Trusts and Estates Wills and Probate Tax Saving Strategies Medicaid

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Your “basis” for calculating capital gains taxes is what you paid for the stock or the real estate. For real estate, the basis gets raised by the amount of any capital improvements you make to the property.  When you sell your primary residence you may exclude the first $500,000 of gain if you’re a couple or $250,000 if you’re single.  The $500,000 exclusion for a couple get extended for a sale occurring up to two years after a spouse dies.

For gifts you receive of appreciated stock or real estate during the donor’s lifetime, no capital gains tax is payable, however the donee receives the donor’s basis.  It is generally considered better to wait, if possible, and pass the gift to the donee at death, due to the “stepped-up basis”.  The basis of any inherited property is “stepped-up” to date of death value.  If the property is sold within six months of the date of death, then the sale price is deemed to be the date of death value.

If the property is going to be held for some time it is helpful to get date of death values to establish the new basis.  For real estate, this means getting an appraisal from a licensed real estate appraiser (not a real estate broker!).  For stocks, you simply ask the company holding the stocks to provide this information.

You should strive to review your estate plans every few years. While it might not seem like it, many events can occur during this period that impacts your estate planning goals. Besides personal changes, the country also experiences national elections every four years which often lead to changes in estate taxes.

Consider Role Appointments

One of the most critical parts of estate planning is appointing who among your friends and family members will act in the role of executor, power of attorney, and other estate planning positions. You should also question whether the parties you nominate to act in such a role remain fit and willing to act in these positions. It’s also important to remember that the suitability of appointments can change. While a person might seem like a good executor, they might not be a suitable executor a decade from now. 

After a person is named an executor, the individual takes on the obligation to adequately and promptly complete the estate’s administration in addition to distributing an estate’s assets to anyone listed as a beneficiary. Assuming that the executor appreciates the duty that he or she owes to the estate and pursues appropriate assistance, an estate’s administration can be performed in a timely manner, and assets are distributed appropriately.

It’s not unique for new challenges to appear during estate administration. This article highlights some situations where a court might remove an executor after paperwork is filed by an estate beneficiary.

A common issue faced by beneficiaries is when executors do not timely administer an estate. Even though estate administration is nuanced, executors have a duty to administer estates in a timely manner. Unfortunately, executors sometimes do not expediently process how an estate should be administered. Instead, executors sometimes take too long to complete estate planning processes. 

When participating in estate planning, many people focus solely on large assets like real estate or retirement accounts. This often means that people end up downplaying the value of personal property planning. People who make this mistake often overlook the point that personal items can have a value that far surpasses anything measured by monetary value. As a result, everyone should spend adequate time planning for personal assets. Certain items require special focus. Firearms are one of these unique items. Making matters even more complex, firearms are one of the unique items of personal value that carry a distinct risk of danger including liability for accidents that might result. As a result, a person should be cautious but deliberate when it comes to estate planning and firearms. 

Be Careful to Whom You Give a Firearm

A personal representative or trustee is the individual that you select to function in a fiduciary role or administer your estate in reflection of your wishes. Transferring your favorite firearm to a relative can end up being a complex issue if the person is a prohibited individual. The Gun Control Act of 1968 made it against the law for certain types of individuals to not just ship but also receive, transport, or possess firearms. Some categories of individuals prohibited by the Act include individuals who have been convicted of felonies, users of illicit drugs, people with mental illnesses, and people who have been convicted of domestic violence. Simply transferring a firearm to a prohibited individual can create a wide range of complex issues. 

Federal workers are currently reminding the country’s health care workers that withholding treatment due to an individual’s disability is frequently illegal. Withholding services in such a way is illegal even if resources are few.

The US Department of Health and Human Services’ Office for Civil Rights is currently informing providers that civil rights liberties for disabled individuals are still “full force” despite the COVID-19 pandemic. As part of a statement, the Department stated that civil rights law remains regardless of what happens including pandemics and that it is vital that the country works to make sure that fairness exists for all patients.

Additionally, the Department stated that the pandemic has illuminated the disparities that exist in the healthcare system and provided healthcare workers with the chance to resolve these disparities. 

A 90-year-old woman is a recent victim of elder abuse. The financial scammers hacked into the woman’s account and removed $20,000. Frequently, financial abuse scammers present themselves as technical support or service representatives who offer to resolve issues connected to compromised email or bank accounts or even the renewal of software licenses.

In reality, people who are 60 years of age and older are routinely subject to targeting from financial scammers because elderly adults are more financially secure. Elderly adults also routinely experience difficulty with more and are more trusting than younger people. Scams of this nature are growing in number. The Internet Crime Complaint Center recently reported that fraud involving tech support is the third most common type of fraud involving elder adults.

Two years ago, the Internet Crime Complaint received almost 10,000 complaints involving tech scams targeting older adults who encountered over $116 million in losses. Elderly adults represented 66% of the total reports involving tech support fraud.

Although it was long predicted, the country is currently in the middle of the biggest transfer of assets in current history. The Federal Reserve reports that at the end of 2021’s first quarter, people in the United States who are 70 years of age and older had net worths of approximately $35 trillion.

The question of whether people in the United States will prepare to transfer assets depends on the extent of funds that pass on to attorneys, courts of love, and needy loved ones.

When someone you love passes away, assets are ideally passed to people and organizations chosen by the deceased individual. Many people are not adequately prepared to pass on assets, though. One study reveals that approximately 46% of Americans own wills, which are vital estate planning documents. Estate planning helps a person appoint who will take care of loved ones and determine how assets will be assigned after you pass away. While some people make the mistake of thinking that only the wealthiest individuals need estate plans, everyone including people of modest means need estate plans to achieve their estate planning goals.

The estate tax exemption is slated to return to $5 million in 2026. For married individuals, the exemption is considered portable”, which means that the estate of the second spouse to pass away can benefit from the unused amount of the exemption that was available to the first spouse who passed away.

This change in tax law means that wealthy individuals’ estates can be protected from the claw of federal law through a $10 estate tax exemption. The indexed amount is $12.06 million for people who pass away in 2022. Meanwhile, transfers among spouses remain exempt from taxation due to the unlimited marital deduction. Consequently, many people do not need to be concerned about the federal estate tax.

The portability election, which has been titled by legislatures the “deceased spouse unused exemption” (DSUE) is an election utilized by an estate’s executor.

Many adults with special needs children routinely worry about how the child will survive when the parent can no longer support them. Often, leaving money directly to a special needs child can end up jeopardizing that child’s ability to receive any support from government-funded programs including Medicaid and Supplemental Social Security Income. To receive funds from these programs, beneficiaries often must have below a few thousand dollars in assets.

In these situations, special needs trusts can help to provide for the beneficiary once the parent or loved one is no longer around. Because the special needs trusts are viewed as owning assets, they are exempt from asset limit tests associated with government programs. Special needs trusts can meanwhile help to support quality-of-life improvements for a beneficiary. Special needs trusts also help to avoid situations where a family member receives funds and the other relatives are left to face the burden of this responsibility as well as the cost of care.

Due to the interest in special needs trusts, the number of these trusts has been growing substantially. Despite these benefits, special needs trusts come with certain regulations regarding who can qualify to use them as well as how earnings are taxed, which can end up influencing situations that warrant using these trusts.

One new study found that many LGBTQ+ individuals worry that prejudices held by long-term care facility staff could continue placing these elderly individuals in an environment rife with discrimination and misunderstanding. Many elderly LGBTQ+ individuals even feel the need to go “back into the closet” due to fears about being treated worse by long-term care staff. 

These findings come thanks to a new review that examined 20 recent studies between 2000 to 2019. Each of these studies focused on older individuals as they adapt to long-term care settings. This review also found that long-term care staff is often unfamiliar with the challenges faced by same-sex Americans.

The LGBTQ individuals who are currently transitioning to nursing homes and long-term care facilities are the first “out” generation who lived through the Stonewall Riots and marked the first generation to live openly. This generation also weathered the HIV outbreak along with a great deal of other trauma and discrimination. 

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