Where Elder Law and Estate Planning Meet

Pashman Stein Walder Hayden’s (PSWH) Trusts and Estates’ group provides clients with advice to help them preserve, manage and plan for the transfer of their assets and wealth.  We assist in developing planning strategies designed for each client’s unique situation, to achieve their personal goals, while minimizing the gift, inheritance and estate tax impact of implementing those strategies.  While this traditional estate planning remains as important as ever, PSWH’s Trusts and Estates/ group has expanded to include an Elder Law practice.  Our Trusts and Estates/Elder Law group now also addresses the specific needs of aging individuals, people with disabilities and their families, providing a more comprehensive and holistic approach to planning for our clients while providing future options in case of an emergency.


It is important to note that a Last Will and Testament, a Durable Power of Attorney, an Advanced Directive for Health Care/Health Care Proxy and Directive (commonly referred to as a Living Will) are basic estate planning documents that all individuals should have in place.  Without them, in the event of incapacity or death, your specific wishes and goals may not be realized.  The Last Will and Testament memorializes your wishes relating to your estate after you have died, while the other documents are important during your lifetime if you are unable to make decisions for yourself.

It is a common misconception that elder law is simply estate planning for elderly individuals. While it is imperative to ensure that older people (just like their younger counterparts) have appropriate estate planning documents in place to cover all of the “what ifs”, and that those documents are reviewed periodically to ensure that they continue to make sense under the circumstances and comply with current law, elder planning is much more than that.  The focus of elder law is on planning for common issues that arise when individuals live longer.  The objective is not only to help them preserve family wealth, but also live with dignity.

For instance, many individuals ultimately require some level of care as they get older, from extra assistance in the home to around the clock long-term care in a nursing home.  Many people are understandably concerned about how this care will be funded.  PSWH’s Trusts and Estates/Elder Law group now provides advice regarding asset protection planning that specifically includes educating our clients about the tax and legal issues surrounding long-term care, Medicare and Medicaid.  We are also able to provide tailored recommendations to minimize long-term care costs, with particular attention to how those recommendations may impact your other estate and tax planning goals.

Other issues commonly covered under the umbrella of elder law include determining what sources are available to fund long-term care, how to qualify, and how to apply for those needs based benefits.  They also include guardianship and conservatorship actions when individuals have not put the appropriate estate planning documents in place before mental capacity has declined.  An elder law attorney can also assist individuals with diminished capacity that may be suffering from elder abuse, including physical, emotional and financial abuse and exploitation.

Many of you have elderly parents or other family members who currently need elder planning.  Additionally, even if you have estate planning documents in place, there may come a time where the focus shifts from traditional estate planning to elder law planning.  Advance planning before an emergency situation arises provides individuals with a wider array of options.

If we can assist you or your family with issues relating to elder law and/or planning for individuals with disabilities, please contact Joseph L. Goldman (jgoldman@pashmanstein.com) or Naomi Becker Collier (ncollier@pashmanstein.com)..

Before You Retire: Steps for Planning In Advance

By Joseph L. Goldman, Esq. and Naomi B. Collier, Esq.

The article below appeared in the November issue of Meadowlands USA newsletter.

As the average life expectancy in the United States seems to increase with each passing year, having a secure retirement plan is more important than ever. Retirement planning encompasses much more than simply saving enough money to live on after you stop working—it is an ongoing and dynamic process.

While it is tempting to put it off, the best time to start planning for retirement is well in advance of when you are actually ready to retire.

Consider the following suggestions as you start down the long, winding road that is your retirement:

  1. Get organized. Organizing and understanding your finances is a great starting point. Create a balance sheet that contains your financial information, including asset type and value, and how owned. Consider how the assets will be distributed upon your death. Consolidate your account log-in information and corresponding passwords—and ensure that your advisors and trusted family members/friends can access the information in the event of your incapacity or death.
  1. Build your team. Pick professional advisors that you trust to work with you towards your goals. Make sure your team works together. By gathering a well-rounded team, including an attorney specializing in estate planning, a financial planner, an accountant and an insurance adviser, you will have put in place a system with built-in checks and balances.
  1. Create a budget and savings plan. Carefully monitor your spending patterns and expenses to determine how much you will need to live during your retirement years. This will enable you to work with your advisors to create realistic current and projected budgets, and tailor your savings approach. Review spending and expenses (at least annually) to reflect any significant changes.
  1. Consider retirement goals. Think about your life after retirement. Consider where you might live, your desired retirement lifestyle, any ongoing obligations, as well as expected and unexpected health care expenses. Consider the impact of these factors on your finances in retirement.
  1. Review your estate planning documents. Review your existing estate planning documents to make sure they still make sense. Have the documents reviewed by a trust and estates attorney to ensure that they reflect current law. If you do not have documents in place (including a will, durable power of attorney, and health care proxy/living will) consult with an attorney qualified to assist you with preparing and implementing these documents.
  1. Review your beneficiary forms. Even if you have estate planning documents in place, be mindful that certain assets pass outside of a will. For example, life insurance, IRAs and retirement plans generally pass to the designated beneficiaries. If your beneficiary designation forms are not coordinated with your estate planning goals, your objectives may not be realized. Be aware that failure to designate individual beneficiaries may also have adverse income tax consequences.
  1. Consider estate tax implications on your estate. It is also important to discuss with your attorney whether your estate will be subject to estate tax. While the federal exemption has increased dramatically over the years ($5,450,000 in 2016, indexed for inflation), some states continue to have much lower exemptions ($675,000 in New Jersey). If your estate will be subject to estate and/or inheritance tax, consider how it will be paid and/or whether you can minimize those taxes.
  1. Consider long term care implications on your estate. Consider how you will fund your long term care, if necessary. Are your assets sufficient to self-fund such care? Alternatively, evaluate whether long term care insurance is a viable option or if qualifying for government benefits might be necessary. Consult an attorney versed in elder law to better understand the options available to you.
  1. Talk about it. Most people do not want to think about what will happen when they die or become incapacitated, let alone talk about it! However, having a discussion with the important people in your life when you still can, before you are in a crisis situation, beats the alternative. Ensure that everyone understands your wishes as related to health care decisions, why you made certain provisions in your estate planning documents and how you wish your affairs to be handled if you are unable to handle them yourself.

Not all roads to retirement are alike and events often occur that require adjustments to your plan.  However, if you create a retirement plan in advance, select the right advisors to help you implement and oversee your plan and make adjustments as necessary, you will go a long way to helping yourself enjoy a successful and rewarding retirement.

New Jersey Passes Law Repealing Estate Tax By 2018

On October 14, 2016 Governor Christie signed into law the much discussed gas tax hike bill, ultimately repealing the New Jersey estate tax in its entirety.  Beginning on January 1, 2017, a decedent will not be subject to New Jersey estate tax unless his or her taxable estates are greater than $2,000,000 (a significant increase from the current $675,000 New Jersey estate tax exemption).  For individuals dying on or after January 1, 2018, the New Jersey estate tax is repealed entirely.  A decedent domiciled in New Jersey and dying in 2016, however, will remain subject to New Jersey estate tax if the value of his or her taxable estate exceeds $675,000.

Despite the imminent repeal of the New Jersey estate tax, New Jersey will continue to impose an inheritance tax on transfers after death.  Unlike the estate tax, which is based on the size an estate, this tax is based on the relationship between the decedent and the beneficiary receiving the assets.  There is no inheritance tax imposed on Class A beneficiaries (spouse or civil union or domestic partner, lineal ancestors, descendants, and stepchildren) and qualifying charities.  The rate of inheritance tax imposed on transfers and exemptions available to other individuals depends on the Class that they fall under.  The New Jersey inheritance tax rates range from 11% to 16% (the applicable rate depends on the transfer amount and the class of beneficiary).  The inheritance tax excludes the transfer of certain assets, including retirement benefits and life insurance paid directly to a beneficiary or trust.  However, the inheritance tax is imposed on transfers for less than fair market value (gifts) that occur within three years of death to beneficiaries who are not Class A or qualified charities.

In light of the elimination of the New Jersey estate tax, you should consider reviewing your estate plan to ensure that it achieves your objectives.  The repeal of New Jersey’s estate tax does not negate the need for estate planning.  There are many issues to consider during the planning process that have nothing to do with New Jersey estate tax planning.  The federal estate tax exemption remains at $5.45 million, indexed for annual inflation, and inheritance planning might still be relevant, depending on your individual circumstances.  A well thought out estate plan will let you decide for yourself what is best for you and for your family, both during your life (in the event of incapacity) and after your death.

If you have any questions about how the phase-out and elimination of the New Jersey estate tax impacts your specific planning, please contact us.  We are happy to assist you in achieving your estate planning goals.

If you would like to discuss these issues further, please do not hesitate to contact Joseph L. Goldman, Esq., or Naomi B. Collier, Esq., at 201-488-8200.

Joe Goldman Interviewed by NJ1015 Radio

Partner Joe Goldman is interviewed by NJ1015 radio. See link for full article: http://nj1015.com/survey-majority-of-american-parents-have-a-will/

Another Year, Another Chance to Review Your Estate Plan

By Joseph L. Goldman, Esq.

In the words of John Lennon:  “Another year over.  And a new one just begun.”  So this year, among your New Year’s resolutions, why not review your existing estate plan and estate plan documents (Will, Power of Attorney, Health Care Directive)?

For 2015, the top federal estate tax rate remains at 40%.  The federal estate tax exemption amount is up to $5,430,000 per individual.  That amount is $10,860,000 for a married couple, if each owns at least $5,430,000 in his or her own name, or if they take advantage of “portability”.  But remember, there is no “portability” for state estate tax purposes.

The New Jersey estate tax exemption amount remains at only $675,000.  For couples with total assets of over $1,350,000 that means there can be New Jersey estate tax due on the death of the surviving spouse, even if their assets are well below the federal estate tax threshold.

A big change in the New York estate tax exemption amount took place last year.  An increase to the New York exemption is being phased in so that it will conform to the federal exemption amount in 2019.  For decedents who die prior to April 1, 2015, the New York estate tax exemption amount is $2,062,500.  For decedents dying after April 1, 2015, the exemption is $3,125,000.  For couples with total assets of over $6,250,000 there can be New York estate tax due on the death of the surviving spouse after April 1, 2015.

Non-tax considerations, including changes in your family situation, such as marriage or divorce, births or deaths, or a change of residence to another state, may also call for updating your estate plan documents and your estate plan.

Consider also the use of gifting strategies, life insurance planning, and use of lifetime trusts for both tax and non-tax purposes.  Even if you fully used up your federal state and gift tax exemption in 2015 ($5,340,000 for an individual, $10,680,000 for a married couple), the increased 2015 exemption amount ($5,430,000) allows you to make additional gifts of $90,000 ($180,000 for a married couple) in 2015 beyond the $14,000 annual gift tax exclusion gifts per donee.  But be careful what you give away.  A gift of appreciated property can result in a loss of the stepped-up basis the donee would take if he or she inherited the property.  The capital gain on the subsequent sale of that property could exceed any estate tax savings.

Finally, don’t forget to check your beneficiary designations on retirement plans and life insurance to make sure they are up to date.

Here’s hoping you stick to your New Year’s resolutions in 2015!


IRS Releases Draft of Streamlined Application for Tax-Exempt Status

By Joseph L. Goldman, Esq.

IRS has released Draft Form 1023-EZ (Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code) and its draft instructions.  The 2-page Form 1023-EZ is a shorter version of the regular Form 1023 that may be used if an organization meets specific criteria (determined by completing the Form 1023-EZ Eligibility Worksheet).

The new form has been created as a method for smaller organizations to apply for exemption under Code Sec. 501(c)(3).  Form 1023-EZ (like Form 1023) provides IRS with information to determine the applicant’s exempt status and private foundation status.  Upon acceptance of the form, IRS will issue a letter that provides written assurance about the organization’s tax-exempt status and its qualification to receive tax-deductible charitable contributions.

Organizations that would normally file Form 1023 will be able to file Form 1023-EZ if they meet the following requirements:  no more than $200,000 of projected annual gross receipts in any of the next three years; annual gross receipts of not more than $200,000 in any of the past two years; total assets not in excess of $500,000.

An organization is a tax-exempt organization under Code Sec. 501(c)(3) if it is organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.  With limited exceptions, an organization must notify IRS that it is applying for Code Sec. 501(c)(3) status.  To obtain recognition of exemption from federal income tax under Code Sec. 501(c)(3), an organization must generally file the 26-page Form 1023 (Application of Exemption Under Section 501(c)(3) of the Internal Revenue Code).

The Form 1023-EZ Instructions remind taxpayers about key requirements for an organization to be exempt from federal income tax under Code Sec. 501(c)(3).  It must be organized and operated exclusively for one or more exempt purposes.  Further, an organization doesn’t qualify for Code Sec. 501(c)(3) status if a substantial part of its activities is attempting to influence legislation.  In addition, all Code Sect. 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for elective public office; although non-partisan voter education activities (including public forums and voter education guides) are allowed.

IRA Rollovers to be Limited

A law limits the number of IRA rollovers that can be made in any 1-year period to one.  Recently, the Tax Court held that the limit applies not to each separate IRA an individual may own, but to all of his or her IRAs.  It reached this result even though the  IRS had indicated in proposed regulations and tax publications that the limit applies to each IRA.  Thus, an individual with three IRAs could make three rollovers in a 1-year period under the IRS guidance but only one under the Tax Court decision.

After considering the matter, the IRS has announced that it will adopt the more restrictive view of the Tax Court.  However, the new rule won’t apply to any rollover that involves a distribution occurring before 2015.

The IRS emphasized that an IRA owner will continue to be able to transfer funds from one IRA trustee directly to another as frequently desired.  Such transfers are not rollovers and thus are not subject to the limit.

Major Changes to New York’s Estate and Gift Tax Law

By Joseph L. Goldman, Esq.

Effective April 1, 2014, the 2014-2015 “Executive Budget” makes significant changes to New York’s estate tax and gift tax.  These changes will have a major effect on estate planning for New York residents.  While these changes provide some tax relief for the moderately wealthy, wealthier New Yorkers will see little, if any, change, except under certain circumstances that will cause an increase in estate tax.

The Executive Budget increases New York’s basic exclusion amount ($1 million per decedent prior to April 1, 2014) to $2.0625 million per decedent as of April 1, 2014, with gradual increases annually until January 1, 2019 when the basic exclusion amount will reach $5.25 million.  Thereafter, it will be indexed for inflation, which should link New York’s basic exclusion amount to the federal amount (presently $5.34 million, but also indexed for inflation).  The basic exclusion amount is increased as follows:


Because of a quirk in the way New York calculates its estate tax, the basic exclusion amount is rapidly phased out once the value of a decedent’s taxable estate exceeds the basic exclusion amount in the year of death, and is totally phased out when the value of a decedent’s taxable estate is greater than 105% of the basic exclusion amount.

The Executive Budget implements the exclusion by allowing a credit of the “Applicable Credit Amount” to be taken against the tax imposed by the statute, as follows:

  • If the New York taxable estate is less than or equal to the basic exclusion amount, the Applicable Credit Amount will be the amount of the tax so computed and, therefore, serves as a wash.
  • If the New York taxable estate is up to 5% greater than the basic exclusion amount, the Applicable Credit Amount will be limited based on a formula, resulting in a rapidly increasing tax for each percent over the basic exclusion amount.
  • If the New York taxable estate is greater than 105% of the basic exclusion amount, no credit is allowed.

The Executive Budget keeps the top bracket at 16%.  Nevertheless, there has been a change in bracket structure.  As a result, estates valued in excess of 105% of the basic exclusion amount will have the same tax they would have had under the old law.

The rates included in the Executive Budget only cover the period for a decedent dying on or after April 1, 2014 and before April 1, 2015.  While this might have been an error that will require a technical correction, there is some question as to whether it is a time-limited compromise, test period or mandate reached during the budget negotiations.

New York has not had a gift tax since 2000 when New York’s gift tax was repealed.  Consequently, a commonly used estate planning technique to reduce the size of a New York resident’s estate tax was to make gifts within the allowable federal exemption.  Not only was the donor able to make a completed gift without incurring gift tax liability in New York, but so long as she had no retained an interest in the gifted property, she was assured that the value of the gift would not come back into her estate for estate tax purposes.  The Executive Budget provides that taxable gifts made within three (3) years of death (if not otherwise includible in the federal gross estate) must be added back to a decedent’s New York estate for estate tax purposes.  The “addback” does not apply to  gifts made (i) when the decedent was not a resident of New York, (ii) before April 1, 2014, and (iii) after December 31, 2018.  In general, “taxable gifts” do not include annual exclusion gifts (currently $14,000 per done) and payments made directly for tuition and medical expenses.  The addback, however, does not appear to exclude gifts of real or tangible personal property outside of New York State, which, if owned at a decedent’s death, would not be subject to New York’s estate tax.

The Executive Budget has repealed New York’s generation-skipping transfer (“GST”) tax, applicable to taxable distributions to “skip persons” and taxable terminations where “skip persons” receive a trust distribution on its termination.

New York residents may need to modify their estate plan and estate plan documents to reflect these changes to the New York State estate and gift tax law.  Pashman Stein tax attorneys are prepared to advise you and assist you in how best to incorporate these changes into your estate plan.