Cincinnati Tax Problem Attorney Blog

Most states provide people 65 and older with a reduction on their property tax bills called a homestead exemption. Frequently, this tax reduction is also given to people with disabilities who own their own homes, veterans, and others. The reduction usually must be applied for, and the application period typically begins in January and runs through April. Some application periods run through the first Monday in June, as is the case in Ohio.

Paul A. Nidich
http://paulnidich.webs.com/

A recent news story has reported a trend that could be costly to life insurance beneficiaries and could risk the stability of the financial system. In order to retain the assets of life insurance proceeds, some insurance companies send checkbooks to beneficiaries, instead of the insurance proceeds. These checkbooks are tied to investment accounts from which the insurance company profits, are not insured by the federal government, and could upset an already unsteady financial system.

Since these investment accounts are not insured by the federal government, something that may not be known or understood by the beneficiary, the beneficiary is at risk of losing the whole proceeds if the insurance company goes under. Further, if enough beneficiaries decide to demand all of their money at the same time, the life insurance company may not be able to meet the demand, causing the kind of "run on the bank" government insurance and regulation is intended to prevent.

Continue reading "Elder Law -- Life Insurers Give Beneficiaries Checkbooks Not Insurance Proceeds" »

In a letter to a member of Congress, the Internal Revenue Service recently re-iterated its position that the costs related to buying, training, and maintaining a service animal may be a deductible medical expense for a taxpayer. The tests regarding the deductibility of expenses for service animals are not different from other expenses that qualify for medical expense deduction.

Paul A. Nidich
http://paulnidich.webs.com/

I had a new client come to my office recently. She was looking for Medicaid planning advice for her husband's parents. (This is a very frequent occurrence.) Her mother-in-law was suffering from dementia but was still able to live at home. Her father-in-law was 85 years old but in good health and led a fairly active life.

I explained that Medicaid had a five-year look-back period on transfers of assets for less than fair market value. I suggested that her in-laws might want to have a new irrevocable trust drafted. We also discussed the possibility of an irrevocable grantor trust, a special type of irrevocable trust that causes income to the trust to be taxed to the individual's personal return, rather than taxed at the higher trust rates.

Continue reading "Elder Law -- Is Avoiding Probate Enough?" »

The Department of Health and Human Services has created a web site to help people search out information about the new health care reform legislation. Health Care There is a lot of misinformation about the new law, some of which goes into effect this year.

Paul A. Nidich
http://paulnidich.com

Failure to keep beneficiary designations up-to-date can be a very costly mistake. Most people have some life insurance, retirement accounts, IRAs, and other contracts that designate a recipient or beneficiary. When the primary beneficiary becomes disabled, enters a nursing home, or dies, the owner of these contracts frequently fails to update the beneficiary designation. This can cause problems with probate, estate taxes, especially state estate taxes, and inheritances.

Paul A. Nidich
http://paulnidich.webs.com

Continue reading "Elder Law -- Keep Beneficiary Designations Up-to-Date" »

Trusts are used by estate planners, Medicaid planners, special needs trust planners, and tax attorneys for a variety of reasons. A particular type of trust, an irrevocable grantor trust, is particularly useful in Medicaid planning.

The second element is that the trust is designed to be a grantor trust, a significant tax saving. The income of a grantor trust is taxed to the individual who created the trust, rather than being taxed as income to the trust. Income of trusts have the highest rate of taxation applied, while no individual, no matter how rich, pays a tax rate even close to the tax rate of a trust.

Continue reading "Elder Law -- Planning With An Irrevocable Grantor Trust" »

On April 22nd, the Senate Budget Committee approved and sent to the Senate its Budget Resolution for Fiscal Year 2011 that begins on October 1, 2010. There are many provisions that deserve notice, but one issue that has plagued estate planners and taxpayers alike has been the issue of the estate tax.

Paul A. Nidich
http://paulnidich.webs.com

As the year 2010 approached, most people believed that Congress would clean up the mess made by it by passing President Bush's 2001 estate tax changes. Estate Plans were drafted with attorneys and clients convinced that Congress would act, and the draconian changes scheduled to occur in 2010 would not take place. They were dead wrong.

Under the law as it exists today, each individual has a limited amount of property that can pass to heirs with a stepped-up basis. All other capital assets with be taxed under the capital gains structure based on the cost of the property when it was first purchased, unless there is some other provision of the tax code that affects how the property will be taxed or not taxed.

Continue reading "The Estate Tax Mess -- When Members of Congress are More Concerned with Politics than Governing" »

Most people are aware of typical estate planning concepts, including the use of living trusts to avoid the expense and complications of probate. Fewer people are aware of the considerable need for estate planning for families with individuals who have disabilities, such as autism or down syndrome or any other disability that makes it likely the individual will qualify for government benefits because of his or her disability.

Another social security program that provides benefits to individuals with disabilities is "Disabled Adult Children." To qualify for this benefit, one must have a disability with an onset before age 22, and at least one of the individual's parents is already receiving social security benefits. This benefit can provide more financial assistance than SSI, and after receiving benefits for two years, the individual qualifies for Medicare, irrespective of age.

Continue reading "Special Needs Trusts -- Estate Planning is Not Just For The Wealthy" »