The earned income tax credit is a benefit for working people with low to moderate incomes and dependents, and this includes grandparents.  (Taxpayers without a dependent may also qualify, but it is more difficult.) To be able to claim the tax credit, you must be raising a child who meets the following criteria:

• Is your son, daughter, adopted child, stepchild, foster child, brother, sister, half brother, half sister, step-sister or a descendent of any of them, such as a grandchild or niece or nephew
• Is younger than 19 at the end of the year, younger than 24 and a full-time student at the end of the year, or any age and permanently and totally disabled
• Lives with you for more than half the year

In addition, to qualify for the tax credit your income must be below certain limits, depending on how many dependents you have. The limits for 2020 are as follows:

• One child.  Filing as an individual, your income must be less than $41,756. Filing jointly, your income must be less than $47,646.
• Two children. Filing as an individual, your income must be less than $47,440. Filing jointly, your income must be less than $53,330.
• Three or more children. Filing as an individual, your income must be less than $50,594. Filing jointly, your income must be less than $56,844.

The maximum amount of the tax credit also depends on how many dependents you have. In 2020, the following are the maximum credit amounts:

• $6,660 with three or more qualifying children
• $5,920 with two qualifying children
• $3,584 with one qualifying child

For more information from the IRS about the tax credit, click here.

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Ordinarily, most income that SSI recipients earn is deducted from their benefits. The Student Earned Income Exclusion (SEIE) allows students to exclude up to $1,903.45 monthly from their countable income. This amount, however, is subject to an annual cap of just $7,670 (in 2020). The penalty for exceeding this annual cap is harsh: If students earn more than the cap in a given year, their benefits are reduced on a dollar-for-dollar basis.

These income caps rise each year in line with the Social Security Administration's annual Cost-of-Living Adjustment (COLA) formula, which is meant to ensure the value of benefits are not eroded by inflation. 

To qualify for this exclusion, students must be under 22 years old. If attending a university, community college, or other higher education institute, students must be enrolled at least eight hours per week to qualify for the SEIE. People may also qualify if they are enrolled in a training course to prepare for employment at least 12 hours per week, or 15 hours per week if that training course is considered a shop practice. 

In addition, high school and middle schoolers may qualify, as well as homebound students. If enrolled in grades 7-12, the student must be enrolled in classes 12 hours per week. (These thresholds may be waived if the student can’t meet them due to circumstances beyond her control.)

Click here and here to learn more about the SEIE. 

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The Constitution of the United States requires that states give “full faith and credit” to the laws of other states. This means that your will, trust, durable power of attorney, and health care proxy executed in Massachusetts (just to pick one state) should be honored in New Hampshire, Florida, and every other state. That's the law. 

The practical realities, however, are not the same as the legal requirements. While you should not need a separate will or trust for a second state, your power of attorney and health care proxy may be a different story. Financial and health care institutions are used to the documents used in their states and may refuse to honor out-of-state documents. In the case of health care proxies, other states may use different terms for the document, such as “durable power of attorney for health care” or “advance directive.” (And the people reviewing your power of attorney or health care proxy may not be well versed in constitutional law.)

In the absence of a durable power of attorney or health care proxy, family members often must resort to going to court to be appointed guardian or conservator. This causes delay and expensive and unnecessary legal fees. So, even though it should not be necessary, if you do spend a good part of the year out-of-state, executing a local health care directive and durable power of attorney may be a good idea. Make sure that you appoint the same people you appointed on your other estate planning documents, so that there's no confusion about who should act for you when the time comes. 

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What happens, though, if disputes arise? Perhaps the beneficiary wants money for a particular purpose, for example to pay for an alternative form of treatment or therapy, and the trustee refuses to comply, believing such an expense is not within the terms of the trust or would breach the trustee’s fiduciary duty towards the beneficiary.

Even though the terms of the trust have been long established, does the beneficiary have any rights to challenge the trustee or dispute the terms of the trust itself? Special needs trusts are typically irrevocable, which means that the trust’s terms and its assigned beneficiaries cannot be changed without a court’s intervention. Does the named beneficiary of a special needs trust have any rights beyond that? In general terms, yes, thanks to something called the Uniform Trust Code, or UTC. Drawn up in 2000 by the Uniform Law Commission, the UTC is a nonbinding set of guidelines relating to trusts. State legislatures can vote to adopt the UTC into state law, with their own modifications if they so choose, and as of January 2020, 34 states had done so.

Here are five common rights of beneficiaries recommended by the UTC, any of which might come into play in a dispute between the special needs beneficiary and the trustee. These would be brought forward in a court and decided according to state law.

Payment: The special needs beneficiary has the right to distributions from the trust, to pay for her care and support as detailed in the trust’s terms and conditions. 

The right to be informed: Beneficiaries are entitled to the trust’s financial information, such as tax returns, annual reports, quarterly earnings statements, and so on. These can be provided on a regular basis or on the beneficiary’s request.

The right to an accounting: If a beneficiary has questions about the trust’s performance or assets, he can request a thorough accounting from the trustee.

Removal and replacement of trustees: If a trustee has demonstrated behavior that violates the purpose of the trust or does not adequately protect the beneficiary’s interests, that trustee can be removed and replaced with someone else.

Termination: If the trust has failed to fulfill its purpose, or is no longer valid, the beneficiary may petition to terminate the trust altogether. 

It’s important to keep in mind that these rights are codes, drawn up by the Uniform Law Commission to guide state legislatures. They are only binding if state law puts them into effect. States have made their own modifications to the UTC guidelines or enacted them only selectively. Some, such as California, haven’t adopted them at all, although these states’ laws governing trusts also likely include protections for beneficiaries.

If you are a special needs beneficiary and have questions about your rights, you will first need to find out if your state has adopted the UTC, and to what extent, and if not, what beneficiary rights and protections your state’s law provides. Consult with your special needs planner to get a complete picture of beneficiary rights where you live.

The post Do Beneficiaries of Special Needs Trusts Have Rights? appeared first on Bourget Law Group.

The department of Health and Human Services has designated the test for the new strain of coronavirus (officially called COVID-19) an essential health benefit. This designation means that Medicare and Medicaid will cover testing of beneficiaries who are suspected of having the virus. In order to be covered, a doctor or other health care provider must order the test. All tests on or after February 4, 2020 are covered, although your provider will need to wait until after April 1, 2020, to be able to submit a claim to Medicare for the test.

Congress has also passed an $8.3 billion emergency funding bill to help federal agencies respond to the outbreak. The funding will provide federal agencies with money to develop tests and treatment options as well as help local governments deal with outbreaks. 

As always, to prevent the spread of this illness or other illnesses, including the flu, take the following precautions:
•    Wash your hands often with soap and water
•    Cover your mouth and nose when you cough or sneeze
•    Stay home when you're sick
•    See your doctor if you think you're ill

For Medicare’s notice about coverage for the coronavirus, click here.

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Experts recommend that you will need to revisit your plan after certain key life events, including changes in health, finances, or family status. Unfortunately, this global health crisis can affect all of those aspects of your life. You should make sure you have these essential documents in place to protect yourself and your family: 

• Medical Directives. A medical directive may encompass a number of different documents, including a health care proxy, a durable power of attorney for health care, a living will, and medical instructions. The exact document or documents will depend on your state's laws and the choices you make. Both a health care proxy and a durable power of attorney for health care designate someone you choose to make health care decisions for you if you are unable to do so yourself. A living will instructs your health care provider to withdraw life support if you are terminally ill or in a vegetative state. A broader medical directive may include the terms of a living will, but will also provide instructions if you are in a less serious state of health, but are still unable to direct your health care yourself. 
• Power of Attorney. A power of attorney allows a person you appoint — your “attorney-in-fact” — to act in your place for financial purposes when and if you ever become incapacitated. In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney. 
• Will. A will is a legally-binding statement directing who will receive your property at your death. If you do not have a will, the state will determine how your property is distributed. A will also appoints a legal representative (called an executor or a personal representative) to carry out your wishes. A will is especially important if you have minor children because it allows you to name a guardian for the children. However, a will covers only probate property. Many types of property or forms of ownership pass outside of probate. Jointly-owned property, property in trust, life insurance proceeds and property with a named beneficiary, such as IRAs or 401(k) plans, all pass outside of probate and aren't covered under a will.  
• Trust. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” Trusts have one set of beneficiaries during those beneficiaries' lives and another set — often their children — who begin to benefit only after the first group has died. There are several different reasons for setting up a trust. The most common reason is to avoid probate. If you establish a revocable living trust that terminates when you die, any property in the trust passes immediately to the beneficiaries. This can save time and money for the beneficiaries. Provided they are well-drafted, another advantage of trusts is their continuing effectiveness even if the donor dies or becomes incapacitated. 
• Beneficiary Designations. Although not necessarily a part of your estate plan, at the same time you create an estate plan, you should make sure your retirement plan beneficiary designations are up to date. If you don't name a beneficiary, the distribution of benefits may be controlled by state or federal law or according to your particular retirement plan. Some plans automatically distribute money to a spouse or children. Although others may leave it to the retirement plan holder's estate, this could have negative tax consequences. The only way to control where the money goes is to name a beneficiary. 

Contact your attorney to make sure your estate plan is complete. Many attorneys are set up to meet with clients remotely, and states are beginning to temporarily relax their rules regarding requirements that documents be notarized in person. 

The post The Coronavirus Pandemic Presents Ample Reasons to Reevaluate Your Estate Plan appeared first on Bourget Law Group.

Nursing homes have been hit hard by the coronavirus. The Life Care Center of Kirkland, Washington near Seattle was one of the first clusters of coronavirus in the United States and is one of the deadliest, with at least 35 deaths associated with the facility. In response, the Centers for Medicare and Medicaid Services (CMS) issued guidance to all nursing homes, restricting all visitors, except for compassionate care in end-of-life situations; restricting all volunteers and nonessential personnel; and cancelling all group activities and communal dining. While these actions are necessary to prevent the spread of the virus, they can leave families worried and upset and residents feeling isolated and confused. 

Families are taking varying tacks to keep in contact with their loved ones, many of whom don’t fully understand why their family is no longer visiting. Nursing homes are also helping to facilitate contact. Some options for keeping in touch, include the following: 

• Phone calls. Phone calls are still an option to be able to talk to your loved one. 
• Window visits. Families who are able to visit their loved one’s window can use that to have in-person visits. You can hold up signs and blow kisses. Talking on a cell phone or typing messages on it and holding them up to the window may be a way to have a conversation. 
• Facetime and Skype. Many nursing homes are facilitating video calls with families using platforms like Facetime or Skype. Some nursing homes have purchased additional iPads, while others have staff members going between rooms with a dedicated iPad to help residents make calls. 
• Cards and letters. Sending cards and letters to your loved ones is another way to show them that you are thinking of them. Some nursing homes have also set up Facebook pages, where people can send messages to residents. 

In this unprecedented time, families will need to get creative to stay in touch with their loved ones. For more articles about how families and nursing homes around the country are coping with the new restrictions, click here, here, and here. 

The post Staying Connected to Family Members in a Nursing Home When Visits are Banned appeared first on Bourget Law Group.

Social Security retirement benefits are financed primarily through dedicated payroll taxes paid by workers and their employers, with employees and employers splitting the tax equally. Employers pay 6.2 percent of an employee's income into the Social Security system, and the employee kicks in the same. Self-employed individuals pay the entire 12.4 percent Social Security payroll tax. This money is put into a trust fund that is used to pay retiree benefits. 

The trustees of the Social Security trust fund have reported that if Congress doesn’t take action, the fund’s balance will reach zero in 2035. This is because more people are retiring than are working, so the program is paying out more in benefits than it is taking in. Additionally, seniors are living longer, so they receive benefits for a longer period of time. 

Once the fund runs out of money, it does not mean that benefits stop altogether. Instead, retirees’ benefits would be cut. According to the trustees’ projections, the fund’s income would be sufficient to pay retirees 77 percent of their total benefit. 

Congress can act to shore up Social Security before this happens. Some ideas include eliminating the cap on benefits. Right now, workers only pay Social Security tax on the first $137,700 of income (in 2020). That amount can be increased, so that higher-earning workers pay more in taxes. The Social Security tax or the retirement age could also be increased.

Social Security is immensely popular and lawmakers are unlikely to allow steep benefit cuts to take place. The last time the program was in financial trouble and received a major overhaul was in 1983, when President Ronald Reagan and congressional Democrats struck a deal to increase taxes and gradually raise the retirement age from 65 to 67.

For more information about a the potential Social Security shortfall, click here and here. 

The post How Secure Is Social Security? appeared first on Bourget Law Group.

The U.S Constitution mandates that the federal government conduct a census every 10 years. Information from the census is used to determine how many representatives each state sends to Congress as well as where hundreds of billions of dollars from federal programs, such as Medicare, Medicaid, nutrition assistance and supportive housing, is allocated. In addition, communities rely on census data to apportion services like new roads, schools, libraries and emergency services.  Think of it as America’s 10-year checkup.

While the census is being conducted largely online, you do not need to fill out the form online if you don’t want to. Beginning in March 2020, the census will mail out postcards to each household, giving instructions on how to respond. You will have the option of responding online, by mail, or via the phone. If you don’t respond, a census worker will visit your home to collect the data. 

If someone visits your home to collect information for the 2020 Census, check to make sure that they have a valid ID badge, with their photograph, a U.S. Department of Commerce watermark, and an expiration date. Census workers will not ask for donations or for your Social Security or bank account information. 

For more information about the 2020 census, click here.

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Since its launch in 1965, Medicaid has operated as an open-ended entitlement program, meaning it does not include any pre-set funding limits. It is a joint partnership between the federal government and the states: Each state runs its own Medicaid program with the help of matching funds from the federal government.

The Trump administration has been exploring options for block-granting Medicaid since last March. A block grant funding structure would end the open-ended nature of Medicaid’s federal-state partnership. Instead, states that choose the block grant arrangement would receive a pre-set amount of money in exchange for increased flexibility in how they administer their programs. 

The question of what increased program flexibility would look like is central to all debates surrounding block grants. Advocates of block grants—from the Reagan administration to former House Speaker Paul Ryan—have argued that block-granting is necessary to ensure the program's long-term funding stability. Disability rights advocates, among other groups, fear it is just a back-door way to slash benefits.

Announced on January 30, 2020, the new HHS plan, dubbed “Healthy Adult Opportunity,” would allow states to apply for waivers to cover healthy adults under age 65 using a block grant.  This means that the states most likely to apply for the waivers are those that have not expanded Medicaid under the Affordable Care Act but may now do so given the increased flexibility in how to design their program, or those that have expanded Medicaid but wish to reduce costs. 

But funds designated to pay for services for children, pregnant women, and people with disabilities could not be block-granted.  Likewise, states cannot block grant services that are required under the Medicaid statute, such as emergency and hospital services. The Affordable Care Act—specifically its much-publicized 10 essential health benefits provision—significantly expanded this list of required services.

On the other hand, states have significant discretion when choosing to fund other services, for example, various prescription drugs and dental care. States that opt for a block-grant funding structure would likely impose cuts to these services. States that choose to block grant could also impose higher premiums and co-pays than those currently allowed under Medicaid, and as well as work requirements for beneficiaries, an effort that has largely been stymied in the courts.  Moreover, if enrollment in Medicaid dramatically increases due to a health crisis or a recession, states that received a pre-set amount of funding may not have enough money to cover everyone, resulting in additional cuts to services.

Opponents of the block grant concept contend it is illegal because only Congress can make such program changes, and litigation against the proposal is almost certain.  In addition, it is unlikely that a state could get a waiver before 2021, when there may be a new federal administration.

For more on the administration's block grant guidelines, click here.

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