South Carolina Trust
and Estate Law Blog

If your spouse is disabled and has qualified to receive Supplemental Security Income (SSI) and/or Medicaid benefits, you will need to carefully consider how to provide your Spouse with an inheritance, or else those benefits be endangered. The resource and income limits required in order to qualify for SSI and Medicaid are very low. A poorly planned inheritance to your Spouse can result in disqualification from these vital programs.

There are a number of planning techniques that can be utilized in order to prevent this disqualification. They include converting counted resources into exempt resources, such as using the inheritance to fund the purchase of a home, car, a pre-need funeral contract, or a qualified-Medicaid annuity for the benefit of the disabled Spouse. Another technique is the establishment of a third-party Special Needs Trust.

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Medicaid Special Needs Trusts have received much needed legislative attention from the United States Congress and President of the United States. HR 34 was signed into law by President Obama on December 13, 2016. Title 5, Section 5007 of HR 34 is entitled “Fairness In Medicaid Supplemental Needs Trusts” and contains exactly two sentences designed to correct a 23 year old omission made in the Social Security Act.

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The Stephen Beck, Jr. ABLE Act (Achieving a Better Life Experience) was conceived and championed by Stephen Beck, Jr., a Virginia father of a daughter with Down’s Syndrome, who thought up a new way to allow disabled people to save money without impacting their qualification for Medicaid and SSI benefits. The Act was signed into law by President Obama on December 19, 2014. This Act’s purpose is to provide a new account type specifically for special needs individuals which enables them to save money without losing their needs-based public benefits like Medicaid and SSI.

Under the ABLE Act, the individual states set up the savings program for people with disabilities. This savings program is similar to how 529 college savings accounts work. With certain restrictions, an account can be established for use by a beneficiary with special needs. On April 1, 2016, South Carolina Governor Nikki Haley signed SC’s ABLE Act-enacting legislation into law.

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A part of estate planning that is sometimes overlooked is the naming of beneficiaries for retirement accounts. What may seem like a trivial exercise can have damaging impact if neglected. Be sure to name beneficiaries of your retirement accounts. And be sure to name contingent beneficiaries in case your primary beneficiary dies before you.

In Private Letter Ruling 201612001 (released March 18, 2016), the IRS was asked to provide an opinion on the following situation: Husband died owning an IRA account. His spouse survived him. The primary named beneficiary (not the spouse) died before Husband. There was no contingent beneficiary named. As a result the Husband’s estate became the beneficiary of the retirement account. The Surviving Spouse then requested the IRS’s opinion on whether she could treat the IRA account as her own, thus potentially delaying the payment of income taxes on the account. In this case, the IRS stated that because the Surviving Spouse was both the executor and the sole heir of the estate, she could treat the IRA account as her own.

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While a number of states (South Carolina included) have introduced legislation to adopt the Uniform Fiduciary Access to Digital Assets Act, only three have actually adopted it thus far. The first was Delaware, which adopted it on August 12, 2015, effective January 1, 2015. Second was Oregon, adopted on March 2, 2016, effective January 1, 2017. Now Wyoming makes the third, which adopted the uniform law on March 7, 2016.

The Uniform Fiduciary Access to Digital Assets Act allows personal representatives, executors, guardians/conservators, and persons acting under a power of attorney to have access to digital accounts of a decedent or incapacitated person. The law is intended to make it easier to gather the digital assets and get access to them to administer a decedent’s or incapacitated person’s estate. Nowadays, an important part of estate planning will be focused on generating a list of digital assets and providing the ability for our designated agents to obtain access to the digital assets when necessary. Other bills are pending around the country, so it is expected that this uniform law will be adopted somewhat rapidly.

South Carolina has a bill currently pending in the state legislature. You can find it here. It will be interesting to see if this bill can move forward, particularly when lots of attention seems to be on the highway bill and gas tax proposal. I am unsure however how effective this bill will be. The various terms of services agreements users accept when using online services can potentially take the effectiveness out of this law. This will be a fascinating area of estate planning and probate to watch in the coming years.

Check out this prior post for some examples of why this bill can be so important.