EMBRACING LIFE TO ITS FULLEST - LEGACY RESERVE

Patrons of Legacy Reserve at Fritz Farm can hardly wait to move into their new homes this month. Some of them signed up over a year ago.  “I chose Legacy Reserve as my future home for many reasons,” said Don Bayer, a retired Chicago Public Schools principal. “I was fascinated by the fact that it is going to have a heated saltwater swimming pool. I love to swim.”   “We decided we wanted to live here the rest of our lives,” said Loretta Jones, another resident looking forward to moving in. “So we are downsizing and we’re ready to go.”

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LIVING FRUGALLY

Many people in the United States with significant savings fear going broke in retirement, according to a recent survey. However, there are ways to live frugally to try to prevent that from happening.

1. Analyze your living situation. According to research, the cost of a home and home-related expenses accounts for nearly 43 percent of spending for people who are 65 to 74 years of age. ....

….FULL ARTICLE

TECHNOLOGY PRIMER FOR GRANDPARENTS

No one needs to be told the younger generations are attached to their technology. It used to just be computers, but now it’s smart phones. These days, if you want to stay in contact with your grandchildren – and sometimes even your children – you’d be wise to learn a few basic methods of keeping in touch in the digital age. A study released in 2012 by Microsoft and AARP called “Connecting Generations” found teens and their parents and grandparents are communicating more because of social media and other online tools.

….FULL ARTICLE

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*. “Supplemental Needs Person” means a person who: is disabled or is receiving, or is eligible to receive, assistance or other benefits under a means based government program (such as Medicaid or Supplemental Security Income). “Disabled” is defined under USC Title 42, Section 1382c(a)(3), KAR Title 907 Chapter 20:005, or under any Kentucky law related to means based government programs. “Assistance” is defined in United States Code Title 42, Section 1396d(a), or under Kentucky law related to means based government programs, and in particular KRS 205.510.

The main way most American families save for the future is through private retirement savings plans such as 401(k)s and IRAs.  These plans offer the opportunity to designate a beneficiary upon the death of the account holder.  These designations allow the account assets to bypass probate and pass directly to the named beneficiaries. Often, individuals make these decisions when initially setting up the account and never reconsider them.


Typically, the account holder names a primary beneficiary and a contingent (or back-up) beneficiary.  The contingent beneficiary only receives the account assets if the primary beneficiary predeceases the account holder.  The account holder can generally name more than one person.  Some financial institutions will allow the account holder to name a class of beneficiaries, such as “my children.”   


However, for individuals who have children or loved-ones with special needs*, being the beneficiary of a retirement account could wreak havoc on their needs-based government benefits, such as Supplemental Security Income (SSI), Medicaid, or housing assistance. This is not simply a problem for large retirement accounts, many of the needs-based programs have very strict income and asset limits.  A Special Needs Person could lose access to these programs which provide medical coverage, housing, and other neces-sities if they inherit

PREVENTING BENEFICIARY DESIGNATIONS FROM WREAKING HAVOC ON SPECIAL NEEDS BENEFICIARIES

assets or income in their individual name.


Proper planning can prevent a Special Needs Person from losing their government benefits.  Creating a Special Needs Trust to receive the funds on behalf of the Special Needs Person will accomplish this goal. The account holder merely designates the trust as the beneficiary. If properly drafted, the trust can receive funds from a retirement account without negative income tax implications and the funds can be used to assist the beneficiary without compromising government benefits.  The purpose is to supplement the benefits.


A Special Needs Person may be provided for through designating their Special Needs Trust as the beneficiary of a 401(k) or an IRA account. There are also other ways to fund Special Needs Trusts, including designating the trust as a beneficiary of a life insurance policy and giving assets to the Special Needs Trust in a Last Will and Testament.


Routinely review your retirement account beneficiary designations and Estate Planning Documents, especially for the Special Needs Person in your life.       

AMY E. DOUGHERTY

Amy E. Dougherty has been with Bluegrass Elderlaw, PLLC since 2012. Amy focuses her practice on assisting older persons in qualifying for Medicaid long term care using Wills, Powers-of-Attorney, Advanced Directives, and Trusts.  She also advocates for clients before Social Security, Medicare, and Medic-aid agencies and defends against involuntary dismissal from long term care facilities. Previously, Amy practiced elder law for Legal Aid of the Bluegrass.

more articles by amy e. dougherty