APRIL 2008

The information that follows summarizes some of the current issues in the areas of estate, tax and personal and business planning which may be of interest to you. Although this information is accurate and authoritative, it is general in nature and not intended to constitute specific professional advice. For professional advice or more specific information, please contact my office.

Deficit Reduction Act Update. There have been no developments since our February newsletter. The Indiana legislature is still in session, and while it is still possible that some action could be taken during the current session, nothing has been reported thus far. Since the enactment of the DRA, we have aided hundreds of families with the implementation of asset preservation plans, and our practice is still to tread carefully between the current operative rules and those which might become effective when Indiana implements the DRA. Readers of this newsletter will be among the first to know when legislative action has actually been taken.

Long-Term Care Insurance Revisited. The February 2008 issue of this newsletter discussed a report issued by the Center for Retirement Research (CRR) at Boston College. The previous article also provided information concerning the additional premiums that are sometimes imposed by long-term care insurers as well as some of the planning considerations applicable to long-term care insurance. A settlement was recently proposed in a class action lawsuit involving the sale, marketing and renewal of long-term care insurance by Continental Casualty Company and Valley Forge Life Insurance Company, in which one of the defendants was CNA Financial Corporation. If you have a CNA product, you may have received a notice about the proposed settlement and your legal rights and options. Readers are advised to remember that the purchase of long-term care insurance does not end the planning process and that there are numerous other issues that should be considered even if you purchase a long-term care insurance product. Unfortunately, most marketers do not suggest to the people that they solicit that it is important for everyone to receive capable legal counsel in regard to the planning issues surrounding long-term care insurance. It is interesting that, in an era when advertisements for aspirin include a recommendation that your physician should be consulted, when it comes to the marketing of significant financial and insurance products, people are not only not encouraged to seek professional guidance, but are often discouraged from seeking the kind of professional input that they ought to obtain.

Tax Benefits For The Disabled. If you have provided support for a disabled individual, be sure to check with your tax preparer about the availability of particular tax benefits. You may be able to claim a dependency exemption if you satisfy the necessary tests (e.g., providing more than one-half of the dependant’s support, and the dependant must be a "qualifying relative" or a member of your household for the entire year). Of course, medical expenses of the dependant may be deductible as such, subject to the rules relating to the deduction for medical expenses. Even special education expenses may be deductible as medical expenses, such as the unreimbursed cost of attending a special school for a mentally or physically handicapped individual. This deduction may also include amounts paid for lodging, meals, transportation, etc., as well as any cost incurred for supervision. In addition, if the parent of a special needs child attends special programs to learn more about the child’s condition or disability, the amounts paid for registration fees and travel expenses may be deductible as medical expenses. In addition, a special needs person who is working may be able to claim itemized deductions for unreimbursed impairment-related work expenses.