Should I deed my property to my kids?

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The Most Common Do-It-Yourself Estate Planning Mistake

By Attorney Ted Brown


Answer: No. Not unless you (and your children) understand the risks and drawbacks.

In an effort to protect their real estate from nursing home or from estate taxes, many people consider deeding their real estate to their children. This is a very risky strategy for a variety of reasons.

Taxes – By transferring real estate to a child while you are still alive can create a future tax time-bomb for that child.

A gift of property during the owner’s lifetime results in what is known as a carry-over in basis. Basis is the IRS term for the value of the property when you received it, being either the price you paid for it or the value it was worth when you inherited it. Basis is important when the property is sold. The sale price, minus your basis, equals your capital gain which is taxable at roughly 29% between Federal and State taxes.

For example, if you buy a piece of land for $100,000 and you sell it for $225,000, you have a capital gain of $125,000.

So if you have a piece of property that was worth $150,000 when you bought it and now it is worth $400,000, you have a lot of taxable appreciation. If you deed that property to a child, you pass on that taxable appreciation. Moreover, if the child holds onto the property for another 20 years and the value increases to $750,000 then they will owe tax on a $600,000 gain when they sell. This could result in $174,000 being lost to taxes.

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Seniors Beware- Consumer Alert- Potential Scams

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By Roy Whited

This information was taken in part from a recent newsletter from the Ohio Department of Insurance. Columbus- Ohio Lieutenant Governor and Insurance Director Mary Taylor have issued a consumer alert after reports have surfaced that telephone con artists are using the confusion surrounding the Affordable Care Act (ACA) to attempt to steal Ohioans personal information. The scammers are claiming to be representatives of a health insurance exchange, Medicare, or a “government program”.

Taylor said, “ No one from an official government program should be calling you requesting personal information. If you are contacted by a suspicious caller, do not provide your personal information, including your Medicare, Social Security and bank account numbers.” [Read more...]

Cautions for Family Caregivers

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By: Attorney Nathan Simpson

As seniors need more care, many are choosing to move in with their adult children in order to avoid a Nursing Home stay. This is beneficial for both comfort and financial reasons. Because of the care provided by the adult children, it is common to see that the senior wants to help their child out with bills, food expenses, or even financial compensation for the time and care they provide.

While this arrangement can be beneficial for everyone involved, it can raise issues with regard to eligibility for long-term care benefits. If the proper procedures are not followed, these payments may cause the State to refuse coverage for Nursing Home bills that would otherwise be covered. Handling these payments incorrectly may also interfere with the ability of a Veteran to receive benefits they may be entitled to. Also, many people do not realize that there may be tax consequences for these payments.

If you or a family member wish to set up a family caregiver arrangement, please contact Cooper, Adel & Associates to set up an appointment with an Elder Law Attorney.

 

Four Threats to your Retirement Income?

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By Roy Whited

The following came in part from information posted on Yahoo Finance.

“Just Explain It”, April 18, 2013. What four events are most likely to drain your retirement savings?

#1 Medical expenses. These shouldn’t be unexpected, but they’re probably the number one threat to a retiree’s financial security. Most people don’t plan adequately for this. And a lot of retirees don’t understand that Medicare doesn’t pay for costs related to a long-term stay in a nursing home. With the cost of a nursing home stay reaching to $70,000 – $100,000 a year, this can quickly deplete the retirement nest egg for a lot of retirees. [Read more...]