Syracuse Elder Law Blog

Savvy real estate investors in New York may prefer to explore potential tax saving options like combining cost segregation and Section 1031 exchanges. Due to provisions in the Tax Cut and Jobs Act, or TCJA, this particular strategy may be even more important for investors. The TCJA has modified rules that apply to Section 1031 exchanges and expanded applicable depreciation rules. These changes present new opportunities that some investors may not know are available.

One newly available tax planning strategy involves IDing short-life assets that will be fully depreciated with a cost segregation study. Because these no-value assets are not part of the Section 1031 exchange, there is no depreciation recapture that has to be reported as income. With a cost segregation study, tax-paying real estate owners may be able to reclassify some assets as Section 1245 properties instead of 1250. Doing so allows for depreciation over a shorter period of time.

Over the years, one or both of your New York parents may have indicated to you what they want and do not want when it comes to end-of-life medical care. Maybe their respective wishes coincide, but maybe each of them has different preferences. In addition, not only has medical technology changed in the past several decades, but palliative and hospice care also have become available. Consequently, the end-of-life care either of your parents said they wanted when they were younger may not be what they want now.

All of this makes it difficult for you and your siblings to know what to do if and when the time comes when your parents can no longer make these decisions for themselves. You may wish to suggest to your parents that each of them execute a living will. Unlike a “regular” will, your parents’ respective living wills do not state to whom they want their various assets to go when they die. Rather, these documents state the types of medical care each of them wants and does not want if and when they become terminally ill or suffer an injury or illness that leaves them in a permanent vegetative state.

Since there are now many new types of assets available to New Yorkers, it's important to know how to account for them in an estate plan. For instance, those who have digital coins will need to find a way to grant access to executors and other designated parties. Currently, 42 states have laws allowing digital assets to be managed in a similar fashion to physical assets.

Ideally, digital assets will be stored in one location for easy access. In fact, one could keep a copy of a digital currency wallet on a USB drive that is kept in a secure location. Individuals should update their cryptocurrency holdings on a weekly to annual basis depending on how often they trade. To further organize a digital estate, it is a good idea to keep a list of passwords and other information needed to access a given account.

New York residents may know that changes to the tax code could have an impact on an estate plan. However, there are steps that individuals should take to protect their wealth regardless of whether or not there are any significant changes on the horizon. For example, it can be a good idea to review a plan regularly to check whether beneficiary designations or terms of a trust need to be changed.

It can also be a good idea to sell off assets such as a family business and move them into a trust. Ideally, assets will be sold at as low a valuation as possible to ensure that growth takes place outside of the estate. While the asset is in the trust, its original owner can still benefit from revenue that it generates. If an asset is in a trust when a person passes on, it may reduce estate taxes owed.