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.
SWIRCA & More Dementia Friends Program. The SWIRCA & More Dementia Friends program is part of a global movement developed by the Alzheimer’s Society in the United Kingdom and now underway in the United States. The goal is to help everyone in a community understand five key messages about dementia, how it affects people, and how we can each make a difference in the lives of people living with the disease. People with dementia need to be understood and supported in their communities. Readers can help by becoming a dementia friend. Part of the program is understanding the normal aging process compared to Alzheimer’s disease and other forms of dementia. It is a part of the normal aging process to sometimes forget names or appointments, but remembering them later, and to sometimes have trouble finding the right word. Everyone misplaces things from time to time, and most people have specific ways of doing things and become irritable when a routine is disrupted. However, signs of dementia are: memory loss that disrupts daily life; difficulty completing familiar tasks at home or at work or at leisure; new problems with words in speaking or writing; and changes in mood and personality. Eighty percent of people with dementia are cared for in their homes. Family caregivers for Alzheimer’s disease and other forms of dementia have an increased risk for anxiety, depression, and a poorer quality of life than family caregivers of others in other conditions. Family care giving for someone with dementia is becoming a public health issue. SWIRCA & More offers periodic presentations relating to the Dementia Friends program. The program in February will be held February 10, 2020 from 1:00 p.m. – 2:00 p.m. at the SWIRCA & More office at 16 West Virginia Street, Evansville, Indiana 47710. For additional information, contact Linda Wright, B.S.W., the SWIRCA & More Community Transitions Supervisor, at email@example.com, 812/492-7443.
Designating Trusts As Beneficiaries Of Retirement Benefits. As we approach the beginning of a new year, the time is right to revisit some of the issues pertaining to trusts being designated as beneficiaries of retirement benefits. Making the right decision when designating beneficiaries for an IRA can have a significant impact on the income tax consequences of the retirement plan distributions. The most common objective of planning with retirement benefits is to stretch the distribution period of the inherited benefit over the longest time period possible. To do this, the age of the inherited retirement benefit beneficiary of the trust is used. The younger the age of the beneficiary, the longer the applicable distribution period. A longer distribution period allows assets within the retirement benefit to continue to grow on an income tax-deferred basis. In the case of a trust, there can be separate shares so that there could be multiple distribution periods depending on the age of the beneficiary of each share. If there will be multiple beneficiaries, and one of the benficiary’s shares will be received by a trust, then the beneficiary distribution must designate each individual child as a beneficiary and then the trust for the particular child as a beneficiary of a separate share. Please note that in the case of a trust, the applicable distribution period will depend on the age of the beneficiary, and not with what the trust says in terms of how long it will last or when distributions from the trust will be made. Also, trusts have to meet specific requirements in order to be treated as a qualified beneficiary. Too many people plan flippantly when it comes to retirement benefits. Your financial advisor may, or may not, coordinate beneficiary arrangements with your individual estate plan. The parties involved in that planning process must work together. Those parties will typically include your attorney, your tax advisor, and your financial advisor. Many so-called financial advisors, unfortunately, are geared more toward generating commissions rather than in-depth planning and coordinating beneficiary arrangements with the client’s particular estate plan. Recently passed federal legislation changing IRA distribution periods will be discussed in the next newsletter.
Can A Medicaid Beneficiary Keep A Private Room? It is a matter of fact that in our county area, some nursing facilities will allow a Medicaid resident to pay extra for a private room, while some will not. While there are some provisions of federal law that might be deemed to indicate that a facility which is already being paid for room and board cannot impose a separate charge for a private room, nevertheless there is a specific federal statute that permits facilities to “charge a resident who is eligible for Medicaid for items and services” the resident has requested and received. In my opinion, there is no federal or state prohibition against the family paying an additional charge for a private room for a resident who is eligible for Medicaid, but some facilities do not allow it while others do.
Including Specific Powers In A Power Of Attorney. Although Indiana law allows a durable general power of attorney to incorporate the Indiana Power of Attorney Act, thus including by that reference all possible powers allowed by Indiana law, most powers of attorney do include specific acts that the agent will be allowed to perform. Doing so is a good idea, since dealing with third parties, such as banks and insurance companies, means that there could be many interpretations of what an attorney-in-fact under a power of attorney is allowed to do, and by including those specific powers, many questions and disagreements can be avoided. It is always a good idea to incorporate specific estate planning powers, as well as specific asset protection powers, making it very clear that the attorney-in-fact under the power of attorney is allowed to transfer assets, set up trusts, etc., in order to protect assets and qualify the principal under the power of attorney for Medicaid. It is very common for powers of attorney to refer to safe deposit box opening and drilling, signing tax returns, paying the attorney-in-fact or reimbursing the attorney-in-fact for expenses, payment of home or assisted living care costs even though institutional care might be less expensive, arranging for the care of pets, providing access to online bank accounts or other “digital assets” and similar matters. In my practice, in general, when I authorize gifting or establishing trusts, I make it very clear that the attorney-in-fact must act consistently with the principal’s estate plan, and that the attorney-in-fact cannot be benefited disproportionately compared to other beneficiaries. Powers of attorney need to be tailored and specific to each individual planning situation. Besides naming the agent, also known as the attorney-in-fact, to act under the power of attorney, there should always be at least one designated successor. In general, health care provisions should be included in a separate document. Readers are encouraged to read previous issues of this newsletter in which many of these issues have been addressed in detail.
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.