Divorce As A Medicaid Planning Tool?

Many happily married seniors are facing a previously unthinkable proposition:  terminate their marriage or risk losing a majority of their savings to medical expenses, leaving both of them with little savings to enjoy their twilight years, regardless of how well they planned in advance.  How can this happen?  With medical technology ever improving, allowing us to live longer, most individuals will spend at least a few years in a nursing or retirement facility during our lifetimes.  With the baby boomer generation approaching retirement age, more and more of us will fall into this category.  How will these long-term care expenses be paid?  The choices are private savings, long-term health care insurance, Medicaid or a combination.  This is where the dilemma occurs.

For example, consider a devoted husband and wife living financially comfortable in retirement.  Husband has a series of strokes and reaches the point physically where wife can no longer care for him.  … View Full Article → “Divorce As A Medicaid Planning Tool?”

How the New Health Care Reform Will Affect Seniors

There remains great concern among seniors about how the new Health Reform Law will affect them, and it will be years before the true effect of the law among this group of citizens is known.  However, some aspects of the law are clear, and the hope is that the overall positives will outweigh the negatives when all is said and done.

Among the negatives are broad cuts in projected Medicare payments to insurance plans, hospitals, nursing homes, and other service providers.  Although many projections have been made, this is one area in which it is too early to evaluate the size of reductions or its effect.  Another negative is that those seniors enrolled in private insurance plans under Medicare Advantage will likely face higher premiums and reduced benefits.  Prior to passage of the new law, private insurers were subsidized by the government to manage Medicare programs on the government’s behalf.  The government will begin lowering the subsidies to these private plans likely resulting in higher premiums to the insured.  … View Full Article → “How the New Health Care Reform Will Affect Seniors”

The Nuts and Bolts of Real Estate “Short Sales”

Recent estimates indicate that possibly more than twenty-five percent of all homeowners are upside-down on their home mortgages, meaning that they owe more on their home loan or loans than the fair market value of the residence.  This makes it virtually impossible to sell at a private sale.  When a couple goes through a divorce or dissolution and needs to divide the assets including such a home, what are they to do?  One answer is to walk away from the house, which will lead to foreclosure litigation and a crippled credit rating.  Another possible answer is to complete a “short sale”.

A “short sale” is when a lender agrees to the sale of a property by the owner for less than the amount owed to the lender.  It means that the lender is willing to accept less than the amount owed.  Except for those lenders who are participants in the Home Affordable Foreclosure Alternatives Program (HAFA), the lender may or may not pursue the difference against the borrower.… View Full Article → “The Nuts and Bolts of Real Estate “Short Sales””

Marital Consequences of the Repeal of Federal Estate Tax

To the surprise of everyone in the estate planning community, Congress failed to address a critical estate and generation-skipping tax matter before the end of 2009, resulting in the repeal of the federal estate tax.  However, this repeal is for 2010 only.  In 2011, the exclusion for federal estate tax reverts back to $1,000,000.  How is this possible, and what effect does it have on couples’ estate plans, particularly second marriages?

Since 2001, the federal estate tax has been gradually phasing out, with an increasing exclusion from federal estate tax each year.  In 2009, the exclusion increased to $3,500,000. In 2010 however, the federal estate tax disappears, only to return in 2011 with only a $1,000,000 exclusion.  To further complicate things, although the federal estate tax disappears in 2010, the unlimited step-up in basis for inherited assets also disappears; and a decedent’s estate is permitted to increase the basis of assets by only up to a total of $1.3 million with an additional $3 million if there is a surviving spouse.  … View Full Article → “Marital Consequences of the Repeal of Federal Estate Tax”

Simple Year End Tax Tips

As the end of the year approaches, the following simple tax tips can keep taxes as low as possible.

    1. Charitable gifting. Charitable donations may be used as deductions against your taxable income.  However, all charitable donations must be supported with written receipts unless under $250 in which case a bank record is sufficient.  Also, donations of services or your time are not tax deductible.
    2. Gifting in general. Each individual may gift up to $13,000 per year to an unlimited number of individuals without filing a gift tax return.  Any gifts over $13,000 per year reduce the lifetime gift tax exclusion of $1,000,000.  Once the lifetime exclusion is exhausted, gift taxes must be paid.
    3. Pay property taxes early. Real estate taxes are deductible.  For taxes due early next year, if you pay them this year, you can use them as a deduction.
    4. Sell poor performing securities. Losses can be offset against gains reducing any capital gains.  
… View Full Article → “Simple Year End Tax Tips”

Estate Planning For The Modern Family – Use Of The QTIP Trust For Second Marriages

As we all know, the typical family from the 1950’s television shows such as “Leave it to Beaver” have become a rarity over the years.  A couple celebrating their golden wedding anniversary is not so commonplace.  Today, approximately fifty percent of all marriages end in divorce.  In the traditional family, estates usually involve wills and the use of “joint and survivorship” ownership between husband and wife or “beneficiary designations” to ensure that upon the death of a spouse everything would pass to the surviving spouse.  However, in today’s modern family, there may be a second or even third spouse and children from prior marriages.  How does an individual take care of his or her current spouse yet protect his/her children from a prior marriage?

The problem with leaving everything outright to one’s spouse in such a family is that the spouse may presumably leave everything to a new spouse or to their own children upon their death, leaving the children from one’s prior marriage with nothing.  … View Full Article → “Estate Planning For The Modern Family – Use Of The QTIP Trust For Second Marriages”

Why One Should Not Postpone Post-Divorce Estate Planning

Attorney Joseph E. Balmer is head of the estate planning and probate department at Holzfaster, Cecil, McKnight & Mues and is one of only 17 attorneys in the Dayton, Ohio area to be certified specialist in estate planning and probate administration.

Many individuals first think about estate planning when they get married. They realize that, at a minimum, they should have a will, general power of attorney and power of attorney for health care. They may later amend these documents due to life changes or changes in their financial position. However, one might be surprised to know that a recent survey by PNC Wealth Management disclosed that 30% of adults with financial assets of $500,000 or more did not have a will! A recent Harris Interactive survey of the general population found that 58% of all adults had no will. One might be even more surprised that if he or she had a will and became divorced, he or she may be no better off than if he or she had no will.… View Full Article → “Why One Should Not Postpone Post-Divorce Estate Planning”

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