by H2R CPA Team
The “sandwich generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.
Including your parents as beneficiaries of your estate plan raises a number of complex issues. Here are five tips to consider:
1. Plan for long-term care (LTC). The annual cost of LTC can reach well into six figures. These expenses aren’t covered by traditional health insurance policies or Medicare. To prevent LTC expenses from devouring your parents’ resources, work with them to develop a plan for funding their health care needs through LTC insurance or other investments.
2. Make gifts. One of the simplest ways to help your parents financially is to make cash gifts to them. If gift and estate taxes are a concern, you can take advantage of the annual gift tax exclusion, which allows you to give each parent up to $15,000 per year without triggering taxes.
3. Pay medical expenses. You can pay an unlimited amount of medical expenses on your parents’ behalf, without tax consequences, so long as you make the payments directly to medical providers.
4. Set up trusts. There are many trust-based strategies you can use to financially assist your parents. For example, in the event you predecease your parents, your estate plan might establish a trust for their benefit, with any remaining assets passing to your children when your parents die.
5. Buy your parents’ home. If your parents have built up significant equity in their home, consider buying it and leasing it back to them. This arrangement allows your parents to tap their home equity without moving out while providing you with valuable tax deductions for mortgage interest, depreciation, maintenance and other expenses. To avoid negative tax consequences, be sure to pay a fair price for the home (supported by a qualified appraisal) and charge your parents fair-market rent.
As you review these and other options for providing financial assistance to your aging parents, try not to overdo it. If you give your parents too much, these assets could end up back in your estate and potentially exposed to gift or estate taxes. Also, keep in mind that some gifts could disqualify your parents from certain federal or state government benefits.
Contact H2R CPA at 412-391-2920 or email@example.com to learn more about how we can assist you with your Estate Planning needs. Our team would be pleased to provide a complimentary consultation.
by Joseph M. Delisi, CPA, Principal
Despite the continuing decline in overall paper check usage, check fraud continues to pose a risk for many organizations. Since checks are passed person-to-person on their way to payment, they can easily be stolen, duplicated, altered or cashed illegally.
Are you concerned about check fraud losses at your business? Positive Pay may be the solution for you. It is essentially an insurance policy against unauthorized disbursements from your bank account. It is a service offered by banks for a fee, although some banks are now offering this service at no cost.
Here’s how it works: Positive Pay requires a company to transmit to the bank a file of checks issued each time checks are written. The file submitted to the bank contains the check number, date, amount, and bank account number. When those checks are presented to the bank for payment, they are compared electronically against the list of transmitted checks.
When a check presented for payment does not match the information on the file transmitted to the bank, it becomes an exception item. Before the bank processes the check for payment, it sends an image of the exception item to the client. The client then reviews the image, and instructs the bank to either process the check for payment, or return the check as unpaid. This allows the company to identify fraudulent checks before they are paid by the bank.
Positive Pay is an effective way to institute check fraud protection, stop bad payments, and reduce liability when dealing with a large volume of checks.
H2R CPA is pleased to assist clients in finding ways to protect themselves against fraud. Contact our team at 412-391-2920 or firstname.lastname@example.org for more information. We would be pleased to provide a complimentary consultation.
by Bill Bodnar, CPA, MST, Tax Director
The Tax Cuts and Jobs Act was signed by President Trump on December 22, 2017. The Act represents the most comprehensive change to the Internal Revenue Code since 1986. There have been a number of changes affecting all taxpayers, and to assist in identifying those which may impact you, we have put together a summary of the major provisions from the new legislation. Generally, most of these changes will become effective in 2018.
The new legislation will produce both opportunities and drawbacks that differ from taxpayer to taxpayer. Many of the specific rules for implementing the new laws will require further guidance from Treasury, which will be issued in 2018. We certainly understand that each taxpayer is unique, so we look forward to working individually with each of our clients to ensure the proper treatment of these new rules and to implement the most advantageous tax approach. Please feel free to contact us at H2R CPA with any follow-up questions or insight that may be of interest to you.
Highlights and some details of the new law are provided in the attached letter.
Contact H2R CPA at 412-391-2920 or email@example.com for additional details or interpretation related to the Tax Cuts and Jobs Act, as needed. Our tax team members would be pleased to assist you with your tax planning.
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