Trust, Estates, and Elder Law Newsletter - 1st Quarter 2013

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O’Connell & Aronowitz Attorneys at Law

Trusts, Estates, and Elder Law Update First Quarter 2013

Pictured above are the attorneys of our Trusts, Estates, and Elder Law Department, left to right: Matthew J. Dorsey, Esq. William A. Favreau, Esq. Heidi Dennis, Esq. Fred B. Wander, Esq. Jami Durante Rogowski, Esq. Not pictured: Brittnay M. McMahon, Esq.

In This Issue: • The American Taxpayer Relief Act of 2012 • What To Do When Medicare Doesn’t Cover You At The Hospital • How Your Assets Pass Within and Outside of Your Estate • Meet Brittnay M. McMahon, Esq. • Ask the Lawyer: How Does Medicare Work?

• O&A Events • General Information about O’Connell & Aronowitz

The American Taxpayer Relief Act of 2012 Back from the Brink of the Fiscal Cliff

On January 1st, Congress passed the American Taxpayer Relief Act of 2012 (ATRA), which President Obama has since signed into law. Now that we’re back from the brink of the fiscal cliff, what is in the details?

Additional Marginal Rate The ATRA has added an additional marginal tax rate of 39.6 % to the current marginal rates of 10%, 15%, 25%, 28%, 33%, and 35%. This new top rate applies to married taxpayers earning more than $450,000 and single taxpayers earning more than $400,000.

Payroll Tax Holiday is Over The 2% payroll tax holiday that was in effect since 2011 expires in 2013. FICA payroll taxes, which previously were set at 4.2% for 2011 and 2012, are now increased to 6.2%.

New Affordable Care Act Tax The Affordable Care Act (a/k/a Obamacare) mandates the imposition of an additional 0.9% FICA tax on wages and self employment income in excess of $250,000 for married couples and $200,000 for single taxpayers.

In addition, a 3.8% tax is levied on the lesser of: a) net investment income, or b) modified adjusted gross income over the income levels set forth above.

Capital Gains Tax Increase Long term capital gains in excess of $450,000 for married taxpayers and $400,000 for single taxpayers are subject to a 20% tax. Long term capital gains are not taxed for those in the two lowest

marginal tax brackets (10% and 15%).

Those in the middle brackets (25%, 28%, 33%, and 35%) are subject to long term capital gains taxes at the rate of 15%.

Education Deduction Extended The deduction for qualified tuition and related expenses has been extended for 2012 and 2013. The maximum deduction is $4,000 for taxpayers making less than $65,000 ($130,000 if married filing jointly). Taxpayers making between $65,001 and $80,000 ($160,000 if married filing jointly) qualify for a maximum deduction of $2,000. Filers above the last limit are not entitled to any deduction.

Student Loan Deduction Available An above the line deduction of up to $2,500 is available for student loan interest. The deduction is available beyond the initial 60 months of payments, but is phased out over higher income levels.

Mortgage Insurance Deductible Mortgage insurance payable as part of a purchase money mortgage for a qualified residence is now deductible like qualified mortgage interest.

These are a representative sample of the important changes to our tax laws for 2012 and 2013. If you’d like more information on how the American Taxpayer Relief Act (ATRA) affects you, please contact our tax attorneys at O’Connell and Aronowitz.

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Saratoga Office: 1 Court Street Saratoga Springs, NY 12866 518.584.5205 Fax: 518.584.5441

Albany Office: 54 State Street Albany, NY 12207 518.462.5601 Fax: 518.462.2670

www.oalaw.com

Plattsburgh Office: 206 West Bay Plaza Plattsburgh, NY 12901 518.562.0600 Fax: 518.562.0657

Meet Brittnay M. McMahon, Esq. Brittnay M. McMahon is an associate with our firm who works in our Saratoga Springs office, as well as our Albany office.

In addition to practicing in our Trusts and Estates department, Brittnay also works in our Residential Real Estate department. She represents purchasers, sellers, lenders, builders and developers.

Brittnay also practices in the area of Civil

Litigation.

Brittnay graduated from the University at Albany and Albany Law School. While in law school, Brittnay interned with the United States Attorney for the Northern District of New York, the Hon. Thomas J. McAvoy, a Federal Judge in the Northern District of New York, and the New York State Bar Association Continuing Legal Education Department. She also received a Pro Bono Distinction award for her work with the Albany Law School Pro Bono Society.

Brittnay is admitted to practice law in the State of New York. She is a member of the New York State Bar Association, the Albany County Bar Association, the Saratoga County Bar Association, the Capital District

Women’s Bar Association, the Italian American Bar Association and the Estate Planning Council of Eastern New York.

She is actively involved in the Capital District community.

Brittnay has served on the Capital District Community Gardens “An Autumn Evening in the Garden” gala committee, and currently serves on the Board of Directors of the Boys and Girls Clubs of Schenectady. She enjoys fundraising for multiple charities and organizations throughout the capital region, including the Lustgarten Foundation for Pancreatic Cancer Research and the Regional Food Bank of Northeastern New York.

Brittnay resides in Albany with her husband Josh and their dog and cat. In her spare time she enjoys cooking, baking, visiting museums, and spending time with family and friends.

O&A Events

Congratulations...

O’Connell and Aronowitz is pleased to announce our newest shareholder, Kurt Bratten.

Mr. Bratten practices in the firm’s Health Law, Civil Litigation, Employment Law and Commercial & Corporate Transactions areas. He focuses on representing health care providers in civil litigation, statutory and regulatory compliance, and employment and transactional matters.

Kurt is a graduate of New England School of Law and the University of Mary Washington. He serves on the Board of Directors of the Northeast String Orchestra and is a 2012 graduate of Leadership Tech Valley. He is a member of the American Health Lawyers Association, and the New York State and Albany County Bar Associations.

We are also pleased to announce F. Matthew Jackson is Of Counsel to the firm, concentrating his practice in Collections Law where he will provide full-service collection representation including litigation, post-judgment enforcement, wage garnishments, property executions, lien enforcement, and the negotiation of voluntary payment agreements. He also handles commercial and residential real estate and landlord-tenant matters.

Matt is a graduate of Syracuse University College of Law and University of Rochester. An active member of the local community, he is currently a Director of the Colonie Youth Center.

Throughout 2013:

Attorneys at O’Connell and Aronowitz are in their second year of volunteering their time to visit high schools and other civic groups to discuss Distracted Driving, in conjunction with EndDD.org and 60ForSafety.org. This is a free, 45-60 minute long presentation, created with young drivers in mind. For more information, or to schedule a presentation, please contact Meg Frisoni at: mfrisoni@oalaw.com.

April 22, 2013:

Calling All Chefs! The 3rd Annual Taste of The Capital Region, benefitting The Boys and Girls Clubs of Schenectady, will be held on Monday, April 22. Kudos to our own Jami Durante Rogowski, Chair of this fabulous, fun event!

May 17, 2013:

Mendelssohn Club Spring Concert: Music of the Sixties On Up at 7:30pm, Chancellor’s Hall, Albany. Tickets are $18.

The Mendelssohn Club is a 65-Member Male Chorus, including our own John Musacchio.

For information, or to purchase tickets, please contact John at: jmusacchio@oalaw.com For the latest information regarding our upcoming events, please visit our website, www.oalaw.com, or our Facebook page,www.facebook.com/oalaw

O’Connell & Aronowitz has been providing a broad range of legal services since 1925, with offices now in Albany, Saratoga Springs, and Plattsburgh. This newsletter is intended to provide general information about our firm and its services in the area of trusts, estates, and elder law. This newsletter is not legal advice and does not create an attorney client relationship with the reader or any other person. Legal advice may be rendered by the attorneys of O’Connell & Aronowitz after consultation and the retaining of our firm. Prior results do not guarantee a similar outcome.

New Developments in Trusts, Estates, and Elder Law What to do When Medicare Doesn’t Cover You at the Hospital How to avoid being held responsible for a big hospital bill

When you go to the hospital and have Medicare Part A coverage (see our “Ask the Lawyer” article on Medicare on page 4), you may assume that Medicare will pay for the cost of your hospital stay. Unfortunately, that is not always the case, and if you’re not careful, you could end up having to pay an astronomical hospital bill.

Medicare Part A coverage only pays for hospital costs which are “medically necessary”. If, in the opinion of the hospital, you do not require hospital level care which is medically necessary, you will receive a notice from the hospital advising of its opinion and further advising you that, as of the date of the notice, you will be personally liable for the cost of the hospital stay.

The cost of a hospital stay, even if you are not receiving medically necessary hospital level services, can be in excess of $1,500 per day. If you remain in the hospital and Medicare Part A does not cover those costs, the hospital will personally bill you for the charges.

If the hospital believes that Medicare Part A will not

pay for your hospital stay, it must promptly give you notice of its opinion and advise you on your right to appeal that decision. You may appeal the hospital’s decision to a Quality Improvement Organization (QIO), which is an independent contractor which reviews such determinations. If your appeal is unsuccessful, you may appeal thereafter to an Administrative Law Judge and potentially a federal court.

An appeal from the hospital’s decision should be done in consultation with an attorney experienced in such appeals - someone who can ensure that all potential arguments are made on your behalf. An experienced attorney can also review with you all of your options regarding discharge from the hospital to another facility, where the cost of care may not be so prohibitive.

At O’Connell and Aronowitz, we have experience in handling Medicare appeals and would be happy to discuss your options with you should the need arise.

How Your Assets Pass Within and Outside of Your Estate The importance of how you title your assets

In planning your estate, it is crucial to understand the difference between those assets that will pass within and outside of your estate. Any assets that are titled in your name only at the time of your death will pass within your estate. In addition, any assets that are made payable to your estate, via a death beneficiary designation or the provisions of a lifetime trust, for example, will also pass within your estate.

Your estate is handled under the supervision of the local County Surrogates Court and involves the probate of your Will or the administration of your intestate estate. You have an “intestate” estate in the event that you died without a Will. In that case, the New York State intestacy laws determine who,

amongst your living relatives, will receive your assets.

Those assets that will pass outside your estate include joint assets and assets that are payable to a named beneficiary other than your estate.

Joint assets are those assets held jointly with another person or persons.

The most common examples are joint checking accounts or jointly held real estate. When one joint owner dies, the surviving joint tenant receives title to the jointly held asset.

Assets payable to a named beneficiary go to that beneficiary upon the death of the owner of the assets.

The most common examples include life insurance and retirement accounts, i.e. IRAs. These assets will pass outside of your estate that is supervised by the

Surrogates Court, unless you have named your estate as the beneficiary of the assets.

The distinction between assets that pass within or outside your estate is crucial when developing your estate plan. A comprehensive review of your joint property and all beneficiary designations for life insurance, retirement accounts, and other similar assets is essential to ensure that your assets pass on according to your wishes.

For a review of your assets and the development of an individualized estate plan, please contact the experienced estate planning attorneys at the O’Connell and Aronowitz office closest to you.

O’Connell & Aronowitz • Attorneys at Law Since 1925 • www.oalaw.com

Trusts, Estates, and Elder Law Update

Inside This Issue: • The American Taxpayer Relief Act of 2012 • What To Do When Medicare Doesn’t Cover You At The Hospital Albany Office: 54 State Street Albany, NY 12207 518.462.5601 Fax: 518.462.2670

Saratoga Springs Office: 1 Court Street Saratoga Springs, NY 12866 518.584.5205 Fax: 518.584.5441

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Plattsburgh Office: 206 West Bay Plaza Plattsburgh, NY 12901 518.562.0600 Fax: 518.562.0657

www.oalaw.com

Ask the Lawyer: How Does Medicare Work?

Medicare is a confusing alphabet soup of government sponsored medical coverage.

Here is a basic primer on the Medicare program.

Who is eligible for Medicare?

Medicare is generally available to persons over the age of 65, recipients of Social Security Disability (SSD) who have received SSD for over 24 months, and those who suffer from certain serious chronic diseases.

What is Medicare Part A? Medicare Part A provides coverage for in-patient hospital care, home health services, and hospice care. Medicare Part A is only available to pay for in-patient hospital care if the care is medically necessary (see related story on Page 2).

Are there costs for Medicare Part A? Yes. Medicare Part A is subject to a yearly deductible of $1,184 for the first 60 days of a hospital stay and increasing co-insurance costs for stays beyond that.

Additional deductibles apply to home health care and hospice care.

What is Medicare Part B? Medicare Part B covers physician services and a variety of out-patient services and devices. Included are costs for x-rays, durable medical equipment, and outpatient physical therapy.

Are there costs for Medicare Part B? Yes. Those enrolled in Medicare Part B must pay a monthly premium ranging from $104.90 to $335.70 depending on a person’s income and marital status.

Medicare Part B also carries a $147 annual deductible and co-insurance payments of between 20% and 40% based on the service provided.

What is Medicare Part C? Medicare Part C is a private insurance program that is required to provide all the services of Medicare Part A and B. It is available to those already enrolled in Medicare Part A and B. These plans, sometimes referred to as Medicare Advantage plans, often provide for additional services not provided by traditional Medicare, including

prescription drug coverage. Costs and coverage vary and are often provided through private Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs).

What is Medicare Part D? Medicare Part D covers prescription drug costs and is available to those who enroll in Medicare Part A and B and some Medicare Part C plans. The plans vary in cost and involve a monthly premium and sometimes a deductible as well as copayments for medications.

What is Medigap Insurance?

Medigap insurance is private insurance available to those enrolled in Medicare Part A and B, but not Part C. It covers certain uncovered costs, such as deductibles and co-insurance.

Medicare is a confusing array of medical insurance coverages. If you need help deciphering the Medicare alphabet soup and getting the right coverage for you, feel free to contact the Elder Law attorneys at O’Connell and Aronowitz.