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LAW OFFICE OF RAYMOND J. CANNON, JR., P.C.
Estate Planning, Elder Law, Medicaid-Long Term Care Planning,
Asset Protection Planning, Tax Planning, Real Estate,
Probate and Estate Administration |
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Our mission is to preserve and protect your assets. | |
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THE NUMBERS
(Old-Age, Survivors, and Disability Payroll taxes for Social Security benefits are collected under the authority of the Federal Insurance Contributions Act (FICA). Many people simply refer to these taxes as FICA tax. The wage base limit for Social Security ty Insurance or OASDI) withholding was increased to $113,700. For 2011 and 2012, Congress temporarily lowered the Social Security withholding rate to 4.2%, but for 2013 the rate returned to the old 6.2% level. That means a maximum of $7,049.40 per employee will be withheld in 2013 ($113,700 × .062). |
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LAW OFFICE
OF
RAYMOND J. CANNON, JR., P.C.
Admitted
Massachusetts Bar
United States Tax Court
Federal District Court of MA
United States Supreme Court
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 3 YEAR REVIEWS We encourage you to take advantage of our free one-hour consultation to review your estate plan on your plan's third year anniversary. Please call 978-989-9999 for an appointment.
Please notify us at ray@rjcannonlaw.com
if your contact information has changed since your last visit.
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Please feel free to forward this Newsletter to your family, friends and associates who may be interested in a one-hour free consultation to discuss these topics. |
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JANE CONSIDERS AN IRREVOCABLE TRUST
Jane called to tell me that her sister, Mary, had been advised to create an irrevocable trust in order to preserve her assets in the event that she might need long term care in a nursing home. She asked me what the difference is between an irrevocable trust and a revocable trust.
as a general rule, an irrevocable trust cannot be revoked, terminated or amended whereas a revocable trust can be. But, there are other differences as well. Since Mary wants to protect her assets from the cost of a nursing home her irrevocable trust, if properly drawn, will not allow her to act as trustee nor will it allow her any access to principal. She will only be allowed to be paid income generated by the principal and no more.
I reminded Jane that any transfer for no consideration (which is what a transfer to an irrevocable trust would be) is a disqualifying transfer under the Medicaid rules. This means that if the individual needs long term care during the five years following the transfer, he or she will not qualify for long term care benefits until the transfer is either cured or until someone pays for his or her care during the disqualification period. However, if drafted properly, an irrevocable trust will preserve those assets from the cost of a nursing home once the five year look back period expires. A revocable trust will not preserver your assets from the cost of long term care because you can access them unconditionally and as such, those assets are countable for Medicaid purposes.
Jane then asked if creating an irrevocable trust is something she should consider doing. After reminding her that her own trust is revocable and that she has complete access to and control over the assets in the trust, I said that it depends upon whether she would not mind losing control of her assets, in other words, once in an irrevocable trust she could no longer use those assets to buy a car, go on vacation or a long trip or even give them to her grandchildren. Jane agreed that she was not quite ready to do that, indicating that she is still in good health, wants to continue to travel whenever she wants, and wants to continue making gifts to her grandchildren. We agreed to defer that discussion to another time.
LESSON: Whenever you consider making a transfer of assets to an irrevocable trust (which you can never get back) you should always consult with an Elder Law Attorney so that you understand fully all of the consequences of doing so.
If you are new to the Jane Chronicles, you may read past issues by going to our website:
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Adult children of elderly parents in many states could be held liable for their parents' nursing home bills as a result of the new Medicaid long-term care provisions contained in The Deficit Reduction Act of 2005. The children could even be subject to criminal penalties.
The law includes punitive restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.
With enactment of the law, advocates for the elderly predict that nursing homes will likely be flooded with residents who need care but have no way to pay for it. In states that have so-called "filial responsibility laws," the nursing homes may seek reimbursement from the residents' children. These rarely-enforced laws, which are on the books in 29 states, hold adult children responsible for financial support of indigent parents and, in some cases, medical and nursing home costs.
For example, Pennsylvania recently re-enacted its law making children liable for the financial support of their indigent parents. According to the National Center for Policy Analysis, 21 states allow a civil court action to obtain financial support or cost recovery, 12 states impose criminal penalties for filial nonsupport, and three states allow both civil and criminal actions. While both Massachusetts and New Hampshire have such laws which incur criminal penalties, they have been rarely enforced.
Source: Elder Law Answers, April, 2013
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Can the IRS read your emails? The nation's tax collector is backpedaling on a controversial policy found in its manual that permits email snooping without first obtaining a warrant. But Acting IRS Commissioner Steven Miller, who was forced to resign on May 15, told the Senate he has no knowledge of this ever occurring. Miller vowed to revise the policy regarding emails, but made no such promises concerning social media postings on websites. In a noteworthy case, the 6th Circuit Court of Appeals determined that "probable cause" is needed before the government can ask email providers to release communications. (U.S. v. Warshak, CA-6, 12/14/10) On the other hand, the laws in this area have yet to catch up with the technology.
Source: Kiplinger Small Business Tax Strategies, June, 2013
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Essex County Community Foundation manages charitable funds for donors and provides grants, services and education to nonprofit leaders to improve the effectiveness and capacity of nonprofit organizations serving Essex County, Massachusetts.
175 Andover St. Danvers, MA 01923 Tel: 978-777-8876 Fax: 978-777-9454 info@eccf.org
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