In estate planning, what is the reason for tension over control vs. tax planning and other long-term benefits? by Kurt R. Bachman
Estate planning is often a struggle between giving up control and receiving tax savings or other long-term benefits. For instance, to obtain the full benefit of the federal unified estate and gift tax credit (currently $12,920,000.00) or the annual gift tax exclusion (currently $17,000.00 per person per year), you must relinquish all incidents of ownership over the assets you wish to use to take advantage of such credits and exclusions. In other words, you must give up legal control over that particular asset (whether it is cash, stock, real estate, or anything else). Also, to take advantage of the Medicaid eligibility rules to fund long-term care needs, there must be a relinquishment of legal control over all countable resources more than $2,000.00 (subject of course to the current 5-year lookback). The good news is that this struggle over whether or not to give up control to obtain tax and/or Medicaid benefits can be addressed with careful planning with an Elder Law attorney.