Why an Irrevocable Trust May Be Superior to Gifting — Lexington, KY

Why an Irrevocable Trust May Be Superior to Gifting — Lexington, KY

Parents and other family members who want to pass on assets during their lifetimes may be tempted to gift the assets.  Although setting up an irrevocable trust lacks the simplicity of giving a gift, it may be a better way to preserve assets for the future.  A trust is a legal entity under which one person — the “trustee” — holds legal title to property for the benefit of others — the “beneficiaries.” The trustee must follow the rules provided in the trust instrument. An “irrevocable” trust cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the “grantor”) for life, and the principal cannot be applied to benefit you or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses.  While gifting assets outright is much simpler process than setting up a trust, the following are some of the advantages of setting up a trust instead: Income. Putting assets in a trust means you can receive income from the assets to continue to pay for living expenses. Depending on how the trust is set up, you can receive regular income payments or the trustee could have discretion to make payments. Control. With an irrevocable trust, you as the grantor can maintain some control over the assets. You get to choose the trustees and establish the rules of the trust. You can also retain the right to change beneficiaries with a power of appointment in your will.  Asset protection from creditors. If you give money to a family member directly, that money could be lost to the recipient’s carelessness, creditors, or divorce. Keeping the funds in a trust protects the assets for the future. Taxes. If the trust is structured properly, it can have a tax advantage for your beneficiaries. Assets that have gone up in value will receive a “step-up” in basis on your death, which means your beneficiaries will pay less in capital gains taxes. Assets that are gifted do not receive a “step-up.” Medicaid. If you anticipate needing long-term care benefits in the future, then it is important to plan ahead. If you give away money or fund an irrevocable trust within the five years (the “look-back period”) before applying for Medicaid, you may face a period of ineligibility for Medicaid benefits. The actual period of ineligibility will depend on the amount gifted or transferred to the trust. Putting assets in a trust allows you to plan ahead. For all your legal questions about trusts, taxes, Medicaid, and other financial worries, call Gayheart Law at 859-276-6193 or request a consultation...

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Biden Administration Eases Recommended Restrictions on Nursing Home Visits — Lexington, KY

Biden Administration Eases Recommended Restrictions on Nursing Home Visits — Lexington, KY

The Centers for Medicare and Medicaid Services (CMS) has issued new guidance on whether families can visit loved ones in nursing homes. The guidance allows indoor visitation even when the resident has not been vaccinated.  The coronavirus pandemic has hit long-term care facilities particularly hard, with more than 170,000 residents and employees dying of COVID-19. Most nursing homes have had at least some restrictions on visitors in place since the start of the pandemic in March 2020. Some nursing homes have banned all visitors, some allow visits by appointment only, and some restrict visitation to outdoors only. The absence of close contact with loved ones has been extremely difficult for both residents and their families over the past year.   Now that millions of vaccines have been administered to nursing home residents and staff, CMS has revised its guidance on nursing home visitation. The new non-binding guidance notes that outdoor visitation is preferred, even when both the resident and visitor are fully vaccinated. However, the guidance goes on to advise that indoor visitation should be allowed regardless of the visitor’s or resident’s vaccination status in most situations. CMS recommends limiting indoor visitation in the following circumstances: If the resident is unvaccinated and the county’s COVID-19 positivity rate is greater than 10 percent and less than 70 percent of the residents in the facility are fully vaccinated. The resident has a confirmed COVID-19 infection.The resident is in quarantine because of exposure to a person infected with COVID-19. CMS also states that while physically distancing should be maintained, a fully vaccinated resident may choose to have close contact with a masked visitor who performs good hand hygiene before and after.  If the nursing home has a resident or staff member who tests positive for COVID-19, the CMS guidance recommends that visitation be suspended until the entire facility has been tested. If the outbreak is contained, then visitation can continue, but if additional cases are found, then CMS recommends suspending visitation once again.  While the CMS provides recommendations, each state is free to make its own visitation rules.  To read the guidance, click here.  For resources on visiting long-term care facilities from The National Consumer Voice for Quality Long-Term Care, click here. For your legal questions and help with long-term financial planning, contact Gayheart Law at 859-276-6193 or request an appointment...

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How the $1.9 Trillion COVID-19 Relief Bill Aids Seniors – Lexington, KY

How the $1.9 Trillion COVID-19 Relief Bill Aids Seniors – Lexington, KY

President Biden has signed the latest COVID-19 relief bill, which in addition to authorizing stimulus checks, funding vaccine distribution, and extending unemployment benefits, also provides assistance to seniors in a number of ways.  The $1.9 trillion American Rescue Plan Act (ARPA) delivers a broad swath of relief, covering families, employers, health care, education, and housing. The following are the provisions that most directly affect older Americans: Relief checks. The ARPA provides $1,400 direct payments to individuals earning up to $75,000 in annual income and couples with incomes up to $150,000. The payments phase out for higher earners, and there are no payments for individuals earning more than $80,000 a year or couples making more than $160,000. Eligible dependents, including adult dependents, also receive $1,400. People collecting Social Security, railroad retirement, or VA benefits will automatically receive the payment even if they don’t file a tax return. The checks will not affect eligibility for Medicaid or Supplemental Security Income as long as any amount that pushes recipients above the programs’ asset limits is spent within 12 months.  Medicaid home care. The Act provides more than $12 billion in funding to expand Medicaid home and community-based waivers for one year. This funding will allow states to provide additional home-based long-term care, which could keep people from being forced into a nursing home. The money will also allow states to increase caregivers’ pay. Nursing homes. Nursing homes have been hit hard during the pandemic. The Act supports the deployment of strike teams to help nursing homes that have COVID-19 outbreaks. It also provides funds to improve infection control in nursing homes. Pensions. Many multi-employer pension plans are on the verge of collapse due to underfunding. The Act creates a system to allow plans that are insolvent to apply for grants in order to keep paying full benefits. Medical deductions. If you have a large number of medical expenses, you may be able to deduct some of them from your taxes, including long-term care and hospital expenses. The Act permanently lowers the threshold for deducting medical expenses. Taxpayers can deduct unreimbursed medical expenses that exceed 7.5 percent of their income. The threshold was lowered to 7.5 percent under the 2017 tax law, but was set to revert to 10 percent for some taxpayers in 2021.  Older Americans Act. The ARPA provides funding to programs authorized under the Older Americans Act, including vaccine outreach, caregiver support, and the long-term care ombudsman program. It also directs funding for the Elder Justice Act and to improve transportation for older Americans and people with disabilities.  For more information about what is in the ARPA, click here and here. For help with all your retirement planning or legal questions, call Gayheart Law at 859-276-6193 or request an appointment...

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