 Elder
Law Update
Georgia Edition
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Vol 2
Issue Two
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July 2008
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PLEASE VISIT MASON LAW
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I WANT TO KNOW
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If you have an idea or comment that will help me
make this a better newsletter
please
send it to me. Just
click! |
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Dear Bob & Ann,
238 years into the Great American Experiment and
counting. Saturday evening the Masons began watching
the HBO series John Adams. So far, after Episodes I
and II we are impressed.
For those of you who haven't seen it, the first
episode centers on attorney John Adams' successful
defense of the British soldiers accused of murder in
the Boston Massacre case. You can imagine his
popularity after that decision. Yet the locals
respected his integrity and courage enough to send
him to the first Continental Congress.
Episode II covers the lead-up events to the
Declaration of Independence. Lack of cohesion,
argumentation, entreaties to bargain with the King.
Yet sudden cohesion when the King wrote back that
treason would be met with a noose.
Two things struck me. One was the incredible courage
and integrity of the leading figures. The other was
the rather shallow, self-serving and mundane view of
many of the lesser politicos and the mindless
behavior of the lawless mob.
Some things change . . . others never do.
Update on Vet
Benefits
Since publishing my Missing Puzzle Piece brochure on
veterans' benefits (view by clicking
HERE). I have had enough further questions that
I wish to clarify two related points.
If income exceeds the benefit threshold (say, for
example $1,842) you may still qualify for benefits.
Remember, the VA looks at income after a downward
adjustment for certain medical expenses (including
the cost of sitters, assisted living facilities, or
nursing homes). On a second look many, many who
believed they did not qualify do qualify.
The other point is that while there is an informal
asset limit of around $80,000, a variety of
techniques can be used to qualify . . . and often
they aren't too painful. So don't give up simply
because you believe you are over the VA asset level.
Again, for more info look at
Veterans Benefits:The Missing Puzzle Piece. By
the way, if you need some hard copies you may
download the online version or shoot me an email and
I'll send some to you.
Transferring Assets
I "retooled" one of my seminars recently to focus on
just a few of our best asset preservation
techniques. The seminar made its debut at a talk I
gave at Savannah Commons (an assisted living
facility in, of all places, Savannah). The attendees
seemed interested and had many questions.
One of the main topics, and the subject of a number
of audience questions, involved the "right way" and
the "wrong way" to transfer property. So . . . I
thought I'd look at the topic for the benefit of all
readers.
Read below for my summary of why a direct transfer
to others (notably children) is not a good idea and
what I propose as a much better idea.
Accompanying Mom or
Dad to the Doc's
Dr. Shevlin is back this month with a great article.
Here's the article setup: Many older parents have a
child (even an in-law) accompany them on visits to
the doctor to listen in, take notes, and weigh in
with commentary. That is going on in both sides of
my family as I write.
Dr. Shevlin concludes with a resolution to herself
on how she intends to handle such situations as a
physician. Nevertheless, children-caregivers should
take much of what she says to heart. Don't let your
own agenda cloud your thinking, and listen to what
Mom wants.
Preparing for the
Emergency
For many readers (along both the North Carolina and
Georgia coasts) summer fun may include more than
broiling under the sun - it may involve dodging
hurricanes. Geriatric Care Manager Barbara Dunn
continues her three part series on hurricane (and
other emergency) planning for seniors with episode
2. Barbara has a wealth of knowledge in this area
and, in addition to running her own practice, is
Chair of the Disaster Services Committee for the
Savannah Chapter of the Red Cross.
Have a great 4th of July . . . and give thanks for
the courage, character and intellect of John Adams,
Thomas Jefferson, Ben Franklin and their colleagues.
Bob Mason
Certified Elder Law Attorney
Certified by the
National Elder Law Foundation,
recognized by the American Bar Association as the
certifying entity for specialization in Elder Law.
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TRANSFERRING PROPERTY: THE WRONG WAY AND THE RIGHT
WAY
Bob Mason
My clients understand that I am rarely in favor of
outright transfers of property (especially real
property) for asset protection purposes.
The topic has been on my mind lately. I recently
gave a talk at Savannah Commons that touched on the
issue. Further, North Carolina is working on a
likely repeal of the North Carolina gift tax, which
always was a consideration when transferring
property (Georgia doesn't have a gift tax). A number
of my North Carolina clients emailed me and asked if
my position regarding direct transfers had changed.
Good question. The answer is: No. The reasons apply
regardless of where you might live.
I believe this is a good opportunity to revisit why
I rarely advise direct transfers of property (often
to adult children) to protect those assets. Quite
often clients see me years after a valuable piece of
property has been transferred (perhaps a farm or a
home) to children . . . and if there is a current
crisis (perhaps Mom has gone into a nursing home)
the earlier transfer worked well because the asset
is gone . . . and "protected".
The problem with direct transfers, however, is that
there are better ways of handling the situation.
Further, even if the long-ago transferred asset is
out of Mom's name it may not be "protected".
Trading Mom's and
Dad's Risks for the Kid's Risks
First, when an asset is transferred by parents to
children in order to avoid the parents' future risks
(often the fear of paying for nursing home care),
the transferred asset is subject to a new set of
risks: the children's risks. Adult children divorce,
get sued, get in trouble with the IRS or are
financially careless. The property transferred by
Mom and Dad is subject to all of those risks.
A Sound 'Basis'
Saves Tax Dollars
Second, if there is any possibility that the
children may someday need or want to sell the
property, a direct life time transfer may not make
sense, especially if the property is highly
appreciated. Here's why.
"Basis" is a technical term that refers to either
what you paid for property or what the property was
worth when you received the property as a gift or an
inheritance. There are adjustments made to basis,
but I won't go into those here.
The amount someone receives on the sale of property
is called the "amount realized" on the sale.
If someone sells property, the amount realized minus
the basis in the property represents what you make
think of as "profit" but what the tax code calls
"gain" . . . as in capital gain . . . as in capital
gain tax.
Now for the important part. If a gift of property is
made, the person making the gift also transfers her
basis with the gifted property. If Mom inherited the
property in 1960 when the land was worth $100 an
acre, that is Mom's basis, and after the transfer it
is also the children's basis. If the children sell
the property for $1,500 an acre, the taxable gain
will be $1,400 an acre to the children.
On the other hand, if the children do not receive
the gift until (and triggered by) Mom's death, the
fair market value of the property on Mom's death
will become the children's basis. In this case if
the children receive the property when it is worth
$1,500 an acre and sell the property for $1,500 an
acre, their taxable gain will be zero (nothing!).
A Better Way
So, what is the better way? Mom could transfer the
property to a properly drafted trust (a plain
revocable or living trust will not do), retain use
of the property and provide in the trust that the
property will pass to the children on her death.
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After 5 years the trust
should be irrelevant for Medicaid purposes
(Mom no longer owns the property, after all
. . . the trust does).
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While Mom is alive, the
financial mischief of the children is also
irrelevant (remember, the trust owns the
property).
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If the trust has been drafted
correctly and if it contains Mom's
residence, the trust may sell Mom's
residence and still qualify for the tax
exclusion on the sale of a home that Mom
would have enjoyed.
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When Mom dies, the property
will pass to the children, and because it
was Mom's death that triggered the transfer,
the children will receive "stepped-up basis"
to the value of the property on the date of
Mom's death.
That's not too shabby!
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VISITING THE DOCTOR WITH MOM
Patricia Shevlin, MD
As a family member, I have occasionally accompanied
a relative to a physician's office. I have been in
the exam room at times also. I have served as
driver, as informant and as organizer of
information, prescriptions, and follow-up
appointments. I don't have this role often. I hope,
however, that some of my recent experiences as a
physician will make me more aware of the dynamics in
the room the next time I am in that role.
In my practice, I have many patients who bring a
family member to the office visit. Mrs. Smith (not
her real name) is an example of the complexity of
the encounter. Mrs. Smith has several children, one
of whom is usually with her. The patient is fairly
quiet in general, but more so when compared to her
children.
Although I address the patient first, I usually get
a list of complaints from the family member. I try
to watch Mrs. Smith's expression as her symptoms are
described. Some days she appears disinterested.
Other days she will frown. She will occasionally
state, usually at the end of a visit, that a
particular symptom is not very bothersome to her at
all. I find these office visits very frustrating
because I don't want to spend time on a symptom that
isn't important to the patient.
Recently, Mrs. Smith was hospitalized. I had several
opportunities to speak to Mrs. Smith alone and
several facts became clear. Like most of us, Mrs.
Smith wants to appease her family so she will allow
them to address what they think is important to her.
If it appears that we are going to subject her to
testing, then she gives her opinion and puts a stop
to it.
Mrs. Smith also is very realistic about her family.
She knows they would like to help her, but due to
multiple issues of their own, they are not able to
do much. She allows them control in the office
because they feel better after the visit, even if
she doesn't. It's quite a generous gift she's giving
them: the feeling of being helpful. She is still in
control in the exam room, but her agenda may not be
as obvious.
So how will this information change my next
encounter with a patient and family members? I must
be aware of the source of the information I am
given. I need to be sure to check with the patient
to be sure he or she agrees with what's been said,
and with the plan of care. Finally, I have to
remind myself that family dynamics are complicated,
even in the best of circumstances.
Patricia Shevlin,
MD, is a principal in Asheboro Family Physicians,
with offices in Asheboro, North Carolina.
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Evacuation
Planning for Older Adults
Barbara J. Dunn, RN, MSN
Editor's note: This
is the second in a three part series telling you how
to begin devising an emergency evacuation plan for
the elderly.
In the last issue of Elder Law Update I stressed the
absolute importance of starting on a written
evacuation plan for older loved ones. I also
promised to discuss some specific areas you must
consider. These may seem obvious, but you must think
through and plan for each.
Mobility Needs
Label every single piece of durable medical
equipment (DME) no matter how recognizable you think
it is. Walkers and canes packed into a van or bus
begin to look the same.
Is an electric scooter needed? Be sure to plan for
an extra battery. A dead battery is useless, whether
going by private or public transportation. Does the
vehicle have the means to transport the scooter? Too
often families face having to leave the scooter
behind. If a wheelchair is necessary, will it fit in
the trunk or back seat and who has the upper body
strength to load it?
Planning to take mom or dad home with you? If so,
are there mobility barriers where you are going? How
will your loved one bathe, negotiate the front
stairs, or fit the wheel chair through the bathroom
door? Do the bathrooms have grab bars and are there
scatter rugs that need to come up?
Communication Needs
Eyeglasses and hearing aids can be a problem during
an evacuation. Be sure to plan for an extra pair of
eyeglasses along with the prescription. Even with a
prescription, replacing broken or missing glasses
hundreds of miles from home is time consuming and
difficult at best. Don't forget to label the glasses
in some way. Does your loved one wear a hearing aid?
Take along plenty of batteries-you can't predict how
long your loved one will be gone.
Medication Needs
Have a current, accurate, list of all medications.
Keep it updated. During a hurricane evacuation is
not a good time to be asking "Is Dad really on this
medication or was it discontinued at the last
visit?"
Have a current list of your loved one's medical
providers. Even then, your loved one's primary
physician will likely evacuate too and may not be
reachable for medication issues. What plans do you
have for a back up provider? Consider one of the web
based vehicles that make medical records available
no matter where you are (www.medicalsummary.com is
one example). If medications are running low, will
the pharmacy plan permit an early, emergency,
refill? Some will, some will not. Ask your
pharmacy, and then put it in your plan.
Barbara Dunn, MSN,
is owner of Elder Care of Coastal Georgia, as well
as Chair of the Disaster Services Committee of the
Savannah Chapter of the American Red Cross. You may
email comments and questions to Barbara by clicking
HERE.
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The Usual Disclaimer: This newsletter is for
general information only. Please do not rely on
anything you read in this email as definitive legal
advice applicable to you. All situations are
different, including yours. Nothing you read in this
newsletter is a suitable substitute for professional
advice you may receive from your attorney, your
accountant, or your tax advisor.
All contents copyrighted 2008 by Mason Law, PC.
Contents may be republished with written permission
of Mason Law, PC (which permission will usually be
given!). |
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