Articles By Timothy Doolittle

What’s New in Estate and Gift Taxes Under the Federal Tax Cuts and Jobs Act


As many are likely very aware, the end of 2017 brought with it new tax reform that took effect January 1, 2018. The Federal Tax Cuts and Jobs Act (the “Act”) made many revisions to the tax code in the first significant reform to the tax code since 1986.  This article will focus on the impact the Act has with regard to estate and gift taxes.

Changes to Federal Transfer Tax Laws

Previously, an individual was able to transfer up to $5.49 million without any worry of Federal gift, estate or generation skipping transfer taxes (collectively referred to as “transfer taxes”) during life, at death, or by combination of the two. Married couples could transfer a combined $10.98 million free of transfer taxes.  Any assets transferred beyond those exempt amounts were subject to a 40% tax

The Act provides for a doubling of the exemption amount to roughly $11.2 million per person, adjusted annually for inflation.  Married couples will now be able to effectively transfer a combined $22.4 million free of transfer taxes.  This doubled exemption is scheduled to remain in effect for 8 years and will sunset at the end of 2025, if the federal government does not act sooner.  Property transferred in excess of the increased exemption will continue to be taxed at a rate of 40%.

Individuals are also offered an annual exclusion from gift tax for direct gifts to individuals or certain trusts. In 2017 this exclusion was $14,000.00 per recipient, per year.  In 2018, the IRS raised the annual gift exclusion to $15,000 per recipient.  A married couple may combine their individual exclusions to allow for tax-free gifts of $30,000 per recipient.  This scheduled change is due to inflation and not the new legislation and follows the IRS’s pattern of raising the annual exclusion every three (3) to four (4) years based on inflation.

It is important to note that the rules regarding basis for gifted assets versus inherited assets will remain the same.  A donor’s basis in property which is gifted will “carry-over” to the gift recipient while property owned at death will receive a “step-up” in basis equal to the date of death value. Therefore, individuals will need to consider if it is more advantageous to gift property during their lifetime or wait for the step-up in basis that would occur at the time of their death.

Changes to New York State Transfer Tax Laws

New York estate and gift tax continues on in its previous form adopted in 2014. There continues to be no New York gift tax and the exemption from the New York estate tax will continue to be $5.25 million through the end of 2018.  The exemption will rise for decedents dying on or after January 1, 2019 and it is estimated that the exemption will be between $5.6 million and $6 million at that time.  Estates in excess of the exemption will continue to be taxed at a maximum rate of 16%.  The unique estate tax “cliff” in New York will continue such that there is no exemption for estates exceeding the NY exemption amount by more than 5%.





Is Estate Planning Important for Young Adults?


For many young adults, the consequences of not having an estate plan in place can be dire.  Estate planning is not only tax and probate avoidance, but it is planning for your lifetime and incapacity as well.

One tragic case that many people are familiar with is that of Terry Schiavo. Terry Schiavo was a persistent vegetative state for 15 years. During the course of that 15 years, her husband petitioned the courts in Florida to have Terry’s feeding tube removed. This was opposed by her parents. This prolonged legal battle garnered national attention. At the time of her cardiac arrest that precipitated the persistent vegetative state, Terry was 26 years old.

It is these types of situations that many young adults do not consider. They believe that nothing will happen to them, and even if it does, they feel that they do not have the assets to justify the expense of putting together an estate plan and that everything “will work out”. They do not anticipate the potential for prolonged legal battles between loved ones.

Estate planning becomes even increasingly important for those young adults with minor children. Minor children require special planning. A Last Will and Testament is a document where you can name a guardian for your minor child. If you do not name a guardian for your minor child it will be up to the court to decide who will care for your child when you are gone. You also need to be able to decide who will manage the inheritance that you leave to them. An extremely valuable tool to accomplish this goal is a revocable living trust. A revocable living trust is a will substitute that allows you to retitle your assets during lifetime into a trust to make the transfer and management of assets upon your death much easier for your beneficiaries. Through the living trust you can name a successor trustee to manage any assets for your children with whatever conditions you set forth. Many of my clients chose to name a specific age at which their children will have full access to their inheritance.  Others choose to have a sprinkling distribution, such as ½ of the inheritance at 21 and the remainder at 30.  Still others choose to allow a mandatory distribution of a certain amount of the assets each year until such a time that the full inheritance will go out to the child.

Planning even as a young adult is critically important to protect yourself and your family.   A comprehensive estate plan includes a revocable living trust, pour over will, financial power of attorney, health care power of attorney, and living will.  Anyone over the age of 18 should strongly consider having at least a financial power of attorney, health care power of attorney, and living will.

Contact a qualified estate planning attorney to counsel you in creating a comprehensive estate plan that can adequately prepare for incapacity and death.



Estate Planning for Single People


While discussions for estate planning often focus on married couples, estate planning for a single person is equally as important. In many instances, a single person may need to do things differently and the consequences of not having a well-coordinated plan can create real problems. Most single people own assets in their names individually and may also own some assets as a joint tenant with right of survivorship. Other assets, such as life insurance or retirement assets, will be distributed at death according to the terms of their beneficiary designations. How these varying assets are titled and how the beneficiary designations are prepared will directly impact who will get control of the assets and how they’ll be distributed at the individual’s death.

For a single person, the default under state law usually provides that assets are passed on to their closest relatives. If an individual dies without a will (known as intestate), possessions are distributed according to the default laws of his or her state. Under these state laws, a married individual’s assets typically go to their spouse or children. For a single person, however, the default under state law provides that assets are passed on to their closest relatives (e.g. children, parents, siblings). If there are no relatives alive, assets may go to the state. To avoid having the state decide the fate of your assets, it is imperative that you put an estate plan in order to ensure your wishes are carried out

Here is a brief guide to preparing essential estate plan documents providing direction on how your estate should be distributed and who should be responsible for making important decisions on your behalf — if you become mentally or physically incapacitated or for your estate following your death.

A will: Your will is the centerpiece of your estate plan and allows you to distribute assets as you see fit; name guardians for minor children and assign an executor to guide your estate through probate, the court-supervised process of accounting for your assets. The executor you name should be someone trustworthy and not easily swayed; if you don’t have close relatives, choose a close friend or an independent third-party, such as an attorney. When preparing your will, give some thought to how your home or personal property should be distributed. Investments are easily divided between beneficiaries, but a single person may have very specific wishes about who should inherit his or her home or personal property with special sentimental value.

Durable power of attorney: This document lets you appoint someone to manage your day-to-day financial and personal affairs even if you become unable to do so for yourself. A married person often names a spouse for this role; a single person should select a trusted friend or family member with strong financial acumen.

Medical provisions: A health care directive speaks to your medical wishes if you are unable to communicate them yourself. A medical power of attorney names an individual who is authorized to discuss and make decisions on your treatment and care. When selecting someone for this role, remember that it doesn’t have to be the same person as your financial power of attorney. Take care to choose a trusted individual who knows you well and who will respect your wishes regarding medical care and life-support decisions.

Updated beneficiary designations: These will determine who will receive your benefits including life insurance and retirement plan assets. So be certain the designation forms are up-to-date, coordinated with your estate planning documents and best reflect your wishes.

Advice for Transferring Assets: When planning for the distribution of your estate, there are important tools to keep in mind, such as a trust, which holds assets for the benefit of a third-party beneficiary. Since a single person determines the right tools to use for effectively creating an estate plan to properly dispose of his or her assets, it’s important that you also coordinate that planning with the way your assets are titled and the way your beneficiary designations are prepared. Speak to an Estate Attorney and Financial Adviser If you don’t have an estate plan that speaks to asset transfer; business and financial decisions and health care directives, meet with an estate planning attorney and financial adviser. These professionals will help you craft a comprehensive plan tailored to your situation to ensure that your assets will be distributed the way you intend.



Selecting the Appropriate Trustee of Your Trust



When you are selecting a trustee as part of the trust creation process, you need to ensure that you select the right person. The trustee has many different responsibilities and serves a vitally important role. Before you decide who will fulfill this position, you need to understand what trustees are actually responsible for and what their legal obligations are.

The decision on who should serve as your trustee is just one of many important choices that you are going to have to make when you create a trust.  You should talk with a qualified trusts attorney throughout the trust creation process so you can make informed choices about every aspect of creating your trust. Your trust should provide you, your family, and your assets with important protections and making informed choices is an important part of creating the protections.

When selecting trustees, the type of trust that you create can make an impact on the role that your chosen person will play and on when that person begins to take responsibility for actively managing trust assets.

For example, the job of a trustee will differ when you create a revocable living trust, which you may maintain substantial control over while naming a backup trustee to take over in the event of your incapacity, versus when you create an irrevocable living trust which requires you to give up substantial control over trust assets. The person who you put in charge of a special needs trust or a spendthrift trust is also going to have a different, and more active, role to play than the trustee for other types of trusts.

Still, when you create both a revocable trust and an irrevocable trust, the person who you select as a trustee will have a fiduciary duty and could have substantial responsibilities for managing trust assets and following instructions you set forth in your trust document. You want to find someone who you can count on to fulfill the role that the law assigns to trustees and someone who you can trust absolutely to manage your trust assets and act in the best interests of your beneficiaries.

Some of the key characteristics that you should look for when selecting the person to serve as your trustee include the following:

  • Honesty: Above all else, the person who you select to manage your trust should be someone who you believe is honest. The individual you select is going to have a lot of control over assets and over important financial decisions and you want to know beyond a shadow of doubt that the individual is trustworthy and will do the right thing. While it is true the law requires honesty and prohibits conflicts of interest, it can still be a major aggravation to pursue legal action against a trustee who abuses his power or mismanages assets.


  • Financial knowledge: The person who you select is going to have responsibility for managing the assets held within the trust. You want someone who has a good grasp of the management of the type of property and assets that are held within the trust. You need to ensure that the person who you select has good financial knowledge and can keep the assets safe and make smart decisions that could potentially help to increase the value of the assets that are held within the trust.


  • Shared Philosophies: Odds are, if a successor trustee is acting under your trust, it will be to guide the assets left for the benefit of your children. You should select a trustee that shares the same philosophies as you with regard to how you would want the funds used. Do you believe your children should pay their way through college? Make sure your trustee feels the same or understands your position. Do you believe your children should want for nothing and should have everything they ask for? Make sure your trustee would be willing to do the same.


Selecting a trustee is not always an easy task. If no one in the family seems to be an appropriate choice or if the assets left in trust are of a large amount, a professional trustee is always a suitable alternative to consider. This could be a financial institution or an attorney/law firm. Speaking with a qualified attorney will help you make the important decision of selecting a trustee.



Special Needs Fairness Act Approved in New York

Disabled Veteran

A First Party Special Needs Trust is a very powerful tool that allows an individual with a disability to protect a large sum of money from counting against them with regard to qualifying for needs based governmental programs, such as Medicaid and Supplemental Security Income (SSI).  By federal law, a First Party Special Needs Trust can hold the individual’s assets and allow the individual to benefit from the funds without risk of losing their public benefits.  Previously, the federal government has only allowed the individual’s parent, grandparent, guardian, or a court of proper jurisdiction to create the First Party Special Needs Trust.   This created some unnecessarily unfair situations where an individual may not have had a parent, grandparent or guardian at the time when a Special Needs Trust was needed.  A large number of First Party Special Needs Trusts are created upon the death of the parent, when the individual inherits a large sum of money.  Since the parents and grandparents were no longer living, the individual often required a court to create the First Party Special Needs Trust, adding unnecessary delay and expense.

In December 2016, President Obama signed the Special Needs Fairness Act into law and we are happy to report that the New York State Department of Health has issued a General Information System (GIS) message that states “effective immediately, in the case of a certified disabled Medicaid applicant/recipient, districts must not consider as available income or resources the corpus or income of a trust established by such disabled individual when he or she was under 65 years of age, provided the trust otherwise complies with the ‘exception trust’ provisions…”.  This means that the Special Needs Fairness Act allows the individual with a disability to create a First Party Special Needs Trust to hold their assets while still allowing eligibility for Medicaid, SSI, and the like.  The passage of the Act is important as it ends the ends the incorrect and unfair presumption that all individuals with disabilities lack the mental capacity to handle their own affairs.  Many individuals who qualify for a Special Needs Trust handle their personal affairs on their own every single day.  In order to create a First Party Special Needs Trust, the individual must be under the age of 65, certified as an individual with a disability, and have the mental capacity to understand the document they are creating.

The passage of this law allows for more flexibility in allowing individuals with disabilities to live their lives beyond what public benefits provide for.  If you or someone you know would like to learn more about First Party Special Needs Trusts, contact a qualified attorney who is knowledgeable in the area to help guide you.



Why Do I Need a Living Will AND a Health Care Proxy?


One of the more common questions we deal with in the initial interview with many clients is why they need both a living will and a health care proxy.  The answer to this question is quite simple but a background on what each document specifically does is useful.

Medical-Power-of-Attorney-300x200Health Care Proxy

The health care proxy is an important document that every person should have as part of their overall estate planning portfolio.  Under a health care proxy, the person signing (the “Principal”) designates one Health Care Agent and as many successor Health Care Agents as the Principal chooses.  This Health Care Agent will make decisions regarding the Principal’s medical treatment in the event that the Principal is unable to make these decisions on their own, as determined by a physician. The Health Care Agent will not be able to make decisions before this determination by a physician and will not be able to make further decisions if there comes a time when the Principal regains capacity.

Appointing the Health Care Agent allows you to control your medical treatment by: allowing the Health Care Agent to make medical decisions as the Principal would have wanted; allowing the Principal to choose a person who the Principal believes would make the right decisions; and allowing the Principal to avoid conflict and/or confusion amongst the Principal’s family members.  This last point raises an important facet of the Health Care Proxy, only one person may act as a Health Care Agent at a time.  The Health Care Agent will likely be an individual that the Principal is very close with. Because of this, making end of life decisions could be a very difficult choice for the Agent.  This leads to the power of a living will and why a living will should always go hand in hand with a Health Care Proxy.

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Living Will

The Living Will, when cut to its core purpose, is a simple document.  It is, typically, a written statement of the signee’s health care wishes when they are not able to communicate a decision regarding specific medical situations.  Often, it is a document used to indicate that the signee either wants to stay on life support or be removed from life support when more than one physician determines the signee is in an incurable or irreversible mental or physical condition with no reasonable expectation of recovery.  While New York State does not have a statute that specifically addresses the Living Will, the Court of Appeals (New York’s highest court) has stated that Living Wills are valid as long as they provide clear and convincing evidence of the signee’s wishes and the signee is 18 years of age or older.

Since the Living Will is an express declaration of the signee’s wishes and intentions regarding end of life medical decisions it can relieve a Health Care Agent of having to make the difficult decision of whether or not someone should stay on life support.  The Health Care Agent will simply indicate that the signee has a Living Will and not have the cloud of making such a large decision hang over them.   The signee will also have assurance that their wishes regarding end of life medical treatment will be honored.



Legal, financial issues for people who have chronic diseases or a child with special needs


Estate planning is especially important for those who have a chronic disease or a child with a disability, says lawyer Tim Doolittle, from the Wladis Law Firm in East Syracuse. He gives an overview of Medicare, Medicaid, Social Security, trusts, guardianships and other related matters. More information can be found through these links: on special needs trusts, on supplemental security income and on benefits for adult children with disabilities.




Four Key Reasons You Don’t Want to Die Intestate

Esatte Planning 3.11.17

There are many reasons why an individual should consider some sort of estate plan to avoid dying intestate. Four of the key reasons why you do not want to die intestate include the following:

  • A family fight over assets: If you pass away without a will or some other estate planning document, New York State intestacy law will determine the disposition of your estate. Without specifics, your family could end up fighting over everything from money to the family camp to an engagement ring that has been in the family for years. By writing down your wishes through a will or other estate planning document, you reduce the chances this fighting will happen.
  • Your assets could go to people you would prefer not have your assets: You only get to determine who inherits if you make a plan to transfer assets in a will or through other means. Otherwise, the state law determines who receives your assets. While intestacy law aims to give inheritances to close family, these laws won’t necessarily distribute your assets the way you would have wanted, or in the manner you intended.
  • Your assets may not be used in preferred ways:You have no control over what happens to your wealth if it transfers via intestacy law. For example, you may have wanted your money to be used to pay for a grandchild’s education or for the money to go to charity. You won’t get to have your wishes met if you don’t use trusts, wills, and other tools to ensure your assets are used as you see fit.
  • You cannot protect your assets:If you have a large estate, estate tax may be assessed and wealth will be lost. Money could be lost during the probate process. You don’t want your hard-earned assets to be wasted just because you did not get around to making an estate plan to protect them.

There are also many other reasons why you want to avoid dying intestate by making a comprehensive estate plan. To find out more about the ways in which an experienced attorney can assist you in the planning process, you should reach out for legal help as soon as possible. Do not assume you have lots of time, as even younger people can experience an unexpected illness or injury, making it too late for them to make an estate plan.  At a minimum, the creation of a last will and testament will give you the chance to determine who inherits your assets. However, other tools like trusts can give you much more control, which is especially important if you are trying to reduce estate tax or if you have heirs or beneficiaries with unique needs, such as underaged or disabled heirs.  Sitting down with an attorney will be a great help in clarifying what is the appropriate course of action for you unique situation.


What is a Living Trust and Do You Need One?

Living Trust

A living trust is also known as an inter vivos trust or a revocable trust. It is a trust that is made during your lifetime and involves transferring assets into the trust and naming a trustee to manage those assets. Usually, the trust creator or settlor is the initial trustee and a backup trustee is named. Trust beneficiaries who will inherit the living trust after the death of the settlor are also named.

This type of trust is created by preparing a trust document with the help of your attorney. The process will involve naming a trustee and backup trustee and designating a beneficiary. In order for a living trust to accomplish its goals, you must fund the trust by transferring assets into it. The revocable trust will become the legal owner of the assets transferred into it, instead of you being considered the legal owner of the assets.

Revocable trusts are generally modifiable and revocable, so you have flexibility when you create this kind of trust. You must follow the New York requirements for trust creation in order to ensure you create a valid trust which offers advantages that you desire.

There are many reasons why it may make sense for you to create a living trust. One of the biggest reasons why they are created is to avoid probate. The ABA indicates revocable trusts are one of the two most popular probate avoidance methods; joint tenancy or survivorship is the other.

Avoiding probate means there will be less costs faced by your family members and estate during the probate process. You can save a substantial amount of money by not having to go to court. You can also facilitate the transfer of the assets that you put into the trust in a more timely manner. Probate can stretch on for months, during which time there may be uncertainty about business interests and during which time investments and property may not be managed as carefully as they would by new owners. A revocable trust eliminates this period of uncertainty because trust assets can quickly transfer to new owners.

Living trusts can also help you to make sure that your assets are appropriately cared for in case of incapacity. By naming a backup trustee in your trust document, you vest authority in that backup trustee to take control over trust assets in the event something happens to you. You will not need to worry about your family having to initiate guardianship proceedings while trust assets remain unmanaged.

While all of these reasons are very good reasons to create a living trust, it is important to understand limitations of this type of trust. For example, assets held within a living trust are still considered resources which can be spent on nursing home care, so you may not be able to get Medicaid to pay for coverage until you have spent down assets. The trust assets also are considered part of your taxable estate, which can trigger federal estate taxes and New York estate taxes. If Medicaid planning and/or estate tax planning are part of your goals, speaking with estate planning attorney about the alternatives available is a must.



Special Needs Trusts: Where Can the Funds Be Used

Spevcial Needs2
The creation of a special needs trust is of vital importance if you have a person in your life who is disabled and you want to provide a financial gift to that individual. Money or property that you wish to give should be placed into a trust so as not to cause a loss of access to important government benefits like Medicaid. The money held within the trust is to be managed by a trustee and used for the benefit of the person with the disabling condition.

As a trustee, you need to make certain the money in the trust is used wisely for appropriate purposes and that it is not distributed in ways that count as resources and that cause a loss of benefits access.

Money is put into a special needs trust to provide for the supplemental needs of a disabled person who may be unable to work or manage his or her own money. When a trust creator establishes a special needs trust, the trust creator can provide the trustee with some instruction as to the ways in which the funds are to be used.  In general, however, money in a special needs trust is to be used to enrich and improve the quality of life of the individual who is disabled. Money could be used, for example, to provide for games or a new TV for a disabled person who enjoys playing games or watching shows as a hobby. Money could be used for the disabled person to do activities, to participate in programs, or to take trips.

Because every person’s situation is different, it is important for the trustee to know what particular types of things would most benefit the person with disabilities who the trust was created to provide for. While trustees can have some discretion on spending, they must always make certain they are fulfilling their fiduciary duty to act in the best interests of the person with special needs. A trustee should never use any of the trust assets for his or her own benefit, and should never put his or her own interests above those of the person with special needs who the trust was created to provide for.

A special needs trust exists to ensure money and assets held within the trust aren’t counted as resources and don’t cause a disqualification from important government benefits that are means tested. There are certain restrictions on how the assets in the trust are used, in order to ensure continued benefits eligibility.

For example, money cannot be given directly in cash to a disabled person and gift cards also generally cannot be provided to a person with disabilities, as the money or gift card could be considered a resource and cause benefits disqualification. Paying rent or providing food for a person with a disability is also a no/no because these are considered in-kind benefits equivalent to cash, and a loss of Medicaid, Supplemental Security Income, and other means-tested benefits could occur.  Distributions from a special needs trust need to be contemplated and carried out in the correct manner.  Doing so allows for the individual to receive the full benefit of the supplemental needs trust.

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