Estate Planning Bits

Open enrollment period for 2015 health insurance coverage

Did you know that we are currently in the open enrollment period for “Obamacare”? For plans sold on the individual market, consumers should act promptly to avoid any gap in coverage. If you do not act, you could be exposed to a penalty for being uninsured – the penalty will be the greater of 2% of your household income, or $325.00. The 2015 enrollment period runs from November 15, 2014 through February 15, 2015, so there is still time to address this after the holiday season. But beware that if your coverage is ending on December 31, 2014, you must enroll by December 15 to be covered as of January 1, 2015.

There are many different plans to consider, and it is important to spend time determining which plan is best for you. One of the best websites for information is www.healthcare.gov. There are links to considering new plans, staying covered through the marketplace, reviewing plans that have changed from the prior year, and informing you as to what happens if you do not have your enrollment in place. Prices are also available to review. If you wish to change your coverage, now is the time review your options. Another helpful website is www.gohealthinsurance.com which will assist you in checking if you qualify for government-assisted health insurance.

There is no shortage of websites or information, but whatever your choice, it should be elected very soon so that you will have an opportunity to thoroughly review your options and not allow your coverage to lapse risking a penalty.

Hyman G. Darling, Esquire

Image credit: Pixabay

No bankruptcy protection for inherited IRA

In June of 2014, the U.S. Supreme Court heard a case and unanimously ruled that an Individual Retirement Account (IRA) left to a non-spouse beneficiary was not to be a protected asset from a bankruptcy proceeding. This ruling changed how inherited IRAs are to be treated in bankruptcy; previously, an IRA was an exempt asset, but this case now alters the rule on the protection or non-protection of inherited IRAs.

The facts of the case were that a husband and wife filed for bankruptcy in 2010, claiming that an IRA the wife inherited from her mother (worth approximately $300,000.00) was a qualified retirement fund and therefore should not be applied towards the claims of creditors. Several years later, the case made its way up to the U.S. Supreme Court, which determined that the client was not going to have protection from bankruptcy proceedings for those assets.

Essentially, the prior concept protecting IRAs from bankruptcy proceedings was a consideration by the court that a self-funded IRA was a protected account because the contributor was working and the funds were sheltered from taxes. In the case discussed above, however, the court treated an inherited IRA differently; since it was not saved by the taxpayer/bankruptcy filer, it did not receive the same protection from bankruptcy proceedings. Basically, a person can no longer deposit money and contribute to a rollover/inherited account, and is also required to take distributions, whereas a self-contributed IRA is not required to make distributions until the required minimum distribution date occurs.

It is important, therefore, to pay attention to all court rulings, and presume that only a self-contributed IRA would be protected from proceedings in the unfortunate event of a bankruptcy. If a person is considering bankruptcy, and has received funds, it is crucial to plan for the protection of those assets. A wealth creation and wealth protection plan should be implemented in all cases, as this important new decision affects non-contributed, or inherited IRAs. 

Hyman G. Darling, Esq.

Image credit: AAG with permission

Is a religious marriage valid for estate planning purposes when no civil service was performed?

In a recent New York surrogate court case, a battle was initiated over competing claims to administer an estate. The decedent, who was from an Orthodox Jewish family, died without a will. His daughter, acting on behalf of his mother, asserted that he was unmarried, while another person did claim to be his wife. Each person was claiming to be the sole distributee of his estate, and each filed a competing petition for administration. Of course, determining whether he was married or not would clarify whether his alleged wife or mother would inherit his estate. 

Apparently, four years before his death, he become romantically interested in the alleged wife and sought an Islamic marriage. He converted to Islam and then participated in a religious ceremony in 2008, four years before his death. However, the parties did not take out a license with any civil city or town clerk, nor did he inform his family of the marriage ceremony until approximately four years later, when he informed his sister. At that time, the relationship between the parties was in trouble, and his attorney drafted, but never filed, a divorce petition. 

It is certainly questionable whether a divorce could have been obtained if the couple was not legally married. In any event, both parties filed in family court for orders of protection against each other. Several months before the “husband” died, the couple said they wanted to reconcile and withdrew their petitions, and within six months, the “husband” was hospitalized and subsequently died. 

The decedent’s mother claimed that the ceremony was invalid as a matter of Islamic Law. However, the court ruled that the matter of a religious doctrine may not be determined by a civil court, and it also refused to grant summary judgment to the alleged wife. 

Basically, the court ruled that the marriage would be valid if conducted in accord with the requirements of the New York domestic relations law, including the requirement of a clergy to perform a ceremony with at least one other witness and the attestation of both parties that they intended to and took each other as husband and wife. 

Basically, because neither party in the contest could conclusively prove any evidence, the court remanded the matter to a further court for further discovery and trial as to whether they were in fact married or not. Only time will tell as to how the court determines the marital status of this person as of his date of death. Certainly, if an individual wants to be legally married, he or she should take all necessary steps to have the ceremony performed both religiously, if desired, as well as civilly, with the recording of a proper marriage license. 

 

Hyman G. Darling, Esq.

Image credit: Ray Dumas under Creative Commons license

Threshold numbers for 2014

2014 Medicare Rate Increase 

Medicare Part A 

Hospital deductible Day 1-60 = $1,216.00 

Co-Insurance per day – Day 61 – 93 = $304.00

                                     Day 91 – 150 = $608.00

Medicare Part B 

Monthly premium = $104.90 - $335.70 based on one’s modified adjusted gross income 

Deductible per year = $147.00 
 

Supplemental Security Income 2014 Rate

Single, aged, or disabled = $877.40 

Couple, aged and disabled = $1,524.00

Gift Tax Exemption 

$14,000.00 per person per year 

Lifetime exclusion = $5.34 Million 

Estate exemption - $5.34 Million 

(Note that gift and estate exemption is a unified amount, not to be duplicated, but merely a total lifetime/death exemption). 

 

2014 Medicaid Figures 

Community Spouse Resource Allowance (CSRA) = $117,240.00 (in many states) 

Minimum Monthly Maintenance Needs Allowance (MMMNA) $2,931.00. 

Average Private Pay Rate (varies from state to state. In Massachusetts $9,000.00 per month, in California $7,628.00 per month).
 

All of these figures and calculations are meant to be used as the current rates in most states, although these figures vary from state to state, and in some cases, from county to county within a state. Of course, there are always exceptions to the rules, such as whether a gift is really a taxable gift or a completed gift, or whether a gift is a disqualifying transfer for Medicaid purposes or not. Your elder law attorney is available to help you through the process of understanding what these numbers mean and how they work within your plan. You may also obtain information on how to select a qualified attorney on the National Academy of Elder Law Attorney’s website.

  

Hyman G. Darling, Esq.

Family fight over fetus ashes

In a recent New York case, a judge was faced with a difficult decision. A fetus had died, was cremated, and the parents ended up bringing actions against each other as to the division of the ashes.

The couple had been married for a brief time, and they then separated after the wife suffered a miscarriage. The child was stillborn at twenty-six weeks, and after the divorce, they raised issues of the distribution of the ashes.

The judge had to determine whether the ashes were “marital property” as the New York law defines property that is acquired during the course of the marriage. The judge felt that the ashes were clearly property, but not the separate property of only one spouse, since both husband and wife had contributed to the production of the fetus, which was produced during their marriage.

Normally, when a child is born, the issue of property ownership disappears, as the child is considered a person and not property. On the other hand, once the baby’s status was other than live, and the remains were converted to ashes, the characterization of the remains were determined to be property.

The judge determined that the remains were to be construed as belonging solely to the mother under the statutory and common law of reproductive rights, and that the father was not entitled to have the ashes as marital property. The judge said “that while it would be good to” confer a property interest in property remains to a husband, unless it was clearly to be the case, the ashes of the wife’s stillborn birth shall be presumed to be her separate property”.

It is unfortunate that this type of case had to find its way to the court and the family could not agree, and it also remains to be seen as to whether there will be a follow-up appeal or further cases to be determined on this subject. It is doubtful that this type of situation could be anticipated and that the family would ever decide in advance as to how remains should be distributed, but certainly, this type of situation is unfortunately being determined by a court and not the family itself.

Hyman G. Darling, Esq.

Image credit: kevin dooley under Cteative Commons license

Important numbers for 2014

Every year, certain important information on changes of tax and other important numbers are revised. The following is a listing of some of the most important numbers for 2014. Some have changed, and some have remained the same.

• Social Security Tax Wage Base- $117,000
• Individual Retirement Account- Traditional Contribution- $5,500
• ROTH, IRA- Individual Contribution- $5,500
• 401k, and other types of Retirement Plans limit - $17,500
• Additional catch-up contribution if 50 or older-$5,500
• Business mileage- .56 cents/mile
• Charitable Mileage- .14 cents/mile
• Standard deduction on income taxes for married filing jointly-$12,400
• Standard deduction for single person (or married filing separately)- $6,200
• Personal exemption- $3,950
• Phase out of personal exemption (married filing jointly)- begins at $305,050
• Phase out of personal exemption (unmarried individuals)-$254,200
• Estate tax limit (federal)-$5.34 million
• Gift exclusion(annual) - $14,000
• Gift exclusion (lifetime) - $5.34 million
• Rate of tax above exclusion for estate and gift purposes- 40%
• Maximum amount for community spouse if other spouse is institutionalized- $117,240
• Maximum amount the institutionalized spouse is permitted to have (could change by state) - $2,000
• Home equity limit for long-term care purposes: Minimum - $543,000, Maximum - $814,000

Hyman G. Darling, Esq.

Estate planning checklist: health insurance related and Affordable Care Act (Part 7)

This check-list would be incomplete if you are not reminded about open-enrollment for many health insurance plans, in general, and the Affordable Care Act (open enrollment has been extended through March 2014). Even if you currently have health insurance, there may be financial advantages to reviewing the costs associated with the ACA. This is particularly true for blended families, those where an ex-spouse continues to be covered or where you are straddling being on Medicare, but have children to cover.

This checklist provides a starting point. For more information, contact an estate planning professional for a comprehensive review of your plans. 

 

Lisa L. Halbert, Esq.

Image credit: Leader Nancy Pelosi under Creative Commons license

Estate planning checklist: passwords and important papers (Part 6)

Passwords:

While not directly related to estate planning, a more controversial issue arises about passwords. While any IT person will advise against making a comprehensive list of your accounts and associated passwords, those same individuals might not regularly work with a segment of the population that may become ill or lose their memory. There is no perfect solution in this electronic world. Perhaps you prefer to prepare the list of passwords and save it on paper, publish it to your attorney-in-fact under a durable power of attorney, or provide a copy to your legal counsel. Others recommend putting the passwords into a paper file and filing it at the back of your filing cabinet, backwards. The list should be comprehensive and cover whatever assets you access (such as a bank card (such as an ATM), or electronic account whether for bank, brokerage, credit card, loan, and even health related information. It also helps to print out the most recent security questions and the answers too.)

Important papers:

Organize a filing system for important papers. If an alphabetical system is not your style, consider putting all important papers in one place. Documents to be retained include: social security card, copy of birth certificate, legal documents (will, trust, health care proxy, durable power of attorney, marriage license or divorce decree, and funeral-related paperwork. Include on this list your children or next of kin and their addresses. If you should die, and a non-family member is involved, it makes locating family much easier.

Lisa L. Halbert, Esq.

Image credit: liako under Creative Commons license

Update on FDIC insurance

Most people are confused about the insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC). Initially, when you go to your local bank, you should check to see if the emblem stating that they have FDIC coverage is posted either on the door or near the tellers. If not, then you should ask to determine whether the coverage is in existence. If so, there is no need to apply for it or to request it, as it is automatic. 

The amount of coverage you can have is based on the depositor named on the account, and whether it is a checking, savings, certificate of deposit, or money market account. Please note that all other types of products that banks may be selling are probably not covered by FDIC Insurance. This coverage excludes annuities, insurance policies, stocks, mutual funds, etc. 

The standard amount for insurance is $250,000.00 per depositor. However there are separate categories of deposits that are covered, and you may have more coverage by having funds in different types of accounts. 

The following chart will attempt to clarify your coverage. This information is taken from the FDIC website, which you may access at www.fdic.gov/deposit/deposits. 

There are other types of specific accounts for which coverage is provided that are not necessary to discuss at this time. Please note that the above chart is the standard insurance amount for most categories. If more coverage is necessary, there are other ways accounts may be titled to access it. Also, you may open accounts at additional banks if necessary.

 

Hyman G. Darling, Esq.

 

Estate planning checklist: Health care proxy and do not resuscitate (Part 4)

Health Care Proxy (HCP):

Review your HCP to confirm that it identifies current designations of those who you want making health care decisions for you if/when you can no longer make or communicate on your own. It can only benefit you to list appointees to serve in consecutive order. Ask your attorney whether additional provisions to your document would be prudent. For example: do you have a religious belief that needs to be articulated? Would you allow certain drugs to be administered that might otherwise require court approval? Do you want your health care agent to choose a nursing home for you if it become necessary? 

Once signed, provide your HCP to your health care providers and hospitals. Keep an extra copy in your car or with your other important papers And, of course, provide a copy of your HCP to those you have appointed as decision makers. 

Without an HCP, if health care decisions need to be made for you, a court will appoint a guardian to make decisions for you. Your spouse does not automatically have the right. The benefit of an HCP is that you get to choose those individuals who you trust to make decisions for you as you would want for yourself, as opposed to having a court choose. 

 

Do Not Resuscitate Order (DNR): 

This document is not prepared by your attorney. It is available to be signed in your physician’s office, and it merely states that if your heart stops, you do not want extraordinary measures taken to re-start it.

 

Lisa L. Halbert, Esq.

Image credit:  Kyle Taylor, Dream It. Do It. World Tour, under Creative Commons license