Questions asked and answered from our last workshop!

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  1. I have elderly parents with modest assets. Is it possible to protect any of those assets?
  2. What is the financial impact of parents moving into my home for care? Do I have liability as their Power of Attorney? Is it possible to use Veterans Benefits for their care in my home?
  3. What is the criteria for a disabled child (exempt transfer)? Can I transfer assets to a disabled child without a Medicaid eligibility penalty?
  4. My mom is 87 years old and she is $600 short each month after paying for care. Should I sell her house?
  5. Can I do IRA planning to minimize taxes and maximize benefits to my heirs?
  6. What are the tax consequences of transferring $50,000 as a gift in a single year?

Join us at our next workshop and have your questions answered! Click here to see upcoming dates.

When is it too late to protect assets when qualifying for Medicaid?

asset-protectQuick answer: when all (or almost all) of your assets are spent down and you’re qualified for Medicaid benefits.

Until that time, there are usually opportunities for some savings.

Most people are aware that Medicaid provides benefits for long term stays in skilled nursing, and that the Medicaid rules require applicants to spend down assets to a certain level before qualifying for benefits. Many are also aware that an applicant can keep some assets, like a house and a car, and still get benefits.

Fewer people know that some assets can be transferred away without incurring any type of penalty. These “exempt transfers” (you can read more about them here) include transfers such as establishing a special needs trust for the benefit of a disabled son or daughter, or deeding a house to a caregiver child.

Another way to protect assets is to transfer them to the spouse of the applicant (in Medicaid parlance, called a “community spouse”). Medicaid law contains a number of provisions allowing the community spouse to keep assets, but people often need the advice of an experienced elder law attorney to know how to take advantage of those opportunities.

In addition, an applicant may also have the opportunity to purchase exempt assets. That is, an applicant may be able to use funds that would otherwise be spent down and use them to benefit the applicant or someone else in the family.

In short, you may have many opportunities to protect assets, even when someone has already entered a nursing home. We can help you to devise a plan tailored to getting the best result possible in your situation.

Questions asked & answered at yesterday’s “Estate Planning Essentials” workshop

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  1. Can I protect assets for my heirs?
  2. How can I avoid court and family disputes?
  3. How can I set up a trust?
  4. Is it true that “probate” costs a lot? Should I avoid probate?
  5. If I have no children or trustworthy people in my life, who can I appoint as my agent or executor?
  6. What is Medicaid Planning?

Join us at our next workshop and have your questions answered! Click here to see upcoming dates.

 

 

“myRA” announced to boost retirement savings

In a visit to the Pittsburgh area last week, President Obama signed a presidential order directing the Treasury Department to create “myRA,” a new vehicle for retirement savings. The proposal was originally announced in the State of the Union address to Congress.

According to the White House Fact Sheet, myRA will work like a Roth IRA account, but have principal protection “so the account balance will never go down in value.”

The new proposal is targeted to workers with low to moderate incomes. Initial investments start at $25, and contributions can be made in amounts as low as $5 through payroll deductions. It will be available to households earning up to $191,000 a year.

With reports showing many Americans are not saving enough for retirement, any new program encouraging retirement savings should be welcome news indeed.

Courts extend estate tax, pension plan rights to same-sex couples

In recent months, courts have extended important elder rights to same-sex married couples.

Estate tax

Last summer’s landmark ruling by the U.S. Supreme Court in United States v. Windsor struck down a provision of federal law that excluded same-sex couples from the definitions of “marriage” and “spouse.”

Edith Windsor sued to obtain a refund of federal estate tax she had paid after the death of her spouse, Thea Spyer. Edith and Thea married in Canada in 2007, and their marriage was recognized by the state of New York, where they resided. Edith claimed she was entitled to a refund because of the exemption from federal estate tax available to surviving spouses, but the IRS denied the refund.

The Supreme Court ruled it was unconstitutional for the law to exclude same-sex couples from the definition of “marriage.” “The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity,” the Court held. “By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment.”

As a result, Edith was entitled to an estate tax refund of $363,053.

Pension plan

Following the Windsor ruling, a federal court in Pennsylvania ruled in favor of another same-sex surviving spouse who sought of the death benefits from her deceased wife’s pension plan.

Under the terms of pension plan, death benefits were payable to the surviving spouse unless she had signed a written waiver. Jean Tobits, who was considered the spouse of Sarah Farley under Illinois law where they lived, applied to receive Sarah’s pension plan death benefits after Sarah died from cancer in 2010.

The Pennsylvania-based law firm for whom Sarah worked also received a claim for death benefits from Sarah’s parents. The firm asked the court to resolve the competing claims.

Following the Windsor decision, the court held that Jean met the definition of a “spouse” under applicable federal law, since her marriage to Sarah was recognized as valid by the state where they lived. Since Jean had never signed a waiver, she was entitled by law to receive the death benefits of Sarah’s pension plan. (Cozen O’Connor, P.C. v. Tobits, et al.)

Pennsylvania status

Pennsylvania now recognizes same-sex marriages, under the 2014 case of Whitewood v. Wolf. Among other benefits, this change in the law affords more favorable treatment to same-sex couples for purposes of inheritance tax and real estate transfer tax. For more information on this issue, click here.