Lenza Law Firm, PLLC-Estate Planning, Elder Law and Medicaid Planning- Staten Island » Lenza Law Firm, PLLC is estate planning and elder law firm with a focus is Elder Law, Probate, Estate Administration, Estate Planning, and Medicaid Asset Protection in Staten Island, New York. Lenza Law Firm, PLLC Island,is dedicated solely to offering legal advice in estate planning, elder law, Medicaid planning, Nursing Home and estate administration matters

dt-101As we welcome President-Elect Trump into our lives as a key policy maker for the next four years I feel it wise to write about how his election may impact Estate Planning laws, rules and strategies. While it is too early to know what changes (if any) will actually be made, there are some things worth monitoring.

Start first with the fact that many people believe that the whole concept of Estate Tax is actually in jeopardy. There are a few possibilities about how the Estate Tax laws may be changed. Here are some options. As you may remember from previous blog posts, the Federal Estate and Gift Tax, while two separate things, are very much intertwined when determining total tax liability at guest.

  • Immediately permanent repeal of the gift, estate, and generation-skipping transfer (GST) tax.
  • Permanent repeal of all transfer taxes to take effect over some phase-out period, for example ten years similar to what occurred in 2001. This would also present the risk that the tax may be changed again during such phase out period as happened in the past.
  • Repeal of the estate tax but retention of the gift tax as a backstop to the income tax.
  • Repeal of the estate tax (with or without a repeal of the gift tax) and carryover basis.
  • Repeal of the estate tax (with or without a repeal of the gift tax) and a capital gains tax on death – a capital gains tax on death, for instance. Or maybe a President Trump would treat inheritances as ordinary income.

Another wrinkle in this whole situation is that if there ARE any changes or repeals to the Estate Tax, nobody knows when they would actually be deemed effective. Could it be January 2018? Could it be made retroactive to January 2017 after Trump takes office? Only time will tell.

LTAs you likely have ready by now on this blog, our firm is a big proponent of utilizing various kinds of trust documents in a well designed Estate Plan. One popular trust used is called the Living Revocable Trust. It is also commonly referred to as a “Lifetime Trust”.

The benefits of placing assets into a trust are numerous, but the biggest advantage is undoubtedly the benefit of not having your family endure a lengthy and expensive Probate process when you die. Quite simply, if you die after only executing a Last Will and Testament, before any money is dispersed from your estate the actual distribution must be approved by a court (In New York City the court tasked with such a matter is the Surrogate’s Court). By using a Living Revocable Trust you can save your family thousands in attorney and court fees after you die.

As I have mentioned in this blog before, the key however is not CREATING the trust, which is done with the help of a trained and specialized Estate Planning Attorney, but rather the FUNDING of the trust. You can have the most well drafted Living Trust in the history of the world but without funding it (placing your assets INTO the trust) it is essentially worthless for probate avoidance purposes.

There are several things to consider when funding a trust, and a smart Estate Planner will guide you through the process along with his trusted network of bankers, insurance agents, and accountants.

In layman’s terms, funding your trust is the actual process of transferring your assets from your own name into your trust. You will need to physically change the titles of your assets from your individual name (or joint names, if married) to the name of your trust. These assets can be almost anything that you can think of, whether it be real estate, cars, bank accounts, investment accounts, etc.  You will also change most beneficiary designations to your trust. A trustee is the person charged with the management of the assets, and in this type of trust you will most likely name yourself as trustee, so you will still have complete control. Perhaps the biggest benefit of a revocable living trust is that you can continue to buy and sell assets just as you do now. You get a checkbook and debit card if you like for any bank accounts and you have complete control over the assets during your lifetime. You can also remove assets from your living trust should you ever decide to do so, although be warned that doing so instantly removes the benefits obtained by utilizing the trust mechanism to begin with. If you simply visit an attorneys office, sign your living trust document and don’t change title to property and any beneficiary designations on accounts, you will not avoid probate. Your living trust can only control the assets you manually elect to place into it.

In the event that you DO fail to place an asset into the trust (sometimes intentionally and sometimes not),  your attorney will likely prepare what we call a “Pour Over Will” that acts something like a safety net. When you die, the will “catches” any forgotten asset and sends it to your trust. This ensures that you only need to edit beneficiaries in one place (your trust) regardless as to what assets you may forget to place inside of it.  Unfortunately, the asset will almost surely need go through the probate process first, however NY State has a mechanism in place to ensure that if probate assets are under $30,000.00, then a much simpler, cost effective and less complex mechanism is available.  What this means is that you can have millions upon millions of dollars worth of assets placed within your trust and keep up to $30,000.00 outside of the confines of the document and not be subject to a full probate proceeding. While not always a recommended strategy that is a point worth noting here.

In the end, while you are personally responsible for actually transferring assets into your trust, a smart and thorough Estate Planning attorney will both guide you on some transfers and actually handle some him or herself.  What you are going to want is your attorney to carefully explain how each asset is going to be transferred and present you with a list of instructions on what assets you will be transferring yourself. As a general rule, an attorney will likely want to handle any real estate transfers because of the inherently complex nature of the paperwork.  While the funding process is not by any means a difficult endeavor, it is somewhat time consuming.. Because of how common Living Trusts are today, you should have little trouble in transferring asset.

Many institutions will actually want to see proof that your trust exists. To satisfy them you can either send them a copy of the document or your attorney will prepare what is often called a certificate of trust. This is a shortened version of your trust that verifies your trust’s existence, explains the powers given to the trustee and identifies the trustees, but it does not reveal any information about your assets, your beneficiaries and their inheritances. Be warned though that funding a trust is a marathon and not a sprint! It is easy to start motivated and then lose interest in completing the work necessary to finish the job. Your attorney can help you prioritize which assets you should concentrate on first.


Generally, assets you want in your trust include real estate, bank/saving accounts, investments, business interests and notes payable to you. You will also want to change most beneficiary designations to your trust so those assets will flow into your trust and be part of your overall plan. IRAs, retirement plans and other exceptions are addressed later. In most cases you will notice little difference in the day to day management (if any) of the assets. You may even find it easy to transfer real estate you own to your living trust, and to purchase new real estate in the name of your trust.

Because your living trust is revocable, transferring real estate to your trust should not disturb your current mortgage in any way. Even if the mortgage contains a “due on sale or transfer” clause, retitling the property in the name of your trust should not activate the clause. There should be no effect on your property taxes because the transfer does not cause your property to be reappraised. Also, having your home in your trust will have no effect on your being able to use the capital gains tax exemption when you sell it, nor will you lose the New York  STAR or Senior Citizen tax advantage if you currently are benefiting from those.  If you own property in another state, transferring it to your living trust will prevent a conservatorship and/or probate in that state.

One common question that I receive is whether to retitle a car or truck in the name of the trust. Unless the car is valuable and substantially increases your estate, you will probably not want it in your trust. Note that you do NOT gain any personal liability protection from this type of trust, so if you are at fault in an auto accident and the injured party sees that your car is owned by a trust, you will still be personally liable to same the extent you would have been in the event that the car was titled individually. Also, remember as discussed above that all states allow a small amount of assets to transfer using a “small estate proceeding” and the value of your car may part of a small estate.

As it pertains to IRA’s, I recommend not changing the ownership of these to your living trust. You can of course name your trust as the beneficiary, but be sure to consider all your options, which could include your spouse; children, grandchildren or other individuals; a trust; a charity; or a combination of these. Whom you name as beneficiary will determine the amount of tax-deferred growth that can continue on this money after you die. Most married couples name their spouse as beneficiary because 1) the money will be available to provide for the surviving spouse and 2) the spousal rollover option can provide for many more years of tax-deferred growth. (After you die, your spouse can “roll over” your tax-deferred account into his/her own IRA and name a new beneficiary, preferably someone much younger, as your children and/or grandchildren would be.) Interestingly, a non-spouse beneficiary can also inherit a tax-deferred plan and roll it into an IRA to continue the tax-deferred growth, but only a spouse can name additional beneficiaries.

Naming a trust as beneficiary will give you maximum control because the distributions will be paid not to an individual, but into a trust that contains your written instructions stating who will receive this money and when.
Finally, as it pertains to Personal property (artwork, clothing, jewelry, cameras, sporting equipment, books and other household goods), these items typically do not have a formal document reflecting ownership. Your attorney will prepare an assignment to transfer these items to your trust should you wish to do so.

In the end, there are many valid reasons to have a Living Trust prepared for you and/or your family. It is even more important to actually FUND the trust, which is the often overlooked and critical step to utilizing any trust as a part of a well drafted Estate Plan. 

p15855_p_v8_adIf you are like me you enjoy a good military drama. One of the best authors in this genre that ever lived was Tom Clancy. His books were so riveting that many were converted over to the big screen, including the Hunt for Red October, Clear and Present Danger and Patriot Games.

One thing that Tom Clancy did NOT consider was the enormous Estate Tax that his family would have to pay at his death. Some intermediate level planning could have saved his family a fortune!

Forbes Magazine has a great breakdown of what went wrong.

Read Here:

Tom Clancy

1140-social-security-myths-facts.imgcache.rev1473191511117I came across an excellent  article on the AARP website today about some widely held myths about social security.

Deciding when and how to take  your social security benefits is a very important decision to make.

In the overarching context of an Estate Plan the discussion of monthly available income is always a key factor in determining the best course of action.

I urge you to take a good look and read it in it’s entirety over at AARP.com!


Myth 1: The President sets the COLA.

Fact: The annual cost-of-living adjustment is not determined by the president or by congressional lawmakers. President Richard Nixon signed legislation in 1972 requiring that Social Security benefits be automatically adjusted for inflation. The calculation is made using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a formula that gauges how the prices of things we need (food, for example) change over time.

Social Security compares the CPI-W for the third quarter of the current year against the inflation rate for the corresponding quarter of the year in which a COLA was last approved. The COLA for 2017, for instance, will be based on the inflation rate for the July-August-September quarter of 2016, compared with the same period of 2014 — the last time the inflation rate was high enough to trigger a COLA.

Myth 2: Members of Congress don’t pay into the system.

Fact: Before Social Security even existed, there was the Civil Service Retirement System, which covered federal workers and officials. But in 1984, the president, members of Congress and federal employees became part of the Social Security system, and they have since paid into it. (Some federal employees hired before 1984 had the option of sticking with the old system or enrolling in Social Security. But everyone hired since falls under Social Security.)

See also: How Do Women 50+ Feel About Social Security?


Myth 3: Social Security is going broke.

Fact: No doubt, Social Security faces funding challenges, but not immediately and not bankruptcy. Benefits are paid through payroll taxes collected from current workers and their employers, and the program currently operates with a surplus of about $2.8 trillion.

Yet with a rising number of retirees and a drop in the birthrate, that’s changing. The latest projection has the combined Social Security trust funds that pay retirement and disability benefits running out of cash reserves by 2034.

But that wouldn’t leave Social Security bankrupt and unable to pay any benefits. Even if Congress does nothing to shore up the system by 2034, Social Security will be able to pay out 79 percent of promised benefits until 2090. The last time Social Security nearly depleted its reserves was in the early 1980s, when Congress shored up the program by gradually increasing the full retirement age from 65 to 67 and started to tax benefits based on income levels.

Myth 4: Retirees lose benefits forever if they work.

Fact: If you claim Social Security retirement benefits early while still working, some of those benefits may be withheld — depending on your income. This year, Social Security deducts $1 of benefits for every $2 earned above $15,720. For those reaching full retirement age in 2016, Social Security deducts $1 for every $3 earned above $41,880. Once you reach full retirement age — 66 for those born from 1943 through 1954 – you can earn an unlimited amount without a reduction in benefits.

But the withheld benefits aren’t lost forever. When you reach full retirement age, Social Security will recalculate your monthly benefit, bumping it up to give you credit for the benefits withheld. And over time, you will recoup those withheld benefits.

See also: How to Start the Social Security Benefits Flowing

Myth 5: Social Security payroll taxes go into the general fund.

Fact: Since its creation in the 1930s, the Social Security trust fund has never been part of the general fund, so politicians have not been free to spend the money on pet projects. The way it works: The Internal Revenue Service daily collects payroll taxes paid by workers and their employers. This revenue is immediately invested in interest-bearing U.S. Treasury securities, as required by law, and credited to the Social Security trust fund. Social Security regularly redeems Treasury securities to pay benefits. Meanwhile, the government spends the proceeds raised from the sale of Treasury securities on a wide range of programs and projects. But Uncle Sam is ultimately obligated to repay the money with interest to the Social Security trust fund.

Myth 6: Undocumented immigrants collect Social Security.

Fact: Almost any online article on the financial health of Social Security generates lots of reader comments claiming the system’s resources are being drained by undocumented immigrants. Undocumented immigrants are not allowed to claim Social Security benefits. Yet these workers and their employers pay payroll taxes that benefit the bottom line of Social Security. In 2010 alone, Social Security netted $12 billion from undocumented workers and their employers.

It may be that some people confuse Social Security with Supplemental Security Income, which pays benefits to those with limited means and who are disabled, blind or 65 and older. SSI is administered by the Social Security Administration but receives no money from payroll taxes. Instead, SSI’s funding comes from the government’s general fund. Noncitizens eligible for SSI include refugees, asylum seekers and those “lawfully admitted for permanent residence.”


Now available on Amazon in paperback and on Amazon Kindle!

About a year ago I made a decision to devote some serious time to creating a resource for young couples and young parents to introduce them to some key Estate Planning concepts. About 100 edited versions later I am proud to announce that the book is now available for purchase via Amazon.com and on the Amazon Kindle platform. It is also available at select bookstores nationwide and that list is growing by the day.

It covers a variety of topics such as Wills, Trusts, Healthcare Directives, Powers of Attorney, Guardianship issues, Disability Planning, Life Insurance, and many many more.

It’s written in plain English with short chapters so that if any concept is confusing it can be quickly reviewed.

Buy it here on Amazon!

  • Markhweiss - October 26, 2016 - 2:44 am

    The art of estate planning comes down to two things: communication and implementation.ReplyCancel