Pennsylvania authorizes ABLE Act accounts for the disabled

SNT1Many disabled individuals in the U.S. receive public benefits from programs that place restrictions on the dollar amount (typically $2,000) of assets a recipient can own. Medicaid and SSI are two examples.

Federal and state law allow the establishment of certain trusts, such as special needs trusts and pooled trusts, to benefit the disabled without affecting their eligibility for benefits. This type of trust is not limited in dollar amount.

Now disabled Pennsylvanians will have another tool to assist them financially – a private savings account authorized by the Achieving a Better Life Experience Act, known as ABLE for short. Last week, Pennsylvania Governor Tom Wolf signed legislation authorizing the creation of ABLE accounts in this state.

The law will allow accounts to be funded with up to $14,000 per year, which can grow tax-free. Participants can make tax-free withdrawals from ABLE accounts to pay for qualified disability expenses.

The law directs the Pennsylvania Treasury Department to create the mechanism for disabled Pennsylvanians to create their own ABLE accounts, and to administer the program, as the department currently does for 529 accounts used to fund education of a family member.

According to the Governor’s office, the current goal is to have the program ready for people to create accounts by the fourth quarter of 2016.

Click here for a link to read about the various features of Pennsylvania ABLE accounts.

If you need advice about using an ABLE account, special needs trust, or other strategy to aid the disabled, consult an attorney experienced in working with programs for the disabled. You can call Sykes Elder Law to discuss your situation.

Why every adult should have a POA

Having a power of attorney (or POA) is at least as important as having a will.

That’s the opinion I’ve come to after 24 years helping individual clients and families in private practice.

As people’s lifespans have increased, many spend more years than ever with a weakened ability to manage their own affairs. They increasingly rely on the help of a family member or friend to pay bills, manage finances, and deal with issues like taxes, insurance, and medical coverage.

For others, a temporary illness, accident, or absence from the state or country means someone else needs to manage personal affairs for a while, often on short notice.

A POA appoints another person (called your “agent”) to act on your behalf, usually with regard to financial, property, and legal matters. For the following reasons, a POA makes up a vital part of your estate planning arsenal.

Your entire estate could be distributed during your lifetime.

Here is the reason why I believe a POA is at least as important as your will.

What you now own, or major portions of it, could be spent or given away during your lifetime. For example, a person with a net worth of $400,000 could need skilled nursing care for several years, costing in excess of the net worth. Illness or misfortune could also befall another family member, requiring a major contribution from you.

Whatever the circumstances, you should appoint someone whose judgment you trust to make decisions for you, and carefully define your agent’s power. That way, you have more say in what happens to your assets if you can’t make your own decisions.

A POA allows your agent to protect your assets.

An elder law attorney can help you identify ways in which your assets could be at risk during your lifetime, especially in your senior years. Using that knowledge, you and your attorney can craft a POA that would give your agent the right mix of powers to protect those assets for you and other family members.

Suppose you are married and have a disabled son or daughter. If someday you need to apply for Medicaid benefits to pay for nursing home care (as many people do), your agent should have the ability to transfer assets to your spouse or disabled child. Those transfers would protect the assets while still allowing you to qualify for benefits. Without the right powers built into your POA, that opportunity could be lost.

A POA is preferable to guardianship.

If you have no POA, a court could appoint someone to make property or healthcare decisions for you. But guardianship comes with distinct disadvantages:

  • Delay. In most cases, obtaining a guardianship order from a court takes at least 30 to 60 days in Pennsylvania.
  • Cost. Legal costs for obtaining guardianship can easily cost several thousand dollars in legal fees, and much more if any part of the process is contested.
  • Red tape. A court-appointed guardian must take additional steps to comply with court rules that would be unnecessary for someone acting on your behalf under a POA. These include filing an inventory of all your assets; filing annual reports with the court; and asking court permission anytime the guardian needs to spend money out of principal. Many of these steps also require additional legal fees.
  • Lack of choice. When you appoint an agent with your POA, you choose the agent. In a guardianship proceeding, a judge will make the choice for you.

Even a POA carefully tailored by an experienced attorney costs less than a typical guardianship. You can choose your own agent. The agent you pick can act on your behalf immediately, or on short notice, and without unnecessary red tape.

Get professional help.

For these and many other reasons, every adult should have a POA. Given its importance in the management of your estate, I recommend using a well qualified attorney to help you plan and design a POA that will suit your individual needs and put you in good stead if the need arises.

Social Security claiming strategies to change within 6 months

When Congress passed the new budget deal October 30, it also included changes to the rules for claiming Social Security benefits. The new rules will end a popular claiming strategy that allowed claimants to receive more in benefits over their lifetimes.

The change will be fully implemented in the Spring of 2016.

If you are reaching full retirement age within the next six months, you still may have time to act under the old rules.

Read a summary of the changes in Liz Weston’s Money Talk column in the Los Angeles Times here. You can also read an article by Tim Grant of the Pittsburgh Post-Gazette here.

Report: seniors lose billions to scams each year

Financial exploitation of the elderly “is rising fast,” according to the cover article of Consumer Reports’ November 2015 issue.

The article cites one study that concluded that nearly 1 in 20 seniors in America report having been financially exploited in their later years.

The magazine profiles a number of scam victims and tells their stories. You can read the full article here.

A related article gives tips on preventing elder financial abuse: Build Your Own Safety Net. One of the tips is to visit an elder law attorney.

Dementia symptoms improved in pilot study

Many of the challenges our clients face as they age stem from loss of cognitive ability.

They need to rely on the agents they appoint in their powers of attorney and health care directives because they can’t process information and make decision the way they used to.

With all the advances in health and medical care that have extended life expectancies, treatments for cognitive impairments remain scant.

So it was exciting to hear in the past week about a pilot study in which patients taking the drug nilotinib experienced improvements in Parkinson’s disease symptoms, including improvement in cognitive ability. You can read, and listen to, NPR’s coverage of this development here.

The story concludes with a report that the drug will next be tested with Alzheimer’s patients.