Credit shelter trusts
A new resource is now available to veterans and their families for health and healthcare-related information. This online library provides reliable information on topics ranging from diseases to rehabilitation and medication. The library is geared to give veterans access to information that will allow them to take charge of their own health and well-being.
The library was developed by Veterans Health Administration clinical experts in an effort to provide information that is specific to the unique needs of veterans. It contains over 1,500 information sheets and 150 videos to help veterans to learn about topics such as PTSD, Agent Orange exposure, combat-related injury, and traumatic brain injury. Also, information about staying healthy mentally, emotionally, and physically, is available through the program. Topics that are not readily available on other websites are made easily accessible here.
The VHL plans to focus its content and design to a veteran-specific audience. The Veterans Health Administration intends to address health issues that are most pressing to veterans and their families right now. The VA hopes that this new resource will allow veterans to feel informed when making a health care plan with their providers. Also, the library will be available to VHA providers directly so that medical staff can work in collaboration with patients in developing a comprehensive plan.
As we discussed in a past blog, many families are affected by state estate and inheritance taxes even if they are exempt from federal taxes. Fortunately, the federal limit was substantially raised and now only affects those who die with an estate valued over $5.2 million. For the vast majority of individuals, this means no federal “death” tax. However, there is still something to worry about in 21 states where taxes exist for estates below the federal limit.
Four hints to help to avoid these tricky state taxes:
Move. Moving to avoid state death taxes can work. However, it only works if you truly move and give up most ties to your old state. This usually means changing your driver’s license and registration, where you vote, and recording the time you spend in the new state. It is also important to consider where the majority of your assets are, as this can be used by the state to determine where you are officially domiciled.
Credit Shelter/Bypass Trust. This type of trust can be set up upon the death of the first spouse in order to “shelter” the amount of the estate equal to the state tax exemption. The remainder exceeding the exemption can then be put into a marital Q-TIP trust that will allow no estate taxes to be paid at the time of the first spouses death. To shelter the rest of the federal exemption, you rely on a provision of the new federal law called “portability,” allowing surviving spouses to carry over the estate tax exemption of the spouse who died first and add it to their own.
Spousal Lifetime Access Trust. This type of trust works much like putting life insurance in an irrevocable life trust for your beneficiaries. Because federal law allows a $5 million dollar lifetime gift, putting property into a trust for the benefit of your spouse or children will take it out of your estate and keep it free from state and federal estate taxes.
Outright Gifts. In addition to the $5 million dollar lifetime gift allowance, each taxpayer can give any number of individuals $14,000 per year without being taxed. This $14,000 must be an “outright” gift that is available immediately. Connecticut is the only state that currently has a gift tax on these types of transfers.
Technological developments seem to constantly make our world more convenient and information more accessible. This is definitely the case in the realm of long-term care after the release of new software that should significantly improve communication between long-term care facilities and the families of patients.
This software has an app for smartphones, called Mobile Family Updates. The app is free to family members and can be downloaded on any Apple or Android phone. It costs 49.95 per month for care facilities to offer and many places are already recognizing its advantages.
Essentially, the software allows employees of assisted living or nursing homes to post updates about the condition of residents. The information can be spoken orally or typed via computer. Some information can be made available to all residents and families while other information can be confidentially shared with only one individual. Once updates are posted, an alert is instantly sent to family members who have the app.
The creator of Mobile Family Updates developed the software after he became frustrated with the difficulty of communicating with his mother-in-law’s care facility. He found that it was difficult to always stay on top of the status of his loved one and to have clear communication with facility employees. He also realized that his struggle is one faced by many family members so he decided to create a system that would make information more readily accessible. If this service is something you think would benefit your family, ask whether or not it is offered by a long-term care facility you are considering. Or if a loved one is already living in a facility, speak with the director about setting up the software there.
Can you imagine a world where robots help to take care of the seniors in our community? Do you think that would be a good technological development, or a bad mistake? The reality is that in the future the elderly will likely account for over 15% of the global population. Caring for those seniors, emotionally, mentally, and physically will be an enormous undertaking. The load may be too large to handle for the number of trained professionals who are willing to take on the job. Experts at the University of Salford in England are working to find a potential solution to this future problem.
According to these scientists, robots may hold the key to meeting the needs of the aging population. One model has already been designed that is able to monitor patients, communicate with doctors, and provide basic care and even companionship. For many people, robots may seem like an impersonal solution that cannot possibly provide real, valuable care. However, the experts who have developed the idea claim that robots have great potential. Automated home systems are already able to detect everything from falls to the stove being left on too long. Robots are able to take this level of care a step further. They can remind people with memory problems of important information like when to take medicine, or what someone’s phone number is. Robots may also help to promote social activity and brain stimulation in aging adults who don’t have family or friends. These elder-care robots are able to actually chit-chat and have the capacity to challenge the user with games while tracking their progress or loss of memory over time.
Some ideas for these robots involve the inclusion of screens which would allow patients and doctors to connect more often without a visit to the office. Family and friends would also be able to connect through the screen in a way similar to Skype on the computer today. The robots also may have the capacity to check vitals and report back to medical professionals making inconvenient doctor visits less frequent.
Japan is already experimenting with elder care robots. The Japanese government is seriously considering robots as a solution to the growing elder care problem there and has already budgeted $34 million for research of senior care robots. It will most likely be over twenty years, if ever, before elder care robots are a universal reality. Researchers are working on improving reliability and general function but there will always be the issue of ethics. Is it morally wrong to allow our elders to be cared for by machines? Or is it an ingenious solution to a growing problem? That is something for future generations to decide.
In addition to the annual exclusion we discussed in the last blog, there is also an unlimited gift tax exclusion for direct payments of some educational and medical expenses. This exception applies regardless of your relationship to the educational or medical services recipient, however, the payments must be made directly to the provider. IRS regulations define which types of payments qualify for this unlimited tax exclusion.
Educational expenses for tuition at an institution that maintains a regular facility and includes grade school, high school, and higher education qualify. However, payments for books, dormitory fees, and other similar expenses do not qualify.
Medical expenses qualify for the tax exclusion if they are incurred for diagnosis, cure, mitigation, treatment, or prevention of disease. Expenses for transportation essential to medical care and payments for medical insurance are also eligible. However, medical care reimbursed by insurance is not eligible for the exclusion.
The annual exclusion and unlimited health and education exclusion provide a simple yet effective tax savings technique. Also, remember that the earlier you begin to gift, the more that benefits from tax savings can build up!
Although depression is becoming more and more common for people age 65 and over, it is not a normal part of the aging process. Depression often goes undiagnosed in older individuals for a variety of reasons. In senior citizens it can sometimes be difficult to tell the difference between depression and other illnesses such as dementia. It can also be embarrassing for individuals to speak with their family or doctor about feelings of depression, but it is nothing to be embarrassed about. Depression is not a personal weakness, it is a medical condition that can be prevented and treated.
Many things that older adults go through can bring on feelings of depression. Retirement, health problems, and the loss of loved ones can all contribute to feelings of sadness or hopelessness. Keep in mind, though, that it is not normal for these feelings to persist or to keep you from daily activities.
In addition to the regular symptoms of depression experienced by younger people, older individuals may also display feelings of boredom, memory problems, and hallucinations. If you are a friend or family member caring for a senior, look for signs of depression and consider contacting your doctor. A doctor may be able to run tests to rule out certain medical problems, talk with the individual themselves, and ask you or other family members important questions. The doctor may also be able to develop a treatment plan that will allow your loved one to live a happier life.
If you, or a loved one, are experiencing depression, contact your doctor. There are a variety of causes of this illness that can often be treated by medication or therapy. There are also many support groups available to individuals suffering from depression and their families.
- Investment Expenses – Income gained from interest, dividends, or capital gain on investments is taxed at a much lower rate than other forms of income. Furthermore, this type of income is not subject to taxes for Social Security or Medicare. Also, any expenses related to your investments that exceed 2% of your AGI can be included with your itemized deductions. These expenses might include accounting fees, attorney fees, online broking fees, and fees to financial planners.
- Business Expenses – If you own a business you may be able to claim business expenses as a senior tax break. These expenses might include business travel expenses, equipment, and office costs. Most any business expenses can qualify so long as they are necessary and reasonable.
- Contributions to Charity – Contributions to charitable organizations are deductible as an itemized deduction. Donations of money exceeding 50% of your AGI are deductible as is the fair market value of any property you have donated.
- Standard Deduction – The standard deduction is the tax deduction you take at the end of the year if you do not itemize your deductions. If you are 65 or older, your standard deduction can increase. Furthermore, if you are legally blind you may be eligible for a larger standard deduction.
As we grow older it is often a shock to realize how little we have saved and how much cost we have to plan for later in life. Luckily, there are a variety of tax breaks available to people over 50. In this blog and the next, we will discuss a few ways to hang on to the money you have saved.
- Medical & Dental – The increasing cost of healthcare is one of the greatest concerns to seniors today. If you are a person who itemizes your tax deductions, you may be able to deduct your out-of-pocket medical expenses on your income taxes. You are allowed to deduct any expenses that exceed 7.5% of your adjusted gross income (AGI).
- Home sale – If you intend on selling your home and have lived in the home for at least two of the five years before selling it, you may not have to pay taxes on any profit from the sale. Tax laws allow $250,000 per individual from a home sale to be exempt from taxes, or $500,000 per married couple.
- Contributions to Retirement – People over 50 have higher limits on what they can contribute to retirement accounts (IRA/401K) compared to those under 50. Furthermore, any amount placed into a retirement account may be claimed as an exemption on your income tax filing. Contributing to your retirement account is a great way to avoid unnecessary taxes while at the same time adding to the account that you will likely live off of later in life.
The economic downturn in recent years has unfortunately created a variety of significant adverse health consequences in society. The negative health impact of the recession has affected both the developed and developing world. Increasing unemployment, the erosion of savings and pension funds, and reductions in health and social spending has created an environment of diminishing health. Some of these health consequences include: depression, anxiety, tobacco and alcohol usage, and a general neglect of overall health. Furthermore, the impact of the economic crisis may be particularly hard on older people. Those who are physically vulnerable or dependent on private pensions are especially susceptible.
Older people are at greater risk of losing their jobs or becoming injured on the job. They are also less likely to be re-hired somewhere else. Also, families struggling to budget a limited income may choose to allocate resources toward food or education for younger family members rather than for the health care of elders.
The World Health Organization has recognized this problem and is currently working to find a solution. Their current challenge is to prevent the economic crisis from becoming a social crisis for senior citizens. The WHO has declared that it is important for the government to include mechanisms that support the participation of older people in the workforce. The Organization also plans to implement new programs that would allow people to collect social pensions while at the same time working part-time.
Current political decisions will likely determine whether the economic crisis will leave a long-term social impact. Hopefully the increasing number of older individuals living in poverty and isolation will plateau and eventually decline. The WHO hopes to make sustainable changes that will promote social protection and health care. It also hopes to counter the perception that older people are an economic burden on society. The idea is that a society will have more positive relationships where the environment supports the engagement of older people in society.