When completing a Medicaid spend-down, one asset that may cause hesitation is how best to spend down the client’s IRA without incurring large tax consequences. In states where an IRA is considered a countable asset for Medicaid purposes, the solution may be converting the existing IRA to a tax-qualified MCA. Learn More: What … Continued
Many people may misinterpret the Gift Tax Exclusion and assume, incorrectly, that the amount they gift to a loved one will not have any effect on their Medicaid eligibility. As you are planning with your client, you will want to make it clear that even if they are within the Gift Tax Exclusion, that they … Continued
For those of you not familiar with the term “Name on the Check” rule, it is a common guideline used by Medicaid in determining who owns income. If a check is made payable to a particular individual, that individual is considered the owner of the income. This guideline can be quite advantageous in cases involving … Continued
In 2010 Ms. Heffron-Clark and her husband filed a Chapter 7 bankruptcy petition. They identified the inherited IRA Ms. Heffron-Clark received from her mother as exempt from the estate in that it was “retirement funds” under 11 U.S.C. § 522(b)(3)(c). Respondents, the bankruptcy trustee, and unsecured creditors of the estate objected to this exemption. … Continued
An Intentionally Defective Grantor Trust (“IDGT”) is an irrevocable trust created so that the assets of the trust are attributable to the grantor for federal income tax purposes, but not for gift, estate, or generation skipping transfer tax. The “defect” is that the grantor reports all of the income, deductions, and credits associated to the … Continued
Internal Revenue Code (“IRC”) § 121 provides that a taxpayer may exclude from taxable income up to $250,000 of the gain realized on the sale or exchange of a principal residence, provided that the taxpayer owned and used the home as a principal residence for periods aggregating at least two years during the five … Continued
Recently, I worked on a case involving an individual who wanted to put his $90,000 IRA into a Self-Settled (d)(4)(A) Trust. Even though I could get the IRA transferred into a tax-deferred annuity owned by the trust, there was a question as to whether the transaction involved a taxable event. To eliminate the question, the … Continued
The income taxation of annuity contracts is governed by Section 72 of the Internal Revenue Code (“IRC”). In the 1980s, as a result of the tax simplification and reform measures, the code section went through extensive revisions. The legislation was intended to encourage the use of tax-deferred annuity contracts as long-term retirement savings vehicles. … Continued
A private letter from the Internal Revenue Service explains that meals and lodging costs for an assisted living stay may be deducted as medical expenses if the individual is in the facility for qualifying medical reasons. The letter explains the types of conditions that would meet the standards in order to qualify these costs … Continued