January is often a time for making resolutions for the New Year or looking back on the notable events of the prior year. In the world of estate planning, elder law, and planning for persons with disabilities, 2014 brought several notable changes.
In June, the Supreme Court of the United States issued its opinion in Clark v. Rameker, deciding that an inherited IRA is not entitled to the same creditor protections that other retirement accounts receive under the bankruptcy laws. This is important in the estate planning arena as many parents are concerned about protecting their children’s inheritance from creditors such as a divorcing spouse, a lawsuit, a bad business investment, or bankruptcy. Prior to the Rameker decision there was uncertainty about whether or not inherited retirement accounts are creditor-protected assets. Although the Court did not decide the case in the way we had hoped, knowing that inherited retirement accounts are not automatically protected means that individuals who have large retirement assets to pass on at death can take steps during their lifetime to protect those assets from their beneficiaries’ creditors by creating a trust specifically designed to provide asset protection for qualified retirement assets. Check out my article in the Samuel, Sayward & Baler LLC July newsletter to read more about this.
In August, Governor Patrick signed the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA) into law. The Act, which is now the law in 40 states, means that Massachusetts state courts may recognize the authority of an individual who was appointed as guardian (the person who makes medical or residential decisions) or conservator (the person who is in charge of financial matters) in another state. Prior to the enactment of this law, if a New York resident had a conservator appointed for her by a New York court and that conservator needed to sell the individual’s Massachusetts real estate, Massachusetts law required that someone be appointed as conservator by the Massachusetts probate court in order to have the authority to sell the property. The Act also includes provisions addressing issues that can arise when family members try to use the courts to improperly gain control over an elderly relative. Visit MassNAELA to learn more about UAGPPJA. Of course, the better option in all cases is to prepare for the possibility of future incapacity by creating and maintaining a comprehensive, up-to-date Durable Power of Attorney and Health Care documents which are effective in states in which you own property or anticipate that you may live in the future.
Lastly, President Obama signed the ABLE Act into law just last month (December, 2014). The ABLE Act has also been enacted in Massachusetts. ABLE, which stands for Achieving a Better Life Experience, allows for tax-free savings accounts to be established and funded for individuals with disabilities. Many governmental benefit programs which provide services to people with disabilities, including medical coverage, require that the applicant have very limited resources. Not only does this limit a person with disabilities from saving for his or her future, it means that making a gift, or leaving an inheritance, to a person with a disability can cause the recipient to lose important benefits. At the same, individuals with disabilities and their families often struggle financially. The ABLE Act is intended to mitigate the harshness of the eligibility rules. Although signed into law in 2014, the details of the federal law still need to be hammered out and this is expected to occur in 2015.
Happy New Year and best wishes for a happy, healthy 2015!
Published January 2015