If you find yourself taking on
the responsibility of a caretaker to your elderly parents, are you documenting
your efforts? If you are giving time and money for the care of loved ones and
would like to take tax deductions for your efforts, you ought to make sure you
brush up on your bookkeeping skills. Otherwise, when it comes to tax time, you
may be out of luck (and money).
Forbes examined the Olivo case in an article titled “Mother's Day? Son Claims $1.2M Tax Write-Off
For Helping Mom.” From the title of the article, it is clear that the son
may have been a bit generous in his claim. To make matters even more
interesting, the son was a tax attorney.
Background: Anthony Olivo was
the son/tax attorney. He took nearly ten years away from his law practice to
care for his parents. Accordingly, Anthony lost his law practice income.
However, he did collect fees from his parents for managing their estates. When
Anthony’s mother died, he sought to deduct $44,200 in administrator’s fees, $55,000
in accountant’s and attorney’s fees, and a whopping $1,240,000 for a
near-decade’s worth of lost wages (he did manage his own firm, after all).
The IRS raised an eyebrow, and
then raised it further when they took a look at his documentation of all of
these fees and amounts. Problem: there was no contract, no invoice, and no
evidence. Not good.
Even when Anthony was handling
the estate and filing the tax return he didn’t keep track of his time and just
estimated. Also, not good.
In reality, not everything
claimed may have been deductible. Nevertheless, the lack of recordkeeping
killed any chance for success.
If you and your loved ones are
entering a period of caregiving, then a little forethought and planning can go
a long way. In the end, a little recordkeeping can be the deciding factor in
making your claim.
For more information on this and other Elder Law issues, contact Idaho
Estate Planning and schedule a consultation. If you are caring for a veteran you need to investigate the VA Pension Benefit as well. Remember,
good planning is no accident.
Another oldie but goodie from January 2011 made more timely by the celebration of Mother's Day today. Our Moms (and Dads) deserve our attention when it comes to their potential long term care needs.
There is a very good chance that you or
someone you know is taking care of elderly parents now or looking at that
possibility in the near future. In 2008 a USA TODAY/ABC News/Gallup Poll of
baby boomers found that 41% who had a living parent were providing care for
them — either financial help, personal care or both — and 8% of boomers said
their parents had moved in with them.
Of those who were not caring for an
aging parent, 37% said they expected to do so in the future. About half said
they were concerned about being able to provide such care.
If financial planning and long term
care planning have not been done previous to the need for care, the burden
falls on the caregiving family member. Decisions about how care will be paid
for, who will be responsible for managing the estate as well as how the long
term care will be given can cause stress and contention among family members.
It is best for parents and all family members to be involved in planning for
future financial needs. The financial resources being used today could change
drastically with the occurrence of a stroke, illness or onset of dementia. In
order to plan financially for long term care, you need to know what the costs
are now and what they will be in the future.
Every year MetLife does a survey of
long term care costs. Their 2010 survey shows that the average daily rate for
private nursing home is $229 which is up from $219 in 2009. Assisted living
monthly base rate cost rose to $3,293 in 2010 from $3131 in 2009. Home health aides
average $21 an hour.
Planning financial needs can be very
difficult, considering you do not know when long term care will be required or
how long it will be needed. Staying in the home for care will require professional
home care assistance, travel accommodations to doctor appointments, help with
shopping, meals, medical supplies and medication and possibly a 24-hour
attendant. Even if a family member is doing most of the care, in most cases professional
care will eventually be required or a move to a nursing home facility will be
necessary.
When evaluating present income and
assets consider how they would work for future needs. Consider the following:
This "Best of" blog is from January of 2011 on the subject of helping a veteran apply for benefits.
Accreditation
The
VA Pension Benefit helps veterans and surviving spouses pay for assisted living
care in the home, nursing home, or assisted living facility. It pays up
to $1,949 ($2054 in 2013) per month to provide care for single or married veterans, or their
surviving spouses. Applicants must meet certain medical and financial
thresholds. Many find the application process complicated and seek help
preparing the forms. It is important to understand federal law dictates that no one may help a
veteran in the preparation, presentation and prosecution of an initial claim
for VA benefits unless that person is accredited by the VA. The only exception
to this law is that any one person can help any veteran – one-time only – with
a claim. To help any veteran a second time requires accreditation.
VA
recognizes 3 types of individuals for purposes of accreditation.
Accredited attorneys
Accredited agents and
Accredited representatives
of service organizations. (Veterans Service Officers)
In
order to be accredited to help veterans with new claims, an individual desiring
this certification from VA must submit a formal application, must meet certain
character requirements and work history requirements and – except for attorneys
– must pass a comprehensive test relating to veterans claims and benefits.
There are also requirements for ongoing continuing education.
What Does It Mean to Help a Veteran with a Claim?
VA
interprets its prohibition on preparing, presenting and prosecuting a claim to
mean that talking to a veteran or a veteran's qualifying spouse or dependent
after that person has indicated an intent to file a specific claim for benefits
requires accreditation. Anyone can talk about veterans benefits in general
with any veteran and need not be accredited. The point at which discussion
narrows down to specific information about the veteran's service record,
medical conditions, financial situation including income and assets and other
issues relating to a claim specific to a veteran or dependent triggers
accreditation. According to VA, discussing the specifics of the claim means
that the veteran has expressed an intent to file an application for veterans
benefits, and at this point, the consultant helping the veteran must be
accredited.
This
bears repeating: An individual cannot advise a veteran or other eligible
beneficiary about that person's specific claim for VA benefits unless that
individual is accredited.
Using an Accredited Agent
The secret for receiving a successful award from the VA is
not in filling out the form but in knowing what documents and evidence must be
submitted with the application. Knowing the secrets for a successful award –
with the special case of long term care recipients – is 95% of the battle. A
knowledgeable, accredited consultant can provide information to shorten the
VA’s decision window of 6 to 12 months to possibly 3 or 4 months.
At Idaho Estate Planning we understand how to maximize the
benefit or avoid a denial. We can also provide guidance for meeting the asset
test. We provide the best strategies for reallocating assets through trusts or
income conversions to allow for the best possible accommodation of assets for
beneficiaries thus avoiding or reducing taxes, family disputes and Medicaid
penalties.
We are VA Accredited and we know how to help you
get the benefits you earned through your greatly appreciated service to our
country. To secure your peace of mind as well as
your family's future, get started now. Remember, good
planning is no accident.
We have another installment in our series of favorite blogs from the past. Here is part of a blog from June of 2010. The information is still very valuable.
An online article from FamilyDoctor.org
outlines some common symptoms in recognizing dementia.
"Dementia causes many problems for
the person who has it and for the person's family. Many of the problems are
caused by memory loss. Some common symptoms of dementia are listed below. Not
everyone who has dementia will experience all of these symptoms.
Recent memory loss. All
of us forget things for a while and then remember them later. People who
have dementia often forget things, but they never remember them. They
might ask you the same question over and over, each time forgetting that
you've already given them the answer. They won't even remember that they
already asked the question.
Difficulty performing familiar tasks. People who have dementia might cook a meal but
forget to serve it. They might even forget that they cooked it.
Problems with language. People who have dementia may forget simple words
or use the wrong words. This makes it hard to understand what they want.
Time and place disorientation. People who have dementia may get lost on their
own street. They may forget how they got to a certain place and how to get
back home.
Poor judgment. Even a person who doesn't have dementia might get
distracted. But people who have dementia can forget simple things, like
forgetting to put on a coat before going out in cold weather.
Problems with abstract thinking. Anybody might have trouble balancing a checkbook,
but people who have dementia may forget what the numbers are and what has
to be done with them.
Misplacing things. People
who have dementia may put things in the wrong places. They might put an
iron in the freezer or a wristwatch in the sugar bowl. Then they can't
find these things later.
Changes in mood. Everyone
is moody at times, but people who have dementia may have fast mood swings,
going from calm to tears to anger in a few minutes.
Personality changes. People who have dementia may have drastic changes in
personality. They might become irritable, suspicious or fearful.
Loss of initiative. People
who have dementia may become passive. They might not want to go places or
see other people."
Dementia is caused by change or
destruction of brain cells. Often this change is a result of small strokes or
blockage of blood cells, severe hypothyroidism or Alzheimer’s disease. There is
a continuous decline in ability to perform normal daily activities. Personal
care including dressing, bathing, preparing meals and even eating a meal
eventually becomes impossible.
The Alzheimer’s Organization reports
that 5.3 million Americans suffer from Alzheimer’s disease, the most common cause
of dementia. They also report that there are 10.9 million unpaid caregivers
helping those afflicted by the disease. In 2000, there were an estimated
411,000 new (incident) cases of Alzheimer’s disease. For 2010, that number is
projected to be 454,000 new cases; by 2030, 615,000; and by 2050, 959,000. To
read the full report, visit www.alz.org.
In the beginning, family members find
part time caregivers for their loved one. At first, loved ones need only a
little help with remembering to do daily activities or prepare meals. As
dementia progresses, caregiving demands often progress to 24 hour care. Night
and day become confused and normal routines of sleeping, eating and functioning
become more difficult for the patient. The demented person feels frustrated and
may lash out in anger or fear. It is not uncommon for a child or spouse giving
the care to quickly become overwhelmed and discouraged.
Here is another in our "Greatest Hits" series of blogs. This one was first published in June of 2010.
Being In Control
Perhaps the most important goal of any estate plan is to allow the client to
maintain control. Most of our clients here at Idaho Estate Planning are very
intent on “being in control” as long as possible. They want to make their own
decisions about whether to go into a “facility” or stay in their house.
(Usually the choice is to stay at home as long as possible.) However, the
ability to be in control and stay at home is challenged constantly.
Some of the challenges to
being in control consist of those disabilities we all fear: Alzheimer’s
disease, dementia, other mental challenges and numerous physical disabilities.
The biggest question becomes, “How do I maintain control if I suffer one of these
disabilities?” While these situations are varied (and extremely difficult),
there are some basics that will allow you to exercise control, that is, allow
you to voice your opinion is such a situation.
Durable Power of Attorney for
Health Care
First and foremost, you need to execute a Durable Power of Attorney for Health
Care. This is a legal document that allows you to personally choose who will
make decisions or give instructions if you are not able to, whether from mental
or physical disability. This is an extremely important document to have in your
estate plan. It is, therefore, extremely important to carefully consider who
you want giving instructions to health care providers on your behalf.
Typically, this is a spouse.
But, if the spouse is unable to
fulfill this responsibility, who will take over? This requires great thought
and consideration. Who has the skill set to take on this responsibility? Who
understands what you want to have happen? These are not easy decisions and
should not be undertaken lightly.
Living Will
A Living Will is a form created by statute that allows you to express a
preference if it is determined by two doctors that you are in a terminal state
and being kept alive by artificial life support measures. The Living Will also
applies if you are determined to be in a persistent vegetative state (some call
this being “brain dead”). The Living Will allows you three basic choices: 1) to
forego all life preserving efforts being applied whether artificial or natural;
2) to forego any life preserving efforts applied; or 3) only natural efforts
applied including food or water or both. In reality, while these situations do
occur, they are rare.
The POST
The Physician Orders for Scope of Treatment or “POST” is a more detailed legal
document that allows you be very specific in how treatment, whether artificial
or natural is applied to you. You can choose to forego intravenous feeding or
the use of a feeding tube. You can choose to forego intubation to keep you
breathing. You can choose to forego “aggressive methods” to preserve your life.
Each of these is an option that you choose.
HIPAA
If your Living Will or POST is needed, it is your Health Care Agent as
established in your Power of Attorney for Health Care who gives the
instructions to the health care professionals. These documents, then, work
together to help you maintain control of your own situation. One more document
that makes all the others work better is the HIPAA release. This is an
informational release in which you give the health care professionals
permission to provide your health information to your Health Care Agent or
other family members. In essence, the Power of Attorney allows your Health Care
Agent to talk to the doctor. The HIPAA release allows your doctor to talk to
your Health Care Agent.
These, then, are the minimum
documents you need to make sure your wishes for health and medical care and end
of life decisions are honored. Now is the time to address these concerns and
plan for the most difficult of times. Once it starts raining (or hailing as it
did yesterday), it’s a little late to start fixing the roof. Once you are
incapacitated, it’s too late to do this planning.
At Idaho Estate Planning,
we understand the challenges faced by elder Americans. We have the experience
and expertise to help you maintain your options and protect yourself as well as
your loved ones now and into the future. Remember, good
planning is no accident.
Here is another in our "Greatest Hits" series of blogs. This one was first published in November of 2011.
While medical research and advocacy
are vital causes to uphold, Alzheimer’s is a disease that you and your loved
ones might have to face directly, if you have not already. With the reality of
Alzheimer’s or dementia striking close to home, some understanding and prior
planning can help you in terms of the extensive economic toll and the unique
legal ramifications.
According to a recent
Forbes article, Alzheimer’s is as widespread as it is demanding. Consider
this: Another American citizen will develop Alzheimer’s every 69 seconds. The
symptoms are oftentimes subtle, at least initially. Some estimate that more
than 13 million Americans will have the disease by 2050 and run up as much as
$1 trillion in costs. Because of the progressive nature of the disease, most of
the costs and problems won’t develop until later on. Nevertheless, significant
planning must take place at the time of diagnosis, if not anticipated
beforehand.
So, what is the scope of this
“significant planning”? First, you will need to secure medical care, both for
now and for the future. That means fundamental financial planning needs to be
addressed, to include securing government benefits such as Medicaid and Social
Security Disability Insurance. Second, because of Alzheimer’s progressive
cognitive degeneration, estate planning must occur early in the process to
secure and protect family assets. Thorough estate planning should include
durable powers of attorney and advance health care directives. These
documents create a plan for your future when you may no longer be able to
manage your finances or make decisions regarding your health or personal care
due to mental incapacity. With these documents, you identify a
trusted person to act on your behalf and in your best interests to make
financial and health care decisions for you.
Establishing durable
powers of attorney and advance health care directives while you are in good
mental and physical health will allow you to avoid the prospects of a
court-supervised and expensive conservatorship.
Fundamentally, it’s important to
understand that Alzheimer’s is not the same as other diseases. Through it all,
competent counsel will be necessary to properly assess the needs and
possibilities, as well as to ensure that everything is in place when needed
most. At Idaho Estate Planning we have the experience and expertise to help you
maintain your options and protect yourself as well as your loved ones now and
into the future. We have a network of resources throughout the Treasure Valley
ready to help us meet your needs. Remember, good planning is no accident!
This is not a new topic for us as a quick scan through our past blogs will show. I came across a nice article from Florida with some good pointers I would like to share. The article titled Scams
on the Elderly: Senior Care Tips for Fraud Prevention is a good read.
The article gives a few pointers on helping our parents or other loved ones avoid Elder Abuse.
Regularly evaluate how things are going
for your loved one. Hire a geriatric care manager to help you keep an eye on things from
a distance, get a periodic evaluation and check in with calls and in-person
visits. Continual communication can help you spot issues, as well as give your loved
one opportunities to mention concerns. A professional assessment (and ongoing evaluations)
can help determine when it may be necessary to assist with managing finances and
household maintenance. Contact us
to learn more about geriatric assessments and other eldercare assistance services.
Share information about popular scams
with your loved one and educate on issues such as giving out personal information.
Help set up a dignified "out"
for solicitations. Perhaps your loved one can say they have their "advisor"
review everything before they make decisions (whether that really is some type of
professional advisor, or running it by you). You might even suggest/share that you
do the same yourself, as it is easy for anyone to get caught up in scams and some
time to think about purchases and decisions helps.
Determine
ways to simplify finances and possibly consider a system for oversight (regular
review/access by a trusted professional or family member).
At Idaho Estate Planning,
we understand the challenges faced by elder Americans. We have the experience
and expertise to help you maintain your options and protect yourself as well as
your loved ones now and into the future. Remember, good
planning is no accident.
I wanted to share an older blog with you. Even though it was originally posted a couple years ago it still rings true. Dollar amounts for the benefits have changed so you'll see the new amounts next to the old. Enjoy!
Looking for a way to help Mom and Dad pay for home care or
assisted living? Perhaps you are their caregiver. Wouldn't it be nice to
receive some compensation to help you provide their care? There is financial
help available for senior veterans and their spouses.
For veterans who served during a time of war or for their
surviving spouses, veterans benefits such as the Veterans Aid &
Attendance Pension will pay additional income to cover long term care costs.
The great news about this program is that VA will allow veterans' households to
include the annual cost of paying any person such as family members, friends or
hired help for care when calculating the Pension benefit.
Pension can provide an additional monthly income of up to
$1,949 (Now $2,054) a month for a couple, $1,644 (Now $1,732) a month for a single veteran or $1,056 (Now $1,113) a
month for a single surviving spouse of a veteran. This money can be used to
help pay the cost of home care, adult day services, assisted living or nursing
home services.
A family member can be considered an in-home attendant, but
that family member has to be paid for services duly rendered. There is
potential for fraud here where a family member may move into the home and
ostensibly receive payment as a caregiver but not actually provide the level of
care paid for. Documentation for this care must be provided to VA, and it is
reasonable for VA to question whether the services being purchased from a
family member living in the household are legitimate. Such arrangements should
be extensively documented and completely arm's-length.
The care arrangements and payment for home care must be made
prior to application and there must be evidence that this care is needed on an
ongoing and regular basis. We recommend a formal care contract and monthly
invoice billing for services. Money must exchange hands and there must be
evidence of this. All of this documentation must be provided as proof to VA
when making application for the pension benefit. Costs for these services must
be unreimbursed; meaning these costs are not paid by insurance, by
contributions from the family or from other sources. Even though the family
member being paid for services cannot reimburse the veteran household directly,
the family may pay the bills for the veteran household. This indirect form of
support is allowed.
In 2007 the AARP released a study on Caregivers in America
in which they reported, “Many caregivers make direct out-of pocket expenditures
to help support a family member or friend with a disability. Non-spousal caregivers
were asked how much money they spend in a typical month for groceries,
medicines, or other kinds of cash support for the care recipient. About half of
caregivers contributed financially, spending an average of $200 per month ($2,400
per year). Caregivers who had the greatest level of caregiving burden reported
spending $324 per month ($3,888per year) out of pocket.”
The study went on to say, “In addition to direct
out-of-pocket expenditures made by caregivers, many caregivers experience other
significant economic losses. The majority of caregivers in the United States
(59 percent) are employed either full or part time. The financial impact of
caregiving on caregivers in the workforce can involve multiple aspects of their
income security, including their wages, job security and career paths, and
employment benefits such as health insurance and retirement savings.
Those family members acting as caregivers for America’s
veterans and/or their spouses can help reduce the stress on their own and their
families emotional, social and financial well being by making use of the VA
Pension Benefit.
The secret for receiving a successful award from the VA is
not in filling out the form but in knowing what documents and evidence must be
submitted with the application. Knowing the secrets for a successful award –
with the special case of long term care recipients – is 95% of the battle. A
knowledgeable, accredited consultant can provide information to shorten the
VA’s decision window of 6 to 12 months to possibly 3 or 4 months.
At Idaho Estate Planning we understand how to maximize the
benefit or avoid a denial. We can also provide guidance for meeting the asset
test. We provide the best strategies for reallocating assets through trusts or
income conversions to allow for the best possible accommodation of assets for
beneficiaries thus avoiding or reducing taxes, family disputes and Medicaid
penalties.
We are VA Accredited and we know how to help veterans get
the benefits they have earned through their
greatly appreciated service to our country. Remember, good planning in
no accident.
An article in USA Today last year reported that on a given night, more than 75,000 veterans (male and female) are living homeless on the streets of their cities. Nearly half (40%) of all homeless males are veterans. The homeless are often looked down upon in American society. They are often seen as lowly beggars, leeching off of the system. The true tragedy is when we see our brave, courageous, strong soldiers fall to homelessness. What we often don't understand is what would cause our protectors, our soldiers, to give up on ambition and dreams to live an unfulfilled life on the corner of Main Street. We don't understand this because we will never know, as our soldiers did, the trauma of war.
Veterans have to deal with high rates of Post-Traumatic Stress Disorder and often may have traumatic brain injuries or sexual trauma. Due to their experiences in war, Veterans may often want to be secluded and are more likely to live unsheltered and outdoors. According to the United States Interagency Council on Homelessness, Veterans are also most likely to experience long-term, chronic homelessness.
Generally, a homeless person is expected to have not graduated from high school, but studies show that 85% of homeless veterans have completed high school or received a GED. On the other hand, only 56% of non-veteran homeless have completed high school. Furthermore, our homeless veterans were not necessarily the 'problem soldiers' in the army. Eighty-nine percent of homeless veterans received Honorable Discharges and 67% served in the military for three or more years.
These men and woman risked their lives for our country. They gave of their time and their service honorably and without question. And now, nearly half of them are living alone on the streets, not knowing how to get the help they deserve.
Our veterans deserve better. At Idaho Estate Planning we understand the challenges faced by our older veterans especially when it comes to long term care needs. For many of America’s elderly that find
themselves struggling to meet growing health costs a solution comes in the form
of an underutilized VA benefit. For veterans who served during a time of war or
for their surviving spouses, the Veterans Aid & Attendance Pension will pay
additional income to cover long term care costs. Pension can provide an
additional monthly income of up to $2,053 a month for a couple, $1,731 a month
for a single veteran or $1,112 a month for a single surviving spouse of a
veteran. This money can be used to help pay the cost of home care, adult day
services, assisted living or nursing home services.
We are VA Accredited and we know how to
help veterans get the benefits they have earned through their greatly
appreciated service to our country. Remember, good planning is no
accident.
With the nation's senior population growing there is more focus on programs to help seniors remain healthy and active as they age physically, mentally and emotionally.
“Most adults spend years looking forward to a healthy retirement. Whether you're still planning your retirement or you're ready to make the change, there's much you can do to ensure a healthy retirement.
Start by learning what to expect as you get older, from changes in muscle mass and sex drive to vision and cardiovascular health. After all, your dreams for a healthy retirement likely depend on good health. Then consider ways to maintain a healthy retirement, from reducing your risk of falls and staying safe behind the wheel to improving your memory.
Another important aspect of healthy retirement is long term care. Consider your options now — including type of long term care, as well as how to pay for it — to help prevent hasty decisions later.“
A new population of seniors and those nearing senior status are looking for some type of financial support to maintain their quality of life and pay for eldercare during their final years of life. The need for some form of long term care will happen to 3 out of every 5 people. Paying for this care can be devastating for those who are not prepared. For more information on attaining a healthy retirement contact
Idaho
Estate Planning and schedule a consultation. Remember, good planning is no
accident.
You can also check out our You Tube Channel, especially this video on Long Term Care.
