Preview of the Proposed New Tax Relief Act of 2010 - Part 1

 

 

There’s a lot of talk about the New Tax Relief Act of 2010. 

At the time of this writing, it isn’t law, and with our current political logjam, there is likely to be a fair bit of change between now and then. 

We thought, however, that our clients would like to hear some of the elements that are of most direct interest to their welfare, and to the health of their estate.

Once again.. this is a preview of what is currently under discussion.  It is NOT law, and should not be looked at as political, legal, or financial advice.  This is only  a brief look at some of the currently debated act, as it impacts our senior clientele.

Reductions in Individual Income Tax Rates

Under contemplation is to temporarily extend the 10% bracket. The 10% individual income tax bracket expires at the end of 2010, and this impacts a great deal of our elder law clients. If nothing happens, the lowest tax rate will be 15%. This proposal extends the 10% individual income tax bracket for an additional two years, through 2012.

 

Part 2 will look at the proposed changes to Capital Gains and Dividends as well as The Dependant Care Credit.

 

Your friends at…

Cohen & Oalican, LLP

Boston ElderLaw Attorneys
Raynham ElderLaw Attorneys
Andover ElderLaw Attorneys

Scams and our elderly clients

• Unlicensed contractors offering home repairs: "Hey, we just finished a job for the smiths two streets over, and there's leftover tile, would you like a great deal on....."  If it sounds too good to be true, it probably is.  Beware of home repair scams.   Look out for transient work crews, strangers claiming to have extra material, free inspections in your home.. All of these should be red flags.  You should look to licensed bonded and insured professionals.  It may feel more expensive at the outset than these street contractors that show up.. but nothing is more expensive than a botched job, or worse, paying and never seeing your money or the work again.  Shop around for a certified contractor insist on a detailed contract on the work to be done, estimated cost and timetable.

• The state of Massachusetts Executive Office of Elder Affairs should be notified of any scam, or scam attempt by calling 1-800-243-4636.

If you have been victimized, keeping quiet will not help the next victim in line.  Just last month (October 20/2010) in Ipswitch an elderly citizen was approached by someone saying that they were the recipient of funds from the federal government, and asked to provide personal information in order to claim his windfall.  The man intelligently informed local police, and the scammer was investigated and arrested.  We applaud this anonymous individual.  Our elders cannot be a doormat waiting for the next scam artist to come knocking. 

If you are subjected to a scam, contact local authorities, and your elder law attorney.

 

At Cohen & Olican we take pride in protecting our clients.

Cohen & Oalican answer: Can enrollment in Medicare Part B be delayed without having to pay a higher premium?

Can enrollment in Medicare Part B be delayed without having to pay a higher premium?

Enrollment in Medicare Part B can be delayed without paying a higher premium under certain circumstances. If you or your spouse was employed and had group health plan coverage through the union or your respective employer and therefore did not enroll in Medicare Part B when you were first eligible, you can sign up for it during a Special Enrollment Period. You can sign up for Medicare Part B:

• While you still have health plan coverage provided by your employer or group plan coverage offered by the union, during your period of employment or that of your spouse

• In the eight-month period after the health plan coverage given by your employer or union ends or your employment ends, whichever happens first

The rules for Special Enrollment in Medicare Part B are also applicable if you have any disability and are working, or if you have health plan coverage provided by an employed member of your family. If you enroll for Medicare Plan B during the Special Enrollment Period, the effective date for commencement of coverage differs depending on when you enroll:

1. If you are covered by the group health plan or you enroll in Medicare Part B in the first month after the group health plan coverage ends, the coverage provided by Medicare Part B would begin on the first day of the month of enrollment. If you wish to postpone the coverage, you can designate the starting date to the first day of any of the three months immediately following the enrollment.

2. If you enroll any time during the remaining seven months of the Special Enrollment Period, your coverage under the Medicare Part B will begin the month following your enrollment.
If you are unable to enroll in the Medicare Part B during your Special Enrollment Period, you cannot enroll again until the next General Enrollment Period, which is scheduled on January 1st through March 31st of each year. If you enroll during this period, you may have to make a higher premium payment for the Medicare Part B health coverage, since you had the opportunity to enroll earlier and chose not to.

For more information on enrollment, please contact Social Security Administration at 1-800-772-1213.

Make sure you will be protected, call Cohen & Oalican, LLP to discuss your Medicaid Plan.

"Living Longer on Less in Massachusetts:"

These tough economic times have made it increasingly difficult for many Massachusetts seniors to make ends meet. The Institute on Assets and Social Policy recently released a report entitled: "Living Longer on Less in Massachusetts: The New Economic (in)Security of Seniors." This report highlights some of the financial difficulties faced by seniors today and discusses proposed changes to the law.
The study identified five factors critical in determining the economic stability of seniors. These factors are: Housing costs, healthcare expenses, household budget, home equity, and household assets. According to the study, 68 percent of all senior households in the state are financially at risk. Single and widowed seniors face the greatest financial hardships. The study recommended that seniors meet minimum financial criteria to be considered financially stable. To view the criteria and the proposed changes to state law, click on the following link to read the article in it's entirety:
Article
If you have any questions pertaining to Medicaid, guardianship, or other elderlaw issues, please feel free to contact us at scohen@cohenoalican.com or eoalican@cohenoalican.com or by phone at (617) 263-1035 Boston or (508) 821-5599 Raynham

Real Estate Tax Abatements

Real Estate Tax Abatements


Think your home is overvalued? If so, consider filing an application for a real estate tax abatement. A real estate tax abatement reduces the tax you pay on the value of your home. To obtain the abatement form, contact your town's tax assessor's office. This is an important first step because each of the 351 cities and towns in Massachusetts may have different forms. Most towns have their own website with instructions on how to complete the form.

Applications for abatements must be submitted by the due date of the first actual tax bill of the year. In communities that have quarterly tax bills, the application is due with the 3rd quarter tax bill, usually on February 1st. To meet the deadline, the application must be in the tax assessor's office by close of business day, or postmarked no later than the due date.

To determine if a bill is an actual tax bill or an estimated bill, the taxpayer should look on their bill for a property assessment value and a designated tax-rate. The application must be completed and filed by the current owner or their agent. Under certain circumstances other parties with an interest in the property may file the abatement. You should contact your assessor's office for any special rules that may apply.

Filing an abatement does not guarantee that your tax bill will be reduced. However, you won't know unless you ask. Remember the deadline is February 1, 2010. You can obtain additional information by clicking on the following link:

MA state website.

If you have any questions, please see our contact information below or visit our website: Cohen & Oalican.

Cohen & Oalican, LLP.
18 Tremont Street, Suite 903
Boston, MA 02108
Telephone 617-263-1035 x310
Fax 617-263-1038
scohen@cohenoalican.com

Protecting Your Spouse/Assets/Annuities

Cohen & Oalican LLP, Boston, Raynham and Andover Present:

The Final Article in the Series "Protecting Your Assets from the Cost of Nursing Home Care"

Protecting Your Spouse/Assets

Medicaid law provides for special protections for the spouse of a nursing home resident, known in the law as the "community" spouse. The spouse of a Medicaid applicant is entitled to keep a portion of the couple’s assets. The community spouse is entitled to keep a maximum of $109,560 (2010 figures). This assessment is not affected whether the assets are jointly held by the couple or they are all in the name of the nursing home spouse. For example, if a couple owns $75,000 in countable assets on the date the applicant enters a hospital, the community spouse will be entitled to a resource allowance of $75,000. If they have $250,000, the community spouse can keep the maximum of $109,560.

Protecting Your Spouse/Annuities

One means of protecting assets for the community spouse is through the purchase of an annuity. The purchase of an annuity transforms excess assets that would otherwise make the nursing home spouse ineligible for Medicaid into a non-countable stream of income for the community spouse. In other words, we can typically protect all of a couple’s savings for the at-home spouse and obtain Medicaid eligibility for the nursing home spouse, even at the last minute through the purchase of a Medicaid qualified annuity. However, the annuity does not need to be purchased ahead of time. In fact, the annuity should not be purchased until the spouse enters a nursing home.

Conclusion

The possibility for a spouse or parent to need nursing home care is the greatest financial risk facing most seniors. Given the State’s tightening budget, it has become even more difficult to obtain Medicaid eligibility and protect your assets. For your own peace of mind, it’s more important than ever to hire an experienced Elder Law Attorney to create a comprehensive Asset Protection Plan to preserve all that you have worked for.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

PROTECTING YOUR ASSETS FROM THE COST OF NURSING HOME CARE

Cohen & Oalican LLP, Boston, Raynham and Andover Present Part 3: The Transfer Penalty and the Look-Back



The Transfer Penalty and the Look-Back


If you give away your assets it will make you and your spouse ineligible for Medicaid benefits for up to five years. When you apply for benefits, Medicaid reviews five years of bank statements in order to identify any disqualifying transfers. This is known as the “look-back period.” Any transfers that happened before the five year period are protected and do not have to be reported to Medicaid. However, if you apply for benefits during the look-back period, Medicaid imposes one month of ineligibility for approximately every $8,000 you give away. In addition, the clock does not start “ticking” on the ineligibility period until you are in a nursing and have spent down your assets. The easiest way to explain the transfer rules is by way of an example. Let’s assume Mrs. Smith transfers $24,000 to her grandson on March 15, 2009. On April 15, 2010, Mrs. Smith suffers a stroke and is admitted to a nursing home. Assume she spends down her assets below $2,000 as of August 2010. Because she would be applying during the look-back period, Medicaid would impose three months of ineligibility ($24,000 ÷ $8,000 = 3 months). The transfer penalty would not start until August 1, 2010 and would end in November 2010.

In Part 4 Cohen & Oalican will discuss Protecting Your Spouse/Assets


Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

PROTECTING YOUR ASSETS FROM THE COST OF NURSING HOME CARE

Cohen & Oalican LLP, Boston, Raynham and Andover PResent Part 2: The Home


The Home

Homes with equity of less than $750,000 are not considered a noncountable asset. However this does not mean that the house is protected. Without proper planning, at death the State will have a lien against your house and at death Medicaid will seek reimbursement for benefits provided. With proper legal planning you can avoid a Medicaid lien and protect your home saving hundreds of thousands of dollars. Many people think the best way to protect their home is to give it outright to their children. Although this may sound like the simplest solution -- it may be the worst choice. Transferring a home outright to children can result in large capital gains taxes. Secondly, things can happen to children that can place the house at risk. What happens if a child gets divorced, is sued or has creditor problems? Seniors have been literally forced out of their own home as a result of ‘gifting’ their house to their children. One strategy our office uses to protect homes from the Medicaid lien is an irrevocable trust. An irrevocable trust can protect your home from a Medicaid lien and avoid the risks of outright gifts.

In Part 3 Cohen & Oalican will discuss The Transfer Penalty and the Look-Back

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

PROTECTING YOUR ASSETS FROM THE COST OF NURSING HOME CARE

Cohen & Oalican LLP present Part 1 The Asset Rules

PROTECTING YOUR ASSETS FROM THE COST OF NURSING HOME CARE

Nobody wants to think of the possibility of entering a nursing home. But the truth is, if you ignore this issue you are putting your spouse’s financial security, your life savings, your home and your children’s inheritance at risk. Nursing homes in Massachusetts cost approximately $10,000 a month. Most people don’t realize that traditional health insurance policies and Medicare provide little or no long term care coverage, but Medicaid coverage is very different. With proper planning and the right legal guidance, most married middle-class seniors,
who have accumulated savings and a house, could be eligible for Medicaid to help pay some or all of their long term care costs. Unfortunately many seniors, who pay privately for nursing home care, spend their life savings until they have nothing left – and only then do they believe they are eligible for Medicaid (the program is called MassHealth in Massachusetts).

The Medicaid rules are complicated and include many traps for the unwary. An experienced elder law attorney can help you navigate through the Medicaid maze protecting your family’s savings and home.

The Asset Rules

The first basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than $2,000 in "countable" assets in his or her name. "Countable" assets generally include everything you own, except for the applicant's home (if it is located in Massachusetts and it has equity less than $750,000). Everything else,(second homes, retirement savings, life insurance) is counted and may have to be spent down before you can obtain eligibility.

In Part 2 Cohen & Oalican will discuss The Home

Cohen & Oalican provide a full spectrum of services for the elderly, for disabled adults, and for the families.