Wednesday, November 25, 2015

Long Term Care Planning

What long term care planning tips can you pass along?


I got a lot of phone calls about long term care planning after an article on Medicaid planning I ran a month or so ago. There were common areas of concern from spouses, parents and children caring for loved ones about the nature and range of financial planning options for long term care so here goes my top five tips.


Tip #1 Long term care includes nursing home care, assisted living, adult day care, respite care, and home health care. By age 85 nearly 55% will require some form of long-term care and approximately 44% will require nursing home care after age 65. These numbers do not reflect the millions of younger disabled persons that need long-term care at some point in their life. Caregivers report endless frustration, severe emotional stress and lose billions of dollars a year in lost wages trying to deal with bureaucracy. A knowledgeable professional should be able to review everything in an hour or two and give you a solid plan that suits your family situation and personal needs. Working with a professional will give you peace of mind and you will spend much less up front and save tens of thousands of dollars and endless hours of trying to learn everything on your own.


Tip #2 Purchase long term care insurance, if you can afford it. Many policies use to be for only 3 years, now you will see five year plans and more affordable spousal options. Nevertheless, shorter plans can still be good deals and useful planning tools if you have family support for home care.


Tip #3 Professional long-term care planning tools include: personal dependency, medical deductions, home transfers after accounting for basis and capital gain issues, annuities, converting interest income, domestic help, sale of property, sale of the home, owner financing, purchasing a new home or condo, commercial and family held reverse mortgages, owner occupancy rules and using a Medicaid waiver on the back side, partial sales, gift tax rules, life estates, private pay using long-term care insurance and other options, Medicare, Veterans Benefits, Medicaid, dozens of spend-down strategies, promissory notes, student loan forgiveness, life insurance loans and cash ins, legal separations and divorce, QDROs, bankruptcy, income trusts, special needs trusts, housekeeping and caregiving contracts, and various asset transfer options including special consideration for IRAs, 401K, deferred pension plans and other retirement plans. One plan does not fit all situations. Be wary of the source of your legal information. I’ve had the family insurance man cost clients $8,000 on a preneed burial, an elder’s home sold when a lawyer gifted it to a son who then lost his job and declared bankruptcy, and an entire estate gobbled up by listening to the next door neighbor.


Tip #4 Consider a caregiver contract with children or others where you pay for necessary services. Such contracts need to be in writing and comply with all aspects of the law including state and federal earned income rules and mandatory withholdings.


Tip #5 Disability and long-term care needs can come at any age, this is not just a senior issue, and therefore having good legal documents is the foundation of any plan. All powers of attorneys and wills should be reviewed for adequacy. Often old documents or those prepared by non-elder law or estate planning specialists fail to include language to deal with the IRS, gifting, specifics on the description of real property that may be sold or financed that a title insurance company may prefer, and have accounting provisions to safeguard your financial assets.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing with this legal 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.




Long Term Care Planning

Tuesday, November 24, 2015

Pet Trusts - planning for your pets in your estate

Would you please provide some information about pet trusts?


Some animals are undoubtedly beloved pets. They provide us with love and companionship, while there are other animals that are more than pets. For example, horses are an investment, they are a partner in exercise, they help some children with therapy and a comrade to see the world with if you ever had the distinct pleasure of exploring the wilderness on horseback. Seeing eye dogs or other therapeutically trained animals are literal life savers in some cases. All of these animals are deserving of the full legal protections that you can provide to them. Pet trusts are not tools reserved for the rich and eccentric. As of 2012, 46 states (and the District of Columbia) have laws in effect that allow for pet trusts. In 1996, the New York legislature enacted NY EPTL § 7-8.1, which allows for the care of any pet or animal by way of a trust, which terminates when the beneficiary animal dies. In fact, pet trusts are so popular and well ingrained in the law, that there is a model, uniform law, found at Uniform Trust Code 402. Pet trusts are now practically commonplace.


WILL VERSUS TRUST


There are some distinct issues that you will need to address if planning for your pet. The first is whether you want to plan for your pet in your will or create a trust. If you address the matter in your will, it is generally more inexpensive and easier to plan for. Wills, however, dispose of property, they do not impose enforceable promises upon the caretaker. Wills are more likely to be invalidated by a Court and wills only fund for the caretaking of the pet one time. If you have an expensive animal, such as a horse, you may need to insure continued funding and care. Trusts generally require more planning and involvement in its creation, but allow a greater degree of peace of mind and assurance that your wishes will be carried out. Trusts allow for a stream of income over time. If the trustee or caretaker is unable to fulfill their obligation the law allows for a Court to appoint another trustee or caretaker. In addition, you do not need to wait for the trust to be administered as you do a will.


ISSUES TO ADDRESS


There are several issues that best practice dictate you should address, whether you choose a will or trust.


Ownership: Pets are property, hence the need for an owner. A trust document can still control even with a third party owning the pet.


Financing: Paying for a pet rabbit is easy. This issue rears itself for more expensive animals such as a horse or exotic animals. You should also take into account the medical care for the pet. Horse owners know that horses even have their own dentists. If you have an large animal, transportation is necessary. Additional insurance costs may be incurred to transport them. The caretaker’s homeowners policy may increase or require a separate liability policy.


Remainder beneficiary: If there is money left in the trust when the animal passes, who gets that money?


Income generated: If the pet is also an investment, such as allowing for stud fees, who receives the income?


Whatever your decision, it will require legal counsel to guide your decision every step of the way. Only an experienced estate planning attorney should be considered for these decisions.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing with this legal 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.



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Pet Trusts - planning for your pets in your estate

Monday, November 23, 2015

Special Needs Estate Planning

What is Special Needs Estate Planning?


Special Needs Estate Planning focuses on providing for the special needs of our loved ones with disabilities when we are no longer there to organize and advocate on their behalf. Parents of children with special needs must make careful estate planning choices to coordinate all of the legal, financial, and special care needs of their children – both now and in the future.


An Overview of Special Needs Estate Planning


There are several types of trusts to assist with these special planning challenges. The most common types are Support Trusts and Special Needs Trusts.


  • Support Trusts:  Support Trusts require the Trustee to make distributions for the child’s support in areas like food, shelter, clothing, medical care, and educational services. Beneficiaries of Support Trusts are not eligible to receive financial assistance through Supplemental Security Income (SSI) or Medicaid. If your child will require SSI or Medicaid, you should avoid a Support Trust.

  • Special Needs Trusts:  For many parents, a Special Needs Trust is the most effective way to help their child with a disability. A Special Needs Trust manages resources while also maintaining the child’s eligibility for public assistance benefits.

There are two types of Special Needs Trusts:


  • Third-Party Special Needs Trust:  Created using the assets of the parent(s) as part of an estate plan; distributed by a Will or Living Trust.

  • Self-Settled Special Needs Trust: Generally created by a parent, grandparent or legal guardian using the child’s assets to fund the Trust (e.g., when the child receives a settlement from a personal injury lawsuit and will require lifelong care). If assets remain in the Trust after the child’s death, a payback to the state is required, but only to the extent the child receives public assistance benefits.

Special Needs Trusts are a critical component of your estate planning if you have loved ones with disabilities for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand-alone trusts funded with separate assets (like life insurance) or they can be sub-trusts in existing living trusts.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing with this legal 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.



#elderlaw, #eldercarematters, #eldercare, #eldercareanswers, #elderlawattorneys, #elderlawanswers, #seniorcareanswers,  #estateplanning, #estateplanningattorneys, #findestateplanningattorneys, #specialneedsplanning, #specialneedsattorneys, #findspecialneedsattorneys



Special Needs Estate Planning

Sunday, November 22, 2015

Year-End Tax Planning for Individuals

Year-End Tax Planning for Individuals


Written by:


Tax Planning

Michael E. Scott, CPA

Scott & Scott CPAs, LLC

Lander, Wyoming
An ElderCare Matters Partner


Tax planning for the year ahead presents similar challenges to last year due to the unknown fate of the numerous tax extenders that expired at the end of 2014.


These tax extenders, which include the mortgage insurance premium deduction and the sales tax deduction that allows taxpayers to deduct state and local general sales taxes instead of state and local income taxes, may or may not be reauthorized by Congress and made retroactive to the beginning of the year.


In the meantime, let’s take a look at some of the tax strategies that you can use right now, given the current tax situation.


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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Year-End Tax Planning for Individuals

Saturday, November 21, 2015

The Importance of having an Estate Plan

Would you please share an example of why it is so important to have an estate plan?


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 have an estate plan.


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 having an estate plan. 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.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing 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.



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The Importance of having an Estate Plan

Friday, November 20, 2015

Things to Consider Before Transferring Your Home to Your Children

Should you transfer your home to your children?



Before transferring your home to your children, there are several issues that should be considered. Some are tax-related issues and some are none-tax issues that can have grave consequences on your livelihood.


The first thing to keep in mind is that the current federal estate tax exemption is currently over $5 million and thus it is likely that you may not have an estate tax issue anyway. If you are married you and your spouse can double that exemption to over $10 million. So, make sure the federal estate tax is truly an issue for you before proceeding.


Second, if you gift the home to your kids now they will legally be the owners. If they get sued or divorced, a creditor or an ex- in-law may end up with an interest in the house and could evict you. Also, if a child dies before you, that child’s interest may pass to his or her spouse or child who may want the house sold so they can simply get their money.


Third, if you give the kids the house now, their income tax basis will be the same as yours is (the value at which you purchased it) and thus when the house is later sold they may have to pay a significant capital gains tax on the difference. On the other hand if you pass it to them at death their basis gets stepped-up to the value of the home at your death, which will reduce or eliminate the capital gains tax the children will pay.


Fourth, if you gift the house now you likely will lose some property tax exemptions such as the homestead exemption because that exemption is normally only available for owner-occupied homes.


Fifth, you will still have to report the gift on a gift tax return and the value of the home will reduce your estate tax exemption available at death, though any future appreciation will be removed from your taxable estate.


Given the multitude of tax and practical issues involved, seek counsel before making any transfers of property.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing 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.



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Things to Consider Before Transferring Your Home to Your Children

Thursday, November 19, 2015

Medicaid

Should you complete the Medicaid Application yourself? 


Simply stated, the answer is “No”, “No”, and “No”. There are no instructions to explain how to fill-out the Medicaid Application. This results in many hidden traps that must be avoided. Even a retired attorney was fooled into thinking he could fill-out the Medicaid Application. He got a “first-look denial” of benefits for his friend. Medicaid workers, at most offices, don’t know how to fill-out an application. Remember, it is the function of the Medicaid office to deny you benefits that you are entitled too! It can become very adversarial at times. Medicaid wins when you get frustrated with the system and drop your claim for benefits. The private pay rate for a local nursing home is anywhere from $7,000 to $10,000 per month depending upon services needed. Mistakes can be very costly.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing 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.



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Medicaid

Wednesday, November 18, 2015

Medicare Information for 2016

What are the Medicare Parts A and B Premiums and Deductibles for 2016?


The Centers for Medicare and Medicaid has announced the Medicare premiums, deductibles, and coinsurances for 2016. As expected, for the third year in a row the standard Medicare Part B premium that most recipients pay will hold steady at $104.90 a month. However, about 30 percent of beneficiaries will see their Part B premium rise to $121.80 a month. Meanwhile, the Part B deductible will increase for all beneficiaries from the current $147 to $166 in 2016.


The Part B rise was supposed to be much steeper for the 30 percent of beneficiaries who are not “held harmless” from any increase in premiums when Social Security benefits remain stagnant, as will be the case for 2016. But the premium rise was blunted by the Bipartisan Budget Act signed into law by President Obama November 2. Medicare beneficiaries who are unprotected from a premium increase include those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who receive both Medicare and Medicaid benefits.


For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will go up from $157.50 to $161. Medicare coverage ends after day 100.


Here are all the new Medicare figures:


•Basic Part B premium: $104.90/month (unchanged)

•Part B premium for those not “held harmless”: $121.80

•Part B deductible: $166 (was $147)

•Part A deductible: $1,288 (was $1,260)

•Co-payment for hospital stay days 61-90: $322/day (was $315)

•Co-payment for hospital stay days 91 and beyond: $644/day (was $630)

•Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50)


Higher-income beneficiaries will pay higher Part B premiums:


•Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $170.50 (was $146.90).

•Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $243.60 (was $209.80).

•Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $316.70 (was $272.70).

•Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $389.80 (was $335.70).


Rates differ for beneficiaries who are married but file a separate tax return from their spouse:


•Those with incomes between $85,000 and $129,000 will pay a monthly premium of $316.70 (was $272.70).

•Those with incomes greater than $129,000 will pay a monthly premium of $389.80 (was $335.70).


The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2014 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2016. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.


Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. The average Medicare Advantage premium is expected to decrease slightly, from $32.91 on average in 2015 to $32.60 in 2016.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing 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.




Medicare Information for 2016

Tuesday, November 17, 2015

Lawmakers in Washington have made major changes to Social Security

Changes to Social Security will take away some key strategies that couples used to boost their total benefits


As part of recent negotiations between Congress and the White House over the budget, major changes to Social Security took away some key strategies that couples could use to boost their total benefits.


File and Suspend


Social Security BenefitsUnder this strategy, a higher earner at full retirement age (currently 66) would claim his benefit, enabling his lower-earning spouse to claim a spousal benefit (generally half of the higher earner’s benefit). He then immediately would suspend  his benefit so that he could earn 8% a year in delayed retirement credits until he reapplied up until age 70. In the meantime, his lower-earning spouse would collect monthly spousal benefits.


This new legislation will change the rules so that if someone suspends benefits, no one can collect based on his earnings record. That puts the kibosh on the spouse’s benefit.


That means that people who are getting benefits now under the strategy will continue to receive them, and those who want to try to maximize lifetime family benefits using this strategy will be able to for a while longer. You must be at least age 66 to use this tactic, and the window will probably close around May 1, 2016.


Another useful benefit of the file-and-suspend strategy is that it can greatly enhance the opportunity to collect benefits retroactively. Generally, Social Security will not pay more than six months’ of benefits retroactively. But, for those who file and suspend at age 66, any benefits due from that point on can be collected retroactively. Let’s say you file and suspend at 66 to earn delayed retirement credits, but become ill at 69. In that case, you could collect three full years worth of benefits retroactively if you were willing to forfeit the delayed retirement credits. This change in Social Security wipes out this option.


Restricting an Application


Under the current rules, if a beneficiary applies for benefits between ages 62 and full retirement age, that beneficiary will be paid the highest benefit he is entitled to — whether that is his own benefit or a spousal benefit. By waiting to full retirement age to claim, a beneficiary has had the opportunity to “restrict an application to spousal benefits only.” The reward: You could collect the spousal benefit while allowing your own benefit to grow thanks to 8%-a-year delayed retirement credits.


The new law will eliminate this option for most future beneficiaries.


There’s a caveat: Anyone age 62 or older at the end of 2015 is spared this clampdown. They will continue to have the option, at age 66, to restrict an application to spousal benefits only.


Since the file-and-suspend strategy is disappearing, this will work only if one spouse is actually receiving benefits. In that case, the other spouse could file a restricted application and collect spousal benefits at the same time he or she continues to rack up delayed retirement credits.


Couples in this situation will have to carefully weigh whether the lower earner should trigger his benefit in order for his spouse to claim a spousal benefit. Equal earner couples who both want to delay their own benefits may want to forgo bringing in income through a spousal benefit so that they can both boost their benefits. Couples who have unequal benefit amounts could find it advantageous to have the lower earner claim his benefit and have the higher earner file a restricted application for a spousal benefit.


The Good News


While these claiming strategies will disappear, some key Social Security rules that allow beneficiaries to boost benefits will remain. Beneficiaries will still be able to earn delayed retirement credits of 8% a year up to age 70 if they wait past full retirement age to claim benefits.


Also, a beneficiary will still be able to voluntarily suspend his or her own retirement benefit at age 66 or later, as a beneficiary can do now. That’s good news for someone who claims a reduced benefit early, but later wishes he hadn’t. Once he reaches full retirement age, he can choose to suspend his benefit to earn delayed retirement credits up to age 70 to erase most of the reduction from claiming early.


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

Social Security

Robert M. Slutsky, Esq.

Robert Slutsky Associates

Plymouth Meeting, Pennslyvania
An ElderCare Matters Partner


#SocialSecurity, #ElderLaw, #ElderCare, #PennsylvaniaElderLaw, #RetirementPlanning, #RetirementBenefits, #ElderCareMatters



Lawmakers in Washington have made major changes to Social Security

Monday, November 16, 2015

Elder Care / Senior Care Directories

Get Listed in 21 of America’s TOP Elder Care Directories For 1 Low Price


ElderCare Matters Alliance


If you are an Elder Care Professional with expertise in any of the 75 Elder Care Services that are listed on ElderCareMatters.com and you would like to “GET THE WORD OUT” across America about your expertise in helping families plan for and/or deal with their Elder Care Matters (in a “cost effective” way), then you owe it to yourself and to families across America to become a Member of the National ElderCare Matters Alliance Today.  As a member of this national Elder Care / Senior Care professional organization, you will be listed in ALL of our 21 “Mobile Friendly” Elder Care Directories that apply to you for just one low monthly price.


Here are the 21 Elder Care / Senior Care – specific Directories that 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.




Elder Care / Senior Care Directories

Sunday, November 15, 2015

Probate

What Is Probate, Anyway?


Probate is the court proceeding to transfer a dead person’s assets to the people who are supposed to get them. Simple in concept, but humbug in practice. Probate can easily take a year or more to complete, and the attorneys’ fees and other costs associated with probate could easily eat up 5% or more of a decedent’s gross estate. (“Decedent” is lawyer talk for a “dead person.”) If a decedent owned assets located in more than one state or country, it may be necessary to have a probate in each jurisdiction where the assets are located. If one probate is bad, you can bet that more than one probate is worse. In addition to the money and time that probate can consume, another reason people try to avoid probate is that the court’s probate files are public records. Nosy people can go through the court’s probate files and gather all kinds of information that may be profitable to them-and detrimental to decedents’ families.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing 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.




Probate

Friday, November 13, 2015

Certified Elder Law Attorney (CELA)

What is a Certified Elder Law Attorney (CELA)?



A quick glance through the “attorneys” section of the yellow pages or one of the many internet directories will reveal that most attorneys specialize in certain fields of law. With the aging baby boom and a slump in some other specialties such as real estate, more attorneys are looking to elder law as an area of practice. So how can you, as a consumer, know whether an attorney has deep expertise in the area or if they are a newcomer to the field?


The National Elder Law Foundation offers a certification for elder law and special needs practitioners to reflect their specialized knowledge and experience. The title, Certified Elder Law Attorney (CELA), identifies an attorney who has completed the requirements for the NELF certification and passed a written examination. The American Bar Association (ABA) accredits specialty certification programs including the CELA designation to ensure it meets standards for reliably recognizing experienced legal specialists.


The CELA certification has frequently been referred to as “the gold standard” for elder law attorneys.  There are only approximately 450 CELAs in the United States and less than 50 in all of New Jersey.  Compare that to the approximately 1500 certified matrimonial lawyers in the state.


Choosing a CELA means that you can be sure your attorney has:


(1) focused at least half of their practice in the specialty for three of the last five years,


(2) demonstrated “substantial involvement” by handling a minimum number of cases across seven subspecialties of elder law,


(3) passed a rigorous examination (less than 50% recent pass rate), and


(4) undergone a peer review.


Shana Siegel, Esq., CELA has attained this certification and subsequently has been a grader for the CELA exam.


21 “Mobile Friendly” Elder Care / Senior Care Directories


If you need help in planning for and/or dealing with an 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.



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Certified Elder Law Attorney (CELA)