information over the phone. In March, the AARP began a Fraud Watch Network map in order to expand awareness of the growing epidemic. The network also has a fraud hotline, 877-908-3360, which you can call if you have any questions or receive any suspicious phone calls.

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.


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