Elder Law & Estate Planning

1. Elder Law & Estate Planning By David R. Okrent, CPA, Esq. The Law Offices of David R. Okrent www.davidrokrentlaw.com Available for consultation call 631-427-4600

2. Mr. Okrent is a CPA and an attorney, with prior experience at both KPMG Peat Marwick and the IRS as a Revenue Agent and has more than 29 years. • He is the recipient of the Long Island Coalition for the Aging, Inc. " Man of Spirit" Award for his commitment to the field of Aging, in 2006 Mr. Okrent. • Honored by theLong Island Alzheimer Foundation as "Angels of Spirits,” Day Haven, & the Long Island Business News. • Co-Chair of the Elder Law Committee for the Suffolk County Bar, Member of the National Aging in Place Council & the Executive Committee of the NY Bar Association’s Elder Law Section. The Law Offices of David R. Okrent

3. Ten Most Common Mistakesin Elder Law & Estate Planning • No Estate Plan & Beneficiary Designation Wrong/Missing • No Documents or they are Outdated • The Wrong Executor/Trustee/Agent in POA and HCPOA • Failure to fund/Coordinate Living Trust and Assets • Failure Properly Execute Power of Attorney w/Gift Rider • Failure to Sign Documents and Incomplete Will • Failure to Properly Insure Assets inside a Living Trust • Failure to Consider Income Tax Impact of Estate as well Estate Tax • Failure to Plan for Long Term Care • Failure to Consult with Qualified Professionals The Law Offices of David R. Okrent

4. Type of Long Term Care and Cost • Home Care • Day Care • Social Model • Medical Model • Assisted Living • Nursing Home The Law Offices of David R. Okrent

5. The Law Offices of David R. Okrent How Will the Care be Paid for? • Medicare • Private Pay • Long Term Care Insurance • Medicaid

6. The Law Offices of David R. Okrent Medicaid Limits for a Single Person • Income • $50.00 a month under Institutional Medicaid • $862.00 a month under Community Medicaid • However, more can be kept under Community Medicaid for any type of expenses with a “Pooled Income trust” • Resources • $15,150 in non-qualified assets • Unlimited amounts in certain *tax qualified retirement accounts in a Medicaid pay status (*may be subject to recovery) • Prepaid funeral • A Home…….see next slide for important details

7. Medicaid and the Home • Equity in the Home must be equal to or less than $858,000.00, unless occupied by a • Spouse • Child under the age of 21, or • Child certified blind or disabled • Intent to return home • Purchase of a Life Estate in the home of another The Law Offices of David R. Okrent

8. Community Medicaid & Married Couples • One applying • Spouse - A Home of any value • Resources: • Applicant $15,150 and spouse can have Basic $74,820 – $123,600 • In addition unlimited amounts in certain Tax-Qualified-Retirement accounts in a Medicaid pay status • Be careful with annuities • Monthly Income • Applying spouse $391 and community spouse can have $3,090.00 (total $3,481.00) or Pooled Trust • Both applying • Income $1,253 + Pooled Trust • Home subject to the limit, Retirement accounts in pay status and $22,250.00 • Spousal Refusal The Law Offices of David R. Okrent

9. Nursing Home Medicaid and the Married Couple • Resources: • Applicant: • Basic $15,150 • In addition unlimited amounts in certain Tax-Qualified-Retirement accounts in a Medicaid pay status • Be carful with annuities • The Community Spouse is permitted: • A Home of any value • Basic $74,820 – $123,600 • In addition unlimited amounts in certain Tax-Qualified-Retirement accounts in a Medicaid pay status • Be careful with annuities • Monthly Income spouse $3,090.00 and Applicant $50.00 • Spousal Refusal The Law Offices of David R. Okrent

10. Transfer of Assets & the 5 year Rule • Does not apply to Community Medicaid • Does not apply if there is a special exemption • The transfer penalty • For every $13,053 a person transfers they are ineligible for Nursing Home Medicaid for one month, starting with the …….. • The month the donor • Is in a nursing home • has a medical bill in excess of income • Is otherwise eligible for Medicaid, and • applies for Medicaid and is denied solely based on the transfer penalty • Medicaid can only penalize for transfers made within 5 years of applying for Nursing Home Medicaid The Law Offices of David R. Okrent

11. Estate tax • NY estate tax exemption • April 1, 2017 – January 1, 2019 the exemption will go to $5,250,000 and thereafter will grow with inflation. • Maximum Tax Rate 16% • During this phase in Gifts in Excess of the Annual Exclusion after April 1, 2014-January 1,2019 are pulled back into the “Gross Estate”. • If the estate and gifts exceed exemption by 5% the increased exemption goes away, i.e. estate of $5,376,000 draws a tax of about $324,050. • Federal Exemption 2018 10,000,000 (adjust for inflation $11,200,000) • Annual Exclusion gifts in 2018, $15,000 The Law Offices of David R. Okrent

12. 2017 Federal Tax Reform • Tax brackets, tax rates change and Alternative Minimum Tax. New Rates Pre-TCJA rates 10%, 12%, 22%, 24%, 10%, 15%, 25%, 28%, 32%, 35%, 37% 33%, 35%, 39.6% • children with unearned income apply rates applicable to trusts and estates to the net unearned. • Capital gains and qualified dividends did not change the income levels for the 15% and 20% rates did. The 15% rate: $77,200 for married joint, $51,700 for heads of household, and $38,600 for individuals. The 20% rate: $479,000 for married joint, $452,400 for heads of household, and $425,800 for individuals. • Alternative minimum tax (AMT) for individuals, kept the tax, but increased the exemption. The AMT exemption amount is now $109,400 for married joint and half for married separate, and $70,300 for individual. The phaseout of thresholds at $1 million for married joint & $500,000 for all other taxpayers. For corporations it has been repealed. The Law Offices of David R. Okrent

13. 2017 Federal Tax Reform • Personal and dependent exemptions are eliminated • Child tax credit increased - from $1,000 to $1,400, phase out at modified adjusted gross income (MAGI) of $200,000, married filing Jointly which is $400,000. • New credit for non-child dependents – A new $500 nonrefundable credit for dependents who do not qualify for the child tax credit. • Standard deduction increases - $12,000 for a single taxpayer, $18,000 for a head of household taxpayer and $24,000 for taxpayers who file jointly. The Law Offices of David R. Okrent

14. 2017 Federal Tax Reform • Itemized deductions eliminated, limited or modified • Miscellaneous itemized deductions eliminated • Employee business expenses, including Tax preparation fees, Investment interest expenses. • Personal casualty and theft losses (except for certain losses in certain federally declared disaster areas). •  State and local income taxes total $10,000 ($5,000 if MFS). • Home mortgage interest new home mortgage is limited to interest on a maximum of $750,000 ($375,000 if Married filing separately) and non on home equity Loans. •  Charitable contributions: Can donate up to 60% of their adjusted gross income, rather than up to 50% for cash to pubic charities and certain private foundations. • Gambling Losses any otherwise allowable deduction incurred • Medical expenses for 2017 and 2018, medical expenses in excess of 7.5% of AGI. In 2019, the threshold will increase to 10% of AGI. The House. • Suspension of the “Pease” limitation. The Law Offices of David R. Okrent

15. 2017 Federal Tax Reform • “Above-the-line” deductions • Alimony • Tuition and fees deduction expired under previous law and was not renewed by the TCJA. • Above-the-line deductions that stayed the same • Educator expense deduction (K-12 educators can deduct up to $250 per year for unreimbursed classroom supplies.) • Student loan interest of up to $2,500 can be deducted by qualifying taxpayers for interest paid on student loans. • Health savings account (HSA) deduction. • Deductions for self-employed taxpayers (SE tax, SE health insurance, SE qualified retirement plan contributions). • IRA deduction remained but eliminates the rollback correction for Roth IRAs • Exclusion for bicycle commuting reimbursements. • Moving expenses are disallowed The Law Offices of David R. Okrent

16. 2017 Federal Tax Reform • Education benefits : • The American Opportunity Credit, remains a credit of up to $2,500 per year for the first four years of college education, and the lifetime learning credit, a credit of up to $2,000 per year for qualifying education expenses. • Can continue to use savings bonds for education, educational assistance programs provided by employers, 529 plans and Coverdell education savings plans to save for college. • 529 plans can now be used for K-12 expenses, up to $10,000 per year per per-student. • Taxpayers whose student loans are cancelled because death or total and permanent disability may be eligible to treat the cancellation of debt as tax-free. • Increase to Able Accounts. The overall limit on contributions remains the same ($14,000 for 2017). After the limit is reached, but the designated beneficiary may contribute an additional amount up to the lesser of the Federal poverty line for a one-person household as determined for the preceding calendar year, or the individual’s compensation for the tax year. • Rollovers between qualified tuition programs qualified tuition programs under section 529 may be rolled over to an ABLE account without penalty provided that the ABLE account is owned by the designated beneficiary of the 529 account or a member of the designated beneficiary’s family. The rollover counts toward the overall limitation on amounts that can be contributed to an ABLE account in a tax year. Amounts in excess of the limit would be included in income as provided under section 72. The Law Offices of David R. Okrent

17. 2017 Federal Tax Reform • Health care penalty eliminated. • Passthrough income deduction taxpayers may claim a new deduction for qualified business income, Terminating S Corporations and ESBTS. • Esbts (Electing Small Business Trusts) charitable contributions • Estate, gift, and generation-skipping transfer taxes. •  Senate proposal to specific identification method. The Law Offices of David R. Okrent

18. A & A Veterans benefit • The A&A Pension can provide up to $1,830 per month to a veteran, $1,176 per month to a surviving spouse, or $2,170 per month to a couple. • Any War-Time Veteran with 90 days of active duty. • To qualify medically, Veteran or Surviving Spouse requires assistance of another person to help with activites of daily living • Deductible Medical Expenses include: • Payments for meals, lodging, health care, custodial care and other services provided by a facility (assisted living, independent living, etc.) are deductible medical expenses as long as the Veteran: • Resides in a facility that is staffed 24 hours/day • Needs assistance with 2 Activities of Daily Living (ADLs) • An in-home attendant with health care or custodial care. The Law Offices of David R. Okrent

19. A & A Veterans benefit • Net Worth: • Asset limit:  $123,600. • Net worth includes monthly income multiplied by 12 and added to total. • Certain medical expenses can be deducted from income (see below). • Look-Back and Penalty Periods for transfers after October 18, 2018: • 3 year (36 month) look-back period. • Applicant can return assets and un-do a penalty period (in whole or in part) within 60 days of a penalty period decision. • Penalty period cannot exceed 5 years. • Transfers to a trust for a disabled child will not be penalized. • Real Property • Primary residence is excluded from net worth • Acreage limit: Primary residence plus 2 acres is excluded. Additional acreage will be counted toward net worth unless it is unmarketable. • Proceeds from the sale of real property, after benefit entitlement, not counted as long used to purchase another property in the same year.  The Law Offices of David R. Okrent

20. Advance Directives The Law Offices of David R. Okrent

21. Methods of Protecting Assets • OUTRIGHT GIFTS • LIFE ESTATES • TRUSTS The Law Offices of David R. Okrent

22. Okrent’s Transfer Matrix The Law Office of David R. Okrent

23. Thank You…… Attendees only - Schedule an Office Consultation this morning and pay only $175 for a 1 hour consultation (a $400 value). By David R. Okrent, CPA, Esq. The Law Offices of David R. Okrent www.davidrokrentlaw.com 631-427-4600