What resources can you refer me to for long-term care financial help? My 84-year-old mother needs assisted living or nursing home care, but we do not have a lot of money and she does not have long-term care insurance.

If your mother does not have a long-term care insurance policy there are several resources you should look into that may help pay for her care depending on her particular circumstances.

Medicaid: The first thing to understand is that Medicare (the government health insurance program for seniors 65 and older and individuals with disabilities) does not cover long-term care. This includes nursing home care, the costs of assisted living facilities and home aide services (unless your mom is receiving skilled nursing or therapy services too). Medicare only provides limited short-term coverage, which includes up to 100 days for skilled nursing or rehabilitation services after a hospital stay.

However, Medicaid (the joint federal and state program that covers health care for individuals who have very low income) as it currently stands, does cover long-term care facilities and in-home care. To be eligible for coverage, your mother must have a very low level of income. Her countable assets cannot be more than around $2,000, including investments.

Note that most people who enter a nursing home do not qualify for Medicaid at first, but pay for care out-of-pocket until they deplete their savings enough to qualify. Contact your state Medicaid office (see Medicaid.gov) for eligibility details.

Veterans aid: If your mom is a wartime veteran, or a spouse or surviving spouse of a wartime veteran, there is a benefit called “Aid and Attendance,” which can help pay between $1,153 and $2,127 a month toward her long-term care.

To be eligible, your mom must need assistance with daily living activities like bathing, dressing or going to the bathroom. In addition, her yearly income must be under $13,836 as a surviving spouse, $21,531 as a single veteran or $25,525 as a married veteran (after her medical and long-term care expenses). Her assets must also be less than $80,000 excluding her home and car.

To learn more, see Benefits.VA.gov/pension or contact your regional Veterans Administration office or local veterans service organization. Call 800-827-1000 for contact information.

Life insurance: If your mom has a life insurance policy, find out if it offers an accelerated death benefit that would allow you to receive a tax-free advance to help pay for her care.

Another option to consider is selling her policy to a life settlement company. These are companies that buy life insurance policies for cash, continue to pay the premiums and collect the death benefit when she dies. Most sellers generally get four to eight times more than the policy cash surrender value.

If she owns a policy with a face value of $100,000 or more and is interested in this option, ask for quotes from several brokers or life settlement providers. To locate some, use the Life Insurance Settlement Association member directory at LISA.org.

Tax breaks: If you are helping out your mom financially, you may also be able to claim her as a dependent on your taxes. This could potentially reduce your taxable income by $4,050, which you could use for her care. To qualify, you must pay at least half of your mom’s yearly expenses and her annual income must be below $4,050, excluding Social Security. For more information, see IRS Publication 501 at IRS.gov/pub/irs-pdf/p501.pdf.

If you cannot claim your mom as a dependent because her income is too high, you may still be able to get a tax break if you are paying at least half her living expenses and they exceed 7.5% of your adjusted gross income. These expenses include her medical, dental and long-term care costs. You can include your own medical expenses in calculating the total. See the IRS Publication 502 (IRS.gov/pub/irs-pdf/p502.pdf) for details.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Showand author of “The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Grand Central Inc., Newton’s local Senior Center, established a fund with Central Kansas Community Foundation (CKCF) as part of a strategy to ensure long term sustainability of this local charity.

Grand Central Inc. was established in1987 and has a mission to serve the needs and interests of Newton area citizens age 55+ as part of a range of opportunities available to this population.

With an aging adult population Grand Central Inc., like other organizations serving seniors, is positioning themselves for organizational longevity. In 2016 more than 360 participants engaged in more than 15,000 visits. Already in 2017 over 590 participants have been served. Serving more is expected to continue.

During the signing of the Memorandum of Understand with Angie Tatro, Executive Director of CKCF, Betty Lanzrath, Grant Central Inc. Board Chair said, “Grand Central Inc.’s Board of Directors goal in collaboration with CKCF seeks to preserve our commitment to the senior population.” She went on to say this partnership will allow Grand Central Inc. to provide services to enrich, engage and enlighten those we serve now and in the future.

The economic climate as it relates to state and federal funding for charities has brought growing recognition to not-for-profit agencies to see opportunities for private donations. This new fund will do just that. The purpose of this fund is to provide a resource to Grand Central for general operational needs if needed but more importantly would be an accessible resource for building maintenance needs and other unexpected expenditures that an annual budget often doesn’t plan for.

If you would like to contribute to the Grand Central Inc. Fund please make your check out to The Grand Central Inc. Fund and mail it CKCF, 301 N. Main, Suite 200, Newton, KS 67114. Or contact CKCF for other non-cash gift options at 316-283-5474. Leslie Runnalls, Director of Grand Central can also be reached at 316-283-2222.

In IR 2017-123, IRS Commissioner John Koskinen reported significant success in reducing personal identity theft. From January to May of 2016, 204,000 taxpayers reported being victims of identity theft. However, for the first five months of 2017, the number of identity theft victims declined 47% to 107,000 taxpayers.

Koskinen stated, “The IRS, state tax agencies and the tax community have worked hard to turn the tide against tax-related identity theft. We are making progress in protecting individuals, but still have more work to do, especially in the business tax area and involving tax professionals. Continued lapses in simple security measures can happen in tax professional offices and other businesses as well as at home.”

As Koskinen observed, the news was different for identity theft involving business related tax returns. There were 10,000 reports of business returns with identity theft issues in the first five months of 2017. The number of similar incidents in 2016 was 4,000 for the full year. Cybercriminals continued to target tax professionals. Most of the fraudulent income tax returns were for corporations, trusts or estates.

Koskinen noted, “It is especially difficult to identify any tax return as fraudulent when criminals are using information stolen from tax preparers. The stolen data allows criminals to better impersonate the legitimate taxpayers.”

In the information letter, the IRS updated recommended steps for business protection against identity theft.

1. Education – Explain the dangers of phishing activity to all staff. Warn them to be especially wary of emails that claim to be from clients.
2. Software – Install and use excellent quality security software. Security software should automatically update each day.
3. Passwords – Use strong passwords. These will have multiple characters, upper and lowercase letters and numbers.
4. Encryption – Use appropriate encryption methods for sensitive data. Back up your data every day and retain backups off site.

“Big Six” Agreement on Tax Reform

In the midst of uncertainty about health care reform, on July 27 six leaders of the House, Senate and White House claimed agreement on the provisions of tax reform. The six leaders were House Speaker Paul Ryan (R-WI), House Ways and Means Committee Chair Kevin Brady (R-TX), Senate Majority Leader Mitch McConnell (R-KY), Senate Finance Committee Chair Orrin Hatch (R-UT), Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.

Their release stated, “We are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for insuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base. While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”

The stated goals of the group of six leaders are to reduce individual and business taxes “as much as possible.” There would also be lower rates on passthrough businesses, even though they are now dropping the plan for a border adjustment tax.

A key issue is whether or not there would be expensing of new equipment. Chairman Brady has been an advocate of the border adjustment tax as a way to pay for this provision. He stated, “That means that expensing is an enormous pro-growth provision. You get some the greatest bang for the buck in growth from allowing those business to have a zero tax rate on new investment. Unprecedented expensing means that we recognize the growth aspects. We are pushing towards more than it is in the tax code today, and as far as we can, because that will drive productivity, wages and economic growth.”

The statement did not explain whether or not it will be possible to find $1 trillion in new revenue to cover expensing. There is no specific reference to any tax increase.

Ways and Means Committee Member Lloyd Doggett (D-TX) published a release and highlighted the challenges facing Chairman Brady in drafting a bill without the border adjustment tax. Doggett stated, “By finally abandoning their ill-advised border adjustment tax, Republicans have created a trillion dollar hole in their plan.”

Editor’s Note: The border adjustment tax was very unpopular in the Senate. The challenge for Brady is to release a bill in September without this revenue. If he continues to plan to release a revenue-neutral bill, then there will have to be a limit to expensing and probable smaller rate deductions in business, personal and corporate taxes. It is unknown whether there still will be a plan to repeal both the alternative minimum tax and the estate tax.

Tax Reform and Giving to Colleges

On a July 20 webcast by the National Association for College and University Business Officers, Brian Flaven of the Council for Advancement and Support of Education (CASE) discussed the potential effect of tax reform on charitable giving to colleges and universities.

There are two provisions of the White House plan that may impact gifts. First, the top rates may be reduced. Upper-income donors in 2017 may save as much as 39.6% in federal taxes on their charitable gifts. If the top personal tax rate is reduced to 33%, their tax savings will be lower.

However the larger issue is the White House proposal to double the standard deduction. This change will simplify tax-filing for many Americans because they will no longer be required to itemize. The downside for nonprofits is that charitable gifts are the largest itemized deductions for many senior Americans.

Currently, about 30% of American taxpayers itemize. By itemizing deductions, taxpayers are able to claim and deduct their charitable gifts. If there is a new tax bill with a much larger standard deduction and repeal of deductions for state and local taxes, the number of itemizers may be reduced from 30% to as low as 5%.

Flaven notes, “We have really been encouraging the Administration and Congress to consider the universal charitable deduction as a way to help offset some of these unintended negative consequences on charitable giving that result from the doubling of the standard deduction and other aspects of tax reform.”

The CASE solution is to move charitable giving “above the line” and enable taxpayers to benefit both from charitable deductions and the standard deduction.

If the charitable deduction were moved above the line, CASE predicts that there would not be a decrease in giving, but there could be an increase of $4.8 billion in charitable giving each year.

Applicable Federal Rate of 2.4% for August — Rev. Rul. 2017-15; 2017-32 IRB 1 (19 July 2017)

The IRS has announced the Applicable Federal Rate (AFR) for August of 2017. The AFR under Section 7520 for the month of August will be 2.4%. The rates for July of 2.2% or June of 2.4% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2017, pooled income funds in existence less than three tax years must use a 1.2% deemed rate of return. Federal rates are available by clicking here.

Your Family Letter – Memorial Services

A family letter is a key part of a good estate plan. It is much more personal than many of your estate documents. A family letter allows you to share your heart and show appreciation and gratitude to family members. During a time when family members are grieving, it also helps them to complete many practical steps to protect your property.

The family letter may have up to ten different sections. Each section will cover an important but separate topic.

Estate Data

Your estate organizer usually has four parts. It will explain the family names and key information, identify your attorney, CPA and other financial and health advisors, cover all of your assets and financial information and outline your estate planning choices.

The estate organizer may be printed or you may use an online version. Your family letter should explain where the information is located. If you are using an online estate planner, it’s important to know your account name and password so the information will be available.

Important Documents

Your important documents will generally be safeguarded in three different ways. First, many individuals have a safe deposit box. The safe deposit box typically holds birth certificates, death certificates, degrees and other legal agreements, marriage or divorce documents, military discharge records, property deeds, a personal property inventory, stock and bond certificates and vehicle titles.

Second, you may have a fireproof box at home. This box will frequently include your insurance policies, your living will, medical power of attorney or advance directive, trust documents and your will.

Third, there are some items that should be left with your attorney, friend, agent or another trusted person. These are items that may be needed while you are still living or will be necessary very soon after you pass away. These documents (or copies of documents) could include your financial power of attorney, a durable power of attorney for healthcare or advance directive, your living will, trusts and your will.

Accounts and Passwords

Because an increasing number of records and information are retained online in personal accounts, you will want to be certain that your personal letter lists all accounts. You may decide to include passwords with the personal letter. Alternatively, if you are entrusting all of this information to a specific person or other location, that should be identified.

With the rapid movement to online banking, online mutual funds and securities accounts, donor advised fund accounts, health savings accounts and your email accounts, you may have six to 10 accounts with various passwords. It will be important to have all of this information recorded.

Your Family History

While your estate organizer will include basic information about you and your family members, there is an excellent opportunity in your family letter to discuss your family history. This can include a few short paragraphs that give the names and background of your parents. List all of their children or other key relatives in your family. Your history may discuss marriages, divorces and any blended family relationships. Finally, the family history will show the date of death for persons who have passed away.

Family history can include discussions of your activities, interests and career. It enables all of your extended family to have a good picture of your entire life.

Care for Children, Grandchildren or Pets

If you are responsible for any children, grandchildren or pets, this is an opportunity for you to explain your plan for their care. While your estate planning documents will normally appoint guardians for your children or grandchildren who are under your care, it still may be beneficial for the guardian to receive recommendations from you on their education and other areas of development that you understand very well. If someone is to care for pets, you may have recommendations on the way in which that is done.

Memberships

You may have memberships in a number of organizations. Some memberships, such as those in a golf course or in a club that purchases various types of sporting event tickets, are transferable to heirs. It would be helpful to your family for you to list any memberships that you have so they can handle them properly.

Care of Your Body

When you pass away, your body may be in the custody of a medical center or nursing home. If you have previously decided to make any organ donations, it is helpful to explain that decision in your family letter. The requirements for making organ donations are typically covered under state law. In many cases, decisions on organ donations are made when you sign your living will or advance medical directive.

Funeral or Memorial Services

The cost of many funerals now exceeds $10,000. If you would like to assist family members in the decisions surrounding your funeral or memorial service, the family letter is an excellent way to do so.

First, your family will need to decide whether to have a burial in a cemetery with a casket or to use cremation services and an urn. You may have personal or religious reasons for preferring one or the other.

With a casket and burial in a cemetery, your family will generally make use of a funeral home. Because there now is significant competition in the industry, funeral homes are starting to offer advance prices and package services. If you desire a specific range of services, type of casket or prefer not to be embalmed, those directions are helpful to your family.

There are funeral consumers’ alliances in many locations. Your family may find assistance and guidance on www.funerals.org. This guidance may help them make good decisions during a very difficult time in the midst of grief over your loss.

If you are a veteran, your family may want to contact the Department of Veterans Affairs. You may qualify for a gravesite at no cost in one of the 130 national cemeteries for veterans and their spouses.

Obituary

In your funeral or memorial service, there will be eulogies. It is also customary to have a printed description of your lifetime. This will frequently include your basic history, awards, achievements, military service and lifetime employment. If you have specific requests for information to be included in the obituary, it is helpful to your family to give them guidance. You may have certain principles or values that are important to you that you would like to share through the obituary. This is an opportunity for you to communicate your values to the public.

Final Words and Blessings for Family

Your family letter may conclude with a word of blessing. It is a tradition in many cultures for the elders to provide a blessing for the next generation. This is frequently done when the elder is still living, but certainly your family letter provides a similar way to bless your children, grandchildren, nephews, nieces and other family members.

Your final words of wisdom and blessing for family members will be of great comfort as they grieve for your loss. It is an appropriate and fitting way to conclude your family letter.