JANUARY 2024
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.
Super Lawyers Announcement. Back in October, I was happy to announce my selection as one of the Best Lawyers in America for my expertise in the practice area of trusts and estates. I am now happy to announce that I have again been selected for inclusion in the 2024 Indiana Super Lawyers list which is an honor that is limited to 5% of the top attorneys practicing in the State of Indiana. This is in recognition of my practice in the area of Elder Law. I have been designated as an Indiana Super Lawyer by Law and Politics, publishers of the Indianapolis Monthly, from 2007-2015, and again from 2019-2023. I was the first and the only Indiana attorney selected for several years as a member of the Council of Advanced Practitioners (“CAP”) of the National Academy of Elder Law Attorneys, and now I am one of only two who hold the CAP designation in the State of Indiana.
SWIRCA & More Capital Campaign. SWIRCA & More (“SWIRCA”) just announced the public phase of its Building Engagement Capital Campaign. Inspired by its mission and to prepare for the evolution of aging-in-place and enhanced disability services, SWIRCA determined the best way to prepare for the future was to improve on the areas that are most critical for the populations it serves, including seniors, those living with disabilities, and caregivers in Southwestern Indiana. To date, SWIRCA has raised $3.6 million, or 71% of its total fundraising goal, and seeks the support of the community to help reach $5 million. My wife, Becky, and I personally made a very significant commitment. Funds raised by the campaign will help SWIRCA to expand its current programs and services, offer new classes and educational programming, and provide SWIRCA with a larger facility so that it may serve a rapidly growing senior population. Readers may not be aware, but adults 65 and older will be the largest age demographic in the U.S. by 2030. Here at home, our numbers will more than double. In 2021, 53% of the senior population turned to SWIRCA for counseling, nutritional services, health and wellness activities, community-based services, and long-term care. SWIRCA has already experienced a significant increase in demand for its services following the pandemic and must take steps to prepare to assist the growing number of seniors, the disabled, and caregivers in our area, which means additional services, more staff, and a larger physical space. This year, SWIRCA celebrates 50 years of dedicated service, advocacy, and supporting individuals who desire to age independently and with dignity in their homes and (Continued on Reverse Side) communities. If readers are interested in learning more about SWIRCA and how readers can support the Building Engagement Capital Campaign, please visit www.swirca.org. Anyone who would like to take a tour of the facility or needs assistance with age-related or disability questions, please feel free to contact SWIRCA’s offices at 812-464-7800.
Common Asset Protection Planning Errors – Continued. Another common asset protection planning error that people frequently make in planning for Medicaid eligibility is to overlook the existence of life insurance policies, or surrendering policies when planning arrangements are available that would allow for preserving the life insurance policy. In the context of Medicaid qualification, if the death benefit of a policy substantially exceeds its cash value, efforts should be made to preserve the policy. Several options exist: the cash value could be borrowed in order to reduce the countable value of the policy, and then the cash can be used to implement an appropriate planning arrangement as a means of reducing the excess resources; alternatively, a family member could purchase the policy for its cash value, perhaps after implementing a policy loan to reduce the cash value, and the family member could then purchase the policy at its reduced value; or the policy could be transferred as a penalizable transfer which would have a much reduced Medicaid impact because of the reduced value of the policy. If a penalizable transfer occurs, funds might also be transferred which could be used to pay premiums or later used to pay off the policy loan. When an asset protection trust is used, in most instances an insurance policy worth keeping should be transferred to the trust. When that is done, the trust should pay all future premiums and the trust should likewise be designated as the beneficiary. Other options exist for planning with life insurance in the context of asset protection.
Funding Charitable Pledges With Retirement Benefits. If a person designates a creditor as a beneficiary of retirement benefits, using those taxable benefits to satisfy the debt would generally give rise to taxable income following the individual’s death. Since retirement benefits are usually taxed to the recipient, under the tax law the IRS would presumably treat the estate as having “received” the income in respect of the decedent because of the cancellation of the debt. However, a charitable pledge is different. In general, a charitable pledge is not considered a debt for federal income tax purposes. Therefore, leaving retirement benefits to a charity in fulfillment of a lifetime charitable pledge should not cause the estate to realize income when the charity collects the benefits. This should be true even if the pledge was enforceable as a debt against the qualified plan participant’s estate.
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.