Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 6, 1993 TAG: 9309030406
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
There are sufficient funds to pay for her care for the foreseeable future. However, at some point, we may need to apply for Medicaid assistance.
Social Services has advised me that I need to submit a statement of our joint resources as of the first day of the month in which she was admitted. I was told that I should do this for my own protection. Being unfamiliar with Social Services and Medicaid rules and regulations, I would appreciate it if you could help me understand what I need to be protected from. I would have preferred to wait until the need arose to become involved with that and committed to a course of financial action.
We have no children together, so I have no interest in hiding assets or giving them away, but I would like to be free to manage my own financial affairs as long as I am able. I don't want to forfeit any spousal rights to which I might be entitled.
A: You should prepare such a statement now, showing your joint assets. You can either file it with Social Services now or wait until you apply for Medicaid. If you give it to Social Services at this time, it will be merely filed away. You are committed to nothing.
This so-called resource assessment is not an application for Medicaid. The state of Virginia says it is a calculation of how much property a couple has at the time one of them enters a nursing home or begins receiving aid.
A supervisor in the Roanoke office of Medicaid assistance said the advantage of filing early is to prevent a spouse from draining away too much of his or her assets. It protects you from spending more than the law requires.
Under present law, the spouse who is not institutionalized is entitled to keep one-half of the couple's combined resources up to a maximum of $70,500.
Before you spend down to this amount, be sure your home, furniture and car are paid for. You should also prepay funeral expenses for both of you. These are things you are entitled to keep.
You might also want to consult a lawyer who is experienced in Medicaid trusts, but it may already be too late for you to create such a trust. Besides, it would involve giving away your money, which you should not do if you need it to live on.
Remainder trusts
Q: I am considering the idea of giving a charitable remainder trust. I believe I understand the irrevocability and the tax consequences of such a trust.
My question involves how best to determine the financial stability of the charitable organization in order to best insure the return of income from the trust during my lifetime. Is there any rating service that lists such organizations in order of their financial strength? If not, where would I find a listing of charities, and how would I go about making my own determination of their financial integrity and the probability that they would be reliable managers of their trust assets?
A: A charitable remainder trust is designed to help the charity as well as the donor. The charity provides lifetime income to the donor in return for an irrevocable gift.
Why not select your favorite charities and just check up on them? Then you would have a good feeling about the cause you would be helping. Many people give such trusts to colleges and universities, which are experienced in managing their own endowments. Most colleges and universities also are reliable.
The Roanoke Public Library and most other libraries have directories that provide information about charities and foundations. Ask at the reference desk to see these volumes.
Linda Holsinger of United Way of Roanoke Valley said you also can obtain ratings from the National Charities Information Bureau. Call (202) 929-6300 to ask for a free "Wise Giving Guide." The ratings, however, are based more on the integrity of the charity than on its financial soundness.
Avoiding gifts tax
A reader of this column, Edward D. Spear of Bedford, has pointed out that people can legally give gifts of more than $10,000 a year without income or gifts taxes. These provisions were included in the Economic Recovery Tax Act of 1981.
These are gifts for medical care and tuition expenses.
The medical-care exclusion lets a person help a child or anyone else by paying for their medical and hospital insurance and medical and dental expenses. These are the same expenses as for the income tax deduction.
But the law does not permit giving money to the beneficiary. The money must be paid directly to the heath insurance company or to the hospital, physician or other provider. Check with your tax adviser to determine if you can deduct these expenses.
You also can make tuition payments to educational institutions, exempt from gift tax, for the account of any individual.
The payment must be made to the institution, not the student. It applies only to tuition. Dormitory fees, books, board and the like are not eligible.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010.
by CNB