Master Your Finances Radio Show Appearance

Special thanks to Kurt Baker, host of the radio show “Master Your Finances,” for inviting me on his show to discuss how recent legal, economic and social changes, including the COVID-19 pandemic, can impact the finances of the elderly and disabled and their families, what you can do to protect your life savings. The segment aired on Sunday, September 13, 2020 at 9:00 AM on 107.7 FM TheBronc and is now available on demand on the Master Your Finances website.

Other topics we discussed during the segment on practical financial issues include:

  • How the SECURE Act really impacts your retirement plan and why it is very important to update estate planning for your tax-qualified retirement accounts (i.e., individual retirement accounts, 401(k)’s, 403(b)’s, 457(b)’s) 
  • Why life insurance and long term care policies are important investments in your family’s future
  • Estate planning strategies you might not have thought of, including a ROTH IRA conversion
  • How to ensure that your estate plan accomplishes what you intended 
  • Tips and traps for retirement income planning, including how the new individual retirement rollover rules affect your bottom line 
  • Health insurance tips and traps (and how to avoid them) in the event of a job loss
  • How to protect your home and your life savings while getting your loved one the best long-term care
  • How to navigate the changes to the long term care and Medicaid application process landscapes brought about by the COVID-19 pandemic
  • How the COVID-19 pandemic is exacerbating the mental health crisis and the important steps you can take to protect yourself and your finances if you are faced with an involuntary commitment

Is My Memory Loss Normal Aging or Something More?

Sad senior woman after quarrel

Garden variety memory lapses, like misplacing car keys, are normal, but where do you draw the line? A good rule of thumb is that if you notice that your loved one has repeated episodes of memory loss, and/or troubling personality changes or difficulty performing everyday tasks, like driving or financial management, it could be time for a crisis elder care plan. Here are some red flags to watch for:

  • Asking the same questions over and over again;
  • Repeating the same stories;
  • Difficulty paying bills, balancing the check book or reading a bank or credit card statement;
  • Difficulty adding and subtracting;
  • Late notices and missed payments, unopened mail accumulating;
  • Paying the same bill multiple times in the same month;
  • Difficulty performing everyday tasks (getting lost and being unable to find your way home, forgetting how to operate a home appliance);
  • Decline in personal hygiene (not bathing or brushing teeth, wearing the same clothing day after day);
  • Inappropriate attire, behavior, statements and/or language;
  • Confusion or word-finding difficulty (ex. asking where the “bread-thingy” is instead of where the toaster is;
  • Inability to retain new information; and/or
  • Irritability or foul language, behavior consistent with depression, apathy, anxiety, agitation, delusions and hallucinations, wandering, aggression

If you notice one or more of these signs, it may be a good idea to contact an elder lawyer without delay. An elder lawyer can help you find the best care and a way to pay for that care with public benefits, while protecting your life savings and the family home.

Questions? Let Jane know.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

Financial Support for an Adult Disabled Child

Financial Support for an Adult Disabled ChildEven with child support payments from the non-custodial parent, raising a special needs child on a single parent’s income can be very challenging. N.J.S.A. 2A:17-56.67, a relatively new New Jersey emancipation law, requires termination of child support at age 19 unless otherwise provided in a court order or a judgment. As a practical matter, this means that the parents of adult disabled children who have prior court orders mandating continued child support after age nineteen, must either submit a written request for the continuation of the child support obligation prior to the nineteenth birthday of the child in question, or, if the child’s nineteenth birthday has already passed, the custodial parent must petition the Probate Court, rather than the Family Court, for continued financial support of the adult disabled child, even though the support obligation is already provided for in the court order.

The new law, enacted in 2015, further provides that the obligation to pay child support must terminate by operation of law when the child (who may be a special needs child) reaches the age of twenty-three. The custodial parent of an adult special needs child then bears the burden of seeking a court order for financial maintenance or reimbursement, as authorized by law.

The custodial parent is frequently the economically disadvantaged parent and the new law and the proposed new court rule will likely disproportionately impact these families. Among other things, the custodial parent must learn to navigate an entirely different set of legal rules and will no longer have the enforcement mechanism of the Probation Department.

Recently, I worked together with other elder and family law attorneys to advocate for the disability community on these issues. The Elder and Disability Law Section of the New Jersey State Bar Association presented this letter to the New Jersey State Bar Association, with the goal of making the process of obtaining continued financial support for an adult disabled child after the age of 23 as easy and cost-effective a process as possible.

Questions? Let Jane know.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

New Jersey ABLE Program Offers a New Savings Option for the Disabled

ABLE Program in New JerseyEarlier this month, New Jersey joined the list of states with an ABLE Plan. An ABLE account is a special tax-favored disability savings account designed to help individuals living with a severe disability save and manage their own funds, while protecting their SSI, Medicaid and DDD eligibility.  The account can only be opened in connection with a state ABLE Program. Information regarding the NJ ABLE Program is available online. ABLE accounts are important because they provide a competent disabled individual with an option to preserve their continued eligibility for Medicaid, SSI, SNAP, Section 8 housing assistance, DDD services and other benefits, while saving and investing funds in the account, which they can use to pay for qualified disability expenses.

In 2018, up to $15,000 annually from parents, grandparents, the disabled individual, or anyone else, may be deposited into an ABLE account for a qualifying disabled person. Disabled beneficiaries with their own ABLE account may now fund an ABLE account from their own earnings, as long as they do not participate in an employer’s retirement plan. Alternatively, an ABLE account could be funded through a tax-free rollover of up to $15,000 in funds held in an educational savings section 529 plan. For the rollover to be tax-free, the ABLE account must be either for the same beneficiary of the section 529 plan or for a family member of that individual. If more than $15,000 in funds held in an educational savings plan is rolled over into an ABLE account plan in the same taxable year, the excess over the $15,000 limit is treated as an excess contribution, subject to a safe harbor provision. The ABLE provisions of the Tax Cuts and Jobs Act of 2017 expire on December 31, 2025.

While in the ABLE account, the funds are invested, similarly to funds invested in a 529 educational savings account. The competent, disabled individual can withdraw funds as needed from the ABLE account, at which time, any investment return on the original proceeds would be includible in the gross income of the account beneficiary (i.e., the disabled individual). See IRC § 529A(c)(1)(A). The account earnings and the original return of principal, once withdrawn from the ABLE account, are includible in determining the income of the disabled account beneficiary for the month in question and generally are taken into account in determining the individual’s Medicaid eligibility and SSI eligibility.

However, the funds would not be taken into account for Medicaid eligibility purposes, to the extent that they are offset by any qualified disability expenses incurred by the beneficiary during the taxable year in question. See I.R.C. § 529A(c)(1)(B). That means that funds may be distributed out of the ABLE account directly for a disabled individual, as long as the distribution proceeds are used to pay for qualified disability expenses during the same calendar year. The beauty of an ABLE account is that for income tax and public benefits purposes, the distributions from ABLE accounts are generally excluded from a qualifying disabled beneficiary’s income so long as the distribution proceeds are used for qualifying disability expenses. The definition of qualifying disability expenses is very broad and may include expenses for housing, education, transportation, employment training and support and assistive technology, even if the disabled individual receives SSI.

If the balance on deposit in an ABLE account increase to exceed the sum of $100,000, the disabled beneficiary will lose any eligibility for SSI until the ABLE account proceeds are spent down below the $100,000 limit; however, the funds in the ABLE account will remain an exempt resource for Medicaid.

Upon the death of a disabled beneficiary, any state paying Medicaid benefits during the disabled beneficiary’s lifetime will have a Medicaid lien on the account proceeds. If there are funds remaining in the account after the payment of the Medicaid lien, the account balance may be disbursed to the estate of the disabled beneficiary.

An ABLE account may be an option where there is a qualified disabled beneficiary, whose disability was incurred (and documented) prior to age 26.

For qualified disabled individuals, an ABLE account may also be a good way to “spend down” proceeds from an UTMA or UGMA.

Once opened, an ABLE account is generally portable if the beneficiary moves to another state. State ABLE plans may offer different features and attributes, such as debit cards, online account access, checking accounts, and a range of investment options, such as mutual funds, exchange traded funds, and interest bearing bank accounts.

Questions? Let Jane know