IRS Publishes Rules for ABLE Disability Accounts

Last December Congress passed a law authorizing states to offer special tax and public benefit favored ABLE accounts to people with disabilities who became disabled before age 26.

The Achieving a Better Life Experience Act of 2014 (ABLE Act) is designed to enable a limited class of people with disabilities to save for and pay for disability-related expenses without paying income tax or jeopardizing their public benefit (SSI and Medicaid) eligibility.

Earnings on an ABLE account will not be subject to federal income tax, and more importantly, the funds in the account will not disqualify the owner from continued benefits under the Supplemental Security Income (SSI) and Medicaid programs. If program rules are followed, money can be saved for a qualified beneficiary’s future expenses and needs without jeopardizing the owner’s SSI and Medicaid eligibility.

ABLE accounts are only available to residents of a state which has either established its own qualified ABLE program or entered into a contract with another state to provide its residents with access to a qualified ABLE program.

Moving quickly, the Internal Revenue Service has now released proposed regulations implementing the new law. The regulations give guidance to states that want to establish ABLE programs and to individuals who wish to establish ABLE accounts in those states.

Pennsylvania is likely to enact legislation authorizing the establishment of ABLE accounts by qualified residents of the Commonwealth. House Bill 1319 has already passed the House and will now be reviewed in the State Senate.

The IRS regulations are currently "proposed." Before they are adopted as final regulations, consideration will be given to any comments that are timely submitted to the IRS.  Comments must be received by September 21, 2015. 

The proposed regulations have already been subject to criticism and I anticipate that there will be some changes made in the final regulations. However, taxpayers and state programs can rely on the proposed regulations until final regulations are eventually adopted.

Here are links to additional information:

ABLE Accounts - a New but Limited Financial Option for the Disabled, Marshall Elder and Estate Planning Blog, December 22, 2014.

IRS’s Proposed Section 529A Regulations for ABLE Programs: A Mixed Bag, Leonard Weiser-Varon, National Law Review, June 19, 2015.

Proposed Regulations Offer Guidelines for New State-Sponsored ABLE Accounts for People with Disabilities, IR-2015-91, June 19, 2015.

Pennsylvania House Bill 1319, Regular Session 2015-2016.

To contact your PA State Senator to support the PA legislation, click here.  

ABLE Act Program for the National Down Syndrome Congress  (Stephen Dale, June 28, 2015)

Living in the Moment

[Kelsey Pazanski Wargo, a geriatric care manager with my law firm, wrote the following thoughts about a birthday party her family had for her grandmother this past weekend. I think her message about “Living in the Moment” is an important one for caregiving families. So, I asked Kelsey for permission to post her thoughts on this blog.]

 

Living in the Moment

Kelsey Pazanski Wargo

It is often that I hear people say that they don’t go to visit their loved ones anymore because “they won’t remember I was there anyway.” And to an extent, I can understand that statement, but I want to show you another side of the story.

When someone has dementia, the way she lives her life changes. Life becomes about reminiscing; talking about memories from long ago that can still be recalled. Many times people can’t form new memories because their short term memory is affected, so they may not recall new grandchildren or the fact that they are no longer able to live alone or even the fact that their loved ones visit them five days a week. This can be extremely upsetting for both parties involved, understandably so. But life also becomes about living in the moment.

Living in the moment means that you are present. You are aware right now. You are carrying on a conversation or sharing a feeling about something that is happening right at this moment. It is not about yesterday or about tomorrow or even about an hour from now. It’s just right now. And right now, in this moment, you are happy and you are enjoying your company and you are aware.

My mom goes to visit my grandmother in the nursing home at least 5 times a week. When she goes, my gram almost always asks her how she found her there. She typically says that she just got there (she’s been there 3 years), she also doesn’t know what day or time it is and sometimes she even has her bags packed because she is going home. Sure, it’s devastating and my mom will call me and tell me what happened and we talk through it and then we move on and look forward to another, better day.

Yesterday was one of those better days. Yesterday was my gram’s 86^th Birthday. My mom arranged a nice little party for her with ice cream cake, iced tea, a cute table cover and matching utensils, cups and napkins. We went inside and found my gram sitting with her best friend, Phyllis and her daughter and her son-in-law. We alerted the staff that we were going to be taking gram and Phyllis outside and then we headed out to sit under the gazebo because it had finally stopped raining.

We set up our little party and started serving cake when my gram’s sister arrived from Binghamton and then my grams’ niece arrived and brought her husband outside to sit with us and then finally my gram’s favorite person, Tim, my mom’s boyfriend, came. Tim gave kisses to all the ladies and made their day. They couldn’t stop talking about it. We all sat outside as my gram enjoyed her ice cream cake and opened her gifts. She was so happy. She must have thanked everyone 30 times. And the best part was that she remembered why everyone was there.

She kept telling us that this was the best birthday and the best way to celebrate and that she appreciated everyone being there and she couldn’t believe how nice it was. Even though she said it so many times, we all just kept telling her that she was welcome and we were glad to be there and we were happy that the weather was so nice. She was living in that moment. We were living in that moment. We were present.

Whether or not Gram will remember everyone being there is not the point. Does it really matter if she remembers her party today? The truth is- no it doesn’t matter. The truth is that she had the best 86^th birthday she could have asked for and that she enjoyed her family and friends and we enjoyed her. We don’t know whether or not there will be an 87^th Birthday, but we know that her 86^th was great because we were there celebrating with her in that moment.

The next time you feel that visiting doesn’t matter because your loved one won’t remember that you were there, remember that your loved one lives in the moment. Tomorrow doesn’t matter, but today does. Go today and you won’t regret it tomorrow. I promise.

I've Named my Executor. Do I also need a Power of Attorney?

Someday you will no longer be able to attend to your own personal and financial affairs. This may be because you are alive but incapacitated. Or it may be because of your death.  

When that time comes your assets will still need to be managed and your bills and taxes paid. Someone is going to need the authority to step in and take care of things for you.

You can choose who you want to act on your behalf when you are no longer capable yourself. The main two legal documents people use to authorize a surrogate to handle things for them are Wills and Powers of Attorney. It’s important to understand that these documents work in different time frames. And that you need both.

An Executor is the person you name in your Will to take care of your affairs after you die. A Power of Attorney names a person, often called your agent or attorney-in-fact, to handle matters for you while you are alive.

Generally speaking, your Power of Attorney ceases to be effective at the moment of your death. Your agent can only take care of your affairs while you are alive. After your death, your Executor should take over. In order to get authority, your Executor must file a death certificate, your Will, and other legal papers with a court official in a proceeding called "probate." Even though named in your Will, your Executor has no authority to act for you while you are alive.

This means that people need have both a Power of Attorney (Agent) to give someone authority to act for them during life, and a Will (Executor) to name someone to wind up your affairs after you are gone.

For more information on Powers of Attorney see my recent blog post PA’s New Law on Powers of Attorney: What You Need to Know