A problem families occasionally have when making plans for a loved one with a disability may soon be resolved thanks to recently introduced legislation. Any assets bequeathed to such a recipient should typically be placed in a special needs trust. Things may become tricky when an IRA or other type of retirement plan is included in the assets to be passed on, especially for families who might want to name the charity that helps their loved one as a second beneficiary to such a trust. Suppose charities are designated beneficiaries under regulations governing retirement plans and trusts. In that case, the retirement plans must be liquidated, and taxes must be paid within five years of the original owner’s passing. The time limit for such liquidations is ten years after the original owner’s death for retirement plans that pass to most people. However, individuals with disabilities or chronic illnesses are exempt under the 2019 statute known as the Setting Every Community Up for Retirement Enhancement (SECURE) Act. They may put off paying taxes by spreading out the dividends across their lifetimes. The extended withdrawal schedule can be preserved via trusts, but not if a charity is named as the beneficiary. To overcome this gap, the Special Needs Trust (SNT) Improvement Act of 2022 would allow families to designate a nonprofit organization as a remaining beneficiary. The Senate Financial Committee recently supported the measure on a bipartisan basis. The Special Needs Alliance, a nationwide association of attorneys representing senior citizens, individuals with disabilities, and their families, is one of the organizations backing the SNT Improvement Act. According to Special Needs Alliance President Mary O’Byrne in a recent news release, “individuals and families want to make sure that they can donate to organizations that are providing important services that are severely depended upon by so many.” This legislation provides people with disabilities and their families the opportunity to guarantee that future services [for persons with disabilities] may be maintained without incurring increased tax costs.
Contact Information:
Email: [email protected]
Phone: 9143022300
Bio:
My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial [email protected] 914-302-2300
