Ranking Democratic member of the House Energy and Commerce Committee Frank Pallone, Jr. of New Jersey recently introduced a new proposal aimed at tackling the rising costs of long term health care insurance to give seniors a better life. Under the current system, Medicare only covers very limited long-term care and support for seniors until a senior eventually qualifies for the Medicaid program after they have depleted all of their financial resources.

If adopted, the The Medicare Long-Term Care Services and Supports Act would enact multiple measures to help seniors get the care they need without depleting their finances. Among other things, The Act would includes incentives for people to seek care at home and give much needed relief to overburdened family caregivers by compensating these individuals for lost income other retirement benefits, and career opportunities if they have to cut back on work hours or leave the workforce.

The Act would establish a standard cash benefit within Medicare for anyone who is eligible for Medicare and those under the age of 65-years old who meet certain disability thresholds and begin after a two-year waiting period that functions as a deductible. The proposed legislation would allow individuals to use their self-directed benefits towards all long-term services and supports, including nursing facility care, adult daycare programs, home health aide services, personal care services, transportation, and assistance provided by a family caregiver.

According to reports, celebrity chef Anthony Bourdain has left the bulk of his $1.2 million estate to his young daughter, which will be placed into a trust that will make two payouts over her lifetime. Bourdain’s estranged wife, on the other hand, was named executor to the estate will receive his personal effects including furniture, cars, books, and even his frequent flier miles which could be quite valuable given the deceased’s career as a professional traveller.

Documents filed with the Manhattan Surrogate’s Court indicate Bourdain’s estate was worth $1.21 million, including $425,000 in savings, $35,000 in brokerage money, $250,000 in personal property and $500,000 in “intangible property” which includes royalties. Media outlets report that Bourdain’s 11-year-old daughter is the primary beneficiary of his trust which will distribute assets when she is 25 and 30, and disperse the remaining balance when she turns 35 years old.

Establishing trusts for minors is a very common practice in estate planning as it is meant to these young persons do not become overwhelmed by receiving an inheritance all at once, which could lead to financial mismanagement. In the meantime, a guardian appointed by the Surrogate Court will safeguard the younger Bourdain’s estate until the final payouts are made. While all this may seem straightforward, experts reviewing Bourdain’s estate situation believe it may be subject to complications, including potential challengers by the spouse.

With President Trump’s recent immigration reforms impacting the domiciliary status of many New York residents, estate trust administrators are faced with changes to the taxable status of those asset transfers. New York Consolidated Laws, Estates, Powers and Trusts Law (EPTL) applies specific rules to asset transfer procedure when there is a change in domiciliary of a trust holder. The federal Internal Revenue Service (IRS) provides fiduciary income taxation rules for U.S. residents with foreign income (I.R.C. §§ 1, 61), estates, and generation skipping asset transfers (I.R.C. §§ 2001, 2031-2046, 2601). Non-U.S. residents are subject to U.S. income tax from income sourced solely in the country, and are subject to taxation of estate, gift and generation skipping transfer of U.S. situs assets.

New York Rules to Domiciliary

In New York, trust asset transfer falls under three (3) categories of domiciliary: 1) resident, 2) nonresident, and 3) exempt resident.

The primary benefit of trust and family foundation investment in stock funds, is the transferability of those vested assets to cash. Unlike real property, securities offer wealth enhancement features, as well as a ready source of liquidity. The Securities and Exchange Commission Act of 1934 (“The Exchange Act”) is the legislation binding securities transactions. The Act also applies to rules of securities investment and transfer of shares as part of fund interests or irrevocable trusts within federal and state estate and probate laws.  Section 16(b) amendment of the Act in 1999, improved estate planning benefits of transferable stock options,  no longer requiring stock options to be non-transferable for trust investors to take advantage of tax-exemption rules.

Still, there are qualifying rules for trust investors. A licensed attorney at law experienced at matters of estate planning and probate law can provide professional advice about securities investment and qualifying rules for trust investors.

Qualifying Rules for Trust Investors

In the United States, the inheritance rights of children with unmarried parents are virtually the same as those of children with married parents.

New York estate law allows trust holders to leave property to anyone named in a will, trust, or other joint estate or investment device. Where there is no will or trust naming heirs or beneficiaries, however, estate distribution of assets is left up to the courts. For children of unmarried parents, this latter scenario can lead to lengthy probate litigation. Unmarried parents who have not affirmatively left property in a will, or distributed it in a trust, run the risk of leaving their children a serious legal mess.

The “Illegitimate” Child in Estate Law

In 2015, the U.S. Congress passed S.349 – Special Needs Trust Fairness Act, allowing disabled persons to plan their own estates without the assistance of a family member or other guardian. The Act has resolved some of the complex issues associated with trust formation, and now informs the estate planning process coinciding with execution of trust assets in the interest of disabled beneficiaries. An estate planning attorney will advise a family of the proper legal process for developing an estate plan that includes a disabled beneficiary to ensure that the loved one’s special needs are supported after the decedent has passed. The following are recommended steps to planning an estate for a trust holder or beneficiary with special needs:

The Estate Planning Guide for SNTs

  •         Trust Formation. A Supplemental Needs Trust (“SNT”) is a trust designated exclusively for the benefit of a disabled family member or named beneficiary. The SNT allows family members and friends contribute to trust assets through payment for good or services. SNT beneficiaries remain eligibility for government assistance programs as well.  

Legacy ownership of a business interest can continue to have control over an enterprise if that entity becomes part of a probate estate. Stock transfer to a single, or to multiple trusts, in the interest of continued business operations, is not only a plausible, but legitimate estate planning strategy that allows a decedent and named beneficiaries to capitalize on future earnings. Any risk connected to trust transfer of a distressed business shareholder asset at the time of a decedent’s death, is the obligation of the estate in which it is held. Estate executors and trustees have fiduciary duty to a standard of care in oversight of shareholder voting privileges of a trust-owned business interest under New York Consolidated Laws, Business Corporation Law – BSC § 621 (a)(b)(c)(d). Voting trust agreements.

Shareholder Rights, Maximum Value

Executors and Trustees considering whether to continue shareholder interest in a business operation, may find it more appropriate to sell those shares in order to maximize value of the estate or trust for the heirs or beneficiaries. Valuation of shareholder assets may result in a beneficiary’s decision to convert a certificate(s) to a different investment vehicle in exchange for higher earnings, or to cash out at time of contract expiry. Transferred shares can also be surrendered and cancelled for reissue under the name of another trustee or trustees. The statute of limitations for transfer of shareholder interests to other voting trustee shareholders for purposes of conferring voting rights is ten years (BSC § 621 (a)).

Since federal income tax rule changes in 2017, estate planners will find disclaimers to be a better exemption tool than before. A disclaimer allows for adjustment to an estate or trust for purposes of shifting tax liability from high-wealth beneficiaries. U.S. Internal Revenue Service ({“IRS”) guidelines allow for disclaimer by a beneficiary (“disclaimant”) to bypass taxation with a default transfer to a beneficiary eligible for estate or gift tax exempt status. Disclaiming parties may not be enriched by estate assets once disclaimed or entitled to name the beneficiary whom those assets will pass to as result.

Interested estate parties can consult with an attorney about the benefits of disclaimer provisions “qualified” under federal law (Title 26 Revenue Code USC §. 2518).  Disclaimer modification of an estate, trust, or will must be made in writing within nine (9) months from the death of the decedent.


Since congressional ratification of the “Tax Cuts and Jobs Act” of 2017 (“TCJA”), federal Internal Revenue Service (“IRS”) guidelines effective tax year 2017 have proven to be a challenge for estate planners. Reform introduced to “simplify” the tax reporting process for entities, the Act modifies estate income tax guidelines; imposing a new set of rules for transfers and exemptions.

Guidelines to Tax-free Transfers

Specifying rule changes affecting both estate and gift tax exemptions, as well as generation skipping transfer exemptions, the new law increases the amount to $11,180,000 from $5,490,000 per person with inflationary adjustments assigned annually. Portability election rules continue, allowing a deceased spouse’s estate and gift tax exemption to carry over to a surviving spouse for use while living. Effective January 1, 2018 through December 31, 2025, the Act now makes it possible for a married couple to transfer a total of $22,360,000 without tax on gifts or estate transfers to family, heirs, or other beneficiaries.

If the interest of a family-owned corporation part of an estate or trust has been violated, a derivative action lawsuit can be filed on behalf of those shareholders alleged to be harmed by improper fiduciary conduct. In probate litigation matters, family-owned corporation interests can complicate execution of an estate or trust. Derivative actions filed on behalf of inheritors of the shares of a family-owned business are subject to what is called “demand futility” analysis in court. This double-bind principle can be frustrating for beneficiaries seeking timely transfer of estate or trust family-owned business shareholder assets.

Demand Futility and Exceptions

The rule of “demand futility” is enforced by a court if it is determined that the plaintiffs who have filed a claim against a party allegedly making an independent and disinterested business judgment of detriment to the other shareholders. Such lawsuits are often dismissed by the courts, however, on a motion of the defense. The reason for dismissal? “Demand futility” – where it is deemed that the corporation suing itself is not in majority interests on basis of no adequately cited exception.  

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