»  Pay Attention to Year-End Estate Planning, Says New Jersey Estate Planning Firm

Pay Attention to Year-End Estate Planning, Says New Jersey Estate Planning Firm

Moorestown, NJ (Law Firm Newswire) November 9, 2012 - The year 2012 is quickly coming to a close and the New Jersey estate planning attorneys at Begley Law Group, PC, have some suggestions that should be considered before the year's end.

Medicare Advantage

There is an open enrollment period permitting Medicare recipients to disenroll from traditional Medicare and enroll in a Medicare Advantage Plan (Medicare Part C) from October 15, 2012 until December 7, 2012. During the open enrollment period, Medicare beneficiaries may choose original Medicare, or they may choose from among many Medicare Advantage programs. Many beneficiaries choose to enroll in Medicare Advantage, because they do not need a Medicare Supplement.

Individuals with pre-existing conditions who have been enrolled in Medicare Part D for more than six months are no longer eligible to obtain a Medicare Supplement. They may enroll in Medicare Advantage and get the same, or similar coverage, during the open enrollment period. However, the traditional Medicare program continues to be the choice for most beneficiaries. Many beneficiaries have experienced difficulties with Medicare Advantage plans and appeals, and many plans have pulled out of the Medicare market entirely. In addition, Medicare Advantage plans are constantly changing their benefit packages and increasing payments.

The Center for Medicare Advocacy recommends the following guidelines before enrolling in a Medicare Advantage plan:
• Review coverage carefully.
• Determine what the plan pays for.
• Does the plan include Part D prescription coverage?
• Determine what plan services are provided at additional cost.
• Try to assess the plan’s stability.
• Ask about plan physicians and determine if your physicians are in the plan.
• Determine how to use the plan’s complaint system and how appeals and grievances are handled.

Under traditional Medicare, a beneficiary can go to any provider who accepts Medicare. Under Medicare Advantage, the provider must be included in the plan. Traditional Medicare has deductibles and coinsurance costs. These can be covered by a supplemental policy. Medicare Advantage covers many of the gaps that Medicare Supplement policies cover.

Gifting

Individuals with large estates have an opportunity through December 31, 2012, to make a gift of up to $5,120,000 without payment of federal gift tax. This would then remove those assets from the individual’s estate for federal estate tax purposes. Unless Congress acts, this exemption is scheduled to be reduced to $1,000,000 for both federal gift and estate tax on January 1, 2013. Most commentators believe that Congress will eventually act, but this is uncertain at this time.

Capital Gains

Currently, the capital gains tax for long-term capital gains is very advantageous. The long-term capital gain is the gain on an asset that has been held for more than one year. Currently, there is a 0% rate on capital gains, if total income (including capital gains income) places someone in the 10% or 15% tax bracket. There is a 15% federal capital gains tax rate, if someone’s total income (including capital gain income) places them in the 25% tax bracket or higher. Most states do not have separate capital gains tax rates; they tax capital gains as ordinary income.

Beginning January 1, 2013, the federal tax rate on long-term capital gains will be 20% (or 10% if a taxpayer is in the 15% tax bracket). Also beginning on January 1, 2013, capital gain income will be subject to an additional 3.8% Medicare tax. In determining whether to realize capital gains in 2012 or 2013, this change should be considered.

Medicare Tax

Currently, there is a federal tax rate of 2.9% of wages received by an employee and on business or farming income earned by self-employed individuals. Beginning January 1, 2013, the Medicare tax will be increased to 3.8% and expanded to cover both wage income and investment income for higher income individuals.

The Medicare tax is expanded in 2013 for higher income individuals, and the income subject to a Medicare tax will include investment income. An individual might want to consider gifting income-producing assets to children or other family members who are not subject to the additional Medicare tax. The tax only affects single taxpayers with modified adjusted gross income (MAGI) of $200,000 or more, or married taxpayers with an MAGI of $250,000 or more, or married taxpayers filing separately with MAGI in excess of $125,000, and trusts and estates that file their own returns and have MAGI in excess of $11,650.

To learn more about Begley Law Group call 1.800.533.7227 or visit www.begleylawgroup.com.

Begley Law Group, P.C.
509 S. Lenola Road, Building 7
Moorestown, NJ 08057
Tel: 800.533.7227


  • THE PROBLEM WITH INCOME ONLY TRUSTS IN MEDICAID PLANNING
    by Thomas D. Begley, Jr., CELA   Purpose Income Only Trusts are a means by which seniors transfer assets to a trust rather than to their children. Seniors tend to view transfers to trusts as protection, while they tend to view transfers to children as gifts. Trusts provide them with a sense of dignity and security. Requirements Income only trusts are permitted by OBRA-93.[1] They must be irrevocable. The trust instrument provides that the grantor or the grantor’s spouse receive all of the income from the trust, but has no access to principal. Design of the Trust In order to [...]
  • RETIREMENT ACCOUNT TRUSTS – Part 2
    by Thomas D. Begley, Jr., CELA Separate Trust A separate trust designed specifically to control the retirement account is recommended. It is best that the trust not be part of a revocable living trust or any other trust. A “standalone retirement trust” is preferred. Professional Trustee When an IRA is paid to a standalone retirement trust or any other trust, it is important to consider a professional trustee. The rules regarding inherited retirement accounts are complex and family member trustees are often unfamiliar with them. This could cause a loss of important tax benefits. Most family members do not understand [...]
  • Barkann Foundation Lunch 2016
    Begley Law Group was honored to attend the Barkann Foundation Lunch on April 12, 2016 at the Capital Grille and offer our support to the Barkann Family Healing Hearts Foundation. The Barkann Foundation provides financial aid to families who are in need, due to recent adversity or tragedy. Whether it be the sudden death or illness of a parent, the long term illness of a child, or the loss of a home or property due to fire, flood or disaster, they strive to help families bridge the gap until they can seek long term stability to lessen the financial burdens due to [...]

See other news sources publishing this article. BETA | Tags: , , , , , , , , , , , ,



Get headlines from Law Firm Newswire sent right to your inbox.

* indicates required