Estate planning is the process of legally structuring the future disposition of current and projected assets during life and in death. It’s important to have a basic estate plan in place regardless of your net worth. Although it may seem like a morbid chore, estate planning offers several benefits:
- You get to name the people to whom you wish to give your assets.
- Your wishes will be legally binding.
- Your heirs will not have to pay estate tax, with proper estate planning with an estate planning attorney.
- Protect your assets from Medicaid
An estate plan can include several elements:
A Will, in a Will your basic directives of who will get your assets are put into writing.
Assignment of power of attorney, which gives the person you name the authority to manage your financial affairs if you are unable to do so.
A health care proxy, which authorizes someone you trust to make medical decisions on your behalf.
For some people, a trust may make more sense. A living trust will avoid the costs of probate; if properly funded.
Trust vs Wills * Removal of a Trustee * Guardianship * Probate * Beneficiary Rights
Medicaid Asset Protection * Probate Litigation * Estate Litigation * Living Trusts
In Home Care * Supplemental Needs Trusts * Fraudulent Transfers
Make an appointment with one of the elder law estate planning attorneys at the law offices of Rubinstein, Zeh & Associates today to discuss your options. If you or your loved ones have liquid assets or you own your own home your heirs are at risk of losing a significant part of your assets upon you getting sick or upon your untimely death. It is more important than ever to prepare an estate plan if you have stocks, bonds, money market accounts, savings accounts, CD’s annuities or an IRA. An IRA can be protected with an IRA Standalone Retirement Trust. An IRA Standalone Retirement Trust must be drafted carefully in order to ensure that the trust qualifies as a “Designated Beneficiary.” This guarantees that the trust will be able to take out the minimum required distributions according to the beneficiary’s life expectancy, not the plan participant’s. If the trust is not set up properly, the entire inherited IRA will need to be withdrawn within five years of the plan participant’s death. Work with a reputable planner to make sure your trust is structured correctly and that your beneficiary, and not his or her creditor will receive the funds you pass down. The attorneys at Rubinstein, Zeh & Associates are not only trained in handling simple elder law planning, estate planning, will and probate matters, we take care of complex estate planning, elder law and living trust estate litigation in Nassau County, Suffolk County, Queens County, Bronx, Westchester, Richmond County, Manhattan and Brooklyn Kings County New York.
What is new in Estate Planning?
Inherited IRAs No Longer Protected From Creditors
In a major decision, the Supreme Court ruled this past June that inherited IRAs are not considered protected retirement funds and are thus subject to creditors’ claims if the beneficiary files for bankruptcy.
In the case of Clark v. Rameker, Heidi Heffron-Clark argued that a $300,000 IRA she inherited from her mother in 2001 qualified as a protected retirement account. As such, she contended, the account was exempt from the claims of creditors after Heffron-Clark and her husband filed for bankruptcy in 2010.
However, under U.S. tax code regarding inherited IRAs, Heffron-Clark was required to withdraw a minimum amount of money from the account each year, even though she is not yet retirement age. Given this, the court decided the account was not a protected retirement fund because the beneficiary wasn’t using it as one.
Why does that matter?
The Clark v. Rameker decision means that, in the case of bankrupt estates, inherited IRAs will now be considered assets fully available to satisfy creditors’ claims. If you pass a retirement fund down to a child or grandchild, which inherited asset will no longer be protected if your beneficiary must file for bankruptcy.
What should I do?
Careful estate planning can ensure that inherited IRAs remain safe from your beneficiary’s creditors. In most cases, establishing a Standalone Retirement Trust will protect your assets without restricting your beneficiary’s access to them.
How does it work?
Upon the retirement plan participant’s passing, his or her funds will flow into the third-party trust instead of passing directly to the beneficiary. Because the beneficiary does not establish the trust, doesn’t fund the trust with his or her own money, and cannot modify the trust, the trust will in most jurisdictions enjoy substantial protection from the claims of the beneficiary’s creditors. An independent trustee, who isn’t the beneficiary, can also be appointed to oversee the trust’s distributions in order to ensure further protection from any creditors’ claims.
What do I need to do?
Elder law and estate planning is a requirement for everyone who has any liquid or real estate assets worth more than $ 50,000 and who want to make certain that their families do not lose control of any assets, and do not pay unnecessary taxes, and that their loved ones are provided for adequately. Estate planning and elder law planning is specially essential for the caring individual who wishes to control the disposition of their assets after their death, and to minimize the tax bite imposed by both the state and federal government.
With proper planning from an experienced elder law estate planning attorney it is quite possible to zero out all estate taxes that may come due. However, such strategies require the formal control over selected assets. In many cases, the use of charitable trusts, for example, makes it possible to eliminate any and all estate taxes. However, the result of such an approach is the transfer of not only wealth but direct control of the assets in question.
Basic elder law and estate planning techniques may utilize a living trust, a life estate, a credit-shelter trust, traditional life insurance and the like are all used for the middle class to keep whatever assets they may control during their life time and to plan for their demise. The idea of executing very complex strategies when simpler approaches can produce the desired results is all too common and foolish, if not disingenuous.
On the other hand, due to the goals of the more affluent client and the types of assets owned, there are a number of more sophisticated approaches to wealth transfer. It’s possible to reduce or eliminate transfer taxes, creditor proof assets and attain the client’s goals with bespoke planning that can achieve phenomenal results. Sometimes the structures are complicated; foreign grantor trusts, private placement life insurance, dynasty trusts and numerous types of leveraged gifting are not simple, but they work from both an income and transfer tax perspective and allow the client to achieve his or her personal goals.
Life insurance is often used by the affluent as part of their estate plan. The ability to creatively use life insurance and to pay the premiums in a highly efficient manner can be very beneficial for wealthier individuals; unfortunately, this is not always the case. Poorly designed purchases of life insurance are all too pervasive amongst all consumers.
It’s important to remember that the goal is to transfer wealth in accordance with a person’s wishes. Tax mitigation, while often very important, is not always a critical motivation. “The first concern a person has is the disposition of his or her assets as he or she would like. This proves to rarely equate with the post tax-efficacious transfer of these assets. But that is not really the issue. Hence, the role of the elder law, estate planning attorney is to make it possible for the affluent client to achieve a desired agenda and be tax efficient at the same time.
To put it simply, estate planning involves deciding on how you want your assets distributed after you die (or become disabled and preventing you from being able to make your own financial decisions). Estate planning can be complicated, so it is best to consult a financial adviser and an experienced elder law and estate planning lawyer when drawing up your estate plan.
We are dedicated to your success so contact us. Speak with one of our knowledgeable Long Island will and elder law, estate planning, living trust estate litigation attorneys today from wherever you are in New York state in Nassau, Suffolk, Brooklyn, Kings and Queens Counties, on Long Island and all New York City boroughs including Bronx, Westchester, Richmond County, and Manhattan.
Call 1-800-960-1529 today.
Get Help With Your Estate Plan Now be prepared for your loved ones with the proper estate plan.
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