Cincinnati Tax Problem Attorney Blog

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" »

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?" »

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" »