Written by Robert T. Nickerson
When many people hear the term “estate plan”, they assume that the direction only flows from adult to child; as in once something happens to the parent, when the child (assuming their an adult) will be the beneficiaries to their assets. What most don’t know is that there are situations in which it can go to opposite direction as well. This is called a “reverse estate plan”.
To start, it’s usually not about ensuring that parents can inherit from adult children (though that can also be the case). What it is about is creating some wealth opportunities for the family after taxes.
As time flows and parents retire, it’s common that the adult children will end up in a higher tax bracket as their own income increases. Reverse estate planning ought to be considered especially if mom and dad don’t end up using all their lifetime estate and gift tax exemptions. The goal overall is using the estate plan to transfer assets in a more tax advantage way.
A good example would be that a irrevocable trust is set up. You have adult children that make the transfer (which would be assisted through an estate planning attorney). The parents then have a legal irrevocable trust crafted as a way to pass on those lifetime exemptions to their grandchildren or great-grandchildren. Though this would mean it couldn’t be changed once everything is officially signed, this would create very little federal tax.
What could also happen is using loans to help with assets that appreciate. So instead of taxable money being an asset for beneficiaries, the adult child would make personal loans to their parents. The parents then use that to purchase assets that can appreciate while also paying back that loan. That can be completely tax free! The parents can even make those assets lifetime gifts, by classifying them as lifetime exemptions.
These are just some examples of how these methods can be done from child to parents through estate plans as a way to reduce to tax burden. One of the reasons that I wanted to bring this up is because by 2025, this law could be changed.
The 2017 is set to expire after 2025 in which the lifetime exemptions would be cut in half. Rather then wait, I would suggest thinking about a reverse estate plan tactic to handle assets you’d rather not be taxed on. It can benefit the family, but especially the children you’d want have a beneficiaries. Excess exemptions are only good to use for a limited time.
The Nickerson Law Office can help guide you through potential estate planning that can ensure a lower or even no tax burden, depending on your assets or the kind of trust that needs to be set up. Click on the button below to contact us for more information.
Written by Jill Roamer J.D.
The Americans with Disabilities Act (ADA) is a broad-sweeping federal law meant to eliminate discrimination against those with disabilities. The ADA doesn’t specifically address polling places, but Title II requires equal voting rights for those with disabilities. As such, state and local governments must ensure that those with disabilities have physical access to polling places. In addition, reasonable modifications of voting procedures are required to meet an individual’s needs.
However, new trends in voting laws over the last couple of years are being hailed as discriminatory towards those with disabilities or mobility issues. Those with disabilities or mobility issues oftentimes use non-traditional methods to cast their votes: mail-in ballots, ballot drop-boxes, curbside voting, or inciting the help of another at the voting booth. Altering these methods is often the focus of these new laws. The Brennan Center for Justice states that “Between January 1 and December 7 , at least 19 states passed 34 laws restricting access to voting. More than 440 bills with provisions that restrict voting access have been introduced in 49 states in the 2021 legislative sessions.”
Up first is the new law in Texas, which was effective in December 2021. Voters who mail in their ballots must now provide their driver’s license number on the ballot (or the last four digits of their social security number if they do not have a driver’s license); that number must match the number provided on their voter registration. For some, their voter registration paperwork was submitted years ago, and they may not remember what number was provided. Or, the voter may not be aware of the new requirement and not provide that information on the ballot.
In addition, the new Texas law has additional requirements for assistants at the polling location. The voting assistant must now sign a form containing their information and take an oath. There are now criminal penalties if the assistant helps the voter in any way that was not authorized by law or pre-approved with voting officials beforehand. These additional requirements will likely deter folks from assisting those with disabilities when voting. Finally, the Texas law now bans 24-hour voting and drive-through voting, and adds provisions to bolster the authorities of poll watchers.
Georgia’s S.B. 202 modified the rules regarding absentee ballots. The old law allowed an absentee ballot to be requested up to 180 days before the election. Under the new law, that timeframe is decreased to 78 days and cuts off the ability to request such ballot 11 days before election day. Absentee voters must now include their driver’s license number on the ballot. Georgia’s new law also limits the number of drop boxes that can be instituted.
Finally, there is now a ban on curbside voting in Alabama; all ballots and voting machines must remain inside the polling place. While it is understandable that legislatures want to make voting more secure and fair, how does this interact with the rights of those who are disabled? Is there a way to maintain security and privacy while still affording accommodations for those who need it? For a handy list of all the recent bills and laws involving these issues, click here.
The Nickerson Law Office is committed to helping families with loved ones with special needs. Click on the button for more information about how we can help put you at ease and ensure your future is secure.
Written by Jill Roamer J.D.
A First-Party Special Needs Trust (SNT) and a Third-Party Supplemental Needs Trust (SNT) are used when a beneficiary would like access to extra funds without jeopardizing their eligibility for public benefits. Let’s review some key differences between these trusts.
The First-Party SNT is irrevocable and is used when the assets funding the trust belong to the beneficiary. This would be if an individual has money in the bank, or comes into money, such as via a settlement or inheritance. If the funds are obtained through a settlement, an MSA subtrust may be needed. (More on that in a bit.)
Public benefits programs will let that individual still have access to the money, via the terms of the trust, but a payback provision is required. The payback provision states that after the individual has passed away, any remaining funds must be paid to the state to the extent the state expended Medicaid funds on that individual. Any funds remaining after the state has been repaid can be distributed to residuary beneficiaries.
For social security benefits, in order for the corpus of the First-Party SNT to be a non-countable asset, the First-Party SNT must have been funded before the beneficiary’s 65th birthday. (See POMS SI 01120.203B.) If the beneficiary has a structured settlement and those payments extend beyond the beneficiary’s 65th birthday, the additional payments to the trust after the 65th birthday will not be a countable asset so long as the settlement was reached and the payments began before that magical birth date.
The federal statute that keeps the corpus of a First-Party SNT from being a countable asset for Medicaid-eligibility purposes is 42 U.S. Code § 1396p(d)(4)(A). As such, a First-Party SNT is oftentimes called a d4A Trust. Per that Code section, the trust must be funded before the beneficiary’s 65th birthday.
The beneficiary of a First-Party SNT must be disabled within the definition of § 1382c(a)(3). A First-Party SNT must be established by the beneficiary, a parent, a grandparent, legal guardian, or a court.
A Medicare Set-Aside (MSA) subtrust is needed when certain types of settlements are reached, such as a Worker’s Compensation claim or injury settlement. If a settlement is reached in a case where future medical payments will be made from the settlement money, Medicare wants to ensure the settlement funds designated for that purpose will be preserved. So those funds are placed in the MSA subtrust to be used for future medical expenses.
A Third-Party SNT is funded with assets that never belonged to the beneficiary. As such, a payback provision is not required and thus the terms of the trust are more favorable. This trust is used when someone wants to put their own money aside for the beneficiary’s care and benefit. There are no age restrictions on when the Third-Party SNT must be established.
The Third-Party SNT can be revocable or irrevocable. However, the revocable Third-Party SNT in ElderDocx is designed so as to become irrevocable on certain events: upon the death of the Grantor, when the trust is funded with retirement account benefits, or if someone other than the Grantor funds the trust with a specified dollar amount. While the Third-Party SNT is revocable, it is a grantor trust and the Grantor will be taxed on the income of that trust. If someone other than the Grantor funds the trust with a large dollar amount, the Grantor would likely not want to be taxed on the income from those funds.
The Grantor may choose to make the trust irrevocable from the onset if she knows that retirement account funds will be funded into the trust, if someone other than the Grantor plans on funding the trust with a substantial amount, or if she otherwise doesn’t want to be taxed on the trust income. Also, if the Grantor dies while the trust is revocable, the funds in the trust will be included in the Grantor’s estate; she may not desire that outcome and so she may design the Third-Party SNT as an irrevocable trust.
The First-Party (Self-Settled) SNT and Third-Party SNT are just two of the trusts available in ElderDocx. Other trusts you can generate using ElderDocx include a Revocable Living Trust, Medicaid Asset Protection Trust, Medicaid Family Protection Trust, Veterans Asset Protection Trust, Miller Trust, Sole Benefit Trust, Parental Protection Trust, and Secure Supplemental Needs Trust.
Written By Robert T. Nickerson
Ever since Britney Spears hit the news recently when she was declared independent, conservatorships have been getting more attention. This is nothing new. In fact, conservatorships are much more common then we think. Their not just something for celebrities to use when their not in the right mental mind to make sound decisions. Many families find themselves in a situation in which conservatorships are the best thing for a loved one. Perhaps someone is going through a mental toll of depression, bipolar disorder, dementia or the various types of conditions that prevent them from living on their own. Or perhaps their in a situation where they cannot be trusted with their own finances. Or even in the case of the Nickerson Law Office, the families with special needs loved ones who aren't sure what direction to take.
Conservatorships don’t have to be a bad thing; we just need to be sure that it’s being done when another person needs to step in for the well-being of someone else. So that’s why I found it interesting when retired actress Amanda Bynes made the rounds when it was announced that she filed to have her conservatorship terminated.
While she is not as famous as Britney Spears, Amanda Bynes certainly made an impact with children and families in the 90’s and early 2000s. Most remember her from her comedic television performances from a variety of Nickelodeon shows such as All That, Figure it Out, and her own sketch series, The Amanda Show. She’s no stranger to movies either, showcasing her talent in Big Fat Liar, Robots, Hairspray and Easy A. All of that couldn’t have been easy for a child actress to juggle. Like a lot of stories involving them as adults, because they never had the chance to experience an ordinary life and grew up within an industry that has an open dark side, she would succumb to a lot of temptations.
A mix of run ins with the law and being diagnosed with bipolar disorder only fueled the troubles she faced. She hit her worst in 2013 when she set a small fire on her parents driveway and was placed on a 72 hour mental health hold in a hospital. This set the path in place in which her mother was granted a temporary conservatorship over her daughter. This of course wouldn’t be temporary. Her mother then next year would again receive conservatorship over Amanda while the former actress had enrolled in college for fashion design. For the next nine years, as far as we know, Amanda had managed to take more control on her health and has settled well into her education to even receive a bachelors from FIDM.
It’s hard to talk about everything that happened behind closed doors, but it’s said that her estate has an estimated net worth of $3 million. We of course have no clue on what her relationship is like with her mother. She’s been active on her social media pages and has talked about her struggles with drugs and mental issues, but has been quiet about how she felt about her mom making the majority of her decisions. This has included treatment for mental health and substance abuse along with transitional living in sobor homes.
According to her attorney David A. Espuibias, the current conservatorship is set until 2023, but if they go to court and challenge that, it could be terminated earlier similar to how Britney Spears had been able to do so. A hearing is set for March 11.
So far, a capacity declaration has been filed by Espuibias. This is a legal form that’s completed by a medical professional who has had past experience with Amanda and can give an update on her current status. This form provides information for the court to determine if a conservatorship is needed. The hearing will also provide an opportunity for Amanda to prove that she can make medical, financial and legal decisions. This isn’t to say her mother can’t get involved, but rather if the retired actress can prove she is of sound mind to be fully independent.
Now whether she is of sound mind… only Amanda and her health care team knows. We’ll have to wait and see what happens, but I wanted to emphasize that no matter who you are, anyone can be in a similar situation. Conservatorships can both be a safety net for a loved one you want to help and a cage for someone who thinks their ready to get out but can’t. Plenty of estate plans can include what happens to those loved ones if their currently within a conservatorship. This is more common with elders and those with special needs but I’ve seen a variety of reasons.
The Nickerson Law Office is more then happy to help your family and talk about whether a conservatorship can be beneficial. Click on the button below to contact us for more information.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!