Written by Jill Roamer, JD
In a recent case out of Ohio, a court of appeals analyzed whether the state could recover child support arrears from the estate of a Medicaid recipient. Here, Betty was the legal guardian of her grandchildren, Emily and Bradley. Their father was under court order to pay child support, with Betty as obligee. After both children reached the age of majority, Betty died intestate.
In the probate case, the state filed to recover the amount expended upon Betty during her life. The only asset of the estate was the intangible personal property of the child support arrears. Emily filed an Exception to the Inventory, claiming that the child support arrearages were her personal property and not an asset of the estate. After a hearing on the matter, the trial court ruled that since Betty was the obligee and the amount owed was reduced to a judgement, the arrearages were a party of Betty’s estate.
Emily appealed, arguing that the arrearages were not reduced to judgment before Betty’s death and that she had a superior claim to the money. Emily’s arguments relied heavily on In re Estate of Antkowiak, 95 Ohio App. 3d 546 (6th Dist. 1994). In that case, the court ruled “the existence of a child support arrearage upon the beneficiary’s emancipation and the death of a custodial parent establishes a prima facie case that the emancipated child has been denied the standard of living to which he or she was entitled…he or she has a superior claim to the arrearages. * * * [T]he right to collect support arrearages passes directly to the emancipated beneficiary upon the death of the custodial parent.” However, in that case, the court was clear that this ruling applied only to child support arrearages that had not been reduced to judgment prior to the obligee’s death.
The appeals court here held that Antkowiak was a narrow ruling and most courts do not rely on that precedence. Instead, most courts rely on the general rule that the child was not denied the standard of living to which she was entitled. Rather, the obligee assumed an additional burden when child support wasn’t received, and so that money is owed to them, and subsequently, their estate.
The state argued that since Ohio has expanded estate recovery, whether the arrearages are included in Betty’s probate estate is inconsequential. The court agreed, citing the definition of “estate” in R.C. 5162.21(A)(1):
“(a) All real and personal property and other asserts to be administered under Title XXI of the Revised Code and property that would be administered under that title if not for section 2113.03 or 2113.031 of the Revised Code; (b) Any other real and personal property and other assets in which an individual had any legal title or interest at the time of death(to the extent of the interest), including assets conveyed to a survivor, heir, or assign of the individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.” (emphasis added)
In the end, the court confirmed that the trial court was correct when it declined to apply the Antkowiak ruling to the case. The arrearages were Betty’s property and not Emily’s property. And because the state has expanded estate recovery, it was not determinate to decide whether the arrearages were a part of the estate or not. The judgment was affirmed.
Written by Robert T. Nickerson
Don't be afraid to admit that despite hearing about Bitcoin millionaires and Cryptocurrency trailers, you don't understand a lot about this kind of new market. Digital currencies are an intangible, electronic form of cash that only exists on computers. Compared to physical currencies like dollars and coins that are physical, digital currencies are still very new and are in the "wild west" era of regulation in the United States. Congress is even in the middle of "digitizing the dollar" to keep up with China in what appears to be a new kind of economic war. But that’s a conversation for another day. I wanted to focus on the personal ownership of cryptocurrencies and how they apply to your estate plan.
As stated before, Cryptocurrency is so new that there have been stories of people throwing out old computers…forgetting that they have hard drives of Bitcoin still stored, and ultimately neglecting potential thousands and even millions of dollars in real world value. We don't want anybody making the same mistake, especially if their heirs might have a better understanding of how to utilize Bitcoin to their advantage. So how do we integrate Cryptocurrency into an estate plan?
First, we have to have a way for beneficiaries to have access to their digital assets. Bitcoin and other digital currencies are already quite secure, but it'll mean nothing if their stored on a computer that someone can't get into because of a lost password. It's important to state in a will where they can find that information. It'll be interesting as like real money, Cryptocurrency can't be traced. Unless if the transfer is done on a platform like a bank or an online store, then there is no electronic or paper trail that can tack a link between two people who make a transfer. But there's an advantage. Because Bitcoin is digital, a transfer could be make in a moment. Documents need to be created to provide legality and proof of ownership.
Second, we have to look into the risks of Cryptocurrency. It can't be studied and exchange like regular money. Because its market is volatile and can fluctuate at different points throughout the day, it needs to be analyzed more like a stock in a private company. Because Cryptocurrency operates outside of United States regulation (as of 2021), neither federal nor state is liable for any losses due to scam or theft. Security options seem to be forming and we can expect even more to come soon, similar to bankruptcy protection.
As for taxes, the current rule by the IRS is that Cryptocurrency is filed as Property rather then currency. This means that the fair market value is set by conversion into U.S. dollars at “a reasonable exchange rate” and transactions involving Cryptocurrency are subject to the capital gains tax regulations. While that doesn't make sense at all, this is all likely to change beyond 2021. This also means that for trusts, writing in cryptocurrencies needs to have very specific language otherwise the wrong names or terms could create problems.
Our office is one of the few in the area that has experience with wills, trusts, estate plans, and the addition of complex assets. Click on the button below to learn more about how we can make the estate planning process simple.
Written by Jill Roamer J.D.
Social Security Disability Insurance (SSDI) is a program that is overseen by the Social Security Administration (SSA). SSDI is funded through payroll taxes, and a recipient is considered “insured” because that individual has a certain amount of work credits to receive benefits. Those work credits are earned by working for a certain number of years and paying into the Social Security trust fund via taxes paid.
After establishing the onset of a total disability, there is a five-month waiting period before the insured individual can receive SSDI benefits. However, there are a few exceptions to this waiting period. The first exception is for benefits for dependents of the disabled individual.
The second exception is for folks who are reinstating prior SSDI benefits. Meaning, the individual received benefits in the past but then went back to work and stopped receiving benefits. If benefits were once again needed due to the same disability, there wouldn’t be the five-month waiting period and the entire application process would not have to be redone.
There is now a third exception to the five-month waiting period for folks with amyotrophic lateral sclerosis (ALS). ALS is also known as Lou Gehrig’s disease. It is a fast-moving neurodegenerative disease that causes the loss of muscle movements and bodily control. Individuals with ALS lose their motor-function abilities, to the point they can no longer breathe on their own.
The legislation allowing for this additional exception to the five-month waiting period was passed late in Trump’s presidency, and was driven by U.S. Senators Tom Cotton of Arkansas and Sheldon Whitehouse of Rhode Island. Senator Whitehouse said “This represents a simple act of humanity for Americans battling a disease that often moves too quickly for the current system. Allowing patients and their families to immediately access the benefits they’ve earned will offer comfort as they confront a difficult diagnosis. Thank you to the tireless advocates and allies all over the country who joined our fight to get this done.”
The theory behind the five-month waiting period for SSDI benefits is that the disability may pass and the individual may be able to return to work. And the SSA only intended SSDI benefits for folks that had a disability that would last longer than one year. However, for many diseases and conditions, there is no cure. A return to work is virtually impossible. In the weeks before the legislation was passed, other Senators sought to broaden the scope of the new law to include other medical conditions. Advocates and leaders are pushing for new legislation that will eliminate the SSDI five-month waiting period for other diseases that have no known cure and have a short life expectancy.
Social security benefits can be a bit of a cakewalk and bureaucratic, especially if your not sure where to begin. Estate plans that involves family members with special needs often requires looking into the current social security laws and if their a part of the program, how that affects the wishes of the rest of the family. The law offices of Jeffrey C. Nickerson can help navigate a complex rulebook to make it easier. Click on the tab below to learn more.
Written by Robert T. Nickerson
As we get older, relationships can change. Sometimes we lose our loved ones. Sometimes we find someone new and want to be with that person. Sometimes we may even get remarried. In fact, grey divorces, which are divorces that happen to people in their sixties, have been more common in the past ten years. Hence, we've been seeing a lot more remarriages among the senior community. The joy of finding love later in life is always beautiful. But that happiness can also cause you to cloud your judgment and become forgetful in areas that need a little attention…such as your estate plan.
One problem is that under a new marriage, an estate plan that might have been good to go ten years ago will suddenly by out of date and could even cause consequences to your offspring from a previous relationship. Like perhaps your getting involved with someone who also has children from another marriage. There's a lot that could go wrong. In fact, here are four common issues I see and what can be done to avoid them.
Failure to protect your current spouse: I see this a lot, especially with those that have had many wives or husbands before (see my previous article on Larry King and the situation with his last wife to know more). In the event that you pass away without having updated your will to include your new spouse, it'll depend on the state your in, but in most cases, all your assets would go directly to your children. Nothing would go to the new wife. It would then be up to the kids to decide if they want to support a stepparent, but they have no legal obligation. It's unfortunate how family dynamics can go south when a patriarch dies.
What needs to be done is to work with an estate-planning attorney to design a plan that distributes your assets to both your spouse and children. Whether you'll want an equal distribution will depend on how you feel.
Not protecting your children from your last marriage: Like in the last statement where you protect your children but not your spouse, this can also swing in the other extreme; where all or most assets are left to the new spouse with only an "assumption" that they'll distribute assets to the children. This is very risky maneuver that I don't recommend as it puts your children in a stressful position. There are a couple of things you can do.
One option is to have a revocable trust that can provide some flexibility to both a spouse and children.
Another option is to have a separate marital trust set up. What this does is it directly crafts an exclusive fund for your spouse. You can even have a clause added that stipulates remaining assets in the trust are automatically passed to the offspring in the event of a spouses death.
Not protecting against depletion of assets: This one is also common. Let’s say you do trust your spouse enough that you do leave everything or a lot to her with the understanding it'll all pass along to the children when she dies. But because of life, something else like an illness happens, forcing most of the assets to go towards paying those kinds of expenses. What about long term care? That’s another thing I see come up all the time but people don't prepare for it in advance.
What I'd recommend is a life insurance policy that can provide for your spouse, which in turn could lead you to leave your assets. This is something that people wait until it's too late to consider.
Failure to protect your estate from your first spouse: I'm sorry to say just because both sides have signed the divorce papers, you still have work to do if you don't want them to play a part in your estate plan. While a legal divorce may automatically disinherit them (the keyword is "may"), you still need to change the names on retirement accounts and company life insurance plans to properly name the beneficiary.
People tend to forget to change names on those kinds of documents, but not doing so can cause a lot of problems for your children and even your current spouse. Not to mention that you need to make sure that a healthcare proxy has the right names for a power of attorney in the event of a medical circumstance.
The Law Offices of Jeffrey C. Nickerson can help you avoid all of these pitfalls. Estate planning can seem complicated, but we strive to ensure it's simple and creates an ease of mind. Click on the tab below to contact us for more information.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!