Elder Law with Frank and Mary

December is about giving (and about planning).


December. The season of giving. Because it’s also the end of the tax year for most people, it should also be the season of planning. Here are a few tips for doing both.

  • Most of my clients need to qualify for MassHealth. Oftentimes, this requires them to withdraw all their tax-deferred funds, which can be very expensive tax-wise if it’s done all at once. The best way to avoid this big tax hit is by gradually deducting the money each year, so that the extra income in any one year does not put you into a higher tax bracket for federal income tax purposes. Talk to your accountant about this, and about whether you want to keep some tax benefits by rolling some of these funds into a Roth IRA. Also, if you have deductible medical expenses, consider withdrawing a corresponding amount from your IRA to have the additional taxable income be offset by the medical deductions.
  • If you’re thinking about making a year-end gift to your favorite charity, consider doing that with your IRA or other tax-deferred funds by making a Qualified Charitable Distribution (QCD) of up to $100,000. Remember, this distribution needs to come directly from the folks holding your IRA money. That way, you avoid paying any income tax on the withdrawal and the charity gets to use all the money.
  • Remember, there’s really no limit to the amount you can give your children (or anyone else). Unless you plan on making total gifts over the federal estate tax exemption amount before you die ($12.92M if you pass away in 2023) during your lifetime, there is no gift tax on your gift, no matter how much you give, and the receipt of your gift is not income to the recipient for tax purposes. Although you will have to file a gift tax return to report the gift, you will not have to pay any gift tax.
  • The holidays are also a great time to give away some of those special things that you were planning on leaving people after you die anyway. There is probably not a lot of “stuff” your children or other loved ones need. Folks may really cherish that special ring or other item of jewelry, or other things around your home that will always remind them of you. Give people those things now, while they still have the chance to say “thank you.” It will make their holiday, and it may make yours special, too.

If you want to learn more about these issues, you can watch this month’s episode of Elder Law 101. You can find it on MVTV (Comcast 13) or visit Frank and Mary’s YouTube channel, www.youtube.com/elderlawfrankandmary. If you have any questions, please contact me at 508-860-1470 or abergeron@mirickoconnell.com.

Arthur P. Bergeron is an elder law attorney in the trusts and estates group at Mirick O’Connell.