Asset protection is a key consideration in estate planning.   Most people seek to protect their assets through liability insurance – but what if you no longer have liability insurance in place?

A standard homeowners insurance policy typically includes some form of general liability insurance – like if a guest falls down the stairs or a friend slips in your kitchen.  Liability insurance is designed to protect you from claims made when you are in some way considered to be at fault.

That’s great – but say you or your parents decide to move to a retirement community or apartment.  Once the home is sold homeowners insurance is no longer in effect… but you could still be at risk of claims or even lawsuits.

Liability insurance policies tend to be relatively affordable.  Shop around and take the time to fully understand the terms, the situations that are covered, and the limits of the coverage you will receive.

Downsizing is a great financial move for many people; plus it can make daily life a lot simpler.  Just make sure you take care of the details:  Sometimes downsizing in one area requires a little bit of upsizing in another.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Great estate plans accomplish a number of goals.  Chief among them is avoiding probate.  Owning property jointly is one way to avoid probate, and designating someone as the beneficiary is another.  You can even designate a beneficiary for property, using strategies like Transfer on Death and Payable on Death provisions.

Designating a beneficiary is a good way to avoid probate.  Setting up a Living Trust is a better way.  Why?

• Timing. Living Trusts allow you to specify when the beneficiary can access funds or take control of property.
• Creditor protection. Structured properly, a Trust can help prevent creditors from tapping assets held in the Trust.
• Ease of management. If you are disabled or incapacitated, a Trust can allow the trustee to take over management of assets so decisions can be made on your behalf.
• Avoids probate. If your beneficiary passes away before you do, you’ll have to name another beneficiary – or the asset(s) in question will need to enter probate.

Living Trusts are flexible estate planning tools; beneficiary designations are not.  Contact us to see how a Living Trust can accomplish a number of goals – both while you are living and after you pass away.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Sometimes our clients wish for a loved one or friend to be able to live in a home after they (our client) passes away, without transferring ownership to that loved one or friend.  (For example, you may wish for your brother, who lives with you now, to be able to live in your home until he passes away, at which time your kids will take possession of the home.)  A simple way to create what is called a “life interest” in real estate is through a Trust.

Here’s how it works:  You transfer ownership of your home to a Trust.  You name your brother (or someone else if you prefer) as the Trustee and beneficiary, and name another person as the successor Trustee and contingent beneficiary.  When you pass away your brother can stay in the home.  When he passes away, the successor trustee passes ownership of the home to your children, who can move into the home, sell it, etc.

That way your children’s long-term interest in your home is maintained and protected, but your brother has a place to live until he passes away.

Is the process often more complicated?  Of course – this is just a basic overview.  Make an appointment to learn how life interests can provide for a loved one after you pass away, while also ensuring the right beneficiaries eventually take ownership of the property.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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For many Americans, their home is their biggest investment and asset – as well as a repository of lasting family memories.  Many people hope to keep their home in the family after they pass away; some go so far as to transfer ownership in the property to their children before they die.

Transferring ownership can help keep the home in the family, but it also can create unintended tax consequences.  When you transfer ownership you give up your exemption on capital gains.  Currently, you can exempt $250,000 in capital gains (or $500,000 if you’re married) when you sell the home.  The math is simple:  Subtract the purchase price (plus any qualifying improvements) from the amount you sell the house for.  The remainder is considered to be profit, and profits that do not exceed the exemption limit are not taxed.

If you transfer ownership to your kids, you lose your exemption, even if you maintain a life estate (meaning the right to stay in the home until you pass away.)  If you sell a remainder interest to your children, you must report any gain on the sale, and you may also have to pay gift taxes since the IRS considers the difference between full market value and the “consideration” your children pay as a gift.

Instead of transferring ownership directly through a sale or as a gift, consider setting up an Irrevocable Trust instead.  With a Trust your home will pass to your children, it will not be treated as a capital gain, and your heirs can avoid the time and cost of probate.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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For years New York residents with homes in other states – especially states like Florida, with no state estate tax – have changed their residency in order to take advantage of the tax-friendly treatment of their estates.  Twenty-two states currently impose estate tax or inheritance tax, but starting in 2013, Ohio won’t be one of them.

That’s great news for Ohio residents; the current estate tax exclusion amount in Ohio is slightly under $340,000, the smallest exemption in the U.S. among states imposing an estate tax.  (The exclusion in New York is currently $1 million.)

That could also be great news for you if you want a second home in a nearby state and may someday consider changing your residency status for estate tax purposes.  (Currently the closest states with no estate or inheritance tax are New Hampshire, West Virginia, and Virginia.)

Of course you don’t have to change your residence to minimize or avoid estate taxes.  We can help create a comprehensive estate plan that minimizes the impact of taxes, ensures your assets are protected and, eventually, that your wishes are carried out.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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A few weeks ago, the Wall Street Journal reported on how the cost of caring for elderly parents continues to rise and can place a major financial burden on their children.  According to the U.S. Health and Retirement study, almost 10 million people over the age of 50 are helping to take care of their elderly parents, three times as many as in 1994.

The average cost?  $303,000 per person, factoring in lost wages and reduced pension, retirement, and Social Security benefits due to leaving the workforce earlier than expected in order to care for an elderly parent. As you can imagine the cost of care is even higher here on Long Island.

If you are taking care of an elderly parent – or suspect you may need to in the future – contact us for advice and guidance. We are centrally located in Smithtown.  There are steps you can take to reduce the overall cost and make providing care easier, including asset protection and estate planning strategies, putting the right legal documents in place, helping a parent qualify for government programs, and seeking assistance from community organizations.

Our elderly parents deserve our help; just make sure you do everything possible to reduce the financial burden providing that care can place on you and your family.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Even with advances in technology, our lives are still filled with paper – some more important than others, like financial documents and critical estate planning documents.   Those papers are worthless to you and your heirs and beneficiaries if they get lost, though.  Here is a basic list of important financial and estate planning documents you should store in a safe place:

• Estate planning documents: Powers of attorney, healthcare directives, living wills, Trust documents
• Real estate documents: Mortgages, deeds, closing statements, receipts showing the cost of renovations or major repairs, appraisals, title documents.
• Financial and insurance documents: Copies of tax returns, bank and financial account statements, pension plan documents, IRA and 401(k) statements, loan documents, list of credit cards and other debts, life insurance and other insurance documents.
• Personal documents: Marriage licenses, divorce and separation decrees, military records, military service records.

Where should you store important documents?  A bank safe deposit box is probably not the best option;  if the box is not titled to a Trust your heirs could be denied access.  At our office, we maintain a complete file for each of our clients.  I also recommend that the client keep a fire proof box at home and make sure they let family know where their important documents are stored so they can be accessed if needed.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Marriage or remarriage requires a number of important steps, including revising your estate plan to take into account your new marital status.  One step that is often overlooked – at least until tax time arrives – is the need to review and possibly change your withholding status.

Why?  Your marital status can change how you file and how much tax you owe.  You certainly have the right to file taxes separately even if you are married, but often you will owe less tax if you file jointly.  But in some cases you may fall prey to what is often called the “marriage penalty,” a situation where you owe more because you are married than you would have had you remained single.

In either case, you should review your current withholding to determine if you should make a change.  If marriage will cause your tax burden to drop, you may want to have less taken out of each check so you get the use of your money now rather than at refund time.  If marriage increases your tax burden and you don’t want to owe money at tax time, increase your withholding.

Talk to your account, if you have one.  Every situation is different, so if you’re unsure, get professional help.

And if you want to ensure that your tax burden is as low as possible where your estate is concerned, call our offices for an appointment.  Tax planning is important while you’re alive – and after.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Our goal is to help you protect your assets, your estate, and your loved ones, both now and after you pass away.  With that in mind, here are some basic tips to help protect your money when you’re online:

• Check your accounts regularly for unauthorized activity or unusual purchases.  The sooner you report a problem, the quicker it can be fixed.  Check your bank accounts at least once every couple days, and if you see a problem contact your bank immediately.
• Don’t use public computers to access financial accounts.  It might be handy to use a computer at the library, for example, but viruses or spyware could snag your personal information.  The same holds true for friends’ computers.
• Make your login and password difficult to guess.  Birthdays, the names of your kids, the street you grew up on – those can be easy for hackers to determine.  Use random characters, including numbers and capital letters.  A password that is easy for you to remember is also easy for a hacker to guess.
• Never respond to emails from your bank or financial institution. And don’t click on links in “bank” emails.  No bank will ask for information by email.
• Never provide your PIN by phone.  If you call your bank, the representative may ask for your middle name, birthday, or zip code in order to verify your identity, but they will never ask for your PIN.
• If you receive a call and aren’t sure whether it is legitimate, ask for a phone number so you can call that person back.  In fact, ask for the bank’s main switchboard number and then the person’s extension so you can be sure the caller is legitimate.  The bank won’t mind – but an identity theft will.

It’s your money and your identity – keep it safe!

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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A reverse mortgage is exactly what it sounds like:  Instead of making payments to the bank to pay off your mortgage, the bank makes monthly or lump-sum payments to you from the equity in your home.   That way you get extra income while remaining in your home – for as long as you live (or are able.)

Reverse mortgages can, under the right circumstances, be a great way to create additional income without significant risk.  The loan does not have to be repaid until you leave your home or pass away.  (Keep in mind that depending on how long you live no real equity may remain in your home when you do pass away, so if you intend to leave your home to your heirs, a reverse mortgage may not make sense.)

Until recently up-front reverse mortgage costs have been relatively high.  A new FHA reverse mortgage program, the Home Equity Conversion Mortgage (HECM), cuts up front costs from 2% to just .01% of the property value of your home.  To learn more about reverse mortgages, check out this booklet from the National Council on Aging.

Also keep in mind proceeds from a reverse mortgage could impact your eligibility for Medicaid, Social Security, or other programs.  Call our office to make sure a reverse mortgage makes sense within the context of your overall estate plan.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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