By: Jillian F. Zacks[1]

For many, estate planning may seem like an emotional and daunting endeavor. What’s more, writing a will may seem like something only done by those more mature in life with a trove of wealth to distribute. But, with the right guidance, drafting a will is an organized and proactive way to ensure your estate reaches its potential to support your beneficiaries. You’ve spent your whole life accumulating your assets, why not maximize their ability to provide for others in the future?

A sound will benefits everyone. You, as the testator, have peace of mind knowing that your assets will be going to the people and places who need them most-your spouse, your children, maybe even your favorite charity.  It follow then, that your beneficiaries will take comfort in knowing that they are provided for in your absence. Without a will, your intestate estate will go into default mode and be distributed according to familial relation. This may be an issue for those with non-traditional families, or for those who would like their assets to be divided unevenly. If you fall into any of the following circumstances, a will would be the proper mechanism to spread your assets accordingly:

Once you’ve settled on completing a will, why should you not do it yourself? Wills have specific requirements that may be easy to overlook when using a preprinted form or internet service. A formal will needs to be in writing, signed, and attested to. The right attorney can ensure that the testator is competent, that the witnesses are disinterested and that the will is valid. If you’d like to amend or revoke that online form you pulled off of Pinterest, it is not as simple as scribbling  out a line item. Further,  proper estate planning will look at your whole estate and make sure it is coordinated. For instance, common non-probate instruments or the effect of taxes may be easily overlooked in a DIY will. Is the beneficiary of your life insurance policy still your ex? Is your pension account going to the right place? Most importantly, you want to make sure your will is safe. An attorney will have your will authenticated and hold a copy for safekeeping.

Strassburger McKenna Gutnick & Gefsky is prepared to assist with estate and succession planning and estate administration for business owners and others. Please contact Jillian Zacks, jzacks@smgglaw.com or Dave Pollack, dpollack@smgglaw.com at (412) 281-5423 to talk about your estate or succession plan.

[1] The author would like to recognize the significant contributions of Alexis Wheeler, of the University of Pittsburgh Law School, to this post.

The Steven Beck Achieving a Better Life Experience Act was signed by President Obama and became law on December 19, 2014.  ABLE accounts were added to Section 529A of the Internal Revenue Code.  The ABLE Act allows states to create a new option for eligible people with disabilities to save money in a tax-exempt account that may be used for qualified disability expenses while still protecting their eligibility to receive most means-tested federal benefits such as Supplemental Security Income (SSI) and Medicaid.

Eligibility

To be eligible for an ABLE Account an individual must have developed a disability prior to age 26.  Additionally, the individual must be found eligible for SSI or Social Security Disability Income (SSD/SSDI) or obtain a signed “disability certification” from a physician that states the person’s diagnosis and that the person meets the functional disability criteria according to the ABLE Act.  The certification should be maintained by the beneficiary of the account and should only be provided to the IRS or ABLE program upon request.  The eligible person is the ABLE account designated beneficiary and owner, although a legal guardian or an agent under a power of attorney may have signatory authority.  A disabled person may only have one ABLE Account.

Money in the ABLE account may be used for qualified disability expenses related to the individual’s disability or blindness to maintain health, independence and quality of life.  The expenses do not need to be medically necessary and may include: education, transportation, employment training and support, assistive  technology, health prevention, financial management, legal fees, or funeral and burial expenses.   New Social Security Administration rules will treat housing expenses as resources only if distributed in one month and held until the following month or later.  ABLE assets do not impact state benefits, but for SSI, only the first $100,000 of ABLE assets will be disregarded. If an ABLE account exceeds $100,000, SSI payments will be suspended but Medicaid eligibility will not be terminated.

Tax Implications

Contributions to the accounts are made with post tax dollars.  Multiple individuals may contribute to the account but total annual contributions may not exceed the federal annual gift tax limit, which is currently $14,000.  Distributions from the ABLE accounts for qualified disability expenses are exempt from taxation.  Generally, distributions not used for qualified disability expenses are taxable and subject to an additional tax of 10%.  In Pennsylvania, the property of the program, the earnings and the contributions made to ABLE accounts are exempt from taxation by the Commonwealth and its political subdivisions.

PA ABLE

Each state has to decide if and how to offer ABLE accounts. The Consolidated Appropriation Act of 2016 amended the ABLE Act residency requirement for qualified ABLE programs. Now, you can open an ABLE account in any state. Currently, Nebraska, Ohio, Tennessee, and Florida are offering ABLE programs.  Although, you can open an ABLE account in any state, if a disabled person lives in and is receiving Medicaid serves in Pennsylvania,  opening an account in Pennsylvania may be beneficial.  Governor Wolf signed Pennsylvania’s ABLE legislation on April 18, 2016 (Act 17 of 2016).  The accounts will go through the Pennsylvania Treasury Department.  You will be able to open the account online or by mail.  Although the disabled individual will be the owner of the account, in PA, the following individuals/entities may be authorized signatories on the account:  a parent/guardian, any person designated in writing by the parent or guardian, a trustee of a trust for which the eligible individual is a beneficiary, a representative payee or anyone else allowed by federal law. Additionally, if a parent/guardian/Agent under Power of Attorney opens an ABLE account on behalf of a minor, they are the fiduciary until they decide to relinquish control of the account.  This does not apply if the account is opened for an individual with a disability who is over 18.  Prior to death, the account may be  rolled over to the ABLE account of an eligible sibling.  Importantly, Pennsylvania’s ABLE Act ensures that money remaining in the ABLE account after the account owner passes away will be distributed according to his or her estate.  Specifically, Section 503(d) of  Act 17 of 2016, states, “an agency or instrumentality of the Commonwealth may not seek payment under section 529A(f) of the Internal Revenue Code from the account proceeds for benefits provided to a designated beneficiary.”  Consequently, there is no payback provision for those services provided by Pennsylvania.

It is anticipated that the PA Department of Treasury will roll out the ABLE Account program at the end of 2016 or at the latest the beginning of 2017.  Pennsylvania is joining with eight other states to form an ABLE consortium that will allow them to minimize program costs and attract investment opportunities.  For more information go to www.PAABLE.gov.

If you have a question about the ABLE Act, please contact Jillian F. Zacks of Strassburger McKenna Gutnick & Gefsky at jzacks@smgglaw.com or (412) 281-5423.

 

 

On March 10, 2016, Governor Tom Wolf signed Executive Order 2016-03 – Establishing “Employment First” Policy and Increasing Competitive Integrated Employment for Pennsylvanians with a Disability. Governor Wolf set the tone by stating, “Pennsylvanians with a disability are valued members of society and all members of society deserve to have the opportunity to work…there is dignity in work…” The Order correctly notes that Pennsylvanians with a disability make-up a largely untapped labor pool. In fact, the unemployment rate for workers with disabilities is twice that of workers without disabilities. The new policy looks at it from both a business and advocacy perspective. Workers with disabilities are an asset to the workplace that can improve an employer’s bottom line.

“Employment First” is the policy that reflects the Commonwealth’s goal of making Pennsylvania a model state when it comes to creating a climate hospitable to workers with disabilities. Competitive integrated employment is the goal of the Order. Individuals will be compensated at the customary rate paid by employers for the same work performed by individuals who do not have a disability in an inclusive setting. The Order calls for the Secretaries of the Departments of Education, Human Services and Labor and Industry to work together with other Commonwealth agencies to develop a written plan to address the implementation of the Employment First policy.

This Order is thanks to the efforts of state-wide advocates for individuals with disabilities, in particular 21 and Able of the United Way of Southwestern Pennsylvania. The 21 and Able initiative’s goal has been to increase the opportunities for individuals with disabilities who graduate from the school environment. The Governor’s goal of increasing the number of Pennsylvanians with a disability employed in competitive integrated jobs is a big step in creating opportunities for individuals during and after high school.

If you have a question about advocacy or future planning for an individual with a disability, please contact Jillian F. Zacks of Strassburger McKenna Gutnick & Gefsky’s Estates and Trust Practice Group in Pittsburgh at jzacks@smgglaw.com or (412) 281-5423.