Grimaldi & Yeung

Estate Planning Essentials

An estate plan starts with a will, but that’s just the beginning. A true estate plan includes addressing issues that occur while we are living, as well as when we have passed. Everyone needs to have these plans in place, regardless of how much or little one owns.

Having an estate plan means that you and your family are prepared not just for death, but also for illness and incapacity. Distribution of your property according to your wishes, is just one part of an estate plan. Minimizing state and federal estate taxes is another. A complete estate plan addresses many legal, financial and health issues.

Investopedia’s recent article, “6 Estate Planning Must-Haves,” provides us with a list of items every estate plan should include:

• A will and/or a trust;
• Powers of attorney;
• Beneficiary designations;
• A letter of intent;
• Guardianship designations;
• Health Directives.

In addition to these documents and designations, a thorough estate plan also should consider the purchase of insurance, like long-term care insurance, income producing investments, and life insurance to pass money to beneficiaries without probate.

Let's look at each item on this checklist to make sure you haven't left any decisions to chance.

Wills and Trusts. A will or trust should be one of the primary parts of your estate plan, even if you don't have a lot of assets. Wills make certain that your assets are distributed according to your instructions.  Your family will appreciate your clear direction on how your personal effects should be shared. Trusts can also help limit estate taxes or legal challenges and costly and slow court procedures.

Power Of Attorney and Health Directives. A durable power of attorney (POA) allows an agent or a person you assign to act on your behalf, if you’re unable to do so yourself during your life when it is most important. A Health Care Proxy (HCP) designates another person to make critical healthcare decisions on your behalf in the event of incapacity.

Beneficiary Designations. Some of your assets will pass to your heirs without being mentioned in your will, such as 401(k) plan assets, annuities, IRAs, etc. Therefore, maintain a beneficiary and a contingent beneficiary on these types of accounts. Likewise, insurance plans should have a beneficiary and a contingent beneficiary, because they also pass outside of a will. Your beneficiaries should be over 21 and mentally competent.  These need to be updated regularly as your life changes.

Letter of Intent. This is simply a document for your executor or a beneficiary to define what you want done with a particular asset after your death or incapacitation. Some letters of intent also contain funeral details and other special requests. A letter of intent isn’t legally binding. It helps inform a probate judge of your intentions and may help in the distribution of your assets, if the will is declared invalid for some reason.  These can be extremely helpful for blended families or when close friends or non-family members are selected as your executor or trustee.

Guardians/Special Needs Provisions. If you have minor children or are considering having kids, naming a guardian is very important. Be sure the person(s) shares your views, is financially sound and willing to raise your children. You should also name a backup or contingent guardian.  Most people don’t understand that if you don’t name a guardian in your will, the decision is made by the court. It is possible that the court choses someone you would never have wanted to raise your children.

There may also be a need to provide for other dependent or disabled loved ones in your Estate Planning documents, such as a disabled adult child.  Your Estate Planning documents can includes special provisions to set up a Special Needs Trust or Discretionary Trust for the benefit of the person who may need help in managing their inheritance.  This can also include individuals who have other financial or spendthrift issues.  Your documents can be customized to include those protective trusts to be created after you pass, as part of their inheritance.  

Meet with one of our estate planning attorneys and prepare a complete estate plan to protect your loved ones.

Reference: Investopedia (July 16, 2019) “6 Estate Planning Must-Haves”

Asian American Bar Association's Pro Bono Clinic Receives NYS Bar Association Award!

Congratulations to our partner, Pauline Yeung-Ha, Co-Chair of the Asian American Bar Association of New York's (AABANY) Pro Bono Legal Advice and Referral Clinic program for receiving the New York State Bar Association's Bar Leaders Innovation Award, in recognition of the tireless efforts of outreach and service to the communities in need of legal assistance. Pauline Yeung-Ha is Co-Chair of this AABANY program along with Karen Yao, Asako Aiba and Judy Lee.

Below, Pauline Yeung-Ha receives the award from Hank Greenberg, President of the New York State Bar Association:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pauline Yeung-Ha with Hank Greenberg and co-chairs: Karen Yau, Judy Lee:

 

 

 

 

 

 

 

 

 

 

 

 

 

AABANY group photo including the Pro Bono Clinic co-chairs, Pauline Yeung-Ha, Karen Yau, (both in center) Judy Lee and Asako Aiba (both on far left):

 

 

 

 

 

 

 

Judith D. Grimaldi, partner of Grimaldi & Yeung LLP and Michelle Yeung, associate attorney in attendance supporting their partner, Pauline Yeung-Ha:

Representative Payee and ABLE Accounts Updates

Representative Payees

This Applies to Families Who May be Social Security Representative Payees for a Disabled Family Member:

New regulations effective February 25, 2020 will allow you to designate a successor representative payee for your social security benefits, in advance of your own death or disability. This important change means that a family can make sure there is no interruption of benefits such as SSA and SSI for themselves or a disabled family member. This is particularly critical when the impairment is a developmental or intellectual disability and a 17A guardian has been appointed. SSA had refused to permit a successor rep payee until the successor guardian is appointed – a process that can take several months in many New York State counties. The new forms have not yet been finalized. Contact your local SSA office in March to secure the proper application to pre-appoint a Representative Payee who will be able to collect and manage social security benefits when you are unable to do so.

 

 

 

 

 

 

 

 

New Rules for ABLE Accounts - for Special Needs Adults:

Achieving a Better Life Experience (ABLE) Accounts are for persons with disabilities to help in saving money without risking their government benefits or entitlements. A person who holds an ABLE account up to $100,000 would still be eligible for Supplemental Security Income (SSI), and Medicaid or other important federal benefits. 

The new rules listed below expand options for disabled individuals who use ABLE accounts. The funding limits for ABLE accounts are aligned with the Federal gift tax exclusion, which currently allows $15,000 annual gifts or transfers to an ABLE account (2019). Employed persons with disabilities can deposit their income and wages into an ABLE account up to $12,140 per year as long as they do not also have an employer-contributed retirement plan available such as a 401K or a tax deferred savings plan or any other qualified retirement plan.

ABLE accounts now have the flexibility to hold funds that were previously kept in a tuition program or 529 account. This is an important allowance for those who are saving for their children’s college in a 529 account, but may have needed to use the funds for other services for a disabled child. The tuition fund can now be moved into an ABLE account in the amount of $15,000 each year.

The final valuable update to persons with ABLE accounts is the Saver Credit. For people with low to moderate income, the deposits made to the ABLE accounts can qualify for a tax credit of up to $2,000.

Our law firm can assist in setting up Supplemental Needs Trusts, ABLE Accounts and any other estate planning services you may need for your special needs family member. Please call our office at: 718-238-6960.

What is the SECURE Act of 2019?

Changes to your IRAs, 401(k)s, RMDs, and more:

The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, was approved by the Senate on Dec.19, 2019. This Act includes retirement savings and employee benefit changes as outlined below:

• The Act changes the age required to take Required Minimum Distributions (RMDs) from your retirement accounts, from age 70 ½ to age 72. This applies to the following accounts: 401(a), 401(k), 403(b), and governmental 457(b) plans and traditional IRAs. As of today though, there is no age limit on making Roth IRA
• For beneficiaries of a retirement account and traditional IRAs, whose account owner passed after December 31, 2019, you will need to withdraw the assets in these accounts within 10 years after owner’s death. The only exceptions to this 10-year distribution requirement apply to a surviving spouse, a minor child, a disabled or ill individual, and beneficiaries who are less than 10 years younger than the account owner.

Benefits of the SECURE Act:

• Act will allow account owners to continue their retirement savings for a longer period of time, and allows traditional IRA owners to keep making contributions indefinitely.
• The SECURE Act makes it easier for small business owners to set up “safe harbor” retirement plans.
• Part-time workers will be able to participate in an employer retirement plan.
• The Act directs most non-spouses inheriting IRAs take distributions that empty the account in 10 years.
• The Act allows 401(k) plans to offer annuities.

The Secure Act requirement that the named beneficiaries take out their payments over a 10-year period comes with challenges. The concentration of payment in a short period will certainly suddenly increase the named beneficiary’s income and with a potential increase of their own income tax liability, by increasing their income tax rate on all of their other regular income. This increase in annual income during their next 10 years could impact their eligibility for other tax benefits, entitlements, etc. and should be considered in naming beneficiaries.

Contact our office for an update of your retirement planning and to learn the advantages of using a Trust in the payout of a retirement account.

Senior Veterans Should Apply for These Benefits

There are funding programs from the VA that can help offset the cost of certain types of care later in life. For those who served their country, these benefits may be a big help.

Senior budgets are part of the challenge of aging. For veterans, there’s good news from a recent article from U.S. News & World Report, “Veteran Benefits for Assisted Living,” that says some senior living companies are working to help veterans obtain benefits that can help with their costs.

Note that the VA won’t pay for a veteran’s rent in an assisted living facility. However, VA benefits may pay for some of the extra services required, like nursing assistance, help with bathing and toileting, and possibly meals.

There are a variety of benefits that may help, based on a veteran’s specific service history and eligibility. The most commonly used benefits are the Aid & Attendance Pension.  Another common benefit is the Survivor’s Pension for spouses of a deceased veteran with wartime service.

The VA’s Aid & Attendance and Housebound program is part of the pension benefits paid to veterans and survivors. The VA says these benefits are paid, in addition to a monthly pension. A veteran must satisfy one of the potential conditions, including:

• Requiring the aid of another person to perform personal functions, like bathing, dressing, eating, toileting, or staying safe from hazards;
• Being disabled and bedridden, above what would be thought of as recovery from a course of treatment, such as surgery;
• Being a patient in a nursing home due to physical or mental incapacity; and
• Having very poor eyesight (5/200 corrected visual acuity or less in both eyes) or a field of vision limited to five degrees or less.

Veterans may qualify for these benefits, which are added to the standard monthly pension, when he or she is “substantially confined to your immediate premises because of permanent disability,” the VA says. Eligibility for the program is based on a case by case basis and involves a review by the VA.

Like any other government benefit, it’s important to start the application process early, rather than waiting until a crisis hits and benefits are critical. The goal is to maximize the use of the money saved, so that the individual can afford high-quality care for as long as possible, and the hope is that the VA benefits will help to do that. An experienced estate planning or elder law attorney who routinely works with veterans and their families will be an important resource.

Reference: U.S. News & World Report (August 12, 2019) “Veteran Benefits for Assisted Living”

How Does a 457(b) Retirement Plan Differ from a 401(k)?

City, State and Municipal Employees – this article is for you!  Your 457(b) retirement plan is a way to save for retirement, with tax benefits similar to a 401(k).

The tax-free growth of savings is perhaps the best known advantage of the 457(b) retirement plan, says Bankrate’s recent article, “Pros and cons of government 457(b) retirement plans.” Federal Government employees have access to a 457(b) plan and federal workers  have tax deferral thrift savings plan.  Both are available to supplement government pensions.

A 457(b) is similar to a 401(k), in that it lets employees deposit money in a special retirement account that provides tax advantages, letting savings grow tax-free over time. You can only defer a certain dollar amount each year, and the amount you can defer is linked to the cost-of-living (indexes), like the 401(k). Similar to the 401(k) program, which has both a pre-tax and an after-tax Roth version, 457(b) plans may also offer these two versions of the retirement plan.

The major difference between the two is that the pre-tax plan lets you contribute money and take a tax deduction today, and then at retirement you’ll pay taxes when you take money out of the account.  However, the Roth version of the 457(b) lets you put in money after-tax–paying taxes on the contributions today–but you won’t have to pay tax on any withdrawals at retirement.

A key difference in 457(b) plans is that 457(b) plans also may allow employees to save extra money, beginning three years before the “normal retirement age” (which is specified in the plan). In each of those three years, employees can contribute twice the normal elective deferral limit or the sum of the current year’s ceiling, plus unused portions from prior years, whichever is less.

When it comes to withdrawing funds early, 457(b) plans make it difficult to withdraw money in an emergency. A 457(b) plan can only make hardship distributions, if the participant has no other resources available. Then, if you take a distribution from the 457(b), you’d be required to stop making deferrals for a certain period of time.

You can’t take out money from 457(b) plan for foreseeable withdrawals like buying a house or paying tuition for a dependent. You can do so from a 401(k) plan, although most experts will tell you it’s not a great idea. The only way you can take a withdrawal from a 457(b), is if it is an extreme and provable emergency.

Another advantage is when you have an IRA, in addition to a 401(k) or a 457(b). These accounts are equally very tax-friendly for saving for retirement.

Reference: Bankrate (July 19, 2019) “Pros and cons of government 457(b) retirement plans”

New York State Bar Association Annual Meeting 2020

It has been a full week for the partners of Grimaldi & Yeung LLP participating in the 2020 New York State Bar Association (NYSBA) Annual Meeting. They attended the Elder Law Section meeting, the Trusts and Estates Meeting, the House of Delegates meeting and the first Bar Gala in several years.

Also, congratulations to the Asian American Bar Association of New York's (AABANY) Pro Bono Legal Advice and Referral Clinic program for receiving the Bar Leaders Innovation Award. Our partner, Pauline Yeung-Ha is Co-Chair of this AABANY program along with Karen Yao, Asako Aiba and Judy Lee.

Here are some photos from the above events:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Left to right: Judith D. Grimaldi at the House of Delegates meeting; Joanne Seminara, Co Chair of the Ethics Committee, participating on Ethics Panel CLE; Associate Justice Elena Kagan, honoree of Gala Dinner; Our partners, Pauline Yeung-Ha, Joanne Seminara & Judith D. Grimaldi at Gala Dinner; Joanne Seminara, Pauline Yeung-Ha, Judith D. Grimaldi with Hon. Tanya Kennedy