Skip to content
Apr 1 21

Potential Federal Estate Tax Law Changes Under Biden Administration

by Phil Levin, Esq.

There has been much discussion in Congress of changes to the tax code in the coming months or years. Tax laws seem to change more often these days, which hampers tax planning for the long-term.

Currently, for your estate to be impacted with federal estate tax upon death, you would have had to accumulate over $11.7 million. Biden’s team has discussed lowering that exemption to between $3.5 and $5 million, with anything above that amount being taxed at a rate of between 40-55%. Even at those levels, the tax would not affect most U.S. citizens.

What may be more concerning for the majority of our clients is the possibility that a new tax law would eliminate “step-up in basis” laws and instead be replaced by “carryover basis.” Under current law, if you passed away today, your heirs inherit any highly appreciated assets (i.e., stock and real estate) with a basis for transfer tax purposes at the value as of your date of death.

If for example, you bought Apple stock in 1980 for $5 and it’s now worth $500. If you sold your stock during life, you would have a capital gains tax due on $495 worth of the value of that asset.

Under current law, upon death your heirs would inherit your assets with a stepped-up basis based upon the value of the asset as of the date you passed away (i.e., the basis for the Apple stock in the example above is now $500, not $5). Therefore, if your beneficiary sells the stock for $500, he or she pays no capital gains tax.

If federal tax laws changes, with a switch to carryover basis, then your beneficiary would inherit your property with your basis (i.e., $5 instead of $500). The effect of this change would impact the vast majority of citizens who own highly appreciated securities, which would impact many more people than a change in the federal estate tax exemption amount, as detailed above.

We will continue to monitor these potential changes in federal estate tax laws, and provide you with updates as we learn of them.

Mar 1 21

How To Spot Elder Abuse

by Phil Levin, Esq.

Unfortunately, more and more members of our senior population are being subjected to mistreatment, both in their homes and in care facilities. That vulnerable population is increasing. In 2017, about 22 percent of the U.S. population was age 60 and older. That number is projected to increase to 28 percent by 2050. If you want to protect yourself or an aging loved one, it is essential to recognize the signs of elder abuse and neglect. When someone mentions elder abuse, we usually think of physical harm. However, there are other forms of mistreatment of seniors.
The primary categories of elder abuse are:

Physical or sexual abuse, including relationship violence or violence within the home
Financial abuse
Psychological abuse
Neglect by a caregiver
Self-neglect by the elderly person.
Physical or Sexual Abuse

When someone is physically or sexually abusing a senior, there are usually some red flags to alert you. However, you must be observant and aware of the symptoms. Physical abuse can include any harmful or unwanted physical contact, like slapping, hitting, pushing or shoving. Sexual abuse can encompass any unwanted or nonconsensual sexual contact or activity. In addition, it includes any sexual contact or activity for which the senior does not have the capacity to give consent, because she is asleep, unconscious or has cognitive issues.
Signs of physical abuse can include:

Unexplained injuries, like bruises, scrapes, cuts, burns or broken bones.
Repeated injuries, even when someone offers an explanation.
Sudden or unusual mood or personality changes. Abuse victims often become depressed, anxious, angry, restless, hopeless or sad.
Unusual reactions of the victim to specific individuals. If your loved one acts fearful, anxious, or hostile toward someone or “shuts down” in the presence of that person, he might be doing so in response to mistreatment.
A relative or caregiver does not allow the senior to meet with a doctor alone or isolates the senior from friends, relatives and social activities.
How big is the physical abuse problem? According to the Centers for Disease Control and Prevention (CDC), the rate of non-fatal assaults against men age 60 and older grew by 75.4 percent between 2002 and 2016. Similarly, the rate of non-fatal assaults against women of the same age range increased by 35.4 percent during the same period. Interestingly, some 58 percent of the perpetrators were related to or knew their elder victims.
Symptoms of elder sexual abuse can include

Sexually-transmitted infections (STDs).
Injuries around the genital area.
Mood, behavioral, or personality changes in general or especially when the abuser is around the senior.
Financial Abuse

Strangers, friends, relatives and people in a position of trust steal from aging adults at staggering rates. Look into the situation, if you notice any of these factors:
The senior’s bills are going unpaid, late notices are piling up and the utility companies have cut off services.
Valuables go missing from the senior’s home or nursing home room.
His bank and investment accounts are lower than they should be.
Her credit card balances are higher than they should be.
Psychological Abuse

Some people act as if a person loses value when he becomes old. As a result, it does not matter how one treats him. Other people are hateful and mean to anyone who is vulnerable, regardless of age. Be on your guard, if someone treats your loved one with disrespect, impatience, anger, hostility or any other inappropriate attitude. You should also look for mood, personality or behavioral changes in the senior.
Caregiver Neglect

The gross failure to provide appropriate care to someone in your charge is abuse. Whether the caregiver is an unpaid friend or relative, a paid in-home caregiver or a member of the nursing home staff, unacceptable levels of care can take neglect up to the level of abuse. Here are some examples of caregiver neglect that can be abuse:

Unexplained weight loss, which can mean that the senior is not getting enough food or an insufficient quality of nutritious food to eat. Both quantity and quality can be issues.
Dry skin and cracked lips (indicating dehydration, which can be lethal to a senior).
Messy, unwashed hair and skin, a sign that the senior is not getting regular baths or grooming.
Dirty clothes or bed linens.
Odor of urine, feces, or body odor. A person’s house or a nursing home should never have these smells.

Closing Thoughts

Abusive people permeate our society, so there is no “safe” group you can assume will never harm your senior loved one. If you see any symptoms of abuse, you need to act quickly to get your loved one into a safe place. You should then be sure to report the incident to law enforcement.
Educate yourself and others about this important issue, to include how to recognize the signs of elder abuse when you see them.

Feb 1 21

Using SLATs in Estate Planning

by Phil Levin, Esq.

Transferring assets out of the estate now to reduce estate taxes later is often a good strategy, but individuals may be reluctant to make a large gift to take advantage of the high exemption because they fear losing access to the transferred funds. The spousal lifetime access trust may provide a solution. A SLAT is a type of irrevocable trust that may be used to preserve the transfer tax benefit of the increased exemption amount while also building flexibility into the estate plan.

A SLAT is an irrevocable trust established by one spouse for the benefit of the other spouse and the couple’s children and/or grandchildren. It requires use of the donor spouse’s exemption amount to protect the transfer from gift tax. When funding the SLAT, the grantor-spouse should use his or her separate property, as opposed to jointly owned or community property (this could make the transferred property includible in the estate of the beneficiary-spouse).

Spousal access to the funds in a SLAT is not unlimited. If distributions are made to the beneficiary-spouse, who consistently uses them to benefit the grantor-spouse, this could be considered a retained interest on the part of the grantor-spouse and make the trust assets includible in the grantor-spouse’s estate for estate tax purposes.

If there is a divorce or the beneficiary-spouse dies, the grantor-spouse will lose indirect access to the trust. Accordingly, the grantor-spouse may want to limit the amount transferred to the trust, or provide that if the grantor remarries, the new spouse will be a trust beneficiary or that the trustee may lend trust property to the grantor.

The SLAT is an important tool that may allow a grantor-spouse to take full advantage of the increased exemption amount while permitting indirect access to the trust funds by way of the beneficiary-spouse’s interest. Ideally, however, this access would never be needed, and as long as the grantor-spouse is still responsible for paying the trust’s income tax liability, an even greater amount of assets will pass to the next generation, free of federal estate and gift tax.

Jan 1 21

Corona Vaccine – Informed Consent Issues

by Phil Levin, Esq.

The much-anticipated Coronavirus vaccine has arrived. It is now rolling out to nursing homes and assisted living residences throughout the country and many residents are already receiving inoculations.

Long-term care facilities have been prioritized, having been hit brutally hard by the virus. Although less than 1% of the American population resides in long-term care facilities, 40% of all Covid-related deaths have occurred in them, according to Atlantic magazine’s Covid tracking project.

While inoculation centers are being established at many LTC facilities, there are several legal and logistical concerns to be addressed going forward, particularly in view of the speed with which this massive operation is unfolding. If you have a loved one residing in long-term care, you should be aware of the issues detailed in this edition of Estate Planning Matters.

The Vaccination Is Not Mandatory, But Consent Is
The medical community has cheered the arrival of the vaccine. Based on a study of 44,000 people, including the elderly and those susceptible to other health problems, the FDA has determined that the vaccine is safe and 90% effective. The American Health Care Association is encouraging all nursing home residents to be inoculated by March 1.

That said, some people are skeptical. A recent Associated Press poll reveals that 25% of those polled will reject the vaccine, and an additional quarter are not sure about receiving it. Therefore, it is not hard to imagine disputes arising within families.

The vaccine is not mandatory, and LTC residents have the right to accept or reject medical treatment and medication, including vaccines. If your loved one is mentally competent, it will be his or her choice to accept or reject the vaccine.

However, nearly 50% of all long-term care residents are cognitively impaired to some extent, and incapable of giving informed consent. If that is the case with your loved one, who does have a valid Health Care Power of Attorney, the duly appointed Health Care Agent will be contacted so that consent can be secured.

Family Disagreements Could Arise
But what happens if the resident does not have a valid Health Care Power of Attorney? Suppose, for example, Mrs. Smith has a Health Care Agent appointing her husband as her Agent. If her husband predeceased her, or is not competent, and she never named backup Agents, or her backup Agents are not alive, that could open the door to multiple family members becoming involved in the decision-making process, and increase the chances of family disagreements.

Another potential issue that may arise: What happens if the resident is only mildly cognitively impaired, wherein he or she is lucid some of the time? Suppose the patient wants the vaccine but the Health Care Agent is opposed to it, or vice-versa?

Get the Facts
Pfizer and Moderna, manufacturers of the currently available vaccines, are providing comprehensive fact sheets for the public. The safety and effectiveness record are very good. On the other hand, the fact sheets note that the FDA has made the vaccine available for emergency use, which is less than complete FDA approval.

Some medical experts are concerned that residents, as well as their Health Care Agents, may not be able to fully understand the information provided in the vaccine decision making process. It is also unlikely that facility staff, stretched as thin as they are right now, will have the time to spend with all residents and families to answer all their questions thoroughly. However, it is vitally important for the elderly and impaired, along with their loved ones, to understand the benefits and potential risks of receiving the new vaccine.

We suggest that you do your own research on the coronavirus vaccines using reputable sources, and talk to your doctor. Then, when you have to decide about the coronavirus vaccine – for your loved ones and yourself – you will feel confident in your decision.

Talk to Your Estate Planning Attorney
Everyone – not just residents of long-term care facilities – should have an up-to-date estate plan, which includes a valid Health Care Power of Attorney, designating who should make vitally important health care decisions, if they are unable to do so for themselves

Dec 1 20

Steps to Take When Appointed as an Estate Executor

by Phil Levin, Esq.

In the real world, many people do not even know that they have been appointed as the executor of an estate until after a person dies and they read the decedent’s Last Will and Testament.

Being appointed as the executor for an estate is both an honor and a burden, but that burden can be made infinitely harder when the executor does not have the right information or guidance to know how to handle the estate. Here are some quick tips to help you out if you or a family member has been named the executor of an estate and you do not know where to begin:

Find a Competent Probate Attorney –

An experienced probate attorney is a great resource to help you carry out and discharge your duties and responsibilities as the executor of an estate. In many cases, you can work with the attorney who originally drafted the decedent’s Last Will and Testament, but there will be times when this is not possible, either because the attorney passed away, retired, or you have a conflict of interest. If this is the case, you should find an attorney who has experience dealing with your local probate court and can help you navigate the estate administration process.

Locate the Decedent’s Last Will and Testament –

The Last Will and Testament must be filed with the probate court to start the probate proceedings. Many times, the lawyer who originally drafted the document may have the original Last Will and Testament in their vault for safekeeping purposes. If not, the original Will may have been in a secure location, such as the decedent’s safety deposit box or in a fireproof storage box in the decedent’s residence. If the original Last Will and Testament of the decedent cannot be located, there are usually steps which probate courts allow to admit a copy of the decedent’s Will to probate through preparation of a petition to the court in order to allow the commencement of an estate administration.

Establish the Estate Bank Account –

Once the Last Will and Testament has been filed and accepted by the probate court, the executor appointed under the Will receives legal documents, including the Certification of Probate, that allows the executor to access bank and brokerage accounts, as well as establish a new estate bank account. The best practice is to close all of the decedent’s accounts held in the individual name of the decedent and transfer them all into the estate account, which gives the executor the ability to track the estate’s finances and pay any bills or debts.