TOP 5 ESTATE PLANNING GOALS

When you think about creating an initial estate plan, you likely focus entirely on the need to create a roadmap for the distribution of your estate assets in the event of your death. While that certainly will always remain an important estate planning goal, you will undoubtedly include additional goals into your estate plan over time. The best way to decide which estate planning goals should be included in your plan is to consult with an experienced estate planning attorney. In the meantime, it may help to learn more about some of the most common estate planning goals.

Incapacity Planning

People typically associate the possibility of becoming incapacitated with old age, specifically with Alzheimer’s and other age-related dementia conditions. While Alzheimer’s will certainly lead to incapacity eventually, the reality is that you would suffer a period of incapacity at any age as a result of a tragic accident or debilitating illness. If that happens, who will take over control of your assets? Who will make health care decisions for you? In the absence of an incapacity planning component in your estate plan, a judge may be forced to answer those questions – and you may not like the answers.

Probate Avoidance

Probate is the legal process that is required after the death of an individual. The primary purpose of probate is to identify, value, and eventually transfer the decedent’s assets to the intended beneficiaries and/or heirs of the estate. If the estate is required to go through formal probate, it can take months, even years, to get through the process. In addition, a lengthy probate can be costly, often diminishing the value of the estate that is ultimately passed down to loved ones. Probate avoidance tools and strategies can help your estate avoid the need for formal probate.

Planning for Parents with Minor Children

If you are the parent of a minor child, you undoubtedly want to make sure your child is provided for if something happens to you. Your minor child, however, cannot inherit directly from your estate. As such, simply leaving assets for your child in your Will doesn’t ensure that your child will be well cared for in your absence. Instead, most parents establish a trust to protect their child’s inheritance until the child reaches the age of majority. As the creator of the trust, you appoint someone as the Trustee to manage and invest the trust assets while your child is a minor. That same trust can then be used to stagger disbursements once your child becomes an adult, allowing your child to learn how to manage his/her inheritance before receiving it all.

Asset Protection Planning

You will probably spend the better part of your life working hard and investing wisely to build up your estate assets. Acquiring assets is only the first step though. You must then think about protecting the assets you have acquired. Most people are not aware of the numerous and varied threats to their assets. An asset protection attorney can help you identify those threats and incorporate asset protection tools and strategies into your estate plan to keep your assets safe.

Long-Term Care Planning

Long before you reach retirement age, you should start thinking about the possibility that you, or a spouse, will need long-term care (LTC). Specifically, you need to plan for the high cost of that care. With a nationwide average of over $80,000 per year for 2018, most people cannot afford to pay for LTC out of pocket – and Medicare will not cover LTC expenses. Medicaid can help with those expenses, but you must first qualify for Medicaid benefits. Medicaid uses both an income and an asset test that could be problematic if you failed to include Medicaid Planning in your estate plan well ahead of the time you need to qualify.

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Nursing Homes and Protecting Your Home

During a consultation about estate planning, one of the questions most frequently asked by clients is “Will Medicaid take my house?” While some people amass a great deal of wealth during their lifetimes, for the average middle class person the family residence is his/her most valuable asset, and the concern of losing this asset to pay for one’s long term care is at the forefront of many discussions revolving around long term care.

The answer to this frequently asked question is not a simple yes or no. First, in the context of eligibility for Medicaid, a home with a spouse still living in it is exempt. Similarly, if a disabled child lives in the home, the home is exempt. If the individual who requires nursing home care does not have a spouse or disabled child living in the home, the home loses its exempt status. However, if the value of the applicant’s home is no more than $878,000, the applicant can express that he/she intends to return home. If the applicant expresses this intent to return home, the house will not lose its exempt Nonetheless, the house will lose such status if the applicant is declared to be in permanent absent status because it is not likely that the individual can return home. At that point, the cost of the applicant’s nursing home care will continue to be covered by Medicaid, but Medicaid can place a lien on the house for the amount of funds it expended and can recover such funds once the applicant passes away or when the house is sold.

The most failsafe option for protecting a home from potential liens is to place the home in a Medicaid Asset Protection trust. These types of trusts will allow an individual to gift the home into the trust, maintain the right to live in the home for the rest of their lives, maintain eligibility for property tax benefits (STAR, Veterans, Enhanced STAR, etc.), and direct where the home shall go upon their passing. Due to Medicaid’s 5-year look-back period for gifts, it is essential to put a plan in place for protecting one’s home as soon as is practical.

Some of this information may be comforting to a person who had otherwise believed that he/she would most definitely lose his/her house to Medicaid in the face of long-term care needs. Nonetheless, there is still a significant amount of vulnerability. In light of the fact that an applicant’s house can be protected in its entirety if advanced planning is effectuated, it behooves individuals to plan in advance and seek the counsel of an attorney who concentrates in elder law/asset protection planning.

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End of Year Estate and Gift Tax Planning Considerations 2018

 

As the end of the year approaches, there are a number of planning techniques that individuals can consider implementing before December 31, and after the first of the year, to take advantage of estate and gift tax savings opportunities.

Gifts to Individuals

Individuals may gift away a certain amount of assets to other individuals free of gift tax up to the annual exclusion limit. The 2018 limit on such gifts – $15,000 per donee per year – will apply in 2019 as well.  In addition, married couples will still be able to gift up to $30,000 to each donee.  It is important to remember that a donor is not limited to a certain number of annual exclusion gifts every year.  Making annual gifts to multiple beneficiaries enables individuals to transfer significant wealth over time.  The gift is considered to be made on the date the donee receives the gift.  Therefore, in the case of checks, the donee must cash the check before the end of the year for it to count towards 2018.  Since the gift tax annual exclusion is based on a calendar year, individuals also may wish to make 2019 gifts in early January.

Individuals interested in creating or adding to 529 Plan accounts for children or grandchildren should make the contributions before year-end and consider front-loading the accounts with five years’ worth of annual exclusion gifts.

Gifts to Charities

Gifts made to charities enjoy the dual benefits of reducing estate tax exposure and yielding current income tax deductions.  Such transfers must be effectuated on or before December 31 in order for donors to reap the tax benefit in 2019, when 2018 tax returns are filed and income tax is due to be paid.  It is important that donations be delivered to the charity before December 31, as the deduction is recognized on the date the charity receives the gift, not the date the check was written.

Maximization of Income Tax Savings with QCDs and RMDs

IRA owners must begin taking required minimum distributions (“RMDs”) after age 70½. These distributions are generally taxable income to the account owner.  It is possible, however, to reduce or eliminate such taxable income through use of qualified charitable distributions (“QCDs”).  A QCD is a direct transfer of funds from an IRA to a qualified charity.  When a QCD is made, the amount gifted to the charity is counted toward satisfying the IRA owner’s RMDs for the year but is excluded from his or her taxable income. Before QCDs became available to use, an individual traditionally would take a distribution from his or her IRA and then donate the amount of the distribution to charity. With this approach, the IRA distribution would be included in the individual’s income.  The individual would then claim an itemized charitable deduction for the amount of the distribution. However, under the new tax law, many people will not benefit from itemized deductions and therefore, with the traditional approach, will not be able to offset the additional income with a charitable deduction.

In contrast, the QCD strategy enables the IRA owner to reduce his or her income and resultant tax.  In addition, because adjusted gross income determines the taxation of Social Security Benefits, Medicare surcharges, and other tax deductions, credits, and benefits, use of QCDs can have significant ancillary tax advantages. It is important to note that QCDs are only available to IRA owners age 70½ and older.  In addition, private foundations and donor-advised funds do not count as qualified charitable organizations for purposes of QCDs.

Review of Estate Planning Documents

It is advisable for individuals to review Wills, Trusts and other estate planning documents periodically. The end or beginning of each year is a good time for this.  When reviewing estate plans, individuals should consider these questions:

  1. Do the provisions still accomplish your goals?
  2. Have your documents been updated to take advantage of changes to tax laws?
  3. Do your documents contain provisions that provide asset protection to your children, grandchildren and other loved ones?
  4. Are the fiduciaries named (Executor, Trustee, Power of Attorney/Agent, Health Care Agent) still appropriate?
  5. Are your Durable Power of Attorney and Living Will updated to your current wishes?
  6. Have estate planning concepts, funeral arrangements and decisions on anatomical gifts been discussed with family?
  7. Are your life insurance policy and retirement plan beneficiary designations still appropriate and in line with your overall estate plan?
  8. Are bank accounts and other assets titled in line with your overall estate plan?
  9. For business owners, are buy-sell agreements and the related valuations and life insurance policies up to date?

 

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The Importance of the Title to Assets

In estate planning, the titling of assets is often the most important consideration of how those assets will be distributed upon death. If you have not taken time lately to review how all of your assets are titled and how beneficiaries are designated, it can be a useful exercise.  Let’s take a look at a few examples:

Brother and Sister own a piece of real estate as tenants in common. Many people think that this titling means that Brother and Sister own this “jointly”, however there is a very important distinction to be made. If Brother or Sister die, the other party will not be the sole owner. The deceased sibling’s share will pass through their estate. If the deceased sibling has a Last Will and Testament, it will go to who is designated in the deceased sibling’s Will.  If there is no Will, the state laws will control the distribution through what is known as intestate succession.  The result can be that now Sister owns the property 50%, and the other 50% owned by any number of Brother’s heirs, maybe spouse, children, grandchildren, significant other, etc.

Three small words on a deed can dramatically change the outcome. Those words are “as joint tenants”. If the deed stated that brother and sister hold the property “as joint tenants” then upon the death of one sibling, the other sibling will be the sole owner.  Joint ownership is perfect in some cases, but can be problematic in others. For example, any jointly owned property may be subject to the other owner’s creditors. If Brother has creditors, they can pursue a judgment against the property owned by Brother and Sister together.

A different example that is often seen in the estate administration realm is when a parent adds a child as a joint owner on a bank account. Upon that parent’s death the joint owner child is the sole owner. That asset will not be distributed through the terms of any trust or will, even if the parent intended for the asset to be split amongst all of their children, not just the child who was a joint owner. This can, and often does, cause problems if there are other children named in the estate planning documents. The joint owner child may choose not to share the asset with the other children, even though this is what the parent intended, and would be perfectly within their rights in doing so.

If an asset is titled as the property of a sole owner, we do not have any of the problems of joint owner, or tenancy in common ownership.  However, that asset will have to pass through probate upon that sole owner’s death. Probate is the court supervised process of transferring title of assets. Probate is designed to protect the deceased person’s wishes; however probate can often be expensive and time consuming.

Another way of titling an asset is in a trust. A trust is a legal document that can hold title to an asset, which allows for effective management of that asset by the trustee. A common tool is a revocable living trust that allows the person setting up the trust to be the trustee and beneficiary, so they continue to have complete control over the asset during lifetime, and upon death, the trust terms determine the distribution and the distribution is made without any court probate process.

When setting up your estate plan, the key is often how the assets are titled. Your estate planning attorney can develop the best documents in the world, but if they do not match how the assets are titled, the plan may not work properly. It is important to meet with an estate planning attorney to determine exactly how things are titled and how that may or may not accomplish your goals.

 

 

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New York State Right of Election

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What is the Right of Election?

New York’s Spousal Right of Election protects a surviving spouse from being completely disinherited from the estate of the deceased spouse.  Under EPTL 5-1.1A, a surviving spouse is entitled to take the larger of $50,000 or one-third (1/3) of the deceased spouse’s net estate.  This is known as the “elective share.”

The elective share is calculated from the net estate, which includes the probate estate AND all testamentary substitutes that may exist.  Testamentary substitutes are assets that do not go through the probate process; transferring automatically upon death. Examples of testamentary substitutes include: jointly owned property; joint bank accounts; transfer on death (TOD) designations; payable on death (POD) accounts; assets held in living trusts; and retirement account beneficiary designations (IRA’s, 401k, 403b). Life insurance proceeds are not included in the net estate for elective share purposes.

The effect is that you simply cannot disinherit your spouse in New York State without going through a specific process involving the spouse.

Passing Away with a Valid Last Will and Testament:

Contrary to what many may believe, even if the deceased spouse’s Will explicitly disinherits the surviving spouse, the surviving spouse will not be disinherited.  The same is true if the Will does not contain any bequest to the surviving spouse.  The surviving spouse will generally have the ability to file a Right of Election in the Surrogate’s Court probate proceeding in order to receive assets equal to the elective share.  The Right of Election needs to be filed within six months of the Surrogate’s Court appointing an executor and issuing Letters Testamentary.

If the right of election is timely filed, the judge can recover bequests left to other beneficiaries in order to satisfy the spouse’s interest.  Once the spouse’s elective share is satisfied, the remaining estate will be distributed as per the deceased spouse’s will.

Dying Intestate (without a Valid Last Will and Testament):

You are said to die intestate when you pass away without a properly executed will.  If there are no children involved, the surviving spouse receives the entire estate. If there are children, the surviving spouse receives the first $50,000 and then half of the remaining estate.  The remaining portion of the estate then goes to the deceased spouse’s children, per stirpes.  The surviving spouse has to assert her right to election within either 6 months if letters are issue or within two years of her spouse’s death.  A suriving spouse may file a Right of Election if the majority of the assets go through testamentary substitutes that are not covered by the intestate distribution provided for under New York law.

Exceptions to the Right of Election:

EPTL 5-1.1A can be avoided with a pre or post-nuptial agreement.  These agreements often will contain a clause waiving the Right of Election.  In order for the waiver of a Right of Election to be valid, the waivers must have been understood, agreed to and signed.  Attorneys should be retained, by each spouse, to prepare, supervise and explain such an agreement.  If a judge finds that either party entered into the agreement without full understanding of the agreement, it may disregard the agreement in full, which would include the waiver of the Right of Election.  In addition, a spouse who has been determined to have “abandoned” the deceased spouse is disqualified from making the election.

The Elective Share & Second Marriages:

There may be many reasons why one spouse may decide to disinherit the other.  The most common is when two individuals enter into a second marriage later in life and one or both wishes to leave their assets to their children from a prior relationship.  In life, each may promise to have no interest in the other’s estate, but that does not prevent the surviving spouse from changing her/her mind upon the first spouse’s death, thus going against the wishes of the deceased spouse and causing issues in the administration of the deceased spouse’s estate.

full estate plan review should be conducted prior and subsequent to a second marriage to ensure that the proper protections are in place to ensure that each spouse’s assets will be distributed according to their wishes.

 

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

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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%.

 

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Planning Ahead in Case of an Emergency

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Keeping up with passwords and usernames in an increasingly electronic world
can be overwhelming at best. For many people even bank statements are now delivered
neatly to electronic inboxes, but have you ever stopped to think who else may need
access to all those usernames and passwords? If something were to happen to you, do
your loved ones know how to access your accounts electronically? While the mechanics
of estate planning are best left to a legal professional, preparing a list of account access
information can give both you and your loved ones piece of mind in times of emergency.

When determining what information to include you should consider who would
manage your affairs if you were unable to do so. For example, if you pay your bills
electronically, does someone know how to access the accounts? Would you like your
loved ones to have access to your email? Next, discuss the list with your loved one; they
may have additional suggestions for information to include. After you have determined
what information to include you should consider how you would like to store the
information.

When making a list of account access information it is important to keep security
in mind. There are various “In Case of Emergency” (I.C.E.) workbooks and resources
available for those who prefer to keep a hard copy of the information. Such books should
be filled out completely and kept in a safe or other secure location. Loved ones should be
informed of the book’s contents and location so that it is easily accessible in times of
emergency. Another option is to keep private information on an encrypted USB flash
drive. Password protected drives can be paired with password protected PDF documents
to give an extra layer of security. As with hardcopies of the materials, it is best to keep
the drive in a safe or other secure location. Finally, there are websites where companies
will electronically store such information for you, though some charge a monthly fee.
(This last solution may be especially helpful if you are someone who has trouble keeping
track of your usernames and passwords for your own use.)

Planning for an emergency is rarely at the top of any to do list, but ensuring that
your loved ones have the ability to manage your affairs in case of a short term illness or
other emergency can save time and ease stress. Creating a list of electronic usernames
and passwords is just one way to ensure that your loved ones have time to focus on what
counts.

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Is Estate Planning Important for Young Adults?

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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.

 

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Estate Planning for Single People

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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.

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New York Able Accounts Open For Business

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State of New York has become the 27th state in the nation to launch an ABLE program. The New York ABLE Program, named NY ABLE, is administered by the Office of the New York State Comptroller, managed by Ascensus Broker Dealer Services, Inc. and backed by Vanguard, Sallie Mae and Fifth Third Bank. NY ABLE accounts are available to eligible New York residents with disabilities.

NY ABLE allows qualified individuals with disabilities to save up to $14,000 a year in an ABLE account without jeopardizing their eligibility for federally-funded means tested benefits, such as Supplemental Security Income (SSI) and Medicaid. The funds in the account can be used for disability-related expenses that assist the beneficiary in increasing and/or maintaining his or her health, independence or quality of life. The maximum account limit for a NY ABLE account is $100,000.

Individuals with disabilities and their families are often relegated to a life of poverty as a result of not being allowed to build even the most modest levels of resources. Individuals receiving supports through Social Security, Medicaid and other publicly-funded programs are often disqualified from those programs if they have more than $2,000 worth of resources or assets. With the launch of ABLE programs nationwide, individuals with disabilities and their families will be able to allow the individual with a disability to grow their savings and not be subject to the embarrassment of poverty.

Like the other ABLE programs across the country, the NY ABLE program focuses efforts to ensure minimal costs associated with establishing and maintaining an ABLE account (which can be done online). There is a $45 annual fee payable quarterly at $11.25. If paper statements are selected, the fee increases to $13.75 per quarter ($55 annually). The NY ABLE program has a monthly maintenance fee of $2, which can be waived if the average daily balance is over $250 or by electing electronic statements at Fifth Third Bank. The annual investment fee is 0.40%.

In addition to NY ABLE, there are, as of the date of this blog, 26 other states that have launched ABLE programs: Alabama, Alaska, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia. Most of these ABLE programs are open to eligible individuals nationwide.

Eligible individuals and their families may consider looking at another State besides New York, if that state offers better benefits.  For instance, in Ohio, the ABLE program allows for a maximum balance of $445,000.00 for the accounts, while maintaining the federally mandated $14,000.00 annual limitation for deposits into the ABLE account.  This would mean a family could deposit the maximum amount of $14,000.00 for over 30 years before reaching the limit.

NY ABLE offers 5 account options for individuals that open an ABLE account.  There are four investment plans based on the level of risk one is willing to take, much like a 401k plan.  These levels are Conservative, Intermediate, Moderate, and Aggressive.  NY ABLE also offers a checking account option, allowing the account to have a debit card and checkbook associated with it.  The checking account could be very appealing to those families where the individual with a disability should experience handling a checkbook.  There is also the benefit of not having any risk, as these are FDIC insured accounts, through Fifth Third Bank.

For more information on the NY ABLE program and how to enroll, families can visit www.mynyable.org.

 

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