A few legal updates for your consideration as we enter our new decade:
The SECURE Act of 2019 makes important changes to retirement accounts. The age at which required distributions must be taken is increased from age 70 ½ to age 72 for persons who turn 70 1/2 after December 31, 2019.
The Act also changes distribution rules for inherited retirement accounts creating eligible designated beneficiaries and others.
A spouse is an eligible designated beneficiary. The spouse can still roll- over the retirement account and can still take distributions – RMDs–over his or her lifetime.
An eligible designated beneficiary includes a disabled or chronically ill person for distributions over lifetime. It also permits a properly drafted trust or special needs trust to receive the RMD distributions over the disabled person’s lifetime.
All other beneficiaries will now be required take distributions from the inherited retirement account over a 10-year period rather than over their own lifetime (for retirement accounts inherited on or after December 31, 2019). However, if a minor (under age 18 or 21) is the beneficiary, the 10-year rule doesn’t apply until the child reaches the age of majority.
With an uptick in the numbers of applications for Veterans Benefits (pension, aid and attendance) for persons age 65 and older — including in Suffolk County where even applicants with assets or income which exceed the financial limits are required to apply for VA benefits when applying for Medicaid for a nursing home resident who is also a veteran — New York State amended its rules about compensation to advisors on applications.
Now, no person or entity can receive compensation for preparing the application for benefits or advising on such benefits for persons over age 65 unless certified by the VA to do so. This certification includes ongoing education requirements. The new law classifies fees charged for applications as a deceptive act in the conduct of business, trade or commerce and makes the individual or entity liable for civil penalties if not certified by the VA.
Spousal refusal is still legal in New York State for nursing home applications and will continue for home and community-based services/MLTC.
The SECURE Act makes permanent the same budgeting for non-applying spouses whether their husband/wife is in a nursing home or requires home care/community Medicaid/MLTC.
In 2020, the maximum federal community spouse resource allowance is $128,640.10; the maximum spousal income allowance is $3,216.00.
If you are applying for community Medicaid/MLTC, seek legal counsel to evaluate which budget is most beneficial – traditional with spend down, traditional with spousal refusal and pooled community income trust, or spousal impoverishment budgeting. Only a lawyer can give you this legal advice.
Social Security
New regulations effective February 25, 2020 will allow you to designate a successor representative payee in advance of your own death or disability. This important change means that a family can make sure there is no interruption of benefits such as SSA and SSI for their disabled family member. This is particularly critical when the impairment is developmental or intellectual disability and a 17A guardian has been appointed. SSA has refused to permit a successor rep payee until the successor guardian is appointed – a process that can take several months in many New York State counties, including Nassau. The new forms have not yet been finalized. Contact your local SSA office in March.
For persons dying after November 25, 2019, with a will or without (called intestacy), you can use a simpler process to administer the estate and have an estate representative appointed using a Small Estate (called Voluntary Administration) if the estate is worth less than $50,000.00. This is a change from the lower sum of $30,000.00. The forms are available on the website of the Office of Court Administration for New York State.