IRS Extends Time to File for Portability Election from Two to Five Years After Death

The IRS has added a rare spot of good news this summer. On July 8, the Internal Revenue Service released procedures extending the time when a surviving spouse can file an estate tax return to elect portability without a private letter ruling from two years after death to five years after death. Revenue Procedure 2022-32 gives surviving spouses a lot more time to take advantage of an often overlooked opportunity.

The need for a longer period of time resulted so many requests for these letter rulings that an overburdened IRS decided to implement this change. What’s behind the increasing requests leading to the extended time period?

The rise in housing prices in New York and Florida means that many homeowners with healthy retirement accounts may find themselves very close or over the federal estate tax exemption level.

Despite recent months of turbulence, the recent bull market, spanning from 2009 to 2020, brought significant growth to most people’s portfolios.

Finally, as estate planning attorneys and taxpayers become aware of the coming dramatic drop in the federal estate tax exemption, they are looking for ways to manage tax liability, and the DSUE (Decedent’s Unused Spousal Exclusion) makes good sense.

When a first spouse dies, until December 31, 2025, they have a federal estate tax exemption of $12.06 million. On January 1, 2026, the federal estate exemption will drop to $6.2 million (adjusted for inflation).

DSUE is not automatic, so the surviving spouse has to be sure to make the election on the estate tax return (Form 706).

A reminder: The estate tax return is due nine months after death, and the estate may obtain a six-month extension. However, if the estate is not required to file an estate tax return, the IRS has discretion to extend the time for filing the return.

Prior to this new rule, the IRA allowed a blanket extension of up to two years after death to file returns to elect portability if the estate was not required to file a return. After that time, the estate had to apply for a private letter ruling to file a return to elect portability.

Any surviving spouse is advised to file a portability return whenever there’s a possibility that the surviving spouse’s estate might exceed the estate tax exclusion at their death. Simply put, there’s no reason not to.

If the surviving spouse fails to elect portability and their estate exceeds the estate tax exclusion, it could lead to millions lost to estate taxes.

If you have questions, we invite you to call the office at 516-307-1236 to make an appointment to discuss your situation.

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SCOTUS Rules State Medicaid Programs Can Recoup a Larger Share of Personal Injury Settlements

Suppose you were injured due to another person’s negligence and your medical expenses were paid in whole or part by Medicaid. In that case, the state has a legal right to recover the funds it spends on your care from a personal injury settlement or award. In a case involving a Florida teen catastrophically injured more than a decade ago, the United States Supreme Court has ruled that state Medicaid programs can recover the amounts paid from settlement funds reserved for future medical expenses.

In 2008, a truck struck 13-year-old Gianinna Gallardo, leaving her in a persistent vegetative state. The state’s Medicaid agency provided $862,688.77 in medical payments on Gallardo’s behalf. Her parents sued the parties responsible, and the case eventually settled for $800,000, of which about $35,000 represented payment for past medical expenses. The settlement also included funds for Gallardo’s future medical expenses, lost wages, and other damages.

The state Medicaid agency claimed it was entitled to more than $300,000 in medical payments from this settlement, including money specifically allocated for Gianinna’s future medical expenses.

Gianinna’s parents then sued the agency in federal court, arguing that Florida should be able to recover monies only from that portion of the settlement allocated for past medical expenses in accord with a prior Supreme Court ruling.

A U.S. District Court ruled for Gianinna, and the Medicaid agency appealed. The Court of Appeals reversed the lower court’s decision. Ultimately, the Supreme Court agreed to hear the case

In a 7-2 decision, the Supreme Court agreed that Florida could recover from the proceeds allocated to Gianinna’s past and future medical care. Justice Clarence Thomas, who wrote the majority opinion, noted that Medicaid law “distinguishes only between medical and non-medical care, not between past (paid) medical care payments and future (un-paid) medical care payments.”

Justices Sonia Sotomayor and Stephen Breyer dissented. They argued that accepting Medicaid shouldn’t leave a beneficiary indebted to the state for future care that may or may not be necessary.

If you or a family member are receiving care through Medicaid and expect a settlement, it would be wise to contact our office and learn if Medicaid will zero in on you or your estate for past, present, and future medical expenses.

Chadwick Boseman

Lack of Estate Planning Turns a Private Life into Public News: Chadwick Boseman

Chadwick Boseman, the actor known for performances in “Black Panther” and “Ma Rainey’s Black Bottom” was only 43 when he died. Despite knowing he was seriously ill from colon cancer, he did not have a will, so Boseman’s family was tasked with managing his estate in a public manner, the direct opposite of how he lived his life.

The estate had significant expenses and it wasn’t too hard for reporters to find the details because there was no will. Court documents obtained by several news sources reveal the estate was initially valued at $3.8 million before taxes, court fees and funeral expenses. The final amount to be divided between his widow and is parents is $2.5 million.

In October 2020, his widow Taylor Simone Ledward petitioned the court to make her an administrator with limited authority of his estate, and then filed a probate case in Los Angeles.

Chadwick did not have an estate plan with trusts that could have provided the family with privacy, reporters and others were able to access court papers to learn details like the exact amount and breakdown spent on his funeral, moneys used to purchase burial spaces for other family members and the court’s determination on several private matters.

You don’t have to be a celebrity for details of your life to be made public. All probate and administration proceedings are public records, and copies of these documents can be obtained by anyone who shows up at the court. Creditors, family members and anyone who wants to pry into the details of your life can obtain these documents. Having an estate plan with the methods and tools best suited for your estate can keep your life private and minimize estate expenses.

But another lesson from the passing of Chadwick Boseman is that families do have the ability—even celebrity families—to treat each other with kindness and respect. His widow asked the court to divide his estate evenly between herself and Boseman’s parents. Most families facing an estate without a will end up in court, battling for an inheritance. Sadly, this is the exception and not the rule with estates. Having an estate plan can prevent the likelihood of your family facing this situation.

 

How to Grill the Perfect Steak

Annual Summer  BBQ Recipe

Buy the steak

Choose steaks best for grilling. Examples are flank steak, T-bone, tenderloin, and skirt steaks. With skirt steaks, always ask for an “outside” cut – it is larger, has more meat, and is more tender. Inside skirt steaks are thinner and tougher. They are primarily used for fajitas. The thickness of the steak will determine how long you need to grill the meat. Like rib-eyes or porterhouses, Thicker steaks will take longer to cook than thinner/leaner steaks, like skirt steak, which benefits from a marinade and a quick cook time on the grill.

Prep the steak

Bring your steak to room temperature at least 30 minutes before grilling—a cold steak won’t cook evenly. You can marinate the steaks but don’t go over two to three hours. Marinades contain acids that break down the meat and leave the steak mushy.

Whether you use a marinade, pat the steak very dry with a paper towel and season generously with salt and pepper on both sides. A wet steak will not caramelize properly, and if there is sugar in the marinade, it will burn.

Grill the steak

Fire up your grill and make sure it’s nice and hot! Whether using a charcoal grill or a gas grill, you’ll want to preheat your grill before adding the steaks. Set up two zones in your grill; the heat should be intense on one side. You should not be able to hold your hand over it for more than five seconds. On the other side of the grill, the heat should be lower but still hot. Sear the steaks for two to three minutes each on both sides, depending on the thickness of the meat. This will produce a nice, charred crust.

Move the steaks to the cooler side and flip them every minute or two. A quality digital thermometer is critical to prevent overcooked meat. I prefer the digital thermometers from Thermopen. They are professional quality and give quick, accurate readings in seconds. They may cost a little more, but it has countless applications in the kitchen.

Insert the thermometer into the thickest part of the steak (avoiding the bone or fat) and follow the temperature guide below. How long you grill the steak will depend on your desired doneness. But remember, the meat temperature will continue to rise after being removed from the grill, so you’ll want to remove the steak when it reaches about 5˚ lower than the temperatures below, as the residual heat will continue cooking the steak after it you take off the grill.

Grilled Steak Temperatures

  1. Rare: 125 to 130˚ (very red/pink)
  2. Medium Rare: 130 to 135˚ (pink)
  3. Medium: 135 to 145˚ (slightly pink)
  4. Medium-Well: 145 to 150˚ (mostly brown)
  5. Well-Done: 155˚ or higher (all brown

The two most important things to remember are never cutting into the steak while cooking (trust your thermometer) and giving your meat a chance to rest once it comes off the grill. Otherwise, the juices from the meat will dry up, leaving you with shoe leather. The juices accumulate in the meat while cooking. Letting the steak rest for about 5 minutes will allow the juices to redistribute throughout the steak. You can loosely cover the steak with foil, then let it sit for 5 minutes.

Enjoy!

IRS Actuarial Tables Updated, Retirees Can Keep More in their IRAs

It has been 20 years since the IRS last updated its actuarial tables – the ones used to indicate how much taxpayers must take from their retirement accounts. For the first time in many years, retirees can keep more money in their tax-deferred accounts starting at age 72.

The new tables reflect a longer lifespan, which is surprising, given recent reports of American life expectancy decreasing, mainly because of COVID. But we will not question the IRS’ decision, which makes it possible for retirees to keep more money in their IRAs (traditional and Roth), 401(k)s, and other tax-deferred retirement savings accounts.

Traditional IRAs and 401(k)s encouraged wage earners to save for retirement. They allow the deferral of income taxes until owners take money out of the accounts. But there is only so much waiting until Uncle Sam wants those revenues, so starting at a certain age—72— Required Minimum Distributions (RMDs) must commence and are taxed as ordinary income.

RMDs prevented taxpayers from keeping money out of the tax rolls indefinitely. However, today’s billionaires are likely to have an enormous IRA as having a heliport on their ranch in Montana.

Previously, RMDs commenced at age 70.5, but the SECURE Act of 2019 changed when RMDs began. If you reached 70.5 in 2019, you had to comply with the old law and take your first RMD by April 1, 2020. If you reach age 70.5 in 2020 or later, you must take your first RMD by April 1 of the year after you become 72.

RMDs apply to traditional IRAs, SEP IRAs, 401(k)s, 403(b), 457(b), profit sharing plans, and other defined contribution plans. Roth IRAs and Roth SEPs do not have RMDs.

Why is this good news? The IRS has effectively raised the life expectancy for Americans from 82.4 to 84.6, so retirees can extend their retirement accounts over more years. Smaller RMDs mean more funds remain in investment accounts and smaller tax bills.

Good news from the IRS!

 

Reference: Yahoo! Finance (June 15, 2022) “Good News for Retirees: RMD Formula Changing for First Time in Decades”

Are You Ready for the SECURE Act’s Next Act? SECURE 2.0 Update

The latest version of SECURE Act 2.0, Securing a Strong Retirement Act of 2022, made it through the House of Representatives on March 29. Next is getting through the Senate, which is expected soon. Once it does, and after President Biden signs the bill into law, here’s what will change:

  • Employees will be automatically enrolled in 401(k) and 403(b) plans, with a minimum of 3% and a max of 10%, and a 1% increase every year until it reaches 10%.
  • Businesses with 10 or fewer employees, businesses under 3 years old, church plans and government plans do not have to follow these guidelines.
  • Employees may opt out at any time, but the thinking is to encourage employees to save for retirement by making it an automatic deduction.
  • Policies are changed for catch ups for retirement plans, student loan repayments and employer matching of retirement contributions and small employer plan start-up credits.

There’s more: the RMD—Required Minimum Distribution—age will extend further to age 73 in 2022, to age 74 in 2029 and to age 75 in 2032. People with traditional IRAs will have a longer period of time before they need to consider taking money from their retirement funds.

If you are concerned about how this bill may impact your estate and tax plan, please call our office to make an appointment.

Scott B. Silverberg Becomes Member of Estate Planning Council of Nassau County

We are very pleased to announce that Scott B. Silverberg has become a member of The Estate Planning Council of Nassau County, a member chapter of the National Association of Estate Planners and Councils (NAEPC).

Membership in the Council is very selective. Candidates must be nominated, and endorsements provided by two members, then the Board of Directors makes the determination of whether or not the candidate meets the high standards of the Council.

In recent years, Scott has become a member of the National Board of Directors of the National Academy of Elder Law Attorneys (NAELA) and a member of the Board of Directors of the New York Chapter of NAELA. He attained his L.L.M. in Elder Law from the prestigious Stetson University School of Law.

Scott also serves as Vice-Chair of the Practice Management Committee of the Elder Law and Special Needs Section Executive Committee of the New York State Bar Association.

He has been recognized by Super Lawyers as a Rising Star since 2020.

Scott focuses his practice on estate planning, Elder Law, and Special Needs Practice. He is an associate with the Law Office of Stephen J. Silverberg, PC, located in Roslyn Heights, New York www.sjslawpc.com.

Why Did Decoration Day Become Memorial Day, and Why Does It Matter?

Every May, I find myself looking at the calendar and thinking about Decoration Day.

Most of you know the last weekend in May as Memorial Day, and this year it’s likely you have plans to gather in person with family and friends at an outdoor event. You may have summer memories of parades with veterans, high school marching bands, local Boy Scouts and Girl Scouts, barbeques, and picnics. My family took trips north to the Catskill Mountains when all the old-fashioned roadside signs highlighted the star performers scheduled for the holiday weekend. Decoration Day was a big deal.

Decoration Day began in 1868 when General John A. Logan called for a holiday to honor the soldiers who died in the Civil War. On the first Decoration Day, 5,000 people helped decorate the graves of the over 20,000 soldiers buried in Arlington National Cemetery – both Union and Confederate soldiers.

Similar ceremonies inspired the event in cities around the country. Soldiers would decorate the graves of fallen comrades with flags, wreaths, and flowers. By 1890, every Union state had a Decoration Day.

After World War I, the purpose of Decoration Day expanded to honor all soldiers who died in all American wars. It was considered a day of civic duty to honor the dead and remember why they gave their lives.

As the years and wars have come and gone, Decoration Day became Memorial Day. Unlike Veterans Day, which honors all who serve, the traditions of Memorial Day honor those who gave their lives in service to our nation.

In 1971, Congress declared a national holiday on the last Monday in May.

For many veterans who know firsthand the experience of losing a trusted comrade in battle, that Memorial Day is only about sales, barbeques, and summertime fun is frustrating. Once a solemn holiday, I believe it is time to return at least part of the day to the concept of honoring the people who lost their lives in service to our country.

What can you do?

  • Visit a military cemetery and bring small flags. Decorate graves where it seems no one has visited.
  • Visit your local fire department in the morning before the parade, when most hold a memorial service to honor fallen soldiers.
  • Support an organization that helps veterans. The rate of veteran suicide and homelessness in America is embarrassingly high.

Celebrate and enjoy Memorial Day with friends and family. But remember how it began, and let’s honor those who gave their lives to protect our democracy.

Stephen Silverberg wins tailgating cook-off contest at New York Jets game

Can My Family Inherit My Season Tickets?

Getting season tickets is a long game for New Yorkers, and everyone knows someone who waited decades before getting them. I’ve had my New York Jets season tickets for many, many years, and hope to pass the tickets to my sons. But the sporting world has become more complicated than it was.

Will professional sports owners still allow you to pass your prized season tickets along?

The answer is it depends.

A season ticket is a contract between the ticket holder and the sports team. The terms are up to the sports team. Look at the paperwork or emails you receive along with the tickets to see if they are transferable after death.

Professional sports teams have their own process and paperwork for transferring season tickets, and there may be restrictions. The team may limit transfers to family members or surviving spouses. An original death certificate may be required. Or teams may explicitly state that the tickets cannot be transferred by will or trust, allow transfers only to a spouse or close family members, or require that ticket holders follow certain procedures to transfer the tickets. Each one will be different.

If you have New York Jets season tickets and want to pass them along (or Giants, or Nicks), you’ll want to be familiar with the team’s own rules and the estate law pertaining to this asset. It’s different from other personal property.

For example, some teams have a form you will need to fill out when you purchase season tickets, designating a beneficiary to inherit your tickets. Other teams state that only a spouse can use a deceased fan’s season tickets. Still others allow transfers only to a parent, spouse, child, or sibling. If there is no surviving family member who can take over the tickets, the tickets go back to the team.

Many teams require fans to purchase a Personal Seat License (“PSL”).  The price of a PSL can range from $5,000 up to $25,000 depending on the location of the seat. Owning a PSL gives you the right to purchase tickets for a specific seat. If you want four seats, you must purchase four PSLs. The price of the tickets is based on the location of the seats. The fan pays a large fee to buy a license for particular seats and may then buy season tickets for those seats. Most teams allow PSLs to be transferred during their lifetime or upon death.

However, not every team operates the same. The New York Giants require a PSL for every seat in the stadium. The New York Jets only require PSLs for seats in the two lower decks. No PSL is necessary for seats in the upper deck. Before implementing PSLs, the Jets allowed the transfer of season tickets to anyone. Now, only seats with PSLs can be transferred. Where there is no PSL, the tickets are forfeited upon the death of the ticket owner.

If you’ve got questions about transferring season tickets to family members, please call the office to make an appointment – 516-307-1236.

MEDICAID ALERT: New Medicaid Community Care Look Back Rules Start October 1, 2022

If this sounds familiar, you’re right—recent years have seen many extensions of rules regarding Medicaid. But for New Yorkers, this most recent change to Medicaid Community Based Care is a result of a New York State’s 2022-2023 budget and not the pandemic.

There has always been a five-year lookback period for Medicaid applicants seeking coverage for long-term nursing home care. Any transfer or sale of assets within a five year makes an applicant ineligible and nursing home costs have to be paid by the person or the family until the person spends down enough of their assets to become eligible.

The look-back is now being applied to Medicaid Community or Home Care. This is a first for New York State, and it requires seniors to do advance planning if they wish to receive Medicaid Community and Home Care services and protect their assets.

After October 1, 2022, anyone applying for Medicaid Home Care benefits will be subject to at least a 15-month lookback. It’s also possible the person and their spouses will have to provide records of up to 2.5 years before the application date.

The lookback period is not as long as for long-term nursing care, but this will still have a negative impact on those who need Medicaid Home Care.

We can’t stress this enough: As of right now, there is NO look-back or penalty period for Medicaid Home Care benefits. This includes home health aides, adult day care and community based services.

If you are considering applying for Medicaid for a loved one or for yourself, you need to act now. Once these rules change, you or your loved one may lose their eligibility. The time to plan for this care is today. Not tomorrow, not next week.

In time, the Medicaid Home Care lookback period will increase to 30 months, and an additional month will be added until the period for asset transfer records reaches 2.5 years.

As a premier Elder Law firm, we help families and individuals plan to protect assets and ensure eligibility for needed care.  Call us today at 516-307-1236 and learn how we can help you and your family.