Video: Getting Started in Estate Planning

Forbes' video network online posted, on September 15, 2010, a short segment entitled Estate Planning:  How to Get Started, starring Deborah L. Jacobs, the author of the recently-published book Estate Planning Smarts.

Her advice during the interview impresses the need for personal planning, and urges that this not "be done at home" due to the pitfalls and pain that can result.  Pain avoidance is a real motivator, since "[a]bove all, estate planning is a way to take care of yourself and the people you love."

Her book's website notes that, "[r]egardless of your net worth, a good estate plan should accomplish these essential goals:

• Caring for yourself by authorizing people to handle your affairs if you no longer can because of illness or disability

• Specifying who gets what after you pass away

• Providing for children who are minors or who have special needs.

In my blog posting on September 29, 2010, I noted an article written by Deborah L. Jacobs entitled Do-It-Yourself Wills, a No-No.  I agreed with Deborah that "DYI" should not be an option in personal and estate planning.

However, thorough preparation -- in learning about this area of the law, in listing your personal goals and obstacles, and in summarizing your situation (your holdings & income, versus your debts & commitments) -- is very important.

Pairing a prepared client with a qualified professional should result in a good outcome.

"Charitable Giving: Past, Present & Future" at PSU's Hershey Medical Center

On Thursday afternoon, October 29, 2009, beginning at 4:30 pm, Penn State University and the Milton S. Hershey Medical Center, will hold a reception and then a one-hour presentation entitled Charitable Gift Planning at the Hershey County Club, in its Picard Grand Pavilion, 1000 E. Derry Road, Hershey, PA 17033.

The reception is hosted by Harold L. Paz, M.D., Senior Vice President for Health Affairs for Penn State, Dean of Penn State College of Medicine, and Chief Executive Officer of Penn State Milton S. Hershey Medical Center, and by Mark Faulkner, Esq., Partner, McQuaide Blasko.

The speaker will be me.

I will make a presentation for an hour (5:15 - 6:15 pm) entitled "Charitable Giving: Past, Present, and Future" tracing what has transpired, is happening now, and can happen in Hershey, Pennsylvania through charitable donations.

In nearly fifty PowerPoint slides, I borrow from etymology, world and local history, the Milton S. Hershey legacy, Professor Don Kelly's fine software program The Intuitive Estate Planner (now in Version 13, updated 10/13/09, published by Thompson-West), recent photos taken at Hershey Medical Center, the ten-year development plan for HMC, and my own recent experience as a patient in a similar medical system to consider the purpose and value of charitable giving.

I conclude that the greatest giving arises from the deepest appreciation of suffering and the strongest determination to remedy it beyond ourselves.

We lawyers draft documents to define purposes and uses of charitable gifts. Accountants count the income and estate tax savings accruing from charitable gifts. Investment advisors study the most appropriate holdings or income earnings of gifts in the hands of a charity. Development officers tout the merits of one institution or gift program over another.

But the real purpose of a charitable gift is to help others with the least fuss and the most effect.

In my recent examination of the great work, the good people, and the consistent mission of Penn State's Hershey Medical Center, I conclude that its facilities, research programs, and patient services are worthy objectives for charitable donations, small or large.

More "Truth About Probate and Living Trusts"

The Allegheny County Bar Association and the Pennsylvania Attorney General’s Office will conduct a second, free “Truth About Probate and Living Trusts” Clinic for the public, this time in the North Hills area of Allegheny County, PA (not the North Hills in Montgomery County, PA) on Monday, June 29, 2009.

I received word about the scheduled repeat of the public presentation in an email message from Scott P. Magnuson, Esq. (who is a contact person for the event, along with Christine Kornosky, Esq., Chair of the sponsoring ACBA Probate & Trust Section), as follows:

I understand that you were aware of our last clinic for the general public of Allegheny County regarding probate and living trusts.

The response to the clinic was so overwhelming that we are having our second clinic on the 29th in a different part of Allegheny County.

I thought I would pass this press release on to you in case you had any interest in seeing it.

Thank you for you efforts in your blog. I'm sure it is appreciated by many.

Indeed, I had noticed and promoted the first run of the ACBA's Clinic on this topic held March 31, 2009. See: PA EE&F Law Blog, Lawyers & a Judge Educate about Living Trust Scams (03/23/09).

Western Pennsylvania publications reported about that Clinic too. See: "Protect yourself from dubious wills, living trust schemes" (03/19/09) by Larry Walsh, posted by the Pittsburgh Post-Gazette; and "Free clinic to focus on living trusts, probate" (03/25/09) posted by The Almanac.

Years ago, the ACBA published an informative booklet on the same topic as the Clinic, entitled "The Truth About Probate & Living Trusts in Pennsylvania," which is still available for download in electronic form (2002, PDF, 4 pages) or for order in paper form.

We have produced this booklet to alleviate the confusion about living trusts and probate, and to protect consumers from purchasing a product that might not be right for them.

The booklet answers questions about probate, such as: What is probate? What are the costs of probate? Does probate take a long time? The booklet also answers questions about a living trust, such as: Why am I now hearing so much about living trusts? Do I need a living trust?

If a consumer or organization would like to obtain multiple copies of the booklet, the first copy is free and the additional booklets are $1 each to cover copying expenses.

Recently, the focus has shifted from calm education on such topics into sterner warnings. Due to growing financial elder abuse, consumers must be trained to spot and avoid unprofessional and unqualified peddlers who frighten with tales of probate woes or tax tragedies, and then pitch unnecessary, ineffective, and often expensive "living trusts" as a panacea.

This Clinic's panel will speak the truth about these matters.

Here's the ACBA's recent Press Release about the next presentation offering the “Truth About Probate and Living Trusts”:

Due to the overwhelming response to their free Truth About Probate and Living Trusts clinic held in March [2009] in the South Hills section of Pittsburgh, The Probate and Trust Law Section of the Allegheny County Bar Association along with the Pennsylvania Attorney General’s Office today announced that another free clinic will be held June 29 in the North Hills section of the city.

The clinic, which will run from 6:30 p.m. to 8:30 p.m., will be held at the Four Points by Sheraton Pittsburgh North, located at 910 Sheraton Drive, Mars, PA 16046. The clinic will again be limited to 250 people, so reservations are required. Call 412-402-6651 to make a reservation.

The clinic will feature a panel discussion of members of the bar association’s probate and trust law section in addition to the Honorable Frank J. Lucchino, administrative judge in the Orphans’ Court Division of the Allegheny County Court of Common Pleas, and John Abel, Senior Deputy Attorney General in the Bureau of Consumer Protection.

The clinic will address issues and questions about revocable living trusts and probate and will help to address misinformation that is being distributed about these subjects. The clinic will also advise attendees on how to guard against living trust scams targeting senior citizens.

According to Pennsylvania Attorney General Tom Corbett, “It is important for consumers to understand that planning an estate and choosing investments involves many different legal, financial and personal decisions. Consumers need to gather as much information as possible about these offers and look beyond fancy credentials or high-pressure sales pitches, understanding that some of these ‘consultants’ are nothing more than sales agents looking to earn a commission on living trusts or investments that may be of questionable value,” said Corbett.

“While we all understand the importance of getting this critical information out to the general public, we were pleasantly surprised by how quickly the reservations came in for our first clinic in the South Hills,” said Christine Kornosky, chairperson of the Probate and Trust Law Section of the Allegheny County Bar Association.

“Many callers asked for a similar clinic to be held in the North Hills and other parts of the city. We are pleased to again offer this important clinic in association with the Attorney General’s office. Our attorneys see firsthand every day how important it is to get the correct information about probate and living trusts into the hands of our county residents before they make misguided decisions that could negatively affect themselves and their families.”

This clinic is sponsored by: the Allegheny County Bar Association; Eckert Seamans Cherin & Mellott LLC; and PNC Bank.

Additional probate clinics are being considered for other locations in Allegheny County. If you cannot attend the clinic, important information on probate and living trusts can be found on the Allegheny County’s Bar Association For the Public website at www.acba.org.

Additional Contacts who will be part of the panel discussion:

• Raymond Vogliano, Esquire, Eckert Seamans Cherin & Mellott, LLC
• Thomas Crowley, Esquire, PNC Wealth Management
• Tom Loftus, Director of Marketing and Media Relations, Allegheny County Bar Association
  

* * *

I am not bound to win, but I am bound to be true.
I am not bound to succeed, but I am bound to live by the light that I have.
I must stand with anybody that stands right, and stand with him while he is right,
and part with him when he goes wrong.
-- Abraham Lincoln

Update: 06/17/09:

In response to this posting, I received an email message from Christine Kornosky, Esq., Chair of the sponsoring ACBA Probate & Trust Section. She reminded me about our prior discussion when we visualized just such an educational effort as now offered successfully by the ACBA:

Neil:

Thank you for your kind publicity of our events.

You may remember our discussion (about a year ago) about how to deal with the living trust peddlers who may also be attorneys and how to address truth in advertising issues without being negative.

As you can see, we took your advice to heart when we were deciding how to handle these issues. I just hope it does some good.

Best regards,
Chris Kornosky

The Heat is On: Federal Estate Tax Reform Brews

Congress returned from its Spring Recess on April 20, 2009, and now confronts many significant issues. Among them is federal estate tax reform, presently sent to House and Senate Conference Committee negotiations in anticipation of acceptable legislation.

On April 9, 2009, Web CPA posted an article entitled "Estate Tax Planning for 2009 and Beyond" by Jonathan M. Forster and Jennifer M. Smith, who summarized the pressing need for federal legislation, and updated the political situation just before that Spring Recess:

Senate Finance Committee Chairman Max Baucus, D-Mont., unveiled a proposal last month to make permanent key features of the 2009 estate tax rules. President Obama also has voiced support for freezing 2009 rates and exemptions. * * *

The Senate version of the budget plan passed by Congress last Thursday included a bipartisan amendment that raises the estate tax exemption by $1.5 million to $5 million for individuals and $10 million for couples, and cuts the maximum rate from 45 to 35 percent.

However, the House version, which was also approved Thursday, maintains the estate tax at 2009 levels. Under the House version, which preserves Obama’s proposal, individual heirs would be able to exempt $3.5 million from taxes, while couples could exempt $7 million. Amounts above the exemption cutoff would be taxed at 45 percent.

A conference committee will resolve the differences between the House and Senate versions after Congress returns from recess later this month. * * *

Reconsideration of federal estate, gift, and generation-skipping tax legislation now occurs in a vastly different setting than in the past. These taxes are no longer viewed in a segregated philosophical debate, but have become a component of far-larger economic issues involving federal spending and revenue, and financial structure realignments.

The Washington Post, in its article published April 3, 2009, "After Recess, a packed agenda for Congress" by Ben Pershing, described the storm-like environment affecting all federal tax legislation:

First off will be a budget conference report, which the House and Senate will have to negotiate and pass after both chambers approve their own versions this week.

Ratifying the budget will let the Appropriations Committee get to work on spending bills, and Pelosi said action on those measures "will be a good part of how we go forward in May and June."

Pelosi hopes to have most or all appropriations bills through the House by June 30.* * *

So the "heat is on." Opinions are being tossed into the brewing concoction, before it will be served to taxpayers.

Academics weigh in. For example, see: Estate tax reform (04/08/09) posted by Professor Gerry Beyer on his Wills, Trusts & Estates Prof Blog, announcing that "Lily Batchelder (Professor of Law, NYU Law) has written a new article entitled Estate Tax Reform: Issues and Options, Tax Notes, Feb. 2, 2009."

Poll-takers and public interest groups weigh in. See: "Public Opinion on Taxes" (updated 04/10/09; PDF, 85 pages) posted by the American Enterprise Institute, which tracked public opinion on taxation since April, 2003; "Poll: Tax Code Complex, Needs Reform; Federal Incomes Taxes 'Too High'" (04/09/09) posted by The Tax Foundation; and "Independent Sector Issues Statement On Reform of the Estate Tax" (03/31/09) posted by the Independent Sector.

And newspapers weigh in. See, for example, Editorial, "The Forgotten Rich" (04/02/09) published in The New York Times; and Editorial, "Our view on rewarding the well-born: What deficits or wealth gap? Congress eyes estate-tax cut" (04/26/09) published in USA Today.

Need we even mention the private interest groups and lobbyists?

The brew is coming to a boil.

The heat is on, on the street
Inside your head, on every beat
And the beat's so loud, deep inside
The pressure's high, just to stay alive
'Cause the heat is on

* * *
The shadows are on the darker side
Behind those doors, it's a wilder ride
You can make a break, you can win or lose
That's a chance you take, when the heat's on you
When the heat is on

-- Song, "The Heat is On"
by Glenn Frey

Steelers and Estate Tax

With the Super Bowl scheduled to be played on Sunday evening, February 1, 2009, sports fans worldwide will focus on the Arizona Cardinals and the PITTSBURGH STEELERS -- you know, that football team from PENNSYLVANIA.

Both teams are family-controlled. Owners in both families face a significant hurdle: Payment of Federal Estate Tax. Complex estate planning is in order so that the games can go on.

According to Wikipedia, "the Arizona Cardinals, founded in 1898, hold the distinction of being the oldest continuously run professional American football club in the United States." The team's history divides into the Chicago years (1898–1959), the St. Louis years (1960–1987), and the Arizona years (1988–Present). The Cardinals' current coach, Ken Whisenhunt, was hired away from the Pittsburgh Steelers -- where he served as offensive coordinator -- on January 14, 2007.

Also according to Wikipedia, "[f]ounded in 1933, the Steelers are the oldest and most championed franchise in the AFC [American Football Conference]."

The team will appear in its seventh Super Bowl on February 1st 2009 and is one of three teams to have won the Super Bowl five times.

No team has played more conference championship games and Pittsburgh has hosted more conference championship games than any other NFL franchise.

From 1974 to 1979 the franchise became the first NFL franchise to win four Super Bowl titles in six seasons, a feat which is yet to be matched.

The 2005 team was the first sixth-seeded team in NFL history to advance to a conference championship game; they went on to win the game, followed by their latest Super Bowl victory on February 5, 2006. * * *

When these two powerhouse teams meet on Sunday evening, will you be thinking about estate planning, among the many other aspects of the game? There would be reasons.

On July 11, 2008, the Pittsburgh Tribune Review published an article entitled "Estate tax threatens NFL's old guard of owners" by Kevin Gorman & Mike Prisuta, who mentioned both teams when reporting about the concentrated family ownership of the Pittsburgh Steelers that will present problems one day when subject to federal estate tax:

There have been a dozen changes of NFL ownership since 1994, with three involving family estates.

With four of the five Rooney brothers -- Art Jr., Timothy, Patrick and John -- seeking to divest their combined 64 percent interest in the club (Steelers president Dan Rooney also owns a 16-percent share), the estate-tax issue could play a prominent role in any decision. * * *

It's an issue that many longtime NFL owners will eventually have to address. The Bidwill family has owned the Cardinals as long as the Rooneys have owned the Steelers, since 1933.

The key is for family-owned teams to find loopholes in the transference of NFL ownership, which has allowed the Mara and Tisch families to maintain control of the New York Giants, and the Chicago Bears to remain in the Halas/McCaskey families. * * *

Estate planning and family cooperation were concerns of "the Chief," Art Rooney, when he wrote a letter dated March 18, 1987, to his five sons. According to a New York Times "Freakonomics" blog posting entitled "Art Rooney Saw the Steelers’ Future" by Stephen J. Dubner, the Chief (as "Dad") wrote:

Time is starting to run out on me. I am concerned, just as you are, about my Will, particularly my Stock in the football club. I would like to reach some kind of an understanding so that there will be no questions or complications regarding my estate. * * *

Matters of ownership, cooperation, and estate planning came to a head in 2008 for the Steelers, as noted in a blog posting entitled "Death, Taxes and NFL Football (Go Steelers!)" by Julie Garber posted Wednesday August 6, 2008 by About.com:

Having grown up in Pittsburgh, the recent news that my beloved Pittsburgh Steelers are on the verge of being sold to an outside third party did not sit well with me.

This fifth oldest NFL franchise was purchased by Arthur Joseph Rooney in 1933 for a mere $2,500 and is still controlled today by a majority of Rooney family members.

According to a 2007 Forbes.com article, the fair market value of the team is now estimated at well over $900,000,000 and this has put the five sons of Arthur Joseph Rooney at odds over the future of the team. It seems that one son, Daniel, wants to keep the team, but the other four sons want to cash out and focus on other businesses.

Recently stepping into the middle of this family feud is a potential buyer named Stanley Druckenmiller, a billionaire Pittsburgh businessman with very deep pockets. * * *

The death tax threat to the Steelers football franchise was discounted, however, in an article entitled "Estate taxes pose little threat to Steelers ownership" (08/10/08) by Mark Roth, published in the Pittsburgh Post-Gazette.

As the Rooney family prepares to meet with NFL Commissioner Roger Goodell to discuss a possible ownership change in the Steelers, the federal estate tax may turn out to be the least important factor affecting the team's future, tax experts and some family members say.

On the surface, the estate tax seems daunting -- 45 percent on all estates above $2 million in value. With the Rooneys' 80 percent share of the franchise being valued at $800 million or more on the open market, that would seem to make the family liable for hundreds of millions of dollars in tax liabilities.

In reality, though, few estates pay the full estate tax rate, and there is almost no evidence that any family-owned enterprises have had to dissolve or sell out because of the federal tax, said Ben Harris, a senior research associate at the Tax Policy Center in Washington, D.C., a joint operation of the Brookings Institution and Urban Institute. * * *

Before the general election in November, 2008, levy of a succession tax on National Football League team franchises had become a "political football" kicked by the candidates, according to "NFL owners have rooting interest in election --McCain estate-tax plan would save some owners millions" by David Sweet, posted on MSNBC.

Democrat Barack Obama and Republican John McCain may obfuscate on some issues, but they are clear where they stand on the estate tax, which is levied on well-off citizens after they die.

Obama favors a 45 percent top rate after a $3.5 million exemption, while McCain embraces a 15 percent top rate and a $5 million exemption.

As the value of NFL franchises continues to soar — thanks to new stadiums, labor peace, billion-dollar television contracts and other factors — the estate tax has become a primary concern, especially as owners enter their 70s and 80s.* * *

At least for the Steelers, by early December 2008, the ownership and transfer issues appear to have been resolved, according to a posting on Sports Business Daily, "NFL Franchise Notes: Steelers Ownership Deal Nearly Finished" (12/02/08) citing a KDKA report:

CBS' Andy Sheehan cited sources as saying that details surrounding the Steelers ownership transition "should be settled by this weekend."

The sources indicated that Steelers investors Tim, Art Jr., Patrick and John Rooney, each of whom is selling all or part of his 16% ownership stake in the franchise, and their brother, Steelers Chair Dan Rooney, will stay in Pittsburgh following Sunday's Cowboys-Steelers game for a Monday board meeting, at which they "plan to ratify the deal."

Sources indicated that the deal "affixes a value to the team" of between $750-800M. In compliance with NFL rules, Tim and Patrick Rooney will "completely divest themselves of the team," as they both operate race tracks, while Art Jr. and John Rooney also will "sell shares to Dan but retain a smaller stake."

In order to purchase the shares, PNC is "loaning Dan Rooney an undisclosed sum".

With that now resolved, you can focus on Super Bowl XLIII game-play.

Go Steelers!!!

“Estate taxes make every one of us nervous.
If there’s an owner who isn’t, he has his head in the sand.”

-- Dan Rooney, quoted by Bloomberg News (2000)

Update: 02/01/09 @ 10:30 pm:

In a nerve-shattering, topsy-turvy, "incredible game" that demonstrated the tenacity, skill, focus, and passion of the titans on both teams, the Pittsburgh Steelers won the Super Bowl, 27-23.

The game will be remembered not only as the Steelers' sixth Super Bowl victory (a record), but also for the plays at the ends of the first half and the second half, which likely made football history.

Post-game, the Vince Lombardi Trophy was presented by Pennsylvania native, Pro Football Hall of Famer Joe Namath, to Club representative Dan Rooney, in the presence of transfixed fans.

"Both teams, when they were down,
kept fightin' and comin' back."
-- John Madden
ESPN TV sports commentator, immediately post-game

"Anything's possible."
-- Ben Roethlisberger
Quarterback for the Pittsburgh Steelers, interviewed post-game

"If you believe together you can accomplish things, you can be successful."
--Ken Whisenhunt
Head Coach of the Phoenix Cardinals, interviewed post-game

Federal Estate Tax: Get Ready to Rumble!

On January 27, 2009, the Center on Budget and Policy Proposals posted an article entitled "Congress Should Not Weaken Estate Tax Beyond 2009 Parameters", by Chye-Ching Huang, who reported:

Senate Finance Committee Chairman Max Baucus reportedly plans to unveil a proposal in coming weeks to make permanent key features of the estate tax that are in place in 2009.

This will launch a major congressional debate. * * *

Reform of the federal estate, gift, and generation-skipping tax system have been debated routinely since the last enactment in 2001. In October, 2007, CBPP prepared its "Issues Surrounding the Federal Estate Tax" slide show presentation (11 slides), which summarized its concerns long-term.

The current article notes that, "[i]n his campaign, President Obama called for addressing this matter by making the 2009 estate-tax parameters permanent."

Consistent with its prior presentations, CCPP argues forcefully -- using updated data and projections, and considering six legislative scenarios -- against reducing rates and thresholds below those now applicable in 2009.

These are the summarized reasons advocated by CCPP:

• Making the 2009 parameters permanent would be very expensive, costing $609 billion over the first decade in which its effects would be fully felt (2012-2021). Going further would not be fiscally responsible.

• Under the 2009 parameters, the estates of fewer than three of every 1,000 people who die will owe any estate tax whatsoever; there is no need to shrink this tiny fraction further.

• While going beyond the 2009 rules would benefit only a very small number of wealthy individuals, millions of middle- and low-income Americans likely would eventually bear a significant share of the costs, in the form of higher taxes and lower government benefits. Millions of ordinary Americans could end up with a lower standard of living so that some of the nation’s wealthiest individuals could escape much or all of the estate tax.

• The few estates that are taxable under the 2009 rules would be taxed much more lightly than is commonly understood. In 2011, taxable estates would owe less than one-fifth of their value in tax, on average.

• Under the 2009 estate tax parameters, almost no small business and farm estates would owe any estate tax — just 140 such estates in the entire nation would be taxable in 2011, for example. Moreover, it is extremely unlikely that any taxable estates would have to be liquidated to pay the tax under the 2009 estate tax parameters.

• A meaningful estate tax is an important incentive for charitable giving. Shrinking the tax beyond its 2009 level would weaken this incentive, likely producing a drop in donations.

Read the article for the detailed analysis under each scenario.

The article's conclusion recognizes that maintenance of the 2009 status quo into the future would represent a compromise already:

Estate-tax legislation is necessary and is likely to be considered in 2009.

Repeal of the estate tax would be fiscally irresponsible, costing $1.3 trillion over the decade from 2012 through 2021.

Making the 2009 estate tax parameters permanent would be very costly itself but would be a much more responsible approach. Under it, the estates of 997 of every 1,000 Americans who die would be entirely tax free in 2011; for 99.7 percent of Americans who die, there would be no estate tax at all.

Going farther than this, especially in the face of the grave long-term fiscal problems the nation faces and the array of significant unmet needs, would be exceedingly difficult to justify.

Congressional debate and some enactment is crucial to avoid the "mayhem" anticipated by The Tax Foundation in its posting on December 31, 2008, entitled "365 Days until Estate Tax Mayhem Begins" by Gerald Prante:

Beginning [January 1, 2009], the federal estate tax will have a rate of 45 percent combined with a generous exemption level of $3.5 million. That's until Dec. 31, 2009.

On Jan. 1, 2010, the federal estate tax rate is scheduled to be zero. That's until Dec. 31, 2010.

On Jan. 1, 2011, the federal estate tax rate is scheduled to be 55 percent with an exemption level of only $1 million. * * *

The Tax Foundation views the FET system far less favorably, stating: "Studies routinely find that estate taxes discourage entrepreneurship and lead to large tax compliance costs." Its prior postings under the heading Estate and Gift Taxes stretch back to 1969.

These two organizations are among perhaps thousands that have taken a position on reform of the FET system. This is the year when those divergent viewpoints will be resolved in Congress in the political process and then enacted long-term.

To examine proposals pending before Congress, see: "Four Pending Federal Estate Tax Bills" (01/16/09) posted by Greg Herman-Giddens on the North Carolina Estate Planning Blog. For background regarding prior proposals, read past postings on this PA EE&F Law Blog under the heading "Federal Estate Tax."

"Let's get ready to rumble!"

-- Trademarked catchphrase owned & used by
American boxing & Professional Wrestling announcer Michael Buffer.

2008 Changes to IRA Rules

On January 21, 2009, MarketWatch posted an excellent article by Robert Powell, entitled Keep Track of Your IRA, about the many significant rule changes made in 2008 affecting individual retirement accounts.

There were many new laws, court decisions, IRS notices and other rule changes affecting the retirement plan of choice for millions of Americans, according to Ed Slott, the nation's preeminent IRA expert. * * *

The article was also posted by Fox Business under the title "Don't Miss The Many New Rules Governing IRAs" (01/21/09).

The general features of an IRA are well-summarized on the AARP website.

The article first discussed the most significant changes in 2008, which were made by federal legislation:

By far, the biggest changes came as part of the Worker, Retiree, and Employer Recovery Act of 2008, or WRERA (which might be an acronym for "we're in big trouble").

Under that law, required minimum distributions for IRA owners, plan participants and beneficiaries are waived for 2009. Of note, you are still required to take your RMD if you turned 701/2 in 2008 but decided to wait until this year to take that distribution.

Another provision of WRERA: Starting in 2010, non-spouse beneficiaries aren't allowed to leave retirement plans with the former IRA owner's employer. They will have to transfer those plans to an IRA at a bank, brokerage or mutual-fund firm.

Under the Emergency Economic Stabilization Act of 2008, sometimes called the bailout bill, IRA owners who are 701/2 can transfer up to $100,000 to a charity in 2009 without having the amount included in their gross income.* * * [Links added.]

The article then highlighted, under headings, additional changes regarding IRAs, from which I derive a bullet-point Tip:

• Court decisions -- Tip: "According to Goldberg, the lesson learned is this: Don't designate a revocable trust as the IRA beneficiary. Instead, name an irrevocable discretionary trust with spendthrift language as the beneficiary, he said."

• IRS takes note of Roth conversions -- Tip: Starting in 2010, plans must allow . . . a non-spouse beneficiary of a qualified retirement plan to transfer the account to an inherited Roth IRA so long as the transfer is allowed by the plan and the beneficiary meets the Roth conversion eligibility requirements.

• Saving the 'stretch' IRA -- Tip: The IRS ruled in two cases that, where the custodian was at fault in failing to make a required annual distribution and then did a make-up distribution, the IRA owner didn't have to pay the 10% penalty on the early distributions.

• Identifying the beneficiary -- Tip: "Make sure your beneficiary or beneficiaries are 'readily identifiable.'"

• Rules on disclaimers -- Tip: "Suffice to say: If you plan to disclaim IRAs, make sure you talk to a qualified professional."

• IRA trust rulings -- Tip: "If you have a beneficiary who's a minor, it's best to designate 'a custodian or a trust to hold an inherited IRA for the minor' rather than have to ask for a ruling later."

• What the future holds -- Tip: "The only certainty is that that there will be a list next year, too."
  

The article did not mention another development in 2008 that could affect self-trusteed IRAs held with one particular custodian, as described in a New York Daily News article posted November 16, 2008, entitled "Accessing your IRA is easy with new Entrust Group debit card" by Phyllis Furman.

Tapping into your retirement savings is just one swipe away.

You may have heard of the 401(k) card, the debit card that makes borrowing from your 401(k) plan as easy as heading to an ATM. Now its cousin is coming to the market: the IRA Card.

This latest piece of plastic offering quickie access to your retirement funds is from the Entrust Group, an administrator of self-directed Individual Retirement Accounts.

The card, which launches Monday, lets you draw from your IRA savings and do other things like change investment allocations within your account, in a flash.

To get started, you set up an IRA checking account with a minimum deposit of $1,000. You can then tap into those funds with the IRA Debit card - which is co-branded with Visa - or with IRA Card checks. * * *

The article mentions one criticism of the new access card:

But critics of products like the IRA Card and 401(k) cards warn they can be dangerous because they allow you to quickly tap into funds that should be locked away and growing for your retirement. * * *

Remember too, the IRS will evaluate any distributions made under such an IRA access card, whether casual or intentional, under its very strict taxation rules.

PA DPW Updates Medicaid LTC Handbook Online

On January 6, 2009, the Pennsylvania Department of Public Welfare updated its Long-Term Care Handbook Operations Memoranda webpage (previously revised on 07/29/08) publicly posting its collective policies and procedures for long-term care payments under the Medicaid program in the Commonwealth, applied post-DRA (federal Deficit Reduction Act of 2005). The modified policies affected by the DRA are highlighted in red text.

The Table of Links for DPW's Operations Memoranda (all in PDF format) is copied below:

LONG-TERM CARE HANDBOOK OPERATIONS MEMORANDA

OPS NUMBER	DESCRIPTION	CHAPTER(S)/ SECTIONS(S)	Ops Date
OPS081205	Cost of Living Adjustment (COLA) Increase Affecting Long Term Care (LTC) Budgets Effective January 1, 2009	Not Linked	December 5, 2008
OPS080604	Money Follows the Person (MFP) Demonstration Project	Pending Chapter Release	June 13, 2008
OPS080603	Adult Autism Waiver	Not Linked Pending Chapter Release	June 13, 2008
OPS070211	Disqualification for Payment of Long Term Care Services for Individuals With Substantial Home Equity	Not Linked	February 26, 2007
OPS070210	Changes to Spousal Impoverishment Policy and Procedures Related to Medicaid/Long Term Care	Not Linked	February 26, 2007
OPS070209	Undue Hardship Waiver Provisions	Not Linked	February 26, 2007
OPS070208	Annuities	Not Linked	February 26, 2007
OPS070207	Changes to Policy Regarding the Purchase of a Life Estate in Another Individual’s Home	Not Linked	February 26, 2007
OPS070206	Changes to Policy Regarding Promissory Notes, Loans and Mortgages	Not Linked	February 26, 2007
OPS070205	Transfer of Assets for Less Than Fair Market Value	Not Linked	February 26, 2007
OPS060503	(SSP) Program – Overpayment Referrals	450.13	May 26, 2006
OPS060603	Application of Spousal Impoverishment Provisions for Current Recipients of Home and Community-Based Services	Not Linked Pending Chapter Release	June 15, 2006
OPS041005	Exclusion of Mandatory Income Tax Withholdings and Social Security Administration Benefit Recoupments When Determining Contribution Toward Cost of Long-Term Care Services	450.24	October 22, 2004
OPS020407	Annuities and Guardian Fees	468.3	April 30, 2002
OPS040204	Mandatory Standard Utility Allowances (SUAs)	468.33, 468.331	February 13, 2004

For background regarding the changes wrought by the DRA, see: PA EE&F Law Blog postings: "PA DPW's New Policies under DRA" (04/04/07); "DRA to be Effective in PA on Feb 1st ... no ... Mar 1st, 2007" (01/03/07); and "Pre-DRA Annuities in PA" (11/27/06).

The only recently promulgated regulations are dated December 5, 2008, related to "Cost of Living Adjustment (COLA) Increase Affecting Long Term Care (LTC)." The other additions (in red text) to the website were effective February 26, 2007, but only now are posted on DPW's website for public access.

Is this DPW's compliant response to the new Pennsylvania Open Records Law, which took effect on January 1, 2009? If so, that's a good effect of the new law.

To learn more about this new law, see: the Pennsylvania Open Records Office official website.

For whatever reason, it is good to know where to find, online, DPW's current standards and rules applicable to long-term care payments under the Medicaid program administered in Pennsylvania.

Thanks go to Attorney Robert Clofine, of York, PA, for drawing this development to the attention of the listserv members of the Elder Law Section, of the Pennsylvania Bar Association.