CURRENT ISSUES IN THE AREAS OF ESTATE, TAX
AND PERSONAL AND BUSINESS PLANNING
The information that follows summarizes some of the current issues in the areas of estate, tax and personal and business planning which may be of interest to you. Although this information is accurate and authoritative, it is general in nature and not intended to constitute specific professional advice. For professional advice or more specific information, please contact my office.
Expansion Of SWIRCA & More Pooled Trust. The SWIRCA & More Pooled Trust is a particular kind of special needs trust (SNT) that is designed to benefit disabled beneficiaries of all ages. It is one of the few “safe harbor” SNTs that can be set up using the assets of the disabled person without affecting the eligibility of the disabled person for certain public benefits such as Medicaid and Supplemental Security Income (SSI). For example, a beneficiary receiving public benefits might receive an inheritance, and the receipt of that inheritance would cause the beneficiary to lose public benefits. The SWIRCA & More Pooled Trust would allow the inheritance to be placed in a trust sub-account for the beneficiary without affecting the beneficiary’s eligibility for public benefits, and as long as the trust funds are used properly, the quality of life of the beneficiary can be improved without affecting the beneficiary’s Medicaid or SSI eligibility. It can be a Godsend for many disabled people who otherwise have very limited benefits and exist with minimal financial support. There are a few other pooled trusts, but the advantage of the SWIRCA & More Pooled Trust, in my opinion, which is why I wrote it and SWIRCA & More sponsored it, is that we have a local trustee. Old National Bank’s trust services are utilized while the experienced and compassionate SWIRCA & More caseworkers monitor the needs of the beneficiary. Until recently, the SWIRCA & More Pooled Trust was available only to beneficiaries in the SWIRCA & More service area, which includes the counties of Gibson, Perry, Posey, Spencer, Vanderburgh and Warrick counties. Now, however, the SWIRCA & More Pooled Trust is available to beneficiaries throughout the State of Indiana in appropriate cases. If you know a disabled beneficiary, or a family with a disabled family member, please keep in mind that the SWIRCA & More Pooled Trust may provide significant help and assistance. It can even be used by a parent or other family member who wants to set funds aside for a disabled family member when there may not be enough money available to justify a stand-alone trust. It is relatively easy to implement a SWIRCA & More Pooled Trust sub-account and the cost will be substantially less than establishing and maintaining a free-standing trust arrangement. Further, with small trusts, it is virtually impossible to find a corporate trustee to serve, while in the case of the SWIRCA & More Pooled Trust, the professional, capable and experienced services of Old National are fully available at charges which are drastically reduced as compared to larger trusts. For additional information concerning the SWIRCA & More Pooled Trust, contact Rhonda Zuber, the SWIRCA & More President, at firstname.lastname@example.org, c/o SWIRCA & More, 16 West Virginia Street, Evansville, Indiana 47710-1742, or contact Jillian Hall, the SWIRCA & More Special Programs Coordinator, at email@example.com. The telephone number for SWIRCA & More is 812-464-7800.
Trust Decanting To Implement A Special Needs Trust. To “decant” a trust means to set up a different trust, which is done by the trustee of an existing trust, and then the assets of the old trust are moved into the new trust with certain different terms and conditions. It is one way to change a trust, or certain implications concerning the trust, compared to other alternatives, such as a trust modification. A modification of an existing trust would usually require court approval, while decanting an existing trust may or may not require court approval depending on the requirements of Indiana’s decanting statutes. Trust decanting can be used to avoid certain unanticipated tax implications of a trust, or to change the nature of a beneficiary’s interest so that the beneficiary might be impacted more favorably, as well as to avoid or cure certain trust administration problems. In New York case, the Matter of Alan D. Kroll, etc. v. New York State Department of Health, 2016 NY Slip OP 06499,OCT 2016, File No. 369907/12, No. 2016-06499 (Supreme Court of New York, Second Department, October 5, 2016), the court allowed a Trustee of an existing trust to appoint the assets of the existing trust to a new special needs trust. The goal was to permit the beneficiary to continue to receive certain public benefits, such as Medicaid, which the terms of the existing trust would have precluded. Indiana’s decanting statute would appear to allow the assets of a non-conforming trust to be transferred to a qualified special needs trust depending on the particular facts and circumstances. Although there are other planning options available in such circumstances, the use of decanting is another arrow in the quiver holding various planning options that might be utilized in appropriate planning circumstances.
Is It Time To Review Your Buy/Sell Agreement? Shareholder agreements are frequently used in small business situations to protect the owners of the business from the death or other departure of another owner. It might provide for the sale of the departing owner’s interest, as well as determine the price and payment terms, and usually would restrict transfers completely or limit them to other stockholders or certain family members. Since relationships change, and businesses change, an agreement done several years ago will probably not reflect the current actualities of the business. The price formula may no longer make sense, and if the payment terms are too rapid, there may not be enough money in the business to finance the purchase. There are fairly significant and complex tax issues relating to stock transfers, especially in the case of a redemption when the corporation purchases a shareholder’s stock. If you visit your family physician several times a year, it does not make sense to allow what may be your most significant financial resource to languish unattended after many years, the result of which may be an absolute financial morass when the untimely death or disability of an owner occurs.
Additional Information. Future issues of this Newsletter will address other issues of current interest. Please contact my office with any questions that you might have.