Estate Taxes

Friday, February 11, 2011

"Nice" Lawyer Costs Family $300,000.00

by Michael Ettinger, Esq.

A couple came in to see me today for the husband's 88 year old father who is a nursing home in Florida. They now wish to bring him up to New York to be nearer to the family. He has about $600,000 in assets, including his home.

They told me about the very nice lawyer he has down on the west coast of Florida, who set up a revocable living trust for Dad and for Mom who died last year, in February of 2006, and amended it in March of 2010.

They had a great deal of confidence in the lawyer, especially since he had won an award as one of the top lawyers in the locality.

Regrettably, while the attorney prepared a fine estate plan, he was not an elder law attorney and took no steps to protect the couples' assets back in 2006, when they were well into their eighties.

Had the lawyer been knowledgeable in elder law, which unfortunately so many estate planning attorneys are not, he would have set up a Medicaid Asset Protection Trust (MAPT) and started the five year "look back" period running. It is now February, 2011, five years later. Had the MAPT been set up when it should have, in February 2006, instead of the revocable living trust, all of Dad's assets would now be protected and he would be eligible for Medicaid benefits to pay for the cost of his nursing home care.

Instead, the couple will only save half the assets by using the "gift and loan" strategy developed by elder law attorneys to save half the assets on the nursing home doorstep when the client has failed to set up the MAPT. The technique is also call "half a loaf" planning after the old expression.

Nevertheless, the "nice" lawyer ended up costing the family $300,000.00 and it is not the first time we have seen it happen. Indeed, it is the reason your writer published "Ettinger on Elder Law Estate Planning", available on Amazon.com. We believe that clients need a new york "elder law estate planning" attorney and not just an "estate planning" attorney so mistakes like this no longer happen to good people.

Wednesday, June 25, 2008

Estate Tax Puzzle Becoming Clearer According to Kiplinger

According to a recent Kiplinger Report, the future of estate taxes is becoming clearer:

"A quick refresher course: Back in 2001, Congress passed a law to phase out the tax. The amount Americans can pass to their heirs tax-free was set to rise from $675,000 in 2001 to $3.5 million by 2009 (it's $2 million this year). Then, in 2010, the estate tax was supposed to expire. But there was a catch: The tax was also scheduled to rise from the dead in 2011 with a paltry $1 million exemption.

That seesaw scenario is what had a lot of people pulling out their hair instead of planning. Although the schedule is still in place, it's clear that it will never happen. Why not? The next president is against it. John McCain and Barack Obama oppose repeal of the estate tax.

Obama would let the $3.5 million exemption continue; McCain would prefer a $5 million exemption. Because the law allows married couples to double the tax-free amounts, it's likely that, in the future, couples could leave their heirs a minimum of $7 million -- and maybe up to $10 million -- before Uncle Sam gets a bite of their assets."

For the full report, click http://tiny.cc/aateela