Cincinnati Tax Problem Attorney Blog

The Senate finally passed a test vote that will allow increased Medicaid funding for the first half of 2011 to pass Congress after the House returns from its August recess. GOP Senators Susan Collins and Olympia Snowe, both from Maine, joined Senate Democrats to end debate on the legislation that will provide states with billions of dollars to shore up their Medicaid programs and prevent layoffs and program cuts.

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

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" »