Estate Administration

Estate administration is the process of managing and distributing a person’s property (the “estate”) after death.  If the person had a will, the will goes through probate, which is the process by which the deceased person's property is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered among many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. (One exception: Social Security should be notified within a month of death. If checks are issued following death, you could be in for a battle.

When you're ready, but not a day sooner, meet with an attorney to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.

The exact rules of estate administration differ from state to state. In general, they include the following steps:

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, heirs must petition the court 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 one set up by your attorney, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an state or federal estate tax return is needed---generally if the estate exceeds $1 million in value---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, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. 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.

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.

Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

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Century of Giving Philanthropy Contest Concludes for 2013

Century of Giving Philanthropy Contest Concludes for 2013

       

Long Islanders have voted for the final time in 2013, and have selected the Suffolk County Chapter of the AHRC as the winner of the Century of Giving contest, sponsored by Davidow, Davidow, Siegel & Stern.

"We are grateful to all Long Islanders who cast ballots online and endorsed these three deserving non-profit organizations," declared Lawrence Davidow, Senior and Managing Partner of the firm.  AHRC Suffolk will be awarded $5,000 from the law firm.

"We are pleased to have been nominated for the Century of Giving initiative, and our recognition as a recipient is deeply gratifying," announced Director of Development, J. Andreassi.  "The award will be used to continue to support individuals and families impacted by intellectual and other developmental disabilities."

Mr. Davidow added that the other two Century of Giving nominees are essential to supporting Long Islanders with special needs and their families.  "The Long Island Advocacy Center and the Viscardi Center both serve thousands of families and individuals impacted by special needs," stated Mr. Davidow.  "Their contribution to our community is outstanding, and we wish to recognize their support.

The Century of Giving initiative was created by the Law Firm of Davidow, Davidow, Siegel and Stern to celebrate the law firm's centennial on Long Island.  The firm designed a philanthropic celebration to recognize non-profits that mirror the firm's mission: serving seniors and special needs populations.

The final phase coincided with the celebration of "Special Needs Law Month", a recognition offered by the National Academy of Elder Law Attorneys, of which the law firm is a member.  The previous two phases of Century of Giving recognized organizations serving Long Island seniors, and awarded $5,000 to two of the non-profits that were selected by Long Islanders.

Century of Giving Promotion Announces Phase III Nominees

The Law Firm of Davidow, Davidow, Siegel and Stern (DDSS) announced the Phase III nominees for “Century of Giving”, a philanthropic endeavor created to recognize and reward Long Island charities for the good works performed for local seniors and individuals with special needs.  

Managing Partner Lawrence Davidow stated, “It is our privilege to recognize the wonderful contributions of the following three non-profits, and to single them out as eligible nominees within the Century of Giving program: The SuffolkAssociation for the Help of Retarded Children (AHRC); The Long Island Advocacy Center; and the The Viscardi Center and School.”

Mr. Davidow added, “These three non-profit organizations have made a difference in the lives of so many individuals with special needs and their families on Long Island. While we can only select a single final recipient for the $5,000 award within the category of ‘organizations serving those with special needs’, we appreciate and acknowledge the good works performed by all our nominees.”The Century of Giving promotion celebrates the law firm’s centennial anniversary by recognizing worthy charities, and permits the public to vote for the charity which most deserves the $5,000 award donated by DDSS (vote at Davidow Century of Giving). The organizations have been selected with the expertise and guidance of the Long Island Community Foundation (LICF), and the pool of nominees serves the same populations as DDSS: seniors or those with special needs.

The promotion has been funded by DDSS, with LICF managing the fund and providing a comprehensive review of each nominee. “This is a wonderful philanthropic endeavor created by the 100 year-old law firm, and we were pleased to be the stewards of this initiative,” stated David M. Okorn, Executive Director of LICF.

The promotion has three phases: phase I, conducted in April and May, recognized select non-profits that have provided a range of human services for seniors; phase II – nominated organizations that combat specific health conditions among senior populations; and currently phase III nominates those organizations that have helped special needs populations.

Mr. Davidow concluded, “There is no more appropriate celebration for our hundred-year anniversary than one which recognizes organizations that share in our mission of helping seniors or individuals with special needs here on Long Island.”

Century of Giving Phase II Winner Announced

Celebrating 100 Years  1913-2013

Davidow, Davidow, Siegel & Stern, LLP

The votes are in, and Long Islanders have declared the Alzheimer's Disease  Resource Center of New York to be the winner of the second phase of the 2013 Century of Giving philanthropic contest.

"We are pleased to announce that Alzheimer's Disease Resource Center of NY has received the most votes within our category of 'Helping Seniors with Specific Health Conditions', and will be awarded $5,000 from the law firm of Davidow, Davidow, Siegel & Stern," announced Managing Partner Lawrence Davidow.

"It is our pleasure to accept the Century of Giving recognition and the donation," declared Mary Ann Malack-Ragona, Executive Director of the Alzheimer's Disease Resource Center.  "We are honored to have been selected, and we look forward to using these funds to support additional Long Island families impacted by Alzheimer's Disease."

Mr. Davidow added that the other two Century of Giving nominees also have assisted Long Island seniors in significant ways.  "The Arthritis Foundation of Long Island and The American Parkinson Disease Association's Information & Resource Center on Long Island are renowned for historic assistance provided to Long Island's elder populations with health concerns.  We salute them for their inspiring efforts and encourage support of these worthy charities," he noted.

The competition will conclude with a new Phase III nomination of other local non-profit organizations that are focused on Special Needs.  Stay tuned to find out the latest nominees and then log on to the Century of Giving website and vote!

Google Develops 'digital will'

Google has a way to ensure your data dies when you do.

The international tech giant, best known for its much-used search engine, has launched an Inactivity Account Manager, a "digital will" of sorts that allows users to determine what to do with their online "digital assets" once it's no longer needed.

The account manager, which can be activated by a new setting on a Google account page, will also allow the user to have their data expunged after three, six, nine or 12 months of inactivity and users can also designate "trusted contacts" to receive the data.

"Not many of us like thinking about death - especially our own.  But making plans for what happens after you're gone is really important for the people you leave behind.  So today, we're launching a new feature that makes it easy to tell Google what you want done with your digital assets when you die or can no longer use your account," product manager Andreas Tuerk wrote in a posting on Google's publicity blog.

"We hope that this new feature will enable you to plan your digital afterlife - in a way that protects your privacy and security - and make life easier for your loved ones after you're gone," Tuerk added.

In the same vein, but with a twist, a new online app allows people to keep tweeting posthumously.  LivesOn makes it possible by tweeting for you after you've died.

The Twitter app, which came out in March, examines your tweets to learn about your tweeting patterns and creates tweets of its own in your, uh, memory.

It examines your tweets while you're alive, learns about your tweeting patterns and then generates its own to match after you're gone.

An executor, named by users before their demise, notifies the server and then takes control of the account.

Source:  www.thestar.com/life/technology; written by Bruce DeMara, 4/12/13

As you can see, there are many aspects of your life that need to be considered when it comes to advance planning.  We have stressed for years how important it is to plan early so that you can get everything in order the right way, the first time.  Working side by side with our firm will provide you with great peace of mind and eliminate uncertainties and mistakes that can destroy a family, not only financially, but emotionally.

If you have completed your planning, we salute you and remind you to check in with us every now and then as life's circumstances continuously change.  If you haven't, we invite you to begin the process.  Start with attending one of our upcoming free seminars!

Your Special Needs Trust ("SNT") Defined

You have a special needs trust— or you have been designated as the trustee of a special needs trust— or your child has a special needs trust. What is a trust? What is a trustee? What is a beneficiary? What are all these terms you've never used before even though your first language is English? This article provides you with an overview of the more common terms found in your special needs trust. What is a Trust? A trust is a legal arrangement in which a person or a financial institution, called the trustee, holds and manages assets for the beneficiary (see definition below). The trust document explains the trustee's authority, how the trust is to benefit the beneficiary, and how and when the trust is to terminate. There are many types of trusts, but this article is focusing on a specific type of trust—a special needs trust. A special needs trust (SNT) is a trust that will preserve the beneficiary's eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI). Because the beneficiary does not own the assets in the trust, he or she can remain eligible for benefit programs that have an asset limit. As a general rule the trustee will supplement the beneficiary's government benefits but not replace them. Examples of supplemental needs are costs for sitters, companions, and dental or medical expenses not covered by Medicare or Medicaid. A first-party SNT, also referred to as a "self-settled" or "(d)(4)(A) trust," is funded with assets or income that belong to an individual with a disability (see definition below) and who is the beneficiary of the trust. In order for the assets of this type of trust not to count for Medicaid or SSI purposes, federal law requires that the beneficiary must be under the age of 65 when the trust is created and funded; the trust must be irrevocable and provide that Medicaid will be reimbursed upon the beneficiary's death or upon termination of the trust, whichever occurs first; and the trust must be administered for the sole benefit of the beneficiary. Typically the funding comes from a personal injury settlement or inheritance the beneficiary receives directly. A third-party SNT, frequently referred to as a supplemental needs trust, is funded with assets belonging to a person other than the beneficiary. In fact, no funds belonging to the beneficiary may be used to fund the trust. Typical funding comes from gifts, an inheritance from parents or grandparents, and proceeds of life insurance policies. This trust has no provisions to pay back Medicaid upon the trust's termination; rather, the person creating the trust decides how the trust estate is distributed when the beneficiary dies. The following terms are commonly found in first-party and third-party special needs trust agreements: Grantor — A grantor is the person who creates and funds the trust. This person is also commonly referred to as a settlor or trustor. In first-party SNTs, the grantor is actually the beneficiary because the law requires that the trust be funded with the beneficiary's own money, but that it be established by a parent, grandparent, legal guardian or a court. In third-party SNTs, the grantor is anyone other than the beneficiary, usually a parent or other family member. Trustee — A trustee is the person or entity who manages the trust assets and administers the trust provisions. A trustee can be a family member, friend or colleague of the beneficiary, a professional, or a combination of the two. A professional trustee generally is a corporate trust department or an attorney. It is common for more than one person to serve as trustee at the same time. Successor Trustee — A successor trustee is nominated in the trust agreement and is the person or entity to take over when the initial trustee is no longer able to serve. The trust agreement usually has specific requirements that the successor trustee must satisfy before assuming the trustee role. Beneficiary — A beneficiary is the person for whose benefit the trust is established. In first-party SNTs, the beneficiary must be a person who is classified as disabled by the Social Security Administration (SSA). In some states, the beneficiary of a third-party special needs trust must also be a person with a disability. Remainder beneficiary — When the trust ends (usually upon the beneficiary's death), the remainder beneficiaries are the individuals who will receive any remaining trust assets. In first-party SNTs, the state's Medicaid division is typically the first remainder beneficiary (note that in some states, Medicaid is not considered a beneficiary but rather a creditor). After Medicaid is reimbursed for the services it provided to the beneficiary, if trust assets still remain, they usually pass to the beneficiary's estate, or in some cases to persons named as remainder beneficiaries in the trust instrument. In third-party SNTs, the grantor of the trust decides who the remainder beneficiaries are. Medicaid should never be named as a remainder beneficiary of a third-party SNT. Compensation — Unless the trust agreement states otherwise, trustees are usually entitled to compensation for their services. Compensation is usually set forth in state law. If a corporate trustee is serving, it usually receives a fixed amount, based upon the value of the trust estate. All compensation is reportable as taxable income to the trustee. Trust Estate — The trust estate consists of assets placed into the trust and managed by the trustee for the benefit of the beneficiary. It also includes income earned from invested trust assets. Schedule A — Also known as a schedule of assets, Schedule A identifies all of the assets owned by your trust. It is important for the trustee to keep this schedule up to date. Irrevocable — An irrevocable trust is a trust that cannot be revoked or changed. All first-party SNTs must be irrevocable. A third-party SNT can be either irrevocable or revocable. Revocable — A revocable trust is a trust in which the grantor can revoke or change the trust terms at any time. Only third-party SNTs can be revocable. Revocable trusts usually become irrevocable no later than the death of the grantor, if not sooner. Testamentary — A testamentary trust is a trust created under a last will & testament and is not funded until the death of the person who created the will. A testamentary trust can only be a third-party SNT. Inter vivos — "Inter vivos" is a Latin term that means "among the living" or "during life." An inter vivos trust is a trust established during the lifetime of the person creating the trust. All first-party SNTs are inter vivos. An inter vivos third-party SNT can be revocable or irrevocable. Disability — The beneficiary of a first-party SNT must have a disability recognized by section 1614(a)(3) of the Social Security Act. You can visit http://www.ssa.gov/disability/professionals/bluebook/ for a complete list of SSA-recognized disabilities for adults and children. Bond or Surety — At times, a trustee is required to obtain a bond, which provides protection to the beneficiary against the possibility of fraud, negligence or loss of trust assets by the trustee. A bond is similar to an insurance policy in that if the trustee negligently or fraudulently lost trust assets, the bonding company agrees to pay a specified amount of money to reimburse the trust. Frequently when family members are serving as trustee, courts or Medicaid will require the trustee to obtain a bond. Accounting — The accounting is an explanation of the trust activity for a specified time period (usually a year). The accounting is prepared by the trustee, or an accountant or attorney hired by the trustee to prepare the accounting on the trustee's behalf. The accounting can be simple or very detailed. It is important to review the language in the trust agreement to know what the accounting requirements are. For example, in addition to providing the accounting to the beneficiary, the trustee may need to file the accounting with the court, the Social Security Administration or the state Medicaid agency. Special needs trusts are complex. The language used in special needs trusts can vary greatly from one trust agreement to another and from state to state. It is essential for trustees and trust beneficiaries to understand the terms in the written trust agreement. A legal professional experienced in special needs planning can ensure that the trust document will meet the needs of the trust beneficiary, the person who is funding the trust and the trustee who is administering the trust.  "Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org."

Five Myths about Medicaid's Long-Term Care Coverage

 

While Medicare gets most of the news coverage, Medicaid still remains a bit of mystery to many people. The fact is that Medicaid is the largest source for funding nursing home care, but there are many myths about exactly who qualifies for it and what coverage it provides. Here are five myths followed by the real story.

1. Medicare will cover my nursing home expenses. Medicare's coverage of nursing home care is quite limited. Medicare covers only up to 100 days of "skilled nursing care" per illness. To qualify, you must enter a Medicare-approved "skilled nursing facility" or nursing home within 30 days of a hospital stay that lasted at least three days. The care in the nursing home must be for the same condition as the hospital stay.
   
2. You need to be broke to qualify for Medicaid. Medicaid helps needy individuals pay for long-term care, but you do not need to be completely destitute to qualify. While in general a Medicaid applicant can have no more than $2,000 in assets to in order to qualify, this figure is higher in some states and there are many assets that don't count toward this limit. For example, the applicant's home will not be considered a countable asset for eligibility purposes to the extent the equity in the home is less than $536,000, with the states having the option of raising this limit to $802,000 (in 2013). In all states, the house may be kept with no equity limit if the Medicaid applicant's spouse or another dependent relative lives there. In addition the spouse of a nursing home resident may keep one half of the couple's joint assets up to $115,920 (in 2013). For more information on Medicaid’s asset rules, click here.
3. To qualify for Medicaid, you should transfer your money to your children. Medicaid law imposes a penalty on people who transfer assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid, and the length of the penalty period is determined, in part, by the amount of money transferred. The state will look at all transfers made within five years before the application for Medicaid. That doesn't mean that you can't transfer assets at all -- there are exceptions (for example, applicants can transfer money to their spouses without incurring a penalty). However, before transferring any assets, you should talk to an elder law attorney. For more information on Medicaid’s asset transfer rules, click here.
4. A prenuptial agreement will protect my assets from being counted if my spouse needs Medicaid. A prenuptial agreement only works to keep property separate in the event of death or divorce. It does not keep your property separate for purposes of Medicaid eligibility.
5. I can give away up to $14,000 a year under Medicaid rules. You can give away up to $14,000 a year without incurring a gift tax. Under Medicaid law, a gift of $14,000 or any other significant amount could trigger a penalty period if it was made within the five-year look-back period.

Before applying for Medicaid, it is crucially important to consult with an elder law attorney.

Source:  www.elderlawanswers.com