New Medicaid Rules Are Now Effective (November 2009)

The February 2006 Estate Planning Insights column was entitled “Big Change in Medicaid Laws.”  On February 1, 2006, Congress passed the Deficit Reduction Act of 2005.  President Bush signed the bill into law on February 8, 2006.  This new federal law makes important changes to the rules about qualifying for Medicaid for nursing home costs.  These are the biggest changes in this area of law since 1993.

According to the Deficit Reduction Act, some important parts of the new law were to be read more

The Stepped Up Basis (October 2009)

In estate planning, it is important to understand “stepped up basis.”  When you buy property (for example, real estate or stocks) your “tax basis” in the property is the amount you pay for the property.  When you sell the property, you have profit or “gain” equal to the difference between the sale price and tax basis.  You have to pay “capital gains taxes” on your gain.

For example, suppose you bought a vacant lot many years ago for $10,000.  Now, that same land is worth $110,000.  read more

Do Not Resuscitate

“DO NOT RESUSCITATE”

With an Advance Health Care Directive, you can make “end of life” decisions.  You can choose to die naturally, without life support.  However, if your heart stops beating, emergency medical personnel will resuscitate you, even if you have an Advance Health Care Directive.

Some people who suffer pain or have a terminal illness would rather not be resuscitated.  To allow people to refuse resuscitation, the “comfort care only” law was created in 1994.  It provides read more

Small Estates

            When a person dies with $100,000 or less in assets, there are simple ways to settle the estate. One way is to use an Affidavit for Collection of Personal Property. Another way is to have the clerk of the circuit court open a Small Estate proceeding. 

            Before we discuss these procedures, let’s review the definition of an “estate.”  When a person dies, that person is called a “decedent.”  If the person has a revocable living read more

New Rules for Nursing Home Medicaid

On February 8, 2006, President Bush signed the Deficit Reduction Act.  This federal law made big changes to Medicaid for nursing home costs.  Important parts of the new law were supposed to be effective from February 8, 2006.  However, the Hawaii Department of Human Services only recently announced Hawaii’s proposed new rules based on the federal law.  The public hearing on the new rules will be held on July 28, 2009.

One of the big changes involves the home.  Under the old law the home read more

The Special Needs Trust

THE SPECIAL NEEDS TRUST

Suppose you have a child with a disability.  Perhaps the child was born with a mental disability.  Perhaps he or she was born with a physical disability.  In some cases, the child may have been normal at birth, but later in life acquired a mental disability, or acquired a physical disability.  You love the child and want to provide the best possible care for your child.

Because of the disability, the child qualifies for government benefits.  Perhaps the child receives read more

Medicaid Planning

MEDICAID PLANNING

             I am thinking about a meeting I had recently.  The daughter of a client came to discuss her mother’s situation.  Mother is elderly.  She suffers from congestive heart failure.  Recently, she was so weak that she was hospitalized for a while.  Then she was transferred to a nursing home.  For now, Medicare is paying for the nursing home cost.  When Medicare stops paying in a few weeks, mother will have to pay the bill herself.  This nursing read more

Proposed New Laws

PROPOSED NEW LAWS

There are some proposed new rules and laws which would affect estate planning.  First, let’s review the current estate tax law.  The estate tax is a federal tax.  At this time there is no Hawaii estate tax or inheritance tax.  As a result of the 2001 tax act, the current estate tax law is very strange.  A person can die in 2009 with up to $3,500,000 of assets without any estate tax.  For amounts over $3,500,000, the estate tax rate is 45%.  In 2010 there is no estate read more

Be Careful When You Give Assets Away

Whenever you give away assets, there are laws in three different areas to consider:

1) gift taxes; 2) Medicaid rules for nursing home costs; and 3) capital gains taxes.

Many people think you can give only $10,000 tax-free to each individual.  Actually, the amount is now $13,000 a year.  This is called the “annual exclusion” from the gift tax.  This year you can give $13,000 to any number of persons without even reporting it to the IRS.

What most people don’t realize is that, read more