What to Do if a Sibling Keeps You Away from Your Elderly Parents

Estate Planning Advice
for Every Stage of Life.

What to Do if a Sibling Keeps You Away from Your Elderly Parents

Consider this scenario: Your elderly father begins to lose his mental capacity. He lives in his own home and is relatively well-off financially. Your sister is unemployed and moves in with your father. She pays no rent and may even be taking money from Dad. You live in another city across the country, which was what your father always encouraged you to do … to fly the nest and live your own life.

Suddenly your sister seems to have absolute control of your elderly father. You attempt to contact your dad on the phone but no one answers. Or you attempt to visit your father and your sister refuses to let you into the home.

Your sister claims that she is the one taking care of your father and accuses you of abandoning him.

What Could Happen?

In these situations, some people find out after a parent dies that a new will was drafted during the time when a sibling was shut out. The new will leaves everything to the person living with the elderly parent. That sibling may convince the parent not to tell his or her other children about the change in a will.

The parent may be told the other children never call, never visit and perhaps don’t even love the parent — all the while leaving out the fact that the other siblings are being prevented access. This may sound a bit unbelievable but it happens in many circumstances.

The dynamics of families often continue as parents become elderly and more vulnerable. That means that heated rivalries may occur — and adult children who have freeloaded off their parents for years may latch onto them even more.

Note: The person controlling an elderly parent doesn’t have to be part of the family. In some cases, it can be a housekeeper, neighbor or a stranger. The motives are the same — to make the elderly parent believe that the controlling individual is the only one who cares enough to help.

What to Do

If you believe a sibling is keeping you from your parent, your instincts may be correct. Instincts are often based on facts. If you cannot get in touch with your parent and are prevented from seeing him or her, it is a form of elder abuse. Someone who is exerting complete control over an elderly person is evidence of elder abuse. You can contact the adult protective services governmental agency in your area, explain the situation and inquire about an investigation.

Usually, government agencies will send someone to a parent’s home to interview him or her. If possible, ask to go along with them. If the agency says “no,” because it wants an objective opinion, make sure that the controlling sibling is not present when they are interviewing your parent. Ask the investigator to tell your parent that you have been trying to get in touch with him or her.

If you cannot get an investigator to make a visit, or if the investigator decides that your parent has his or her full capacity and is free to come and go, then you may want to seek court intervention if you believe your parent does not have the ability to make decisions.

You can also bypass the step of contacting the governmental agency, and file a petition in court for a guardianship if you believe your parent does not have the capacity to make decisions or if the situation seems urgent.

How to Prevent this from Happening

If you remain in contact with your parent and believe that a controlling sibling (or even an outsider such as a housekeeper or neighbor) is taking advantage of your parent, suggest to your parent to get the proper estate planning documents in place. This can help your family from being blindsided by issues later on. Speak with your attorney about these issues.

When Caregiving is Done by One Sibling in an Inequitable Way

This article focuses on situations in which one sibling keeps other family members away from an elderly parent with the intent to defraud the individual. But there are also families in which one sibling does the bulk of the caregiving — either out of choice or necessity — because the individual lives nearby, doesn’t work full time, or is just more compassionate than other siblings.

Even worse, the family members who are not bearing the brunt of the responsibility sometimes criticize or second-guess the decisions the caregiver makes.

In these cases, resentment and anger build up. It is best if caregiving chores are spread out among siblings as much as possible. Unfortunately, that’s not always feasible. If you are unable to provide the physical assistance on a regular basis, here are some ideas:

      • Pitch in temporarily so the caregiver can take a break.
      • Pay for a housecleaner, a home health aide or other service that can make the life of the caregiver easier.
      • Buy groceries or pick up medications.
      • Provide regular emotional support to a sibling who has disrupted his or her life to care for a parent.
PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

What to Do if a Sibling Keeps You Away from Your Elderly Parents

Consider this scenario: Your elderly father begins to lose his mental capacity. He lives in his own home and is relatively well-off financially. Your sister is unemployed and moves in with your father. She pays no rent and may even be taking money from Dad. You live in another city across the country, which was what your father always encouraged you to do … to fly the nest and live your own life.

Suddenly your sister seems to have absolute control of your elderly father. You attempt to contact your dad on the phone but no one answers. Or you attempt to visit your father and your sister refuses to let you into the home.

Your sister claims that she is the one taking care of your father and accuses you of abandoning him.

What Could Happen?

In these situations, some people find out after a parent dies that a new will was drafted during the time when a sibling was shut out. The new will leaves everything to the person living with the elderly parent. That sibling may convince the parent not to tell his or her other children about the change in a will.

The parent may be told the other children never call, never visit and perhaps don’t even love the parent — all the while leaving out the fact that the other siblings are being prevented access. This may sound a bit unbelievable but it happens in many circumstances.

The dynamics of families often continue as parents become elderly and more vulnerable. That means that heated rivalries may occur — and adult children who have freeloaded off their parents for years may latch onto them even more.

Note: The person controlling an elderly parent doesn’t have to be part of the family. In some cases, it can be a housekeeper, neighbor or a stranger. The motives are the same — to make the elderly parent believe that the controlling individual is the only one who cares enough to help.

What to Do

If you believe a sibling is keeping you from your parent, your instincts may be correct. Instincts are often based on facts. If you cannot get in touch with your parent and are prevented from seeing him or her, it is a form of elder abuse. Someone who is exerting complete control over an elderly person is evidence of elder abuse. You can contact the adult protective services governmental agency in your area, explain the situation and inquire about an investigation.

Usually, government agencies will send someone to a parent’s home to interview him or her. If possible, ask to go along with them. If the agency says “no,” because it wants an objective opinion, make sure that the controlling sibling is not present when they are interviewing your parent. Ask the investigator to tell your parent that you have been trying to get in touch with him or her.

If you cannot get an investigator to make a visit, or if the investigator decides that your parent has his or her full capacity and is free to come and go, then you may want to seek court intervention if you believe your parent does not have the ability to make decisions.

You can also bypass the step of contacting the governmental agency, and file a petition in court for a guardianship if you believe your parent does not have the capacity to make decisions or if the situation seems urgent.

How to Prevent this from Happening

If you remain in contact with your parent and believe that a controlling sibling (or even an outsider such as a housekeeper or neighbor) is taking advantage of your parent, suggest to your parent to get the proper estate planning documents in place. This can help your family from being blindsided by issues later on. Speak with your attorney about these issues.

When Caregiving is Done by One Sibling in an Inequitable Way

This article focuses on situations in which one sibling keeps other family members away from an elderly parent with the intent to defraud the individual. But there are also families in which one sibling does the bulk of the caregiving — either out of choice or necessity — because the individual lives nearby, doesn’t work full time, or is just more compassionate than other siblings.

Even worse, the family members who are not bearing the brunt of the responsibility sometimes criticize or second-guess the decisions the caregiver makes.

In these cases, resentment and anger build up. It is best if caregiving chores are spread out among siblings as much as possible. Unfortunately, that’s not always feasible. If you are unable to provide the physical assistance on a regular basis, here are some ideas:

  • Pitch in temporarily so the caregiver can take a break.
  • Pay for a housecleaner, a home health aide or other service that can make the life of the caregiver easier.
  • Buy groceries or pick up medications.
  • Provide regular emotional support to a sibling who has disrupted his or her life to care for a parent.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Why Are Elderly People Targets of Abuse?

Estate Planning Advice
for Every Stage of Life.

Why Are Elderly People Targets of Abuse?

Approximately 7.3 million elderly Americans — or one in five over age 65 — have been the victims of financial abuse by family, friends, healthcare professionals, trusted advisors and even strangers, according to the Investor Protection Trust Elder Fraud Survey. And an update to the study reports that 82 percent of doctors and nurses consider financial fraud to be a serious ongoing problem among their elderly patients.

The Fraud Triangle

Like other types of fraud, three elements need to be present for elder financial abuse to occur. Often referred to as the “fraud triangle,” these elements are the opportunity, motive and rationalization to commit fraud.

Motives to steal include greed, drug and gambling addictions, and an uncertain economic environment. Low wages paid to caregivers and nursing home workers might led them to rationalize stealing.

The growing opportunities to defraud are due to:

    1. The growing older population. Elders comprise a growing proportion of U.S. residents. The Census Bureau reports that there are currently more than 41 million Americans age 65 or older.
    2. Relative affluence. After a lifetime of working and investing, older people often have substantial wealth compared to other demographic segments. Instead of relying on pensions like generations-past, many of today’s elderly population have large sums of marketable securities sitting in investment accounts, ripe for the taking.
    3. Easy prey. People older than age 60 may have old-school values and ethics, causing them to trust their advisors without question. Some also suffer from dementia or mental impairment, leading to confusion and impaired decision-making.
    4. Weak internal controls. Many states don’t require nursing homes or home health providers to conduct criminal background checks on administrative employees or to audit their financial records. Annual surveys of nursing homes that are required in most states are conducted by healthcare professionals who tend to focus on residents’ health and well being, not their finances.

Moreover, there are few controls in place to stop caretakers who are convicted of stealing from the elderly from obtaining similar jobs elsewhere. Successful predators often strike again — but the second or third time around, they’re likely to be better at hiding their trails.

Stopping the Abuse

Stopping elder financial abuse starts by minimizing these opportunities. No one can stop the demographic trends, but it’s important to educate elderly people and their families about the latest scams and prevention techniques.

Financial professionals and attorneys who specializes in elder care can help seniors take steps to protect their assets from fraud, including assigning trustees, executors, and powers of attorney with people who can be trusted — and who are unbiased and financially secure themselves.

Relatives can also help in the fight against elder financial abuse. Older individuals should discuss financial matters with family members long before they lose the capacity to make decisions. This includes sharing account numbers, names of advisors and personal balance sheets. Then, relatives can watch for these warning signs of financial abuse:

      • Sudden changes in account balances, banks or professional advisors;
      • Unusual purchases or gifts to caregivers;
      • Unauthorized ATM withdrawals;
      • Unfamiliar signatures on checks or legal documents;
      • Unexplained disappearances of valuable possessions;
      • Unpaid bills, despite adequate financial resources; and
      • Deteriorated credit scores.

If you notice these red flags, notify your financial adviser or attorney immediately. He or she can advise you on how to proceed.

Above all, listen to and investigate a parent or grandparent’s allegations of theft. In some cases, it may be tempting to dismiss complaints as part of a faltering mental condition. But the costs of elder financial abuse go beyond monetary losses and may include feelings of insecurity or loss of self-worth — especially if no one believes the elderly individual.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

Why Are Elderly People Targets of Abuse?

Approximately 7.3 million elderly Americans — or one in five over age 65 — have been the victims of financial abuse by family, friends, healthcare professionals, trusted advisors and even strangers, according to the Investor Protection Trust Elder Fraud Survey. And an update to the study reports that 82 percent of doctors and nurses consider financial fraud to be a serious ongoing problem among their elderly patients.

The Fraud Triangle

Like other types of fraud, three elements need to be present for elder financial abuse to occur. Often referred to as the “fraud triangle,” these elements are the opportunity, motive and rationalization to commit fraud.

Motives to steal include greed, drug and gambling addictions, and an uncertain economic environment. Low wages paid to caregivers and nursing home workers might led them to rationalize stealing.

The growing opportunities to defraud are due to:

  1. The growing older population. Elders comprise a growing proportion of U.S. residents. The Census Bureau reports that there are currently more than 41 million Americans age 65 or older.
  2. Relative affluence. After a lifetime of working and investing, older people often have substantial wealth compared to other demographic segments. Instead of relying on pensions like generations-past, many of today’s elderly population have large sums of marketable securities sitting in investment accounts, ripe for the taking.
  3. Easy prey. People older than age 60 may have old-school values and ethics, causing them to trust their advisors without question. Some also suffer from dementia or mental impairment, leading to confusion and impaired decision-making.
  4. Weak internal controls. Many states don’t require nursing homes or home health providers to conduct criminal background checks on administrative employees or to audit their financial records. Annual surveys of nursing homes that are required in most states are conducted by healthcare professionals who tend to focus on residents’ health and well being, not their finances.

Moreover, there are few controls in place to stop caretakers who are convicted of stealing from the elderly from obtaining similar jobs elsewhere. Successful predators often strike again — but the second or third time around, they’re likely to be better at hiding their trails.

Stopping the Abuse

Stopping elder financial abuse starts by minimizing these opportunities. No one can stop the demographic trends, but it’s important to educate elderly people and their families about the latest scams and prevention techniques.

Financial professionals and attorneys who specializes in elder care can help seniors take steps to protect their assets from fraud, including assigning trustees, executors, and powers of attorney with people who can be trusted — and who are unbiased and financially secure themselves.

Relatives can also help in the fight against elder financial abuse. Older individuals should discuss financial matters with family members long before they lose the capacity to make decisions. This includes sharing account numbers, names of advisors and personal balance sheets. Then, relatives can watch for these warning signs of financial abuse:

  • Sudden changes in account balances, banks or professional advisors;
  • Unusual purchases or gifts to caregivers;
  • Unauthorized ATM withdrawals;
  • Unfamiliar signatures on checks or legal documents;
  • Unexplained disappearances of valuable possessions;
  • Unpaid bills, despite adequate financial resources; and
  • Deteriorated credit scores.

If you notice these red flags, notify your financial adviser or attorney immediately. He or she can advise you on how to proceed.

Above all, listen to and investigate a parent or grandparent’s allegations of theft. In some cases, it may be tempting to dismiss complaints as part of a faltering mental condition. But the costs of elder financial abuse go beyond monetary losses and may include feelings of insecurity or loss of self-worth — especially if no one believes the elderly individual.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Take Care of a Loved One’s Care

Estate Planning Advice
for Every Stage of Life.

Take Care of a Loved One’s Care

The responsibility of arranging outside care for an elderly parent or disabled loved one may fall to you someday. It’s not an easy task, but careful planning and consultations with specialists can ease the situation.

The first step is to answer three basic questions:

      1. What level of care does your relative need — skilled, intermediate or basic?
      2. Does the person live alone, with family members, or in a nursing facility?
      3. What kind of care can the relative afford?

To come up with the answers, consult with the following people:

Family members can ease the burden of making choices and help determine the patient’s emotional, as well as physical, needs. Can responsibilities be shared so that one person doesn’t “burn out” shouldering most of the burden?

Physicians and social workers know how much care is needed. They can also help evaluate the care options.

Elder care accountants can assist in estate planning and provide an analysis of the person’s health insurance coverage and financial situation. It’s important to understand the patient’s rights and responsibilities concerning the filing of insurance claims.

There are many day-to-day tasks involved in the care of an elderly parent, including scheduling and payment of health care and domestic care workers, arranging doctors visits, buying and giving medications, overseeing the patient’s general maintenance and arranging meal services if necessary.

In-Home Care

If you need in-home care, you must determine whether to hire a Registered Nurse, a Certified Nursing Assistant, a nursing aide, or a companion. This is often a judgment call based on the physical and emotional needs of the patient.

When choosing a health aide, agency or domestic worker service, check reputations and current references. Don’t forget to ask agencies how they deal with taxes. Some firms consider their workers to be self-employed independent contractors who handle their own tax responsibilities. Others treat them like ordinary employees and take out withholding taxes.

Suitcase Caregiving

It used to be that kids grew up and continued to live in the same town as their parents and grandparents. Today, it’s not uncommon to find different generations living on opposite sides of the country.

Suitcase caregiving can be a daunting challenge. One option is to move your parent closer, but if that’s impossible, here are a few suggestions on how to cope from a distance: 

      • Keep a resource guide handy for the community where your parent lives.
      • Establish a contact person where your parent lives. Communicate regularly with the person to get a true picture. If your parent lives in a facility, a social worker is a good source. Ask what material items your parent needs and how they seem mentally, as well as physically.
      • If your parent still lives independently, the need for assistance will increase as time goes on. Put together a plan to provide housekeeping, meals, and an emergency alert system that connects to a health facility or police department. Consider working with a local professional who can develop a care plan. The Internet makes it easy to shop for groceries and other necessities that can be delivered.
      • Keep your cell phone with you in case someone needs to call.
PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

Take Care of a Loved One’s Care

The responsibility of arranging outside care for an elderly parent or disabled loved one may fall to you someday. It’s not an easy task, but careful planning and consultations with specialists can ease the situation.

The first step is to answer three basic questions:

  1. What level of care does your relative need — skilled, intermediate or basic?
  2. Does the person live alone, with family members, or in a nursing facility?
  3. What kind of care can the relative afford?

To come up with the answers, consult with the following people:

Family members can ease the burden of making choices and help determine the patient’s emotional, as well as physical, needs. Can responsibilities be shared so that one person doesn’t “burn out” shouldering most of the burden?

Physicians and social workers know how much care is needed. They can also help evaluate the care options.

Elder care accountants can assist in estate planning and provide an analysis of the person’s health insurance coverage and financial situation. It’s important to understand the patient’s rights and responsibilities concerning the filing of insurance claims.

There are many day-to-day tasks involved in the care of an elderly parent, including scheduling and payment of health care and domestic care workers, arranging doctors visits, buying and giving medications, overseeing the patient’s general maintenance and arranging meal services if necessary.

In-Home Care

If you need in-home care, you must determine whether to hire a Registered Nurse, a Certified Nursing Assistant, a nursing aide, or a companion. This is often a judgment call based on the physical and emotional needs of the patient.

When choosing a health aide, agency or domestic worker service, check reputations and current references. Don’t forget to ask agencies how they deal with taxes. Some firms consider their workers to be self-employed independent contractors who handle their own tax responsibilities. Others treat them like ordinary employees and take out withholding taxes.

Suitcase Caregiving

It used to be that kids grew up and continued to live in the same town as their parents and grandparents. Today, it’s not uncommon to find different generations living on opposite sides of the country.

Suitcase caregiving can be a daunting challenge. One option is to move your parent closer, but if that’s impossible, here are a few suggestions on how to cope from a distance: 

  • Keep a resource guide handy for the community where your parent lives.
  • Establish a contact person where your parent lives. Communicate regularly with the person to get a true picture. If your parent lives in a facility, a social worker is a good source. Ask what material items your parent needs and how they seem mentally, as well as physically.
  • If your parent still lives independently, the need for assistance will increase as time goes on. Put together a plan to provide housekeeping, meals, and an emergency alert system that connects to a health facility or police department. Consider working with a local professional who can develop a care plan. The Internet makes it easy to shop for groceries and other necessities that can be delivered.
  • Keep your cell phone with you in case someone needs to call.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Don’t Overlook Write-Offs for Medicare Premiums

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

Don’t Overlook Write-Offs for Medicare Premiums

Many seniors (and their families responsible for filing tax returns for them) have gotten into the habit of just claiming the standard deduction instead of itemizing. That’s because seniors typically pay little or no mortgage interest, and they usually don’t owe much for state and local income and property taxes either. So the most common itemized deductions often amount to little or nothing.

Plus, folks age 65 and older get larger standard deductions. All that said, claiming the standard deduction may not be the right answer if an older taxpayer has significant medical expenses.

As you may know, medical expenses can only currently be deducted by seniors to the extent they exceed 7.5% percent of adjusted gross income (AGI) for 2017 and 2018 (down from 10% thanks to the passage of the Tax Cuts and Jobs Act of 2017). In adding up expenses, don’t make the common mistake of forgetting to count Medicare insurance premiums. Together with other out-of-pocket costs, Medicare premiums can easily put you over the percent-of-AGI threshold and also cause an older taxpayer’s total itemized deductions to exceed the standard deduction amount.

Here’s how to find out if a tax bill can be reduced by itemizing.

Identify Outlays that Count as Medical Expenses

To figure out if you have enough medical expenses to benefit from itemizing, add up the following.

  1. Premiums for Medicare Parts B, C, and D Coverage. Seniors enrolled in Medicare can count premiums for Medicare Part B coverage (for medical costs other than hospital bills), Part C coverage (for Medicare Advantage policies), and Part D coverage (for prescription drugs) as medical expenses:
  • For most people, the 2018 the Part B premium is $134.00 per month (or about $1,608 per year) and could be as high as $428.60 per month ($5,143 per year). If both you and your spouse are covered, these amounts could double.
  • Part C premiums depend on the plan, but they can be several thousand per year for each covered person.

Higher-income individuals pay a monthly Medicare Part D surcharge in addition to the plan amount. For 2018, these surcharges range from $13.00 per month to $74.80 per month for each covered person (up from $12.70 to $72.90 in 2017).

These Medicare coverage premiums are generally withheld from Social Security benefit payments. If so, you can find the premium amounts for each year on Form SSA-1099 (Social Security Benefit Statement), which beneficiaries should receive shortly after the end of each year.

  1. Premiums for Supplemental Medicare Coverage (Medigap Insurance). Seniors can also count premiums paid for private Medicare supplemental insurance policies (often called Medigap coverage) as medical expenses. The cost depends on the plan, but annual premiums can easily amount to $1,000 to $2,000 per covered person or more.
  2. Premiums for Qualified Long-Term Care Coverage. Premiums for qualified long-term care insurance also count as medical expenses, subject to age-based limits. For each covered person, count the lesser of: the actual premiums paid for the year or the age-based limit from below.
Age on 12/31/18Maximum Deductible Amount
61 to 70$ 4,160 ($4,090 in 2017)
Over 70$ 5,200 ($5,110 in 2017)
  1. Out-of-Pocket Medical Expenses. Many seniors also incur significant out-of-pocket outlays due to insurance co-payments and deductibles and for dental and vision care. Be sure to add these into the mix.
  2. Medical Expenses Paid for Relatives. Did you pay health premiums or uninsured medical expenses for a qualifying relative this year? If you did, count these outlays too. For a person to be your qualifying relative, you generally must pay over half of his or her support for the year, and the person must be your adult child, son-in-law, daughter-in-law, grandchild, father, stepfather, father-in-law, mother, stepmother, mother-in-law, brother, stepbrother, brother-in-law, sister, stepsister, sister-in-law, aunt, uncle, niece, or nephew. It doesn’t matter if the relative lives with you or not.

Add Qualifying Medical Expenses and Subtract 10% of AGI

As mentioned earlier, most Medicare participants can claim itemized deductions in 2017 and 2018, for medical expenses to the extent the expenses exceed 7.5% of AGI. For example, say your 2017 AGI is $80,000, and you have $15,000 of medical expenses from the preceding list. Your itemized medical expense deduction is $9,000 [$15,000 minus $6,000 (7.5% of your $80,000 AGI)].

Do the Final Calculations

As you can see, you can claim a significant itemized deduction for medical expenses (even after subtracting the percent-of-AGI threshold), the next step is to identify any other potential itemized deductions for the year. These can include (among other things):

  • State and local income and property taxes (including taxes on cars, boats, and other personal property).
  • Home mortgage interest (if any).
  • Charitable contributions.

Add these to your medical expense deduction, and see if the total exceeds your standard deduction amount of:

  • For 2018, $12,000 if you are unmarried, but $13,600 if you are unmarried and 65 years or older as of December 31, 2017 ($7,900 in 2017).
  • For 2018, $24,000 if you file jointly, but $26,600 if both you and your spouse are 65 or older as of December 31, 2018 (in 2017, $15,200). The 2018 amount is $25,300 if only one spouse is 65 or older as of year end ($13,950 in  2017).
  • For 2018, $18,000 if you use head-of-household filing status, or $19,300 if you were 65 or older as of December 31, 2017 (up from $10,900 in 2017).

Obviously, if your total itemized deductions exceed the applicable standard deduction amount, you should forgo the standard deduction and instead claim itemized deductions, on Schedule A of Form 1040, when you file your return.

Note: If a senior taxpayer is self-employed and qualifies for the self-employed health insurance deduction (available for itemizers and non-itemizers), you may be able to add Medicare health insurance premiums to your self-employed health insurance deduction. Contact your tax adviser if this issue affects you.

You May Be Eligible for a Refund

If you do the calculations explained in this article, you may discover that itemizing is the way to go. If you failed to itemize for earlier years, you can usually recoup the tax savings for up to three earlier years by filing amended returns and receiving a refund. However, it’s much easier to simply get it right the first time. Contact your tax advisor if you’re interested in filing amended returns or want additional information.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

How to Protect Assets When Your Spouse Receives Medicaid

Estate Planning Advice
for Every Stage of Life.

How to Protect Assets When Your Spouse Receives Medicaid

Many couples, in their golden years, find themselves wondering: What if one or both of them is admitted into a nursing home and needs Medicaid? After saving throughout their lives, they are fearful that if one of them enters a nursing home, they will have to dissipate their life savings to pay for the cost of care before they can become eligible for Medicaid.

Moreover, some couples with wills drafted in the past may not realize that their wills could harm them if they did not consider Medicaid issues when they executed them.

Sometimes, couples attempt to make an estate plan leaving all assets to each other upon the death of the other spouse. These are sometimes called “sweetheart” wills. This may seem appropriate and easy to do at the time, but if the surviving spouse is on the verge of entering a nursing home and then inherits a large amount of money from the deceased spouse, the surviving spouse may not be eligible for Medicaid. Such an estate plan could result in a difficult situation for the surviving spouse.

One estate planning technique that a couple could consider is having terms set forth in their wills that set forth a supplemental or special needs trust. With this strategy, instead of leaving all the assets outright to the surviving spouse, the assets are distributed to the testamentary special needs trust. This way, at the death of one spouse, all assets would pass to the special needs trust, helping to ensure that the surviving spouse would be eligible for, or could keep, Medicaid benefits, and the inherited assets would be available to supplement his or her care.

Other Considerations When Contemplating Medicaid

Even when executing wills with trust provisions, there are other factors that a couple must consider in their estate plan. For example:

1. The Medicaid Transfer Penalty

If a couple finds that they are in a situation where they have assets greater than what is allowed under Medicaid, they may contemplate transferring assets to be eligible for Medicaid. However, with the transfer of assets to third parties, such as children, a Medicaid applicant might be subject to a penalty period during which the person would be ineligible for coverage if he or she transferred assets for “less than fair market value” within the five years prior to applying for aid.

The state divides the value of all gifts made within the five years leading up to the Medicaid application by the average monthly cost of nursing home care in order to determine the penalty period. For example, let’s say the average monthly cost of nursing home care is $5,000. Thus, an individual who transferred $60,000 within the five-year period would be subject to 12 months of ineligibility running from the date of the Medicaid application.

2. Estate Recovery

Federal law requires states to seek recovery of Medicaid benefits from the estate of a deceased Medicaid recipient. An applicant’s home, vehicle, and several other items are treated as exempt assets and not counted under the asset test when qualifying for Medicaid. However, while these assets are exempt for qualification purposes, they are subject to Medicaid’s right to reimburse itself for benefits paid out to the Medicaid recipient after the recipient has died.

There are several exceptions to this rule, very few of which are common knowledge. For example, assets transferred to a disabled child either outright or in a special needs trust avoid treatment as a transfer for Medicaid purposes, and also avoid estate recovery.

3. Transferring Assets to Joint Ownership

Adding a non-spouse as a joint owner on a bank account or other property will likely be considered a gratuitous transfer for Medicaid purposes. If the transaction occurred within the five years leading up to the filing of a Medicaid application, a transfer penalty will likely be imposed. There may be arguments against the imposition of the penalty, but other estate planning techniques may be more appropriate. If there is just the need to have a joint bank account for convenience only, it may be better to have a durable power of attorney. Alternatively, an option is to add the loved one’s name to the account as an authorized signature provider only, with no ownership rights.

4. Protecting Your Assets with the Use of Trusts

In addition to the testamentary trusts previously discussed, other trusts are typically used to help applicants qualify for Medicaid or to prevent estate recovery of certain assets. Trusts can also prove useful in preventing individuals who are already receiving public benefits from losing them. For example, an applicant may have very few assets but, because of his or her income, still fail to qualify for Medicaid benefits depending on the state. An applicant who exceeds the income cap may still qualify for benefits provided all income in excess of the income cap is placed into a certain type of trust (sometimes called a Miller trust) each month.

5. A First-Party Special Needs Trust

What happens if an individual receives assets that effectively disqualifies him or her from Medicaid? Or, a Medicaid recipient inherits money or gets a payout from a litigation claim? In either situation, the funds received will most likely disqualify the individual from receiving additional benefits unless one of several federally permitted options is used.

Execution of a first-party special needs trust is one option. These trusts are funded with assets owned by the individual receiving Medicaid. First-party trusts must include a payback provision allowing the state to reimburse itself for benefits paid to or for the benefit of the special needs individual. First-party special needs trusts also have additional limitations.

The law related to Medicaid eligibility is complex and there may be other estate planning techniques you can use. This article only covers the basics. Speak with your attorney about the potential steps you must take and the documents you must execute to protect your assets when contemplating future Medicaid coverage.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Advantages of Qualified Long Term Care Insurance

Estate Planning Advice
for Every Stage of Life.

Advantages of Qualified Long Term Care Insurance

Owners of qualified long-term care policies are eligible for some important federal income tax breaks. Here are the details of two benefits policy holders get from Uncle Sam.

1. Benefit Payments Are Usually Federal Income Tax-Free

In general, benefit payments received under a qualified long-term care policy are free from federal income tax because they’re considered reimbursements for medical expenses under health insurance coverage. This tax-free treatment automatically applies to benefits of up to $360 per day  (for 2018 and 2017) or the equivalent for benefits paid on some other periodic basis (such as weekly or monthly). The $360 cap is adjusted annually for inflation.

Even if the policy pays benefits in excess of the cap, they are still federal-income-tax-free as long as they don’t exceed the insured person’s actual long-term care costs. However, benefits that exceed both the cap and the actual costs are generally taxable.

Note: If you receive long-term care insurance benefit payments during the year, you should expect to get a Form 1099-LTC from the IRS early in the following year. It reports the gross payments made to you. The taxable amount (if any) is calculated on IRS Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Ignore the part about MSAs unless you have one.

If you have company-paid qualified long-term care insurance coverage through a job, the cost of the coverage is generally a tax-free fringe benefit to you for federal income tax purposes. However, if you pay the premiums with salary dollars via payroll withholding, the premiums are considered part of your taxable salary.

2. Potential Itemized Deductions For Premiums

Because a qualified long-term care policy is considered health insurance for federal income tax purposes, the premiums are treated as medical expenses on Schedule A. However, there are limits. You can only treat the age-based amounts listed below as medical expenses. Don’t forget to count premiums paid for coverage on your spouse, as well as premiums paid for other dependent family members (meaning you pay over half the cost of supporting the person and he or she doesn’t file a joint federal income tax return).

Age on 12/31/17

Maximum Amount
Treated as a Medical Expense
for 2017
Age on  12/31/18Maximum Amount
Treated as a Medical Expense
for 2018

40 or under

$41040 or under

$420

41 to 50

77041 to 50

  780

51 to 60

1,53051 to 60

 1,560

61 to 704,09061 to 70

 4,160

Older than age 705,110Older
 than age 70

 5,200

Combine these age-based amounts with your other medical expenses, such as health and dental insurance premiums, insurance co-payments, out-of-pocket prescription costs, and any other unreimbursed medical outlays. If the resulting total exceeds 7.5% of your adjusted gross income (AGI) for 2017 and 2018, you can write off the excess as an itemized medical expense deduction on Schedule A. (This percentage rose to 10% for some taxpayers, but thanks to the passage of the Tax Cuts and Jobs Act, it reverts to 7.5% for 2017 and 2018.)

Note: If you pay premiums for a long-term care policy that is not qualified under tax law, the premiums are treated as a nondeductible personal expense.

Example: Let’s say you’re age 63 at the end of 2017 and pay $2,500 during  the year for a “bare bones” qualified long-term care policy. You can treat the entire $2,500 as a medical expense for itemized deduction purposes on your Schedule A, because that amount is less than the $4,160 maximum for 2018. But if you pay $4,200 for a more-generous policy, you can only treat $4,160 as a medical expense. Now let’s say you also pay $5,000 in premiums for a qualified long-term care policy that covers your dependent 82-year-old father. In this case, you can treat an additional $5,000 as a medical expense on your Schedule A. If your total medical expenses, including the age-based long-term care insurance premium amounts, exceed 7.5% of your AGI, you can deduct the difference on Schedule A.

The federal income tax breaks for qualified long-term care insurance are not a reason to buy the coverage. However, they may help lower the effective cost and make it more affordable to obtain adequate coverage.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

Advantages of Qualified Long Term Care Insurance

Owners of qualified long-term care policies are eligible for some important federal income tax breaks. Here are the details of two benefits policy holders get from Uncle Sam.

1. Benefit Payments Are Usually Federal Income Tax-Free

In general, benefit payments received under a qualified long-term care policy are free from federal income tax because they’re considered reimbursements for medical expenses under health insurance coverage. This tax-free treatment automatically applies to benefits of up to $360 per day  (for 2018 and 2017) or the equivalent for benefits paid on some other periodic basis (such as weekly or monthly). The $360 cap is adjusted annually for inflation.

Even if the policy pays benefits in excess of the cap, they are still federal-income-tax-free as long as they don’t exceed the insured person’s actual long-term care costs. However, benefits that exceed both the cap and the actual costs are generally taxable.

Note: If you receive long-term care insurance benefit payments during the year, you should expect to get a Form 1099-LTC from the IRS early in the following year. It reports the gross payments made to you. The taxable amount (if any) is calculated on IRS Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Ignore the part about MSAs unless you have one.

If you have company-paid qualified long-term care insurance coverage through a job, the cost of the coverage is generally a tax-free fringe benefit to you for federal income tax purposes. However, if you pay the premiums with salary dollars via payroll withholding, the premiums are considered part of your taxable salary.

2. Potential Itemized Deductions For Premiums

Because a qualified long-term care policy is considered health insurance for federal income tax purposes, the premiums are treated as medical expenses on Schedule A. However, there are limits. You can only treat the age-based amounts listed below as medical expenses. Don’t forget to count premiums paid for coverage on your spouse, as well as premiums paid for other dependent family members (meaning you pay over half the cost of supporting the person and he or she doesn’t file a joint federal income tax return).

Age on 12/31/17

Maximum Amount
Treated as a Medical Expense
for 2017
Age on  12/31/18Maximum Amount
Treated as a Medical Expense
for 2018

40 or under

$41040 or under

$420

41 to 50

77041 to 50

  780

51 to 60

1,53051 to 60

 1,560

61 to 704,09061 to 70

 4,160

Older than age 705,110Older
 than age 70

 5,200

Combine these age-based amounts with your other medical expenses, such as health and dental insurance premiums, insurance co-payments, out-of-pocket prescription costs, and any other unreimbursed medical outlays. If the resulting total exceeds 7.5% of your adjusted gross income (AGI) for 2017 and 2018, you can write off the excess as an itemized medical expense deduction on Schedule A. (This percentage rose to 10% for some taxpayers, but thanks to the passage of the Tax Cuts and Jobs Act, it reverts to 7.5% for 2017 and 2018.)

Note: If you pay premiums for a long-term care policy that is not qualified under tax law, the premiums are treated as a nondeductible personal expense.

Example: Let’s say you’re age 63 at the end of 2017 and pay $2,500 during  the year for a “bare bones” qualified long-term care policy. You can treat the entire $2,500 as a medical expense for itemized deduction purposes on your Schedule A, because that amount is less than the $4,160 maximum for 2018. But if you pay $4,200 for a more-generous policy, you can only treat $4,160 as a medical expense. Now let’s say you also pay $5,000 in premiums for a qualified long-term care policy that covers your dependent 82-year-old father. In this case, you can treat an additional $5,000 as a medical expense on your Schedule A. If your total medical expenses, including the age-based long-term care insurance premium amounts, exceed 7.5% of your AGI, you can deduct the difference on Schedule A.

The federal income tax breaks for qualified long-term care insurance are not a reason to buy the coverage. However, they may help lower the effective cost and make it more affordable to obtain adequate coverage.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group.