Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Income Options for Seniors Running Out of Money

Personal_Finance / Pensions & Retirement Sep 21, 2015 - 06:01 PM GMT

By: Investment_U

Personal_Finance

Marc Lichtenfeld writes:Many people remember fondly when their parents gave them allowances for doing chores around the house or maybe a few bucks for their birthdays.

However, with over half of today’s seniors unable to pay for their basic needs, more and more adult children are taking care of their parents’ finances.


There are several ways to do it, each with certain advantages and disadvantages.

Gift the Money

The easiest way to help your folks out financially is to simply give them the money. Think of the $10 you got for Christmas 40 years ago as a long-term loan. Now you’re paying it back... with interest.

There is a limit on what you can give them before they run into gift taxes. Each person can give a parent $14,000 per year. In other words, a married couple could give one parent $28,000 or a mother and father $56,000 per year before Uncle Sam starts putting his hand out.

You can also pay some of your parents’ bills, although that might be considered a gift too. So before you send your parents on that $75,000 around-the-world cruise, talk to a tax professional.

In some cases, you can pay for your parents’ medical bills in a way that won’t be considered a gift and you might even be able to take it off your taxes as a qualified medical expense.

However, be careful: If your parents are on Medicaid or receive other government benefits, your gift could make them ineligible for those benefits, so be sure that it makes sense ahead of time.

Upward Trusts

An upward trust is usually set up by a child for his or her parent. It’s a way of giving the parent the income from a lump sum that the parent will use for living expenses. They may or may not be given the right to draw on the trust’s principal.

You can specify that the money be used for only certain expenses, such as housing or healthcare. That way the parent can’t send the money to a Nigerian prince.

David Conover, president and CEO of EverBank Wealth Management, an Oxford Club Pillar One Advisor, stated that an upward trust is similar to any other irrevocable trust, like one set up for a disabled child, for example.

However, he indicated that upward trusts come with a caveat similar to that of cash gifts, advising to “make sure the trust doesn’t disqualify the parent from receiving Medicaid, veterans’ or any other benefits.”

Conover added that wealthy individuals who set up these trusts for their parents often have the trust reverted to their children’s names after the parent dies in order to obtain estate tax benefits.

Medicaid Trust

In order to qualify for Medicaid, a senior essentially has to be broke. Some seniors decide they don’t want the nursing home to get all of their money; they’d rather leave it to their kids and grandkids, so they set up a Medicaid Trust. The move leaves the seniors with very few assets, but qualifies them for Medicaid.

There are a few things to be aware of before sheltering money to get free care from the government. In most states, the trust has to have been in effect for five years. You can’t set up a trust and then claim the following week that your mom or dad has no cash so that they can live off the taxpayers. And a Medicaid trust can be expensive to set up. As much as $10,000 versus $1,500 to $2,500 for most other trusts.

Lastly, are you sure Medicaid is the best option for your parent? You have a lot less control over which nursing home they’ll wind up in if you are relying on the government to pay for it. And a Medicaid facility might not be as nice as one that you pay for out of pocket. (Steve McDonald touched on this just a few weeks ago.)

Insurance Policies

A problem facing a lot of older couples is, when one spouse gets sick, it drains their wealth and the surviving spouse has nothing left to live on.

One solution is a hybrid long-term care/life insurance policy. The policy allows sick patients to receive a tax-free monthly benefit of up to $9,900, which can offset the astronomical costs of a nursing home. The long-term care benefit reduces the death benefit.

So, if a husband with a $500,000 policy got sick and received the $9,900 monthly benefit for two years, he would use $237,600. At his death, the wife would receive a tax-free life insurance benefit of $262,400.

Evan Belaga, a certified financial planner and Oxford Club Pillar One Advisor, says these combination policies “create instant wealth by leveraging your money.” For example, a $50,000 lump-sum payment, or $375 monthly premium, can enable you to receive the $500,000 policy mentioned above.

Rather than gifting the money or setting up a trust, a child could pay the premium on this type of policy and know that, should a parent fall ill, their long-term care expenses will be met and the surviving parent will also have a nest egg to fall back on.

These are complex issues. Many people would gladly repay their parents for all they have done. There are options to help your parents if you are able. Look into the ideas above to find out which makes the most sense for you and your family. Make sure you talk with an experienced professional who is knowledgeable about elder care laws and topics, particularly when it comes to trusts, taxes and insurance.

Good investing,

Marc

Source: http://www.investmentu.com/article/detail/47660/options-for-parents-out-of-money-upward-trusts-medicaid#.VgBTS03bK0k

http://www.investmentu.com

Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in