Trusts and Estates Wills and Probate Tax Saving Strategies Medicaid

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The Secure Act governs distributions from IRA’s and other retirement plans. After the death of the account holder, most named beneficiaries are required to take the funds out over ten years.

While the IRS has not finalized the regulations, the safest approach is to take minimum distributions for the first nine years, based on the life expectancy of the beneficiary. More may be taken, and taxes will be based on that amount. The way the minimum distribution works is as follows. Let’s say the beneficiary has a life expectancy of forty years when the account holder dies. In the year following the account holder’s death they must take one-fortieth, the following year one-thirty-ninth, and so on until year ten when they are required to take the retirement account balance in full.

There are a few exceptions to the ten year rule. Spouses may roll the inherited IRA into an IRA of their own and continue it for their own lifetime — generally waiting until they are 72 to start taking required minimum distributions (RMD’s) unless they need the funds earlier.

In his book, subtitled “Lessons From a Year Among the Oldest Old”, journalist John Leland takes us on a journey into uncharted territory. Mr. Leland spent a year with six elderly New Yorkers, exploring their lives.

He divides the book into the first six chapters chronicling the years spent with each of the six — John, 97, living in the same Manhattan apartment for forty-six years, the last six of them alone after the death of his partner; Fred, 87, a World War II vet and retired civil servant living in a three-story walk up; Helen, 90, living in The Hebrew Home in the Bronx, dating Howie, living down the hall; Ping, 89, providing an Asian perspective, living in a rent-controlled apartment with a Medicaid paid home attendant for seven hours a day; Ruth, a feisty 90, in assisted living in Sheepshead Bay, Brooklyn and, finally, Jonas, 92, an active filmmaker and writer.

Along with the author, we live the lives of these six people from getting up in the morning to going to bed at night. “How did they get through the day, and what were their hopes for the morrow?  How did they manage their medications, their children, and their changing bodies…”  Further, says Mr. Leland “All had lost something: mobility, vision, spouses, children, peers, memory but few had lost everything.”  What the author found was that the “oldest old” are not a different species, as so many people see them, but rather much the same as you and me — getting up each morning with wants and needs and doing the best they can with what they have.  Nevertheless, older people report a greater sense of well-being and fewer negative emotions than younger people.  “Experience helps older people moderate their expectations and makes them more resilient when things don’t go as hoped.” We learn the many ways his six seniors chose to be happy.

For the ever-increasing number of those who become legally incapacitated later in life (i.e. unable to handle their legal and financial affairs) having a legal guardian appointed looms as a distinct possibility.

A guardianship proceeding may be commenced by a hospital, nursing home, assisted living residence, family member or a professional involved in the affairs of the “alleged incapacitated person” or “AIP”. These proceedings arise for various reasons such as the facility looking to secure payment or a family member or professional finding that the AIP is either not handling their affairs well or is being taken advantage of financially.

Once the proceeding is commenced a vast bureaucratic process begins to unfold. Notice of the proceeding and of the date and location of any hearings are sent to all interested parties, including all immediate family members.

In the event of their death, many people wish to provide for the adequate care and feeding of their beloved dog, cat, bird or other pet. Here is an abridged version of New York’s statute authorizing a trust for your pet;

  1. The intended use of the principal or income, of a trust for the care of a designated domestic or pet animal, may be enforced by an individual designated for that purpose in     the trust instrument. Such trust shall terminate when no living animal is covered by the trust.
  2. No portion of the principal or income may be converted to the use of the trustee or to any use other than for the benefit of a covered animal.

Your “basis” for calculating capital gains taxes is what you paid for the stock or the real estate. For real estate, the basis gets raised by the amount of any capital improvements you make to the property.  When you sell your primary residence you may exclude the first $500,000 of gain if you’re a couple or $250,000 if you’re single.  The $500,000 exclusion for a couple get extended for a sale occurring up to two years after a spouse dies.

For gifts you receive of appreciated stock or real estate during the donor’s lifetime, no capital gains tax is payable, however the donee receives the donor’s basis.  It is generally considered better to wait, if possible, and pass the gift to the donee at death, due to the “stepped-up basis”.  The basis of any inherited property is “stepped-up” to date of death value.  If the property is sold within six months of the date of death, then the sale price is deemed to be the date of death value.

If the property is going to be held for some time it is helpful to get date of death values to establish the new basis.  For real estate, this means getting an appraisal from a licensed real estate appraiser (not a real estate broker!).  For stocks, you simply ask the company holding the stocks to provide this information.

You should strive to review your estate plans every few years. While it might not seem like it, many events can occur during this period that impacts your estate planning goals. Besides personal changes, the country also experiences national elections every four years which often lead to changes in estate taxes.

Consider Role Appointments

One of the most critical parts of estate planning is appointing who among your friends and family members will act in the role of executor, power of attorney, and other estate planning positions. You should also question whether the parties you nominate to act in such a role remain fit and willing to act in these positions. It’s also important to remember that the suitability of appointments can change. While a person might seem like a good executor, they might not be a suitable executor a decade from now. 

After a person is named an executor, the individual takes on the obligation to adequately and promptly complete the estate’s administration in addition to distributing an estate’s assets to anyone listed as a beneficiary. Assuming that the executor appreciates the duty that he or she owes to the estate and pursues appropriate assistance, an estate’s administration can be performed in a timely manner, and assets are distributed appropriately.

It’s not unique for new challenges to appear during estate administration. This article highlights some situations where a court might remove an executor after paperwork is filed by an estate beneficiary.

A common issue faced by beneficiaries is when executors do not timely administer an estate. Even though estate administration is nuanced, executors have a duty to administer estates in a timely manner. Unfortunately, executors sometimes do not expediently process how an estate should be administered. Instead, executors sometimes take too long to complete estate planning processes. 

Federal workers are currently reminding the country’s health care workers that withholding treatment due to an individual’s disability is frequently illegal. Withholding services in such a way is illegal even if resources are few.

The US Department of Health and Human Services’ Office for Civil Rights is currently informing providers that civil rights liberties for disabled individuals are still “full force” despite the COVID-19 pandemic. As part of a statement, the Department stated that civil rights law remains regardless of what happens including pandemics and that it is vital that the country works to make sure that fairness exists for all patients.

Additionally, the Department stated that the pandemic has illuminated the disparities that exist in the healthcare system and provided healthcare workers with the chance to resolve these disparities. 

A 90-year-old woman is a recent victim of elder abuse. The financial scammers hacked into the woman’s account and removed $20,000. Frequently, financial abuse scammers present themselves as technical support or service representatives who offer to resolve issues connected to compromised email or bank accounts or even the renewal of software licenses.

In reality, people who are 60 years of age and older are routinely subject to targeting from financial scammers because elderly adults are more financially secure. Elderly adults also routinely experience difficulty with more and are more trusting than younger people. Scams of this nature are growing in number. The Internet Crime Complaint Center recently reported that fraud involving tech support is the third most common type of fraud involving elder adults.

Two years ago, the Internet Crime Complaint received almost 10,000 complaints involving tech scams targeting older adults who encountered over $116 million in losses. Elderly adults represented 66% of the total reports involving tech support fraud.

Although it was long predicted, the country is currently in the middle of the biggest transfer of assets in current history. The Federal Reserve reports that at the end of 2021’s first quarter, people in the United States who are 70 years of age and older had net worths of approximately $35 trillion.

The question of whether people in the United States will prepare to transfer assets depends on the extent of funds that pass on to attorneys, courts of love, and needy loved ones.

When someone you love passes away, assets are ideally passed to people and organizations chosen by the deceased individual. Many people are not adequately prepared to pass on assets, though. One study reveals that approximately 46% of Americans own wills, which are vital estate planning documents. Estate planning helps a person appoint who will take care of loved ones and determine how assets will be assigned after you pass away. While some people make the mistake of thinking that only the wealthiest individuals need estate plans, everyone including people of modest means need estate plans to achieve their estate planning goals.

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