by Vance R. Parker JD, MBA | May 28, 2019
WTOB FM/AM Radio in Winston-Salem, NC interviews elder, special needs, and estate planning attorney Vance Parker as he explains how the new North Carolina Uniform Power of Attorney Act (enacted December 2018) may have made your existing financial power of attorney document deficient (or obsolete) for many later elder law, Medicaid planning, or asset protection needs.
Now-deficient powers of attorney, such as the once popular North Carolina Statutory Short Form Power of Attorney that many people still use today, can cause great problems when a person is later diagnosed with a dementia or becomes mentally impaired so that use of the financial power of attorney is needed to make critical financial, legal, Medicaid planning, or asset protection decisions. Such decisions may later be required in order to protect the senior’s home and other assets from Medicaid estate recovery, or from medical creditors. When the senior or disabled person’s financial power of attorney is deficient, key decisions that the agent must make to financially or legally protect the senior may now need to be first approved by the county Clerk of Superior Court, which can be an expensive, time consuming, and unpredictable process.
Adding an inexpensive financial power of attorney document containing detailed elder law powers (an Elder Law Power of Attorney) to one’s estate documents in the first place, while a person is still healthy to sign such documents, can prevent all of the problems caused by the new NC Power of Attorney Act. With an Elder Law Power of Attorney, the senior or disabled person’s agent will have all of the tools (if needed later) to legally protect the senior’s assets, so that critical Medicaid planning or asset protection decisions can be made quickly to save the senior’s home and assets for the senior, spouse, and family, without having to go to the county Clerk of Superior Court for permission first.
Vance talks with WTOB Radio every Tuesday at 4:38 pm, educating the public about elder and special needs law, and estate planning topics.
by Vance R. Parker JD, MBA | Jul 11, 2016
Categories: Estate planning, special needs trusts, Winston Salem, North Carolina, NC.
The federal Achieving a Better Life Experience (ABLE) Act of 2014 authorized a savings account designed for Special Needs Beneficiaries. With similarities to the popular 529 education savings accounts, 529 ABLE accounts have already been rolled out in Ohio, Nebraska, and Florida, with active development taking place in most other states including North Carolina.
North Carolina parents and caregivers will soon be able to create a new “529 ABLE” savings account in the individual name of their disabled child or adult to save for that child’s future disability-related expenses. Primary benefits include tax-deferred savings for the disabled individual, without affecting eligibility for Medicaid, SSI, or other governmental disability programs. These unique features will allow caregivers to start planning and saving for disabled individuals immediately, with these funds allowed to be used as a supplement to governmental assistance.
In order to establish a 529 ABLE account, the disabled individual must be entitled to benefits under the federal SSI (Social Security Income) or SSDI (Social Security Disability Insurance) program, and must have been disabled before age 26. Because caregivers will be able to set up this account for the beneficiary right away and it can be accessed right away, there is no waiting period (such as with testamentary special needs trusts which do not become active until the death of the parent.) Note, however, that unlike properly designed special needs trust assets, funds remaining in a 529 ABLE account after the beneficiary’s death may be tapped to help repay state Medicaid costs.
The 529 ABLE account will not impact eligibility for government assistance programs, with the first $100,000 in such an account exempt from being counted toward the SSI program’s $2,000 resource limit. The account has a yearly contribution limit of $14,000, with any yearly contributions over that amount subject to a 6% penalty. Total lifetime contributions are limited to $394,000. The disability-related expenses paid for by account funds must be for the benefit of the individual with the disability, and must be related to the disability.
Allowable disability expenses are defined fairly broadly. In addition to medical expenses, allowable disability expenses may include housing, transportation, education, legal fees, and additional categories. To track 529 ABLE development progress in North Carolina, and for more information, click here.
