Massachusetts Estate Planning & Asset Protection Blog

Massachusetts Estate Planning Attorney | End of the Year Gifting

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Dec 31, 2012

Time is running out for 2012 gift giving! End of year gifting by check is always an issue for those trying to use their annual exclusion amounts, but in 2012 the issue also relates to those attempting to make larger gifts to use their unified credit amounts before the scheduled reduction of the unified credit in 2013.gifting, estate planning

The issue with using checks to make gifts is that until the check clears the bank, the donor can revoke the gift by issuing a stop payment or by removing adequate funds from the bank account. A gift that can be revoked is not complete until revocability ends. Thus, a check written in 2012 that does not clear until 2013 is at risk of being a 2013 gift, not a 2012 gift, since the donor could have stopped payment in 2013 before it cleared.

There is case law on gifts by check, and when they will be treated as complete. The safest course is to deliver the check in 2012, have it deposited by the recipient, and have it clear in 2012.

Failing that, Revenue Ruling 96-56 provides a safe harbor. Under that ruling a gift by check delivered in 2012 will be a gift as of the date the check is deposited or presented for payment if:

  • the check was paid by the drawee bank when first presented to the drawee bank for payment;
  • the donor was alive when the check was paid by the drawee bank;
  • the donor intended to make a gift;
  • delivery of the check by the donor was unconditional; and
  • the check was deposited, cashed, or presented in 2012 and within a reasonable time of issuance.

Thus, depositing the check in 2013 will be a problem.

These rules are not the same as for charitable contribution deductions – those rules are more liberal.

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We developed our Unique Self-Guided 19-Point Trust, Estate, & Asset Protection Legal Guide, so you can learn where problems may exist in your planning as well as opportunities for improvement and how to implement a plan to protect your spouse, home, family, and life savings.  Click Here to Download the Guide.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

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

Tags: gifting, Massachusetts, gift, charitable, donations, year end, 2013

Massachusetts Estate Planning Attorney | Year End Gifting Strategies for Your Estate

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Dec 14, 2012

Gifting and other estate tax reduction strategies have been at the forefront of many estate planning discussions as we approach the holidays due to the uncertainty over the estate and gift tax rules for next year. While current Federal estate and gift tax rates have been relatively favorable, much less favorable rules are set to go into effect in January. gifting, estate, planning, holidays

Currently, the federal estate and gift tax exemption is $5.12 million, meaning those with estates worth less than that, or who give away less than that, will not pay Federal estate or gift taxes (the Massachusetts exemption is $1M). The tax rate on estates and gifts above the exemption is a flat 35 percent.

However, unless Congress and the President can agree on a compromise, the Federal estate and gift tax exemption will be reduced to the $1 million credit that was in effect before the Bush tax cuts were enacted. Simultaneously, the maximum estate and gift tax rate will rise to 55 percent.

Gifting Opportunities for Your Estate

Nevertheless, many people are getting ready to make gifts to their loved ones to help reduce their estates. This is because, regardless of what Congress does, you should still be able to rely on the annual gift tax exclusion to shelter lifetime transfers to family members and loved ones. The annual gift tax exclusion hasn’t been affected by other tax law modifications over the last decade and that isn’t expected to change. By systematically giving gifts that qualify for the exclusion, you can gradually reduce the size of your taxable estate over time, thereby reducing your potential estate tax liability.

The current annual gift tax exclusion is $13,000, and it will increase to $14,000 in 2013. You can give gifts of cash or property to an unlimited number of recipients up to this amount each year without any gift tax consequences. The annual exclusion is doubled for joint gifts made by a married couple, although you must file a gift tax return for these joint gifts.

Other gifting opportunities include paying for a loved one’s medical or educational expenses: No gift taxes are imposed on amounts used to pay these costs for another person as long as the bills are paid directly to the provider or institution.

Creating a Planned Gifting Program

In addition to the annual gift exclusions, you can also reduce your taxable estate by bestowing sizeable gifts on as many family members as you desire over a given period of time to reduce your estate tax exposure.

For example, a couple who own $2 million in assets and three adult children could give $28,000 to each child each year for the next five years. By the end of the five-year period, they will have reduced their joint estate by $1.4 million, leaving as estate worth $600,000 (plus earnings in the interim). This would eliminate their exposure to both state and Federal estate taxes. Gifts could be made into an irrevocable trust in order to get assets out of your estate but not subject them to your heirs’ creditors and manage their spending.

However, you must be careful when considering gifting highly appreciated assets such as real estate or stock, as they may expose your beneficiary to capital gains taxes. Gifting through a trust can avoid this outcome as well.

To explore how gifting may benefit your estate, contact The Estate Planning and Asset Protection Law Center of Dennis Sullivan & Associates

Research shows that 86% of trusts don’t work.  That’s why we developed our Unique Self-Guided 19-Point Trust, Estate, & Asset Protection Legal Guide, so you can learn where problems may exist in your planning as well as opportunities for improvement and how to implement a plan to protect your spouse, home, family, and life savings.  Click Here to Download the Guide.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

 

Tags: gifts, gift tax, estate, taxes, gifting, Massachusetts, tax, Attorney, trust, holiday, federal, exclusions

Massachusetts Elder Law Attorney | Does MassHealth’s Penalty Apply Only to Gifts?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Dec 12, 2012

Does MassHealth’s Penalty Apply Only to Gifts?

MassHealth, gifts, elder, law, attorney

When considering the MassHealth penalty elder law clients usually think only in terms of gifts.  However, the penalty is triggered by much more than simply gifts.  The penalty is triggered by a transfer for less than fair value that causes a penalty. Fair value is not measured subjectively, but rather objectively based on fair market value. When there is a transfer of assets out of the applicant’s name, the applicant has the burden of establishing, by documentary evidence that the transfer should not be subject to a penalty.  If it cannot be  prove it – and, again, it is not sufficient to tell MassHealth what the money was spent for – then it is treated as a transfer for less than fair value.  MassHealth requires documentation to prove the fair value.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

To gain free online access to the Complete Alzheimer's Resource Kit, which contains care tips as well as other useful information on Alzheimer’s disease, please visit www.BostonMemoryLawyer.com

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 Planning, gifts, MassHealth, gifting, tax, Elder Law, Alzheimer's

Massachusetts Elder Law Attorney | Avoiding Medicaid Penalties

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Sep 20, 2012

Earlier in the week, we discussed the numerous restrictions the Deficit Reduction Act of 05 (hereinafter DRA) has placed on Medicaid eligibility, and how elder law attorneys are still able to assist individuals and families in developing estate plans to avoid depleting their assets should they become ill and need long term care.medicaid, elder law, estate planning

Despite these new harsh rules, The Estate Planning and Asset Protection Law Center of Dennis Sullivan & Assocaites continues to help people qualify for Medicaid benefits while maximizing the amount of money they are able to keep.

Here is another example of a family we were able to assist post DRA enactment:

Cheryl met with our office in March to discuss the situation with her mother, Lois.

Cheryl moved in with her mother, Lois, a few years ago to help care for her. Last year Lois had a stroke and Cheryl quit her job to assist her mother full time. When Cheryl came to our office, it had gotten to the point that Lois needed more help than Cheryl could provide. The doctor told Lois it was no longer safe for her to live at home, even with Cheryl’s assistance. Lois, the doctor said, needed nursing home care.

Cheryl and Lois were concerned that Lois would have to sell her house to pay for her care and Cheryl would have no place to live. It was very important to Lois that she give her home to her daughter as a way of saying thank you for the care Cheryl had provided. But, both Cheryl and Lois had heard that gifting the home would cause her to be ineligible for Medicaid (and under the new DRA, the penalty wouldn’t even start until Lois applied for Medicaid and was otherwise eligible!)

Through some planning, we were able to transfer the home to Cheryl, without causing any Medicaid penalties for her mother. The same month Lois went into the nursing home, we applied for Medicaid included the transfer of the home on her application, and Lois was approved for benefits!

Gifting an applicant’s residence to a caretaker child continues to be available under the new DRA so long as the requisite proof is provided, including a doctor’s statement. Again, is the transfer is made improperly, the result could be up to five years of Medicaid ineligibility!

While the Deficit Reduction Act can make Medicaid planning and Medicaid crisis situations more difficult, they are certainly not impossible. Call our office today to discuss the specifics of your situation and find out what you can do to protect your family’s assets while getting high-quality care for yourself or your loved one.

For more information, you can gain free online access to the “Seniors’ Guide to Health Care Reform & Avoiding Nursing Home Poverty” which contains secret benefits revealed by the Affordable Care Act.

Click Here to Download the Senior & Boomers Guide to Health Care Reform & Avoiding  Nursing Home Poverty

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

Tags: Elder Law, Medicaid, gifting, Massachusetts, Deficit Reduction Act, Nursing Home, DRA, Medicaid penalties, caretakeer

Massachusetts Elder Law Attorney | Are You Caring for an Elderly Family Member or Friend?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Sep 18, 2012

Millions of Americans are currently caring for an elderly family member or friend, without receiving compensation.caregiver, nursing home care

Depending on the circumstances, however, it may actually be beneficial for both parties to enter into a care contract wherein the caregiver accepts payment for the care they are providing their loved one and also formally assumes responsibility for that care.  

For loved ones still at home:

If the loved one you are caring for reaches a point where nursing home placement is the only option, all of their money will be considered available to pay for their care at the nursing home and they will not eligible for Medicaid assistance until all of their assets have been depleted. Certainly the care they were provided by you, while they remained in the community, is just as valuable to them and worthy of payment as that they will be provided in the nursing home. With a care contract in place, they can pay their caregiver, and every penny spent will count towards their “Medicaid spend down” should they apply for benefits.

It is important to note that without a proper contract in place, Medicaid will assume the money paid is a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.

While the personal care contracts may not be appropriate in everyone’s situation, if you are caring for your loved one at home or in a nursing home, it is something that you may want to discuss with a knowledgeable professional who can advise on possible tax consequences and/or Medicaid and estate planning issues.

To gain free online access to the Complete Alzheimer's Resource Kit, which contains care tips as well as other useful information on Alzheimer’s disease, please visit www.BostonMemoryLawyer.com

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

Tags: Elder Law, Medicaid, gifting, Nursing Home, caregiver, assets, transfer of assets, personal care contracts

Massachusetts Elder Law Attorney | Successful Planning Under New Medicaid Laws

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Sep 17, 2012

 Despite the numerous restrictions the Deficit Reduction Act of 05 (hereinafter DRA) has placed on Medicaid eligibility, elder law attorneys are still able to assist individuals and families in developing estate plans to avoid depleting their assets should they become ill and need long term care.medicaid, elder law

For those individuals who are already in a nursing home, despite the harsh new rules, elder law attorneys are continuing to help them qualify for Medicaid benefits while maximizing the amount of money they are able to keep.

Here is an example of a family we were able to assist post DRA enactment:

Bill came into our office in June. His wife, Diane, had entered a nursing home which was costing the couple over $12,000 each month. Not including their home, their total assets totaled roughly $500,000 at the time Diane entered the nursing home in April. Bill was told by the state that he could keep the couples’ home as an exempt asset and then once they spent down to approximately $113,640, Diane would qualify for Medicaid.

We advised Bill that he could stop spending down immediately and he could purchase a “Medicaid friendly annuity” with his portion of the assets, so long as the terms of the annuity conformed with the provisions under the new law.

The same month of our initial meeting, we put a Medicaid application on file. Shortly after filing the application, we received word that Diane was approved for benefits retroactive to the date of application. This saved Bill thousands of dollars!

Before purchasing an annuity, it is imperative that you consult with someone who understands the new criteria for annuities under the DRA. If structured improperly, the same annuity purchased by Bill could have resulted in a 40 month Medicaid penalty during which Diane would be ineligibly for Medicaid!

While the Deficit Reduction Act can make Medicaid planning and Medicaid crisis situations more difficult, they are certainly not impossible. Call our office today to discuss the specifics of your situation and find out what you can do to protect your family’s assets while getting high-quality care for yourself or your loved one.

For more information, you can gain free online access to the “Seniors’ Guide to Health Care Reform & Avoiding Nursing Home Poverty” which contains secret benefits revealed by the Affordable Care Act.

Click Here to Download the Senior & Boomers Guide to Health Care Reform & Avoiding  Nursing Home Poverty

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

Tags: Estate Planning, Elder Law, Medicaid, Nursing Homes, gifting, Massachusetts, Deficit Reduction Act

The Medicaid Time Bomb | Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 10, 2012

Today we have some extremely important information for you about what NOT to do when you're trying to get your loved one to qualify for VA benefits.

veterans benefits, VA benefits

There are strict rules that govern whether or not your loved one is eligible, and they're put in place so that someone can't just give away his or her money and automatically qualify. You've got to talk to someone who knows the rules, because they will know what sort of penalties you may incur if you take any such action. Make sure you understand what you're doing before you make any changes to someone's assets. Ordinarily, the VA takes a very dim view of individuals transferring their assets to qualify for this benefit.

Another thing you must know is that giving away cash or other things of value can create terrible problems for senior citizens if or when they later need to apply for Medicaid to assist them with skilled nursing home care. Simply giving away assets can create a long penalty period of ineligibility for Medicaid benefits, which we call the Medicaid Time Bomb.

Don't forget, though - if you decide you need help, nobody can charge you a penny for helping you fill out the VA forms! And as we discussed in an earlier blog, many attorneys (even elder law attorneys!) do not know about the VA's benefits or how to get them. In addition, many attorneys may label themselves as elder law attorneys because they can prepare simple things such as wills - but unless they are working with seniors on both Medicaid and VA benefits every day, they are most likely not versed in the complicated and ever-changing maze of laws that surround the benefits that you or your loved one may need - and often our clients need services much sooner than they think! This is dangerous territory. You need a trustworthy guide who has traveled this path before, and travels it on a regular basis!

Today I will also address a frequently asked question by a veteran's family: "Is there anything we can do to qualify for the VA benefit if the veteran has too many assets?”

This truly is the "million dollar question," and I have to tell you that with one wrong move, danger and disaster lurk close by. A veteran and spouse who might be eligible for $1,949 monthly in aid and attendance benefits or $1,510 in housebound benefits might be considering the idea of gifting excess assets to their children. But there are several questions that you must ask before doing that:

1. What is the tax impact of such gifting?

2. What is the net benefit or loss caused by gifting assets?

3. What is the impact to the one who receives the gift?

4. Does the VA impose a penalty against the veteran if they know that the vet has given away excess assets to qualify?

5. How long does it take to get the VA to approve a claim?

6. How likely is it that the VA will approve the claim?

7. What amount will the VA approve?

8. How soon can the veteran get a check?

A much less obvious but important issue is what I call the "Medicaid Time Bomb." The VA does not have a penalty period of ineligibility for VA benefits, even if the veteran were to give away all of his/her excess assets immediately before filing a claim (not that we would recommend this drastic move).

For more information go to www.SullivanVeteransReport.com, which contains important information on the “Hidden Benefit” available to veterans and their spouses, and the steps you should be taking right now to find out if your loved one qualifies. For useful information on Alzheimer’s disease including care tips and resources please visit www.BostonMemoryLawyer.com. You will be given access to the Complete Alzheimer’s Resource Kit, sold nation wide for $197, absolutely free.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling 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.

Tags: Elder Law, gifts, Medicaid, seniors, veterans benefits, taxes, Massachusetts estate tax, VA benefit, gifting

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