Happy New Year / New Decade!!

January 1, 2020

The new year (and new decade) is the perfect time to add meeting with an attorney to review your current estate plan to your list of “new year resolutions” for 2020; particularly, if your estate plan includes either a trust and/or deferrable retirement benefits.  The new year / new decade will usher in significant changes to the laws impacting estate planning with trusts and retirement planning for Illinois residents.

At the state level, recent legislation (with a January 1, 2020 effective date) created the new Illinois Trust Code (ITC).  The ITC applies not only to Illinois trusts created on, or after, January 1, 2020, it also applies to existing trusts which become irrevocable on, or after, January 1, 2020 and/or when there is a trustee change and a new trustee begins serving.  Among other changes, the ITC adds specific, new requirements for Illinois trustees.

The other significant change occurred at the federal level, with the recent passage of the Secure Act. This new act substantially alters the existing law governing deferrable retirement accounts.  Of particular note are the changes made to the “stretch” rules for inherited IRAs, as a result of the passage of the Secure Act.

The bottom line:  quite simply,  if you have not already added reviewing your estate and retirement planning with your attorney and/or your tax advisor to your “to do” list for 2020, we strongly encourage you to add it to your list!

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi, Lenert, & Julien, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

Tips on Creating an Estate Plan that Benefits a Child with Special Needs

July 15, 2019

Parents want their children to be taken care of after they die. Children with disabilities, however, will likely have increased financial and care needs. As such, proper planning by parents to maximize a disabled child’s (including an adult disabled child’s) long-term welfare is necessary. Such planning may also result in assisting the siblings of a disabled child, who may be left with the caretaking responsibility.

Special Needs Trusts

The best and most comprehensive option to protect a disabled child is to set up a special needs trust (also known as a supplemental needs trust). These trusts allow the child to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose their eligibility for certain government programs, such as Medicaid and Supplemental Security Income (SSI). The trusts are drafted so that, pursuant to the applicable laws, the funds will not be considered to belong to the beneficiaries in determining their eligibility for public benefits.

There are three main types of special needs trusts:

A first-party trust is designed to hold a beneficiary’s own assets. While the beneficiary is living, the funds in the trust are used for the beneficiary’s benefit, and when the beneficiary dies, any assets remaining in the trust are used to reimburse the government for the cost of medical care. These trusts are especially useful for beneficiaries who are receiving Medicaid, SSI or other needs-based benefits and come into large amounts of money, because the trust allows the beneficiaries to retain their benefits while still being able to use their own funds when necessary.

A pooled trust is an alternative to the first-party special needs trust, which is also designed to hold a beneficiary’s own assets.  Essentially, a non-profit association sets up these trusts that allow beneficiaries to pool their resources with those of other trust beneficiaries for investment purposes, while still maintaining separate accounts for each beneficiary’s needs. When the beneficiary dies, the funds remaining in the account reimburse the government for care, but a portion also goes towards the non-profit organization responsible for managing the trust.

A third-party special needs trust is most often used by parents and other family members to assist a child with special needs. These trusts can hold nearly any kind of asset belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect a beneficiary’s access to benefits and the funds can be used to pay for the beneficiary’s supplemental needs beyond those covered by government benefits.  However, a third-party special needs trust does not contain the “payback” provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in the trust can pass to other family members, or to charity, without having to be used to reimburse the government.

Life Insurance

Not everyone has a large chunk of money that can be left to a special needs trust for a disabled child.  Some parents, therefore, will utilize life insurance, when planning for their disabled child.  If you have established a special needs trust, a life insurance policy can pay directly into the trust. By designating the third-party special needs trust as the beneficiary of the policy, the proceeds become an asset that will not have to go through probate. Also, it is important for parents to be sure to review the beneficiary designation to make sure it names the trust, and not the child.  Ideally when utilizing life insurance, and if financially feasible, parents will want to do their best to make sure that they have enough insurance to pay for their child’s care long after they are gone. Without proper funding, the burden of care may fall on siblings or other family members. Using a life insurance policy also increases the likelihood that there will money for the future funding of the trust, while keeping the parents’ estate intact for other family members.

ABLE Account

An Achieving a Better Life Experience (ABLE) account allows people with disabilities who became disabled before they turned 26 to set aside up to $15,000 a year in tax-free savings accounts without affecting their eligibility for government benefits. This money can come from the individual with the disability or anyone else who may wish to give him money.

Created by Congress in 2014 and modeled on 529 savings plans for higher education, these accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things. ABLE account programs have been rolling out on a state-by-state basis, but even if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. (For a directory of state programs, click here.)

Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for his/her family members. In addition, ABLE accounts cannot hold more than $100,000 without jeopardizing government benefits like Medicaid and SSI. If there are funds remaining in an ABLE account upon the death of the account beneficiary, they must be first used to reimburse the government for Medicaid benefits received by the beneficiary, and then the remaining funds will have to pass through probate in order to be transferred to the beneficiary’s heirs.

Get Help with Your Plan

Quite simply, the bottom line is that proper planning is essential for parents of disabled children. Thus, talking with an attorney, who is knowledgeable about special needs planning, is strongly recommended to help parents of disabled children create the best plan for their family.

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi, Lenert, & Julien, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

That Time of Year

December 3, 2015


It is, once again, that time of year.  The time of the year where we find ourselves saying, “I cannot believe that it is December already.  Where did 2015 go?”  Some of us are busy reviewing the list of New Year Resolutions we made for 2015.  For many, our 2015 list of resolutions has become our 2015 “to do” list, which we will carefully scan to determine what remains to be accomplished.  We may find ourselves eager to complete the remaining tasks on our lists, so that we can happily cross them off our lists.  Others, who never made such a list, may now find themselves creating, and scrambling to complete, a newly created “to do” list, before 2015 is but a memory.

If you have such a list and if reviewing your current estate and life care plan is already on your list, then give yourself a pat on the back for proactively thinking about your planning.  If you have created both an estate and life care plan and reviewing your current plan is NOT on your “to do” list, we encourage you to add it to your list. If you have such planning in place, pull it out now and review it.  Ideally, absent an intervening life changing event, individuals will get into the habit of reviewing their estate and life care plans on an approximately annual basis.  As such, putting it on your annual “to do” list each year may help keep you on track.   Regardless of whether reviewing your planning is already on your list; whether you are adding it to your list now; or, whether you have no list and you are now going to make it a “to do” item, we encourage you to not delay.

When reviewing your current estate and life care planning documents, we recommend that you keep the following information in mind.  Since you originally created your planning, there may have been changes in the law which may have impacted your planning.  The attorney that assisted you in creating your estate and life care plan, most likely, was not permanently retained to keep you advised of all law changes that may potentially affect your planning.  Typically, the attorney/client relationship ends when the preparation of the plan has been completed and the attorney has closed your file; and thus, there is not an ongoing obligation to continue to advise you of law changes.  As such, we strongly encourage and recommend that you (and an attorney acting on your behalf) periodically review your planning documents to be certain your planning remains consistent with your wishes and remains appropriate for you.  Additionally, we suggest you review your planning documents anytime you experience a life-changing event or significant change in your financial circumstances, even if you just recently completed your regular, periodic review.  In Illinois, if changes to the documents are needed or desired, mark-outs or interlineations on the original documents will NOT be effective; and, any changes that you wish to make to your planning MUST be properly executed and witnessed to effectuate the change you desire.

If you do not have such planning in place, and this post, along with the hustle and bustle of the end of the year, has motivated you to add creating an estate and life care plan to your “to do” list and to move forward with your planning, then you too should give yourself a pat on the back.  As we like to say at our office, there is no time like the present to move forward with creating your estate and life care plan.

©Copyright 2015 by Constance Burnett Renzi. All rights reserved.

Our office is available for consultation regarding estate planning (including Wills and/or Trusts), life care planning (powers of attorney), special needs planning, probate, guardianship matters, Medicaid eligibility for long-term care, and/or other elder law issues.  The Elder Law Center, P.C.  proudly serves clients throughout Illinois and is located in Aurora, IL,  in the Chicago Western Suburbs.  Our office can be reached via telephone (630-844-0065) or email through our website:http://www.elderlawpc.com.

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