Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Tuesday, June 30, 2015

The IRS Has Released Proposed ABLE Account Regulations

ABLE1The Internal Revenue Service (IRS) has released proposed regulations that will serve the purpose of implementing a new law that authorizes states to offer ABLE accounts.  Achieving a Better Life Experience (ABLE) accounts are designed to help people with disabilities and their family save money while reducing or eliminating the tax burden.  This column explains some of the features of ABLE accounts and how they can be a benefit to people who are disabled.  The IRS regulations can be read here.  

See Lewis J. Saret, Guidance Under Section 529A: Qualified ABLE Programs, Wealth Strategies Journal, June 26, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

June 30, 2015 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, June 26, 2015

Life Settlement May Provide For Long Term Care Of Dementia Patient

Old WomenFull time, in house care for a person suffering from dementia or Alzheimer cost an astounding amount every year. Medicare does not cover long term care and Medicaid only applies to those with little or no money which often leaves the family to pay the cost. However, if a patient has a life insurance policy, they have the option to sell the policy on an open market to provide instant liquidity to pay for care. There is a downside though, the immediate payout will be for a percentage of the policies' face value and the seller must continue to make premium payments to maintain the coverage. But a family that needs money now should carefully explore a settlement as it offers, in certain circumstances, the best option to care for a loved one in their dying days without wrecking the survivor's finances.

See Jeff Hallman & Scott Thomas, Families of Alzheimer’s patients turn to life settlements, Life Health Pro, June 25, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.   

June 26, 2015 in Death Event Planning, Disability Planning - Property Management, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, June 9, 2015

A Few Simple Moves To Make When A Client Shows Signs Of Dementia

Wheel ChairWhen a client starts to show signs of dementia or Alzheimer an estate planner may be put in a difficult position concerning what action to take. However, there are a few simple steps that every adviser should take in that situation.  First, always consult with company policies established for such an event and with supervisors who might be in a better position to take action. Planners should also have all key documents gathered together in advance so that any guardian that might be appointed will have access to all key financial information. These steps, taken along with others, should help ensure that the client is protected in their time of need.

See Dave Lindorff, What to Do When Clients Show Signs of Dementia, Financial Planning, May 19, 2015.

June 9, 2015 in Disability Planning - Property Management, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Friday, June 5, 2015

Most Americans Have Little Emergency Savings And How To Fix It

Piggy BankThe sad truth is that most Americans do not have money saved to cover any emergency that might arise be it minor or major. While most people feel they are safe from serious injury or job loss, little consideration is given to the smaller problems that might crop up such as car repairs or a minor, but expensive, hurt. One tip for everyone is to keep savings in a money market account or similar instrument that pays a reliable interest rate and offers easy liquidity. Planners should also look at what liabilities exist, such as a car or house payment, and make sure those obligations are taken into account. In the end, the general rule of thumb is six months of savings enough to cover almost all household expenses.

See Jennifer Waters, Emergency Savings — Here’s What You Really Need, Market Watch, May 28, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

June 5, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally | Permalink | Comments (0)

Thursday, June 4, 2015

No Change To Medicaid Penalty Period Unless All Funds Returned

GavelWhen a women in New Jersey sold her house she transferred half the proceeds to nephews in order to reduce her assets to qualify for Medicaid. However, the act was discovered and a 387 penalty was imposed, which restricted her ability to enroll, prompting a nephew to return $17,000 in order to reduce the penalty period.

In C.C. v. Division of Medical Assistance and Health Services, the court held that complete restitution of the transferred funds must occur before reconsideration of the penalty period is allowed. The court stated that federal and New Jersey law clearly requires all funds to be returned before the penalty can be reevaluated.

See State Cannot Modify Penalty Period Unless All Transferred Assets Are Returned, Elder Law Answers, June 2, 2015.

 

June 4, 2015 in Disability Planning - Property Management, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, May 26, 2015

Three Documents Every 18 Year Old Should Have

Alicecooper18It is always a good idea to plan ahead for not only your client, but also your client’s children.  When a client’s child turns 18 they should have a will, healthcare power of attorney, and property power of attorney.  It makes good business sense for an estate planner to build a working relationship with not only his or her client but also the client’s children since they will be inheriting many of the assets that you helped make plans for.  It is true that 18 year old individuals do not often have a lot of property or assets, but it is still important to plan for unexpected medical emergencies by having a will and naming a person who would have power of attorney.

See David H. Lenok, What Documents Do Your Clients 18-Year-Old-Children Need?, Trusts & Estates, May 26, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 26, 2015 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

How To Avoid Retirement Pain After A Sudden Disability

Wheel ChairThe risk of disability from an unexpected injury is a sad but ever-present fact of life; when it strikes near retirement it can lead to stark financial decisions. Many people opt to dip into savings to cover the unexpected expenses from the injury or illness in addition to maintaining their standard of living. Then, the remaining investments tend to be moved into low risk, and low yield, retirement plans which further pressures the health of the savings. Instead, keep retirement funds in plans that outpace inflation and slash expenses with anticipatory cuts if it is clear that a standard of living downgrade is inevitable. This strategy will help prevent the loss of retirement money down the line and put the individual in control of the new circumstances.

See Kyle Krull, When a Disability Derails Your Retirement Plans, Wealth Managements, May , 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 26, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Friday, May 22, 2015

Common Estate Planning Mistakes That People Need To Avoid

Plan aheadA large number of people often make estate planning mistakes.  Kyle E. Krull, an attorney involved in estate planning, wrote about his own embarrassing experience of forgetting to prepare a durable power of attorney for a loved one when he was a young captain in the U.S. Army.  Mr. Krull wants more people to become aware about the need to plan ahead.  He suggests that people update their wills, trusts, powers of attorney, and healthcare directives every five years or whenever a major life event happens.  Not planning ahead can lead to consequences if something unexpected happens to a loved one. 

See Kyle E. Krull, Avoiding Estate Planning Gotchas, Wealth Management, May 19, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 22, 2015 in Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 20, 2015

The ABLE Act Has Some Drawbacks

Able actI have previously discussed the ABLE Act, which allows for the creation of a trust to help pay for the expenses of a person with a disability without disqualifying that person from receiving government benefits.  As of now there are eleven states that have enacted the ABLE Act and another six states with pending legislation.  In order to benefit from the law a person would need to live in a state that has enacted the ABLE Act.

One problem with the ABLE Act is a Medicaid recovery procedure called a “clawback.”  If a person with a disability who received Medicaid benefits dies with money still left in their ABLE account Medicaid will be able to make a claim to that account through its clawback option.  Some families might prefer setting up a traditional special needs trust as an alternative to using an ABLE account.  The ABLE Act is still a good idea for people with disabilities who want to save for themselves without risking the loss of government benefits.

See Liz Weston, The Limitations Of ABLE Accounts For The Disabled, Reuters, May 18, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.      

May 20, 2015 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, May 11, 2015

The ABLE Act Provides New Alternatives to Help With Disability Planning

ABLE1 I have previously discussed the ABLE Act, which provides a vehicle for families to save for the future care of their loved one with a disability through an account made available by similar legislation for 529 plans. One of the greatest benefit's of ABLE's passage is that it brings awareness to the importance of saving for a disabled child.  An often overlooked issue affecting families with special needs children is saving for the future without jeopardizing eligibility for supplemental security income benefits.  A person can often be disqualified from receiving these government benefits if they put more than $2,000 into a savings account. 

There have been two traditional methods of handling this situation.  One is creating a special needs trust.   A first-party special needs trust is good for people with large sums of money, but it is impractical for people wishing to invest smaller amounts because of the costs of creating and managing the trust.  Another method is a “Medicaid spend down,” which involves buying items necessary in order to get the balance of their account below the $2,000 threshold; yet, this remedy can often be wasteful.  The new ABLE accounts will hopefully provide a better alternative investment strategy.

See John W. Nadworny, Incorporating the ABLE Act into Special Needs Planning, Journal of Financial Planning, May 2015.  

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 11, 2015 in Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)