Estate Planning and Special Needs (Journal Bundle)

Special Needs Estate Planning — Seven Overlooked Challenges (September 2019)

Parents of children with special needs face seven estate planning challenges unique to their situation. This article will address those challenges as well as provide planning tips.

Author: Harry L. Ehrenberg, CLU, is one of the founders of the Special Needs Estate Planning Task Force, an alliance of financial advisors, attorneys, and trust officers who work with parents of children with special needs. He has been advising in this area of estate planning for over 30 years. He has lobbied at both the state and federal levels on behalf of these families. The position he advocated became part of the tax act of 1993 (OBRA 93). His expertise in this area has been recognized by the Arkansas Bar Association. He has taught the material covered in this article at continuing legal education seminars. Harry is the parent of a child with special needs.

Using Roth Conversions of Legacy Retirement Plans to Fund Special Needs Planning (March 2019)

Financial planners who engage in special needs planning (SNP) must be careful not to overlook legacy retirement plans (i.e., plans from previous employers) as possible sources of funding. While some research exists on the best practices for using Roth individual retirement account (IRA) conversions for general estate planning and wealth transfers, there is little guidance available on how to use Roth conversions of legacy retirement plans to fund SNP tools, such as special needs trusts (SNTs) and Achieving a Better Life Experience (ABLE or 529A) accounts. This article examines the strategy and reasoning for using Roth conversions of legacy retirement plans and suggests there are at least seven advantages of this strategy for clients with SNP issues: 1) access to funds at age 59½, rather than 70½; 2) no required minimum distribution (RMDs) in the lifetime of the account owner; 3) no future taxes; 4) reduced risk; 5) wealth transfer in perpetuity; 6) generally not subject to Medicaid recapture if properly structured (subject to certain conditions); and 7) no limitation on the amount of money that can be converted.

Author: Lewis Hershey, PhD, MA, is professor of marketing and department head in the Department of Marketing, Business Law, and Supply Chain Management at Eastern Michigan University in Ypsilanti, Michigan. He was formerly a financial advisor with American Express and Prudential. A 2009 Paul Mills Scholar, he is a former chapter president of the Southeastern North Carolina Chapter of the Society of Financial Service Professionals and serves on the Society’s University Partners Program Committee.

Author: Annemarie Kelly, JD, LLM, is a practicing attorney and assistant professor teaching health law, informatics, and policy within the College of Health and Human Services Department of Health Administration at Eastern Michigan University in Ypsilanti, Michigan. She formerly worked as a legal compliance officer and state administrative manager serving the Michigan Department of Health and Human Services in Lansing. She has served as counsel for both employers and individuals with disabilities across the Midwest in disability-related regulatory compliance and special needs planning matters. Ms. Kelly is licensed to practice law in Illinois, Michigan, and Iowa.

A 50-State Review of ABLE Act 529A Accounts (March 2018)

This article reviews recent literature, legislation, and account information concerning 529A accounts created under the Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act [26 U.S.C. § 529A (2014)] and analyzes ABLE savings programs across all 50 states. The authors conclude that a 50-state review of ABLE Act rollouts dictates that professional planners should consider six key questions when deciding which state ABLE program best serves a client’s needs: 1) Will program fees for maintenance, disbursement, print, rollovers, administration, or other services unduly burden or otherwise inconvenience the client? 2) What are the state account balance limits? 3) Is the client eligible for a state income tax credit for ABLE account use? 4) Is the client best served by a program that offers a debit or purchasing card to use ABLE account funds? 5) Does this state offer the degree of investment risk that most benefits the client? and 6) How will the investment-related fees for this particular state program impact the client? Best practices for due diligence as well as professional standards of care require that specialists be familiar with the core differences between active state ABLE account programs and then tailor their guidance accordingly.

Author: Lewis Hershey, PhD, MA

Author: Annemarie Kelly, JD, LLM