O’Connell & Aronowitz Attorneys at Law
Trusts, Estates, and Elder Law Update First Quarter 2012
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. Gilbert L. Carey, Esq., CPA Jami Durante Rogowski, Esq. Not pictured: Brittnay McMahon, Esq.
In This Issue:
• New Developments in Trusts, Estates and Elder Law • Aid and Attendance Benefit for Veterans • Meet Matthew J. Dorsey, Esq. • Our New Associate, Brittnay McMahon • Ask the Lawyer: What Is A Health Care Proxy? • Upcoming Events • General Information about O’Connell & Aronowitz
Reporting Changes for 2011 and Prospective Tax Changes for 2012 What are the Changes and How Do They Affect You? Here are some things to consider when filing your 2011 tax return and highlights of tax law changes to help you plan for 2012. Due date of return: The due date for filing your tax return is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia. April 17th is also the deadline for requesting extensions and making 2011 IRA contributions. New Forms: Capital gains and losses must now be listed on the new Form 8949, Sales and Other Dispositions of Capital Assets. If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets. Failure to file a Form 8938 may subject you to significant penalties. Changes for Individuals: Repayment of First-Time Homebuyer Credit: Taxpayers who claimed the first-time homebuyer credit for a home bought in 2008 must generally make the second of 15 annual repayment installments on their 2011 return. Exemptions: The amount of each personal and dependent exemption is $3,800 for 2012, up by $100 from $3,700 for 2011. Additional Child Credit: The $1,000 per-child additional child tax credit has been extended through 2012. The credit Saratoga Office: 1 Court Street Saratoga Springs, NY 12866 518.584.5205 Fax: 518.584.5441
will decrease to $500 per child in 2013. The Child Tax Credit is available to eligible taxpayers with qualifying children under age 17. Social Security Tax: The Social Security tax rate remains at 6.2% for employers, but the wage limit increases to $110,100 for wages paid in 2012. Estate Tax: For an estate of any decedent dying during calendar year 2012, the basic exclusion amount is $5,120,000, up from $5,000,000 in 2011. The maximum tax rate remains at 35%. Changes for Businesses: Work Opportunity Credit: Returning Heroes and Wounded Warriors Work Opportunity Tax Credit has been expanded to provide employers with new incentives to hire certain unemployed veterans. Employers are eligible for a credit of up to $9,600 for each qualified veteran that they hire. Section 179 Expensing: For 2012, the maximum Section 179 expense deduction for equipment purchases is $139,000 (down from $500,000 in 2011) of the first $560,000 (down from $2 million in 2011) of business property placed in service during the year. For a comprehensive review of your personal and business tax issues, please contact our Tax Law Department at O’Connell & Aronowitz. Follow us on:
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 IRS Reopens Offshore Voluntary Disclosure Initiative on Foreign Based Income Avoid Serious Potential Criminal Penalties and Get Current with Your Taxes On January 9, 2012, the Internal Revenue Service reopened the offshore voluntary disclosure program to allow people to disclose their offshore accounts and get current with their taxes. The Offshore Voluntary Disclosure Program concerns the non filing of both U.S. income tax returns and the Foreign Bank Account Reports (FBARs). The IRS announced this third Offshore Voluntary Disclosure Program following continued strong interest from taxpayers and tax practitioners. This third program comes as the IRS continues its pursuit of unreported foreign accounts of U.S. citizens and ongoing efforts of the Justice Department to pursue criminal prosecution of international tax evasion. The Bank Secrecy Act may require
you to file Form TD F 90-22.1 (FBAR) if you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year. The FBAR rules apply to all U.S. citizens, resident aliens and other foreign individuals who are considered U.S. persons under the Substantial Presence Test. FBAR rules also apply to a domestic trust, estate, partnership or corporation. This filing is often overlooked by tax filers because they may have a reporting obligation even though the account produces no taxable income. The FBAR is not filed with the tax-
payer’s federal income tax return, but it must be received by the IRS on or before June 30 of the year following the calendar year being reported. You may not request an extension for filing the FBAR. The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR helps the United States government identify persons who may be using foreign financial accounts to circumvent United States law. The Offshore Voluntary Disclosure Program may end at any time. In order to take advantage of this opportunity while it’s still available, you may contact our Tax Law Department at O’Connell & Aronowitz.
Can Assisted Living Care be Affordable for Senior Veterans? The Aid and Attendance Benefit can make it happen
Aid and Attendance is a supplemental income benefit available to veterans who have served at least 90 days of active service during wartime and have health needs consistent with Assisted Living care. This benefit can pay Assisted Living expenses for veterans and their spouses and is often overlooked as part of a comprehensive Elder Law plan. Assisted Living facilities provide a welcome alternative to nursing homes for those seniors who can no longer live at home, but don’t quite have health issues that require nursing home care. Although more affordable than nursing homes, Assisted Living facilities still cost between $3,000 and $4,000 per month, and neither Medicare nor Medicaid is generally
available to cover the cost. This makes costs) can qualify for an Aid and Assisted Living care a financial Attendance benefit of $15,287. This benefit increases burden for many veteran with $28,500 in yearly the veteran’s inseniors, especially those who income and $23,340 in medical come by 54%! depend on social expenses (including Assisted Living With a new total security and a costs) can qualify for an Aid and income of almost $44,000, the cost small monthly Attendance benefit of $15,287. of Assisted Living pension for their income. As a This benefit increases the veteran’s care is now within reach, and the nest result, seniors income by 54%! egg built up by the often draw down their nest eggs to pay for the monthly veteran over his lifetime can pass on to shortfall, leaving nothing for them to the next generation. pass on to the next generation. Our veterans deserve support for
A
Veterans can qualify for Aid and Attendance benefits even though they still own a home, a car, and generally have around $80,000 in other resources. A veteran with $28,500 in yearly income and $23,340 in medical expenses (including Assisted Living
their service to our country. We at O’Connell and Aronowitz value that service and offer a free initial elder law consultation to veterans, as well as a 10% discount on elder law services. Please contact us today to learn what we can do for you.
O’Connell & Aronowitz • Attorneys at Law Since 1925 • www.oalaw.com
Meet Matthew J. Dorsey, Esq. Matthew J. Dorsey is Of Counsel to O’Connell & Aronowitz, concentrating in elder law, estate administration, and Medicaid planning. In his Medicaid planning practice, Matt works with families to preserve their assets, while obtaining access to necessary long term care services. Matt has been a Legal Services Provider for the Saratoga County Office for the Aging (OFA) for over a decade and previously served as the Saratoga County Examiner of Guardianship Accounts. Matt frequently lectures on elder law issues for the State and County Bar Associations, as well as for the OFA and Community Hospice. Matt is a member of the Elder Law Section of the New York State Bar Association (NYSBA). He also previously served as an elected representative to the NYSBA House of Delegates. The Saratoga County Bar Association previously nominated Matt for a NYSBA Outstanding Lawyer Award. At the time of his nomination, District Attorney Jim Murphy said “I have known Matt for nearly 30 years and know him to be of the highest moral character and value his friendship. Professionally, he has an outstanding background.” Matt established the Saratoga Springs Memory Walk for the benefit of the Alzheimer’s Association in 1997, which has raised over $1 million dollars since its inception. When Matt was Chairman of the Memory Walk, he was recognized as Volunteer of the Year by the Adirondack Branch of the Alzheimer’s Association. Matt will serve as Club President for the Saratoga Springs Rotary Club this year, and will be traveling to Bangkok, Thailand this spring to represent the Club at the Rotary International
Conference. Matt is also Secretary of the Saratoga Springs Rotary Education Foundation, which funds over $40,000 in annual college scholarships. Matt is a prior recipient of the Outstanding Young Leader Award from the Greater Saratoga Springs Jaycees, and he was previously recognized by The Saratogian as an individual who will be “making a difference” in the 21st Century because of his “talent, vitality, and commitment to community.” Matt is a 1998 graduate of the Saratoga County Chamber of Commerce Leadership Saratoga Program. Matt earned his law degree from Vanderbilt University School of Law, winning a Vanderbilt Award for
Upcoming Events March 2 - 4, 2012: O’Connell & Aronowitz will participate in the Saratoga Springs Rotary Home Show. Come visit our table and enter our raffle for a new iPad! March 18, 2012: Jane Bello Burke, Esq. will speak at the NY Chapter of the American College of Health Care Administrators Annual Convention on Provider Compliance Programs and the Self-Disclosure and Repayment of Overpayments to Medicare and Medicaid. April, 2012: As part of Distracted Driving Awareness Month, O’Connell & Aronowitz has volunteered to speak to schools and community organizations about the dangers of Distracted Driving. If you are interested in having us speak at your event, please contact Meg Frisoni at mfrisoni@oalaw.com or 518-462-5601, ext. 3316. For the latest information regarding our upcoming events, please visit our website, www.oalaw.com, or our Facebook page, www.facebook.com/oalaw
Introducing...
Academic Achievement in 1996. He graduated magna cum laude from Brown University in 1989. Matt graduated from Saratoga Springs High School in 1984, and was awarded the Yaddo Medal for Scholarship and Character. Matt is 45 years old and makes his home in Saratoga Springs with daughter Grace. Matt enjoys running and has successfully completed three half marathons, one full marathon, and two 200 mile relay races.
O’Connell & Aronowitz is pleased to announce the addition of associate Brittnay M. McMahon, Esq. to our firm. Ms. McMahon is a graduate of Albany Law School. While in law school, she interned with the United States Attorney for the Northern District of New York, and the Hon. Thomas J. McAvoy, a Federal Judge in the Northern District of New York. She is admitted to practice law in the State of New York. Ms. McMahon will be practicing with our Trusts and Estates Department, as well as our Real Estate and Litigation departments.
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.
Trusts, Estates, and Elder Law Update
Inside This Issue: • Income Tax Issues in 2012 • Veterans’ Benefits and Assisted Living 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
PRSRT STD U.S. POSTAGE PAID ALBANY NY PERMIT #370
Attorney Advertising Plattsburgh Office: 206 West Bay Plaza Plattsburgh, NY 12901 518.562.0600 Fax: 518.562.0657
www.oalaw.com
Ask the Lawyer: What is a Health Care Proxy? A health care proxy is a legal document that allows you to appoint an individual, your “agent”, to make medical decisions for you. It only becomes effective in the event that you are no longer able to make those decisions for yourself. If that time comes, your Health Care Proxy agent will ensure that your individual wishes are conveyed and adhered to by your health care providers. Do I need a Health Care Proxy? The simple answer is yes. You need a trusted person to be your voice in the event you are unable to make your own health care decisions. Any person over the age of eighteen (18) should appoint a health care agent. How do I choose an agent? Your agent should be someone you trust, for example a spouse, other family member, or trusted friend. You should choose someone that you believe will adhere to your wishes and instructions. A successor agent should be chosen in the event your primary
agent is unable to act for any reason. It is imperative to discuss your wishes regarding your care, clearly and in detail, with your agent. Can I revoke my Health Care Proxy? A Health Care Proxy does not expire and continues as valid until you revoke it. Can my Agent make “end of life” decisions for me? An Agent may make decisions regarding withholding artificial hydration or nutrition only if the Health Care Proxy states the Agent knows the Principal’s wishes on those issues. How does a Health Care Proxy differ from a Power of Attorney? A Power of Attorney allows an agent to handle your financial affairs for you, but does not allow them to make health care decisions. A Health Care Proxy allows your agent to make health care decisions, but does not allow them to make financial decisions.
What is the difference between a Living Will and a Health Care Proxy? A Living Will is a legal document that specifies your wishes regarding your medical care. A Living Will does not designate an agent, but can provide important guidance to your Health Care Proxy agent when decisions have to be made regarding your health care. A Living Will can be a separate document or can be integrated into your Health Care Proxy. What if I need a Health Care Proxy prepared? If you haven’t executed a Health Care Proxy, O’Connell and Aronowitz would be happy to offer you a thirty minute consultation and Health Care Proxy at no charge. Once executed, you should deliver a copy of the Proxy to each of your health care providers, as well as your agent or agents. Please contact us at our office nearest to you.