This Week’s Elder Care / Senior Care Article

TITLE:  Medicaid Planning: The Importance of a Well Drafted Power of Attorney

This is a recent Pennsylvania Superior Court case that highlights how important a power of attorney can be in proper planning. In this case an executor who was also the agent under a power of attorney for the decedent was forced to account for his use of the power of attorney prior to the death of the decedent. The objections to how the power of attorney was used were not appealed so we did not get all of the details on the document itself. However, the opinion does shed some light, at least by inference, on Medicaid planning with a power of attorney.

Briefly, Medicaid planning is a process where someone accelerates their eligibility for Medicaid (Medical Assistance in PA) by restructuring or transferring assets so that they meet the financial qualifications for Medicaid eligibility sooner and preserve more resources for their loved ones. Sometimes this restructuring is done directly by the applicant (usually an older or disabled adult), through their agent under a power of attorney or by their legal guardian. Today courts are more likely to allow guardians to engage in this planning to protect the healthy spouse, less so to protect an inheritance for the children unless one or more is disabled or a minor. There has been some discussion, but few cases, as to whether a guardian has the power to engage in this planning for other purposes given that a guardian should be able to do anything the incapacitated person can do for him or herself.

Frequently this type of planning is performed via a power of attorney as in the Binnig case. While the details were not provided in the case as to the terms of the power of attorney, it was abundantly clear that the power of attorney lacked certain provisions that allowed for the transfer of assets that occurred prior to death (thereby reducing the size of the estate and causing another beneficiary to object). Not only does the power of attorney need to allow the administrative function of the transfers (i.e. the ability to convey real estate or transfer assets in a bank or brokerage account) but it needs to clearly identify the reasons why the transfers may occur (Medicaid or Asset Protection Planning). An agent under a power has a fiduciary obligation to the principal (the person who authorizes the agent to act on the principal’s behalf). Therefore he or she cannot simply transfer assets of the principal to him or herself unless doing so is in the best interest of the principal absent authority in the power of attorney to do so.

One can infer from the Court’s opinion that, had the power of attorney been properly drafted with this type of planning in mind and discussed with the principal at the time of execution, the plan would have been carried out and the objections dismissed. Particularly after Act 95 of 2014 where sweeping changes were made to the requirements of powers of attorney in Pennsylvania, it is important that you review your financial powers of attorney to make sure your agent has the ability to do what you would want them to do if you are unable to act.

This article was written by Robert M. Slutsky, Esq., of the law firm Robert Slutsky Associates in Plymouth Meeting, Pennsylvania.  Mr. Slutsky is a Partner member of the national ElderCare Matters Alliance.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with this Elder Care Matter or or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

#MedicaidPlanning, #Medicaid, #findMedicaidAttorneys, #eldercare, #seniorcare, #eldercarematters, #seniorcarematters, #eldercarearticles, #seniorcarearticles, #elderlawarticles, #elderlawanswers, #elderlawattorneys, #findelderlawattorneys, #MedicaidArticles


This Week’s Elder Care / Senior Care Article

 

TITLE:  A Cautionary Tale… Protect Your Hard Earned Money

In the land of opportunity, many people have “made it” and made it big. Mr. Roman Blum did just that. However, having amassed close to 40 million dollars, he died last year at the age of 97 with no apparent heirs to his fortune. According to the state comptroller’s office, Mr. Blum’s estate is the largest unclaimed estate in New York State history. His story illustrates how critical it is to engage in estate planning.

 

Mr. Blum was born in Poland. Having survived the Holocaust, he met and married his wife, also a Holocaust survivor, after the war. They migrated to the United States and settled in Forest Hills. He was a real estate developer who seized the opportunity to develop land in Staten Island when the Verrazano Bridge opened in 1964. He ultimately moved to Staten Island himself. He and his wife never had any children. It was said that the former Mrs. Blum suffered from infertility after being a subject of Dr. Mengele’s experiments while she was held in Auschwitz. The couple eventually divorced and Mrs. Blum later died in 1992. Mr. Blum was said to have had a wife and children in Poland before the war, but there is no evidence of any surviving relatives.

 

In a case like that of Mr. Blum, in which no will was found, the estate will be distributed according to the laws of intestacy. This means that the estate will go through an “administration proceeding” where an administrator (the equivalent of an executor in a will) is appointed to handle the estate. The following list of individuals may petition to be the administrator of the decedent’s estate:

(a)  surviving spouse, (b)  children, (c)  grandchildren, (d)  father or mother, (e)  brothers or sisters, (f)  other persons who are distributees (entitled to receive under the law).

 

If none of the above individuals exist, the Public Administrator of the county will be appointed. Currently, the Richmond County Public Administrator’s office is handling the estate of Mr. Blum. The Public Administrator is charged with collecting his assets, selling them, and paying the appropriate federal and New York State estate taxes. The Public Administrator is also conducting a thorough search for a will, and is hiring a genealogist in an effort to find Mr. Blum’s relatives. If any relatives are found, the order of individuals entitled to inherit from Mr. Blum’s estate is as follows:

  1. surviving spouse and descendants (children, grandchildren, etc);
  2. surviving parents;
  3. surviving descendants of parents (i.e. siblings, nephews and nieces);
  4. surviving grandparents or the descendants of grandparents (i.e. uncles, aunts, and cousins)

 

If no will is found and no relatives are located, Mr. Blum’s estate will be turned over to the New York City Department of Finance. After three years, if no relatives come forward, the funds will then go to the New York State Comptroller’s office as unclaimed funds. If any relatives ever surface, all the funds will be returned.

 

Mr. Blum’s case is a stunning example of the importance of engaging in estate planning. Even if you do have close relatives, it is imperative to take control of your own estate. Why have New York State determine who your beneficiaries will be? Be proactive and make sure that you have a well-prepared will, power of attorney, statutory gifts rider, health care proxy, living will, and living trust. If Mr. Blum had planned ahead, he could have specified in a will that his estate would go to charitable organizations serving Holocaust survivors. Or, he could have engaged in more complex estate planning to avoid or minimize estate taxes and provide for an extensive list of beneficiaries.

This article was written by Ronald A. Fatoullah, Esq, CELA, managing attorney of Ronald Fatoullah & Associates in Great Neck, New York.  Mr. Fatoullah is a Partner member of the national ElderCare Matters Alliance.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with your estate plan or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

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This Week’s Elder Care / Senior Care Article

TITLE: Are Smaller Inheritances a New Trend?

Written by:

Inheritances
Scott A. Makuakane, Esq., CFP
Est8Planning Counsel LLLC
Honolulu, Hawaii
An ElderCare Matters Partner & Hawaii State Coordinator

Due to demographic changes and changing economic fortunes, older Americans increasingly have to transfer money to their adult children to help support those children. Barron’s, in a recent article titled “Boomers Spend Their Kids’ Inheritance – On Supporting Them,” reports that intra-family transfers have increased significantly in the last few years.

The article is a good read for anyone interested in retirement and demographic trends.

For estate planning purposes, this trend could create some issues. For starters, if the money is being spent now, then it obviously cannot be part of the estate later and children might receive smaller inheritances than they are expecting.

What if one child receives more support from the parents while they were alive than another child? This could lead to bitterness and even fighting over the estate. This is likely to happen if the estate plan divides what is left between the children equally, even though one or more children received money along the way.

Parents who are helping to support their adult children now should speak with an experienced estate planning attorney about what that means for their estate plan.

No parent wants a family feud as his or her legacy.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with your estate plan or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

#EstatePlanning, #findEstatePlanningAttorneys, #eldercare, #seniorcare, #eldercarematters, #seniorcarematters, #eldercarearticles, #seniorcarearticles, #elderlawarticles, #elderlawanswers, #elderlawattorneys, #findelderlawattorneys, #EstatePlanningArticles


This Week’s Elder Care / Senior Care Article

TITLE:  Special Needs Trusts

Written by:

Special Needs Trusts
Sheri R. Abrams, Esq.
Sheri R. Abrams, Attorney at Law
Oakton, Virginia
An ElderCare Matters Partner 

Why Would Someone Need a Special Needs Trust?

Many well-intentioned parents don’t realize that an inheritance may cause many problems for their disabled or special needs child.

Under current Federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance, including Supplemental Security Income (SSI) and Medicaid. Benefits from state public assistance programs may also be affected.

A Special Needs Trust, however, offers a means of protecting your child’s eligibility for these benefits, while addressing the ongoing care and needs of your disabled or special needs child.

What are the Advantages of a Special Needs Trust?

The primary advantage a Special Needs Trust offers over a direct gift or inheritance is that, if arranged properly, the assets in the trust do not actually belong to the beneficiary. In this way, the trust can provide benefits to an individual but not cause the individual who has a disability to be disqualified from government programs.

A Special Needs Trust holds title to property for the benefit of a child or adult who has a disability.

The Special Needs Trust can be used to provide for the needs of a person with a disability and to supplement benefits received from various governmental assistance programs.

Special Needs Trusts typically provide for:

– medical and dental expenses;

– eye glasses;

– annual independent check-ups;

– transportation (including vehicle purchase);

– equipment;

– training programs;

– maintenance;

– education;

– insurance (including payment of premiums);

– rehabilitation; and

– essential dietary needs.

Special Needs Trusts also may allow a trustee to give the beneficiary money for:

– various forms of entertainment (e.g., movies);

– electronic equipment;

– trips and vacations;

– computer equipment;

– athletic training and competitions;

– companion services/home health aide; and

– other items to enhance self-esteem.

A trust can hold cash, stocks, personal property, and real property. It can own and/or be the beneficiary of life insurance.

Special Needs Trusts also can be used to protect personal injury settlements or judgments from jeopardizing government benefit eligibility.

Most importantly, Special Needs Trusts can help parents coordinate their estate plans and provide peace of mind that their child will be provided for.

An Attorney with knowledge of Special Needs Trusts can assist parents, family members or friends

establish a Special Needs Trust, during their lifetime or by a Will, for a disabled person without risking that person’s eligibility for public benefits

An Experienced Attorney can also establish an Special Needs Trust for the benefit of a disabled person using that person’s own funds – without incurring a penalty period for Medicaid.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with long-term care or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

#SpecialNeedsPlanning, #SpecialNeeds, #findSpecialNeedsAttorneys, #eldercare, #seniorcare, #eldercarematters, #seniorcarematters, #eldercarearticles, #seniorcarearticles, #elderlawarticles, #elderlawanswers, #elderlawattorneys, #findelderlawattorneys, #SpecialNeedsArticles


This Week’s Elder Care / Senior Care Article

TITLE: Medical and Pension Veterans Benefits

Written by:
What Medical and Pension Benefits Are Available to Veterans?
Don L. Rosenberg, Attorney andCounselor
Barron, Rosenberg, Mayoras & Mayoras, P.C.
Troy, Michigan
An ElderCare Matters Partner

Veterans, as well as spouses and dependents, may be eligible for a variety of medical and pension benefits. If you or a loved one is a veteran, it is important to be aware of these benefits and know if you are eligible.

Medical Care Veterans Benefits

The VA provides medical care benefits to veterans. The standard medical benefit package includes preventative care services, outpatient and outpatient diagnostic and treatment services (including mental health and substance abuse treatment), prescriptions, and long-term care, which can include nursing home care for eligible veterans.

To be eligible for medical benefits, most veterans must be enrolled in the VA health system. Those veterans who need not be enrolled in the VA health system to qualify for medical care benefits are:

    • 50 percent or more disabled due to a service-connected disability
    • seeking care for a VA rated, service-connected disability
    • discharged for a disability less than a year ago that the military determined was caused or worsened by your service, but the disability is not yet rated by the VA.

 

The VA considers a number of factors to determine whether or not a veteran is eligible. To qualify, the veteran must not have been dishonorably discharged. Length of service is also one factor. In general, you must have served a continuous 24-month period of active duty military service. There are many exceptions to this, including for reservists, national guard members, service-related disabilities, and hardship discharges. Other factors include whether or not the veteran has service-related disability, what the veteran’s income level is, and what VA resources are available.

Disability Veterans Benefits

The VA offers two major disability-related benefit programs: disability compensation and disability pension.

Disability Compensation

Disability compensation benefits are available for veterans suffering from service-connected disabilities. This means that you are 10% or more disabled from an injury or disease was incurred or aggravated while on active duty, active duty training, or inactive duty training. Amount of compensation depends on the degree of disability. Veterans may also receive benefits for diseases or conditions that are secondary to service-connected conditions or for diseases or conditions that may be presumed to be from service even if they occur after service is complete.

The compensation you receive is based on compensation rates set out by the VA. Compensation is between 10% and 100% depending on severity. If you are 30% or more disabled and you have dependents, then you may qualify for an additional allowance.

Disability Pension

The VA pension is available to low-income veterans. It is available to the veteran, veteran’s spouse, and children. For this pension, your injury or disease need not be service-connected.

In order to be eligible, the veteran must meet certain requirements. The veteran must have served 90 days of active duty service, with at least one day of wartime service. If you entered active duty after September 7, 1980, you must have served 24 months or the full period you were called into active duty, with at least one day of wartime service.

In addition, to be eligible, you must meet one of the following — you must be either at least 65 years old, permanently and totally disabled, a patient in a nursing home requiring skilled nursing care, receiving Social Security Disability Insurance, or receiving Supplemental Security Income.

Your annual family income must be less than the limit Congress set. Countable income includes earnings, disability / retirement payments, annuity interest and dividend payments, and net income from farming or business. Net worth includes bank accounts, stocks, bonds, mutual funds, annuities, and property other than residence and reasonable lot area. If you qualify for the disability pension, then you would receive the difference between countable income and the annually set pension limit.

Aid and Attendance

This is a veteran’s pension benefit program available to veterans and their families. The program is available to help with unreimbursed home health and medical costs and the unreimbursed cost of assisted living.
There are four requirement prongs that must be met to qualify for Aid and Attendance. This benefit can be the difference for a Veteran or the widow of a Veteran from having to go to a nursing home or staying at home or in assisted living. The yearly benefit for a Veteran can be as much as $21,000 and a widow of a Veteran almost $14,000. All benefits are income tax free.

Service Prong — The Veteran must have served in the active military, navy or air service: (1) for 90 consecutive days or more during a period of wartime, (2) during a period of war was discharged under conditions other than dishonorable or released from such service for a service-connected disability, (3) for a period of 90 consecutive days or more and such a period began or ended during a period of war; or (4) for an aggregate of 90 days or more in two separate periods of service during more than one period of war.

Disability Prong — The applicant need not have a service-connected condition, but must be “permanently and totally disabled”, meaning the veteran needs “care or assistance” on a “regular basis” from another person which protects him or her from “dangers of a daily living environment”. There are many ways to sufficiently show this including being blind, living in an assisted living facility, needing adjustment or attendance to prosthetics or orthopedic appliances, being unable to dress or clean oneself, or has a serious mental or physical incapacity that requires regular assistance. However, the VA presumes “disability” for individuals over the age of 65. Furthermore, the veteran or a widow of a veteran must need assistance with at least two activities of daily living, such as eating, bathing, dressing, transferring and toileting or being cognitively impaired.

Asset Prong — The VA pension benefit is a needs based benefit, and while there is no hard and fast rule, we recommend the surviving spouse should not have more than $40,000.00 plus a home and a car. Before you or loved ones think about transferring assets or doing any other planning, you should consult with one of our estate planning and elder law attorneys. Improper transfers can affect Medicaid eligibility.

Income Prong — The basic rule is one’s unreimbursed medical expenses have to exceed or equal their income to qualify for the full benefit amount. If not, then the veteran could receive a partial benefit. If one does not have actual medical expenses payable to a third party there can be a way to establish a care contract between family members that will qualify as a medical expense.

Determining what benefits you qualify for can get overwhelming, but remember that it can be relieving as well. If you qualify for VA benefits, you should find out as soon as possible so that you can properly undertake veterans planning.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with long-term care or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

#veteransplanning, #veteransbenefits, #findVAAccreditedAttorneys, #eldercare, #seniorcare, #eldercarematters, #seniorcarematters, #eldercarearticles, #seniorcarearticles, #elderlawarticles, #elderlawanswers, #elderlawattorneys, #findelderlawattorneys


This Week’s Elder Care / Senior Care Article

TITLE: Four Myths About Medicaid’s Long-Term Care Coverage

Written by:
Medicaid
Ronald A. Fatoullah, Esq., CELA
Ronald Fatoullah & Associates
Great Neck, New York
An ElderCare Matters Partner

Long-term care is not cheap. The cost of employing a home care attendant in the New York City area ranges from $15 to $25 an hour and a nursing home bed runs from approximately $12,000 to $15,000 per month. Finding the right solution to help pay for long-term care is critical. While Medicare gets most of the news coverage, Medicaid still remains a mystery to many individuals. The fact is that Medicaid is the largest source for funding nursing home care. However, there are many myths about exactly who qualifies for Medicaid and what coverage it provides. Here are four myths about funding long-term care.

Myth #1: Medicare will cover my nursing home expenses.

While Medicare does provide some coverage for nursing home expenses, the coverage is quite limited and is not long-term. Medicare covers only up to 100 days of “skilled nursing care” per spell of illness, of which only 80 days are fully covered. The patient must start paying a copayment of $148 per day (as of 2013) from the 21st to the 100th day unless he or she has supplemental insurance that will cover the copayment. To qualify for Medicare, the patient must enter a Medicare-approved “skilled nursing facility” or nursing home within 30 days of a hospital stay that lasted at least three days, and the care in the nursing home must be for the same condition.

Myth #2: You need to be poor to qualify for Medicaid.

Medicaid helps needy individuals pay for long-term care, but you do not need to be completely destitute to qualify. Generally, as of 2013, an individual is allowed to have up to $14,400 in assets and up to $820 in monthly income to qualify for Medicaid. In addition, retirement accounts of any amount in payout status are exempt in New York State. However, eligibility for Medicaid is not that cut and dried and often depends on the facts of each case. The rules vary depending on whether an individual is looking for “Community Medicaid”, which covers home care costs, or “Institutional Medicaid”, which covers nursing home costs. Eligibility is also different when the applicant has a spouse. Potential applicants or caregivers are strongly encouraged to explore with an elder law attorney the possibility of qualifying for Medicaid in order to help defray the cost of long-term care.

Myth #3: A prenuptial agreement will protect my assets from being counted if my spouse needs Medicaid.

A prenuptial agreement only works to keep property separate in the event of death or divorce. It does not keep property separate for purposes of Medicaid eligibility. However, a “sick spouse” may still be eligible for Medicaid even if the “well spouse” has assets. A “well spouse” should explore the eligibility rules with an elder law attorney.

Myth #4: I can give away up to $14,000 a year under Medicaid rules.

The rule that allows gifting up to $14,000 per year is an Internal Revenue Service (IRS) rule, NOT a Medicaid rule. The IRS allows an individual to gift up to $14,000 a year without incurring any gift tax liability. However, under Medicaid rules, a gift of $14,000 or any other significant amount will trigger a penalty period. This means that for approximately every $11,000 gifted within the 5 year period before a nursing home Medicaid application is filed, Medicaid will not cover the applicant for one month. It is important to note that there is no penalty period on transfers of assets for community-based Medicaid eligibility.

Dispelling the above myths should encourage individuals or their caregivers to explore Medicaid as an option to paying for long-term care. Medicaid is definitely a viable alternative for many of us and is commonly used. However, the rules are complex and it is critical to consult with your elder law attorney to ensure no stone is left unturned.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help in planning for and/or dealing with long-term care or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

#medicaid, #Medicaidattorneys, #findMedicaidattorneys, #eldercare, #seniorcare, #eldercarematters, #seniorcarematters, #eldercarearticles, #seniorcarearticles, #elderlawarticles, #elderlawanswers, #elderlawattorneys, #findelderlawattorneys, #longtermcare, #Medicare


This Week’s Elder Care / Senior Care Article

TITLE: The Formal Probate Administration Process

Written by:
Probate
I. Michael Tucker, Esq.
Law Office of I. Michael Tucker, P.L.C.
Altamonte Springs, Florida
An ElderCare Matters Partner

If someone dies owning assets in his or her name alone (“probatable assets”), there must be
a probate court proceeding to determine who is to receive the assets. In other words, the Will
is given effect through the probate court proceedings. Even if no Will exists a probate
proceeding is necessary.

Probate means “prove.” One must prove to the probate court that the Will is valid, that the
maker was competent and not forced to make the Will, that the heirs and representatives are
proper, that all creditors have been paid and that all persons are getting their just due. Only
after the proofs are made may an heir receive his or her inheritance.

The most common probate proceeding is called the FORMAL PROBATE ADMINISTRATION
proceeding. The following must be done to start and prosecute the proceeding:

STEP ONE: You need to furnish your attorney with the following information and
documents:

1. Original copy of Will or proof that no Will exists;
2. Certified copy of Death Certificate (without cause of death listed);
3. A general description of the kind and value of probatable assets;
4. Names and addresses of all persons named in Will. If any are under the age 18, state so
and give names and addresses of their parents or guardians;
5. Names and addresses of all of the decedent’s following relatives who are named in the
Will (if any are under the age of 18, state so and give names and addresses of their parents or
guardians);
a) Decedent’s parents
b) Decedent’s spouse
c) Decedent’s children
d) Children of deceased children
e) If none of the above exist, then:
i) brothers and sisters of decedent
ii) children of deceased brothers and sisters.
6. Names and addresses of person(s) nominated as personal representatives (executors) in
the Will; and
7. Retainer for fees and costs.

TIME FRAME FOR STEP ONE: 30 days

STEP TWO: Once that information is furnished to the attorney he can commence the
work:

1. Prepares petition for nominated Personal Representative (PR) to sign, listing the same
information as noted above. Obtain signatures.
2. Prepares oath of office and designation of agent for service of process for signature of
nominated PR. Obtain signature.
3. Prepares proposed orders for court to sign.
4. Files original Will, certified copy of death certificate, petition, oath of office and
designation of agent for service of process and proposed orders with Court. Pays court fees.
5. Prepares waivers for heirs and other interested persons to sign.
6. Sends copies of Will, petition and waivers to each heir and interested party by certified
mail, return receipt requested. Recipients have 20 days after receipt of those papers to file
objections to the proceedings, to the Will or to the appointment of the nominated PR. If
addresses are unknown, attorney will have a newspaper publish notices of the proceeding to
notify heirs and interested parties.
Assuming there are no objections filed the Court will grant two (2) orders: one, admitting
the Will for probate and, two, giving Letters of Administration (certificate of appointment) to
PR. If there are objections filed, then hearings will be held.

TIME FRAME FOR STEP TWO: Generally 2 to 3 weeks

STEP THREE: The attorney will pay for and obtain certified copies of the orders and then
commences to do the following work:

1. Causes a notice to be published for two weeks in a newspaper in the county wherein
proceedings are held. Creditors have ninety (90) days after publication to file claims.
2. Asks PR to give the following information:
a) names and addresses of known creditors.
b) detail listing of probatable assets and values thereof.
3. Sends notice to known creditors who then have thirty (30) days to file claims after their
receipt of notice.
4. Prepares an inventory of assets and values for signature.
5. Sends inventory copy to all heirs and interested persons and files same with court.
6. Aids PR in obtaining assets with use of Letters of Administration and to sell real estate
and obtain bank accounts, etc. Note that if attorney handles real estate sale an additional fee
will be due over and above that incurred for probate proceedings.
7. If decedent owned real estate, a tax return must be filed with the State to remove any
estate tax lien thereon. There will be no estate taxes to be paid if the estate is under
$5.43million in value (2015). If estate is over $5.43 million in value, an accountant must be
hired to do federal and state estate tax returns.
8. All cash proceeds and cash assets to be held by PR in bank accounts created in estate
name.
9. PR commences to pay all bills and can make partial distributions to heirs, saving some
funds to cover unknown creditors. Attorney obtains receipts from heirs and files same with
the court.
TIME FRAME FOR STEP THREE: 100 Days (or 9 months if federal estate tax
return necessary).

STEP FOUR: Final Procedures

1. PR furnishes attorney with detailed information as to:
a) Value and nature of estate originally held as per Inventory filed earlier
b) Additions or deletions therefrom
c) Expenses paid
d) Amounts remaining
e) Distributions made
2. Attorney prepares Final Accounting for Court, obtaining PR signature.
3. Attorney prepares petition for discharge for Court. Obtains PR signature.
4. Attorney prepares proposed court order for distribution and discharge.
5. Attorney files Final Accounting, petition and proposed order with court and sends same
to heirs and interested parties. (This is usually waived by family members and they sign a
waiver and acknowledgement of their receipt of their share of the estate) Others have 20 days
after receipt of same to file objections (usually charities, etc.).
6. Attorney obtains certified copy of discharge order from court after objection period
ends.
TIME FRAME FOR STEP FOUR: 40 days

*Note that all time frames are estimates. Much depends on how quick and accurate
information and signatures are forthcoming from the personal representatives, heirs
and other interested persons. Much time will be spent, additional to that noted above, if
objections or creditors’ claims are involved.

Thus, about 185 days (6 months or so) are usually necessary to process a FORMAL
ADMINISTRATION probate proceeding. However, most times, heirs could start receiving
their due after 45-60 days. Due to government funding cuts and staffing cuts over the past
several years, additional delays occur.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help with a probate matter or with any Elder Care / Senior Care issue, you can find the professional help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

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This Week’s Elder Care / Senior Care Article

TITLE: The Perils and Pitfalls of Doing Asset Protection Planning on Your Own

Written by:
Asset Protection Planning
Robert M. Slutsky, Esq.
Robert Slutsky Associates
Plymouth Meeting, Pennsylvania
An ElderCare Matters Partner

Dealing with long term care planning, and especially asset protection planning, is a daunting process. Very complicated state and federal Medicaid laws and regulations present many pitfalls for those who try to engage in that process on their own without working with a competent elder law attorney. A recent Medicaid case from New Jersey is an example of a family that tried to go through the process on their own and are now dealing with some pretty nasty consequences. See C.W. v. New Jersey Division of Medical Assistance and Health Services, NO. A-02352-13T2 (NJ Sup. Ct. App. Aug. 31, 2015).

The facts are as follows: “C.W.” was a 90 year old New Jersey resident who moved into a skilled nursing facility in 2007. The following year, she transferred her home and $540,000 in assets to her children, which together were worth approximately $864,000. The following year C.W. applied for Medicaid benefits. Not surprisingly, the state Medicaid authorities imposed a penalty of 10 years and 4 months before they were willing to begin paying her nursing home costs. At that point, her children tried to fix the problem. They returned $235,000 to C.W. who in turn paid that amount to her nursing home. Then, her children returned the home to her, which was then sold. Oddly enough, the sale proceeds were then deposited into an account in the children’s names, not in C.W.’s name, with the children executing a written agreement to transfer the amount of C.W.’s care cost to her each month. C.W. then reapplied for Medicaid and was again denied as before.

Let’s consider each of the many mistakes made by C.W.’s family and also consider how the results may have been different. Under the Medicaid rules, when a Medicaid penalty period is assessed, it takes the form of a time period before which benefits will be paid. The simple mathematical formula takes the total gifted amount and divides it by the average monthly cost of private-paid skilled nursing home in that state. As of July 1, 2015 in Pennsylvania, that divisor amount is now $8916.65. Dividing $864,000 by $8916.65 would result in a penalty period of roughly 97 months.

What were some of C.W’s mistakes?

The first mistake was in not understanding the rules of Medicaid’s 60 month look back period. When you apply for Medicaid, the administrative authorities are allowed to do a complete financial audit of the Medicaid applicant’s financial activities over the previous 60 months. Whatever was done earlier than 60 months before the application is never considered and has no effect whatsoever on Medicaid eligibility.

There are situations where someone is fairly healthy when they engage in asset protection planning but then suffers unanticipated health issues that force a move to a nursing home much sooner than they ever thought they might need it. That is clearly not the case for C.W. as she was already in a nursing home when she started gifting away her assets. In C.W.’s case, applying for Medicaid in 2008, she would have had no problems if she did the exact same gifting of assets in 2003 or earlier. Alternatively, the family could have considered delaying the Medicaid application for a few years and instead, privately paying the nursing home from the gifted funds until the 60 month look back period elapsed.

The second mistake was in transferring C.W.’s home out of her name. When a single individual applies for Medicaid, their home may be considered an exempt asset if they have a reasonable expectation of returning to the home within a relatively short period of time (at least initially, but the rule might require the home to be sold later on depending on circumstances). As soon as C.W. transferred the home, it ceased to be an exempt asset for purposes of her eligibility. Then, after her children conveyed the house back to her, it was sold. Once the equity in the home is converted to cash, it ceases to be exempt. At that point we might also question why the sales proceeds were put into the children’s’ bank account, rather than staying in C.W.’s account, because she therefore ultimately re-gifted that amount back to the kids.

Also, it is important to note that for income tax purposes, once C.W. transferred the house to her children, the opportunity to claim an exemption from capital gains tax on the sale of the home could have been lost. If the house had been sold by the children instead of being transferred back to C.W. first, and assuming that the house sold for $324,000, and further assuming for our purposes that C.W. had paid approximately $150,000 for the house, then capital gain of $174,000 would have to recognized by the children upon the sale of the home. At a probable 15% capital gains tax rate, there would be $26,100 in capital gains tax due to the IRS because of the sale.

Clearly, good advice from a qualified elder law attorney could have made a big difference in the costs ultimately borne by C.W. and her family for her long-term care needs.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help with this elder care matter or with any Elder Care / Senior Care issue, you can find the help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

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This Week’s Elder Care Article is about enjoying the Holidays with a Memory Impaired Loved One

Written by:

Dementia
Lauren Spiglanin
Family Connect Care
Rancho Palos Verdes, California
An ElderCare Matters Partner

Dashing through Dementia, Enjoying the Holidays with a Memory Impaired Loved One

If you have a loved one with Dementia who will be attending events that you are planning to host this holiday season for your family and friends, here are some tips to remember:

1) Be honest with family members and friends about your loved one’s disease.  Let them know what to expect before they visit.

2) Plan visits for early in the day. Being respectful of your loved one’s routine during the holidays.  This may prevent symptoms of sundowning or fatigue.

3) Adjust your expectations. You don’t have to decorate like the Griswold’s from the movie Christmas Vacation.

4) Take time for you. Attend that holiday party. Drink eggnog and enjoy yourself.

5) Have time alone. Stop what you are doing and close your eyes for one minute. Take a few deep breaths in and exhale slowly, picture a place or an event where you were most happy. When you open your eyes you will feel much more relaxed.

6) Reminisce about holidays past. Looking at old photos, watching the holiday classic movies, listening to songs are a good way to share and create new memories.

7) Go ahead and cry. It is okay to feel sad during the holidays. Finding a friend or joining a support group is a good way to meet other caregivers in your community who understands how you feel can be a huge support to you.

8) Don’t have your loved one with dementia just watch you prepare for the holidays. Instead, have them participate as much as possible. Decorating the house, wrapping gifts, or making cookies are activities that will help your loved one feel useful. These are great sensory activities too!

Whether you’re hosting or attending a holiday party, help your loved one with dementia feel safe and comfortable by having a trusted friend or family member stay beside him or her to field questions from others as needed.

  • Encourage people to say their name and maintain eye contact when conversing with the person who has dementia. 
  • Make sure your loved one can come and go from the party as needed.  Create a quiet space where he or she can rest — or appoint a caring person to drive your loved one home when he/she tires of the festivities. 
  • Have a family photo album or a favorite magazine for them to look at. 
  • Choose background music that is familiar to them, music from their era played in a style they resonate with, such as Bing Crosby’s, White Christmas. 
  • If your loved one needs their food pureed or finely chopped, bring it to the party.  
  • When talking to your loved one, don’t correct or contradict them. If they’re time confused, don’t try to pull them into the current reality. Simply listen carefully and let them talk. Remember; never argue with someone who has a memory impairment. You will never win!

Appreciate your loved one for the person they are right now. You will have a much happier holiday season.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help with this elder care matter or with any Elder Care / Senior Care issue, you can find the help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

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2015 Year-End Tax Planning Tips for Individuals

2015 Year-End Tax Planning Tips for Individuals

Written by:

Tax Planning
Michael E. Scott, CPA
Scott & Scott CPAs, LLC
Lander, Wyoming
An ElderCare Matters Partner

Year End tax planning strategies for individuals this year include postponing income and accelerating deductions, as well as careful consideration of timing related investments, charitable gifts, and retirement planning.

General tax planning strategies that taxpayers might consider, include the following:

  • Sell any investments on which you have a gain or loss this year. For more on this, see Investment Gains and Losses, below.
  • If you anticipate an increase in taxable income in 2016 and are expecting a bonus at year-end, try to get it before December 31. Keep in mind, however, that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file a tax return for tax year 2016.
  • Prepay deductible expenses such as charitable contributions and medical expenses this year using a credit card. This strategy works because deductions may be taken based on when the expense was charged on the credit card, not when the bill was paid.For example, if you charge a medical expense in December but pay the bill in January, assuming it’s an eligible medical expense, it can be taken as a deduction on your 2015 tax return.
  • If your company grants stock options, you may want to exercise the option or sell stock acquired by exercise of an option this year if you think your tax bracket will be higher in 2016. Exercise of the option is often but not always a taxable event; sale of the stock is almost always a taxable event.
  • If you’re self-employed, send invoices or bills to clients or customers this year to be paid in full by the end of December.

Caution: Keep an eye on the estimated tax requirements.

Accelerating Income and Deductions

Accelerating income into 2015 is an especially good idea for taxpayers who anticipate being in a higher tax bracket next year or whose earnings are close to threshold amounts ($200,000 for single filers and $250,000 for married filing jointly) that make them liable for additional Medicare Tax or Net Investment Income Tax (see below).

In cases where tax benefits are phased out over a certain adjusted gross income (AGI) amount, a strategy of accelerating income and deductions might allow you to claim larger deductions, credits, and other tax breaks for 2015, depending on your situation.

The latter benefits include Roth IRA contributions, conversions of regular IRAs to Roth IRAs, child credits, higher education tax credits and deductions for student loan interest.

Caution: Taxpayers close to threshold amounts for the Net Investment Income Tax (3.8 percent of net investment income) should pay close attention to “one-time” income spikes such as those associated with Roth conversions, sale of a home or other large assets that may be subject to tax.

Tip: If you know you have a set amount of income coming in this year that is not covered by withholding taxes, increasing your withholding before year-end can avoid or reduce any estimated tax penalty that might otherwise be due.

Tip: On the other hand, the penalty could be avoided by covering the extra tax in your final estimated tax payment and computing the penalty using the annualized income method.

Here are several examples of what a taxpayer might do to accelerate deductions:

  • Pay a state estimated tax installment in December instead of at the January due date. However, make sure the payment is based on a reasonable estimate of your state tax.
  • Pay your entire property tax bill, including installments due in year 2016, by year-end. This does not apply to mortgage escrow accounts.
  • It may be beneficial to pay 2016 tuition in 2015 to take full advantage of the American Opportunity Tax Credit, an above the line deduction worth up to $2,500 per student to cover the cost of tuition, fees and course materials paid during the taxable year. Forty percent of the credit (up to $1,000) is refundable, which means you can get it even if you owe no tax.
  • Try to bunch “threshold” expenses, such as medical and dental expenses–10 percent of AGI (adjusted gross income) starting in 2013–and miscellaneous itemized deductions. For example, you might pay medical bills and dues and subscriptions in whichever year they would do you the most tax good.

    Note: There is a temporary exemption of 7.5 percent through December 31, 2016 for individuals age 65 and older and their spouses.

    Threshold expenses are deductible only to the extent they exceed a certain percentage of adjusted gross income (AGI). By bunching these expenses into one year, rather than spreading them out over two years, you have a better chance of exceeding the thresholds, thereby maximizing your deduction.

Health Care Law

If you haven’t signed up for health insurance this year, do so now and avoid or reduce any penalty you might be subject to. Depending on your income, you may be able to claim the premium tax credit that reduces your premium payment or reduce your tax obligations, as long as you meet certain requirements. You can choose to get the credit immediately or receive it as a refund when you file your taxes next spring. Please contact the office if you need assistance with this.

Additional Medicare Tax

Taxpayers whose income exceeds certain threshold amounts ($200,000 single filers and $250,000 married filing jointly) are liable for an additional Medicare tax of 0.9 percent on their tax returns, but may request that their employers withhold additional income tax from their pay to be applied against their tax liability when filing their 2015 tax return next April.

High net worth individuals should consider contributing to Roth IRAs and 401(k) because distributions are not subject to the Medicare Tax.

If you’re a taxpayer close to the threshold for the Medicare Tax, it might make sense to switch Roth retirement contributions to a traditional IRA plan, thereby avoiding the 3.8 percent Net Investment Income Tax as well (more about the NIIT below).

Alternate Minimum Tax

The Alternative Minimum Tax (AMT) exemption “patch” was made permanent by the American Taxpayer Relief Act (ATRA) of 2012 and is indexed for inflation. It’s important not to overlook the effect of any year-end planning moves on the AMT for 2015 and 2016.

Items that may affect AMT include deductions for state property taxes and state income taxes, miscellaneous itemized deductions, and personal exemptions. Please call if you’re not sure whether AMT applies to you.

Note: AMT exemption amounts for 2015 are as follows:

  • $53,600 for single and head of household filers,
  • $83,400 for married people filing jointly and for qualifying widows or widowers,
  • $41,700 for married people filing separately.

Residential Energy Tax Credits

Non-Business Energy Credits

ATRA extended the nonbusiness energy credit, which expired in 2011, through 2014 (retroactive to 2012); however, it has not been reauthorized by Congress. For years prior to 2015, taxpayers could claim a credit of 10 percent of the cost of certain energy-saving property that was added to their main home.

Residential Energy Efficient Property Credits

The Residential Energy Efficient Property Credit is available through the end of 2016 to individual taxpayers to help pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and residential wind turbines. In addition, taxpayers are allowed to take the credit against the alternative minimum tax (AMT), subject to certain limitations.

Qualifying equipment must have been installed on or in connection with your home located in the United States.

Geothermal pumps, solar energy systems, and residential wind turbines can be installed in both principal residences and second homes (existing homes and new construction), but not rentals. Fuel cell property qualifies for the tax credit only when it is installed in your principal residence (new construction or existing home). Rentals and second homes do not qualify.

The tax credit is 30 percent of the cost of the qualified property, with no cap on the amount of credit available, except for fuel cell property.

Generally, labor costs can be included when figuring the credit. Any unused portions of this credit can be carried forward. Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.

What’s included in this tax credit?

  • Geothermal Heat Pumps. Must meet the requirements of the ENERGY STAR program that are in effect at the time of the expenditure.
  • Small Residential Wind Turbines. Must have a nameplate capacity of no more than 100 kilowatts (kW).
  • Solar Water Heaters. At least half of the energy generated by the “qualifying property” must come from the sun. The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. Photovoltaic systems must provide electricity for the residence and must meet applicable fire and electrical code requirement.
  • Solar Panels (Photovoltaic Systems). Photovoltaic systems must provide electricity for the residence and must meet applicable fire and electrical code requirement.
  • Fuel Cell (Residential Fuel Cell and Microturbine System.) Efficiency of at least 30 percent and must have a capacity of at least 0.5 kW.

Charitable Contributions

Property, as well as money, can be donated to a charity. You can generally take a deduction for the fair market value of the property; however, for certain property, the deduction is limited to your cost basis. While you can also donate your services to charity, you may not deduct the value of these services. You may also be able to deduct charity-related travel expenses and some out-of-pocket expenses, however.

Keep in mind that a written record of your charitable contributions–including travel expenses such as mileage–is required in order to qualify for a deduction. A donor may not claim a deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Tip: Contributions of appreciated property (i.e. stock) provide an additional benefit because you avoid paying capital gains on any profit.

Investment Gains and Losses

This year, and in the coming years, investment decisions are likely to be more about managing capital gains than about minimizing taxes per se. For example, taxpayers below threshold amounts in 2015 might want to take gains; whereas taxpayers above threshold amounts might want to take losses.

Caution: In recent years, extreme fluctuations in the stock market have been commonplace. Don’t assume that a down market means investment losses. Your cost basis may be low if you’ve held the stock for a long time.

If your tax bracket is either 10 or 15 percent (married couples making less than $74,900 or single filers making less than $37,450), then you might want to take advantage of the zero percent tax rate on qualified dividends and long-term capital gains. If you fall into the highest tax bracket (39.6 percent), the maximum tax rate on long-term capital gains is capped at 20 percent for tax years 2013 and beyond.

Minimize taxes on investments by judicious matching of gains and losses. Where appropriate, try to avoid short-term capital gains, which are usually taxed at a much higher tax rate than long-term gains–up to 39.6 percent in 2015 for high-income earners ($413,200 single filers, $464,850 married filing jointly).

Where feasible, reduce all capital gains and generate short-term capital losses up to $3,000.

Tip: As a general rule, if you have a large capital gain this year, consider selling an investment on which you have an accumulated loss. Capital losses up to the amount of your capital gains plus $3,000 per year ($1,500 if married filing separately) can be claimed as a deduction against income.

Tip: After selling a securities investment to generate a capital loss, you can repurchase it after 30 days. This is known as the “Wash Rule Sale.” If you buy it back within 30 days, the loss will be disallowed. Or you can immediately repurchase a similar (but not the same) investment, e.g., and ETF or another mutual fund with the same objectives as the one you sold.

Tip: If you have losses, you might consider selling securities at a gain and then immediately repurchasing them, since the 30-day rule does not apply to gains. That way, your gain will be tax-free; your original investment is restored, and you have a higher cost basis for your new investment (i.e., any future gain will be lower).

Net Investment Income Tax (NIIT)

The Net Investment Income Tax, which went into effect in 2013, is a 3.8 percent tax that is applied to investment income such as long-term capital gains for earners above certain threshold amounts ($200,000 for single filers and $250,000 for married taxpayers filing jointly). Short-term capital gains are subject to ordinary income tax rates as well as the 3.8 percent NIIT. This information is something to think about as you plan your long-term investments. Business income is not considered subject to the NIIT provided the individual business owner materially participates in the business.

Please call if you need assistance with any of your long term tax planning goals.

Mutual Fund Investments

Before investing in a mutual fund, ask whether a dividend is paid at the end of the year or whether a dividend will be paid early in the next year but be deemed paid this year. The year-end dividend could make a substantial difference in the tax you pay.

Example: You invest $20,000 in a mutual fund at the end of 2015. You opt for automatic reinvestment of dividends. In late December of 2015, the fund pays a $1,000 dividend on the shares you bought. The $1,000 is automatically reinvested.

Result: You must pay tax on the $1,000 dividend. You will have to take funds from another source to pay that tax because of the automatic reinvestment feature. The mutual fund’s long-term capital gains pass through to you as capital gains dividends taxed at long-term rates, however long or short your holding period.

The mutual fund’s distributions to you of dividends it receives generally qualify for the same tax relief as long-term capital gains. If the mutual fund passes through its short-term capital gains, these will be reported to you as “ordinary dividends” that don’t qualify for relief.

Depending on your financial circumstances, it may or may not be a good idea to buy shares right before the fund goes ex-dividend. For instance, the distribution could be relatively small, with only minor tax consequences. Or the market could be moving up, with share prices expected to be higher after the ex-dividend date.

Tip: To find out a fund’s ex-dividend date, call the fund directly.

Please call if you’d like more information on how dividends paid out by mutual funds affect your taxes this year and next.

Year-End Giving To Reduce Your Potential Estate Tax

The federal gift and estate tax exemption, which is currently set at $5.43 million is projected to increase to $5.45 million in 2016. ATRA set the maximum estate tax rate set at 40 percent.

Gift Tax. For many, sound estate planning begins with lifetime gifts to family members. In other words, gifts that reduce the donor’s assets subject to future estate tax. Such gifts are often made at year-end, during the holiday season, in ways that qualify for exemption from federal gift tax.

Gifts to a donee are exempt from the gift tax for amounts up to $14,000 a year per donee.

Caution: An unused annual exemption doesn’t carry over to later years. To make use of the exemption for 2015, you must make your gift by December 31.

Husband-wife joint gifts to any third person are exempt from gift tax for amounts up to $28,000 ($14,000 each). Though what’s given may come from either you or your spouse or both of you, both of you must consent to such “split gifts.”

Gifts of “future interests”, assets that the donee can only enjoy at some future time such as certain gifts in trust, generally don’t qualify for exemption; however, gifts for the benefit of a minor child can be made to qualify.

Tip: If you’re considering adopting a plan of lifetime giving to reduce future estate tax, don’t hesitate to call the office for assistance.

Cash or publicly traded securities raise the fewest problems. You may choose to give property you expect to increase substantially in value later. Shifting future appreciation to your heirs keeps that value out of your estate. But this can trigger IRS questions about the gift’s true value when given.

You may choose to give property that has already appreciated. The idea here is that the donee, not you, will realize and pay income tax on future earnings and built-in gain on sale.

Gift tax returns for 2015 are due the same date as your income tax return. Returns are required for gifts over $14,000 (including husband-wife split gifts totaling more than $14,000) and gifts of future interests. Though you are not required to file if your gifts do not exceed $14,000, you might consider filing anyway as a tactical move to block a future IRS challenge about gifts not “adequately disclosed.”

Tip: Call if you’re considering making a gift of property whose value isn’t unquestionably less than $14,000.

Income earned on investments you give to children or other family members are generally taxed to them, not to you. In the case of dividends paid on stock given to your children, they may qualify for the reduced child tax rate, generally 10 percent, where the first $1,050 in investment income is exempt from tax and the next $1,050 is subject to a child’s tax rate of 10 percent (0 percent tax rate on long-term capital gains and qualified dividends).

Caution: In 2015, investment income for a child (under age 18 at the end of the tax year or a full-time student under age 24) that is in excess of $2,100 is taxed at the parent’s tax rate.

Other Year-End Moves

Retirement Plan Contributions. Maximize your retirement plan contributions. If you own an incorporated or unincorporated business, consider setting up a retirement plan if you don’t already have one. It doesn’t actually need to be funded until you pay your taxes, but allowable contributions will be deductible on this year’s return.

If you are an employee and your employer has a 401(k), contribute the maximum amount ($18,000 for 2015), plus an additional catch-up contribution of $6,000 if age 50 or over, assuming the plan allows this and income restrictions don’t apply.

If you are employed or self-employed with no retirement plan, you can make a deductible contribution of up to $5,500 a year to a traditional IRA (deduction is sometimes allowed even if you have a plan). Further, there is also an additional catch-up contribution of $1,000 if age 50 or over.

Health Savings Accounts. Consider setting up a health savings account (HSA). You can deduct contributions to the account, investment earnings are tax-deferred until withdrawn, and amounts you withdraw are tax-free when used to pay medical bills.

In effect, medical expenses paid from the account are deductible from the first dollar (unlike the usual rule limiting such deductions to the excess over 10 percent of AGI). For amounts withdrawn at age 65 or later, and not used for medical bills, the HSA functions much like an IRA.

To be eligible, you must have a high-deductible health plan (HDHP), and only such insurance, subject to numerous exceptions, and must not be enrolled in Medicare. For 2015, to qualify for the HSA, your minimum deductible in your HDHP must be at least $1,250 for single coverage or $2,500 for a family.

21 “Mobile Friendly” Elder Care / Senior Care Directories

If you need help with this elder care matter or with any Elder Care / Senior Care issue, you can find the help you need in one of the following 21Mobile Friendly” Elder Care / Senior Care Directories. These Elder Care / Senior Care – specific Directories are sponsored by the National ElderCare Matters Alliance, an organization of thousands of America’s TOP Elder Care / Senior Care Professsionals who help families plan for and deal with a wide range of Elder Care Matters.

  1. ElderCareMatters.com
  2. ElderCareMattersBlog.com
  3. ElderCareWebsites.com
  4. ElderCareAnswers.us
  5. ElderCareArticles.us
  6. ElderCareProfessionals.us
  7. ElderLawAttorneys.us
  8. EstatePlanningAttorneys.us
  9. FindDailyMoneyManagers.net
  10. FindElderCareMediators.net
  11. FindElderLawAttorneys.net
  12. FindEstatePlanningAttorneys.net
  13. FindGeriatricCareManagers.net
  14. FindHomeCareProviders.net
  15. FindLongTermCareInsurance.net
  16. FindMedicaidAttorneys.net
  17. FindProbateAttorneys.net
  18. FindSeniorLivingCommunities.net
  19. FindSeniorMoveManagers.net
  20. FindSpecialNeedsAttorneys.net
  21. FindVAAccreditedAttorneys.net

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