Massachusetts Estate Planning & Asset Protection Blog

Be Prepared Before Alzheimer’s Strikes

Posted by Dennis Sullivan & Associates on Fri, Apr 03, 2015

Be Prepared Before Alzheimer’s Strikes | Massachusetts Elder Care Attorney

 

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One of the problems we see in clients with early stages of dementia is trouble managing their personal finances. This can often lead to costly financial mistakes before there are signs that something is wrong.

No one knows exactly what the future holds for us, so early planning for potential late-in-life health issues is essential, as is keeping an eye open for any potential warning signs in loved ones.

If you notice that a loved one seems more disorganized than usual (bills are piling up, they have a hard time remembering names and words, or if things are in strange places throughout their home), it is a good idea to contact a doctor. Alzheimer's and most forms of dementia are progressive, this means it will get worse over the next few years.

Even before a diagnosis, it is important for people to discuss with their families how they would like to be helped. This includes deciding who will be the primary caregiver and who will be in charge of finances. According to a recent USA TODAY article, titled "Financial planning for dementia," a person with dementia often feels insecure that he or she will lose control and everyone else will tell him what to do. This is why conversations are so important to have before there is a problem in order to make sure your loved one’s wishes are carried out as well as avoiding confusion and misunderstandings later on.

We strongly recommend that everyone should have a will, power of attorney, medical directive, as well as a living trust set up before they have a problem. Without these important documents, the courts may need to become involved and appoint someone to oversee the care and finances, possibly someone with no connection to the family involved. This can be frustrating, time-consuming, and expensive.

In the course of the disease, a person may need help with the actions of daily living and may have trouble communicating. At this point, someone else should be designated to take care of all financial matters, and it might be time to start looking into an assisted living facility.

Healthcare costs for dementia patients can be substantial, and it is very important to provide for the financial security of a healthy spouse. If you would like to being the review process, please contact our office.

 

For additional guidance, please see The Seniors and Boomer's Guide to Health Care Reform and Avoiding Nursing Home Poverty the book provides important information for families on resources for quality care and protection for loved ones.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: assisted living, power of attorney, trust, Wills, Alzheimers Disease, 2015

MA Lags Behind on Dementia Care

Posted by Dennis Sullivan & Associates on Wed, Mar 18, 2015

Massachusetts Lags Behind on Dementia Care Compliance | Massachusetts Elder Care Attorney

 

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Arlene Germain, the president of Massachusetts Advocates for Nursing Home Reform, said that once the new rules are implemented, they could substantially improve the lives of nursing home residents across the state. She also added, “strong oversight and greater nursing home participation are critical to ensure that the law’s benefits are meaningful and widespread.”

Massachusetts has been slow with its work on updating the process for dementia care compliance checks. The state only handed out its dementia special care checklist for inspectors in December, almost six months after the rules were officially adopted.

The Boston Globe article, titled Dementia care lacks oversight in Mass., data show,” says that despite the delays, state regulators are not conducting spot checks for compliance; they’re already just too busy with routine monitoring of more than 400 nursing homes. The state health department recently announced that its inspectors would now review dementia care during their annual visits to each facility. This is a step in the right direction, but the reality is that many nursing homes will still not be subject to these compliance checks for months.

The president of the state’s Advocates for Nursing Home Reform says the new rules, once fully implemented, could substantially improve the lives of nursing home residents. Increased oversight and greater nursing home participation will be needed to ensure that the law’s benefits are meaningful. Nevertheless, nursing home administrators say they are struggling to comply with the rules due to its expense.

The Massachusetts Senior Care Association reports that many members have spent as much as $30,000 on the required staff training. Those rules, in addition to other general training requirements, are intended to close a loophole that allowed nursing homes to advertise dementia units without providing added training for their workers, specialized resident activities, or safety measures to prevent residents from wandering. Massachusetts is lagging behind the rest of the country on requiring these protections. The original article reports that according to a federal report written in 2005, that 44 other states were already requiring governing training, staffing, and security for facilities that provide specialized dementia care. Regulators believe it was important to mandate the training, because over half of the state’s 41,000 nursing home residents have dementia.

 

For additional guidance, please see The Seniors and Boomer's Guide to Health Care Reform and Avoiding Nursing Home Poverty the book provides important information for families on resources for quality care and protection for loved ones.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Nursing Homes, Nursing Home, dementia, 2015, new regulations

Step Up Basis Part 2

Posted by Dennis Sullivan & Associates on Tue, Mar 10, 2015

Losing the Step Up Basis Could be a Step Back On Your Estate Planning | Massachusetts Estate Planning Attorney
piggy_bank_Small

Last week we were discussing potential changes to the tax laws proposed by President Obama that would eliminate the step up in basis.  Obama claims the target is wealthy Americans but the change could have a much bigger impact on average middle class citizens.

     That’s because with the federal estate tax exemption currently at $5.43 million, only estates larger than that number must pay federal estate tax.  While Massachusetts estate taxes kick in on estates greater than $1,000,000, removing the step up in basis still means that many heirs would have to pay additional taxes on the assets they will inherit.

     Here is a common scenario:  Mary passes away and leaves her assets to her children.  Those assets include Exxon stock she and Frank bought many years ago and it is now worth $500,000.  The total estate is worth $1,000,000, including her home which Mary and her husband Frank purchased for $30,000, which is now worth $500,000.

     Under current tax laws, the children get a step up in basis on both the inherited stock and home.  Presuming they sell the home immediately after Mary’s passing, there would be no capital gains tax owed on the home.  The new basis would be the sale price.  The stock would also get a step up in basis.  The estate would owe approximately $25,000 in Massachusetts estate tax but no federal estate tax.

     If the step up is eliminated, the estate would still owe the same Massachusetts estate tax but now there would be an additional capital gains tax.  Obama’s proposal does suggest that some amount of capital gain be excluded from tax but let’s assume in my example there is no exemption.  Let’s also assume that the capital gains tax rate is 25%.  In that case, the tax on the home gain would increase to $95,000, almost four times what it is now.

     The tax on the stock would be more complicated to calculate.  We would need to figure out what Mary and Frank bought the stock for in order to determine the original basis. If Mary and Frank didn’t keep good records of their, it may be very difficult for their children to get them since they didn’t buy the stock themselves. The problems will only increase as well if there were stock splits or if the stock was bought in increments over time and different portions have a different basis.

     In any case, if the stock was held for many years then, it is safe to assume there would be substantial capital gains and the tax could easily exceed $100,000.  Add that to the tax on the sale of the home and you can see that a small estate of $1,000,000 could have additional tax of $200,000 or more, on top of the estate tax.

President Obama claims that he wants “wealthy Americans to pay their fair share”, but he doesn’t tell us that in the process everyone else will be paying more than their own fair share. Sure, the wealthy would be subject to this additional tax as well, but Obama’s plan clearly misses the mark.

Click here for more information on  Estate Planning and Asset Protection

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: estate tax, estate tax savings, taxes, Tax Savings, Inheritance, 2015, heir, stock, step up basis

Step Up Basis Part 1

Posted by Dennis Sullivan & Associates on Mon, Mar 02, 2015

Losing the Step Up Basis Could be a Step Back On Your Estate Planning | Massachusetts Estate Planning Attorney

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A few weeks back, President Obama proposed, in his State of the Union address, that the “step up in basis” provision of the capital gains tax be eliminated.  While Obama claims that he wants to eliminate a loophole for the rich, such a change could have a bigger impact on the average middle-class American.

             Before I explain why, let’s review just what exactly what the step up in basis is.  Certain assets, such as stocks, mutual funds and real estate, appreciate in value over time.  Joe bought stock in Apple for $10.  If it is now worth $1,000 and he sells it, he will have a gain of $900.  That $900 gain is subject to something called capital gains tax.  The gain is calculated by subtracting the sale price minus the basis, which usually is the purchase price. (There are cases where the basis gets adjusted but we’ll keep our example simple.)

            There are certain instances where Joe may not have to pay capital gains tax.  One such instance is if he holds onto that stock and don’t sell it before he dies.  Instead, he transfers it to his heirs as part of his estate.  They now own it and the tax that comes with it.

             If his heirs then sell it for $1,000, must they pay tax on the $900 gain?  The answer is no. This is because of something called the step up in basis.  Upon the date of his death Joe’s stock “steps up” in value to $1,000.  So if the market value is $1,000 on Joe’s date of death, and his heirs sell it for its stepped up value of $1,000, the gain will now be zero and all the unrealized gain tax from Joe’s lifetime disappears. 

             This can be a huge tax break for many families.  For example, if Paul purchased Microsoft or IBM stocks many years ago and held onto them as they multiplied; he would have accumulated significant gains over the years.  If he holds onto his stocks until he dies and then his children inherit it, the tax on all that gain is gone and they will owe nothing in taxes if they sell it.  This could amount to tens of thousands of dollars tax-free for his family.  On the other hand, if Paul was to transfer the stock to the children while he is alive they get his original basis, what is called a “carryover basis”.  They’ll have to pay tax on all the unrealized gains based on the original price that Paul paid for the stocks.

            Now that you know how the step up in basis works, next time we’ll tell you why President Obama’s proposal could miss the mark on targeting the wealthy and instead have a greater impact on middle-class America.

 

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: taxes, Obama, middle class, Inheritance, 2015, Capital Gains Tax, proposed changes, heir

VA is Proposing a 3 Year Look Back Together with a Penalty of Up To 10 Years

Posted by Dennis Sullivan & Associates on Mon, Feb 23, 2015

VA is Proposing a 3 Year Look Back Together with a Penalty of Up To 10 Years | Massachusetts Elder Law Attorney

 

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On January 23, 2015, the VA took the initiative in proposing new regulations that would hit wartime veterans and their spouses with a penalty of up to 10 years for making gifts, if they wish to qualify for the VA’s Aid and Attendance program.

As readers of this blog know, the Aid and Attendance program is a non-service connected pension can provide as much as $2,120 per month in tax free income to help pay the cost of long term care.  This program is means tested with an asset limit of about $80,000.  Currently, there is no look back period like Medicaid has, so that transfers for less than fair value to individuals or trusts do not result in a waiting or penalty period for benefits.

Federal legislators have introduced two bills since 2012 seeking to impose a 3 year look back. Neither bill has managed to pass both houses of Congress yet though. The VA however, is sick of waiting and is trying to take matters into its own hands.  They have proposed a penalty of up to 10 years that would result from uncompensated transfers. The penalty itself would be calculated by dividing the amount of the transfer by the claimant’s pension rate. 

Other changes include a net worth standard of $119,220 including annual income. In other words, an applicant would need to have no more than $119,220 in assets and annual income combined in order to qualify.  The higher the applicant’s income, the lower the amount of assets they can keep.

Under the proposal, expenses related to independent living facilities would not count as care costs.  This would mean that veterans with dementia, or other degenerative diseases who can no longer safely live in their own homes but who don’t yet need assistance with the activities of daily living will not be able to include the cost of that facility in an effort to qualify for the VA benefit. Daily living activities are things like such as bathing, dressing, eating, toileting and transferring. Finally, the applicant’s home will remain an exempt asset towards the net worth limitation only if the lot on which it sits is less than 2 acres.

These changes will dramatically reduce the ability of many veterans to qualify for this important benefit.  The new regulations have been submitted for public comment.  To fight these changes, everyone who cares about veterans must respond no later than March 24, 2015.  You can send your comments through http://www.regulations.gov or by mail to Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420 or by fax to (202) 273-9026.  Comments should include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers and Income Exclusions for Needs-Based Benefits”.

 

Click here to access our free report on Aid and Attendance Benefits.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: long term care, Nursing Homes, veterans benefits, Nursing Home, wartime veteran, Veteran, federal, look-back, VA benefits, penalty, 2015

Why Retitling Assets to Your Spouse to Qualify for Medicaid May Not Work Part 2

Posted by Dennis Sullivan & Associates on Fri, Feb 20, 2015

Why Retitling Assets to Your Spouse to Qualify for Medicaid May Not Work Part 2 | Massachusetts Elder Law Attorney

 

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A few weeks ago we were discussing Angela’s dilemma.  Her husband, Peter, has Alzheimer’s disease and is going to need some care at home.  Angela is concerned that he will need nursing home level care sooner rather than later and she wants to preserve their primary home as well as their vacation home.

The problem is that Peter does not have long term care insurance so they will have to privately pay for care until he qualifies as eligible for Medicaid.  Angela can keep the primary home and $119,220 in assets and still be eligible. Unfortunately, all their other assets, including their vacation home, will need to be spent down before Medicaid will cover his care.  She can’t simply take Peter’s name off the deed to their vacation home like she had hoped she could.

So, what are their options?  It may still be possible to transfer the second home to a trust and try to get through the 5 year look back.  Peter doesn’t need nursing home level care yet, and if his decline in health is slow enough, it may be possible to continue paying for the care he needs for the next 5 years.  This option would mean that they would have to spend their other savings during that time frame and if they can’t quite make it, maybe their children or another family member can help to pay for Peter’s care.  If not, Angela can always sell the vacation home if there is no other option.

Another approach for Angela to consider, she could also sell both homes and then buy one primary residence with the proceeds from both sales.  While this option doesn’t accomplish what Angela really wants, keeping their vacation home in the family, it does help preserve their assets for any future needs she may have as well as increase the amount that she will be able to be passed on to her family when she is gone.  If a family member can purchase the property from her, or take a mortgage to do so, then it can stay in the family like she wanted.

So where does Angela go from here?  We told her that a transfer to trust is definitely worth considering since we don’t know how Peter’s illness will progress.  The lesson here is an important one:  Angela should have called us much earlier, when both Peter and Angela were still healthy, not after Peter’s diagnosis.  It would have made it much easier to get through Medicaid’s 5 year look back and Angela would have been able to rest easy knowing she had secured their vacation home that she and her family have enjoyed for years.

As it stands now, she could set up the trust that meets Medicaid requirements, make the transfer and hope for the best to make it through the current five year look back period. If the ten year look back period ever passed, it would not make sense given Peter’s illness.

 

For additional guidance, please see The Seniors and Boomer's Guide to Health Care Reform and Avoiding Nursing Home Poverty the book provides important information for families on resources for quality care and protection for loved ones.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Nursing Home Costs, asset protection, Medicaid, Nursing Homes, transfer of assets, retitling assets, 2015

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