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.
Indiana Super Lawyers and Best Lawyers Announcement. I am proud to announce that I have again been selected for inclusion in the 26th edition of The Best Lawyers of America for 2020 in the area of Trust and Estates, and was selected again as an Indiana Super Lawyer for 2019 in the area of Elder Law. I have also again been selected for inclusion in the Martindale Hubbell Bar Register of Preeminent Lawyers.
Estate And Financial Planning “Gaps”. It is a good idea to review your planning arrangements from time to time. In fact, it is generally recommended that estate plans should be reviewed at least every five years, and more frequently if circumstances change. It is not at all unusual for clients to establish a plan involving a will or a trust, or both, and then not to revisit that plan for twenty years, or perhaps it is never reviewed until death. In this age of rapid change, that practice is a route to disaster. It is very important to address assets of a special type or which may create specific and possibly even unanticipated problems. If firearms are owned, consideration should be given to the best way of transferring or disposing of such weapons. What is the best way to handle a collectible or relic? If the weapon is a Title II firearm requiring ATF registration, then advance planning is particularly important. Non-Title II weapons do not require any particular registration in Indiana, but for safety and liability reasons, if they are to be disposed of, they should be disposed of in a particular way. It might be a good idea to provide instructions to the family.
What about items of particularly sentimental value which may not have a great deal of intrinsic value? A good alternative is to allow certain family members to make selections on either a “round robin” or mutually agreeable basis, and in the case of a failure to agree, to require that particular items be sold. One can also make a list, and if the list is referred to in a will or trust, then the list can be changed later without changing the will or trust. These issues need to be discussed.
Suppose there is an unusual asset which may have significant value but which, because of its uniqueness, may be difficult to appraise. Suppose the estate plan was established some years ago, and because of changes in the tax laws, the plan no longer makes sense? A good example of that is a joint trust, which might split into two separate trusts at the time of the predeceasing spouse’s death. While such plans may still be appropriate, in many instances there can be a significant loss of a tax benefit, thus possibly giving rise to significant capital gain taxes later, which might have been avoided if a different plan had been substituted. Document review allows an opportunity to review what was done in the past in order to determine whether continuing that plan in effect currently would still make sense. Unfortunately, too many people fail to scrutinize their previous arrangements and documents at different points in their lives until emergency circumstances dictate crisis planning changes.
Social Security Changes Impacting Special Needs Trusts. The Social Security Supplemental Income (SSI) program allows for the payment of a monthly benefit to disabled beneficiaries of limited means and income. Some of the new rules affecting SSI benefits may apply also to the Medicaid program. The SSI program is governed by a body of rules referred to as the Program Operations Manual System (“POMS”). Recent changes in the POMS have clarified a number of issues relating to special needs trusts.
There are many types of special needs trusts. If a parent establishes a special needs trust (“SNT”) for a child or grandchild, that type of “third party” arrangement is not subject to many of the special rules that apply to a first party SNT, i.e., a trust that a disabled beneficiary would create for himself or herself, or which would be created by someone for the benefit of the disabled beneficiary using the disabled beneficiary’s own assets. Readers should review previous issues of this newsletter, or they should access my website, for more specific and detailed information pertaining to SNTs. For the purpose of this newsletter, readers should be aware that one of the POMS requirements is that an SNT must be for the “sole benefit” of the beneficiary. The new POMS update make it clear that other people can be incidental beneficiaries without violating the sole benefit requirement (i.e., the purchase of a television does not preclude someone else from watching it). The POMS changes also make it clear that funds from an SNT can be used to fund an ABLE account. An advantage of this is that funds can be used from an ABLE account to pay for food and shelter expenses, such as rent, without impacting the monthly SSI benefit that the beneficiary is receiving, while if the payment was made directly from the SNT, there would be at least a limited impact on the monthly benefit. The POMS rules establish a number of other changes as well. I will be addressing these changes as well as a number of other issues in my presentation on Elder Law Developments at the 41st Annual Judge Robert H. Staton Indiana Law Update that will take place at the Indiana Convention Center in Indianapolis on September 11, 2019. After that presentation, my website will be updated with materials providing detailed information pertaining to elder law developments over the course of the last few years. Readers may wish to look for those materials when my website is updated after September 11, 2019.
Cost Of Long Term Care. In 2016, total national nursing home and home health care costs were more than $255 billion, representing a $10 billion increase over the previous year. By comparison, hospital care cost Americans $1.1 trillion, physicians’ services cost $664.9 billion, and drugs and other nondurable medical expenses cost $390.8 billion [Centers for Medicare & Medicaid Services, national health expenditure data].
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.