Monthly Archives: June 2013

A FATHER’S DAY MESSAGE FROM HEIDI FOX

JPandHFAs Father’s Day approaches, thoughts of my dad and the founder of Petschauer Insurance, John Petschauer, are especially active in my mind. Every Father’s Day, I think of something he either did or said to support me or make me laugh when I needed it the most. This helps me stay connected to my treasured memories of him, his presence and positive influence in mine as well as so many other lives. Doing so definitely brings a smile to my face and joy to my heart.

This year I am remembering his words to me shortly before he became an angel, “Heidi life goes on – make sure life goes on for you.” He had this keen sense to know what I was thinking and know what needed to be said. I hear these words in my heart almost every day. My dad not only left a legacy that included integrity, respect, loyalty, humor and the importance of being honest and doing your best for your family, friends, and clients; but he also left the amazing Petschauer Insurance legacy that embraces those same principles. The legacy of Petschauer Insurance will go on!

I wish all the fathers on their special day a very wonderful Father’s Day. If you are lucky to still have your dad, then treasure every moment and celebrate. If your dad is an angel like mine, remember one special thing about him today and pass it on.

– Heidi Fox

My Neighbor Damaged My House and Has No Insurance

asksheri
Dear Sherri,

My neighbor was power washing his home as he does every spring and this year he managed to hit my house and damaged a section of my brand new wood siding. Well, he had the decency to come to my front door and inform me of the damages. He apologized but also advised me he no longer has insurance and he is not willing to pay for the repairs. OMG!!!!! What can I do? What is my recourse? Please help me.
– Going Ballistic in Queens

Dear Going Ballistic in Queens,

You have several options. One is to rent a bulldozer, go over to your neighbor’s house and… No you better not do that one. So your first real option is to submit a claim through your homeowner’s insurance policy. However, if you do this, your carrier will pay for the cost of the repairs, but you will be responsible for the deductible and it will be a claim against your policy. Your second option is to sue the no good, I mean your neighbor and go to court. In New York you can sue through Small Claims Court if damages are $5,000 or lower without involving a lawyer. Otherwise, you will need to consult an attorney to sue in civil court. Of course, I’m not a lawyer, but I say, ‘’GIVE HIM THE CHAIR!”
Good Luck.
Sherri

Should I Transfer My Home To a Trust or To My Kids?

HomeMany individuals want to know whether they should transfer title to their homes to a trust or to their children. The short answer is “it depends” upon your objectives and comfort level, among other potential factors. For many individuals, such a transfer may be a very good idea provided it is properly structured. There are several good reasons why a person may benefit from transferring title to their home. These reasons include probate avoidance, estate tax planning, Medicaid planning, and ongoing management of the asset in the event of incapacity.

There are different methods used to transfer title to a home. For example, a deed may be transferred to a revocable trust, irrevocable trust, outright to a family member, or to a family member subject to a retained life estate. The best method to make the transfer can be determined after consultation with a qualified attorney. The wrong method can lead to adverse tax consequences and the loss of the right to live in the home.

Probate avoidance is an objective many clients seek. Avoiding probate means that your estate will not pass through the courts. This typically means that there will be a savings, which is often substantial, in court costs and attorney’s fees. In addition, an estate that avoids probate typically passes quicker to the decedent’s heirs and the settlement of the estate is private as opposed to a matter of public record. Avoiding probate is also a good idea if you anticipate your Last Will and Testament will be contested or if you own real property in more than one state.

Estate tax planning is another reason why many persons transfer their home to a trust. As an example, by transferring title to the home to a “Qualified Personal Residence Trust”, the transferor may save substantial estate taxes by removing the home, and all its future appreciation in value, from the transferor’s estate at a discounted value. The discounted value applies because the creator of the trust retains a term of years where he or she will live in the home rent free. After the retained term of years expires, the creator of the trust must pay fair market “rent” if he or she continues to reside in the home and wishes to keep the home outside their taxable estate. This payment of rent can be another effective way to reduce the size of a taxable estate since the rent is not considered taxable income and does not count against the $5.25 million federal exemption. Note: If the creator of the trust dies before the retained term of years expires, the home will be brought back into the creator’s taxable estate.

Medicaid planning is another reason why many people transfer title to their home to a trust or to a family member. Medicaid planning involves restructuring title to your home for it not to count as a resource or have a lien or estate recovery claim filed against it if Medicaid is sought to pay for long-term care at home, in assisted living or in a nursing home. A proper deed transfer to a trust or to a family member for Medicaid planning purposes will allow for the transferor to continue to live on the property rent free for the rest of his or her life, will keep the real estate tax exemptions in place, will allow the transferor to keep the capital gains tax exclusion if the home is sold during the transferor’s life, and will achieve a step up in the basis of the home upon the transferor’s death.

Ongoing asset management is another reason individuals may put their home (or other assets) into a trust. Under this scenario, an individual is typically the trustee of the trust as long as the person has the mental capacity to serve. The trust language typically provides that if the original trustee loses capacity, another person or entity named as a successor trustee assumes control of the trust.

As you can see, there are many issues present when determining whether to transfer title to a home. Unfortunately, many people fail to properly transfer title resulting in tax and other problems that could have been avoided with proper professional advice.

It is important to have your insurance representative involved in the process to help make sure your insurance coverage remains in place and is not lost due to a change in title.

By: Robert J. Kurre, Esq.

Robert J. Kurre, Esq. is a partner with Kurre Levy Schneps LLP located in Manhasset, New York. Mr. Kurre, a certified elder law attorney, represents individuals and corporations in connection with the planning and administration of simple to complex estates and trusts consisting of assets of modest to substantial wealth. Mr. Kurre’s practice concentrates in elder law, estate planning, estate administration, special needs planning, and estate and trust litigation. His website is www.klsllp.com.

Planning For Hurricane Season

hurricaneTypically, hurricane season runs from May 15th to November 15th of any given year. Some of the lessons of SuperStorm Sandy are that you don’t have to be on the coast to suffer extensive damage to homes, commercial property and the loss of income associated with business closures and the resulting loss of earnings.

Many people continue to struggle from the effects of this storm and many businesses are nowhere near back to normal functioning. Off Premises Utility Services coverage was one of the limited means of recourse for those suffering damages from Sandy and for the loss of income sustained as a result of losing power. This coverage provided for losses due to lack of incoming electricity caused by damage from a covered cause (such as fire, windstorm or flood if coverage was purchased) to property away from the premises—usually a utility generating station. The coverage is also referred to as “off-premises power coverage.” However, it is important to remember that such coverage is not provided by standard property insurance policies and is only available by endorsement. Utility service interruption coverage endorsements vary widely as to what utility services are included, whether both direct damage (damage to property) and time element loss (loss of earnings) are covered, and whether addition, not all business income coverage is the same.

Damage to property, ensuing power interruptions and road blocks and/or closures can force a business to cease operating. The absence of personnel and suspension of operations can cause overall financial effects not contemplated by traditional coverage. Especially in cases where damages are caused by heavy rains, rising tides, and heavy winds, without the proper coverage, you could find yourself out of luck and out of business quicker than you ever imagined.

The best way to avoid catastrophe is to have a plan. We here at Petschauer followed our Disaster Recovery Plan during “Sandy” and it made all the difference to our customers and to the continuation of our business operations. By a pre-arranged disaster plan, we all knew what was expected of us and how to swing into action. We were able to work from our homes using our cellular telephone to service customers, report claims, counsel our clients and get restoration underway whenever and wherever possible.

Nobody, not even the meteorologists, can predict with complete accuracy the extent of the damages caused by wild weather conditions. They can, however, issue hurricane, tornado, coastal flooding watches, warnings and advisories all of which can help to better prepare us for approaching deleterious weather conditions. However, once the warnings are in place, insurers generally issue moratoriums against binding any new coverage until after the storms have passed. So, the best offense is truly a good defense or in this case a set of sensible, comprehensive planning which includes making sure to purchase those insurance coverages that can actually make a difference in times of disaster.

By Karen Skoler, CPCU