Oct 27

How Does the Medicaid Look-Back Period Work?

Medicaid Look Back PeriodOne area that causes a lot of confusion with regard to Medicaid is the look-back period. Medicaid, unlike Medicare, is a means-based program, which means that you are only eligible for it if you have very few assets. The government does not want you to transfer all your assets on Monday in order to qualify for Medicaid on Tuesday, so it has imposed a penalty on people who transfer assets without receiving fair value in return.

In order to identify who has transferred assets, states require a person applying for Medicaid to disclose all financial transactions he or she was involved in during the five years before the Medicaid application. This five-year period is known as the “look-back period.” The state Medicaid agency then determines whether the Medicaid applicant transferred any assets for less than fair market value during this period. Read the rest of this entry »

Oct 16

How to Deduct Long-Term Care Insurance Premiums From Your Income

Deducting Long-Term Care Insurance PremiumsTaxpayers with long-term care insurance policies can deduct some of their premiums from their income. Whether you can use the deduction requires comparing your medical expenses to your income in a complicated formula.

Premiums for qualified long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income. In tax year 2016, taxpayers 65 and older only needed medical expenses to exceed 7.5 percent of their income, but in 2017, taxpayers 65 and older have the same 10 percent rule as everyone else. Read the rest of this entry »

Oct 10

How to Reverse Medicare Surcharges When Your Income Changes

Reverse Medicare SurchargesWhat happens if you are a high-income Medicare beneficiary who is paying Medicare surcharges on your premiums and then your income changes? If your circumstances change, you can reverse those surcharges.

Higher-income Medicare beneficiaries (individuals who earn more than $85,000) pay higher Part B and prescription drug benefit premiums than lower-income Medicare beneficiaries. The extra amount the beneficiary owes increases as the beneficiary’s income increases. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. So the income reported on a beneficiary’s 2015 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2017. Read the rest of this entry »

Oct 06

Why You Should Use a Lawyer for Medicaid Planning

Many seniors and their families don’t use a lawyer to plan for Long-Term Care or Medicaid Planning, often because they’re afraid of the cost. But an attorney can help you save money in the long run as well as make sure you are getting the best care for your loved one.

Instead of taking steps based on what you’ve heard from others, doing nothing, or enlisting a non-lawyer referred by a nursing home, you can hire an Elder Law attorney.

Here are a few reasons why you should at least consider this option for Medicaid Planning:

Read the rest of this entry »

Jul 20

Preventing a Will Contest When Family Emotions Run High

Emotions can run high at the death of a family member. If a family member is unhappy with the amount they received (or didn’t receive) under a Will, he or she may contest the Will. A Will contest can drag out for years, keeping all the heirs from getting what they are entitled to. It may be impossible to prevent relatives from fighting over your Will entirely, but there are steps you can take to try to minimize squabbles and ensure your intentions are carried out.

Your Will can be contested if a family member believes you did not have the requisite mental capacity to execute the Will, someone exerted undue influence over you, someone committed fraud, or the Will was not executed properly.

The following are some steps that may make a Will contest less likely to succeed:

Read the rest of this entry »

Jul 12

How Medicare Benefits and Employer Coverage Coordinate

How Medicare Benefits and Employer Coverage CoordinateMedicare benefits start at age 65, but many people continue working past that age, either by choice or need. It is important to understand how Medicare benefits and employer coverage work together.

Depending on your circumstances, Medicare is either the primary or secondary insurer. The primary insurer pays any medical bills first up to the limits of its coverage. The secondary payer covers costs the primary insurer doesn’t cover (although it may not cover all costs). Knowing whether Medicare is primary or secondary to your current coverage is crucial because it determines whether you need to sign up for Medicare Part B when you first become eligible. If Medicare is the primary insurer and you fail to sign up for Part B, your eventual Medicare Part B premium could start going up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it.

Here are the rules governing whether Medicare coverage will be primary or secondary: Read the rest of this entry »

Jul 12

Relief From Medicare Part B Late Enrollment Penalty Offered to Some

Relief from Medicare Part B Late Enrollment PenaltyMedicare is offering relief from the Medicare Part B Late Enrollment Penalty for certain Medicare beneficiaries who enrolled in Medicare Part A and had coverage through the individual marketplace. For a short time, these individuals will be able to enroll in Medicare Part B without paying a penalty for late enrollment.

Individuals who do not enroll in Medicare Part B when they first become eligible pay a stiff penalty. For each year that they put off enrolling, their monthly premium increases by 10 percent — permanently. Some people with marketplace plans – that is, plans purchased by individuals or families, not through employers — did not enroll in Medicare Part B when they were first eligible. Purchasing a marketplace plan with financial assistance from the Affordable Care Act (aka Obamacare) can be cheaper than enrolling in Medicare Part B. However, Medicare recipients are not eligible for marketplace financial assistance plans. And because marketplace plans are not considered equivalent coverage to Medicare Part B, signing up late for Part B will result in a late enrollment penalty. Read the rest of this entry »

Jul 12

Are Trusts Still Useful If the Estate Tax Is Repealed?

Estate TaxWith Republicans in control of Congress and the presidency, there is talk of eliminating the federal estate tax.  In 2017 the tax affects only estates over $5.49 million, meaning that for more than 99 percent of Americans, it’s already been repealed.  With no estate tax, do you still need a trust? While trusts can be used to shelter assets from the estate tax, trusts have many other valuable estate planning uses.

A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” The following are some of the benefits of trusts. Read the rest of this entry »

Dec 22

Lack of a Will Could Mean Chaos for Prince’s Estate

Lack of a Will Impact on Prince's EstateThe famed recording artist Prince died leaving an unknown fortune and possibly no will
or estate plan to dictate what to do with that fortune. Prince’s sister, Tyka Nelson, told
the probate court in the Minnesota county where Prince lived that her brother did not
have a will, which means his estate could be in court for years and exhaust millions of
dollars in court fees and unnecessary taxes. Ms. Nelson filed an emergency order for
the appointment of a special administrator to protect Prince’s assets, even as those
assets are swelling.

Prince owned several properties at his death as well as the rights to hundreds of songs;
estimates put his estate’s value at between $100 million and $300 million. It is possible
a will may still be found, but under state law, if there is no estate plan in place, Prince’s
six siblings – one sister and five half-siblings — will share his estate. In Minnesota, halfsiblings
and full siblings are treated equally when it comes to inheritance.
Ironically for someone who was known for his privacy, dying intestate — without a will —
also means that Prince’s estate will be open to public scrutiny. In addition, if everything
passes through probate, his estate will likely face a large estate tax bill that might have
been at least partially avoided. Read the rest of this entry »

Dec 05

May Someone With Dementia Sign a Will?

Millions of people are affected by dementia, and unfortunately many of them do not have all their estate planning affairs in order before the symptoms start. If you or a loved one has dementia, it may not be too late to sign a will or other documents, but certain criteria must be met to ensure that the signer is mentally competent.Dementia and Estate planning

In order for a will to be valid, the person signing must have “testamentary capacity,” which means he or she must understand the implications of what is being signed. Simply because you have a form of mental illness or disease does not mean that you automatically lack the required mental capacity. As long as you have periods of lucidity, you may still be competent to sign a will.

Generally, you are considered mentally competent to sign a will if the following criteria are met:

  • You understand the nature and extent of your property, which means you know what you own and how much of it.
  • You remember and understand who your relatives and descendants are and are able to articulate who should inherit your property.
  • You understand what a will is and how it disposes of property.
  • You understand how all these things relate to each other and come together to form a plan.

Family members may contest the will if they are unhappy with the distributions and believe you lacked mental capacity to sign it. If a will is found to be invalid, a prior will may be reinstated or the estate may pass through the state’s intestacy laws (as if no will existed). To prevent a will contest, your attorney should help make it as clear as possible that the person signing the will is competent. The attorney may have a series of questions to ask you to assess your competency. In addition, the attorney can have the will signing videotaped or arrange for witnesses to speak to your competency.

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