Massachusetts Estate Planning & Asset Protection Blog

Is your Planning Stuck in Limbo? (part 2)

Posted by Dennis Sullivan & Associates on Tue, Aug 01, 2017

How does the debate over health care reform affect you and your estate plan?

35274856603_c2af85ca10_b.jpg In our last post we discussed the importance of keeping up with the constant changes happening in health care reform. We will continue to examine how the on-going deliberations in Washington may affect you, your future health care and your estate.  We at Dennis Sullivan & Associates are keeping up to date on all the changes, and making sure you stay informed on all the important details.  For more information on the current law of the land, you can download our Report: Senior & Boomers Guide to Health Care Reform.   

The Senate has dealt a devastating setback to Republican efforts to repeal and replace Obamacare, defeating a GOP "skinny repeal" bill early Friday morning. With the "skinny repeal" bill off the table, lawmakers are unsure of where the health care debate is headed. 

Senate Majority Leader McConnell and his staff are trying to find a balance between conservative Republicans, who want a full repeal of ObamaCare and a replacement that has lower health care costs, and more moderate Republicans who want to preserve its more popular benefits.

The deal-making process is in full swing, with the additions of opioid funding and allowing health savings accounts to be used to pay for insurance premiums. Some Senators are for potentially leaving in some taxes to pay for more generous benefits, after weeks of being criticized by Democrats for offering “tax cuts for the rich and Medicaid cuts for the poor.” Conservatives want to cut more from the regulations and many from Medicaid expansion states are uneasy about future cuts to Medicaid.

Senator Ted Cruz of Texas has offered an amendment called the “Consumer Freedom Option” that would allow insurance companies to sell any health coverage plan they wish as long as they provide one plan that satisfies the “essential benefits” mandates of Obamacare. While the Cruz amendment appeals to conservatives who want to provide consumers with lower cost options, moderates are concerned it could negatively impact those with pre-existing conditions. Supporters have suggested that federal subsidies could help ensure that premiums don’t increase for those who are seriously ill. The CBO is currently scoring this amendment.  

President Trump, along with Senator Rand Paul of Kentucky and Senator Ben Sasse of Nebraska, has even offered to repeal ObamaCare for now and replace it later.

Of course, no one is going to get everything they want so there must be compromises. Majority Leader McConnell has said that if the Senate is not able to pass a bill soon, Congress will have to pass a bipartisan measure to shore up the imploding health insurance markets.

And so, the Civics lesson continues. The process is at work.  As we see here the process can be long, unstable and worrisome.  Luckily for you your estate planning doesn’t have be. We at Dennis Sullivan and Associates make your estate planning and asset protection worry and stress free.  Once you have a plan in place you will feel confident knowing it will protect you, your family and your life savings.  You can enjoy life to the fullest knowing you and your family are protected no matter what unknowns lay ahead. 

 

At the Estate Planning & Asset Protection Law Center, we help people and their families protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling 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: Affordable Health Care, Affordable Health Care Act, Announcements, Elder Law, Estate Planning, Financial Planning, Health Care, Health Care Ruling, Medicaid, Medicare, Obamacare, Retirement, applying for medicare, Medicaid penalties, care costs, care, coverage, coverages, disenrollment, elder care, enrollment, elder care journey, federal, health, health Care act, life-care plan, long term care, medicaid qualification, medical expenses, proposed changes, senior, unreimbured medical expenses, seniors

An Explanation of Palliative Care and How it Affects You

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Mar 25, 2016

alzheimers_patient.jpg

     Human life expectancy in the past 100 years has been substantially lengthened as a result of advances in medical science.  However, as we know, the quality of an extended life span isn’t always great.  Many people live with serious illnesses such as COPD, Heart Disease, Cancer, Parkinson’s Disease etc. for many years, often spending those years suffering extreme physical and emotional pain.

     While the medical community continues to focus on finding cures for these illnesses and conditions, an important part of administering medical care is easing a patient’s pain.  This is what is known as palliative care and only recently – within the last 10 years or so – has palliative care become a new discipline of medicine.

     What is palliative care?  It is specialized medical care for people with serious illnesses.  It focuses on providing patients with relief from the symptoms and stress of a serious illness.  The goal of palliative care is to improve the quality of life for both the patient and the patient’s family.

     Palliative care is provided by a specially trained team of doctors, nurses and other specialists such as social workers and chaplains, who work together with a patient’s other doctors to provide extra support.  Palliative care specialists undergo additional training and certification in order to provide palliative care services.

     Palliative care is often coupled with hospice care, however, they are not the same.  Hospice care is for patients who are terminally ill, and have an expected lifespan of less than six months.  Palliative care is available for any patient with a serious or advanced disease who needs the added support that it care can provide.

     Palliative care specialists can play an important role in helping patients and their families discuss and make important and difficult decisions about their medical care.  That could include evaluating the different treatment options presented to the patient, weighing the pros and cons of each.  They can also assist in focusing on the future, on what the patient may or may not want as his/her condition declines.

     The palliative care team can facilitate this discussion well ahead of an acute medical crisis.  Knowing what the patient wants or doesn’t want helps to reduce the stress level of all involved when that medical crisis does arrive.

     Navigating the waters of palliative care and hospice care can feel overwhelming.  Let us help you to make that trip easier with a Health Care Proxy and Living Will and a Release of Protected Health Information (HIPAA, commonly).

     Learning more about Estate Planning and Asset Protection can protect you now and in the future. Call us or register for one of our workshops today to make your life a little easier down the road.  

Click here for more information on  Estate Planning and Asset Protection

Tags: long term care, Estate Planning, palliative, hospice

Understanding Long-Term Care Costs and Alzheimer's I Massachusetts Alzheimer's Attorney

Posted by Massachusetts Alzheimer's Attorney Dennis B. Sullivan, Esq., CPA, LLM on Fri, Mar 18, 2016

Alzheimer's and Long Term Care

alzheimers_walk.jpg

Alzheimer's is growing at an alarming rate. Alzheimer's increased by 46.1% as a cause of death between 2000 and 2006, while causes of death from prostate cancer, breast cancer, heart disease and HIV all declined during that same time period.

The 2015 Alzheimer's Association annual report titled, “Alzheimer's Disease Facts and Figures” explores different types of dementia, causes and risk factors, and the cost involved in providing health care, among other areas. This report contains some eye-opening statistics:

  • An estimated 5.3 million Americans of all ages have Alzheimer's disease. This figure includes 5.1 million people aged 65 and older and 200,000 individuals under age 65 who have early-onset Alzheimer's.
  • One in nine people age 65 and older (11 percent) has Alzheimer’s disease.
  • About one-third of people age 85 and older have Alzheimer’s disease.
  • Eighty-one percent of people who have Alzheimer’s disease are age 75 or older. The number of people aged 65 and older with Alzheimer's disease is estimated to reach 7.7 million in 2030 - more than a 50% increase from the 5.1 million aged 65 and older currently affected.
  • Every 67 seconds, someone in the United States develops Alzheimer’s. Thus, approximately 473,000 people age 65 or older developed Alzheimer’s disease in the United States in 2015.
  • By 2050, the number of individuals aged 65 and older with Alzheimer's is projected to number between 11 million and 16 million - unless medical breakthroughs identify ways to prevent or more effectively treat the disease.

Currently long-term care costs for dementia and Alzheimer's patients are about 80% higher than any other long-term care need. This is because dementia and Alzheimer's patients require more “caregiving” in terms of help with basic daily functions. Things that many of us take for granted to be able to do for ourselves, even when we are sick, such as bathing, dressing, toileting, and eating, are all activities many dementia patients require assistance with as the disease progresses. In addition, dementia patients often need someone with them just to protect them from themselves. Many dementia patients wander or harm themselves. Therefore, constant oversight of them is necessary.

Currently, there is no cure for Alzheimer’s, or any other type of dementia. There are treatments that may help slow the progression of the disease. There are also theories related to diet that may help prevention or stave off the development of dementia. However, there are no surefire ways to beat this disease right now. Advocating for the recognition of the costs associated with the disease as well as the heartbreaking effect on friends and family of the patient, is the best way to raise awareness to support the finding of a cure and prevention of dementia. We can all look forward to a day that this disease is a thing of the past because a cure, and/or prevention, has been found.

Click here to get a FREE copy of our book "The Senior and Boomer's Guide to Health care Reform and Avoiding Nursing Home Poverty"

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our original 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. Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshop - call 800-964-4295 or click the button below, to register and learn more about what youcan do to protect your spouse, your home, and your life savings.

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

Tags: long term care, Elder Law, seniors, elder care, long term care insurance, dementia, alzheimers, boomers, care costs, alzheimers care

Underestimating the Risk of Long Term Disability: The Importance of Being Prepared I Massachusetts Elder Law Attorney

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Mar 11, 2016

Underestimating the Risk of Long Term Disability:
The Importance of Being Prepared

6.25.12.jpg

Most Individuals Will Face At Least a Temporary Disability
Study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime. More specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, according to the definitive study in this area, depending upon their ages, up to 44% of Americans will face a disability of up to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than die in any given year.

Many People Will Face a Long Term Disability
For many Americans, the disability will not be short-lived. According to the 2007 National Home and Hospice Care Survey, conducted by the Centers for Disease Control's National Center for Health Statistics, over 1.46 million Americans received long term home health care services at any given time in 2007 (the most recent year this information is available). Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one "activity of daily living" (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer's disease).

Long Term Care Costs Can Be Staggering
Not only will many individuals and families face prolonged long term care, in-home care and nursing home costs continue to rise. According to the Genworth 2015 Cost of Care Survey, the Median Annual Cost for a Private Room in Massachusetts during 2015 was $114,026.

Perhaps most importantly, despite overwhelming and compelling statistics; most Americans grossly underestimate the risk of disability to themselves and to their loved ones. According to the Council on Disability Awareness 2010 survey:

  • 64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career; the actual odds for a worker entering the workforce today are closer to 25%.
  • Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.

Given the high costs of care, this underestimation often leaves Americans ill prepared to pay for the costs of long term care.

All Planning Should Thoroughly Address Disability
When a person becomes disabled; he or she is often unable to make personal and/or financial decisions. If the disabled person cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian over the person or property, or both. Those who are old enough to remember the public guardianship proceedings for Groucho Marx recognize the need to avoid a guardianship proceeding if at all possible.

At a minimum, seniors need broad powers of attorney that will allow agents to handle all of their property upon disability as well as the appointment of a decision-maker for health care. We recommend that our clients have both a Health Care Proxy and a HIPPAA to make this transition smoothly. Alternatively, a fully funded revocable trust can ensure that the senior's person and property will be cared for as desired, pursuant to the highest duty under the law - that of a trustee.

Click here to view our Free Consumer Report on "The Plain Truth About Alzheimer's."

At the Estate Planning & Asset Protection Law Center, we even 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. Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshop - call 800-964-4295 or click the button below, to register and learn more about what youcan do to protect your spouse, your home, and your life savings.Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: long term care, HIPAA, elder care, Estate Planning Recommendations, health, medical

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

 

veterans_benefits_lawyer 

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

For Those Left Behind

Posted by Dennis Sullivan & Associates on Fri, Oct 24, 2014

Estate Planning Is for Those Left Behind | Massachusetts Estate Planning Attorney

 
 Older_Couple
 
 

One of Life’s Two Certainties

Many people put off creating their estate plans because of the discomfort they feel when thinking about death. This is a basic trait most people have across almost every culture, and it’s true that preparing a Will or buying life insurance forces us to contemplate our own mortality. Not thinking about it won’t make it go away, and one way or another, the things that we own must pass on to others after our deaths.

 

So What Can You Do About It?

We can plan for that transition, and try to see that it happens in as much of a positive and beneficial manner for those left behind as we can. Or you can ignore planning ahead, live self-indulgently now and let chaos take its toll when you pass. You’ll be gone so really, what does it matter?

Well, that depends on how much you care. If there is no one and nothing that you care about that will still be here after you’re gone, then it doesn’t really matter. However, if you do care (and if you’re reading this I can guess that you do), then you’ve got some planning to do. The problem is that if we do care, then you need to recognize that your death has the potential to do serious harm to the people you who survive you.

 

The First Step In Estate Planning

Our Wills are documents we prepare for our surviving loved ones, not for ourselves. But having an up-to-date Will is just one of the critically important things we can do to protect, care for, and provide for the people we care about the most. A Will is an important document, but by itself it is vulnerable to lawsuits and disputes. That is why we always recommend establishing trusts to safeguard your assets and make sure the right people get what you meant them too.

If you have children, your Will provides you with an opportunity to name a guardian to care for them if they are still minors. You can also appoint a trustee to protect their inheritances, even if they are already adults. If you die without naming a guardian in your Will, the courts will appoint one without the benefit of your knowledge and judgment or approval. Without a trust, inheritances may soon be lost to our heirs' improvidence, divorce or even predatory lawsuits.  

You Must Choose Wisely

After deciding to make your Will, you must next select someone to be the executor. The executor is the person or institution who will be in charge of finalizing your affairs and distributing your estate per your wishes outlined in your Will. It can be a burdensome job since executors must collect your assets, arranges for payment of debts and taxes, and then distributes what is left to your designated beneficiaries. This will be a difficult task, so we recommend making sure that your executor is someone who can withstand the pressures of court, lawyers and grieving family members.

If you die without a Will, the courts will appoint someone to perform these functions, and they may be a total stranger with very little interest in fulfilling your wishes. Without a Will, the identity of our beneficiaries and the amounts they inherit will all be determined by state laws without any input from you. 

Using proper estate planning, including Wills and Trusts, we can take steps to limit (or even eliminate) the taxes that our heirs will have to pay on their inheritance. You can also leave instructions with your trusts to ensure that the right people, get the right inheritances, at the right times. By providing for distribution of our assets in a clear and thoughtful manner, we can avoid the potential for delays and family disputes that can be so hurtful to the people we care about. 

A Will Alone Isn’t Enough
A Will is the keystone of most estate plans, but it is not the only planning we need. You most likely own assets that will pass to others without regard to the provisions of your Will. Life insurance policies, IRAs and other retirement plan accounts, annuities, and the like, will be distributed based upon their beneficiary designations, not your Will. These designations may have been created decades ago, and need to reviewed and updated as appropriate. Assets that we own jointly with another may pass "by right of survivorship" to the joint owner. 

We need to consider the effects of all of these "non-probate" arrangements to make sure that our plan best meets our family’s unique circumstances. An estate planning and elder law lawyer can help make certain that we do not miss any important elements in preparing our estate plan. 

Even if we already have a Will, if our family situation has changed, or our planning has not been reviewed and updated in the last five years, we can do our loved ones a great kindness by taking care of this most important task.  

Although we don’t want to think about dying, Estate Planning is just too important to put off.  

I will now leave you with this quote:

“A man's dying is more the survivors' affair than his own.” ~Thomas Mann, The Magic Mountain.

 

Research shows that 86% of trust & estate plans fail! In Our Newest book we reveal what the ten biggest estate and asset protection mistakes are and how to avoid them. Learn where problems may exist in your current plan, and where there may be hidden opportunities in your plan to protect your home, spouse family and life savings. Click here for more information.

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, Estate Planning, estate tax, surviving spouse

Sooner or later

Posted by Dennis Sullivan & Associates on Mon, Oct 20, 2014

Sooner or later, you’ll probably need long-term care – be prepared | Massachusetts Eldercare Attorney

 alzheimers

 

According to a recent article by George Morse in the AAA Membership newspaper

Sooner or later, you’re probably going to need some form of long term care.

Just look at the statistics:

About 70 percent of people turning 65 can expect to use such services during their lifetimes, according to the US Department of Health and Human Services, and their younger population isn’t immune. A 2003 study by Georgetown University’s Long-Term Care Financing Project reported slightly more than one-third of those with long-term care needs were younger than 65.

Long term care insurance is one way that individuals can ready themselves for covering the costs associated with this kind of need. While some may believe traditional health insurance or Medicare will address such an expense Doug Ross, AAA’s Expert on long-term care insurance, said those plans aren’t aimed at the same kind of services associated with long-term care.

“Health insurance is really good at paying for care that’s designed to make you get well again. Long-term care is care to help people with activities of daily living,” he said.

These activities include eating, bathing, dressing, toileting and transferring.

The primary government-support program for long-term care, Ross said, is Medicaid, though individuals must meet both income and asset requirements to qualify.

Your mid-40’s is a good time to start looking at long-term care insurance because coverage rates are age-based, and it’s less likely that a pre-existing medical condition will prevent you from getting coverage. Ross said some companies have even added blood work to their medical underwriting.

Long-term care policies can be crafted to fit an individual’s need and budget.

“One of the biggest challenges with it is that there are a lot of misconceptions. When you hear the words long-term care, the first thing you’re going to think of is your parents or a nursing home, things that have nothing to do with you. What we need is for people to understand it’s something to think about or look at when you’re young and healthy,” Ross said.

A major consideration when looking at a potential policy is to examine resources that could supplement the benefit, such as a means of receiving care at home instead of in a nursing facility.

An inflation protection rider can also be helpful, maintaining the policy’s value to keep pace with inflation.

 

For further information, take a look at our new book, The 10 Biggest Estate and Asset Protection Mistakes People Make and How To Avoid Them now including the special bonus chapter, The Biggest Long Term Care Planning Mistakes that goes more in-depth on your options, works and how to plan for your future.

 

 

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, elder care, long term care insurance, caretaker, AAA

To Give Or Not To Give? A Question of Taxes

Posted by Dennis Sullivan & Associates on Fri, Sep 26, 2014

To Give Or Not To Give? A Question of Taxes
hug

What Do You Do?

You want to leave gifts for your heirs, but should you wait until you pass away? Or should you give some money to them now?

 

Caution: There Is A Lot of Confusion About Gifting

While gifts may make sense for taxes, they can also create a significant penalty for nursing home purposes. With all plans, you need to consider whether it makes more sense to preserve your benefits for nursing home purposes or to obtain tax breaks. As the old saying goes, “Don’t let the tax tail wag the dog.” For those who would like to protect their home, family and life savings with a trust based plan, they will also be able to continue to give gifts without triggering a penalty, but only if as the gifts are made from a qualifying trust. For more information on protecting your home, family, and life savings while also retaining gift giving privilege, take a look at our free report The Ten Biggest Estate Planning and Asset Protection Mistakes People Make and How to Avoid Them.

 

Gift Tax versus Estate Tax
Gift tax is the tax imposed by the federal government on any transfer of property to an individual without any compensation in return. "Property" in this sense includes both tangible property, like art or furniture, and intangible gifts like stocks and cash.

Currently (under 2014 law), you are exempt from gift tax on lifetime donations up to $5.34 million. Once your donations go over that lifetime amount, they can be subject to taxes up to 40%.

However, it's essential to note that this is a lifetime exemption – meaning, that's your cap over the span of your life. The $5.34 million lifetime exemption is a well-known figure in the world of estate planning that's based on what's called the unified gift and estate tax credit.

In any particular year, you can also give a tax-free gift of up to $14,000 per recipient without dipping into the basic exclusion. This is known as the "annual exclusion." However, here's where it gets tricky because of the unified credit. This refers to the federal gift tax and estate tax, combined into one tax system. If you give more than the annual exclusion amount to any one recipient in any particular year, most people are eligible to use the unified credit so that the gift counts against your estate. For example, if you give $15,000 in 2014, $14,000 is eligible for the annual exclusion, and the remaining $1,000 is applied against your lifetime exemption, which also reduces the exemption for your estate when you die by the same amount.

Estate tax is the tax imposed by the federal government on any transfer of property (tangible or intangible) by your estate after you have passed away. It is calculated by figuring out your "gross estate" (all assets including real estate, cash and securities, business interests, etc.) and subtracting any deductions you may qualify for (such as funeral expenses and some charitable contributions). The net amount after these calculations is then added to any taxable gifts you have given that have used up your unified credit to generate your taxable amount.

 

There are definite pros and cons to either option; we’ll take a look at some below:

 

Giving Heirs the Money Now 
Here are some advantages to giving your heirs money while you're still alive.

  • You get to see them enjoy it. If you'd prefer to see your gifts in action, giving your heirs the money now gives you a chance to see the difference it makes in their lives.
  • You can advise how they spend it. If you'd prefer to see your gifts in action in a specific way, giving the money while you're still alive gives you a chance to let your heirs know how you'd prefer they spend it.
  • You can give the gift in the form of paying for something. If you really want to ensure the money is spent on the thing you want it to be spent on, you can pay for something rather than giving your heirs the money for it. For example, you can pay for their wedding, make a down payment on their dream house, or pay for their tuition (which, incidentally, can qualify for the educational exclusion from gift tax).
  • You can stop giving them money if you see them falling off the rails. If you plan to give your heirs free reign with their money, giving it to them now allows you to put a stop to the cash flow if you see them spending it unwisely (like buying a flashy car instead of paying for tuition or paying down their mortgage).
  • You can avoid taxes up to a certain amount. For 2014, the IRS allows you to exclude up to $14,000 in gifts per heir (or $28,000 per heir if the gift is given by you and your spouse jointly). This means you will not have to pay gift tax on gifts up to that amount. If you choose to give a gift beyond that, you'll need to claim the "unified credit" (and have it count against your estate's lifetime exemption) in order to avoid paying taxes on the gift.

 

Waiting Until You Pass Away

Conversely, here are some advantages to waiting until you pass away before bequeathing gifts to your heirs.

  • You may need the money later. What if you find that you need the money to pay for your own expenses during your lifetime? You might need more than you think in order to enjoy your hard-earned retirement, pay for medical expenses not covered by insurance, or cover other long-term care costs such as home health aides and nursing home care.
  • Ability to change your mind. At the moment, you might want to split your money equally among your children; but what happens if one of your children later makes poor decisions that make you want to disinherit that person? Conversely, what happens if one of your children gets into a major accident and requires more medical care, and therefore more financial support? You can always adjust your will to change the amount you'll be leaving heirs after you pass away, but you can't take back money you've already gifted. Waiting until you pass away gives you the opportunity to change your mind during your lifetime.
  • Your heirs might appreciate it more and spend it more wisely. By waiting until you've passed away, you give your heirs a chance to "make their own way in the world" at a younger age. Rather than relying on an annual cash infusion from you, your heirs will be older and more responsible when they receive the inheritance. This might cause them to appreciate the gift more, as they will have experienced the task of earning money.

 

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, long term care, gift tax, estate tax

The High Cost of Seniors Living Longer

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Sep 05, 2014

 

The Cost of Living Longer | Massachusetts Eldercare Attorney

 

 planning, estate, eldercare

 

A Pachyderm of Problems

Every day, we see clients for whom long-term care is the elephant in the room. They feel they can’t afford the costs, but they also feel they can’t afford not to have it either. So their solution is to pretend they don’t see the elephant and try to ignore the problem until it goes away on its own. This unfortunately often leads to our metaphorical elephant trampling their life savings and any future inheritance they are trying to leave behind. The older you are, the more expensive a long-term care policy gets and if you get sick before you have long-term care protection in place, it’s too late. Insurance companies are looking out for their bottom line, and an already ill senior will scare them off.

The costs for these policies are rising faster than inflation too. Therein lies the conundrum for Boomers and seniors: They’re living longer than their parents did but that means they need more money to make it through “old age”. Finding long-term care is a tough and complicated process. You’ll need to find a place that cares for people with your (or your loved one’s) circumstances. You need to find a place with the right facilities and staff, a place that leaves you with a good, safe feeling. And you have to be able to afford it too. This is not any sort of one-size-fits-all situation. Everyone has their own specific services and conditions that they or their loved ones will need met. Remember, what we call “long-term care” is a broad category, with options ranging from live-in facilities to your own home.

Lurking Complications With Long Term Care

The greatest threat to the financial security of Boomers and seniors is the cost of long-term care (and Obamacare will not assist with this). Assisted-living facilities are now climbing toward the $7,500-a-month mark. Many have started bundling more services together, rather than charging for each individually. Bundling might be a good idea from the nursing home’s perspective, but just like pre-packaged cable TV you will wind up paying for a lot of services you don’t need and don’t want. A private room at a nursing home will range from $500 - $600 a day.

The cost of home healthcare is rising, too. Some people choose independent-living apartments. These facilities typically don’t require lump-sum payments, and residents can contract with home health-services independently. Medicaid may be there for those who qualify but if you ever want to learn the true meaning of “jumping through hoops” just try qualifying! The best thing, of course, is long-term care insurance, but that’s getting more expensive too as companies raise their rates while cutting back on their coverage. In addition, this insurance is getting more complicated, now encompassing aspects such as protection of the surviving spouse, caregiver issues, scams/ID theft, and making sure you have an advocate to fight for your rights in a system that’s slanted against you.

In short, we’re living longer, and unlike previous generations, people are generally not living with or even near their children. Seniors are going to need more money for this longer life and for any unforeseen medical problems that may arise.

A Magic Trick No One Wants to See

Do you know the fastest way for a Boomer or senior couple to become an impoverished Boomer or senior couple is? Simple, one of them just needs to become ill before they get long-term care insurance. We see it every day, people who’ve worked hard and saved money all their lives are forced to see it wash away in a flood of medical bills as they age. It is truly heart-breaking, because, if you’ve managed to squirrel some money away, you could probably have afforded long-term care. 

The Downside to Living Longer

Our life expectancies are going up these days and so is the cost of healthcare, the distance seniors are living from their children and families, and the financial pressures on Medicare and Medicaid. The new Affordable Care Act, in fact, stipulates $500 billion in Medicare cuts over the next decade! Where do you turn if you or your spouse gets ill? Home health care? Adult day-care? Assisted-living? A nursing facility? Respite-care services, which allow the caregiver to drop off the senior for a limited period? Who’s going to pay for it? And for how long?  These are the questions to ask now, while you still have time to plan. If you haven’t purchased long-term care before you or your spouse become ill…forget about it. No one will insure you once you’re sick! If this happens to you, you’re going to be out of time, out of options, and very quickly out of money. And if you’ve planned to leave something for your heirs, there may be nothing left to leave to them other than a pile of bills. 

 

It’s an old (but true) cliché: those who fail to plan, are planning to fail. When it comes to healthcare expenses as you age, you fail to plan at the risk of yourself and those you love.  

 

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: living will, Estate Planning, Estate Planning, asset protection, Massacusetts Estate Tax, long term care, life insurance, Medicaid, MassHealth, in-home care, marriage, Estate Planning Tip, seniors, assisted living, life-care plan, hospice, Massachusetts, assets, in home, incapacity, asset, home, surviving spouse, Estate Planning Recommendations, in-home care, long term care insurance, Inheritance

Estate and Long Term Care Planning for Women

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Aug 18, 2014

 

The Unique Challenges in Women Face with Estate Planning

Estate planning for women

Estate and Long Term Care Planning for Women can be different and full of confusing choices. Women are living longer today than ever before, and you will need an estate plan that can protect you from the new challenges arising daily. Let’s look at some of the more common situations below:

Married women tend to be younger than their husbands and tend to be on their own once their husband passes. Many married women let their husbands do all the financial planning, including their estate planning. Unfortunately this leaves many of them confused, or even blindsided by the oncoming costs that can appear with their estate and long term care options. Second marriages can create a whole new set of issues to deal with as well. Children from both marriages must be accounted for and must know what their responsibilities are going to be as well as fairly dividing their inheritance. For your own sake it would be best if you chose exactly who you would want to have power of attorney as well as whom you wish to have as your healthcare proxy. It is also important to update these documents regularly as many institutions do not accept them if they are more than a year old.

Single or childless women may choose to leave their possessions to close friends, relatives or charities. Without a good, up-to-date estate plan however, that won’t happen. Instead a bureaucrat appointed by the state will decide where your worldly goods will go when you’re gone. And for women living with a partner whom they are not legally married to, their partner won’t see one red cent of your estate unless you have an ironclad estate plan stipulating who gets what.

Your documents cannot do you much good unless they have been updated to reflect your current needs and situation. If you have gone through a separation or divorce you probably do not wish for your former partner to inherit your things or be making medical decisions about you. We have seen many cases where this has happened, and it is too late to change anything. Fortunately situations like this can be avoided by simply updating your documents regularly. At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates we provide clients with a unique Lifetime Protection Program to help keep their documents and plans up to date with any changes in their personal, family and health situations.

You must also consider what will happen if you require long term care and make sure there is going to adequate funding for what you may need in the future. Many people have made the mistake of giving away their savings in order to qualify for Medicaid without consulting a professional first. Not only was this unnecessary, they often still do not qualify because they did not plan for their situation ahead of time. Giving away their assets can even create large penalties if you ever need a nursing home. To learn more about some of the other mistakes to watch out for take a look at The Ten Biggest Estate and Asset Protection Mistakes People Make and How to Avoid Them! For a free report based on the book click here.

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.

 

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

Tags: health care proxy, Estate Planning, Elder Law, asset protection, long term care, Charitable Giving, Nursing Homes, marriage, Beneficiary, elder care, assisted living, estate, assets, coverage, death benefit, surviving spouse, Estate Planning Recommendations

Sign-Up Below To Receive Your Free Report

Follow Me

Browse by Tag



Follow DennisBSullivan on Twitter