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How Do Tax Implications Shape Estate Planning Strategies for High-Net-Worth Individuals?

Davidov Law Group

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What is the Value of Thoughtful Estate Planning for High-Net-Worth Individuals?

Estate planning for high-net-worth individuals is crucial due to the need to protect and transfer substantial assets while limiting the potential tax implications. High-net-worth individuals making plans for the future of their estate face the challenges of mitigating estate and capital gains taxes, protecting their assets from creditors, and avoiding costly family or business partner conflicts, which require more sophisticated approaches to preserve and safeguard their wealth. Without a carefully crafted plan, you can lose a substantial portion of your estate to taxes during and after your lifetime, leaving less for your loved ones and charitable causes. 

Working with skilled legal advisors to develop a comprehensive estate plan that addresses these tax implications and aligns with your financial goals and objectives is vital. Every estate is unique and requires careful attention and a tailored approach to ensure the best possible outcomes. A New York estate planning lawyer can help you utilize strategies to minimize taxes and costs for your high-net-worth estate, such as gifting, irrevocable trusts, life insurance policies, family limited partnerships, and private foundations. 

How Does New York’s Estate Tax Cliff Impact Valuable Estates?

New York is one of a handful of states which impose an estate tax on high-net-worth estates. This tax is in addition to the federal estate tax levied on assets at the time of an individual’s passing. The New York estate tax rate ranges from 3.06% to 16%, which could take a significant portion of your heirs’ inheritances.

Estates exceeding the state’s basic exclusion amount by less than five percent will only need to pay taxes on the amount beyond the exemption limit. The exclusion amount is adjusted yearly. In 2023, the basic exclusion amount is $6,580,000. If the value of your assets passing to beneficiaries other than a charitable organization or spouse is above this limit, you will be subject to the New York estate tax.

The so-called New York “tax cliff” comes into play when the value of an estate exceeds the basic exclusion amount by more than five percent. At this point, the entire value of your estate will be subject to taxation at a high rate, as opposed to only the amount over the exemption limit. Avoiding this expensive tax cliff through adequate estate planning is key to preserving your financial legacy for your loved ones.

Which Estate Planning Strategies Could Be Useful for a High-Net-Worth Estate?

You have put considerable effort into growing and maintaining your business endeavors, real estate, investments, and other property during your lifetime. By consulting with your financial advisor and an experienced New York asset protection attorney, you can implement a plan to secure your hard-earned wealth for the benefit of the next generation. Your legal team will likely employ some or all of the following estate planning tools to help you meet your goals and reduce your tax burden.

Charitable Giving

Donating a portion of your estate to charities can help fund causes you believe in while ensuring your estate does not exceed the basic exclusion amount for estate taxes. You may achieve this result through several means, including:

  • Irrevocable charitable trusts: Charitable trusts can be a valuable tool for tax planning. Because the assets you place into the trust are no longer considered part of your estate, they are protected from creditors and are not subject to tax calculations. You may also receive an immediate income tax deduction for your donations. Certain types of trusts even allow the grantor to retain some income generated by the trust’s assets during their lifetime.
  • Donor Advised Funds (DAFs): A DAF is a charitable investment account you can fund with assets. Your donations are tax-deductible but also irrevocable, meaning the funds can only be used to make grants to IRS-qualified public charities. DAFs are a popular charitable giving vehicle because they are relatively easy to set up and provide significant tax benefits to donors.
  • Special terms within your will: It can be challenging to know the exact value of your estate prior to your passing. To ensure you do not go over the tax cliff, your lawyer may add a conditional bequest to your will that donates any assets exceeding the exclusion amount to charities of your choosing.

Gifting

Reducing the value of your taxable estate can help you lessen the taxes your beneficiaries must pay. One way to achieve this reduction is to utilize the annual federal gift tax exclusion. In 2023, this exclusion is $17,000 per recipient, meaning you can give that amount to loved ones tax-free every year. New York has no state gift tax. However, residents must plan carefully when using this strategy because the state has a “clawback” rule on gifts that exceed the federal per-person exclusion amount. Under this rule, any gifts made in the three years before the decedent’s passing that are beyond the exclusion value will be added to the estate’s value for the purpose of calculating the estate tax. Your lawyer or financial advisor can guide you on how to use gifting to your best advantage during the estate planning process.

Trusts

Many varieties of trusts exist for different purposes. Some allow you to structure financial gifts to family members to protect the money from poor spending habits, legal troubles, or other issues that could endanger the inheritance. Other trusts may be set up to provide care for family members with special needs, hold funds you wish to give to charity, or make the transfer of assets to your spouse or family members easier. In all cases, if the trust is irrevocable, the assets placed into it are no longer counted toward your estate’s value, making trusts a valuable tax planning vehicle.

How Can a Skilled Estate Planning Attorney Assist You?

Minimizing tax implications and increasing the value of the estate you pass on to your heirs is critical to a solid estate plan for high-net-worth individuals. Unfortunately, state and federal tax law is ever-changing. Effectively navigating the estate planning process requires detailed legal knowledge and a thorough understanding of every choice’s nuances and long-term effects. Early preparation is often crucial because some strategies take several years to implement effectively. To begin creating a robust plan for your high-value estate with a committed and experienced legal team, contact Davidov Law Group at 516-253-1366 to schedule your assessment.

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How Can a Non-Durable Power of Attorney Allow You to Temporarily Delegate Authority to Another Party?

You may diligently handle your finances on your own or enlist the assistance of a financial planner to help you make the best possible decisions with your assets. But sometimes, you may need more help to complete certain financial transactions. For example, imagine if you required an agent in another location to sign a legal document for you or if you needed to authorize someone to pay your bills at home while you were traveling in another country.

A helpful lawyer from Davidov Law Group can explain how drafting a non-durable power of attorney could prove useful if you find yourself in a situation where you need to transfer the ability to handle some or all aspects of your finances to another party. A New York powers of attorney lawyer can also outline the limitations and state requirements for these powerful documents to ensure you are utilizing them safely for your maximum benefit. Don’t hesitate to contact our firm today for more information and guidance.

What Does a Power of Attorney Do?

A power of attorney (POA) is a legal document that allows a designated person or persons to act on your behalf in financial and property matters. To be legal, the POA must meet the standards outlined in New York state law. Additionally, if you wish your POA to remain valid for an extended time, you should perform regular checks and updates with the assistance of a skilled attorney. Frequent maintenance ensures that your POA is current with all applicable laws and the agent you have designated is still capable of taking on the significant responsibility of the position.

One key point to note is that a New York POA does not grant the agent the ability to make health care or medical decisions for you. To ensure your medical care is properly handled when you cannot make your wishes known, your estate plan should contain a health care proxy. An estate planning lawyer can help you determine which documents are required to meet your needs.

What is the Difference Between a Durable and Non-Durable Power of Attorney?

Both varieties of POA may grant your agent sweeping powers to take care of all your financial issues or can be tailored to handle a specific circumstance. The main difference between the two types of POAs lies in when the powers are revoked. By understanding the options available to you, you can make an informed decision on which POA is best suited to your goals.

Non-Durable Power of Attorney

A non-durable POA is usually drafted to serve a specific, time-limited purpose. The powers granted by the POA remain until the principal (the creator of the POA) revokes them or the transaction(s) defined by the POA are completed. However, this type of POA also immediately ceases if the principal dies or becomes incapacitated for any reason.

Durable Power of Attorney

The terms of a durable POA are still legally valid if you lose your capacity to make decisions on your own due to injury, illness, or advanced age. You can use a durable POA to ensure that a trusted person manages your finances if you become unable to do so. Your agent can pay bills, make gifts, and contend with business affairs and other financial transactions on your behalf.

By creating a durable POA, you prevent your loved ones from having to go to surrogate’s court to get a Guardian of Property assigned to oversee these tasks during your incapacitation. However, a durable POA does expire upon the principal’s death.

What is a Springing Power of Attorney?

A springing power of attorney can be durable or non-durable, depending on how it is structured. This type of POA is designed to “spring” into effect when a predetermined situation arises. For example, you could draft a durable POA to become effective only after you are declared incapacitated by a doctor. A springing POA can prevent your agent from accessing your finances until their assistance is needed, limiting the potential for fraud or misuse of power. It is crucial to enlist the help of an experienced attorney to draft a springing POA because they can be complex, and any errors can result in the document not performing as you wish at a critical time.

When May a Non-Durable Power of Attorney Be Appropriate?

Since a non-durable POA ceases if you become incapacitated or pass away, it is not useful as an estate planning tool. However, a non-durable POA can play a role in your general financial plan or be appropriate for certain short-term circumstances where you wish to allow an agent to act on your behalf in a financial transaction.

Situations where you may choose to draft a non-durable POA include, but are not limited to:

  • Allowing an investment broker to make financial decisions for you regarding the purchase or sale of stocks.
  • Appointing an individual to handle your finances while you are out of the country for military duty, business, or long-term vacation.
  • Giving a trusted person the legal power to sign official documents if you cannot be physically present.

How Can an Experienced Lawyer Help You?

While it is possible to draft a non-durable power of attorney on your own, you may be opening yourself to substantial financial risks. The document must be precisely worded to ensure the agent’s powers are strictly limited to the circumstances where you require their assistance. Otherwise, their powers may not terminate when you want them to, and the agent may be able to take further actions you did not approve, such as spending your money, selling or mortgaging your property, or making important decisions regarding your business.

Davidov Law Group can help you evaluate your needs and explore which powers of attorney are suitable for your circumstances. We will ensure your documents are carefully drafted to meet state laws and protect your interests. Contact our law firm today at 516-253-1366 to schedule a free case evaluation and learn how we can serve you.

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How Can Medicaid Income Disregards Affect Eligibility to Receive Financial Assistance With Long-Term Care Needs?

As the costs of nursing home care have risen, it has become nearly impossible for many older individuals to afford the quality care they deserve. With numerous nursing homes charging upwards of $10,000 a month, an individual’s hard-earned life savings can disappear rapidly if they have not engaged in long-term care planning. Medicaid assistance often plays a significant role in making nursing home care affordable. However, the income eligibility rules can be complex and confusing. An experienced New York Medicaid planning lawyer can help clarify the impact of Medicaid income disregards and suggest strategies for meeting the program’s requirements.

What is Medicaid?

Medicaid is a government-funded and administered program that helps eligible low-income and disabled individuals of all ages pay for medical care. Different types of Medicaid coverage exist, which may pay for in-home services, doctor visits, or other types of care.

However, the primary use of New York’s Medicaid program for older individuals is to help cover the extremely high costs associated with nursing home care. 

How is Medicaid Eligibility Determined?

Medicaid is a means-tested program, and applicants must meet basic requirements to receive benefits. To qualify for long-term care Medicaid, an individual must have a medical need for the level of care provided by a nursing home facility and possess limited income and assets. The asset limits are adjusted annually by the state and vary based on the applicant’s marital status and whether their spouse is also applying. Essentially, the applicant must prove to the government that they are financially incapable of paying for their required care. Additionally, all applicants must be residents of the state where they request assistance.

When determining if an individual is eligible for long-term care Medicaid, officials will not only look at their current financial situation but also look back at their records over the last 60 months (five years) for long-term care in a nursing home facility. It is widely expected that in January 2024 there will be a phased-in look back of 30 months (2.5 years) for community Medicaid or long-term home coverage. These “look back” periods aim to ensure that the applicant did not give away assets or transfer property for less than the fair market value with the sole goal of qualifying for Medicaid benefits. If violations of the rules are found, the applicant may be subject to a penalty period before coverage can begin. Since any length of ineligibility can result in having to pay for expensive nursing home or home care costs out of pocket, it is crucial to start planning for Medicaid long before it is required to achieve the best possible outcome.

What Does Medicaid Consider Assets or Income?

The asset and income limits for Medicaid are very low. With few exceptions, the government counts any property you control and could potentially use or sell to pay for your care as an asset. Unfortunately, this also includes assets you share jointly with your spouse.

The following resources are considered countable income or assets when applying for Medicaid:

  • Employment wages
  • Social Security Income
  • Annuity payments
  • Social Security Disability Income
  • Financial gifts from friends and family
  • Bank accounts
  • Cash
  • Stocks and bonds
  • Vacation or secondary homes or property
  • Investments

What are Medicaid Income Disregards in New York?

A Medicaid income disregard (also known as an exemption) is a resource that is not counted against the applicant’s income limits. Every state has distinct rules on income disregards, and the state laws can change yearly, so consulting with a knowledgeable lawyer who can provide up-to-date information is crucial. In New York, some examples of assets and income that may be exempt include:

  • The first $20 of income each month
  • A primary residence
  • A car
  • Personal belongings and household items
  • Prepaid burial or funeral agreements or up to $1,500 for a burial allowance
  • 401Ks and IRAs in payout status

While your home is usually exempt from being counted against your Medicaid asset limit during your lifetime, it could eventually be subject to Medicaid’s Estate Recovery Program. Without an asset protection plan in place, your heirs may be forced to sell your home to repay Medicaid for your long-term care costs.

How is Income Handled if Only One Spouse Is Applying For Nursing Home Medicaid?

Placing a spouse in a nursing home can be a very emotional decision, but it can also cause financial concerns for the spouse who continues to live independently. Your income will be disregarded if your spouse applies for nursing home Medicaid coverage and you do not. Additionally, you have the right to a minimum amount of monthly income to keep you out of financial hardship. If your personal income does not meet this threshold, you may retain part of your spouse’s income to supplement your own up to the set limit. This is known as the Community Spouse Monthly Income Allowance (CSMIA).

Other state rules may also apply in this situation. If you are seeking long-term care Medicaid on behalf of your spouse, don’t hesitate to speak with a helpful lawyer who can guide you through the process.

Do You Have Options if You Exceed the Asset Limits For New York’s Long-Term Care Medicaid?

While careful planning for future healthcare costs is highly recommended, it isn’t always a viable option for individuals requiring immediate nursing home care. You may still have options if you or a loved one cannot afford your long-term care needs but do not qualify under Medicaid’s strict rules. You may be able to “spend down” your assets on approved expenses, such as credit card debt, medical bills, prepaid burial plans, and more, to meet the asset limits. However, you must act carefully to avoid incurring a penalty period.

You may also qualify for New York’s Medicaid Excess Income Program if you have high medical care bills. Under this program, once you spend enough of your monthly income on medical expenses to meet Medicaid qualification requirements, you become eligible for Medicaid for the remainder of the month.

How Can Medicaid Planning With A Trusted Law Firm Benefit You and Your Loved Ones?

Everyone deserves to age with dignity and receive excellent care after they can no longer live independently. Unfortunately, long-term care services are staggeringly expensive and can quickly deplete your savings, leaving little for your family. A robust estate plan that includes Medicaid planning strategies can protect your legacy and grant you and your loved ones peace of mind. To learn more about Medicaid eligibility and planning, contact Davidov Law Group today to schedule your assessment: (516) 253-1366.

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What is Nursing Home Medicaid?

Nursing Home Medicaid is an all-encompassing program for older adults that covers all Medicaid services. Examples such as lab work, hospital stays, prescriptions, adult day care, and more are all part of the Medicaid program.

It’s important to discuss your options regarding your estate and your healthcare with an experienced local attorney. They are trained to help clients like you and your families prepare for the future. Each chapter of our lives will bring different circumstances, and it’s best to plan for each of them.

How Does New York Help Their Elderly Population?

Each state has a plan in place for our elderly loved ones. Programs are available if applicable, and you can choose the path that works best for you and your family as you approach your elderly years.

New York State has many programs and services that may interest you as you approach this stage of your life, including medical and non-medical assistance at home and after moving to a nursing home. Work with your competent lawyer to determine what is best for you and ensure you are eligible.

Am I or My Loved Ones Eligible for Medicaid?

When working with your trusted attorney, you can explore your options and ensure you can take advantage of the benefits available. As eligibility is primarily based on income and resources, you must have a solid plan in place if you wish to be eligible for Medicaid and other programs. By strategically handling your assets ahead of time through the help of an experienced estate planning attorney, you can set yourself up now for success in the future. For you and your family.

Protecting your assets and how they are accessible may make the difference you need to be eligible for benefits. There are several ways to achieve this, and you can work through the options and decide what is best for you and your family.

Plan Well In Advance

Nursing Home Medicaid typically includes a five-year look-back period regarding assets. This can mean that if you waited until just before the nursing home age to transfer assets, they can look back at those assets or transactions and impose penalties.

This is why you must plan well in advance for your later years and have an effective strategy to protect yourself, your loved ones, and your assets. Maybe a trust is necessary to hold and protect your assets and ensure that they aren’t factored into your eligibility requirements for Medicaid. Maybe there is another strategy that, based on your situation, works best for you. Your experienced and professionally trained attorney is there to assist you.

What Income is Included?

Most sources of income will be counted towards your eligibility equation for Medicaid. Income such as wages, alimony payments, annuity payments, Social Security Income, Social Security Disability Income, and IRA distributions may all count as income resources.

If you are married, and your spouse will remain in the home, also referred to as a “community spouse,” their income is not counted, and they have a certain level of protection to keep them from being impoverished. This protection is typically in the form of a Monthly Maintenance Needs Allowance, or the state of New York; it’s called Community Spouse Monthly Income Allowance. This monthly limit allows the spouse entering the nursing home to transfer some or maybe all of their income to the community spouse, so it doesn’t count toward their income for Medicaid eligibility.

However, if your spouse makes more than the limit (set by each state), you may not be able to utilize this option. Speak with your attorney to fully understand the limitations and how to proceed.

What Assets Are Included?

Nearly all of your assets will be factored into the eligibility equation, making planning and protecting them imperative. Assets such as cash, stocks, bonds, vacation homes, all bank accounts, and investments will all be considered.

Generally speaking, your house, car, personal belongings, burial funds (planned and designated) up to a certain amount, and life insurance up to a certain amount are not included in your assets as eligibility. Most IRAs or 401Ks in payout status (or dispersing the Required Minimum Distribution) are exempted from the included assets.

How Can I Ensure That I Am Eligible?

By working with an estate planning attorney and going through all of the options that you have available to you, you can formulate a solid plan that you and your family can rely on. For example, maybe you choose to spend down some of your assets so that they aren’t standing in the way of you benefiting from Medicaid in the future. Maybe you rearrange some assets to achieve the same outcome.

Changes in the system occur often, and the look-back period may be changing soon, which can mean that planning in advance can look differently than it does today. Don’t miss eligibility by a small amount and deny yourself all the programs and services available simply because you didn’t plan.

Call our office today at (516) 253-1366 to get started. We will sit down and go through all of your assets, discuss what options would be best for you, and then work with you to put an effective strategy in place. Your legacy is important. Your family can continue to be provided for later in life and even after you are gone with effective planning.

We look forward to serving you and your loved ones at this important stage of your life.

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What Does New York Medicaid Cover?

Medicaid is a program that is available to low-income adults. Generally speaking, each state has its own Medicaid program following federal standards. However, Medicaid is not to be confused with Medicare, the federal health insurance program.

Medicaid covers other groups besides low-income adults, such as pregnant individuals, children, and those with disabilities. Medicaid covers a wide array of items, such as dental benefits, hospital inpatient and outpatient services, prenatal care, vision care, glasses, medicine, home care, and care in a nursing home, among other things.

Eligibility For Medicaid Based on Income

Individuals and married couples must meet income requirements to be eligible for Medicaid benefits. Income that is included in this equation is employment wages, pensions, Social Security Disability Income, alimony payments, gifts, annuity payments, IRA distributions, and Social Security income.

If an individual’s income exceeds the required eligibility limit, they may not qualify for Medicaid. This is why planning effectively for Medicaid eligibility is such a crucial step in your financial and estate planning for your future and the future of your loved ones.

If you are married, and only one spouse applies for Medicaid benefits, the other spouse’s income isn’t generally applicable. As non-applicant (or community) spouses, they are also eligible to retain a certain income level to avoid impoverishment, which is factored into the income eligibility limits.

This is called the Community Spouse Monthly Income Allowance (CSMIA) in New York. By utilizing the CSMIA, the applicant spouse can transfer some or all of their income to the community spouse, thereby increasing their chances of eligibility for Medicaid by removing the income from their name.

An exception to this allowance is that if the community spouse already has a consistent monthly income of the allowable limit, they may be unable to utilize the other spouse’s income or the CSMIA.

What About Assets?

Assets such as cash, investments, bank accounts (including savings, checking, and money market), stocks, bonds, and vacation homes are countable assets. By countable, they would qualify towards the asset limit for eligibility for Medicaid.

Non-countable assets such as your home, household items, and personal belongings are generally considered non-countable assets and won’t be factored into eligibility limits. Other non-countable assets can include burial funds set aside of up to $1,500 or your vehicle.

Your home exemption may qualify if you plan to return to your home. The value is then generally determined based on the actual value of the house, less any mortgages owed on the property. It is typically exempt if the applicant’s spouse lives in the home.

To calculate, the individual would need to add up the value of all countable assets, ensuring that non-countable assets aren’t included, and if this amount is under the asset limit, that individual would likely satisfy that portion of eligibility.

What is a Look-Back Rule and Why Does it Apply To Medicaid Eligibility?

The look-back period is one of the most crucial aspects of the asset limit eligibility requirement. The look-back period for nursing home care is typically 60 months or five years back from the time of the application. This can mean that Medicaid will carefully scrutinize any assets transferred within five years to outside sources to determine eligibility.

If individuals are unaware of the look-back period, they may inadvertently subject themselves to a penalty period for Medicaid ineligibility. A penalty period discourages applicants from gifting or selling assets under fair market value to position themselves better for Medicaid benefits.

It is important to note that the penalty period of ineligibility typically starts at the time of the application rather than the time the questionable transaction took place, which could mean that the individual is ineligible for another five years. In the case of nursing home Medicaid, however, the look-back period may overlook asset transfers, depending on the circumstances. You should closely review all assets with your estate planning attorney several years in advance to ensure you are not affecting eligibility for nursing home Medicaid.

What Are My Options?

Some individuals will worry that they can not afford nursing home care and choose to exhaust their assets until they become eligible for Medicaid. While this is an option, there are typically better options that you can choose.

In most cases, you can spend down your countable assets. Some of the ways to spend down assets may be to invest in home improvements, pay off debt such as loans, credit cards, medical bills, or your mortgage, or use funds for in-home care before you (or your loved ones) have determined it’s time to move to a nursing home.

New York also has a Medicaid Excess Income Program, which allows residents to avoid ineligibility due to the income limit if they have significant health costs. For example, suppose an individual has consistently substantial medical expenses. In that case, they may be able to utilize their income to cover those costs, establishing that their leftover income is within the income limits for Medicaid. Medical costs may include prescriptions, doctor visits, medical supplies, or other necessary medical expenses.

An Estate Plan That Benefits You and Your Loved Ones

If you are planning for Medicaid eligibility, you may already be one step ahead of the game without knowing it. Several people don’t consider that they may not be eligible for Medicaid and, therefore, don’t plan accordingly. If you found this article, you are likely researching your options and have taken a necessary step in the right direction.

We pride ourselves on listening to and educating our clients. We provide a clear map for the best options based on your needs and create a plan that ensures success for the later chapters of your life. Call us today at (516) 253-1366 to get started.

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Determining Which Assets Have to Go Through Probate in New York

Everyone needs an estate plan, even if you don’t think you have assets of any value or you don’t have children that need to be provided for. Understanding what probate is and how it works is an important part of the process of ensuring that your estate plan is thorough and clearly outlines your wishes. And one aspect of this is knowing which assets go through probate and which don’t.

New York Probate Rules

When someone dies, their assets need to be properly accounted for, the estate settled, and anything remaining passed on to the beneficiaries. This process is called probate, and most estates in New York will go through it. However, estates that are valued at less than $50,000 can skip probate. Instead, these estates go through a process that involves a voluntary administration hearing. This is similar to the traditional probate process but much simpler.

To be able to file a probate petition, the estate will need to have an executor, and there must be a will and an official death certificate. If there is no will and the estate was valued at at least $50,000, an administration proceeding must be filed. The closest family member is generally responsible for filing the administration. In order to get a better understanding of New York probate rules and laws, it may be in your best interest to contact a legal advisor for probate issues on Long Island.

Probate Assets

Most assets of an estate are subject to probate. This includes any real estate property, such as the person’s main home, a second residence, or investment properties, such as rentals. The exception to this is if there are joint owners on any of the property and the terms of the ownership include right of survivorship. Most bank accounts, including checking, savings, and investment accounts, are subject to probate.

All personal property must go through probate. This includes everything from large-ticket items like vehicles or expensive furniture to smaller items like jewelry or artwork. The value of the individual items isn’t relevant to whether they have to pass through probate, as long as the entire estate hits that $50,000 minimum value mark.

Non-Probate Assets

In general, assets that are jointly owned do not need to go through probate as long as one of the owners is still living. This is because the assets automatically pass to the surviving owner upon the other owner’s death. Assets with a named beneficiary, such as life insurance policies or retirement accounts, are also not subject to probate because the asset is already legally required to go to that beneficiary. This includes assets like trusts and retirement accounts.

Another example of an asset that doesn’t go through the New York probate process is a transfer-on-death account, also known as a TOD. These accounts are less complicated than trusts but offer the benefit of being able to bypass probate while also ensuring the beneficiary isn’t able to access the funds in the account until the owner’s death.

What Does the Probate Process Include?

Probate can be a lengthy process, and it’s important to know what to expect. Some people believe that the deceased’s property will be able to go to the beneficiaries very quickly or that any money in the estate will be able to be passed down as an inheritance, but this isn’t always the case. Below is an overview of the probate process in New York:

Filing the petition for probate. This needs to be filed by the executor of the estate and must be filed in the county where the person was living when they died. The petition includes the death certificate, the fill, the petition, and any required filing fees. Keep in mind that it can take several weeks to get an official death certificate, which pushes back the timeline to even start the probate process.
Distributing the notice of probate. Once the petition has been filed, the notice of probate action has to be sent out to everyone involved, including the potential beneficiaries.
Legitimizing the will. This is the main objective of the probate process. If there are no questions as to the will’s legitimacy and legality, this can be fairly simple to do. However, if any of the potential heirs question whether the will filed is the most current one or whether the person was in the proper state of mind, this process can drag on for months.
Determining the assets. Before the estate can be settled, there has to be a thorough assessment of all of the assets, and this is often more complex than it may seem. In many cases, the executor isn’t aware of all the deceased’s assets, and it can take weeks or months to discover and value all of the accounts, property, and other assets.
Paying creditors. Before any remaining inheritance can be distributed to the beneficiaries of the estate, any debts must be paid. For example, the mortgage on a house may need to be paid off or credit card accounts settled. Any debts incurred as part of the funeral expenses or administrative costs must also be paid at this stage.
Distributing the assets. The final step in the probate process is to distribute the remaining estate to the heirs as specified in the will.

How Can I Protect My Assets From Probate?

If your estate is valued at $50,000 or more, there isn’t much you can do to keep it from going through probate, but you can make use of estate planning tools like trusts and transfer-on-death accounts to protect specific assets from the process. The first step is to talk with a New York estate planning attorney to determine what your options are.

If you have questions about which assets are subject to probate in New York or have questions about estate law, call Davidov Law Group at 647-559-8355.

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The Importance of Establishing Guardianship for Minor Children

Everyone hopes to outlive their children, but you also hope that they are adults and well established in life before you pass on. But what happens if you die while your children are still minors? While it can be temporarily uncomfortable to address these issues, making a plan for these worst-case scenarios is vital for the welfare and security of your child.

In situations where there are two parents, the other parent would naturally step in, but this isn’t the case for everyone. If one parent has already passed or is not a part of the child’s life, it’s important to think about who would talk over as guardian for your children. Learn more about how guardianship works in New York, including picking a suitable guardian and how guardianship is established.

Who is a Guardian and What Are Their Responsibilities?

A guardian is a person who is responsible for providing care, maintenance, and support to the minor individual under their guardianship. The guardian of a minor has the same rights as a parent to make decisions regarding their health care, education, religious upbringing, housing situation, and other essential matters. Any individual over the age of 18 with a sound mind can be appointed as a guardian. However, you should make your designation carefully after considering the potential guardian’s values, skills, resources, and availability, as well as the familiarity of the individual with your children. The court maintains oversight of the guardian’s actions, and guardians must file an annual report with the court to update them on the status of the protected minor. 

The duties of a guardian may vary depending on the type of guardianship granted, but some primary responsibilities include:

  • For guardians of the person:
    • Providing proper care, maintenance, education, and support.
    • Supplying food, clothing, shelter, and necessities.
    • Authorizing medical, surgical, dental, psychiatric, and psychological care.
    • Ensuring the protected person is appropriately trained and educated.
  • For guardians of the property:
    • Managing the individual’s money and property strictly in their interest.
    • Preserving and protecting the individual’s assets.
    • Creating an inventory of the individual’s assets.

How Guardianship Works in New York

Establishing a guardianship plan is a way to ensure that you have some say in who will take over raising your child if something happens to you and the other parent. This is done by naming someone, referred to as the guardian, to assume care of the child, who is called the ward. However, there are also other circumstances where guardianship may be needed. 

For example, if a parent abandons or neglects a child, is deported, or is physically or mentally unable to make decisions for the child, a guardian may be needed.

The court is tasked with appointing a legal guardian, and without a guardianship plan in place, your child may be placed in foster care or be put into the care of someone you wouldn’t have chosen. It’s important to understand that while you can make your wishes known through a guardianship plan, it’s not a guarantee. For example, in the state of New York, once a child is 14 years of age, they must consent to the appointment of the guardian. If your child doesn’t want your choice to be appointed, another guardian may be instituted instead.

What Types of Guardianship Exist in New York?

With the assistance of a knowledgeable estate planning attorney, you can create a guardianship plan that will safeguard your minor children, no matter what happens in the future. Several documents may be used to create a customized plan covering every eventuality. New York law makes provisions for at least three varieties of guardianship that can be utilized in different situations.

Standby Guardian

Emergencies can occur anytime and may impact your ability to be present or provide proper care for your child. By completing a Designation of Standby Guardian form, a parent can ensure that their child will receive immediate care from a trusted person without significant disruption if a specified event occurs. A standby guardian is an individual who is given temporary authority to care for a minor child while the parent or legal guardian is still alive, although the standby guardian may petition the court to make the arrangement permanent if the circumstances warrant it. 

The event that allows the standby guardianship to go into effect is known as a “triggering event.” Examples of triggering events may include:

  • Administrative separation between the parent and child, including incarceration, deportation, detention, and other events.
  • Doctor diagnosed mental incapacitation, which renders the parent unable to care for the child.
  • Physical debilitation, such as terminal illness, that causes the parent to consent to the initiation of the standby guardian’s authority.

The parent can specify whether they want the named standby guardian(s) to be the guardian of their child’s property, person, or both. For extra protection, the parent may choose one or several persons to act as standby guardians, in case a named standby guardian is unable or unwilling to assume responsibility when the triggering event occurs. It is important to note that if this designation is being made in anticipation of a specific triggering event, the standby guardianship must be approved by a judge prior to the event taking place. After completing and filing their form, the parent or legal guardian still retains full parental, guardianship, custodial, or caretaker rights and can revoke or cancel the standby guardianship at any time. 

Permanent Guardian

When creating your estate plan, it is crucial to consider who will care for your children long-term if you should pass away unexpectedly. Your co-parent will generally retain the right to be the guardian for your minor children in this event without any action required from the court. However, appointing a guardian in your Last Will and Testament provides protection if you and your co-parent are both deceased before your children become adults.

You should discuss your decision with the person you intend to name as your child’s guardian to ensure they are comfortable with the role and understand any expectations you may have. You may also wish to speak to your teenage children about your choice and allow for their input, as children over 14 may be consulted by the court for their consent before a guardian is appointed.

Guardian of the Property of a Minor Child

New York state law aims to protect the finances of minor children from fraud or mishandling. If a child receives assets valued at $10,000 or more from an inheritance, lawsuit settlement, or another source, a guardian of the property must be appointed. The guardian, working in conjunction with the court, is tasked with managing the child’s money until they turn 18. The designated individual has a fiduciary duty to act in the child’s best interests, and they cannot withdraw any funds without the consent of the court.

Factors to Consider When Choosing a Guardian for Your Child

While any person who is at least 18 years old and of sound mind can technically serve as a guardian for your children, it’s important to choose who will fill this role very carefully. Taking care of a child is an enormous responsibility — as you well know — and the person you choose should be physically able to care for the child, mentally prepared, and emotionally mature and be financially stable enough to support a child.

It’s also a good idea to choose someone who already has a solid, positive relationship with the child, as this can help ease the transition. Many people choose to name the child’s grandparent, adult sibling, or an aunt or uncle as a guardian. However, you may also choose a more distant relative or family friend if you feel they would be better suited.

Remember to factor in parenting philosophies as well as cultural and religious differences. If you want your child raised in a certain culture or religion, it’s important to consider this when you’re choosing a guardian.

Creating a Guardianship Plan

If you need to create a guardianship plan, your first visit should be to an attorney. A lawyer can help you understand how guardianship works in New York and help you make a plan that covers any specific scenario. A guardianship plan can be written into a will or created as a separate document that goes into play with a triggering event, such as a death, incarceration, or illness.

It’s also a good idea to ensure that you discuss your wishes with the person you intend to name as guardian and the rest of your family members, so there are no surprises when and if the time comes. This also ensures that the potential guardian is aware of their responsibilities and has the opportunity to ask questions, express concerns, or let you know that they don’t feel comfortable taking on that role.
Remember that any guardianship plan you create will still have to go through the court system to be put in place, so it’s important that all parties understand what that entails.

Can Guardianship Be Temporary?

Yes, in some cases, guardianships can be temporary. This may be done if there are temporary circumstances that keep the parents from being able to care for and make decisions for their children. For example, if the parent is in the military and is being deployed, it may make more sense for a temporary guardianship to be established so that the child can stay behind where their friends and school are. When the parent returns, the guardianship would be ended, and they would resume responsibility and care for the child. A temporary guardianship may also be used if a parent is very ill or is being incarcerated. A temporary guardian is usually referred to as a “standby guardian” in the state of New York.

How Do You Change or Rescind a Guardianship?

If the guardianship has not been put into place and you just want to make changes to who your appointed person would be, you can do this at any time. All you have to do is create a new document and destroy the old one. If the guardianship is already in place and the guardian no longer wants to or is unable to continue to care for the child, they must file a petition with the courts. The courts will review the circumstances and appoint a new guardian, if necessary.

How Can Our Estate Planning Law Firm Assist You?

Creating a guardianship plan isn’t difficult, and it’s something that’s important to ensure your children are cared for and that you have peace of mind if something were to happen. Whether you need help creating a guardianship plan or you wish to petition for guardianship, Davidov Law Group can help. Call 516-928-6594 to schedule an appointment to go over your case with an attorney.

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Understanding Business Succession Planning

Ensuring that you have a strong estate plan set up for your personal property and assets can make things smoother and less stressful for your beneficiaries and provide you with peace of mind as you live out the rest of your years. But if you’re a business owner, you also need to make a plan for what you want to happen with your company should something happen to you unexpectedly. Keep reading to learn more about what business succession planning is, why it’s important, and how to create a solid succession plan.

Why Business Succession Planning Is Important

You’ve worked hard to build your business and make it a success, so it’s important to plan for the future when you may not be here to oversee every aspect and make every decision. Business succession planning involves making provisions for the transfer of ownership if you were to pass unexpectedly as well as creating processes that ensure that your business can function well without you.

The main objective of business succession planning is to ensure that your business, including the employees and customers who depend on it, faces as little disruption as possible if something were to happen to you. Larger companies are often more inherently set up for this because they may have more stakeholders and more leadership staff who are able to take over and keep things running, but small businesses can face immediate issues without a proper succession plan in place.

The Benefits of Effective Succession Planning

When done properly, a business succession plan can provide many benefits for you personally and your business’s overall health. A business succession plan lets you rest easy knowing your business is in good hands. It’s also good for your business because it means you’ve ensured that your business isn’t dependent on any one person.

You may have heard people in your industry refer to “hit by a bus syndrome,” which means that if any one person at your company was hit by a bus, the business would not be able to continue or would experience extreme hardship temporarily. For example, if only one person at your company knows how to run payroll and they get “hit by a bus” — which can also mean that they quit or are too ill to come into work — payroll can’t go out, which is extremely problematic. Effective succession planning ensures that your business continues to run smoothly no matter what happens.

Business Succession Laws and Regulations in New York

When you’re creating a business succession plan, it’s important to be aware of the various laws and regulations that govern these types of issues, specifically in regards to transfer of ownership. For example, there are specific rules for how much stock can be gifted to someone on an annual basis. Gifting stock is one way to transfer ownership, but if you don’t consult with an attorney, you could find yourself paying hefty taxes.

Another option is to set up transfer of ownership in the business through a trust, but these also have specific guidelines. An attorney can help you understand what type of trust is the best one for your situation and ensure that everything is done correctly to facilitate a seamless transition when it’s time.

The best way to ensure that your business succession plan is in accordance with New York’s rules and regulations is to develop it with the help of a qualified attorney.

Creating a Succession Plan

If you’ve never created a succession plan before and aren’t sure where to start, the team at Davidov Law Group can help. We can guide you through the following steps to ensure that your succession plan is appropriate for your business and has covered every possible contingency.

Assessing the business. The first step is to take stock of your business, including making a list of employees and their roles, customers and clients, vendors, and your profit and loss history.
Identifying potential successors. Once you know what you have to pass on, you’ll need to start identifying candidates to take over the business. You may want to consider both overall ownership here as well as identify employees who could step up into more responsibility if needed.
Plan how to get current employees and potential successors up to speed. If your successor hasn’t worked in the business before, it’s a good idea to get them familiar with what your company does and how it works long before ownership actually transfers. This step is also where you would start crosstraining or promoting the employees identified in the previous step.
Create the business plan. Meet with an attorney to solidify your succession plan and make it official.

Identifying Potential Pitfalls in Succession Planning

One of the main parts of creating a successful succession plan is to take an inventory of the pain points of your business operations. Ask yourself questions like:

What employees would I be lost without?
Is there anything that only one person can do?
Which of my lower-level employees are showing potential for leadership positions?
Who would I trust with my business?

Asking and answering these questions can help you get a better understanding of where you need to do some extra work to ensure that things can run smoothly if something happens. For example, if you have one key employee that seems to keep the place running, it’s a good idea to focus on cross-training others to start spreading out some of those tasks and ensuring you’re not relying too heavily on any one person.

Whether your business is just starting or you have years of profitable dealings, creating a business succession plan should be part of your larger estate planning. Get help ensuring your company’s future is secure when you work with the legal team at Davidov Law Group. Call our office today at 516-928-6594 to get started.

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What is a Healthcare Proxy?

According to the New York State Assembly, the Health Care Proxy Law “allows you to sign a ‘health care proxy‘ and name your ‘health care agent.’

This law provides the ability to name a person in charge of your healthcare decisions should you not be able to make them yourself. For example, if you have dementia or have serious injuries that don’t allow you to make medical decisions for yourself, your healthcare agent can step in and make them for you.

Benefit of a Healthcare Proxy

This law is essential as it allows you to maintain control of who you wish to have making your medical decisions if you are unable. Ideally you will have communicated with this person regarding what measures you approve of to save your life or preserve functions (and/or have provided direction in a Living Will). A healthcare proxy can also communicate and enact other medical wishes, such as whether or not you choose to be an organ or tissue donor. Generally speaking, you can authorize your healthcare agent to have as much or as little control over your medical care as you wish.

Who Should Be My Healthcare Agent?

There are several aspects to consider when choosing your healthcare agent. They must be competent, of sound mind, and at least 18 years of age. The candidate must also be someone you feel comfortable discussing your wishes and concerns with and be entirely trustworthy to ensure they follow your wishes.

The person you choose must also be able to navigate challenging conversations with family, friends, and medical staff regarding your wishes and choices for medical care. Confusion, conflicting opinions, and distress can quickly occur during a medical emergency, and this person must be able to handle these conversations and focus on the priorities without fail.

Will this person be local to me until I need them? Location is another aspect to consider. If you choose a healthcare agent and they move a significant distance away in the future, it will be difficult for them to handle their responsibilities, or they may no longer want to because of the distance. It is important to understand whether or not the person you choose is willing to travel to maintain their duties as your healthcare agent should they (or you) move in the future.

The weight of some of the decisions that may need to be made may be too much for some. It is essential to consider the stress that this person may endure and be confident they can handle it. It is important that you have communicated your wishes to your health care agent, so that they can be confident that they are making the decisions you would have made. The person should also be someone you trust to make decisions about medical issues that you may not have thought to discuss with them in advance.

Common Reasons to Revoke or Change Your Healthcare Proxy

As life evolves, so do our needs and the people that remain in our lives. You may have significant changes to your family, such as death or divorce, that may prompt you to change your mind about your previously selected healthcare agent.

You may have witnessed a significant emergency or change in the health of someone you love, and this experience may prompt you to rethink who you have designated as your healthcare agent.

You may have moved to another state, or your healthcare agent may have moved away since the proxy was created, making you wish to change the healthcare agent. It is important to note that if you move out of state, you should ensure that your current healthcare proxy is recognized and enforceable in the state that you move to.

How Do I Revoke or Change My Healthcare Proxy?

If you choose to make changes or revoke your healthcare proxy, you can simply fill out a new form and destroy the original. You can notify your current healthcare agent, but it is unnecessary. However, several people choose to inform their preferred healthcare providers to ensure there is no confusion in the future. You can also supply these providers with a revised healthcare proxy to convey the change.

If you are legally separated or divorced, and your spouse was listed as your healthcare agent, their rights will be terminated at the time of the legal separation or divorce. By stipulating this information within the proxy paperwork, you can override this and ensure they remain your healthcare agent even after the divorce.

You may also place an expiration date on your healthcare agent’s duties. If this timeline is expressed within the paperwork and has expired, the healthcare agent will no longer have control of your medical decisions.

Another option that you may wish to consider is naming an alternative healthcare agent. By doing so, if your primary healthcare agent isn’t available or can’t make medical decisions for you, the alternative agent can step in and handle the responsibilities for you.

An Important Step in Estate Planning

Establishing a comprehensive estate plan is one of the most caring and thoughtful processes you can complete. It allows for less confusion and questions when your family needs clarity and peace. Think of it as an extra step that you take to protect and provide for your family, even after you are gone.

Our team has over twenty years of experience dealing exclusively with estate planning and elder law. This experience and focus allow us a unique and capable perspective to ensure our clients receive the best insight and tools available to them.

Contact us at (516) 928-6594 to get started today.