Comments on: 2010 Estate Planning Update

By: sanford

sanford — Wed, 07 Jul 2010 05:21:17 +0000

@Michelle – 1) Medicaid – The best way to protect the home and still have mother qualify for Medicaid for nursing home costs in the future is to have mother transfer it to an irrevocable trust with you as trustee, with your mother retaining a life estate. If your mother does not apply for Medicaid for nursing home costs within 5 years after the transfer, the home should be safe. If mother ends up in a nursing home on Medicaid, a Medicaid lien will still be placed on the home, but we would be able to have it removed after her passing. However, if the estate tax law does not change, and only one million dollars of assets are exempt from the estate tax next year, then we have to be careful that at the time of mother’s passing the value of her assets does not exceed a million dollars. It is possible to have mother transfer a substantial portion of the the home, but not the entire amount, to legally but artificially reduce the value of the home, to protect against estate taxes. Exactly how to do this would require a careful analysis.

2) TSA Account – I may have some incredibly good news for you. Our law firm has recently developed a technique for converting a traditional IRA into a Roth IRA while greatly reducing the income taxes payable upon the conversion. Many articles have been written about whether you should convert to a Roth IRA, but I have never seen anyone suggest the technique which we have developed, which makes a Roth IRA conversion a must for almost everyone with a large retirement account. A TSA (403(b))Account generally can be converted. The article I will be posting on this website on the 3rd Friday of July will be on this subject. Attorneys from our law firm will be presenting seminars in Honolulu on July 23 and 24, 2010 on How To Convert to A Roth IRA Without Paying Huge Taxes. On those same two days, attorneys from our law firm will be presenting seminars on How To Protect Assets from Nursing Home Costs. If you are able to attend, you may register by phoning our Honolulu office at (808) 593-8885.

3) Inheritance Taxes – The death benefits of life insurance policies will be taxable by the estate tax if the policies are owned by your mother at the time of death. It is possible to avoid the tax on the insurance proceeds if mother transfers the ownership of the policies out of her name and then lives for at least 3 years after the transfer. It sounds like your mother could use an estate planning consultation. If you are unable to attend the seminars on July 23rd and 24th, she should probably make an appointment for an estate planning consultation.

By: michelle takenishi

michelle takenishi — Mon, 28 Jun 2010 21:01:10 +0000

I am curious.

1) Medicaid — My mother’s house has me listed as a co-trustee. If our home is valued at just under a million dollars, how can we protect the house and still qualify for medicaid if needed in the future? I am trying to protect the house for my daughter.

2) TSA account – we will probably have up to $500,000 in a TSA account upon retirement in about 4 years. Are there are any loopholes to protect this income for my daughter. We are trying to save this money for my daughter.

3) Inheritance taxes — My mother only has her house (valued at just under a million dollars), two life insurance policies, and a very small savings account ($20,000).
Is a life insurance policy taxable?
Does it look like I will need to pay any estate taxes?

much aloha – michelle

By: sanford

sanford — Fri, 16 Apr 2010 01:15:52 +0000

@Lorna – My blog posted on March 20, 2010 on Protect Your Home From Medicaid Liens introduces the subject of how a life estate can protect the home from nursing home costs. Tomorrow (April 16, 2010) I will be posting a blog that goes into much more depth on life estates in an article that will be entitled Protect Your Home From Medicaid Liens (Part 2). I’d be interested in your comments after you read it.

By: Lorna Chinen

Lorna Chinen — Mon, 08 Feb 2010 03:16:43 +0000

I would be interested to see future blogs on life estates.