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The Elephant in the Room

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We all hear statistics like 70% of seniors over 65 today will need long term care during their lifetime. However, the vast majority of families do not discuss their estate plans with one another. The discussion of estate planning can be taboo and stem from long-held cultural beliefs. My parents have always been extremely private about money matters and certainly about their estate plan.

Valid Reasons for Privacy: Parents have many reasons for not discussing their assets or estate plans with their children. They may not trust their children and may not want to reveal the assets they have. They may not want to show their Wills and cause any controversy within the family. While these are all valid reasons, families can still suffer losses of wealth by ignoring the elephant(s) in the room such as:
• Long Term Care spending down assets and ultimately costing the home.
• Passing away without a will and having the State pass property other than what may have been intended.
• Failing to take advantage of benefits such as Veterans Pension of which they are unaware.

How to broach the subject? A parent, child or other family member could simply dive right into the matter by bringing up the subject of estate planning and asset preservation. This could be easier said than done, however, depending on the family culture and taboo nature of this subject. However, sometimes the medicine doesn’t taste great but needs to be taken anyway. This is often the case with estate planning, elder law and asset preservation. Perhaps on a holiday when the family is all together the discussion could more easily be had.

In my practice I found that getting families to open up about estate planning is sometimes hard. To remedy this I wrote a book on different aspects of estate planning and aging in America to assist seniors and their families. “Saving the Farm” could be a great gift and way to start a family member in your life thinking about saving their hard earned money and property. Available on Amazon or at: mcelderlaw.com/savingthefarm.

 

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

How to plan for a Long-Term Care event and How to Pay For it?

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Is there a chance Medicaid will pay for a long-term care event?

Yes.

But how do you qualify?

People think they must spend down everything to qualify for Medicaid.

Will I lose my house?

First, Medicaid Crisis Planning, (Long Term Care Crisis Planning).

I see this all the time. A spouse says, ‘My wife and I have spent our entire married life saving for retirement and now she’s in a nursing home and it’s taken everything we have.’

Protecting the house is many peoples main concern because it’s their major asset.

One of the ways to protect the house is with a Ladybird Deed.

A Ladybird Deed not only protects your house, it allows you to stay in control of your property for the rest of your life.

Then, when you and your spouse have passed on, that deed can be directed to your children.

The Medicaid look back period.

A Ladybird Deed is a beautiful thing because it protects your house immediately. Then there is no look back period for Medicaid to come in and pay for long term care.

With a Ladybird Deed in place, you could apply for Medicaid directly after putting that protective deed on your property and it will save it. Medicaid knows they cannot go back and take your house, ever.

But don’t you have to spend down below two thousand dollars?   

That’s true if there is nursing home or assisted living care. However, if there is a spouse, you can protect most of the money immediately, if you know how.

There are multiple strategies to protect as close to one hundred percent of your money.

Don’t just throw your money away or spend it down. If you do, it’s gone.

You’ve worked your whole life for that money and paid taxes on it.

If your spouse needs care, you don’t want to lose everything to pay for it.

We can also save other properties you own and you may still qualify for long term care or special assistance Medicaid.

Don’t feel hopeless.

Many people tell me they feel hopeless. They believe they will lose everything, but we can change that.

When you leave a consultation with me, you will feel empowered. You will know how to pay for nursing home or assisted living care, and how to save your house and retirement.

We can talk about protecting your assets ahead of time with a Medicaid Asset Protection Trust or Deed Planning.

This involves writing your Will or insurance policy and setting up trusts to pass things outside the estate.

We’ll talk about:

  • Using a Ladybird Deed versus Life Estate Deed versus a Trust.
  • Avoiding Probate (with Medicaid liens attached) when the Will passes the house.
  • When there is no Will.

An enormous amount of money is lost every day in North Carolina because of a lack of estate planning or knowing who to talk to.

If you’ve worked your whole life to pay for your home, you should be able to use a Ladybird Deed and not have your house sold to satisfy a Medicaid Lien.

There are many ways under the law and rules of Medicaid Planning to protect or pass down money and property for yourself and your family.

We even have a form whereby you can pass automobiles, mobile homes, anything with a DMV title on it outside the Probate estate. It is a North Carolina Division of Motor Vehicles form. The form number is MVR 620, and it’s called the Joint Tenants with Rights of Survivorship Affidavit.

If you have a bank account or car with Joint Tenants Rights of Survivorship, when you pass away, the money in the bank account or the car becomes theirs.

You may be a co-owner with your spouse, but are you a Joint Tenant with Rights of Survivorship owner on a DMV title of a car or RV? To be a Joint Tenant with Rights of Survivorship you must fill out this form.

To determine what you need and your situation, we must talk. Many millions have been saved for the citizens of North Carolina using the protections here.

My goal at McIntyre Elder Law is to empower you and your family and revolutionize your concepts of elder law.

I’m Greg McIntyre. If you have questions about elder law, please call our number below.

704-259-7040

Or go to mcelderlaw.com/MCP and fill out the pre-qualification forms.

 

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

What is the most important document you can have

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General Durable Power of Attorney

This allows someone else to function as you during your life to make legal and financial decisions.
You are literally handing them the keys to your kingdom. They can transfer your house or protect it with a deed, engage in Deed Planning, or transfer, buy, sell property for you. They also can operate your bank, investment and retirement accounts as if they were you.

But people say all the time, ‘That’s okay, I’m a beneficiary on that.’ Think about this. A beneficiary on a life insurance policy has zero access to the policy itself. The beneficiary cannot call up and change the policy. It is the same for an IRA, (Individual Retirement Account). By definition, it’s an individual account, not a joint account. The beneficiary has no rights to operate that account at all.

Why so important? With a General Durable Power of Attorney, when someone passes away, it ceases to exist. You can’t go to the bank and operate the bank or retirement accounts. So what document picks up?

The Will. The Will names an executor, (hopefully several), but not co-executors. If I wanted my wife to handle it, but she couldn’t for whatever reason, then another trusted individual, perhaps my son would be my secondary executor. I may even have a third.

Some Power of Attorney documents do not allow the Attorney in Fact to gift or move money to themselves. That could handcuff your spouse from activating a benefit or planning properly if you were incapacitated and needing long term care. That would force a spend down.

 

Will

With a Will, you also want substitutes for the executor, a person you trust to execute the Will under the Clerk of the court.

The courts make sure the executor carries out your wishes and the money and property are distributed according to your wishes.

The danger:
– Wills only have power when someone passes away. To access accounts, you must probate the Will, and apply the letters of probate to be named in the executor.

– People rely on Wills to pass property. If they need long term care, that could necessitate Medicaid paying for it. In that case, Medicaid liens attach during probate and force the sale of the home.
That is how people lose their money and property.

Healthcare Power of Attorney

A Healthcare Power of Attorney needs a HIPPA designation allowing your appointee to handle your healthcare.
They should be able to:
– Pull your medical records
– Transfer them from place to place
– Do whatever you can do with regards your healthcare, including life or death, long term care and pain management decisions for you.

Again, have substitutes to replace the primary if they cannot fulfill the position.
Why should you have a Healthcare Power of Attorney?
The Attorney in Fact must be capable of making the right decisions at the right time for the benefit of you. This way, there aren’t multiple voices giving opinions. It’s easier for healthcare providers to do their job consistently and with continuity of care if there’s only one voice to listen to. Otherwise they may have to choose between differing opinions of a brother and sister.

Living Will

A Living Will, (The Declaration for a Desire for a Natural Death) should clearly communicate with the Healthcare Power of Attorney.
The Healthcare Power of Attorney should state, if there is conflict between your Living Will and what the designated Attorney in Fact says, the human element should win. The document should say that to avoid conflict.

Concerns:
– There are some fill in the blanks Healthcare Power of Attorney and Living Wills, but I don’t recommend them. When you’re appointing someone to manage your life and death decisions, take time to carefully draft that document. Don’t leave blanks open to be filled in by anyone.
– Many religions have specific guidelines about end of life events. You don’t want conflict here either.

Example: A Catholic Living Will should be written differently than a generic Living Will. You want the eucharist and last rites performed. You also want it clear when to with-hold live saving procedures and why, so to avoid complications with suicide.
By drafting these documents individually, you consider who the person is and their beliefs.
I believe a General Durable Power of Attorney is the must have while you’re alive, but I suggest having all four foundational documents in place.

 

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

Avoiding Probate

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Wills have functioned quite well for the past several thousand years passing property from one person to another at death. Probate and wills are part of an ancient tradition beginning (we think) with the Ancient Greeks to the Romans in the form of predominantly verbal wills. The Romans would have a Roman Citizen create a verbal record of their wishes in front of seven witnesses. I can imagine this was highly problematic both with a witness misremembering or with the possibility of an interested party purposely misinterpreting the wishes of the Testator. Fast forward through English law, written wills to the system we have today, there can still be problems with the probate system.

Image result for avoiding probate Problems can arise from technical issues with the working of a will or challenge by a 3rd party to the will. Probate can take anywhere from six months to years to complete. So, how does one avoid the necessity of probate altogether?

  1. Trusts: are private documents, while a will is a public document. Trust are administered outside of court supervision.
  2. Beneficiary Assets: Financial Assets such as life insurance, annuities, 401k’s, and IRAs can name specific individuals to take property.
  3. Deed planning for Real Estate: Deeds can be written to pass real estate outside of the probate process and also may also serve as asset protection. Some examples are Lady Bird Deed, Life Estate Deed, Joint Tenants with Rights of Survivorship Deed, etc.
  4. Joint Owner with Rights of Survivorship: While deeds can be drafted to pass Real Estate outside of probate to a joint owner, bank accounts can also be owned by multiple people as joint owners with rights of survivorship (JTWROS). Even automobiles can now be owned in North Carolinas by multiple people as JTWROS.
  5. P.O.D./T.O.D.: Banks will now allow an account holder to add beneficiaries to savings, checking, and money market accounts. This is often called adding a payable on death (P.O.D.) or transferrable on death (T.O.D.) beneficiary to an account.

 

Many of the items discussed above can allow you to easily avoid probate with assets. For the impact of these methods one may want to consult an estate planning and elder law attorney.

 

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

Medicaid Divorce: Maybe . . . Maybe Not.

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Harry and Wanda got married late in life. This was their second marriage, and both had children from the prior marriages. The couple wanted their children to inherit from their respective parents, so Harry and Wanda signed a prenuptial agreement to keep their property clearly separated.

 

Unfortunately, Harry was then diagnosed with Alzheimer’s. Medical bills piled up, his condition worsened, and soon Wanda was no longer able to care for him at home. But the cost of nursing-home care was formidable.

 

The Medicaid program is designed to help pay for that staggering cost. However, before a couple can be eligible, the rules require that the assets of both spouses are counted to pay for the care of one, even if only one spouse needs the care. Prenuptial agreements do not matter. The Medicaid rules count the assets of both spouses together. Wanda would be permitted to keep some of her property for her own use – but this would not be enough for her to maintain her standard of living, pay for her retirement, and still leave enough for Wanda’s children to inherit.

 

Image result for medicaidWanda heard that divorce might solve this dilemma. The couple’s assets would get separated in the divorce proceedings and, after that, only the property designated as Harry’s would be applied to the cost of his care. He would spend that down, Medicaid would then step in, and Wanda’s share would remain her own.

 

But Wanda didn’t like the idea of a divorce that would be only “on paper,” because she had no intention of deserting Harry in his time of need. Harry’s children weren’t happy, either. And if the divorce was going to work as intended, the couple should probably consult not just one but three professionals – an elder law attorney, a financial planner, and a divorce lawyer.

 

But this plan would involve expense, possible family unrest, and uncertainty as to whether a court would approve the plan. The divorce strategy comes with significant downsides.

 

Early planning is best, to consult an elder law attorney at least five years before the need for Medicaid arrives. If that is not possible, an experienced elder law attorney can find other, less-fraught ways than divorce.

 

Early planning if possible, though, is always best. If we can be of assistance, please don’t hesitate to reach out.

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

Creative Financial Approaches to Long Term Care Services

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Long term care insurance was sold aggressively in the 1980s, 90s and thereafter to offset the costs of seniors needing to live in a nursing home, assisted living or needing at home health care. Now, however, the business of long term care insurance has dramatically changed. What was once over 100 insurers providing LTC policy for sale has shrunk to a pool of less than twenty insurers who continue to sell the health care product. The big financial problem was that the majority of insurers had badly underestimated the longevity of these long term care policy holders and how many claims would be filed during their lifetime. The model became unsustainable from a business perspective.

As reported by the Wall Street Journal (https://www.wsj.com/articles/millions-bought-insurance-to-cover-retirement-health-costs-now-they-face-an-awful-choice-1516206708) the industry is now in financial turmoil and has turned to the old adage of privatize the gains and socialize the losses; the translation being that millions of people age sixty-five or older with long term care policies are facing steep rate increases. It is not uncommon for a policy holder to face a fifty percent increase in their premium while some of the worst cases are upwards of ninety percent. Because the industry itself used such poor benchmarks and miscalculated projections, policy holders are seemingly left with two choices: Pay the money or leave your coverage after paying into it for years, and sometimes decades.

What if you want a different choice? Everyone would agree that being priced gouged for premiums as you age is inherently unconscionable but if the policy is discontinued what then will happen to the peace of mind long term care brings? What was once the safety net of senior aging care (without becoming a burden to family members) is rapidly disappearing.

CNBC has recently reported about this very issue and suggests getting financially creative for long term care. (https://www.cnbc.com/2018/02/27/heres-a-surprise-source-you-can-tap-for-long-term-care-services.html) There is a surprising source that you can tap in order to maintain protection for yourself but it requires planning, professional help and time. Do not delay.

The financially creative premise is to become asset poor, impoverished, and qualify for Medicaid which pays for nursing home care and services. This does not mean the legacy you built during your lifetime will not go to your selected inheritors. On the contrary the assets you own must move out of your name to qualify for Medicaid. The assets will then shift to your designated beneficiary since to qualify you as an individual cannot have over $2,000 in assets.

To begin you will need to retain the services of a qualified elder law attorney, who may also bring in an accountant and a financial advisor. Ideally, you will be able to wait five years before needing long term care and the help of Medicaid. If there are assets transferred during the “five year lookback” it may be subject to penalties or make the applicant ineligible for some period of time requiring them to pay out of pocket.

Now with time on your side it becomes critical to select the right vehicle for transfer. These can be annuities but more often tend to be irrevocable trusts. The assets in the irrevocable trust are no longer under the control of the older person and can provide protection from certain creditors. The vehicle chosen for transfer of assets is very important not only for the older individual but the recipient as well. In the case of an outright gift of appreciated assets (i.e. stocks or real property) there would be no stepped up cost basis which could lead to crushing capital gains taxes when it is time to sell. An elder law attorney with input from your accountant and financial planner can help you choose the right transfer of wealth plan.

Elder law attorneys are closely watching changes in Medicaid,, as Congress is often proposing legislation to change the program.. Be certain your elder law attorney is up to speed on the current requirements, as the eligibility requirements can change very quickly in each state, and sometimes each county.

Though you may never have thought you would find yourself creatively trying to qualify for Medicaid while protecting assets, the current long term care premium prices preclude a large portion of seniors from being able to pay the cost of the policy. Genworth Financial reports the national median cost of a private nursing home room to be $97,455 a year. It doesn’t take long to be wiped out at that cost without long term care. Medicaid may be your solution and time is of the essence for planning.

Contact our office today and schedule an appointment to discuss how we can help you with your planning.

 

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

Three Questions “The Elder Law Guy” gets asked the most:

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1. If I Don’t Have Debt, Should I Still Worry?

Does not having debt protect you?

A lady and her husband were shrewd, with little or no debt. They lived right, had rental houses, paid everything in cash with no mortgages.

Question: Did they have to worry?

If you or your husband have a long-term care event costing $75 to $100,000 per year, will that dent your finances?

Are the rental houses, bank account, savings going to be okay?

No.

At that rate of spend-down, it’ll be hard maintaining your lifestyle.

So what can you do? Separate the liability with the rental houses and your personal income.

That way if the renter sues, it wouldn’t come back against your personal assets.

Separate your business liability. Maybe set-up an LLC and put all rental houses in it.

Separate it so your house, car, savings can’t be attacked.

How many layers of protection can you add? It’s up to you. The more layers, the more exhaustive to another plaintiff’s attorney to get at your nest egg and assets.

Another consideration is using an Irrevocable Asset Protection Trust to protect assets from a healthcare crisis requiring long-term care?

2. What If My Attorney-In-Fact Predeceases Me?

If the attorney-in-fact under a Power of Attorney passes away before you, then it ceases to have any power… unless you have appointed within the document second or third backup agents to serve as your attorney-in-fact. Think about it. If a player fouls out of the game you always want players on the bench to take their place.

3. I Already Have A Will…

People think they’re protected with a Will.

A will is great but can be a dangerous place to pass property.

If we’re passing your home through your will and open it to a probate estate in court, you must go to the courthouse, pay to open the estate, publish it in the paper, and wait 90 days (at least). That’s when liens such as Medicaid liens which may have paid for long-term care during your lifetime attach and force the sale of that property to pay that lien.

For information about other ways to easily avoid probate with real property (land/homes) and liquid assets (money/investments) contact:

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

Hometown Heroes – Veterans Interview Video Links:

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Below are links to the videos of the interviews I conducted over the last several years that found their way into the Hometown Heroes book. I always enjoy putting a face and voice to a name and thought you may as well. Enjoy!

Click on the link below to view the video interview.

Story 1- Jim Hardin – https://www.youtube.com/watch?v=Tomarr1oV_U

Story 2-  J.C.Horne – https://youtu.be/isOI6dejS3w

Story 3- Roland Stewart – https://www.youtube.com/watch?v=BweOYJTg7h8

Story 4- JD & Virginia Thomas – https://www.youtube.com/watch?v=LMa31-zxc90

Story 5- Earl Mace – https://www.youtube.com/watch?v=pa51DkhWhQs

Story 6- Dr Frank Sincox – https://www.youtube.com/watch?v=v3zO-LMdlmQ&t=18s

Story 7- The Schenk Brothers – https://www.youtube.com/watch?v=APIL6EcjAX8

Story 8- Michael Carpenter & Barry Carpenter – https://www.youtube.com/watch?v=pdikFccm0BQ&t=1s

Story 9- David Rose – https://www.youtube.com/watch?v=A4ZMgrvVulI

Story 10- Bob Cabiness – https://www.youtube.com/watch?v=dQh96KOKqn8&t=300s

Story 11- Gene Ramsay – https://www.youtube.com/watch?v=X7Ezs3bSG_Q

Story 12- Ray Kale – https://www.youtube.com/watch?v=faBa16XDgwA&t=767s

Story 13-  Bill Hardin & Larry Gamble – https://www.youtube.com/watch?v=kK1Ri-9Jv1A

Story 14- Roger Wuerst – https://www.youtube.com/watch?v=_O4zj_GM_2Q

Story 15- Tom Haines – https://www.youtube.com/watch?v=kOxtMIlTyKs

Story 16- Evan Thompson – https://www.youtube.com/watch?v=JBDDLuz3DNM

Story 17- Ludy Wilkie – https://www.youtube.com/watch?v=NWBouWBIgog&t=1216s

Story 18- Jim Quinlan – https://www.youtube.com/watch?v=5zWSosRXwUo

Story 19- Martha Bridges – https://www.youtube.com/watch?v=XF42t5VuHTA

Story 20- Martin Mongiello – https://www.youtube.com/watch?v=zUwvNK3wFpc&t=1502s

Story 21- Arthur Gordon – https://www.youtube.com/watch?v=hf1YxPgBL9E&t=608s

Story 22- Dr Rit Varriale – https://www.youtube.com/watch?v=YM5C0j-MYhA&t=602s

Story 23- Greg McIntyre – https://www.youtube.com/watch?v=6Ei_MHbIdlo

 

Alzheimer’s 101 – Understanding the Basics

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What is Alzheimer’s Disease?

Alzheimer’s disease is defined as an irreversible, progressive mental deterioration that can occur in middle or old age. It is the most common form of dementia.

 

What causes Alzheimer’s Disease?

Alzheimer’s disease is caused by a generalized deterioration of the brain. The disease is caused by a combination of factors, including genetic, lifestyle, and environmental factors. There are a variety of factors that put people at risk for Alzheimer’s disease. Age and genetics are risk factors. As people age or if there is a family history of Alzheimer’s, there is a greater risk of the onset of Alzheimer’s disease. People with Down Syndrome or mild cognitive impairment have a greater chance of having Alzheimer’s as they age. If a person has experienced past head trauma, this puts them at risk for Alzheimer’s.

 

The risk of Alzheimer’s is also related to lifestyle and heart health. Those with poor heart health and an unhealthy lifestyle put themselves at greater risk for the disease.

 

Finally, women are more likely to be diagnosed with Alzheimer’s than men. Some causes and risk factors of Alzheimer’s disease are impossible to change or control, but lifestyle and heart health are things that can be controlled.

What are the symptoms of Alzheimer’s Disease?

Alzheimer’s disease, in general, destroys memory and thinking skills. In the late stages, a person with Alzheimer’s is unable to carry out even the simplest tasks. A person who is experiencing the onset of Alzheimer’s will experience mild symptoms, which may include increasing forgetfulness or mild confusion. As the disease progresses, the memory loss increases, especially recent memories. The progressive nature of the disease causes memory to continue to deteriorate throughout the rest of the person’s life. The ability to think and reason are impaired until even performing familiar tasks can become impossible.

 

A person with Alzheimer’s disease often experiences changes in behavior. They may do things out of their character for them prior to the disease. Common changes in behavior include aggressive behavior, agitation and irritability. Alzheimer’s disease symptoms can include depression, mood swings, and difficulty sleeping. The deterioration of the brain causes a person to change in ways that are difficult and trying for all involved.

 

How is Alzheimer’s Disease diagnosed?

Alzheimer’s disease is complicated and getting to a diagnosis is a long process. If a person or their family suspects the onset of Alzheimer’s disease, it is important to understand that there will be many steps and visits with doctors to determine if in fact it is Alzheimer’s. There is no single test. The first step for the doctor will be to get a comprehensive medical history. The doctor can use this history to determine if the patient has risk factors for Alzheimer’s disease. The next step is to complete testing on mental status and mood of the patient. Beyond this there will be physical and neurological examinations. If the doctor suspects Alzheimer’s, the tests will continue with blood tests and brain imaging. The goal is to rule out other causes to be sure that Alzheimer’s disease is the correct diagnosis.

 

What treatment options are available?

Alzheimer’s disease has no cure. Treatment options are meant to delay or slow the progression of the disease. Medication is one treatment option. The medicines are used to treat the cognitive symptoms. As the disease progresses, symptoms continue to worsen. Medication is unable to stop the damage that Alzheimer’s disease causes to brain cells, it can help stabilize the patient or slow the progression for some time.

 

Behavioral symptoms can be treated with some medication as well, but there are other ways to address these symptoms. The first thing is to know and be aware of triggers. By knowing triggers, there are a variety of coping strategies that can be used. Some of these include avoiding confrontation, making sure the Alzheimer’s patient gets adequate rest, monitoring comfort, and creating a calm environment. Many are now looking at herbal remedies, dietary supplements, and “medical” foods as possible treatments to enhance memory. There is no conclusive evidence that these things work.

 

Alzheimer’s disease is complicated. The causes and symptoms vary from one person to the next as does the progression of the disease. Being educated about the disease and care options is the key to helping a loved one with Alzheimer’s disease. Doctors, therapists, and elder law attorneys can guide families through the difficult process of caring for a loved one with Alzheimer’s.

 

If you have any questions about something you have read or would like additional information, please feel free to contact us.

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

3 Points About the New 2018 Tax Law Seniors Should Know:

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 Is Social Security Taxable?

Combined Income is not taxable under $25,000. As a general rule, Social Security income is taxable! 15% of your social security benefit is a tax free benefit under the tax rules. However, you could pay a maximum of 85% on your Social Security income depending on your total combined income. Combined Income is your Adjusted Gross Income plus your non-taxable interest plus one-half of your Social Security income that year.

Individuals with combined income of $25,000 to $34,000 will pay up to 50% income tax on every dollar of Social Security income over the $25,000 threshold. Individuals with combined income of more than $34,000 will pay up to 85% income tax on every dollar of Social Security income over the $34,000 threshold.*

There are strategies to avoid paying taxes going into retirement which include Roth IRAs and Roth IRAs and having the Social Security Administration withhold taxes from every check or pay quarterly.

 

What are the Rules on Gifting and Estate Tax?

The tax exempt gift limit during an individuals lifetime is now $5.6M. The tax exempt estate and gift tax is the same $5.6M per individual. However, the lifetime and estate taxes work together. For example. If you give away $1M during your lifetime then at death you may only pass $4.6 as tax exempt.

 

Do I have to report gifts?

The reportable gifting limit per person per year went from $14k in 2017 to $15k in 2018. You must report a gift to a person over $15k to the IRS. This is presumably so that the IRS can track your gifting to subtract each gift over $15k from the total allowable lifetime and death tax amount of $5.6M.

 

This has been a summary of just a few of the tax law changes going into 2018 that I wanted to pen from my presentation and discussion at our March Monthly Client Breakfast. If you have any questions, please contact me at: 704-259-7040.

* Average SS Income for 2017 was $1,400 per month or $16,800 per year.

* Always consult a tax professional.

Greg McIntyre

greg@mcelderlaw.com

Elder Law Attorney
McIntyre Elder Law
123 W. Marion Street

Shelby, NC 28150

704–259–7040

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