Is estate planning still needed?

Last year Congress passed the Tax Cuts and Jobs Act of 2017 which pretty much killed the aptly named death tax. It didn’t actually kill it just exempted those who leave less than $11 million to their heirs.

Since the idea of no leaving a federal tax burden to their heirs, many people are questioning the need for estate planning since one of the main reasons to estate plan is to lessen the tax burden. But there is more to estate planning than tax issues. has a very useful piece by Tracy Craig. Craig is a Fellow at the American College of Trust and Estate Counsel.  She has some useful info on estate planning beyond taxes.

To read more click on the links below:

State Estate and Inheritance Taxes Exist for Many

Probate Can be Costly

Many Beneficiaries Have Issues

Blended Families are Common and Can Be Complicated


Read More

Sudden death and family finances

A recent piece on the CNBC website addresses an important issue that many people tend to not think about: the impact of a sudden death on family finances. Writer Carmen Reinicke uses the celebrity suicides of Kate Spade and Anthony Bourdain as her jumping off point to discuss what attorneys, financial advisors and therapists say what you should do if you are faced with a sudden death in the family.

To read the details see Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances

Here is what they recommend:

Get organized and find an expert

Address your mental as well as your financial health

Read More

Including collectibles in you estate plan

What are collectibles?

According to the IRS, collectibles includes works of art, rugs, antiques, any metal or gem (with exceptions), any stamp or coin (with exceptions), valuable alcoholic beverages or “any other tangible personal property that the IRS determines is a “collectible” under IRC Section 408(m)”.

Quite often people don’t have any idea how much their collections are worth which is why when you are doing your estate planning it is in your and your heirs interests to find out. If you plan on bequeathing your collectibles, it is a necessity.

If you own any antiques or other collectibles you should decide how you want to distribute them after you die. You can either donate them to charity or leave them to heirs. The problem is collectibles fall into special laws separate from other assets. That is why you need to appoint someone who knows the value of your collectibles. Experts say you should contact at least two dealers or auction houses that deal in your type(s) of collectibles. They will come in handy for whoever settles your estate. They will know how much your collection is worth which can prevent any fighting among heirs, each of whom may have a different idea of their worth.

By having this information it will also prevent a clueless heir from selling any objects for less than their fair market value.  It is good to remember that even if your heirs decide to keep the assets rather than sell them, they will still need to know the value of your “objects” to establish the total value of your estate.

Read More

Long term health care: Medicaid vs. Medicare

Many people get confused between Medicaid and Medicare. So, what’s the difference? While, both programs were federally created, they do different things

Basically Medicare is health insurance for people 65 or older and Medicaid is for people who meet certain income requirements. While Medicare will pay for some rehabilitative services in a nursing home, Medicaid will pay for long-tern care provided you financially qualify. Each state has different requirements. New York has three income limitations to get long term care using Medicaid. 

Most long term care applicants are disabled, aged 65+, or have diagnosed blindness. If you are any of these you are most likely subject to the Non-Magi (Modified Annual Gross Income) standard

  • Income Limitations: If you are single, your income (wages, Social Security benefits, pensions, veteran’s benefits, annuities, SSI payments, IRAs, etc.) must be no higher than $825.00 per month or $1,209 per household if you are a couple.
  • Asset Limitations (Exempt vs. Available) – Medicaid divides assets into two categories: Exempt and Available. Exempt assets are designated under the rules and ownership of an exempt asset by the applicant will not result in a denial of benefits. If an asset is not listed as exempt then it needs to be liquidated and applied toward the costs of nursing home care before the applicant can receive Medicaid benefits. The state has a look back period of 5 years with a penalty for people who sell assets below fair market price, transfer assets to others, or give money and property away.
Exempt Assets for an applicant in New York include:
  • $14,850 or less in cash/non-exempt assets if single. If the assets exceed the limit on the first of the month the applicant is ineligible for the entire month. If married and both spouses reside in a nursing home, the asset allowance for a couple is $21,750.00.
  • One home is exempt (equity limit $840,000) if planning to return, a spouse, a child under 21, or a disabled person resides in it. Whenever an institutionalized person sells a previously exempted residence, the money from the sale becomes a countable asset. The recipient may then lose eligibility for Medicaid until he/she has spent down the money and their countable resources are once again less than the maximum.
  • One car, no equity amount specified. An irrevocable funeral trust, no amount specified.
  • Life insurance policy if the face value of said policy is $1,500 or less. Household goods and personal effects, i.e. jewelry, furniture, heirlooms, etc.

For more information: New York Medicaid Information- New York Department of Health

Managed Long Term Care


Read More

Estate Planning and terminal illness

Estate/financial planning when suffering from a terminal illness is a two stage process. The first stage comes during the illness when finances need to maximized to treat the illness. If you are terminally ill and still working it can make a significant difference in terms of cash flow. Group disability benefits may be available through your job and workers compensation or Social Security disability might be possible. Maybe you have private disability insurance to supplement the other coverage.

Disability benefits may or may not be taxable. Chances are if it is a private policy they’re non-taxable. Benefits from a group-policy through an employer are not. They are considered taxable income. If you pay the premiums on your group coverage, then it will be tax exempt. If you only pay part of the premium, then it is taxable

Once you leave the workforce the second stage is in effect and a different cash flow is needed. At age 59 1/2, you can tap IRA’s, 401(k)s without occurring any penalties like the 10% early withdrawal penalty. Income tax will probably kick in, but not on a significant level.

Another source of cash can com from existing life insurance policies. Depending on the policy, you might be allowed to dip into it under certain health conditions. A typical policy will allow a lifetime payout if you have less than two years to live.

People who are terminally ill will want to be sure that their assets smoothly pass to loved ones or favored charitable causes. Thus, a thorough estate planning review can help put the your mind at ease.

In 2018, the federal estate tax exemption is $11.2 million for single taxpayers and $22.4 million for married couples. Such an exemption means relatively few people will leave an estate that is subject to federal tax; consequently, many terminally ill people below those asset levels may ignore estate planning for the federal level.

Read More