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Schanker and Hochberg P.C. is a premier Estate Planning law firm. We offer legal services for sophisticated Estate and Gift Tax planning, Decedent Estate Administration and Probate services, Business Succession Planning, Charitable Giving, Special Needs Planning for persons with disabilities, simple Will planning, and all aspects of Elder Law planning including Medicaid planning and applications. Our website, www.schankerhochberg.com, provides detailed information about our practice and the services we offer. It also is an excellent resource for articles of interest about Estate Planning and Estate and Gift Tax Laws. A copy of each newsletter will always be available on our website.

Estate Planning is so much more than just tax planning. There is a considerable decision-making process. Schanker and Hochberg P.C. has over 30 years of experience in counseling clients for their Estate Planning needs.

As always, we encourage feedback from our readers. If there are any topics you wish for us to specifically address or elaborate on, please email me at: andrea@schankerhochberg.com.

Time is Running Out: The Expiring Gifting Opportunity

2012 IS FAST APPROACHING ITS END. With it, the opportunity to maximize the use of the historically highest lifetime gift tax exemption also approaches a likely end. On January 1, 2013, the existing $5.12 million lifetime gift tax exemption will revert to $1 million. The Estate Tax exemption may revert to $1 million and the maximum Estate Tax and Gift Tax rates will increase to 55% from the current 35% rate. New York and New Jersey do not have a ‘gift tax’ which means that any lifetime gifts that are made will not be drawn back into the Estate Tax valuation at time of death.

There is an array of gifting techniques which ensure some level of asset protection and even the donor’s continued asset management however time is running out. Sophisticated gifting requires careful consideration with your Estate Planning Attorney and always includes necessary documentation.

Please schedule a complimentary consultation with Schanker and Hochberg P.C. to discuss the opportunity and if it is appropriate for you.


2012

Federal Estate Tax and Generation Skipping Tax (GST) Exemption: $5,120,000
Estate (and GST) Tax Rate: 35%
Lifetime Gift Tax Exclusion: $5,120,000
Gift Tax Annual Exclusion: $13,000, per done
Gift Tax Rate: 35%
Annual Exclusion; Non-U.S. Spouse: $139,000
NYS Estate Tax Exemption: $1,000,000
NYS Estate Tax Rate: approx. 10%
NJ Estate Tax Exemption: $675,000
NJ Estate Tax Rate: by formula, approx. 10%

2013

Federal Estate Tax Exemption: $1,000,000
Generation Skipping Tax (GST) Exemption: $1,000,000
Estate (and GST) Tax Rate: 55%
Lifetime Gift Tax Exclusion: $1,000,000
Gift Tax Annual Exclusion: $13,000, per done
Gift Tax Rate: 55%
Annual Exclusion; Non-U.S. Spouse: $139,000
NYS Estate Tax Exemption: $1,000,000
NYS Estate Tax Rate: approx. 10%
NJ Estate Tax Exemption: $675,000
NJ Estate Tax Rate: by formula, approx. 10%

Note: New York and New Jersey do not impose a Gift Tax.


Estate Planning for Unmarried Couples and Same Sex Marriages

THERE IS A LARGE population of couples (heterosexual and same-sex) that are in longterm, committed relationships. For all intents and purposes, they are married (without the legal classification).

Absent careful Estate Planning, incapacity or death of one partner can leave the other without a voice in handling the incapacitated or decedent Partner’s affairs and can also result in unintended financial consequences to the ‘well’ or surviving partner (unmarried couples have no statutory elective share which provides that the surviving spouse is entitled to 1/3rd of the decedent’s Estate or $50,000, whichever is greater).

A basic Estate Plan includes a Last Will and Testament (with a Revocable Living Trust in many cases), a Statutory Power of Attorney, Health Care Directives (A Living Will and Health Care Proxy), Guardianship designations for minor children, and HIPAA Waivers (Waivers authorizing the named agents to communicate with Doctors on your behalf when necessary under the documents). These documents allows you to choose who is representing you when you are unable to do so and can thus spare an enormous amount of unnecessary time and money.

For example:

  • Without a Will, New York State’s Statutes direct appointment of the Estate Administrator and that all assets are distributed outright so that fifty percent goes to the surviving spouse and fifty percent goes to surviving children (or to the survivor thereof).
  • If a beneficiary is under the age of 18 (a minor) at the time he/she has a vested right in any outright distribution, there is a required Surrogate’s Court proceeding to account for those monies on behalf of the minor.
  • If no Guardianship designation is made for a minor, and both parents are deceased before the child attains 18, there will be a Court proceeding to appoint a legal Guardian.
  • If there is no Health Care Directive, a Court proceeding will be necessary to obtain the required authorization to communicate with doctors on behalf of the patient or to terminate life sustaining measures when it may be time to do so.
  • Without a Power of Attorney, a Supreme Court proceeding will be necessary to appoint a Guardian to represent the personal and financial interests on behalf of the incapacitated person.

The New York Marriage Equality Act; ‘Food for Thought’

On June 24, 2011 New York State became the seventh State to legalize same-sex marriage in the United States. However, the Defense of Marriage Act (known as “DOMA”) passed in 1996, says that same-sex marriages are not recognized for Federal Income and Federal Gift and Estate Tax purposes. This conflict makes planning considerations more important than ever. Here are a few points to be aware of:

  • There are special and additional Estate Tax filing requirements for a decedent who was in a same-sex marriage.
  • There are specific rules about Federal Income Tax filing for the same-sex married couple.
  • You can not disinherit a spouse in the State of New York, absent a signed waiver (this is that ‘spousal right of election’ described in the beginning of this article).
  • The surviving same-sex spouse is entitled to a full New York marital deduction for assets passing to the surviving spouse.
  • There is no New York Gift Tax but the Federal Government has an annual gift tax exemption of $13,000 per donee and a lifetime exclusion of $5,120,000 (scheduled to revert to $1,000,000 on January 1, 2013). This is important for purposes of transferring assets between spouses during life and for mitigating State and/or Federal Estate Taxation.
  • For purposes of Medicaid planning, DOMA is actually helpful to same-sex married couples because the well-spouse has no financial obligation to the Medicaid applicant.
  • Life Insurance is a particularly powerful tool to help provide liquidity to pay Federal Estate Taxes if the couple has significant assets.
  • Planning with Trusts can enable a same-sex couple to take advantage of the unlimited marital deduction for various purposes and if, in the future, the Federal government repeals DOMA, these Trusts can qualify for recognition for Federal Estate Tax purposes.

Opportunity abounds!

The State and Federal Statutes are all a ‘default’
in lieu of good planning. Schedule a complimentary
initial consultation or an annual review to
discover what strategies are available for you.

What to Know About “Digital” Estate Planning

IN TODAY’S WORLD, nearly everyone has internet access. We have email accounts, online banking, scheduled online bill payments, online access to our investment portfolios, and social media accounts. We own websites, our businesses have web-businesses and websites, we manage E-bay businesses, have Blogs etc. – my husband’s Grandmother uses Facebook actively. What happens to our “digital” footprint upon incapacity or death?

In order for someone to step forward to manage your online presence during incapacity or death, that person requires access. And in today’s world, we are continuously reminded to avoid writing down passwords and to use different passwords for different accounts. This is to provide strong security against hackers and online identity thieves.

There are several things you should consider in order to organize your online existence:

  • Take inventory and identify where your accounts are and what the passwords are.
  • Provide instructions along with this inventory if appropriate. For example, if you keep an online photo journal, you may wish for the person who has access to be able to provide information to particular friends/family members so they can have unlimited access for their own sentimental use.
  • Provide for access. Access should be provided to someone who is a trusted confident. You could keep the inventory described above in a home safe to which your significant other/spouse/children has access. You could also entrust this information to your Estate Planning Attorney. Schanker and Hochberg P.C. regularly stores critical information for our clients in their confidential client files and in our fireproof, waterproofed, locked Will safes.

An Executor/Trustee does not necessarily have authority or access to your digital universe. Discuss this issue at your complimentary Estate Planning consultation or annual review meeting.

Schedule an appointment in our NYC office.
767 Third Avenue, 35th Floor.

Contact us at our main telephone number at (631) 424-5400.
Please see our website for our exact locations.


Insure Your Legacy

LIFE INSURANCE is a valuable Estate Planning tool. The performance, purpose, and adequacy of each life insurance policy must be regularly reviewed to ensure that these valuable devices remain beneficial.

It is a basic Estate Tax Planning technique to create an Irrevocable Trust to be the owner and beneficiary of a life insurance policy. This is to exclude the death benefit from the taxable estate at time of death. Other advantages to using an Irrevocable Trust this way include:

  • Certain asset protections; the death benefit can never become a marital-asset upon remarriage of the surviving spouse or for purposes of an in-law child.
  • Probate avoidance (saves time and money); seamless availability of liquidity
  • Grantor selects the Trustees and Successor Trustees
  • Grantor directs how and when money is distributed (critically important when considering minors as possible beneficiaries)

The Trustee of an Irrevocable Trust (whether individual or a financial institution) has a fiduciary duty to manage the Trust for the benefit of the beneficiaries. This includes a legal obligation to make sure that the premiums are paid and that each policy is functional.

It is crucial that your life insurance policies are regularly reviewed by a qualified professional. Whether the policies are being used as income replacement, estate liquidity, or for business succession purposes, it is ideal to make sure that your policy coordinates with your other Estate Planning and that that particular product is most appropriate. Planning with life insurance has a powerful impact on the value of the Estate.

A well planned and regularly reviewed plan avoids unnecessary costs, time delays and avoidable taxation. Forensic reviews of life insurance policies are usually complimentary by a trusted Insurance professional.


Schanker and Hochberg P.C. regularly delivers presentations for professionals specializing in wealth management, life insurance and accounting. We are accredited to offer continuing education programs for Certified Public Accountants. We also host events for our clients and colleagues when there are significant changes in the Estate Tax and Gift Tax laws.

Extensive Services at Schanker and Hochberg P.C.

  1. Complimentary Initial Consultations for Estate Planning, Probate and Estate Administration matters
  2. Complimentary Annual Review meetings for existing clients
  3. Complimentary Family meetings for existing clients
  4. Tax alert services for existing clients

Our main office is housed in an elegantly restored Victorian structure in the heart of Huntington Village. Here, we welcome you and your family into a relaxing, warm setting where we will work together to improve your circumstances and achieve your goals.

To better serve our clients and their families, we also have convenient office locations in Midtown Manhattan and New Jersey; we also offer our services to clientele in Florida.

GENERAL DISCLAIMER: While we hope this newsletter provides useful information, please know that this newsletter does not predict or guarantee the outcome or result in any particular situation and no attorney-client relationship exists or is established as a result of this newsletter or its receipt.

Highlighted S&H Attorney:
Steven Schanker, Esq. (Partner)

Steven Schanker received a Bachelor of Arts degree from the University of Rochester and his Juris Doctorate from St. John’s University School of Law. He is admitted to practice before the Courts of the State of New York, the Eastern and Southern Districts of the U.S. District Courts, and the Supreme Court of the United States of America.

His knowledge and competence have earned him widespread respect amongst his peers and colleagues. A very relaxed and personable manner has enabled him to build long, gratifying and rewarding relationships with his clients.

Mr. Schanker is an accomplished public speaker and has lectured in front of both lay and professional audiences on an national basis. He has been retained and continues to be retained by several large financial institutions, including life insurance companies and stock brokerage firms. He is an active member of the Society of Chartered Life Underwriters Speakers Bureau, the Estate Tax Planning Council of Long Island, a speaker at “Top of the Table,” a former adjunct professor at Adelphi University on Long Island, and a quoted author, including articles in Forbes and Fortune magazines.

Mr. Schanker resides in Huntington, with his wife, Carol, who is an accomplished artist.
sms@schankerhochberg.com