Massachusetts Estate Planning & Asset Protection Blog

Is your Planning Stuck in Limbo?

Posted by Dennis Sullivan & Associates on Thu, Jul 27, 2017

How does the debate over Health Care Reform affect you and your estate plan?

Everyone is talking about health care reform: whether it’s the House bill, Repeal & Replace, Skinny Repeal, it can make your head spin.  One question on everyone’s mind is how changes to health care will affect them.  We at Dennis Sullivan & Associates are keeping up to date on all the changes, and will cover the process through a series of blogs to explain where health care reform is now, how it affects you and what the future may hold.  For more information on the current law of the land, you can download our Report: Senior & Boomers Guide to Health Care Reform

 


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Eventually, both the House and Senate must vote on the same bill.

The battle continues in Washington over the repeal or replacement of the Affordable Care Act (ObamaCare) and as we are witnessing; this can be a messy process. 

Why Republicans are trying so hard to repeal and replace ObamaCare and how they are going about it:

ObamaCare, you may remember, was passed by the Democrats in 2010 with no Republican support. Ever since, Republicans have campaigned on repealing the program, which was unpopular with many Americans. “Repeal and Replace” was their rallying cry to voters to help them win back control of the House in 2012, then the Senate in 2014, and finally the Presidency in 2016. If the Republicans are not able to fulfill this major promise, some may be in danger of losing their seats in the next election, as they would likely be blamed for the problems with ObamaCare if they don’t fix them. These are the political reasons.

Democrats admit that ObamaCare has problems and needs a major fix to survive. But they are not on board with repeal and replace of such a signature piece of legislation, while Republicans try to find a way to pass new legislation.

The Legislative process:

The normal legislative process is that a bill begins in the House, where it is written, discussed and approved by a committee before the House votes on it. If it passes the House, it is then sent to the Senate. The Senate can vote on the same bill, make amendments to the House bill, or create its own bill. Eventually, both the House and Senate must vote on the same bill, so if there are differences, members of both the House and Senate meet in committee to resolve them. Once a bill passes both the House and Senate, it is then sent to the President who can sign it into law or veto it.

Right now, there is a House bill on health care that has passed the House, and a Senate bill that has not passed the Senate. Discussions and amendments are still occurring with the Senate bill in hopes it will pass soon. The public posture is that this messy legislative process is making the bill better.

Further complicating this process is that while the Republicans have a majority in both the House and the Senate, they only have 52 Republican Senators. 60 votes are required to overcome the filibusters and pass new legislation, so they are attempting to pass health care legislation through the Budget Reconciliation process. It only requires 51 votes, but it limits the legislation to budget-related items only. They would not be able to include provisions some Republicans want in a full repeal and replace bill—for example, letting insurance companies sell across state lines to increase competition, lower prices and create better plans; and allowing the government to negotiate lower drug prices. Issues like these would have to be voted on later.

For the Senate bill to pass in Reconciliation, 50 Republicans must vote for the bill, since no Democrat or Independent is expected to vote for the bill. Vice-President Pence would break the tie if needed.

So far:

The Senate rejected a proposal from Republican lawmakers to repeal Obamacare on Wednesday July 26, 2017, marking a significant milestone in the Republican Party's years-long political crusade to gut former President Barack Obama's legacy health care law.

 

What does the future hold?

We aren’t sure what the future American Health Care Act is going to look like, not sure anyone does, but luckily protecting yourself and your loved ones from expensive long term care doesn’t have to be so uncertain.  With asset based long term care products, there are ways to insure your control over your future long term care and insure you have something left over for your spouse, children and loved ones. Don’t let your long term care plan sit in limbo. Stay tuned we will discuss more about what the future looks like in our next blog post.

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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.

If you would like more information on Medicaid, the Affordable Care, or the impact of new health care laws on your planning, request your free preview of our guide, the Senior & Boomers’ Guide to Health Care Reform & Avoiding Nursing Home Poverty. 

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 Act, Announcements, Dennis Sullivan, Elder Law, Estate Planning, Estate Planning Recommendations, Estate Planning Tip, Financial Planning, Health Care, Health Care Ruling, Medicaid, Medicaid penalties, Medicare, Obama, Obamacare, Retirement, care costs, coverage, unreimbured medical expenses, surviving spouse, senior, coverages, applying for medicare, elder care

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

Bring in the New Year with Clarity about Obamacare!| Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Dec 31, 2013

 

Happy New Year, Affordable Health Care, Obamacare 

I know what you're thinking…

 

"Oh, great...more information on the Affordable Care Act? I can't even understand the information I've already read!"

 

Well, folks if you were born between 1946 and 1964, you should read this - because "Obamacare" may be good for Boomers.

 

Boomers were shattered by the recent recession, and many have significantly-shrunken savings. This is happening at the exact time they're starting to fall prey to the infirmities of advancing age. Many, as a result of the recession, have gone without health insurance. And those who've had to purchase their own insurance are paying five to seven times as much as younger people. Talk about a perfect storm!

 

People who retire before 65 are at special risk. They're not eligible for Medicaid, and if they're not on insurance plans from their former employers, they won't get group discounts. In addition, this age group has been hard-hit by denial of coverage for pre-existing conditions - which cannot happen under ACA.

 

Under ACA, there will be no limit on annual or lifetime benefits, and Boomers will pay no more than three times as much as younger people.

 

In addition, many Boomers will be eligible for tax breaks, which will be used toward paying part of their insurance bills...therefore lowering their rates. And Boomers who've kept working just so they could keep employer-sponsored insurance may now have the freedom to retire, because costs for individual coverage will be lower.

 

But it's certainly complicated. And as of this writing, the government has shut down, politicians are screaming, and registration for ACA has started...making everything even more complicated.

 

But we can help.

 

At The Estate Planning and Asset Protection Law Center of Dennis Sullivan and Associates, we're Elder Law and Estate Planning attorneys. We know how this new legislation will affect Boomers. In fact, we've been helping Massachusetts families figure out new legislation - both Federal and state - for the past 25 years. And we've helped them, too, with comprehensive estate planning, wills, trusts, powers of attorney, long-term care planning, asset-protection plans, and assistance with Medicaid and the VA.

 

If you're confused about "Obamacare," give us a call. We'll clear it up for you. And help you bring in the New Year with peace of mind!

 Don't forget, in our New book "Senior and Boomer's Guide to Health Care and Avoiding Nursing Home Poverty", we discuss the many issues that this law has created for Seniors and Boomers. Download your free report by clicking the button below.

 

Seniors and Boomers Guide

 

 If you would like to learn even more about the changes in health care please attend one of our informative, FREE workshops. 

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

Tags: Medicaid, Obama, Affordable Health Care, Obamacare, 2014, Affordable Health Care Act

Confused About the Affordable Health Care Act (Obamacare)? | Massachusetts Elder Law Attorney

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Nov 14, 2013

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We are here to help!

The Affordable Care Act (Obamacare) provides insurance for those who are uninsured, many of whom have, unfortunately, become overcome with confusion, fear, and misunderstanding, that they are avoiding to process all together. We understand that! We are navigating the options for the people we help, but even we are little unsure of the best options for them.

But there is one thing we are sure of, its the new benefits added to Medicare recipients! These added benefits include yearly Wellness visits (an opportunity to talk about your future), and coverage for numerous procedures that were not covered before.

For more information about this confusing topic, visit our website to receive your free copy of our report, "The Senior's & Boomer's Guide to Health Care Reform and Avoiding Nursing Home Poverty."

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.

Make sure you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about Obamacare, Medicare cuts, taxes, & how to avoid nursing home poverty!

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

Click the picture below for some more information on the 
"Senior & Boomers' Guide to Health Care Reform & Avoiding Nursing Home Poverty." 

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Tags: Medicare, Medicaid, MassHealth, Wellesley, medical expenses, medicaid qualification, Medicare, Obama, 2013, Massachusettes, Affordable Health Care, Obamacare

Massachusetts Estate Planning Attorney | Uncertainty Makes Tax Planning Tricky

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Nov 21, 2012

As recently reported in the Boston Globe, many investors and taxpayers are tackling a daunting task: trying to plot a post-election personal finance strategy as Washington debates the future of Bush-era tax cuts. If they make decisions now, they fear they might guess wrong. But if they wait for the politics to settle, they could get hit with big tax bills they might have avoided. This makes things very difficult.washingtondc

Taxpayers who would ordinarily be in the midst of their year-end planning find themselves in a quandary instead. The Bush tax cuts, which lowered rates and included other tax breaks, will expire December 31 of this year. President Obama and congressional leaders are negotiating whether to extend some or all of the tax cuts; if they deadlock, everyone’s taxes will go up in 2013.

The most likely increases include long-term capital gains taxes, income tax rates on the wealthiest Americans, and top rates on gift and estate taxes. Those are the areas where taxpayers – particularly couples with taxable income of more than $250,000 or individuals with more than $200,000 – are looking for planning advantages. Some may find them.

Take capital gains. The president wants the wealthiest Americans to pay a top rate of 20 percent on gains and selling stock and other investments, a rate which is up from the current 15 percent. Yet if the Bush tax cuts are not extended, middle-income taxpayers would see the rate they pay on capital gains rise to 20 percent as well. Also, some people in lower tax brackets, who are currently exempt from capital gains taxes, would face a 10 percent rate.

The likelihood of such increases means investors may want to sell appreciated stock this year. Some financial planning professionals have suggeted investors should only sell if it makes sense for nontax reasons, such as rebalancing a portfolio, diversifying holdings, or raising cash.

Ultimately with investment decisions,  you don’t want to let the tax tail wag the dog.

The fate of qualified dividends – which are currently taxed at a top rate of 15 percent – also has investors nervous. Without congressional action, the rates would rise between 28 and 31 percent for middle-income tax payers. President Obama wants to impose even higher rates on dividends earned by wealthy individuals and families, increasing the top rate to as high as 39.6 percent for couples with $250,000 of taxable income and individuals making $200,000.

That increased tax bite could make dividend-producing stocks less attractive, which in turn could depress prices. At the same time, municipal bonds may gain some luster since their interest in exempt from both federal income taxes and the new 3.8 Medicare tax. Under the federal health care overhaul, wealthy families and individuals will, for the first time, have to pay Medicare taxes on investment income that exceeds threshold amounts, starting in 2013.

Faced with the likelihood of higher tax rates, those at the top income levels find themselves in an unusual year-end planning position.

Usually you want to accelerate deductions and defer income to the subsequent tax year. I, this case, you may want to do the opposite. That might include such strategies as taking a bonus in 2012 rather than after the New Year or paying property taxes or state estimated income taxes after January 1. State and local taxes are deductible on federal returns, and such a strategy would lower taxable income next year when rates would be higher.

Trying to time deductions, however, comes with a caveat: Congress is considering capping deductions on the wealthiest taxpayers, potentially limiting the advantage of such tax planning. Looking ahead to next year, taxpayers facing rate increases may want to take full advantage of contributions  to retirement accounts, health savings accounts, and other vehicles that allow them to shelter pre-tax dollars and potentially stay in a lower tax bracket.

Financial specialists also agree that it’s a great time for the super wealthy to make gifts to children and other family members. That’s because the current estate and gift tax exemption of $5.12 million per person expires on December 31, 2012. It’s likely to be replaced with a new exemption of $3.5 million – or perhaps just $1 million – with estate tax rates possibly jumping to as high as 55 percent from the current 35 percent.

As a rule of thumb, taxpayers can assume that the outcome in Washington won’t lead to more favorable rates, but they can limit their guesses to about what political leaders might or might not do.

If you decide to take advantage of the current rules, fast action is required. There is not a lot of time left this year.

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.

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Tags: Estate Planning, IRA, tax deductions, tax exemption, taxes, tax, Obama

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