Long-term Care and Asset Protection Planning Sandra L. Smith, CELA Oast & Hook, P.C. Attorneys and Counselors at Law Serving Virginia and North Carolina Tel: 757-399-7506 | Tel: 252-722-2890 Fax: 757-397-1267 www.oasthook.com
Cash value life insurance. Cancel the policy or take a loan against the cash value
Accelerated death benefits. Some life insurance policies permit you to withdraw death benefits while you are alive if you meet eligibility standards which typically include have a year or less to live and confinement to a LTC facility
Proceeds received from viatical settlements, life proceeds from life insurance, are not considered income for federal tax purposes.
Proceeds from a life settlement may be considered ordinary income, capital gains, or a combination of the two. The law is not clear regarding taxation of life settlements.
As a result, using monies from such a benefit to supplement pension or social security income may be enough to cover cost of care and not force you to withdraw amounts from principal investments, which may force capital gains tax.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires that long-term care carriers change their current policies to meet guidelines called for under this legislation. The law allows:
Individuals who itemize to deduct premiums as a medical expense
LTC benefits received by a claimant to be tax free to the recipient
Individuals who itemize to deduct LTC expenses not covered by insurance
Self-employed individuals to deduct 100% of their LTC premiums as a business expense directly on Form 1040
LTC will be an important concern in the upcoming years
Asset protection strategies are numerous and should be handled by specialists
You may be able to advise those who have not considered the consequences of their actions
Oast & Hook, P.C. Attorneys and Counselors at Law Offices in Elizabeth City, Portsmouth, and Virginia Beach Tel: 757-399-7506 | Tel: 252-722-2890 | Fax: 757-397-1267 Please visit our web site at www.oasthook.com
Asset Protection Planning
Long-term Care Planning
Financial Planning and Advice regarding Investments, Insurance, Annuities, Reverse Mortgages, and Equity Lines