Estate Planning





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Brooklyn, NY  11241

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Manhattan, New York, 10036.
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Manhattan, New York, 10173
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Lake Success, New York, 11042 

T: (855) ASK-MARK
T: (347) 606-3333

F: (718) 797-4304

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Estate Planning FAQs

Do I need a health care proxy? (NY)

Every adult should draft a health care proxy designating an agent to act for them and to make medical decisions for them if they are unable to make such decisions for themselves. Without a health care proxy, medical personnel in New York are required to maintain life support, even if this is not your desire. 

What is a Power of Attorney?

A power of attorney is a legal document signed by a person who appoints another (the attorney in fact) to manage certain affairs. Powers of attorney come in a variety of shapes and sizes: there is a durable power of attorney for financial affairs, which can be a comprehensive, long standing arrangement whereby a second person is authorized to handle a person's affairs. Note the use of the term "second person." The individual who grants the Power of Attorney still may manage their own affairs, but under the Power of Attorney, another person is authorized to do so also. This is a very convenient procedure to use for elderly relatives who are encountering trouble managing their affairs. The key is to have the Power of Attorney form executed while the person is still of sound mind and can properly sign the form. Once in place, the Power of Attorney can authorize a relative (or close friend) to manage bank accounts, trade securities, run business, sign key documents . . . all without court order or outside supervision. The key, obviously, is empowering the right person. Make sure it is a trustworthy person, either a close relative (a son or daughter) or a close friend.

I own a house. I want to give it to my children in case I have to go into a nursing home and receive Medicaid assistance, the government cannot take away the house. What should I do? (NY)

There are several things that may be done to secure a home within an estate. The house may be deeded to the children or other heirs and the granter may retain a life estate. This action covers several areas. First it will protect the house from a potential Medicaid lien, provided the government’s five (5) year look back period elapses. Second, by retaining the life estate, when the grantor passes, the children or other heirs will be able to take advantage of capital gains tax savings. They will receive a "stepped up basis", the value of the house at death. Another option may be to create a "Medicaid Trust".

What is a Trust and how can I use it as part of my estate plan?

As noted above, a trust is a legal arrangement where the owner of property (the trustor) appoints a person (a trustee) to manage the property for the benefit of someone (the beneficiary). In many situations, the trustor, trustee and beneficiary are one and the same person. This is how people create living (or inter vivos) trusts. They place all their assets in trust, naming themselves as both trustee and beneficiary. In this way, they keep their property out of probate, and can pass it without court order upon their death. It is an excellent way to reduce the expenses of estate administration and can be effective in transferring a family business or property that requires ongoing management.

How do I deal with the family residence?

You should always pay close attention to the value of the family residence, because this is a hidden form of wealth that can be overlooked, especially in an inflationary real estate market. Many is the family that did not think it had an estate tax problem, only to find that the residence had increased greatly in value, putting the overall value of the estate over the exemption limit. 

One great tax benefit at death is that a surviving heir may be eligible to receive a stepped up basis for the residence (or for other types of property, too). What this means is that the basis (cost) of a residence will vastly increase as the residence is passed from one generation to another. Example: Say a couple purchased a home for $40,000 in 1965. The purchase price (cost) is the basis of the house. They die in 1999 and the house is worth $800,000. If they sold it, they would have a gain of $760,000. But the son or daughter who inherits the house gets a stepped up basis - that means that the Fair Market Value upon death becomes the heir's basis (cost) for the house. In practical terms, the heirs in our example now own a house that has an $800,000 basis. IF they sell it for that amount during probate, they have no taxable gain (although they may be paying estate taxes because the amount of the estate is over the exempt amount). 


How are businesses transferred from one generation to the next?

Often, businesses are placed in trust so they can be run without the intervention of a probate court following the owner's death. Another way to transfer a business is to incorporate it and pass the shares to the heirs. 

Should I make charitable gifts?

This is a personal decision that each person must make for him/herself. Charitable giving is a wonderful thing to do and it benefits a great many people. It can save taxes, too. Consult with your lawyer or accountant to see if charitable giving should have a place in your estate plan. 

What are death taxes?

Death taxes (also commonly called Estate Taxes) are federal and state taxes, imposed by the U.S. Government (through the Internal Revenue Service) and New York on a person's estate. They are usually paid by the estate prior to distribution of property to the heirs. 

Can I avoid paying Death Taxes?

Yes, and this is the major focus of much of the estate planning that is done today. In 2012, federal law allows the first $5,000,000 of a person's estate passes to heirs tax free. Under New York law, that number is $1,000,000. Death (estate) taxes are based on the amount of the estate over these numbers. Bear in mind that the exemption can and has changed from year to year in recent times. There is movement within the federal government to lower the federal exemption back down to $1,000,000 

People who own property that exceeds the exemption often do various things to avoid the imposition of taxes on their estate. The goal usually is to pass as much of the property, tax free, to a person's heirs. One method is to begin a "gift giving" program, whereby an elderly person who has accumulated wealth gives a little of it away each year to various relatives (usually children and grandchildren) to reduce the size of the estate. Another method is the creation of an irrevocable trust and the purchase of a life insurance policy that covers the estimated taxes to be owed.

One nice benefit from gift giving programs is that the elderly parents (and grandparents) actually get to see their family enjoy the gifts they are making. Disposing of property by will means that the "giver" will be dead and gone by the time the gift is enjoyed by the heir(s). 

There is a word of caution about gift giving programs, however. The person making the gifts has to make sure he/she keeps enough money to live on and otherwise provide for the necessities of life, including the various expenses of elder care, which can be substantial. 

Other tax planning devices are generation skipping trusts, family limited partnerships and marital deduction trusts. These can be a bit complicated, and expensive to set up, but are widely used.