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LIFE EXPECTANCY TABLES WATCH OUT FOR DIFFERING RESULTS!

In another wonderful example of the U.S. Government not getting its act together, the Internal Revenue Service has a published life expectancy table for use in calculating values of a retained life estates for gift tax purposes (see http://www.irs.gov/Retirement-Plans/Actuarial-Tables) while the administrators of Medicaid under Title XIX mandate the use of an entirely different table (see http://www.health.ny.gov/health_care/medicaid/publications/docs/adm/06adm-5att8.pdf) which produces significantly different results for the value of a retained life estate.

These differing tables create an issue to watch out for when individuals sell real estate interests which are subject to a retained life estate. The table mandated for Title XIX use results in a higher value for the retained life estate than the IRS table which could in some cases, lead to a longer period of disqualification for Medicaid for the owners of the remainder life interests.

In addition, when dividing sale proceeds, it may be advisable to have all of the sellers agree to use the Title XIX table for purposes of distribution even though the IRS computation for 1099 reporting purposes will produce higher amounts than actually received by the non-life estate owners. Such an agreement should be documented in writing.

Hoeper Law Offices - Waupun Probate Attorney
512 E. Main Street
Waupun, WI 53963
Phone: (920) 324-5050
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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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