Elder Law, Estate Planning, Special Needs Blog Long Island New York

Attending the 25th Annual NAELA Conference

We are in Atlanta for the National Academy of Elder Law Attorneys (NAELA) annual conference.  As a past national and New York State chapter president, I enjoy going to the NAELA conference to learn with colleagues from across the country.  At its heart, NAELA is dedicated to the well-being and protection of our seniors and those with special needs and to me, there is no better reason to be an attorney.

This year is the 25th anniversary of NAELA, so I will be among the past presidents to be recognized for our contributions to the organization and the practice of Elder Law.  In the past twenty-five years, NAELA has accomplished a great deal, and I am proud to be a part of this national organization.  Some of our accomplishments:

We brought many issues facing seniors and those with special needs to the forefront.

We established a set of aspirational standards for Elder Law attorneys.  We felt strongly that simply meeting the basic professional codes of responsibility is not enough in this area of law, where our constituents are vulnerable and need our protection and wise counsel.   NAELA works to raise the bar and calls for our members to serve the senior community in the most professional and ethical way possible. 

NAELA created the phrase “Elder Law” to mean much more than Medicaid planning.

NAELA is now a well-known and respected entity on Capitol Hill.  Our members are invited to testify before House and Senate committees on the plight of seniors, the aged, and special needs individuals and families.  We have met with Presidential advisors on the grounds of the White House, which is always exciting but more importantly, demonstrates that NAELA is taken seriously at the highest levels of government. 

NAELA worked with the American Bar Association to sanction specialization as a CELA – Certified Elder Law Attorney.  Few attorneys attain this credential, and I am pleased that I do.

Today, there are NAELA chapters in 27 states that deal with local issues, including state legislation that affects seniors.  As a former president of the New York State chapter, I am extremely proud of the efforts of our chapter, working in tandem with the Elder Law section of the NYS Bar Association, in preventing cuts to benefits and creating stricter eligibility requirements to ensure that those who need assistance receive it.  

In the first 25 years, NAELA has accomplished a great deal – and we will still have more work to do.     

Why Big Law Doesn't Succeed in Trusts & Estate Law

This morning’s Wall Street Journal has an interesting article on a topic that has been near and dear to my heart for a while – the high rates charged by large law firms.

Earlier this year, one of the nation’s largest and most prestigious law firms, Debevoise & Plimpton, shuttered its Trusts & Estates practice area.   D&P wasn’t the first large law firm to go this route – Weil, Gotshal & Manges closed its Trust & Estates practice area in 2011.

Surprised?  Don’t be. 

This is a simple matter of how the legal world works, and it’s one that I have had personal experience with.  Large law firms are run like large companies – businesses with a focus on the bottom line.  An $800 - $1,000 hourly rate is acceptable for corporate clients, but wealthy families and individuals balk at such fees.  You don’t go into Trusts & Estates or Elder Law if your dream is to own a private jet and a third home in the South of France (assuming your second home is in the Hamptons).  That’s what Mergers & Acquisitions law is for.

In a culture where the more hours billed the better, which by the way rewards inefficiency handsomely, I was constantly being exhorted to increase my billable hours.  I left because, among other reasons, I found the idea of asking clients to pay huge hourly fees more suited to corporate representation did not fit with this highly personal and highly technical area of the law.

All of these firms have completely missed the bigger picture. The need for this area of the law is constant and steady.  A high net-worth family needs their Estate Plans revised every few years.  A second marriage requires planning to avoid family squabbles over money and property.  Happy clients refer other clients with similar family and financial legal needs.

From where I sit, what this area of the law lacks in corporate extravagance it more than makes up for it in realistic legal fees and the personal reward of solving problems for clients who are, far more than any corporation, grateful for the help.

If you want to work with a lawyer who considers you in the same league as a big company, best of luck to you.  In this practice, we like the idea of striking a balance of providing superior legal services, with a human touch and a fee structure that is appropriate for families.

New York State Bar Association’s Elder Law Section to Publish Legal Article by Elizabeth Briand and Sarah C. Moskowitz on Decanting Trusts

We are very pleased that an article on decanting trusts by the firm’s associates Elizabeth Briand and Sarah C. Moskowitz has been accepted for publication by the New York State Bar Association’s Elder Law section journal.   Special Needs Planning and New York’s Amended Decanting Statute examines the changes in the decanting statute and how decanting affects Special Needs and Elder Law planners and their clients.  We expect the article to be published in late spring.

Used by Special Needs and Elder Law planners, irrevocable trusts have historically been difficult and sometimes impossible, to amend or revoke.  When circumstances change, and modifications are needed, attorneys use a process known as “decanting” to metaphorically ‘pour’ the assets of one trust into another trust, similar to the process of decanting wine by pouring it from a bottle into another container.   This is a technical area of the law that is important because of its ability to allow trustees to control and protect assets. 

 If you have questions concerning the ability to decant a trust, please call the office at 516-307- 1236 to speak with Elizabeth Briand or Sarah C. Moskowitz.    

SCOTUS Gay Marriage Case Has Roots in Estate Tax Issue

Many people don’t know that the current Supreme Court case against the Defense of Marriage Act (DOMA) is in essence an estate tax case.  Edie Windsor, 83, brought suit against the federal government after the IRS cited DOMA when it denied her refund for $363,300 in federal estate taxes she had paid following the death of her partner, Thea Spyer.  

Windsor and Spyer had been together for more than 40 years.  They married in Canada in 2007, and Spyer died in 2009.  Under the Internal Revenue Code any property passing to a spouse upon death is exempt from federal and state estate tax. The IRS advised Windsor, a former IBM executive, that under Section 3 of DOMA, no federal agency is permitted to recognize same sex marriage, even if the marriage is legal or recognized under state law.  As a result, she was forced to pay $336,300 in estate tax. Windsor then requested a refund from the IRS, which was denied.  She then brought an action seeking to invalidate Section 3 of DOMA, as Windsor would have been eligible for an estate tax marital deduction had Spyer been a man, arguing that DOMA's Section 3 violates her equal protection rights under the Fifth Amendment.

The resolution of the Supreme Court case may solve the issue of whether same sex marriages are legal from a state or federal perspective, but it has the potential to create a host of additional problems for unmarried domestic partners, regardless of their gender.

In states where same sex marriage is legal, insurance companies are starting to treat unmarried couples as they did in the past, pushing back on providing health insurance for domestic partners.  If same sex marriages are recognized on the federal level, this may become a larger problem.

Now that same-sex couples are  able  to marry in some states, insurance companies are showing signs that they will move backwards to restrict coverage only to  couples who are either married or in a civil union.  We are also concerned that it is possible that other areas where the rights of a spouse had been extended to unmarried couples may also be pulled back. 

This makes it more important than ever before unmarried couples, regardless of their gender or sexual orientation, protect each other’s legal rights. 

Here’s a list of documents that unmarried couples in New York State should have in place:

• Medical Health Proxy  
• Durable Power of Attorney for Financial Matters
• Hospital Visitation Authorization
• Parenting Agreements
• Domestic Partnership Agreements
• Will and Testament and Revocable Trust
• Living Will

This case also highlights the importance of tax planning and the use of appropriate trusts for unmarried and same sex couples.   A Revocable Trust is often the preferred foundation for an estate plan for non-traditional couples.  A Will is a public document, and as such, relatives are required to be notified and see a copy of the Will during the probate process.  If there are parents, siblings or other family members who disapprove of the relationship, relying on a Will leaves the couple open to family disputes and presents the possibility of contesting the will, etc.  The use of a Revocable Trust gives the couple far more control and privacy.

AV® Rated Preeminent by Martindale-Hubbell - And Proud of It!

As an active member in several Elder Law and Trusts and Estates organizations, I have the good fortune to work alongside many of the leading members of the bar. But even among these skilled lawyers, the number of attorneys who hold the AV® Preeminent designation from Martindale-Hubbell is relatively small.  I am proud that Martindale has named me a Preeminent AV® rated attorney and I think it is important for non-attorneys to understand why this matters.

Martindale-Hubbell is a leading global source of information on lawyers and law firms.  For decades Martindale-Hubbell published a complete listing of all lawyers and law firms in America.  Their books were found in every law firm library, and it was important to be included.  Today Martindale’s information is all on-line and accessible to everyone, and the companion site www.lawyers.com is used by consumers to research lawyers. 

Martindale is well known in the legal community for its Peer Review Ratings TM.  These   ratings from lawyers and members of the judiciary are conducted with great care.  They focus on legal knowledge, judgment, analytical capabilities, communication ability and ethical standards.  I have been recognized with the “AV” Preeminent rating - the highest possible Martindale-Hubbell rating.

Here’s why I think it matters:  When making a decision on legal representation and guidance in matters concerning your family and your family’s assets, regardless of the size of your estate or the issues at hand, and an attorney who is a leader in the field is available, wouldn’t you rather hire that attorney?  

I know I would.
 
If you have questions about the importance of these ratings, or would like to speak with me on any issues of concern, please call me at the office. 

Medicare’s Improvement Standard Defeated - Kudos to Judy Stein and Colleagues

Congratulations to our friend and colleague, Judith Stein, Esq., Executive Director of the Center for Medicare Advocacy, Inc., and colleagues in six advocacy organizations that successfully fought to eliminate Medicare’s “Improvement Standard” requirements.  This historic class action lawsuit, Jimmo v. Sebelius, will help thousands of Medicare beneficiaries nationwide.
 
For decades, Medicare beneficiaries and their families have gone through economic and emotional misery because of the Improvement Standard.  When a Medicare beneficiary was transferred from the hospital into a rehabilitation facility, they were entitled to 100 days of care with restrictions.   Days 1 – 20 were completely covered by Medicare.  From days 21 – 100, there is a co-pay ($148 per day this year).

However, coverage for days 21-100 days were subject to the Improvement Standard.  As long as you were showing signs of progress or cooperating with the treatment plan, coverage remained in place.  If, however, your condition was not improving, or you were noted as refusing to comply with treatment, Medicare stopped payment.

This illegal standard has been particularly difficult for those with serious long-term conditions.  Vital care has been denied to patients because their conditions were deemed to be stable, chronic, not improving or not cooperating.  Patients with debilitating diseases like MS, ALS, Parkinson’s and Alzheimer’s in particular suffered greatly as the result of this policy.

We applaud Judy and her colleagues for their hard work that has overturned a policy which has led to hardships for so many.  We encourage everyone to support the Center for Medicare Advocacy so that they can continue their work of education, advocacy and outreach to ensure access to Medicare and health care.  Visit their website to learn more and to make a donation.

Your will - have a little fun with it

 

Most people consider drafting a will a difficult and frankly morbid exercise. They only do it when forced by adult children or spouses. But if you take a slightly creative approach, you really can do more with the will than just dispose of your material possessions.

Strange advice from an estate planning attorney? Perhaps – but consider this comment from Robert Karson, First Republic Private Wealth Management in Garden City, speaking at a recent North Shore Animal League America program: “Your will is the last message that you can leave behind.”

It’s true. From the cranky millionaire who leaves nothing to a son and everything to a museum that he’s never even visited to the control freak who specifies exactly how many times a month heirs must pay a visit to the cemetery to continue receiving funds from a revocable trust, the will is an opportunity to send a message from the beyond.

A few suggestions for those of you who are daring enough to be creative with this otherwise serious document:

Consider the obvious – without being too heavy-handed. If there are people who mean a lot to you, your will is an opportunity to say thank you. It is, and always has been, a vehicle to express positive as much as negative.

Did you want to leave a lasting legacy? If there is an organization – a museum, animal shelter, college or community group – that meant a lot to you or your family, a trust can be set up that will benefit the organization, give your heirs a tax benefit and create a legacy for your family. It does not have to be in the realm of Bill Gates or the Carnegie Foundation to accomplish this.

There are minefields to be navigated. For instance, if you wish to really truly cut a child or family member out of your will completely, make sure that the will reads “I have made no provision for __________.” Do not give a reason, do not say “for reasons known to them” or provide any other detail. Stating your intention in this manner makes it clear that this is your desire – and will make any challenge to the will next to impossible to succeed.

Think of your will as a greeting card from beyond, where you get to write the inscription. What do you want to say?

Portability and the Estate Tax Exemption - Some Good News

With the signing of the new tax laws earlier this month, an eleven-year period of uncertainty about estate tax exemptions and rates ended.  At the same time, a wonderful tax break for widows and widowers that was set to expire at the conclusion of a two-year introductory period was made permanent.  We’re happy to share some good news with you for a change, although the topic is a little gloomy.  Bear with us.

Starting with 2011 deaths, widows and widowers can add any unused exclusion of the spouse who died most recently to their own $5.25 million tax-free amount.  Known as “portability” in the world of trusts and estate planning, this allows one individual – the surviving spouse – to pack up the unused tax exemptions of the first spouse - their gift/estate tax exemption – and pass it along to the surviving spouse.  The surviving spouse doesn’t have to worry quite so much about triggering the estate tax when they pass, because now, all of their assets, plus all of their spouses’ assets can be sheltered by the state tax exemptions of both spouses.

Note that this is not a do-it-yourself kind of estate plan.  It requires some advance planning, and a skillful trusts and estate attorney.  For example, if you remarry, you lose the portability; and unfortunately, portability does not apply to same-sex couples or to couples where the surviving spouse is not a U.S. citizen.  However, where this is applicable, the benefits to the family that wishes to pass assets along to the next generation are considerable. 

How to provide for your pet and help NSALA - Jan 17

Americans spend more than $50 billion every year on their pets - $370 million on Halloween costumes for pets in 2012.   We consider our pets family members in every sense, and that’s why providing for pets who survive their human owners is something every pet family should consider. 

There are ways for pet owners to ensure that their pet will have a loving home if the pet survives the owner, at the same time that they can protect assets for the family and support organizations like NSALA. Everyone remembers the headlines when Leona Helmsley’s dog Trouble was left millions, but even her well-drafted plan to ensure the dog’s care was not followed.  We’ll talk about why that happened, and how to correctly create a surviving pet care plan that works

North Shore Animal League America – the world’s largest no-kill animal rescue and adoption organization - offers a Safe Haven Surviving Pet Care Program, which allows people to secure a space for their surviving pets at the no-kill shelter by means of a simple bequest.  NSALA will provide food, shelter and medical care for pets until they can be adopted into new loving homes.  The process is simple and provides great peace of mind for owners who want to ensure that their pets do not become homeless or be put down at a shelter. 

Planned giving is a method of supporting not-for-profits and charities that allows donors to make larger gifts than they might be able to from their income or during their lifetime.  Most planned gifts are part of an estate plan that is designed to maximize the gift at the same time that it minimizes the tax liability on an estate. The gifts come in many different forms, including property, investment or other assets.

I’ll be joined at the workshop by my colleague Elizabeth Briand, Esq., along with Robert Karson of First Republic Private Wealth Management in Garden City and Eric Lieberman, Senior Manager, Planned Giving at NSALA, who will discuss the organization’s Surviving Pet Care Program.

The event is free, but reservations are required by January 14 to ensure seating, which is limited to the first 100 RSVPs.  To RSVP, contact Eric Lieberman at 516-883-7900 ext 354.  I hope you’ll join us!

Happy New Year

I read in the New York Post that Jerry Della Femina sold his home for a mere $25 million in 2012 because he was worried about having to pay more taxes in 2013. Considering that he bought it for $3 million, tried to sell it at $40 million and it sat on the market for a long time, we think he’s just doing what Jerry has always done best -  making himself the center of attention.  That’s what ad guys do, and did long before Mad Men made doing so a retro-cool sort of thing.

For the very wealthiest Americans or those conducting multi-million home sales, yes, taxes in 2013 are likely to take a bigger bite. The sale of a $25 million property in 2013 will probably cost the seller $50,000 more in taxes than it would in 2012.  

But regardless of what does or does not happen, planning opportunities are always present. Always have been, always will be.   When a total overhaul of the tax laws took place in 1981, planning thrived.  The same held true when large-scale changes were made in 1986, in 1997 and 2001.  

So when the dust settles at last my esteemed colleagues in the estate planning bar and I will sharpen our wits and our pencils and report on what planning opportunities the new tax laws will bring.