Wills, Trusts and End-of-Life Planning in New York
As discussed in our other recent elder law features, effective estate planning is a key concern for many later in life.
NYC estate planning and probate lawyer Regina Kiperman shares a wealth of estate and wealth planning insights in this feature, along with her own predictions as to what developments we can expect to see in the wider elder law space in the coming years.
Why is estate planning so important, and what legal issues can arise from failing to have an estate plan in place?
Estate planning is like an instruction manual for disposing of your assets. It is important to have a plan, just like you would have a plan in all other elements of your life. When you go to the grocery store, you make a list of what you are going to buy so that when you get there you do not buy everything in sight. In the same way, if you have an estate plan, you have an organised and mechanical process for deciding what will happen to your belongings in the event that something happens to you.
In addition to being organised, if you conduct proper estate planning you can avoid payment of certain taxes. You can avoid capital gains, estate taxes, and also avoid family conflicts. Without estate planning, if you pass away and you are survived by three children who you know fight with each other, each of them will have the same rights to serve as an administrator – whereas if you have planning in place and you know those children fight, you could appoint one person to spearhead the process.
What are the key differences between a will and a trust?
A will is a document that only takes effect after a death. A trust is a document that can take effect during a lifetime as well as after death. Some people find trusts very useful to avoid probate.
There is only one type of will. Sometimes there are parallels between these and trusts; you can have trusts inside of a will. Similarly, a trust can act as a substitute for a will. But there are times where a trust may be better than a will. For example, if you are survived by cousins, you probably want to establish a trust rather than a will, because probating a will when your next of kin is a cousin is very onerous in New York and can be difficult and time-consuming.
Another reason why you might want a trust instead of a will is if you want to avoid probate. Some people are unnecessarily scared of probate; they have heard all sorts of myths about how terrible it is. If they want to avoid probate at all costs, they can have a trust instead.
Estate planning is like an instruction manual for disposing of your assets.
A third reason for wanting a trust is if you have volatile assets. If you happen to be invested in fintech or some other volatile investment and your fiduciary needs immediate access to this, you would want a trust so you do not have to wait for the court. Otherwise, you can accomplish tax planning both in a will and in a trust. It is largely a matter of preference and sometimes age. If you have properties in multiple states you would want a trust and not a will, because otherwise you would have to probate in both states, which would be inefficient, uneconomical and unnecessary.
What sort of estate planning should be undertaken in light of the fact that, in 2025, estate tax exemption will be sunset?
Most people undertaking elder law planning will not be affected by this, as most people are not going to have $12 million. For those people who do, a common recourse is gifting assets to their children and to trusts. This is a great opportunity to take advantage of possibly the highest exemptions we have ever had. Since we do not know what is going to happen, if you are comfortable with creating or gifting to a trust or to your family, take advantage. It may be worth paying the capital gains, because those gains will be less than the potential federal estate tax. You have to run that analysis as an individual.
In your view, what are the most crucial aspects of elder law?
In my opinion, elder law is not just moving people’s money to get them on Medicaid. I see elder law as encompassing guardianship, long-term care planning and crisis planning. Those are the three categories I think of when I think of elder law.
With respect to guardianship, the first thing an elder law attorney can do is figure out whether a person who is older or potentially experiencing cognitive difficulties or other functional limitations can sign a power of attorney. If they can – awesome! But sometimes they are unable. If a person cannot tell you what sort of work they used to do, or what they had for breakfast this morning, that is a red flag. In that case, you cannot have a power of attorney, so you have to move for guardianship, and an elder law attorney is well-equipped to assist with that. Once you go to court and follow a petition to have someone appointed as your guardian, they can do essentially all the things they could have done as your agent and your power of attorney. They can get court approval to do trusts, move your assets and do your tax planning. Sometimes those proceedings are contested because there is more than one person vying for the role of guardian, but often they are not.
You can accomplish tax planning both in a will and in a trust. It is largely a matter of preference and sometimes age.
Part two is long-term care planning. An elder law attorney can sit with you, look at all your assets and figure out how to manipulate, transfer and shift your assets in such a way as to qualify you for benefits. They can also figure out if you need a care manager and can connect you with people who will help you stay at home with the services you need. If you need government benefits you can also stay home, but there are different rules that you have to be aware of. In New York, for example, you have to be aware of the different income and resource rule for Medicaid and for some of the other benefits you can avail yourself of.
Crisis planning in elder law often comes in this form: if you are in a nursing home and have some money, but do not want all of it to go to the state – because in New York, almost every nursing home also collects Medicaid dollars – you may ask why you should have to pay as well if Medicaid is already paying for the same thing. Why not leave the money for your children? Crisis planning is therefore another facet of being an elder law attorney and helping clients to shift assets and engage in the proper planning, as well as preventing claims and liens against the estate.
Looking towards the next decade, what changes do you foresee for elder law in New York?
The biggest changes are the alterations to Medicaid that are coming up. For home care, New York did not previously have a 40-month lookback period, but it looks like that period might actually start either in October 2022 or January 2023. That is the biggest coming shift. Number two is the way that you may be assessed for your home care hours.
Besides this, the population aged 65 and over is expected to almost double to 84 million by 2050. That will put pressure on the social system to facilitate and help them. I also think there will be more rampant misuse and abuse of power of attorney, and I think there will be more guardianship proceedings that will be started as a result of this.
Regina Kiperman, Founder
40 Wall Street, Suite 2508, New York, NY 10005
Tel: +1 917-261-4514
Fax : +1 929-556-2089
Regina Kiperman advises clients in the areas of estate planning, probate, trust and estate administration, contested and uncontested guardianship, contested accountings, will contests and special needs planning. She is experienced in preparing complex estate planning documents and representing family members in kinship proceedings, as well as in estate and trust litigation, among many other areas of estate planning and elder law.
RK Law is a New York City-based boutique law firm with a focus on probate, estate planning, guardianship and elder law. With over 30 years of combined experience, the firm focuses on helping clients to accumulate wealth, protect their families and assets and ensure that they receive their due inheritance.