My mother went from private pay to Medicaid pay in her nursing home January 1, 2013. She now has zero money and all of her Social Security goes to the nursing home … Should I sell [her] home and effectively turn all of the assets over for her care or wait until her death, at which point Medicaid will take the proceeds from the sale of the home anyway?

The move to a nursing home is a big step. It is a major life transition for all family members. Your loved one will no longer be living in their own comfortable and familiar home. In addition, there is the issue regarding whether to retain or keep the home given the unpleasant knowledge that the home may ultimately pay for nursing home care either way.

This dilemma was the focus of a recent Q&A in ElderLawAnswers via the question, “Is It Better to Sell a Medicaid Recipient’s Home Now or Wait Until Her Death?”

Essentially, by receiving Medicaid you make certain agreements as to costs and, in the case of nursing home care, the deal often hinges on that most valuable of all assets an elderly person is likely to own: their home. True, it is possible to liquidate and sell the house just to pay for the nursing home care. Although this often reduces or eliminates the costs for maintaining and insuring an empty house, this also means giving up Medicaid benefits until the sale proceeds have been expended for care.

On the other hand, Medicaid will remember your choice whether you sell the home and private pay until spend down or if you to continue receiving benefits in lieu of such sale. In order to qualify for Medicaid in the Utah, Utah does not include the recipient’s home in determining eligibility.  Utah does impose a lien on the recipient’s house to the extent of the amount that Medicaid paid on behalf of the recipient. If a family member attempts to sell the house after the Medicaid recipient loved one passes, then Medicaid has a lien on the sale proceeds (limited to the amount Medicaid paid for the care of the Medicaid recipient). Either way, the home is subject to pay for nursing home care or to reimburse Medicaid for the cost of care.

The answer to the question posed to ElderLawAnswers hinges on more than a few factors. That said, in most cases Medicaid payments will be less than private pay, sometimes a great deal less. Consequently, the resulting lien may be less of a burden than selling the house outright!

Is there something else at work, however? Notably, is the family home worth keeping in the family? These are situations that require some delicacy.

Reference: ElderLawAnswers (updated October 17, 2013) “Is It Better to Sell a Medicaid Recipient’s Home Now or Wait Until Her Death?”

The nation’s elderly and disabled Social Security recipients will receive a 1.5 percent increase in payments in 2014. This is expected to raise the average monthly payment for the typical retired worker by $19.  The increase is even less than last year’s 1.7 percent  cost-of-living adjustment (COLA).

According to the numbers recently released by the Social Security Administration, 2014 will be a “diet COLA” year. That means the Cost Of Living Adjustment (COLA) made to Social Security payments will only be a 1.5% increase.

ElderLawAnswers weighed in on the news in an article titled “Social Security Benefits to Rise Only 1.5 Percent in 2014,” while the SSA has issued its own COLA Fact Sheet.

The COLA is an important adjustment for many Social Security beneficiaries, especially those on a fixed income. These can be very important dollars and cents. If costs of living go up on an annual basis, then Social Security beneficiaries would be left with fewer dollars to purchase more expensive goods (and services) without the COLA increase.

On a positive note, this COLA increase is welcome. Historically, there have been years without any COLA increase. That noted, at 1.5% the 2014 COLA is still less than the 1.7% COLA in 2013, which some regarded as too low.

The math, as summarized by ElderLawAnswers, works out like this:

Starting in January 2014, the average monthly Social Security retirement payment will rise from $1,275 to $1,294 a month for individuals and from $2,080 to $2,111 for couples. The 1.5 percent increase will apply to both elderly and disabled Social Security recipients, and individuals who receive both disability and retirement Social Security will see increases in both types of benefits.  The maximum Social Security benefit for a worker retiring at full retirement age, which is age 66 for those born between 1943 and 1954, will be $2,642 a month.

The good news is that it is not all bad news. While the SSA is seeing a lower COLA, it is worth noting that Medicare Part B will not be seeing an increase from the 2013 standard monthly premium of $104.90. In the end, then, for many beneficiaries 2014 might not be too unreasonable.

Reference: ElderLawAnswers (October 31, 2013) “Social Security Benefits to Rise Only 1.5 Percent in 2014”

Making a charitable donation is not only a chance to make a difference: it’s also an excellent way to reduce your tax burden for the year… [But a] tax deduction for charitable giving isn’t guaranteed just because you’re feeling generous. As with everything in tax law, it’s important to follow the rules.

There is giving, and then there is “smart” giving. As the holiday giving season begins with the tax year ending shortly thereafter, now is a good time to plan your giving. After all, you want the best outcome for both you and the charities you support.

Fortunately, Forbes has provided some giving tips and reminders well in advance in a recent article titled “Making Your Gifts Count:10 Smart Tips For Charitable Giving.”

While there is much to say and consider regarding each of these 10 points, here they are if you are looking for a checklist:

1. Itemize.
2. Choose carefully.
3. Get a receipt – even for cash.
4. Don’t overlook payroll deductions.
5. Pay attention to the value of any incentives.
6. Consider donating appreciated assets.
7. You can’t deduct the value of your time.
8. Document the value of your gift.
9. Limits may apply.
10. Pay attention to the calendar.

It is worth noting, however, that this is really only the beginning of smart charitable giving. What are your ambitions and what are your goals? There are enumerable giving devices available to allow you deductions for charitable giving and at the same time retain some benefits, for example charitable remainder unit trusts and charitable remainder annuity trusts.

The higher you set your giving sights, then the greater your need to pre-plan and seek appropriate legal, financial and tax counsel.

Reference: Forbes (November 1, 2013) “Making Your Gifts Count:10 Smart Tips For Charitable Giving”

Spouses and couples who live together without getting married often keep separate bank or brokerage accounts, and they might hold real estate and other property in their own name rather than jointly. That can be a smart strategy…But separate assets can present some problems as well…

When two people love each other, and especially if they have lived together outside of marriage for some time, then the question of who owns what can get downright ugly. That said, how a couple owns something, whether together or separately, is a pressing question in other regards. Obviously, jointly owned assets are a sticky wicket. Surprising, separately owned assets can have unintended (and unpleasant) consequences, too.

When it comes to jointly owned assets it is not too hard to understand how problems can erupt. When it comes to separately owned assets, take a look at a recent article in The Wall Street Journal titled “Separate Assets, Joint Problems.”

What are the biggest problems behind separate assets?

The original article gives four points to ponder:

1. Those assets aren’t necessarily separate under the law. Utah, for example, recognizes marriages not solemnized.  (Section 30-1-4.5, Utah Code Annotated)
2. Separate accounts may foster a failure to communicate.
3. Separately owned property may be at greater risk in a bankruptcy or lawsuit whereas jointly owned property may present some asset protection.
4. Separate accounts can lead to administrative difficulties.

When you boil it all down, the underlying difficulty behind three of these points is simply coming to terms with what separately held assets mean for a married couple.

For example, sometimes assets are not truly separate because state law makes them marital. Like most things in life, there are trade-offs regardless. The time and money spent getting competent legal, financial and tax counsel may be well worth the investment.

Reference: The Wall Street Journal (November 10, 2013) “Separate Assets, Joint Problems”

Estate planning is the process of legally structuring the future disposition of current and projected assets.

What is estate planning?

Estate planning is many things. This lead question, however, is taken directly from the a recent Forbes article titled “What Is Estate Planning?”

The article concludes that “Estate planning is the process of legally structuring the future disposition of current and projected assets.” The operative words in this definition of sorts are “structure” and “process.”

“Structure” is an essential component of your estate plan. Why? Because, much like a building, estate planning requires putting many diverse things into place to accomplish a goal. A building can be an office, or a home, or a retreat, depending on the pieces you choose and where you choose to put them. Consequently, your estate plan can structure your assets to protect them from creditors, to duck beneath a tax ceiling, and to protect your loved ones for years to come. In essence, like a good building, your estate plan can perform many functions.

Likewise, “process” is equally essential. Unlike a static building, your estate plan is constantly building, sometimes evolving, and sometimes outright changing course completely. In this light, estate planning is abstractly simple. Accordingly, you must keep your estate plan current with the many changes in your life, the lives of our loved ones and the plans you have made.

Reference: Forbes (November 4, 2013) “What Is Estate Planning?”