If your spouse is the beneficiary of your policy, then there is nothing to worry about. Spouses can transfer assets to each other tax-free. But if the beneficiary is anyone else (including your children), the policy will be a part of your estate for tax purposes. For example, suppose you buy a $200,000 life insurance policy and name your son as the beneficiary. When you die, the life insurance policy will be included in your taxable estate. If the total amount of your taxable estate exceeds the estate tax exemption, then your policy will be taxed.

In order to avoid having your life insurance policy taxed, you can either transfer the policy to someone else or put the policy into a trust. Once you transfer a policy to a trust or to someone else, you will no longer own the policy, which means you will not be able to change the beneficiary or exert control over it. In addition, the transfer may be subject to gift tax if the cash value of your policy (the amount you would get for your policy if you cashed it in) is more than $13,000. If you decide to transfer a life insurance policy, do it right away. If you die within three years of transferring the policy, the policy will still be included in your estate.

If you transfer a life insurance policy to a person, you need to make sure it is someone you trust not to cash in the policy. For example, if your spouse owns the policy and you get divorced, there will be no way for you to get it back. A better option may be to transfer the life insurance policy to a life insurance trust. With a life insurance trust, the trust owns the policy and is the beneficiary. You can then dictate who the beneficiary of the trust will be. For a life insurance trust to exclude your policy from estate taxes, it must be irrevocable and you cannot act as trustee.

If you want to transfer a current life insurance policy to someone else or set up a trust to purchase a policy, send us an email to set up a consultation with one of our attorneys.

For more information on estate taxes, click here.

In an in-depth discussion of the rating system, the report highlights numerous instances in which facilities received above-average overall ratings despite being cited for serious deficiencies in care, some of which resulted in serious injuries of residents.

The rating system, which was launched in December 2008 by the federal Centers for Medicare and Medicaid Services (CMS), gives nursing homes a rating of between one and five stars. A five-star designation means the facility ranks "much above average" compared to other facilities in its state, while a one-star designation means that a facility ranks "much below average" in the state. The rankings, which are updated monthly, are based on a nursing home's performance in three areas: quality measures, nurse staffing levels and health inspection reports.

The problem, according to the report, is that the rating scheme uses a quota system to rank facilities. Nursing homes that rank in the top 10 percent in health inspections in each state receive five-star ratings in that rating category, while facilities in the bottom 20 percent receive one-star ratings. This "grading on a curve" approach means that homes with serious deficiencies can still score high as long as their inspection records are better than most other homes in their state, while in another state a home with few problems could nevertheless receive a mediocre or poor rating.

Adding to the confusion is that the star ratings are heavily weighted by the health inspections, which are conducted by state surveyors and, according to the report, "vary considerably in scope and depth from state to state." The report points out that Massachusetts inspectors give nursing homes relatively few deficiency citations, resulting in "grade inflation" where the top 10 percent of homes would not necessarily be as outstanding as the top facilities in another state.

Disturbed by these issues, last year the attorneys general of 30 states sent a letter to CMS asking it to suspend and revise the rating system.

Nursing home consumer advocates appear conflicted about the rating system: on the one hand, they see it as a useful tool for consumers, but on the other they concede that it includes some four- and five-star homes that have been cited for negligence that resulted in deaths or injuries of patients.

According to the Commonwealth report, Edward F. Mortimer, technical director of the Survey and Certification Group for CMS, "says the star ratings should be only the starting point in the search for a nursing home, and he urged consumers to dig deeper into the information provided on the website and to visit homes in person."

Despite problems with the ratings of individual facilities, one overall trend that has emerged from the rating system is the general superiority of non-profit nursing homes compared with for-profit homes, the report points out.

To read the Commonwealth magazine report, "Misdiagnosis," click here.

According to a new consumer guide by the industry trade association, the risk of running out of benefits on a three-year policy is small, particularly for men. Overall, of people who bought a policy with a benefit period longer than three years and made a claim for long-term care, only 13.1 percent needed that care for longer than three years. Only 7.6 percent of those with a policy that paid out longer than four years actually needed care for longer than four years, and only 4.5 percent of those buying policies lasting longer than five years needed care beyond five years.

Men with a three-year policy who begin a long-term care claim at age 82 (a typical age) have a 12.4 percent likelihood of exhausting their benefits, while women face almost twice the risk (23.5 percent).

The guide reports that a policy that pays benefits for three years costs between 42 percent and 54 percent less than one that will pay claims for an unlimited number of years. A two-year policy is 51 percent to 64 percent cheaper than an unlimited policy, while a five-year policy brings a 30 percent to 39 percent savings.

However, if you are one of the individuals whose claim goes past the expected number of years of your policy, you can expect to need care for anywhere from two to six more years, the guide reports. A 55-year-old man who exhausts a three-year policy can expect to need long-term care for another 3.7 years, while a woman of the same age would need an average of 5.3 years of additional care. An 82-year-old who exhausts a three-year policy can expect to need long-term care for another 1.9 years (men) to 2.9 years (women).

The new guide combines comprehensive claims-related data from various studies conducted over the past year by the trade group. In addition, the guide includes findings of a special study conducted for the association by the consulting firm Milliman, Inc.

"Before they buy, people want to know their real risk of using their insurance policy," said Jesse Slome, the association's executive director.

Copies of the guide are available only to association members, but it can be read for free online by clicking here. Click here to go directly to the PDF online version.