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By John M. Bigler The New York State Bar Association (NYSBA) elder law Section meets yearly to update elder law practitioners on changing laws. Fortunately, there have not been any major changes in the law in the past year, so this year's meeting, was an opportunity to bring the close-knit group of Elder Law attorneys together in order to pick each other's brains on the issues and to share client experiences.
As noted in one of my previous columns, an irrevocable life insurance trust can be an excellent way to pay estate taxes. The idea is to take the proceeds from life insurance out of one's estate by transferring it into an irrevocable life insurance trust, which has no ties to the individual after death. The proceeds will not add to the insured's estate but can be used to pay estate taxes. According to Mr. Friedman, for the wealthier seniors, life insurance should be considered as an alternative to long-term catastrophic insurance (LTCI). Prior to Mr. Friedman's discussion, Johnston Whitman, also from New York City, updated us on LTCI. He supplied answers to typical questions such as: Who is likely to need long-term care? How much does it cost? Who is eligible? How do you select an LTCI policy? Which companies offer them? What should be kept in mind when shopping for LTCI? And Which LTCIs are "Tax Qualified?"
Bernard Krooks of White Plains, the chair-elect of the elder law section of the NYSBA, also discussed a topic of increasing interest and that is using both private and commercial annuities as a method of Medicaid planning. Annuities have become the new fad among some planners. The idea is to take assets and use them to purchase an annuity which provides a stream of income to the owner. The thinking is that rather than transferring an asset resulting in a period of Medicaid ineligibility for nursing home care, one is simply changing an asset into income which shouldn't result in a penalty. The upshot is that a person facing immediate entrance to a nursing home could take, for example, $100,000 of assets and purchase an annuity, which would provide them a monthly income based on their life expectancy. The income generated by the annuity would be lost, as it would have to be turned over to the nursing home to reduce Medicaid's cost but the asset would be protected. However, if the annuitant has a long life expectancy, then it is possible that all of the income will be paid out. Therefore, this planning works best for the person who is not expected to be in the nursing home for an extended period of time. Mr. Krooks warned that DSS examines these annuities very carefully, especially private annuities with family members. These annuities are prone to be challenged and result in fair hearings. As a practicing attorney, to hear Gayle Eagan of Buffalo, present an overview of the various types of trusts used both in the areas of elder law as well as estate planning was refreshing. Although this is information I have shared with you in previous columns, it reaffirmed that my colleagues have been applying similar or identical standards to the care of the elderly. She discussed revocable trusts, irevocable trusts, supplemental needs trusts (for those who are disabled) and testamentary trusts created within a will. Trusts continue to be the most essential tools in our practice. Testamentary trusts, which become effective after date of death, are particularly handy in estate planning. Ms. Eagan also discussed Credit Shelter Trusts as well as many charitable trusts that can result in substantial estate tax savings. With regret, I left the beautiful city of Montreal, Canada where the conference was held this year. But there is always next year when the conference will be held in the Napa Valley, Calif. Reprinted with permission of the Suffolk Times © 1999 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
This year the panel of speakers included some of the most renowned names in the area of elder law. Robert M. Friedman, of New York City, one of the first elder law attorneys in New York State, as well as founder and past president of the elder law section of the NYSBA, provided a discussion that centered on estate planning through the use of life insurance trusts.
Robert Baldwin of Syracuse presented an eminent discussion on the increase of retirement IRAs, 401(k)s and pension benefits. These benefits are becoming increasingly common in individual's portfolios because of their tax benefits. However, the rules regarding both tax and Medicaid treatment for these assets are extremely complicated and uncertain. Even the Internal Revenue Service (IRS) and the Department of Social Services (DSS) appear confused as to proper interpretation of the rules and regulations regarding these assets. Mr. Baldwin said that it is very difficult to get a consistent answer as to how these assets should be treated either by the IRS or the DSS.