New Tax Rules on Sale of Home by Surviving Spouse

 

Written By: Attorney Jeffrey A. Marshall , CELA*

  A recent federal law changes the rules governing the tax consequences of the sale of a home by a surviving spouse. It gives the surviving spouse more time to sell and still be eligible for the maximum home-sale income tax break available for married couples who file jointly.

Under Section 121 of the Internal Revenue Code, married couples are able to sell their residence and exclude as much as $500,000 of capital gain from gross income (26 U.S.C. § 121(b)(2)).  [If you're single, the limit is only $250,000]. To qualify for the maximum exclusion, one spouse must have owned the home -- and both must have lived in it as their primary residence -- for at least two of the five years prior to the sale.

But what if your spouse dies?  Under the old law, the survivor could only claim the maximum $500,000 exclusion if he or sold the home during the year the death occurred.  The new law extends this period. 

Under the new law the surviving spouse has up to two years from the date of death to sell the home and claim the full $500,000 exclusion.  One spouse must have owned the property for at least two years during the five-year period immediately before the date of death. However, both spouses must have met the requirement of using the property as a principal residence for two years or more during the five-year period immediately before the date of death [IRC §121(b)(2)(A)(i) and (ii)].

The new law, The Mortgage Forgiveness Debt Relief Act of 2007 (Public Law No: 110-142 (H.R. 3648), applies to sales or exchanges after December 31, 2007.

IRS Warns Taxpayers About Stimulus Payment Scams

Written By: Attorney Jeffrey A. Marshall, CELA*

  The IRS is warning taxpayers to be on the alert for e-mails and phone calls they may receive which impersonate the IRS.  A phone caller may ask the taxpayer for his or her Social Security and bank account numbers, claiming that the IRS needs the information to complete the processing of the taxpayer's stimulus payment.  Or the victim may receive an e-mail claiming to come from the IRS about the stimulus refund.  These are identity theft schemes intended to obtain personal and financial information so the scammers can clean out your financial accounts.

Don't be fooled. The IRS does not send taxpayers e-mails about their tax accounts. Additionally, the only way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return.

For more information:

IRS Scam Warning: http://www.irs.gov/newsroom/article/0,,id=178061,00.html

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Report Predicts 10 Million Baby Boomers Could Face Alzheimer's Disease

Written By: Josephine Reviello, BSW, LPN, Planning Specialist

  If you put the numbers together - the number of baby boomers hitting the age of 65 with the expected number of baby boomers who will be stricken with Alzheimer's - you realize that we are in for some staggering consequences on families, the economy and the nations' health and long term care system. 

In less than three years, the first wave of baby boomers (born 1946 - 1964) will reach the age of 65.  According to a new report by the Alzheimer's Association, 2008 Alzheimer's Disease Facts and Figures, Alzheimer's disease will strike one in eight U.S. baby boomers, meaning that 10 million boomers will develop the mind-wasting disease.

Currently there are 5.2 million Americans with Alzheimer's, including 200,000 to 250,000 people under age 65.  By 2010, projections say there will be 500,000 new cases of Alzheimer's each year and nearly one million new cases annually by 2050.  This growing incidence of Alzheimer's is bound to have a huge negative impact on health care costs, prescription costs, family and professional care givers, and taxpayers. The 2008 Alzheimer's Disease Facts and Figures reports the following statistics:

-In 2007, 9.8 million family members, friends and neighbors provided unpaid care for a person with Alzheimer's disease or another dementia. These unpaid caregivers provided 8.4 billion hours of unpaid care, a contribution to the nation valued at $89 billion.

-People with Alzheimer's and other dementias are high users of health care and long-term care services, which translates into high costs for Medicare and Medicaid.  The direct costs to Medicare and Medicaid for care for people with Alzheimer's and other dementias and the indirect costs to business for employees who are caregivers of persons with Alzheimer's and other dementias amount to more than $148 billion annually.

-The most recent study (2003) of disease severity shows that about 60% of assisted living residents with dementia were in the moderate to severe stages of the disease.

-In June 2007, 46.4% of all nursing home residents had a diagnosis of Alzheimer's or another dementia.

-In 2025 baby boomers begin to reach the median age for admission to a nursing home.  As a result, Medicaid spending for nursing home residents with Alzheimer's will increase rapidly. 

Despite the high present and future cost of Alzheimer's, comparatively little is being spent on Alzheimer's research. According to the Los Angeles Times, "[w]hile the cost of Alzheimer's soars, federal money spent on research has flattened and is expected to decline in real terms in the future as the competition for federal money heightens. The rising costs of treating the disease coupled with reduced research funding is, to some, a foreboding combination."  Scientists Can't Get their Minds Around Alzheimer's, Los Angeles Times, December 27, 2007.

The report 2008 Alzheimer's Disease Facts and Figures, is available online at  http://www.alz.org/national/documents/report_alzfactsfigures2008.pdf 

For more information on legal and financial planning issues see the Marshall, Parker and Associates Alzheimer's Planning page at http://www.paelderlaw.com/alz.html

Josephine can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

PA NAELA Chapter Comments on Level of Care Standards

Written By: Attorney Jeffrey A. Marshall, CELA*

  In order to qualify for Medicaid payment of long term care costs, a senior must meet the state defined standard for needing a nursing facility level of care.  A person who meets this state clinical eligibility standard and meets other Medicaid requirements, must be provided with Medicaid-financed nursing home care. 

In order to allow people to remain at home, Pennsylvania has elected to also provide Medicaid benefits to nursing facility clinically eligible (NFCE) individuals whose care needs can be met in the home.  Important Medicaid funded home based support programs for seniors include the Aging Waiver program and the LIFE program.     

In 2007, Pennsylvania 's Department of Aging tightened the NFCE standards.  This change made it more difficult for seniors to qualify for Medicaid assistance for both nursing facility and home care.  The change was implemented without regulatory oversight or approval from the federal government.  Government officials now agree that the 2007 standard went too far in limiting the level of care criteria.     

Now the Pennsylvania Office of Long Term Living is proposing a new modification of the NFCE standard.  While the proposal is an improvement over the 2007 standard, many elder law attorneys and other senior advocates believe that it remains too strict.  The recently formed Pennsylvania Association of Elder Law Attorneys (PAELA) has commented on the state's proposal and suggested modifications.  The PAELA comment letter is available online at http://www.paelderlaw.com/pdf/NFCE_comments.pdf.

For more information:

The Aging Waiver Program: http://www.dpw.state.pa.us/ServicesPrograms/MedicalAssistance/SuppServWaivers/003671492.htm

LIFE: http://www.dpw.state.pa.us/ServicesPrograms/MedicalAssistance/SuppServWaivers/003671635.htm

Attorney Marshall's article on renewal of the Aging Waiver:  

http://www.paelderlaw.com/pdf/aging_waiver_comments.pdf 

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Learn How to Protect Your Assets from Long Term Care Costs at our FREE Community Workshop in Honesdale

  Saturday, June 14, 2008

10:00 AM until 12:00 PM

Bryn Mawr Mountain Retreat and Conference Center

593 Bryn Mawr Road in Honesdale

Reserve your seat by calling 1-800-401-4552 or visit our registration page online.

CDC Recommends Shingles Vaccine

Written By: Attorney Jeffrey A. Marshall, CELA*

  People age 60 and older should be vaccinated against shingles, or herpes zoster, a condition often marked by debilitating chronic pain, the Centers for Disease Control and Prevention (CDC) recommended on May 15th.

The varicella zoster virus-the same virus that causes chickenpox-causes shingles.  Even after you recover from chickenpox, the virus remains dormant in your body, often for many years, until it reappears as shingles.   Anyone who has had chicken pox can get shingles. That means 95 percent of adults are at risk. CDC recommends a single dose of the zoster vaccine, Zostavax, for adults 60 years of age and older even if they have had a prior episode of shingles.

Researchers found that, overall, in those ages 60 and above the vaccine reduced the occurrence of shingles by about 50 percent. For individuals ages 60-69 it reduced occurrence by 64 percent. The most common side effects in people who received Zostavax were redness, pain and tenderness, swelling at the site of injection, itching and headache.

The risk of contracting shingles increases with age starting at around 50, and is highest in the elderly. Half of people living to age 85 have had or will get shingles. The risk of experiencing chronic pain also increases with age.

Shingles Facts

• Anyone who has had chicken pox can get shingles. That means 95 percent of adults are at risk.
• Approximately one-third of the U.S. population will get shingles.
• More than half of older adults do not understand the seriousness of shingles and its complications.
• Among those who get shingles, more than one-third will develop serious complications. The risk of complications rises after 60 years of age.
• Appropriate and immediate treatment of herpes zoster can control acute symptoms and reduce the risk of longer term complications. Starting anti-viral medication within 72 hours of the onset of shingles can reduce the pain and the length of time the outbreak lasts.

For more information about the shingles vaccine, please visit the CDC Website at http://www.cdc.gov/vaccines/vpd-vac/shingles/default.htm