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Our 1st Annual Elder Law Forum for Professionals was a resounding success! Thank you to all who attended. The learning, sharing and networking was incredible. Video excerpts will soon be posted on our web site for those who were unable to attend.
We provide The Elder Law Update to our clients and our colleagues who make up a wide range of service providers for seniors and people with disabilities to facilitate the dissemination of helpful and accurate information. We thank you for letting us share our knowledge with you. We continue to welcome your comments and questions. You may send them to Info@ElderLawAssociates.com. |
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Annual Gift Tax Exclusion Jumping to $13,000 Next Year
 The annual gift tax exclusion will increase from $12,000 to $13,000 effective January 1, 2009, the Internal Revenue Service (IRS) has announced. The gift tax exclusion is the amount the IRS allows a taxpayer to gift to another individual without reporting the gift.
The increase means that more can be given away for estate tax planning purposes. For example, a married couple with four children will be able to give away up to $104,000 in 2009 with no gift tax implications.
The tax code permits the gift tax exclusion, which has remained at $12,000 since 2006, to rise when inflation would produce an increase of $1,000 or more. This year's inflation figures pushed the amount above the next $1,000 threshold.
For more on this and other inflation-adjusted tax figures for 2009, go to: http://www.irs.gov/newsroom/article/0,,id=187825,00.html
For more from ElderLawAnswers on estate taxation and gifts, click here.
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Tax Deductions for Assisted Living Costs
 If you or a family member lives in an assisted living facility, you know that assisted living costs continue to rise every year. But did you know some of those costs may be tax deductible? Medical expenses, including some long-term care expenses, are deductible if the expenses are more than 7.5 percent of your adjusted gross income.
In order for assisted living expenses to be tax deductible, the resident must be considered "chronically ill." This means a doctor or nurse has certified that the resident either:
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cannot perform at least two activities of daily living, such as eating, toileting, transferring, bathing, dressing, or continence; or
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requires supervision due to a cognitive impairment (such as Alzheimer's disease or another form of dementia).
In addition, to qualify for the deduction, personal care services must be provided according to a plan of care prescribed by a licensed health care provider. This means a doctor, nurse, or social worker must prepare a plan that outlines the specific daily services the resident will receive. Though not required by law, most assisted living facilities prepare care plans for their residents.
Generally, only the medical component of assisted living costs is deductible and ordinary living costs like room and board are not. However, if the resident is chronically ill and in the facility primarily for medical care and the care is being performed according to a certified care plan, then the room and board may be considered part of the medical care and the cost may be deductible, just as it would be in a hospital. If the resident is in the assisted living facility for custodial and not medical care, the costs are deductible only to a limited extent. In any case, the expenses are not deductible if they are reimbursed by insurance or any other programs.
Residents who are not chronically ill may still deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees. The assisted living facility is responsible for providing residents with information as to what portion of fees is attributable to medical costs.
In some circumstances, adult children may also get a tax deduction if their parents or other immediate family members (including in-laws) live at an assisted living facility and qualify as their dependents. The family member must be a U.S. citizen or legal resident or resident of Canada or Mexico and the adult child must provide more than half of the family member's support for the year. Even if the adult child is not paying more than half the family member's total support for the year, the child may still be eligible for a deduction if he or she contributes to the family member's support according to a "multiple support agreement." The adult child must pay more than 10 percent of an individual's total support for the year, and, with others who also support the resident, collectively contribute to more than half of the resident's support. All those supporting the individual must agree on and sign a Multiple Support Declaration.
For more information on deducting medical expenses from your taxes, click here. |
Writing a Memorandum of Intent for a Special Needs Child
 How can you ensure that your special needs child will remain well cared for and secure once others assume the role of guardian or caregiver? While creating a financial plan and establishing a specialized trust are central to preparing for your child's future, special needs planners also advise families to write down their intentions and expectations in a document referred to as a Memorandum of Intent, also known as a "Letter of Intent."
The Memorandum is not legally binding and, when directions conflict, those in wills, trusts and other legal documents take precedence. But for "non-legal" matters, it will serve as the primary source of information about your child, providing a roadmap for the courts, guardians, caregivers and others involved in your child's life. That can be critical in easing your child's transition, ensuring continuity of care and treatment, as well as appropriate decision making regarding living arrangements and other lifestyle choices.
Topics that can be included in a Memorandum, include the following:
- Individuals and organizations that should be contacted upon your death or incapacity
- Your child's health care and therapeutic needs
- Your preferences for education, religion, and childrearing practices
- Contact information for doctors, therapists and teachers
- Your child's personal history, degree of independence or mobility, behavioral issues, and need for assistive technologies
- Your child's interests and personality traits
- The location of medical records and other important documents.
While writing a Memorandum of Intent can be time-consuming and emotionally taxing, it's very important not to postpone this task. Once the Memorandum is complete, place the original in a secure location and distribute copies to others involved in your child's life. Then, mark your calendar, setting aside time to revise the Memorandum at least once a year so it will continue to reflect your child's current life stage and situation.
If you have a child with special needs, ask your attorney about including a Memorandum of Intent in your child's care plan.
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FDIC Temporarily Boosts Insurance Limit to $250,000, Including Trusts
 The recently passed Emergency Economic Stabilization Act of 2008 (aka "the bailout bill") temporarily raises the basic limit on federal deposit insurance coverage (FDIC) from $100,000 to $250,000 per depositor. The legislation provides that the basic deposit insurance limit will return to $100,000 after December 31, 2009.
The rise in insurance coverage applies to trust accounts as well. The owner of a revocable trust is insured up to $250,000 for each beneficiary, provided certain requirements are met and there are no more than five beneficiaries. The temporary coverage increase, coupled with an earlier FDIC interim rule simplifying the rules for determining the coverage available on revocable trust accounts means that the opportunities for increased insurance coverage of revocable trusts -- both informal "pay-on-death" or formal "living trusts," are sizeable -- at least in the short term.
There can be several advantages to establishing a trust, depending on your situation. Best-known is the advantage of avoiding probate. In a trust that terminates with the death of the donor, any property in the trust prior to the donor's death passes immediately to the beneficiaries by the terms of the trust without requiring probate. This can save time and money for the beneficiaries. Certain trusts can also result in tax advantages both for the donor and the beneficiary. These are often referred to as "credit shelter" or "life insurance" trusts.
A qualified elder law attorney can help you determine whether your trust accounts are adequately insured or tell you whether your situation merits setting up a trust.
Bear in mind that while elder law attorneys may recommend a living trust as an estate planning device for some of their clients where it is appropriate for their particular needs, salespeople masquerading as professional estate planners are working the provinces trying to convince older Americans that such trusts are for everyone. For more on this from ElderLawAnswers, click here.
For the FDIC's press release on the temporary increase in coverage, click here.
For a Trusts & Estates article on "FDIC Deposit Insurance In These Hard Times," click here. |
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BOOK REVIEW: Questions and Answers on Life Insurance  Anthony Steuer. Questions and Answers on Life Insurance. iUniverse, Lincoln, NE. 2007. 464 Pages.
$22.45 from Amazon (click on book to order).
Deciding which type of life insurance to purchase can be a confusing process. Term life? Variable life? Whole life? Universal life? What do these terms mean and which option is right for your situation? Questions and Answers on Life Insurance provides answers to those questions and more.
Author Anthony Steuer is a licensed individual life and disability insurance analyst with 20 years of experience. Writing in a question-and-answer format, Steuer outlines the various methods for figuring out how much life insurance you need, including worksheets and tables. Noting that life insurance policies are very complex and hard to compare, he provides detailed information on the different products available and how to evaluate them. The book also includes information on how to choose a life insurance company and agent, the importance of monitoring and replacing policies when needed, and discussions of policy loans, taxes, and life insurance trusts, among other topics.
Steuer provides rare unbiased information on a complicated subject. While this dense book contains more information than any layperson probably needs to know about life insurance, the question-and-answer format makes it easy to find the topics that are of interest to you. |
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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaid and long term care planning including long term care insurance, Medicaid applications, home and community-based Medicaid waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, the purchase of life estates, income producing real estate and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts and advance directives; and probate, which encompasses estate and trust administration as well as litigation.
We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.
We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.
Warm regards,
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Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA
Elder Law Associates PA
phone: (561) 750-3850 / (800) 353-3752
fax: (561) 750-4069
This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client. |
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