Life Happens

June 8th, 2024

Episode Transcript

(00:00):
Good morning everyone. Welcome to LifeHappens Radio, your weekly radio broadcast here

(00:04):
on WGY that brings you information,ideas and tools to help you plan for
your retirement, for your future,to age well, to make sure you
take care of your children. Talkabout education, educating college students, and
paying for college education. Last weekwe had doctor Dean Scarlets on the show
and we had a phenomenal discussion ofall the changes in college education. The

(00:27):
cost of college education which is nowup around ninety thousand dollars per year for
some of the better colleges and institutions, how to prepare for that, how
to fill out the new FAFSA form, how to get your student ready,
and how to save, how touse a five to twenty nine plan,
which is a really great way tosave for college. That's just one of

(00:48):
the topics that we've covered here.We certainly talk about aging, We talk
about New York State, New YorkState government. We've had a number of
New York State legislators on the showto talk about the budget and the budget
season. Today, in the CapitolDistrict of New York, we have a
very special event if you haven't heard, it's the Belmont Stakes. That's going
to be going on right up theroad in Saratoga, going off about six

(01:10):
forty five this afternoon. And theBelmont Stakes is a big deal for Saratoga.
It's going to bring in they estimatefifty million dollars to the economy and
it has brought crowds. And ifyou try to get a restaurant reservation anywhere
near Saratoga tonight, good luck.It is sold out and it has been
sold out for quite some time.And hope you can get up to the
race if you have that opportunity.We'll watch it on TV. There are

(01:34):
a lot of watch parties around theCapitol District and we hope that you pick
the winner. Today we're going totalk about another type of race, and
that is a race to the altar. We talk about marriage. We talk
about a state planning and married coupleswho want to do estate planning. But
what should you be thinking about ifyou are contemplating marriage. What should you

(01:59):
be thinking about if you're in amarriage, how do you take advantage of
the laws and how do you avoidpitfalls in the law to make sure that
what you have is protected, thatit gets to the right places, that
it's preserved for you and your spouse, and if you're fortunate enough to have
children, that you have what youneed going to the kids in a way

(02:21):
that benefits them the most. Sothere are a lot of considerations and I
couldn't possibly do this all by myself. So going to introduce you to two
of my colleagues at Pierre O'Connor andStrauss, And these are two of our
New York City colleagues, one ofwhom happens to be one of our senior
counsel who is a tremendously experienced astate planning attorney, a member of the

(02:42):
American College of Trust and the StatesCouncil ACTECH, which is the highest level
of trust in the state's attorney andwe are very fortunate to have him as
part of our New York City practice. Richard Rothberg, Good morning, Dick,
Good morning, Lou, Good morningeverybody, and welcome to the show.
And for the first time, Dick'sbeen on the show before, but
for the first time, we haveone of our newer associates in the New

(03:02):
York City office, someone who hasjoined the office and hit the ground running,
and we're very happy to introduce himto our life happens radio audience,
and that is Tom Morasco. Goodmorning, Tom, good morning, Thank
you for having me, and gentlemen, we're gonna talk about different aspects of
planning for marriage. I am goingto actually open up the phone lines to

(03:23):
see if anybody out there has aquestion, because we're going to raise some
really interesting issues from everything from prenuptial agreements to credit shelter will's taxation of
a state's asset protection for spouses,long term care, what is the medicaid
situation in terms of spouses, andso we're gonna go through all of that
today and we will take your questions, and I'm gonna give you the phone

(03:45):
number right out of the gate soyou can write it down and as we
talk about topics, you can joinin the conversation. It's eight hundred eight
two five five nine four nine,eight hundred eight two five fifty nine forty
nine. And Dick, how longyou been married? Just last week?
Fifty seven years fifty seven. Well, that's a feed in and of itself.

(04:11):
I am headed for thirty two years. And Tom, how about yourself?
I am on seven years seven.So we have all ranges of experience
here with the marriage game, andDick Sons you have the most experienced.
Why don't we start out with theestate planning issues? As people contemplate marriage
and we deal with a lot ofclients, different types of clients. Sometimes

(04:35):
it's a first marriage, Sometimes it'sa second marriage, third marriage, fourth
marriage. If you're like some people, it's your fifth marriage. When your
age ninety three, you can goto the altar a fifth time and try
it all over again. That's misterMurdoch. So what are the contemplations for
marriage when people are thinking about ittalking about it? These questions usually come

(04:57):
to us from parents who are thinkingabout their kids, how to leave the
inheritance and protect it. But whatkinds of things should people be talking about
and thinking about with their potential spouse. There are a few categories, Lou.
One is what legal rights does aspouse have in the assets of the
other spouse? Obviously before marriage thereare none. After marriage, certain rights

(05:24):
automatically spring into effect, and thatmay not be consistent of what the parties
really want or what the parents ofthe parties really want if they're involved.
That's one whole set of issues.Another is taxes, the income tax and

(05:46):
estate tax. Consequences of being marriedchanged a lot from being single. So
that's a whole other area of thingswe can talk about. So let's start
with the first and that is twopeople. And we're going to start right
at the very beginning, folks,two people who are contemplating walking down the
aisle and let's say that their firstmarriage. And usually when this comes to

(06:13):
our office, it's one family withsignificant wealth, or both families with significant
wealth who want to leave it onto their children but not put it at
risk. Sometimes it's the person themselves, depending upon age, who has already
achieved success and built up a nestegg. What are those considerations? And
in the American system of jurisprudence,the only person protected in terms of your

(06:38):
property is your spouse. We haveclients coming from Europe and different countries where
children also have rights, But here, Dick, it's just the spouse,
right, that's right. I thinka little bit of Louisiana there's an exception,
but that's not really our concern.I could focus first on New York.

(07:00):
This is a matter of state lawfor the most part, so it
varies all over the country, butin particular in the state of New York.
The moment you get married, yourspouse instantly acquires rights in your estate

(07:20):
should you die, and over aperiod of time during the marriage, a
spouse also acquires rights in your assetsof a very different kind based on the
development of something called marital property.And all of this can be planned for.

(07:41):
It can be adjusted by what wecall a prenuptial agreement. If what
the law tells you would happen inthe event of betther divorce is different from
what the parties want. And asyou say, sometimes what the couple themselves
may think is appropriate may not bequite the same as what their parents want,

(08:05):
because the parents are planning to leavesignificant money to their own children and
perhaps don't want the spouse to automaticallyshare in those assets as time goes by.
Sure, and prenuptial agreements, Whenyou think about it, you're entering

(08:28):
a marriage contract and then you're goingto enter a separate contract to establish rights
to property and give up rights toproperty. It isn't the most romantic thing
that you could be talking about beforeyou walk down the aisle, Dick,
and it's no joke. To havean enforceable prenup, you have to go
through a lot of steps. Solet's start with the prenup and talk about

(08:48):
how people can go through this andmake a valid and binding agreement setting those
property rights. Oh sure, andhere again i'm talking about New York,
but it's similar to the laws ofmany other states. At first, you
have to get over the hurdle ofraising the subject with your fiance and being

(09:11):
confident that in so doing you're notspoiling the party or canceling it. Yes,
but once you get past that hurdle, the steps require a number of
things that are prescribed by law.You can't vary them. One is,

(09:33):
you have to have independent counsel foreach side. Each each of the prospective
husband and the wife, or obviouslythe other husband or the other wife if
it's a same sex couple, theyeach have to have their own attorney.

(09:54):
Secondly, there has to be fullfinancial disclosure on each side of what that
side is bringing to the table.Typically that is done by a schedule to
the agreement, which both sides technowledgeis being accurate. And finally, there
is a formality that the agreement mustbe notarized. It's a technicality, but

(10:20):
it is a technicality that you cannotignore and they're challenges to prenuptial agreements usually
attack either a lack of disclosure orthe lopsidedness of the relationship between the two
parties. And we have people comeinto our office all the time saying,

(10:41):
I need a prenuptial agreement. Youknow, can you just give me a
document and I want to sign it. You know, my spouse and I
agree on everything. We want tojust sign this document. We don't want
to spend a lot of money.We want it to be really simple.
Have you ever heard this before?Guys, and we just want to get
this done. Oh and we're gettingmarried tomorrow. Yeah. Actually, seem

(11:01):
that's how it goes typically, right, So this this has to This is
an agreement, it's a contract andall the things you just talked about.
First of all, can you sharean attorney? And the answer is no,
because a lot of times they justwant to use one party. It's
funny because you can use a mediatortogether to get out of a marriage,
but you can't use the same attorneyto get into one. You have to
have separate counsel for that prenup.And a lot of times clients come to

(11:24):
us and say, hey, youknow, just can you recommend somebody,
just have them look it over andyou know we'll go from there. But
independent counsel DICK is a major requirementfor a valid prenup. That's right,
And I'm often I'm often asked,if I am the attorney for one party,
well, can you recommence somebody torepresent my fiance? The answer is

(11:48):
I can. I know other attorneyswho are qualified. I'd certainly rather not,
because if the marriage gets in trouble, the fact that once one party's
attorney recommended, the other party's attorneycould be referred to as a basis for
questioning the independence of the second attorneyand the ultimate decision maker for any contract

(12:16):
as a judge. And if oneparty's unhappy with the contract and it's a
prenuptial contract and they try to avoidthat contract. What are some of the
grounds that people bring up? Youjust mentioned one the lack of independence of
the attorney representing the spouse, andlet's just call it what it is.
The non moneyed spouse is typically theone that doesn't want to really hire council.

(12:39):
Well, I could take a crackat that quickly. One ground is
that the agreement is unfair. Thestandard for proving that is quite high.
You have to prove that the contractwas reasonable when entered into and not unconscionable

(13:01):
at the time of the divorce.So if a couple is flat broke when
they enter into the green up andone spouse hits the jackpot, that doesn't
necessarily mean the contract's unfair. It'sjust that circumstances evolved in a way that
makes one party feel that it's unfair. So that's one and the other you

(13:26):
mentioned lewis lack of full disclosure,and another is coercient you sign this agreement
that I just handed to you,or we don't get married, and that
that could be a grounduating it ifthe circumstances weren't so getting into the marriage

(13:50):
is not child's play. If youwant to do a prenuptial agreement, you
need independent counsel. You should haveenough time for each party to fully disclose
assets and contemplate the terms of theprenuptial agreement. There should be some back
and forth on those terms and discussionbetween the parties and the attorneys, and
once you have negotiated that agreement toa point of the two parties coming together,

(14:16):
they both sign it. It getsnotarized and you have a valid prenuptial
agreement to take into the marriage withyou. Once you're into that marriage,
then the fun starts. So we'regoing to take a short break. When
we come back, we're going totalk about being married and the property interests
that you acquire during a marriage,how to protect assets during that marriage,

(14:37):
and we'll even talk about how youcan protect your kids' assets at the point
in time when you leave that inheritanceon to them and they may not be
married to the right person. Youcan give us a call if you have
any questions or want to make comments. Today's topic, I think is a
really good one, So give usa call at eight hundred eight two five
five nine four nine to be happyto take your call. That's eight hundred

(14:58):
Talk WG. Why. I'm Lupiroon the radio with Richard Rothberg and Tom
Morasco from our New York City office. Happy to have you here on this
Belmont Saturday. We'll be right backafter this short break. What as well

(15:22):
say, go back? Thanks.Hell. Let's start us off into the
second segment of the show. Lupiroon with Tom Morasco and Dick Rothberg from
our New York City office of Pierreo'c connor and Strauss. We have beautiful
offices at two sixty Madison Avenue inManhattan and we service the five boroughs.

(15:45):
We also have a satellite office outin Garden City, Long Island. Tom
happens to be from Long Island andwe have an office there where we service
Nassau in Suffolk Counties, and wedo a state planning. We do elder
law, we do business and taxplanning, we do special needs planning,
and we have a growing practice.And these are the topics that we consider.
We do not do divorces, sowe will recommend a good matrimonial attorney.

(16:10):
But we do prenuptial agreements interestingly becausethey deal with property rights coming into
a marriage. And we discussed howto get a valid prenuptial agreement, and
Tom, I'm gonna turn it backto you. We have a series in
our firm called Medicaid Monday, andthis Monday, June tenth, at noon
twelve to twelve thirty, Frank,Henny and I are going to be talking

(16:30):
about Medicaid in a nursing home setting. And when we start talking about Medicaid
for married couples, there are enormousdifferences in rights between married and non married
couples, and so I'm gonna jumpin there. We're gonna then flip back
in the second half to the taxplanning side of things. But let's just
consider property rights in medicaid and talka little bit for our listeners about what

(16:55):
happens when you get married and nowone spouse needs medicaid. Yeah, you
know, it's extremely important to understandhow medicaid works, especially when you're looking
at nursing home. As you havepointed out, so Medicaid is a needs
based program and as such, it'simportant that you have to look at the

(17:15):
assets of the individual and the individualsin the case of married couples to see
whether they qualify and meat the standardto obtain that sort of care. So
when you are married, both ofyou are going to be looked at and
scrutinized as far as what your assetsare. So that also means for a

(17:36):
reliability perspective, making sure that youhave proper asset protection planning in place,
so that in the event that oneof the spouses does need care, that
the other spouse, the community spousethat's going to be remaining at home is
also going to be cared for duringthat time and adequately provided for in one
of the things that Frank and aregoing to talk about on Monday, and

(17:56):
if anybody would like to join us, this series is every second Monday of
the month, twelve to twelve thirty. We have done this for the past
year and a half. So wehave a lot of shows that are on
our website at purolaw dot com andyou can sign up for Medicaid Monday at
noon at info at purolaw dot com. You can send us an email or
you can just go to pure lawdot com events and you can sign up

(18:19):
there. You can watch them afterthey've been broadcast or live. We do
take questions that are in the chatroomin our zoom meeting, so it's a
video presentation. So in the nursinghome setting, when someone signs a medicaid
application, whether it's the individual ora power of attorney for the individual,
there's a little statement on there thatgives the state some rights. What rights

(18:45):
does the state get when you signup for medicaid? So that enables the
state to be able to put leansagainst them, to be able to collect
for and force the collection of anysort of care that's provided to that individual
over the course of their life onthat a later date. And that's very

(19:07):
as you point out, although it'sa little clause in there, it has
profound impact. So I've actually litigateda lot of these cases in spousal rights
in medicaid. I've gone to theCourt of Appeals, which is the highest
court in New York, twice onspousal medicaid cases. And the spouse in
the community gets a certain amount ofincome little enhanced income allowance called the Minimum
Monthly Maintenance Needs Allowance and an assetallowance called the Community Spouse Resource Allowance.

(19:33):
If you exceed those levels, youhave then excess income or assets, and
as you said, you assign yourright to collect that excess income and assets
over to the state and the county. So you give up your spousal right
to support and give it over tothe county. So that can put people
in a very difficult situation. True, very true. Have you seen much

(20:00):
litigation. We used to see alot of cases brought either in family court
or Supreme Court where counties were goingafter those spouses. I had three little
well, the three little old ladiesin the courtroom all being sued for their
excess income and assets by the county. Have you had any experience with that?

(20:22):
Yeah, unfortunately I have, andand realistically, the reason why that
happened is because of the failure toplan ahead of time and they just did
not know what they were getting themselvesinto and they never sought the help,
so as they were blindly signing.And think about this, it's an emotional
time period for anybody, right,It's a It's a very hard decision for
anybody to make. And so nowyou are eager to have your loved one

(20:45):
cared for, and you're signing thepaperwork thinking yeah, I just I need
to get them the care that theyneed, not really realizing the liability and
what else is at place. Soit is it is crucial that if anybody
is considering that that they that theyconsult with the right people and that they
get the right input and advise priorto making a decision. Yeah, we're

(21:10):
going to come back to that ina second. We do have a caller.
Serage is on the line. Goodmorning, Sarrage, Welcome to life
happens. Yes, this the questionthat I may want to ask may not
be directly related to what you're talkingabout. Okay, but I'll have a
friend after long marriage. They camefrom India's settled here and the wife wants

(21:33):
to take a divorce with no particularreason. Youan is it? And then
of course you want to have halfof the Albany and all all those kinds
of things. Isn't there any protectionfor the husband, well, protection for
the husband against what is it?Protection against getting divorced? Does he have

(21:59):
rights to try to stay in themarriage. But basically, I mean the
one is just often I don't wantto be in this manage anymore. New
York went to no fault divorce severalyears ago, Dick, And yes,
it's based Now you can get adivorce one party can get it without proving
any fault, so you don't haveto prove that the other party was at

(22:22):
fault in order to get a validdivorce. And then you get into something
called equitable distribution, and that's therights of the parties upon divorce, which
in New York governs how those assetswould get divided if there is no pre
nuptial agreement. And we got abouttwo minutes to the news, Dick.
Just if you would for sirrah quicklythe rights on equitable distribution. How does

(22:45):
that work? Well? If ifone party initiates a divorce proceeding, which
they have the right to do,and they don't have to allege fault,
that starts process of determining what theassets of the marriage are and if assets
of marriage arose after the marriage bythe earnings of one spouse or the other,

(23:11):
that is typically called marital property,and marital property is subject to division
by the judge, not fifty tofifty necessarily, but according to what the
judge decides is equitable, which basicallymeans pair and one party can start that
process. The other thing you meant, sir when you called is alimony.

(23:36):
It's called maintenance in New York,but it's the same thing. Depending upon
the needs of the poorer spouse orthe lower income spouse, the court can
make a determination that the other spousehas to provide support for the less financially
well off spouse, and that processcan be started by either spouse and throw

(24:03):
it in the lap of a judge. Mediation is another option. If you
don't have to go to litigation,you can come to an agreement. Mediation
is an option, but sir Rage, I'm afraid your friend is not going
to be able to put up defensesbecause you don't have to prove anything in
terms of the fault of the otherparty. But it now then becomes a
property division. So hope that answeredyour question. We do have to take

(24:26):
a hard break right now for thenews. We're gonna come right back with
Tom Morasco, Dick Rothberg, Lupirofrom Pierre O'Connor and Strauss, and we're
going to talk about spousal issues.We're can go back to the medicaid issue.
Then we're gonna start talking about taxes. Some people have heard of the
marriage penalty in taxation, something thatI think has gone away. But we'll
talk about all of those things righthere on Life Happens Radio. Stay with

(24:49):
us. We'll be back right afterthe news. We're back Life Papa Radio
hosts for this morning on Live withmy colleagues from our New York City office

(25:11):
in Pierre O'connoran and Strauss, DickRothberg and Tom Morasco, and I just
want to let you know about anevent that our firm, along with other
companies in our building at forty threeBritish American We're having a chicken barbecue and
this is some of the best chickenthat you'll ever have. And it's four
to seven pm on June twenty seventh, so I hope you can join us.

(25:32):
And it's all there's games, there'sprizes, there's auction the items,
and it's all to benefit High fiveSports, a wonderful organization that we work
very closely with that provides sports,socialization, friendship, team building for children
with disabilities. High five Sports isright here, local in the Capitol region,
and we are in love with theirorganization and what they do for those

(25:53):
kids. So come out and helpus support High five Sports. The other
charity we're going to support is Operationat Ease and it's Thursday, June twenty
seventh, four to seven pm,and again you can register for the chicken
barbecue and the fun at forty threeBritish American Boulevard. It's going to be
right out side of our building atpyrolaw dot com Events pyrolaw dot com Events.

(26:18):
That's also where you can go tosign up for Medicaid Monday, which
is going to be this Monday,June tenth, from twelve to twelve thirty.
Talking about medicaid and in particular,nursing home medicaid, and Tom,
I'm going to come back to youbecause a lot of times clients walk into
our office and it may be thespouse, it may be the kids,

(26:41):
but mom or dad has just gonethrough the stroke or the fall and the
broken hip. They go into thehospital. They go through the er doors
and they don't come back out.So they go through the er doors.
They get admitted to the hospital,they get treated, they get skilled nursing
rehab in some cases, and theyend up in a nursing home, which

(27:02):
is not anything that any of usever contemplates, but it hits you so
fast and so hard that it putsfamilies back on their heels and they don't
have a plan, they're not ready. When that person going into the nursing
home has a very healthy spouse livingat home, and they have assets above
those levels that we're going to talkabout, there are ways that we try

(27:25):
to protect those assets. And oneof those things, and this is something
that a lot of our listeners maynot have heard of. They might have
doesn't sound very nice, but it'scalled spousal refusal. So Tom just walk
our listeners through what happens when onespouse and this doesn't have to be an
elderly couple. We have people cominginto our office. We're talking to the

(27:47):
Brain Injury Association this Wednesday. Ifyou get in a car accident, you
have a traumatic brain injury, you'reon medicaid, and your spouse has to
live a lifetime with the assets thatthe government and the law allow them to
keep. Talk a little bit aboutwhat that community spouse is facing in this
kind of a situation in terms ofassets and what their rights are if they

(28:07):
have more than that legal limit.That's a great question. And one of
the things that you mentioned was thespell's refusal. So going back earlier about
what we had said that the spouse, when let's say, applying for a
nursing home, is basically subjecting themselvesto future liability to collect those assets.

(28:30):
They can do the spells of refusal, whereby they are stating that they refuse
to have their assets made available forthe care of their spouse. And if
we're over the asset limits, oneof the things also for the individual who's
applying and in this situation, obviouslythere's lots of positives about marriages, but
in that situation that you posed,where there is one spouse that is healthy,

(28:53):
there is a spouse of exemption transfer. Now, there is a look
back period for nursing Home Medicaid,and there's a five year look back whereby
they are going to scrutinize what wasdone with an individual's assets for the five
years leading up to the time ofapplication. Now, whether or not they're

(29:14):
assessing going to assess the penalty.One of the exemptions in that situation would
be a spousal transfer. So ifin the event the ill spouse has assets
that exceed the asset limit, thoseassets could be for the time being,
especially in a situation like you said, where it was an emergency. It's
not planning ahead of time, youknow, that's really more crisis planning.
We're in this situation, now,how do we handle it? So we

(29:37):
could have the spouse who needs tobe admitted for care transfer their assets to
the healthy spouse without triggering any sortof penalty yahouse. The same way for
tax planning, one spouse can transferto another spouse without triggering taxation right,

(29:59):
and the same rules apply for medicaid. One spouse can transfer to another spouse
without triggering any medicaid penalty. Sointraspousal transfers of assets are okay. But
then tom when you have the spousewho's the well spouse who may need to
use those assets to live another twentythirty years in the community without becoming a
public charge, they have some otherconsiderations that they then need to take into

(30:25):
account. That's absolutely true, andthis is where planning comes in to be
crucial. And if there is thatpossibility again, as you said, for
this individual who might need care inthe future, then we need to go
into the realm with asset protection atthat point and make sure that they're properly
cared for for their future. Andso, how do you protect assets if

(30:49):
medicaid is going to come sniff inat them and try to get them,
and they'll get them while you're alive, they'll get them from your estate while
you're dead if you don't plant properly. What tools are available to our clients
to help protect assets. That's agreat question. So one in particular is
what's known as a Medicaid Asset protectiontrust, which is an irrevocable trust.

(31:11):
Now, the reasoning behind this typeof trust is that there has to be
some separation between the individual and theirassets, so that when it is being
viewed at by Medicaid and being scrutinized, they have to discern whether or not
they actually have control over this assetsor whether they've sufficiently insulated it to the

(31:33):
point where they can say, youdo not have the sort of access to
the asset, and so long aswe've satisfied that five year look back period,
they will not consider that as partof their asset when assessing their qualification
for Medicaid. So we do thiswith clients and we talk about this on
the show quite a bit. Oneof our attorneys, Frank Hemming, who
has become our Medicaid guru, doesall of our Medicaid applications. He's on

(31:56):
the show frequently. He and Iwill be doing the Medicaid Monday at noon
on June tenth, and he's donemany of them with me and with my
partner Aaron Connor over the last yearand a half. But that Medicaid asked
a protection trust. If you doit five years in advance is relatively easy.
You get to set your terms.We can make it very flexible.

(32:17):
You wait out five years and whenthat event happens, when that broken hip
that stroke happens, those individuals havea plan in place that will allow them
to access Medicaid right away. Andwhat are nursing home costs down on Long
Island right now? Tom? Whatare you looking at in terms of monthly
cost? Fortunately, the average monthlycost in Long Island for nursing homes around

(32:42):
sixteen thousand dollars a month or more. Yeah, and that's not far different
from what it is up here inthe Capitol District. We see some up
here fifteen sixteen seventeen. I've seensome in New York City at twenty twenty
two. But you're looking, folks, at two hundred to two hundred and
twenty thousand dollars a year as thatnursing home costs. And if you can

(33:02):
get your assets secured into one ofthese trusts and get Medicaid to pick up
that burden and pay that tab,then you can save those assets for the
community spouse in this case, whocould then have use get the income from
those assets over time because they stillhave to live in the community. And
that's one of the hardest parts ofthis is keeping that well spouse well and

(33:27):
solvent so that they can pay mortgages, they can pay taxes, they can
live in the community and have assetsto back that up absolutely, and also
protect a legacy for children if theyhave to make sure that those assets have
a way of passing on. SoI want to take this back one more
step because this is important for spousesto know what these rights are. Get

(33:50):
the planning done more than five yearsout. But if you don't. Yeah,
the rules for community Medicaid are stillvery different than nursing home Medicaid.
Talk a little bit about that differenceand how people can qualify a spouse for
Medicaid homecare. Yeah, so thehomecare rules are different. There are certain
different considerations and there's also different applicablerules when assessing the qualification. So that

(34:16):
asset limit that we were discussing earlieris the same as if it were nursing
home, but for community based there'salso an income threshold that is also looked
at, and if a person makesover a specific amount of income per month,
then we need to utilize other planningtechniques such as a pool trust in

(34:37):
order to get that spouse eligible.But one of the main differences between the
two is the lookback period. Now, currently community Medicaid does not have a
lookback period. So whereas in thenursing home situation, we're talking about this
five years, where you know,any type of transfer that's leading up to
is going to be looked at forpurposes of community Medicaid that currently is not

(34:57):
instituted, although they are. Youknow, there is legislation that perhaps may
pass to impose a thirty month lookback in March of this upcoming year in
twenty twenty five, but at themoment there is not. So if in
this situation there was a sort ofa medical event or episode, but that
ill spouse is able to remain athome but requires just assistance, then we

(35:19):
could utilize community Medicaid. They'll dothe transfers immediately, and at that point
it does not have to just beto a spouse. But it is very
important to note in that situation thatin the event that nursing home care is
going to be required within the fiveyears, that transfer will be looked at.
So that it's just very crucial tounderstand. So people who have very

(35:42):
limited ability to make transfers. Let'ssay there isn't a spouse in this situation,
or there isn't an exempt party thatthey can transfer assets too. For
community Medicaid, we can get pastthat hurdle. But then within five years,
if that individual is going to requirenursing home care, then that's something
that is going to be looked atand should be thought of ahead of time.
Yeah, these rules, folks,get very complex and there are a

(36:05):
lot of nuances. That's why wedid our Medicaid Monday series and that's why
it's there. So we have afull series on Medicaid asset protection trusts,
on Medicaid home care, on thedifferent home care rules. We're just waiting
for the New York State Department ofHealth to let the other shoe drop and
say, okay, now you havea two and a half year look back
for home care. But they haven'tbeen able to do that yet and we're

(36:27):
just waiting and they say sometime inmid twenty twenty five, we may see
it, but we don't have it. So anybody that needs Medicaid home care
today can literally create a trust,put the assets in the trust, and
qualify for Medicaid homecare next month.For spouses with one spouse in the nursing
home, it's a different game.So you transfer the assets to the well

(36:49):
spouse, you apply for Medicaid forthe nursing home spouse, the well spouse
files the spousal refusal, so theassets don't get counted right away, but
the government then has some rights tothem. And once the spouse in the
nursing home goes on Medicaid, thelaws is that the spouse in the community,
those assets are no longer part ofthe game. They're no longer accountable.

(37:13):
So what we do then is wehave the well spouse create the Medicaid
Asset Protection Trust after the nursing homespouse goes on Medicaid, so we try
to shelter the assets long term forthe well spouse. And that's how Medicaid
protection is done in the nursing homesetting and in the home care setting,
and it's a big part of whatwe do at our firm, both up

(37:37):
here in the Capital region and downstate, and it's something that Medicaid Mondays will
tell you all about. So goto Thepyro Law dot com events tab and
you can find all of these topicsdealt on video with clear explanations and we
have a Medicaid guide that you candownload from the website as well. When
we come back. We're going totackle the tax topics, and Dick,

(38:00):
I hope you're still awake. We'regonna get to the estate and income tax
issues for married couples with very importantso stay with us. Loup Piro,
I'm your host for this Morning onthe Radio Live with Tom Morasco and with
Richard Rothsberg. You're listening to LifeHappens Radio every Saturday morning at eleven am
right here on Talk Radio WGY.Welcome back to Life Happens. We're talking

(38:36):
about marriage. Walking into a marriage, be careful, be thoughtful. If
you need a prenuptial agreement, that'ssomething that can be done. We talked
about that in the first segment,how to do it to make it legal
and binding and valid. We talkedabout spousal rights in terms of equitable distribution
upon divorce, and we talked aboutspousal rights in medicaid. And we're going

(38:58):
to turn now to tax topics.And you know, we have enough taxes,
Dick, to keep us busy.So we have income tax, capital
gains tax, gift tax, estatetax, generation skipping, transfer tax,
all of these things kind of comeinto the mix. And the marriage penalty
refers to an income tax provision thatused to make it less beneficial to be

(39:21):
married than single, but that that'skind of been plugged that loophole, hasn't
it to some extent, not completely. If if you have two couples who
are relably low income and they're botheligible for the earned income tax credit,

(39:46):
being married can hurt. At theopposite end of the spectrum, if you
have two couples, both of whomare very high earners. Depending what the
numbers are, the amount of taxcould the higher if you're married and if
you're not. Whether that would convincea couple not to marry or being married

(40:09):
to get divorced just because of thetaxes, I doubt, But Derek Litch
is in the system. One otherI'll mention. We now have a limit
on the amount of deduction you cantake for state and local taxes ten thousand
a year, assuming that you areitemizing. If you have two people living

(40:34):
together but not married, they eachget ten. If they're married, the
two of them together only get ten, and if they file separately, they
only get five each. So youhave those vestiges of issues. But generally
speaking, tax system is arranged insuch a way that a couple that has

(40:59):
wealth liz together, loves each other, but aren't married. Generally speaking,
the choice of getting married will bebeneficial. Now, there are lots of
other issues that intrude in terms ofchildren of prior marriages and the like.
Issues related to the residential situation,whether being married or not being married affects

(41:22):
ownership of a residence or how youcan leave that residence in the event of
death. But for the most part, marriage carries tax benefits. I'll just
mention two of them that are important. One of them if you have an
IRA or an interest in a textqualified retirement plan of some kind, like

(41:52):
a four to one K plan,and you want to leave it to your
partner. If that partner is marriedto you, you can leave it to
the partner. They can put itin their own IRA and take it out
over their lifetime. If your desiredbeneficiary is not married to you, the

(42:15):
tritures are much tighter, you haveonly a limited period of time to take
it out, and the tax benefitsfor the surviving partner are much less.
Yeah, you're getting into the secureact there, and espousal rollover is usually
the best way to leave an IRA, So you leave it to the spouse

(42:37):
and they roll it right over upondeath into their own IRA. If they're
less than ten years younger than you, then they can still take it out
over their individual life expectancy. Butthat's the limitation. But you're right,
there are major benefits in the spousalrollover arena. And when you look at

(43:01):
the other tax that we're going totalk a lot about, the estate tax
and the gift tax. That's wherewe've had a lot of shifts in the
last ten years or so, especiallyin New York State. That's right,
if the couple is wealthy enough thatthey hit the thresholds where the tax might

(43:22):
be imposed, and Louis, youcan say what those are, but you
have to be at least moderately wealthyto have to worry about this. But
being married to your intended beneficiary conveyssignificant benefits. You can make gifts to
your spouse without tax, you canleave property without limitation to your spouse without

(43:49):
tax, and it opens the doorto planning techniques which make sure that you
capture the benefits of very large exemptionsfor both spouses, regardless which spouse dies
first. For federal purposes, thathas become less important because of a peculiarity

(44:12):
we call portability. But on thestate level, New York State, for
example, has an exemption of almostseven million dollars now. But if all
of that if a couple together havemore than that, and all of that
wealth is in one spouse and youdon't do planning and the poorer spouse dies

(44:37):
first, that spouse's exemption could belost. So you have to do careful
planning. And this is for marriedcouples to minimize the impact of the state
death tax. We used to havea lot more need to do this.
In twenty fourteen, the exemption fora state tax was one million dollars and

(45:00):
a lot of people were over amillion dollars. So for a married couple
using the technique you just talked about, which we call credit shelter planning or
bypass planning, where you have atrust created that can use the first spouse's
million and then you plan to usethe second spouse's million, that was credit
shelter planning back then. But overtime, the New York exemption has elevated

(45:22):
to what is now six million,nine hundred and forty thousand dollars per person.
So for wealthier couples, and wemay have more of those in our
New York City office than we havein Albany, but they're certainly here too.
You have to do planning in orderto maximize the use of both of
that spousal exemptions. And in NewYork has another peculiar rule called the cliff.

(45:45):
Just tell our listeners a little bitabout that. So if you miss
this target, there is a punitiveresult. Sure, if the person who
is diied has in a state suchto tax of less than that six million,
nine hundred thousand dollars number you mentionedfor this year, there's no tax.

(46:06):
But if you get over that limit, the tax kicks in with a
vengeance. So that if the amountin question is five percent or more above
that limit. So if it's aseven million dollar exemption, if it's over
it by more than three hundred andfifty thousand dollars, the exemption completely goes

(46:30):
away and you're taxed from the firstdollar. And if you do the math,
you discover that in that in thatrange, the marginal bracket attax is
more than a hundred percent. Itcould be more than two hundred percent.
So if you're in that range,you actually save money if you could take
the extra money, throw it ina barrel of light a match. Now

(46:53):
we don't recommend that, but youmight, for example, want to give
it to charity instead, which actuallybenefits charity, saves your your other error's
money, and the loser is thestate of New York. And this is
mind boggling to most people when whenwe sit down and we talk to clients
and for our listeners to think thatyou could have six million, nine hundred

(47:15):
and forty thousand dollars in your estateand pay zero a state tax in New
York zero and you add three hundredthousand dollars to your estate or three fifty
and all of a sudden, yourtax is over six hundred thousand, six
hundred and fifty thousand. It's justabsurd. But that's the result so careful

(47:39):
drafting. And this is where thebypass plan comes in. And as you
said, Dick, you can makeprovision for the surviving spouse. You can
carve out the exemption a six pointninety four. You can get that exemption
in the second estate. Where itgets a little bit tricky is when you
have second marriage situations. And justtalk a little bit about the planning for

(47:59):
spouse houses who are in second marriagesor non traditional marriages where you have children
from different marriages, and a balancingact that is sometimes delicate. Well,
that's right. I mean, youcan leave property in a trust for your
surviving spouse, and if you obeycertain rules, you can postpone any tax

(48:23):
impact until the second death, andyou can direct that at the end of
the day when the second spouses die, that the property goes back to the
children of the first marriage. Thetax technique works, but the family Thanksgiving
dinner might be a little less pleasant. It's just a matter of balancing the

(48:47):
interests of what were two different families. The two families got merged, and
the children and grandchildren on either sidemay have absolutely loving relationships, there may
not, and the couple just needsto balance all those issues when deciding whether
this trust idea is a good one. And the age disparity sometimes comes into

(49:12):
play here, because if you're relyingon that marital deduction as we call it,
and then the ability to defer taxbased upon the spouse living and collecting
income from that trust, and thatspouse lives another thirty or forty years now,
your children are elderly before they geta penny out of that trust.
There. Yes, it's a problem. It's how the tax structures work that

(49:37):
is a problem. So careful planningfor medicaid planning, careful planning for tax
planning, and just we have aboutanother minute to talk about capital gains taxes,
because this is a tax that hasto be factored into all of the
planning, whether it be medicaid planningor a state tax and gift tax planning,
and Dick just talk very briefly aboutcapital gains tax and how that plays

(49:59):
into this. All right, Justbriefly, there's a very big benefit in
the tax code for dyeing. Ifyou have an asset that you bought many
years ago for a low number andit is now worth many times that amount,
and you die owning that asset,all of that gain goes away for

(50:22):
tax purpoces, Whereas if you soldthat asset, you would be paying a
significant capital gains tax on it.So that greatly affects and some times distorts
what you own and when you disposeof it. So when we're planning,
whether it be a trust for assetprotection, or trust for tax planning,

(50:44):
or or your vocable trust, toavoid probate looking at assets, differentiating between
retirement plan assets which have very specialrules, capital assets which have appreciated life
insurance, and other assets which havedifferent rules. They all have to be
factored together. I want to thankDick Rothberg, Tom Morasco thanks for joining

(51:05):
me today on the air, Fellas, and I want to thank our listeners
as always for joining us on LifeHappens Radio. We'll be back next week
with more and we hope that youhave a great day and enjoy that Belmont,
I hope you pick the winner.Have a great Saturday.