Thursday, June 6, 2019
One piece of good news from Alabama that caught my eye was the passage of a new law regarding pensions and Special Needs Trusts. Here is the press release from the firm of one of the attorneys integrally involved in this legislative effort:
A new act has been passed by the Alabama Legislature and signed into law by the Governor that will allow participants in the Retirement Systems of Alabama (“RSA”) pension plan to direct proceeds to pass to a special needs trust for a beneficiary with a disability who receives government benefits. Sirote & Permutt shareholder, Katherine N. Barr, a member of the firm’s Private Clients Trusts and Estates Group, recognized the need for this important statutory change when doing estate planning for RSA employees and retirees who wanted to leave their RSA pensions to children with disabilities receiving SSI and Medicaid. The RSA provisions required the pension payment to be paid directly to the child, which caused a loss of these critical government benefits in most cases. With input from RSA, Ms. Barr prepared legislation to correct this problem. State Senator Cam Ward from Alabaster, Alabama introduced the legislation as SB 57 this session and State Representative Matt Fridy from Montevallo, Alabama introduced to it the House. Both the House and Senate passed it unanimously. Governor Ivey signed the legislation on May 22, 2019. The Act covers all RSA retirement plan participants and will become effective August 1, 2019. Ms. Barr states that it took more than three years to obtain this result. This legislation will benefit individuals with disabilities for years to come by allowing them to receive the pension payments in a manner that will not affect their Medicaid and SSI payments. The pension can now be directed to a certain type of special needs trust upon the death of the plan participant. The trust can be set up in advance or following the participant’s death. The Alabama Family Trust can be designated to receive the benefit, as can a private trust.
Well done Katherine!