Medicaid Asset Protection Trusts – Common Law Rules Still Seem to Control ‘Availability’

Take-Away: Medicaid self-settled qualifying trusts often lead to common law asset protection principles. While lawyers and courts are familiar with those principles, and the limits on those principles, e.g. the property rights associated with the donee of a limited power of appointment, Medicaid administrators have little or no familiarity, thus leading to some strange reasons for the denial of Medicaid benefits.

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SECURE Act 2.0 – The Student Loan Match

The SECURE Act 2.0 permits employers, particularly those employers who hire college graduates, to match student loan repayments made by plan participants, thus making the employer’s qualified plan more attractive and beneficial to its employees.

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Substantially Equal Installment Payment Rules

Take-Away: One way to avoid an early distribution 10% excise tax on a distribution from an IRA or qualified plan account is to abide by the substantially equal periodic payment exception under the Tax Code. The problem with following that exception is the longer of five years or age 59 ½ requirement.

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Court Created Special-Needs Trusts

Take-Away: While the Michigan Trust Code contains several provisions with regard to the modification or termination of a trust, the purpose of the trust, and the settlor’s intent in creating the trust, will limit the probate court’s authority to modify or terminate the irrevocable trust.

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New SECURE Act 2.0 Penalty Exceptions

The SECURE Act 2.0 created two new exceptions to the early distribution excise tax for domestic abuse and financial emergencies. While ‘better than nothing’ neither provides much in the way of financial relief.

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SECURE Act 2.0 – Long Term Care Premiums

The SECURE Act 2.0 permits the use of some retirement plan assets to pay for long term care premiums.

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SECURE Act 2.0: New Excise Taxes and Limitations

New, favorable, rules apply when an excess contribution is made to an IRA, or there is a failure to take a required minimum distribution (RMD).

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See-Through Trusts – The Search for ‘Countable’ Beneficiaries, Part One, the Disregard Rules

The Proposed Regulations under the SECURE Act contain roughly 10 separate ‘rules’ to identify when an individual named in a trust is disregarded for purposes of determining the identity of all trust beneficiaries, which in turn controls the required minimum distribution that the trustee must take when a retirement account is made payable to the trust on the account owner’s death.

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SECURE Act Proposed Regulations – Two Eligible Designated Beneficiary Surprises

Take-Away: Previously covered in the past has been the IRS’s unique interpretation of the at least as rapidly rule when it comes to distributions from an inherited IRA when the IRA owner was over their required beginning date (RBD) at the time of their death. A couple of other ‘surprise’ interpretations also appear in those SECURE Act Proposed Regulations with regard to a designated beneficiary who is not more than 10 years younger than the deceased account owner. Again, they create a risk that a beneficiary will fail to take their full required minimum distribution (RMD) leading to a 50% excise tax imposed on the amount that should have been taken from the inherited IRA.

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