Trusts, Estates and Elder Law Newsletter - 2nd Quarter 2014

O’Connell & Aronowitz

Trusts, Estates, and Elder Law Update

Attorneys at Law

Trusts, Estates, and Elder Law Update

Second Quarter 2014

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.

Inside This Issue: • Significant Changes in the New York State Estate Tax Law • Advance Care Planning For Those Seriously Ill or Near End of Life 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

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

Attorney Advertising

www.oalaw.com facebook.com/oalaw

Ask the Lawyer: New York State Estate Tax Changes The key change in the NYS Estate Tax system effective April 1, 2014 is the increase in the basic exclusion amount from $1,000,000 to $2,062,500. As noted in the chart on Page 1, the exclusion amount increases to $5,250,000 as of April 1, 2017 and is indexed for inflation after 2019. Beyond that important change, what other changes were considered and what was approved?

Are there changes in the taxability of gifts?

The New York tax on gifts, not present since 2000, was reinstated. As a result, the value of gifts made within three years of death are brought back into the taxable estate of the decedent. The recapture does not apply to gifts made before April 1, 2014, gifts made after December 31, 2018, and gifts made when the decedent was not a New York resident. In addition, recaptured gifts generally do not include gifts under the federal exclusion amount – currently $14,000/year per individual.

Are the exclusion amounts portable?

Portability allows unused exclusion amounts from a decedent spouse to be later used when the surviving spouse dies thereafter. Portability exists for federal taxable estates, if a timely election is made. Unfortunately a proposal by the Assembly to include portability in the New York estate tax

was rejected by the Governor and is not included in the new law.

Are there changes in the GST tax?

The New York Generation Skipping Transfer (GST) tax was repealed. This tax previously applied to certain gifts, such as transfers in trust to grandchildren or more remote descendants and direct transfers to such beneficiaries. The GST tax at the federal level is still in effect.

Are there changes regarding taxes on trusts?

Some New Yorkers have taken advantage of incomplete gift non-grantor (ING) trusts, which allowed them to transfer assets to a Trust in a more tax friendly jurisdiction like Nevada or Delaware. The income then created by these ING trusts was not subject to New York income tax. The law has now changed and all such trusts are considered “grantor trusts” and a New Yorker using this technique will see their income from such trusts subject to New York income tax effective January 1, 2014, with certain exceptions.

The New York Estate Tax laws recently underwent significant changes. Please arrange a consultation with the experienced estate planning attorneys at O’Connell and Aronowitz to ensure your estate plan continues to meet your needs into the future.

Editor-in-chief Matthew J. Dorsey, Esq.

In This Issue:

• Significant Changes in the New York State Estate Tax Law • Advance Care For

Those Seriously Ill or Near End of Life • Estate Planning and Same Sex Marriage • Meet Michael McDermott, Esq. • Ask the Lawyer: New York State Estate Tax Changes • O&A Events • General Information about O’Connell & Aronowitz

Significant Changes in the New York State Estate Tax Law New Exclusion Levels Beginning April 1, 2014 The New York State estate tax law underwent significant changes as of April 1st of this year. For over the past decade, the basic exclusion amount in New York the amount under which your estate would bear no estate tax - was $1 million. As of April 1st, the new exclusion amount is $2,062,500.

New Exclusion Levels The new exclusion amount of $2,062,500 is in effect until April 1, 2015, at which time the level increases over the next three years pursuant to the schedule below, eventually reaching $5,250,000 in 2017. After 2019, the exclusion amount will be indexed for inflation, like the federal exclusion amount, which is currently $5.34 million.

This increase in the exclusion amount is a welcome change for many New Yorkers.

Although the former $1 million exclusion amount may sound like a large number, more and more middle class families are reaching that level as they pay down their home mortgages and work hard to grow their IRAs, 401ks, and other assets.

The Phase-out and the “Cliff” If your taxable estate is less than the basic exclusion amount of $2,062,500, you receive an “applicable credit amount” that acts to eliminate your tax obligation. For taxable estates between 100% and 105% of the basic exclusion amount (between $2,062,500 and $2,165,625), the applicable credit amount quickly decreases and phases out to zero.

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

Once your taxable estate is in excess of 105% of the basic exclusion amount, no applicable credit amount is allowed. Some commentators have referred to this phaseout of the applicable credit amount as the “Cliff”.

What Else is in the New Law? Despite proposals to reduce the top estate tax bracket from 16% to 10%, the legislature rejected that change and the top bracket remains at 16%. The top rate is set only from April 1, 2014 to April 1, 2015 and may change thereafter.

NYS Estate Tax Exclusion Amounts

Death on or After:

And Before:

Basic Exclusion Amounts:

April 1, 2014

April 1, 2015

$2,062,500

April 1, 2015

April 1, 2016

$3,125,000

April 1, 2016

April 1, 2017

$4,187,500

April 1, 2017

April 1, 2018

$5,250,000

The new law also brought back the possible taxing of gifts, which hasn’t existed since the year 2000. For details on the new gift tax law, see the Ask the Lawyer segment on page 4.

The new changes to the New York State estate tax law may present challenges and opportunities for your own estate planning.

For a review of your current estate plan in light of these differences, please contact the experienced estate planning attorneys at O’Connell and Aronowitz.

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

New Developments in Trusts, Estates, and Elder Law

Advance Care Planning For Those Seriously Ill or Near End of Life Should I be part of eMOLST? While understandably uncomfortable to discuss and consider, making provisions and directives for end-of-life health care decisions is very important. Many studies have shown that people are spending their last few days in an intensive care unit and not dying at home or in another setting of their choice. Advance care planning may begin with a designation of a health care proxy and creation of a living will, but those who are seriously ill or near the end of life should also discuss with their physician a Medical Order for Life-Sustaining Treatment (MOLST).

The MOLST is a bright pink form that is recognized by providers, including EMS, as a medical order that explains the patient’s wishes for life-sustaining treatment and is valid from one setting to another. The MOLST is for patients with serious health conditions or those who are near the end of life. It is a valid medical order that sets out the patient’s wishes regarding resuscitation, intubation, extent of treatment (i.e. limited, comfort, or no limits), desire to be hospitalized, antibiotics, and administration of fluids and nutrition. Because it is a medical order, it must be signed by a physician. The MOLST also helps to document if the patient has a health care proxy or a living will or wishes to be an organ donor.

In an effort to eliminate some of the challenges of carrying out the MOLST program, New York has created eMOLST, a secure web-based application that stores MOLST orders for any patient that is part of eMOLST. Everyone who has a MOLST should strongly consider participating in eMOLST. The move to an electronic-based central registry allows providers, including EMS personnel, to have immediate access to the MOLST and ensure that the patient’s wishes are being carried out. eMOLST allows providers to update the most current version of the MOLST, make notations that prior versions are no longer valid, and ensure that the wishes expressed by the patient are consistent with good medical practice.

It is important that the use of eMOLST not replace other advance care planning including creation of a health care proxy and living will. The estate planning attorneys at O’Connell and Aronowitz can assist you in drafting a health care proxy and living will, and they can discuss any questions you may have about participating in the MOLST program.

Please contact them at the office nearest you.

Estate Planning and Same Sex Marriage The Impact of U.S. v. Windsor On June 26, 2013, the landmark case United States v.

Windsor changed the definition of “marriage” for federal purposes. The United States Supreme Court held in a 5-4 decision that restricting the definition of “marriage” to “one man and one woman” under the Defense of Marriage Act (DOMA) is unconstitutional.

The Windsor decision illustrates the estate planning challenges of a surviving spouse in a same sex marriage.

Edith Windsor and Thea Spyer, both females, were legally married in Ontario, Canada in 2007 and were citizens of the United ach same sex couple now has the States. Ms. right to amend past income tax Spyer passed in and estate tax returns because of away 2009, leaving both the Windsor decision and her entire resulting IRS rulings. estate to her spouse. Ms. Windsor sought the marital deduction/federal estate tax exemption for spouses. She was barred from doing so under Section 3 of DOMA, which federally defined marriage as between one man and one woman. As a result, the Internal Revenue Service (IRS) ruled that the exemption did not apply to same sex marriages. Ms. Windsor was forced to pay the federal estate tax of approximately $363,000.00 and sued for a refund. Consequently, the Supreme Court decided that Section 3 of DOMA was unconstitutional “as a deprivation of the liberty of the person protected by the Fifth Amendment”, which made the refund possible.

E

As a result, IRS Revenue Ruling 2013-17 dictates that for the 2013 tax year all legally married couples of the same sex must file their income tax returns together as either “married filing jointly” or “married filing separately.” This Revenue Ruling does not apply to same sex couples in civil unions and/or domestic partnerships.

Each same sex couple now has the right to amend past income tax and estate tax returns because of both the Windsor decision and resulting IRS rulings. Same sex couples face unique challenges in the area of estate planning.

For a professional consultation on strategies to meet those challenges, please contact the experienced estate planning attorneys at O’Connell and Aronowitz.

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

Meet Michael McDermott, Esq. Our firm’s history of significant courtroom victories is attributed to the legal acumen and skill of our outstanding team of attorneys. After joining O’Connell and Aronowitz as Of Counsel attorney in 2007, Mike was made Partner in November. He was formerly with the Albany County District Attorney’s Office where he was Chief Assistant. Prior to that he held a similar post with Rensselaer County District Attorney’s office. Mike has handled or supervised over three dozen homicide prosecutions, trying many of those cases to verdict.

As trial attorney, Mike handles plaintiff’s personal injury cases and criminal defense with a special emphasis in representing children who have suffered brain injuries as a result of lead paint poisoning. In December, he won a blockbuster verdict after 6-week trial in a major white collar prosecution in U.S. District Court. Mike joins attorney Steve Coffey in establishing O’Connell and Aronowitz as one of the premier Criminal Defense firms in the Capital District.

In addition to the practice of law, Mike has been an adjunct professor at Siena College and Southern Vermont College. He has lectured on legal issues for the New York State, Albany County and Schenectady County Bar Associations, as well as the New York State Prosecutors Training Institute, Albany Law School, and National Business Institute. Mike serves on the board of directors of TASC, Inc. a local not-for-profit corporation that provides residential drug treatment as an alternative to incarceration for eligible offenders in the Capital District. He also serves on the board of directors of the Albany County Bar Association.

Senior Partner Neil Rivchin to Retire After a legal career that spanned diverse areas of law and positively impacted his beholden colleagues and countless clients, partner Neil Rivchin retires from O’Connell and Aronowitz on July 1. Neil is a senior partner with our Commercial Litigation, Health Law and Real Estate practices.

For four decades, Neil has advised clients on regulatory and transactional matters relating to business and professional relationships, including litigating complex commercial and business disputes.

He litigated a landmark cable television right of way case that solidified his reputation as a legal powerhouse.

Often referred to by his fellow Partners as the ‘jack of all trades’ because of the vast areas of law that he practiced, Neil has proven himself as a dedicated, committed attorney who gets results while giving equal credence to the important role we play in our community. In 2012, Neil was a recipient of the NYS Bar Association’s Empire State Counsel honorific designation for his outstanding contribution in performing legal services to low income individuals. He also played an integral role in our successful pro bono work in a First Amendment civil rights case on behalf of the Troy-based gallery and media arts facility.

Senior partner Cornelius Murray, who has worked alongside Neil since 1973 said, “It is not possible to overstate what Neil Rivchin has done for this Firm over the years.” This sentiment is echoed

by Fred Wander of our Trusts, Estates and Elder Law practice, “Most importantly, Neil has been, is and will continue to be a good friend to me and all of us. I know that we all wish him good health and happiness in his well-earned retirement.”

Indeed, we do.

O&A Events Throughout 2014: O&A is in the third year of visiting high schools, libraries and other civic groups to discuss distracted driving. In conjunction with EndDD.org and The Casey Feldman Foundation, this free presentation is helping make our communities safer. For more information, or to schedule a presentation, please email us at EndDD@oalaw.com March, 2014: John Musacchio was elected to the Board of Directors of the Capital District Italian American Bar Association.

May, 2014: John Musacchio was elected Vice President of the Mendelssohn Club of Albany, a 65-member male chorus and the oldest continuously-running performing arts group in the Capital District.

June 5, 2014: Kelly Mikullitz presented “The Anatomy of a Lawsuit: A Behind the Scenes Look Into the ‘Body’ of A Personal Injury Lawsuit” at the 32nd Annual Conference of the Brain Injury Association of New York State (BIANYS).

David Ross, in conjunction with New York Council of Nonprofits, Inc (NYCON) “Lunch & Learn” Webinar Series, presented “Self-Disclosure is Not a Four Letter Word! Protocols & Procedures of Medicaid Self Disclosure”.

June 19, 2014: David Ross will present the final webinar in conjunction with NYCON on “Preparing For and Surviving an OMIG Audit” For more information on joining this webinar, please visit www.nycon.com or email us at info@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

Advance Care Planning For Those Seriously Ill or Near End of Life Should I be part of eMOLST? While understandably uncomfortable to discuss and consider, making provisions and directives for end-of-life health care decisions is very important. Many studies have shown that people are spending their last few days in an intensive care unit and not dying at home or in another setting of their choice. Advance care planning may begin with a designation of a health care proxy and creation of a living will, but those who are seriously ill or near the end of life should also discuss with their physician a Medical Order for Life-Sustaining Treatment (MOLST).

The MOLST is a bright pink form that is recognized by providers, including EMS, as a medical order that explains the patient’s wishes for life-sustaining treatment and is valid from one setting to another. The MOLST is for patients with serious health conditions or those who are near the end of life. It is a valid medical order that sets out the patient’s wishes regarding resuscitation, intubation, extent of treatment (i.e. limited, comfort, or no limits), desire to be hospitalized, antibiotics, and administration of fluids and nutrition. Because it is a medical order, it must be signed by a physician. The MOLST also helps to document if the patient has a health care proxy or a living will or wishes to be an organ donor.

In an effort to eliminate some of the challenges of carrying out the MOLST program, New York has created eMOLST, a secure web-based application that stores MOLST orders for any patient that is part of eMOLST. Everyone who has a MOLST should strongly consider participating in eMOLST. The move to an electronic-based central registry allows providers, including EMS personnel, to have immediate access to the MOLST and ensure that the patient’s wishes are being carried out. eMOLST allows providers to update the most current version of the MOLST, make notations that prior versions are no longer valid, and ensure that the wishes expressed by the patient are consistent with good medical practice.

It is important that the use of eMOLST not replace other advance care planning including creation of a health care proxy and living will. The estate planning attorneys at O’Connell and Aronowitz can assist you in drafting a health care proxy and living will, and they can discuss any questions you may have about participating in the MOLST program.

Please contact them at the office nearest you.

Estate Planning and Same Sex Marriage The Impact of U.S. v. Windsor On June 26, 2013, the landmark case United States v.

Windsor changed the definition of “marriage” for federal purposes. The United States Supreme Court held in a 5-4 decision that restricting the definition of “marriage” to “one man and one woman” under the Defense of Marriage Act (DOMA) is unconstitutional.

The Windsor decision illustrates the estate planning challenges of a surviving spouse in a same sex marriage.

Edith Windsor and Thea Spyer, both females, were legally married in Ontario, Canada in 2007 and were citizens of the United ach same sex couple now has the States. Ms. right to amend past income tax Spyer passed in and estate tax returns because of away 2009, leaving both the Windsor decision and her entire resulting IRS rulings. estate to her spouse. Ms. Windsor sought the marital deduction/federal estate tax exemption for spouses. She was barred from doing so under Section 3 of DOMA, which federally defined marriage as between one man and one woman. As a result, the Internal Revenue Service (IRS) ruled that the exemption did not apply to same sex marriages. Ms. Windsor was forced to pay the federal estate tax of approximately $363,000.00 and sued for a refund. Consequently, the Supreme Court decided that Section 3 of DOMA was unconstitutional “as a deprivation of the liberty of the person protected by the Fifth Amendment”, which made the refund possible.

E

As a result, IRS Revenue Ruling 2013-17 dictates that for the 2013 tax year all legally married couples of the same sex must file their income tax returns together as either “married filing jointly” or “married filing separately.” This Revenue Ruling does not apply to same sex couples in civil unions and/or domestic partnerships.

Each same sex couple now has the right to amend past income tax and estate tax returns because of both the Windsor decision and resulting IRS rulings. Same sex couples face unique challenges in the area of estate planning.

For a professional consultation on strategies to meet those challenges, please contact the experienced estate planning attorneys at O’Connell and Aronowitz.

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

Meet Michael McDermott, Esq. Our firm’s history of significant courtroom victories is attributed to the legal acumen and skill of our outstanding team of attorneys. After joining O’Connell and Aronowitz as Of Counsel attorney in 2007, Mike was made Partner in November. He was formerly with the Albany County District Attorney’s Office where he was Chief Assistant. Prior to that he held a similar post with Rensselaer County District Attorney’s office. Mike has handled or supervised over three dozen homicide prosecutions, trying many of those cases to verdict.

As trial attorney, Mike handles plaintiff’s personal injury cases and criminal defense with a special emphasis in representing children who have suffered brain injuries as a result of lead paint poisoning. In December, he won a blockbuster verdict after 6-week trial in a major white collar prosecution in U.S. District Court. Mike joins attorney Steve Coffey in establishing O’Connell and Aronowitz as one of the premier Criminal Defense firms in the Capital District.

In addition to the practice of law, Mike has been an adjunct professor at Siena College and Southern Vermont College. He has lectured on legal issues for the New York State, Albany County and Schenectady County Bar Associations, as well as the New York State Prosecutors Training Institute, Albany Law School, and National Business Institute. Mike serves on the board of directors of TASC, Inc. a local not-for-profit corporation that provides residential drug treatment as an alternative to incarceration for eligible offenders in the Capital District. He also serves on the board of directors of the Albany County Bar Association.

Senior Partner Neil Rivchin to Retire After a legal career that spanned diverse areas of law and positively impacted his beholden colleagues and countless clients, partner Neil Rivchin retires from O’Connell and Aronowitz on July 1. Neil is a senior partner with our Commercial Litigation, Health Law and Real Estate practices.

For four decades, Neil has advised clients on regulatory and transactional matters relating to business and professional relationships, including litigating complex commercial and business disputes.

He litigated a landmark cable television right of way case that solidified his reputation as a legal powerhouse.

Often referred to by his fellow Partners as the ‘jack of all trades’ because of the vast areas of law that he practiced, Neil has proven himself as a dedicated, committed attorney who gets results while giving equal credence to the important role we play in our community. In 2012, Neil was a recipient of the NYS Bar Association’s Empire State Counsel honorific designation for his outstanding contribution in performing legal services to low income individuals. He also played an integral role in our successful pro bono work in a First Amendment civil rights case on behalf of the Troy-based gallery and media arts facility.

Senior partner Cornelius Murray, who has worked alongside Neil since 1973 said, “It is not possible to overstate what Neil Rivchin has done for this Firm over the years.” This sentiment is echoed

by Fred Wander of our Trusts, Estates and Elder Law practice, “Most importantly, Neil has been, is and will continue to be a good friend to me and all of us. I know that we all wish him good health and happiness in his well-earned retirement.”

Indeed, we do.

O&A Events Throughout 2014: O&A is in the third year of visiting high schools, libraries and other civic groups to discuss distracted driving. In conjunction with EndDD.org and The Casey Feldman Foundation, this free presentation is helping make our communities safer. For more information, or to schedule a presentation, please email us at EndDD@oalaw.com March, 2014: John Musacchio was elected to the Board of Directors of the Capital District Italian American Bar Association.

May, 2014: John Musacchio was elected Vice President of the Mendelssohn Club of Albany, a 65-member male chorus and the oldest continuously-running performing arts group in the Capital District.

June 5, 2014: Kelly Mikullitz presented “The Anatomy of a Lawsuit: A Behind the Scenes Look Into the ‘Body’ of A Personal Injury Lawsuit” at the 32nd Annual Conference of the Brain Injury Association of New York State (BIANYS).

David Ross, in conjunction with New York Council of Nonprofits, Inc (NYCON) “Lunch & Learn” Webinar Series, presented “Self-Disclosure is Not a Four Letter Word! Protocols & Procedures of Medicaid Self Disclosure”.

June 19, 2014: David Ross will present the final webinar in conjunction with NYCON on “Preparing For and Surviving an OMIG Audit” For more information on joining this webinar, please visit www.nycon.com or email us at info@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.

O’Connell & Aronowitz

Trusts, Estates, and Elder Law Update

Attorneys at Law

Trusts, Estates, and Elder Law Update

Second Quarter 2014

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.

Inside This Issue: • Significant Changes in the New York State Estate Tax Law • Advance Care Planning For Those Seriously Ill or Near End of Life 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

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

Attorney Advertising

www.oalaw.com facebook.com/oalaw

Ask the Lawyer: New York State Estate Tax Changes The key change in the NYS Estate Tax system effective April 1, 2014 is the increase in the basic exclusion amount from $1,000,000 to $2,062,500. As noted in the chart on Page 1, the exclusion amount increases to $5,250,000 as of April 1, 2017 and is indexed for inflation after 2019. Beyond that important change, what other changes were considered and what was approved?

Are there changes in the taxability of gifts?

The New York tax on gifts, not present since 2000, was reinstated. As a result, the value of gifts made within three years of death are brought back into the taxable estate of the decedent. The recapture does not apply to gifts made before April 1, 2014, gifts made after December 31, 2018, and gifts made when the decedent was not a New York resident. In addition, recaptured gifts generally do not include gifts under the federal exclusion amount – currently $14,000/year per individual.

Are the exclusion amounts portable?

Portability allows unused exclusion amounts from a decedent spouse to be later used when the surviving spouse dies thereafter. Portability exists for federal taxable estates, if a timely election is made. Unfortunately a proposal by the Assembly to include portability in the New York estate tax

was rejected by the Governor and is not included in the new law.

Are there changes in the GST tax?

The New York Generation Skipping Transfer (GST) tax was repealed. This tax previously applied to certain gifts, such as transfers in trust to grandchildren or more remote descendants and direct transfers to such beneficiaries. The GST tax at the federal level is still in effect.

Are there changes regarding taxes on trusts?

Some New Yorkers have taken advantage of incomplete gift non-grantor (ING) trusts, which allowed them to transfer assets to a Trust in a more tax friendly jurisdiction like Nevada or Delaware. The income then created by these ING trusts was not subject to New York income tax. The law has now changed and all such trusts are considered “grantor trusts” and a New Yorker using this technique will see their income from such trusts subject to New York income tax effective January 1, 2014, with certain exceptions.

The New York Estate Tax laws recently underwent significant changes. Please arrange a consultation with the experienced estate planning attorneys at O’Connell and Aronowitz to ensure your estate plan continues to meet your needs into the future.

Editor-in-chief Matthew J. Dorsey, Esq.

In This Issue:

• Significant Changes in the New York State Estate Tax Law • Advance Care For

Those Seriously Ill or Near End of Life • Estate Planning and Same Sex Marriage • Meet Michael McDermott, Esq. • Ask the Lawyer: New York State Estate Tax Changes • O&A Events • General Information about O’Connell & Aronowitz

Significant Changes in the New York State Estate Tax Law New Exclusion Levels Beginning April 1, 2014 The New York State estate tax law underwent significant changes as of April 1st of this year. For over the past decade, the basic exclusion amount in New York the amount under which your estate would bear no estate tax - was $1 million. As of April 1st, the new exclusion amount is $2,062,500.

New Exclusion Levels The new exclusion amount of $2,062,500 is in effect until April 1, 2015, at which time the level increases over the next three years pursuant to the schedule below, eventually reaching $5,250,000 in 2017. After 2019, the exclusion amount will be indexed for inflation, like the federal exclusion amount, which is currently $5.34 million.

This increase in the exclusion amount is a welcome change for many New Yorkers.

Although the former $1 million exclusion amount may sound like a large number, more and more middle class families are reaching that level as they pay down their home mortgages and work hard to grow their IRAs, 401ks, and other assets.

The Phase-out and the “Cliff” If your taxable estate is less than the basic exclusion amount of $2,062,500, you receive an “applicable credit amount” that acts to eliminate your tax obligation. For taxable estates between 100% and 105% of the basic exclusion amount (between $2,062,500 and $2,165,625), the applicable credit amount quickly decreases and phases out to zero.

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

Once your taxable estate is in excess of 105% of the basic exclusion amount, no applicable credit amount is allowed. Some commentators have referred to this phaseout of the applicable credit amount as the “Cliff”.

What Else is in the New Law? Despite proposals to reduce the top estate tax bracket from 16% to 10%, the legislature rejected that change and the top bracket remains at 16%. The top rate is set only from April 1, 2014 to April 1, 2015 and may change thereafter.

NYS Estate Tax Exclusion Amounts

Death on or After:

And Before:

Basic Exclusion Amounts:

April 1, 2014

April 1, 2015

$2,062,500

April 1, 2015

April 1, 2016

$3,125,000

April 1, 2016

April 1, 2017

$4,187,500

April 1, 2017

April 1, 2018

$5,250,000

The new law also brought back the possible taxing of gifts, which hasn’t existed since the year 2000. For details on the new gift tax law, see the Ask the Lawyer segment on page 4.

The new changes to the New York State estate tax law may present challenges and opportunities for your own estate planning.

For a review of your current estate plan in light of these differences, please contact the experienced estate planning attorneys at O’Connell and Aronowitz.

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