Frequently Asked Questions

Never! A simple transfer will result in the loss of your property tax exemptions, it will result in negative capital gains consequences to the kids and the house will be exposed to the children’s liabilities, such as divorce claims.
No. If you can take your house and other assets out of the trust whenever you want, then so can a nursing home. Moreover, to the extent that you have access to the trust assets, they are completely includible in your gross taxable estate at death. Only an irrevocable trust can help with long term care and estate tax planning.
No. If the trust is properly drafted, then you can retain the ability to remove and replace your trustee. You can also retain the ability to change your beneficiaries. If your house is in the trust, it can still be sold, but only with your written permission. Retaining the ability to remove and replace the trustees is important psychologically, but it will also enable the trust to qualify as a Grantor trust for income tax purposes thereby obviating the need to file a separate income tax return for the trust.
Each person has a federal credit of $5.4 mil and a NYS credit of $3,125,000.
This is sort of a trick question. Without credit shelter trust planning, we end up losing the credit of the first spouse to die. If an individual or couple has more than $3,125,000 then you need to explore tax planning options.
No. If it were that simple to avoid estate taxes, then the government wouldn’t collect any. Just because you may successfully avoid probate, does not relieve you of your estate tax obligations.
Regardless of one’s current marital status, I encourage all women to view their estate planning through the lens of a single person. This is because 90% of us will, one day, be single. Some women never marry. 50% of first marriages end in divorce. This is 60% for second and subsequent marriages. For those couples who “go the distance”, women are 4 times as likely to survive their husbands. When life doesn’t present you with a ready-made roster of candidates to help with future possible long term care needs, then you need to recruit and assemble your own team. We specialize in helping women plan for their future years.
No. Medicaid should really be viewed as the payor of last resort. We have seen eligibility restrictions tighten over the past 10 years. This trend will surely continue. Many remember when the so-called look-back period was 3 years. It is now 5. There is a bill in Congress now that would make it 10. The long term care insurance options have never been better. At the very least, you should educate yourself about what’s out there.
Whenever possible, it is advisable to treat your children equally under the will. This will prevent hurt feelings and discord between the children. If you wish to provide more for someone, better to do this outside of the will. A separate account or CD can have one child’s name as the beneficiary. This will pass automatically upon death and not be counted when the will leaves everything “equally”.
I would avoid giving him the house under the will. What if he dies 1 year after you. His will leaves everything to his children, not yours. Better to give him a right to occupy the home upon your death. This right of occupancy can be made to terminate upon the earlier of his death, nursing home admission or cohabitation with an unrelated person. (Not in my house-thank you!)
A Health Care Proxy allows you to appoint an individual to make health care decisions for you in the event that you are unable to express yourself. The living will, on the other hand, allows you to state your subjective preferences regarding health care treatments ahead of time. Within the Living Will, I can state, for example, that I don’t wish to live in a permanent vegetative state dependent upon some machine and fluids from a bottle. In that situation, my living will directs my family to “pull the plug”. I point out to them though that this does not give them license to disconnect my computer and dump out my Chardonnay.
If a child has a developmental disability, long term illness, shaky marriage, gambling or substance abuse issue, consider placing his or her interest under your estate into a trust. The assets in trust will not have an impact on Medicaid or SSI. The trust will also protect the assets from other liability issues. Bottom Line? Laws and life change. Create flexible documents and review them yearly.