Stepmothers and Estate Planning: Who inherits?

Via Quentin Fottrell https://www.marketwatch.com/story/my-stepmother-inherited-my-fathers-estate-when-he-died-what-can-i-do-2016-11-18

Dear Moneyologist,

My dad passed away five years ago. He did leave a will on how he wanted his estate to be dispersed, but only if his current wife was also deceased. She was not, so she got everything. My question is: When she passes, is she required to honor our dad’s will? She has remarried, which is fine and I’m glad she’s happy. My dad has four biological children from his first two wives, and had none with the third wife, his widow when he passed away. We don’t want to take anything from our stepmother, we would just like our dad’s will honored when she passes. Is this even possible? Thank you for your time. They resided in South Carolina at the time of my dad’s passing.

Daughter Left Out in the Cold

Dear Daughter,

When it comes to inheritance, children usually fare better than stepchildren.

Your father’s wishes were honored, I’m afraid to say. He wanted everything to go to his wife and, in the event that she predeceased him, wanted his estate divided between his four children. But she didn’t and she inherited the whole kit and caboodle. You could talk to your stepmother about anything of special sentimental (or monetary) value, but if she chose to leave you anything that belonged to your father in her will it would be out of goodwill rather than legal necessity.

It may be that your father had meant to write a will that divided his estate more evenly between his wife and children, but that’s not what happened here. In this case, any non-probate assets — jointly owned bank accounts between your stepmother and late father, and any life insurance policies or brokerage accounts where your stepmother was named as beneficiary — will go to her. Anything that goes through probate (that is, the court process) will also go to her.

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Ooops! Did you choose the wrong executor?

You finally got around to making your Will. You deserve a sigh of relief. But did you choose the right executor? Or have you burdened an unqualified or unwilling relative and put your Will at risk to be contested?

Generally speaking, the first person that comes to mind to be one’s executor is often an adult child or other family member, followed perhaps by a close friend. These individuals may be honored that you asked them, and will often accept this important duty. Some may even accept the duty despite not wanting the burden, just so they do not insult you.

Your choice of executor may be an emotional one, but also should be chosen based upon what is best for your estate, probate, and your needs. Choosing the executor of your estate is not a task to take lightly. An executor is the person responsible for managing the administration of a deceased individual’s estate. The time and effort involved will vary with the size of the estate. Even the executor of a small estate will have important duties that must be performed correctly, or the executor may be personally liable to the estate or the beneficiaries. One of the many jobs of the executor is to take an accurate inventory of the deceased individual’s assets. This includes making a list of all bank, brokerage and retirement accounts, insurance policies, real property, and any other assets the deceased owned. An inventory of personal effects, antiques or other valuables must be tabulated as well. A list of the estate’s inventory must ultimately be presented to the probate court for review.

This can be a very time-consuming task, and it may mean going through the deceased individual’s personal data or paperwork for information, interviewing heirs, or checking ownership documents at the local town hall. The information presented to the court is expected to be accurate and complete, so that the beneficiaries receive their inheritance on a timely basis. Of course, the executor must probate the deceased person’s Last Will, which may involve locating and notifying the person’s heirs. As if the demands of the probate process aren’t enough work, creditors must be paid, and final income tax returns must be filed. If the estate is large enough, a state and federal estate tax return may be required as well. Once this is complete, distributions to the estate’s beneficiaries must be calculated and dispersed. Of course, if the deceased person’s Last Will is contested, the executor must oversee this process as well. This may put an additional wedge between friends and/or family members. Further, it can add months and perhaps even years to the process, as well as some unwanted stress for the executor.

Tax laws and state and federal estate tax exclusion rates may be different than when the Will was written. If the surviving spouse plans to file for estate tax portability, an estate tax return may need to be filed even if no tax is owed.

Feel free to call me for an opinion on your choice of executor. If you prefer, I may also act as your executor if you do not have a qualified person in mind. This may remove the potential burden it can place on others and offer many efficiencies and time saving as well.

To learn more about the duties of an executor click here>

Regards,

Brian

What is Probate? 6 Steps Outlined:

When a loved one dies there are significant legal issues that come up for the executor or administrator.

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Probate is simply the process of the Court validating the Last Will and Testament of a deceased person, referred to as a “decedent” and having the executor appointed. Some of the duties of the executor are paying the decedent’s final bills and estate taxes and/or inheritance taxes (if any), and then distributing what’s left of the decedent’s assets to his or her heirs.

6 Basic steps of Probate outlined:

1. Filing the Will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a Will, we will petition the court on behalf of heirs to be appointed “administrator” of the estate.

2. Marshaling, or collecting, the assets.

This means that you have to find out everything the deceased owned. You need to file a list, known as an “inventory,” with the probate court. It’s generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or even better, one that we set up as your attorney, so that we and you can keep track of all expenditures.

3. Taxes, taxes, taxes. If a state or federal estate tax return is needed it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, we can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. A final income tax return for the decedent must be filed and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate as well. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings. Our probate attorneys are well versed in the latest probate tax issues.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work. We have the experience to make every step of the probate process less burdensome for our clients so they can arrive at the final accountings with a sense of ease.

Q&A:

Do I need to get the original Will?

Yes. A photocopy of the Will is not considered a legal document and ordinarily will not be honored. If you are the executor it’s likely you have it stored in a safe place such as a safe deposit box. Or perhaps it’s with the attorney that drafted the Will. Note that even though another attorney may have drafted the document or represented you or your family before, there is no obligation to continue use that attorney and we can certainly assist and save you time, money and anguish.

How long should it take to “settle” an estate?

It depends on the individual facts and circumstances involved in the particular estate. With no major disputes among the beneficiaries or the need to commence a lawsuit to collect a debt owed to the decedent or to pursue a wrongful death claim, an estate where no estate tax returns are required should be wound up in less than a year after the decedent has died. With our hands-on approach, clients aren’t lost in the shuffle of a large firm. We expedite to our clients satisfaction.

Removing the burden for an executor and family.

We are proud of our reputation in helping those in need especially around a time of grief. We have provided relief and comfort for countless families while expediting the process and clarifying the ‘legalease’ for our clients. Whether it’s a probate or non-probate estate each client gets the personal attention they need to make the process less of a burden. Feel free to call us for more information or email me personally at braphan@raphanlaw.com.

-Brian

10 Really Good Year-End Tax Tips

Via Screen Shot 2017-12-12 at 4.37.03 PM
By Maryalene LaPonsie, Contributor

With the end of the year looming, the window is quickly closing for taxpayers who want to minimize the taxes they will pay next spring.

What’s more, for those trying to make year-end adjustments to their income and deductions, a tax reform bill being discussed in the District of Columbia has created uncertainty. Although it’s tempting to take action based on expected changes to the law, some finance experts urge caution. “Until the law becomes formal, we have to be very careful,” says Kristin Bulat, senior vice president of strategic resources for insurance and consulting firm NFP.

Taxpayers shouldn’t make rash decisions based on a bill which may or may not become law. However, there are some smart money moves that can help hedge against potential changes.

 

Here are 10 tax tips to reduce the amount of federal income tax you’ll pay for 2017.

1. Make 401(k) and HSA contributions. People can make tax deductible contributions to traditional IRAs up to April 17 of next year. However, the door closes on Dec. 31 for 401(k) and health savings account contributions.

 

Taxpayers with a qualified high-deductible family health insurance plan can deduct up to $6,750 in contributions to a health savings account. Those age 55 or older are eligible for an additional $1,000 catch-up contribution.

Tax deductible contributions to a traditional 401(k) are capped at $18,000 for 2017. Workers age 50 and older can make an additional $6,000 in catch-up contributions.

 

[See: How to Pay Less Tax on Retirement Account Withdrawals.]

 

2. Avoid taxes on a RMD with a charitable donation. Seniors who have a traditional 401(k) or IRA account must take a required minimum distribution each year once they reach age 70 1/2. Those who don’t need this money for living expenses may want to consider having it sent directly to a charity as a qualified charitable distribution. “If you take it out as a qualified charitable distribution, it doesn’t increase your adjusted gross income,” says Mike Piershale, president of Piershale Financial Group in Crystal Lake, Illinois. “It can also hold down the amount of Social Security that is taxed.”

 

3. Hold off on mutual fund purchases. People should be wary of buying mutual funds at this time of year if they will be held in a taxable account. You could get hit with a tax bill for year-end dividends even if you just purchased shares. “It’s a big surprise,” says Emilio Escandon, managing principal of the Northeast region for accounting firm MBAF. To avoid paying those additional taxes, Escandon recommends consulting with a broker before making a purchase to find out when distributions are made.

4. Convert money from a traditional to a Roth IRA. Withdrawals from traditional IRAs are taxed in retirement, but distributions from Roth IRAs are tax-free. Money can be converted from a traditional to a Roth account prior to retirement, but taxes must be paid on the converted amount.

Tax experts say people should be careful that the amount they convert doesn’t bump them into the next tax bracket. The one exception might be those who expect to pay the alternative minimum tax for 2017. The top AMT tax bracket is 28 percent, but it is targeted for elimination in the D.C. tax reform bill. If that happens, people paying the AMT this year could find themselves in a higher tax bracket next year. As a result, some people may be better off converting a greater amount in 2017. “If you were considering [a Roth conversion] and you’re in the AMT, do it this year,” Escandon says.

 

5. Harvest your capital losses. If you own stocks that have lost money, you can sell them and deduct up to $3,000 on your federal taxes. Just be careful not to violate the wash sale rule, which would disallow the deduction. This rule states you cannot purchase the same or a substantially similar stock within 30 days before or after the sale.

 

6. Pick up capital gains if you’re in a low tax bracket. The end of the year is also a good time for some people to sell stocks that have appreciated significantly in value. “If you are in the 10 or 15 percent bracket, the long-term gains [tax rate] is zero,” Piershale says. “Sell them in the 15 percent [tax bracket] and buy the stock back the next day to reset the basis.” By resetting the basis, taxpayers can minimize the amount of tax they could pay on future gains.

 

7. Use your flexible spending account balance. Workers who have flexible spending accounts need to use up their balances soon. These accounts have “use it or lose it” provisions in which money reverts back to an employer if not spent. While some companies provide a grace period for purchases made in the new year, others end reimbursements at the close of the calendar year. “So it’s time to get a new pair of glasses or something like that,” Bulat says.

8. Bunch your itemized deductions. Taxpayers who itemize deductions for 2017 may not need to in 2018. “They’re talking about almost doubling the standard deduction next year,” Piershale says of the tax reform discussion. “Because of that, we’ve been talking [with clients] about maximizing itemized deductions this year.” People may want to prepay their January mortgage payment in December, make additional charitable donations or pull the trigger on big purchases before the end of the year. “Buy the car this year if you are deducting the sales tax,” Piershale says.

[Read: Year-End Retirement Planning Deadlines for 2017.]

 

9. Prepay your state income taxes. Another major change that is brewing in D.C. concerns state income taxes. “Both the House and the Senate bills eliminate the state income tax deduction,” Escandon says. Should that happen, taxpayers won’t be able to deduct any payments made in 2018, even if they are for the 2017 tax year. Therefore, Escandon recommends that anyone who thinks they will owe state income tax in April to send in that money this December.

 

10. Consider whether to defer your bonus. Some workers might want to consider asking their bosses to wait until after the new year to send bonus checks. “Tax rates may be dropping for some, thanks to tax reform,” Escandon says. If that happens, people may be better off delaying income until 2018 when it could be taxed at a lower rate.

There’s only a month to go until we ring in 2018. If you want to minimize your 2017 federal income taxes, the time to act is now.

You were appointed Executor…Now what?

Being the executor of an estate is not a task to take lightly. An executor is the person responsible for managing the administration of a deceased individual’s estate. Although the time and effort involved will vary with the size of the estate, even if you are the executor of a small estate you will have important duties that must be performed correctly or you may be liable to the estate or the beneficiaries.

Last Will & Testament

The executor is either named in the will or if there is no will, appointed by the court. You do not have to accept the position of executor even if you are named in the will.

The average estate administration takes one year, though you won’t need to work full time on it. Following are some of the duties you may have to perform as executor:

  • Find documents. If there is a will, but you don’t already know where the will is or the will hasn’t already been brought to court, you may need to find it among the deceased’s belongings. If all you have is a copy of the will, you may need to get the original from the lawyer who drafted it. You will also need to get a copy of the death certificate.
  • Hire an attorney. You are not required to hire an attorney, but mistakes can cost you money. You may be personally liable if something goes wrong with the estate or the payment of taxes. An attorney can help you make sure all the proper steps are taken and deadlines met.
  • Apply for probate. If there is a will, the court will grant you letters testamentary. If there is no will, you will receive letters of administration. This will officially begin your work as the executor.
  • Notify interested parties. Notify the beneficiaries of the will, if there is a will, as well as any potential heirs (such as children, siblings, or parents who may or may not be named in a will). In addition, you will have to place an advertisement for potential creditors in a newspaper near where the deceased lived.
  • Manage the deceased’s property. You will need to prepare a list of the deceased’s assets and liabilities, and you may need to collect any property in the hands of other people. One of the executor’s jobs is to protect the property from loss, so you will need to assure the property is kept safe. You will also need to hire an appraiser to find out how much any property is worth. In addition, if the estate includes a business, you may have to make sure the business continues to run.
  • Pay valid claims by creditors. Once the creditors are determined, you will need to pay the deceased’s debts from the estate’s funds. The executor is not personally liable for deceased’s debts. The estate usually pays any reasonable funeral expenses first. Other debts include probate and administration fees and taxes as well as any valid claims filed by creditors.
  • File tax returns. You need to make sure the tax forms are filed within the time frame set under the law. Taxes will include estate taxes and income taxes.
  • Distribute the assets to the beneficiaries. Once the creditors’ claims are clear, the executor is responsible for making sure the beneficiaries get what they are entitled to under the will or under the law, if there is no will. You may be required to sell property in order to fulfill legacies in a will. In addition, you may have to set up any trusts required by the will.
  • Keep accurate records. It is very important to keep accurate records of everything you do. You will need to create a final accounting, which the beneficiaries must review before the distribution of the estate can be finalized. The accounting should include any distributions and expenses as well as any income earned by the estate since the deceased died.
  • File the final accounting with the court. Once the final accounting is approved by the beneficiaries and the court, the court will close the estate. File a final report with the court and close the estate.

All this can be a lot of work, but remember that the executor is entitled to compensation, subject to approval by the court. Keep in mind that the compensation is counted as income, so you will need to declare it on your income taxes.

Removing the burden for an executor and family>

We are proud of our reputation in helping those in need especially around a time of grief. We have provided relief and comfort for countless families while expediting the process and clarifying the ‘legalease’ for our clients. Whether it’s a probate or non-probate estate each client gets the personal attention they need to make the process less of a burden. Feel free to call us for more information or email me personally at braphan@raphanlaw.com.

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Be Aware of the Kiddie Tax Before Leaving an IRA to Children

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Grandparents may be tempted to leave an IRA to a grandchild because children have a low tax rate, but the “kiddie tax” could make doing this less beneficial.

An IRA can be a great gift for a grandchild. A young person who inherits an IRA has to take minimum distributions, but because the distributions are based on the beneficiary’s life expectancy, grandchildren’s distributions will be small and allow the IRA to continue to grow. In addition, children are taxed at a lower rate than adults—usually 10 percent.

However, the lower tax rate does not apply to all unearned income. Enacted to prevent parents from lowering their tax burden by shifting investment (unearned) income to children, the so-called “kiddie tax” allows some of a child’s investment income to be taxed at the parent’s rate. For 2017, the first $1,050 of unearned income is tax-free, and the next $1,050 is taxed at the child’s rate. Any additional income is taxed at the parent’s rate, which could be as high as 35 percent. The kiddie tax applies to individuals under age 18, individuals who are age 18 and have earned income that is less than or equal to half their support for the year, and individuals who are age 19 to 23 and full-time students.

If a grandparent leaves an IRA to a grandchild, the grandchild must begin taking required minimum distributions within a year after the grandparent dies. These distributions are unearned income that will be taxed at the parent’s rate if the child receives more than $2,100 of income (in 2017). In addition to IRAs, the kiddie tax applies to other investments that supply income, such as cash, stocks, bonds, mutual funds, and real estate.

If grandparents want to leave investments to their grandchildren, they are better off leaving investments that appreciate in value, but don’t supply income until the investment is sold. Grandparents can also leave grandchildren a Roth IRA because the distributions are tax-free.

For more information about leaving an IRA to grandchildren from Kiplinger, click here.

State Properly Valued Sale of Medicaid Applicant’s Life Estate…

life estates

An Ohio appeals court rules that the state correctly valued the sale of a Medicaid applicant’s life estate using the specific state Medicaid life estate law as opposed to the more general law on determining fair market value. Stutz v. Ohio Department of Job and Family Services (Ohio Ct. App., 3rd Dist., No. 15-17-02, Aug. 21, 2017).

Barbara Stutz owned a life estate in her property and her sons owned the remainder interest. She entered a nursing home and applied for Medicaid. The state approved the application but decided the life estate was an asset that must be valued. Ms. Stutz appraised the life estate at $2,000 and sold it to her sons for $1,800. The state determined that the correct life estate value was $24,941, and it imposed a penalty period on Ms. Stutz for an improper transfer of assets.

Ms. Stutz appealed, arguing that the state should have used the general definition of fair market value in state law, which defines fair market value as the going rate that property can be expected to sell for on the open market, to value her life estate. She presented evidence that local realtors and bankers valued her life estate at $2,000. Instead, the state used the state law that applies to Medicaid and life estates and ruled that $24,941 was the correct value. Ms. Stutz appealed to court, and the trial court affirmed the state’s decision.

The Ohio Court of Appeals, 3rd District, affirms, holding that the state properly valued the life estate. According to the court, “a specific statute prevails over a general statute,” so the state correctly used the life-estate-value statute rather than the general fair-market-value statute.

For the full text of this decision, go to: http://www.supremecourt.ohio.gov/rod/docs/pdf/3/2017/2017-Ohio-7287.pdf

For more on Medicaid Planning go to: http://www.raphanlaw.com/medicaid-planning-

5 Great Tax Deductions and Credits for Retirees

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Via Tina Orem, Nerdwallet

They say that with age comes wisdom. But with age also come a few tax perks.

Once your birthday cake has 50 candles on it, the IRS starts to lighten up a bit. And when you hit 65, the IRS has a few more small presents for you — if you know where to look. Here are five tax deductions and credits you don’t want to miss after you’ve blown out all those candles.

1. A higher standard deduction

If you take the standard deduction instead of itemizing (learn how to decide here), you get a bonus of up to $1,500 if you or your spouse is 65 or older.

Filing status Regular standard deduction Standard deduction, age 65+
Single $6,300 $7,850
Married, filing jointly $12,600 $13,850
Married, filing separately $6,300 $7,550
Head of household $9,300 $10,800

If you or your spouse is legally blind, your standard deduction can increase an additional $1,250.

2. More room to shelter income

Because contributions to a 401(k) are tax-advantaged, the IRS limits how much you can contribute each year. For folks under 50, that limit is $18,000. If you’re over 50, though, you can put in $24,000 per year.

But alas, that assumes that you’re still working and that your employer offers a 401(k) plan.

If you’ve already kissed your cubicle goodbye, you may still be able to contribute an extra $1,000 a year to a traditional IRA or a Roth IRA, if you qualify for a Roth. That’s thanks to the IRS’ catch-up provision for people 50 and older. And remember, you can put money into a traditional IRA until the year you reach age 70½; there’s no age limit on Roth IRA contributions.

» MORE: Traditional IRAs vs. Roth IRAs

3. A bigger deduction for medical expenses

If you itemize, you can deduct unreimbursed medical expenses — but only the amount that exceeds 10% of your adjusted gross income. For example, if your adjusted gross income is $40,000, the threshold is $4,000, meaning that if you rang up $10,000 in medical bills, you could deduct $6,000 of it.

If you or your spouse is 65 or older, however, that 10% threshold dips to 7.5% for the 2016 tax year — netting you a bigger deduction. So for that hypothetical $10,000 in medical bills, that means you could deduct $7,000 instead of $6,000. (Beware, though: the threshold is set to rise to 10% in 2017 unless Congress takes action.)

And if you’ve recently purchased long-term care insurance, you may be able to add in $380 to $4,750 of the premiums, depending on your age (the older you are, the more you can deduct).

One important note: Seniors only get this deal for the 2016 tax year. Starting with the 2017 tax year, the threshold is 10% for everyone.

4. A safety net for selling that empty nest

This tax deduction is available to everyone regardless of age, but it’s especially useful if you’re itching to sell your house and downsize in retirement. The IRS lets you exclude from your income up to $250,000 of capital gains on the sale of your house. That’s if you’re single; the exclusion rises to $500,000 if you’re married.

So, if you bought that four-bedroom ranch house back in 1974 for $100,000 and sold it for $350,000 today, you likely won’t have to share any of that gain with Uncle Sam. There are a few conditions, though:

  • The house has to have been your primary residence.
  • You must have owned it for at least two years.
  • You have to have lived in the house for two of the five years before the sale, although the period of occupancy doesn’t have to be consecutive.
  • You haven’t excluded a capital gain from a home sale in the past two years.

5. More help if you’re disabled

You may qualify for a $3,750 to $5,000 tax credit, depending on your filing status, if you or your spouse retired on permanent and total disability. The credit, called the Credit for the Elderly or the Disabled, goes up to $7,500 if you’re 65 or older.

But be prepared for this one to give you a few gray hairs. First, few people qualify for the credit; most of the time, your Social Security benefits will cause you to exceed the income limits. And if you lived with your spouse during the year, you have to file jointly. Plus, the tax credit is nonrefundable, which means that if you owe $250 in taxes but qualify for a $5,000 credit, you won’t get a check from the IRS for $4,750. But at least you’ll get to enjoy a $0 tax bill.

Tina Orem is a staff writer at NerdWallet, a personal finance website.

Top 10 Elder Law decisions of 2016

Below, in chronological order, is ElderLawAnswers’ annual roundup of the top 10 elder law decisions for the year just ended, as measured by the number of “unique page views” of our summary of the case.

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1. Medicaid Applicant’s Irrevocable Trust Is an Available Resource Because Trustee Can Make Distributions

An Alabama appeals court rules that a Medicaid applicant’s special needs trust is an available resource because the trustee had discretion to make payments under the trust. Alabama Medicaid Agency v. Hardy (Ala. Civ. App., No. 2140565, Jan. 29, 2016). To read the full summary, click here.

2. Trust Is an Available Asset Because Trustees Have Discretion to Make Distributions

A New York appeals court rules that a Medicaid applicant’s trust is an available asset because the trustees have discretion to make distributions to her. In the Matter of Frances Flannery v. Zucker (N.Y. Sup. Ct., App. Div., 4th Dept., No. TP 15-01033, Feb. 11, 2016). To read the full summary, click here.

3. Medicaid Applicant Who Transferred Assets in Exchange for Promissory Note May Proceed with Suit Against State

A U.S. district court holds that a Medicaid applicant who was denied Medicaid benefits after transferring assets to her children in exchange for a promissory note may proceed with her claim against the state because Medicaid law confers a private right of action and the Eleventh Amendment does not bar the claim. Ansley v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV-14-1383-D, March 9, 2016). To read the full summary, click here.

4. Mass. Court Bridles at Allegations in Request for Reconsideration in Irrevocable Trust Case

In a strongly worded response to a Medicaid applicant’s request for reconsideration of an unsuccessful appeal involving an irrevocable trust, a Massachusetts trial court strikes the applicant’s pleadings after it takes great exception to the tone of the argument.  Daley v. Sudders (Mass.Super.Ct., No.15-CV-0188-D, March 28, 2016). To read the full summary, click here.

5. Caretaker Exception Denied Because Child Did Not Provide Continuous Care

A New Jersey appeals court determines that the caretaker child exception does not apply to a Medicaid applicant who transferred her house to her daughter because the daughter did not provide continuous care for the two years before the Medicaid applicant entered a nursing home. M.K. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-0790-14T3, May 13, 2016). To read the full summary, click here.

6. State Can Place Lien on Medicaid Recipient’s Life Estate After Recipient Dies

An Ohio appeals court rules that a deceased Medicaid recipient’s life estate does not extinguish at death for the purposes of Medicaid estate recovery, so the state may place a lien on the property. Phillips v. McCarthy (Ohio Ct. App., 12th Dist., No. CA2015-08-01, May 16, 2016). To read the full summary, click here.

7. Attorney Liable to Third-Party Beneficiary of Will for Legal Malpractice

Virginia’s highest court rules that an intended third-party beneficiary of a will may sue the attorney who drafted the will for legal malpractice. Thorsen v. Richmond Society for the Prevention of Cruelty to Animals (Va., No. 150528, June 2, 2016). To read the full summary, click here.

8. Nursing Home’s Fraudulent Transfer Claim Against Resident’s Sons Can Move Forward

A U.S. district court rules that a nursing home can proceed with its case against the sons of a resident who transferred the resident’s funds to themselves because the fraudulent transfer claim survived the resident’s death. Kindred Nursing Centers East, LLC v. Estate of Barbara Nyce (U.S. Dist. Ct., D. Vt., No. 5:16-cv-73, June 21, 2016). To read the full summary, click here.

9. Irrevocable Trust Is Available Asset Because Medicaid Applicant Retained Some Control

New Hampshire’s highest court rules that a Medicaid applicant’s irrevocable trust is an available asset even though the applicant was not a beneficiary of the trust because the applicant retained a degree of discretionary authority over the trust assets. Petition of Estate of Thea Braiterman (N.H., No. 2015-0395, July 12, 2016). To read the full summary, click here.

10. NY Court Rules that  Spouse’s Refusal to Contribute to Care Creates Implied Contract to Repay Benefits

A New York trial court enters judgment against a woman who refused to contribute to her spouse’s nursing home expenses, finding that because she had adequate resources to do so, an implied contract was created between her and the state entitling the state to repayment of Medicaid benefits it paid on the spouse’s behalf. Banks v. Gonzalez (N.Y. Sup. Ct., Pt. 5, No. 452318/15, Aug. 8, 2016). To read the full summary, click here.

Feel Free to contact me to see how any of these decisions may affect your personal situation.

-Brian A. Raphan, Esq. 

Is It Better to Remarry in 2017 or Just Live Together?

Finding love later in life may be unexpected and exciting, but should it lead to marriage? The considerations are much different for an older couple with adult children and retirement plans than for a young couple just starting out. Before deciding whether to get married or just live together, you need to look at your estate plan, your Social Security benefits, and your potential long-term care needs, among other things. Whatever you decide to do, you may want to consult with your lawyer to make sure your wishes will be carried out.

Here are some things to think about: 

  • Estate Planning. Getting married can have a big effect on your estate plan. Even if you don’t include a new spouse in your will, in most states spouses are automatically entitled to a share of your estate (usually one-third to one-half). One way to prevent a spouse from taking his or her share is to enter into a prenuptial agreement in which both spouses agree not to take anything from the other’s estate. If you want to leave something to your spouse and ensure your heirs receive their inheritance, a trust may be the best option.
  • Long-Term Care. Trusts and prenuptial agreements, however, won’t necessarily keep a spouse from being responsible for your long-term care costs or vice versa. In addition, getting married can have an effect on your or your spouse’s Medicaid eligibility. If you can afford it, a long-term care insurance policy may be a good investment once you remarry.
  • The Family Home. Whether you are getting married or just living together, before combining households you will need to think about what will happen to the house once the owner of the house dies. If the owner wants to keep the house within his or her family, putting the house in both spouse’s names is not an option. On the other hand, the owner may also not want his or her heirs to evict the surviving spouse once the owner dies. One solution is for the owner of the house to give the surviving spouse a life estate. Once the surviving spouse dies, the house will pass to the original owner’s heirs.
  • Social Security. Many divorced or widowed seniors receive Social Security from their former spouses, and remarriage can affect benefits. If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse’s Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends (whether by death, divorce, or annulment). However, if your are a widow, widower or surviving divorced spouse who remarries after age 60, you are entitled to benefits on your prior deceased spouse’s Social Security earnings record.
  • Alimony. If you are receiving alimony from a divorced spouse, it will likely end once you remarry. Depending on the laws in your state and your divorce settlement, alimony may end even if you simply live with someone else.
  • Survivor’s Annuities. Widows and widowers of public employees, such as police officers and firefighters, often receive survivor’s annuities. Many of these annuities end if the surviving spouse remarries. In addition widows and widowers of military personnel may lose their annuities if they remarry before age 57. Before getting married, check your annuity policy to see what the affect will be.
  • College Financial Aid. Single parents with children in college may want to reconsider before getting married. A new spouse’s income could affect the amount of financial aid the college student receives. Some private colleges may even count the combined income of a couple that lives together if they commingle their expenses.
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