My wife and I may need to set up the above-mentioned topic to provide long-term care for her sister's needs beyond what Medicaid will provide. We're pretty aware of the tax-implications -- e.g., the lump sum deposited in an account for her sister's needs/services provided by us -- will be taxable income. What we need some guidance on are the mechanics of doing it properly...i.e., do we issue 1099s and/or W-2s to ourselves (if so, how/where do we obtain these tax documents?); can we set aside some of the lump sum to pay the anticipated taxes (similar to withholding that we would have done with any other form of income?); is there a certain kind of account that works better than others for administering these types of agreements (e.g., bank account, other type of account?) We are working with an elder care law firm in Florida, but, of course, they have declined to provide tax guidance, saying they are not authorized. Any help/guidance here from a subject matter expert or someone who has "been there/done that" with a loved one in Florida would be greatly appreciated.
