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

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

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