For years, the IRS allowed beneficiaries of an individual retirement account (IRA) to defer their receipt of income over their individual lifetimes through the use of the stretch distribution provision. This is no longer possible as the act changes the way in which a beneficiary can elect to receive his or her own share of a decedent’s account: either as a lump sum distribution or as a ten (10) year plan of distribution. The inherited “stretch” IRA is no longer an option after January 1, 2020. As a result, the government will begin to receive more taxes from inherited income beginning 2020 moving forward.

The act does provide some relief as it puts off the age for required minimum distributions (RMDs) until the age of 72, if you have yet to begin receiving your RMDs prior to 2020. It also repeals the maximum age of which a person can contribute to his or her IRA; allows for expansion of 529 plans; and, provides credits to small businesses that setup automatic enrollment into their retirement plans.

Overall, the act appears to be designed to force recognition of income that could otherwise be deferred over a beneficiary’s lifetime. How will this affect your individual estate plan and family wealth planning? We have some answers…

• You may wish to consider engaging in five (5) year longterm care planning to help protect non-IRA assets while using your IRA assets to help fund your own care.
• You may wish to consider “stream-lining your estate planning by using probate avoidance techniques like beneficiary designations, enhanced life estate deeds and joint ownership.
• You may wish to designate trusts, under certain circumstances, as beneficiaries to help protect minors from financial misuse of inherited assets.

If you have questions, we are here to help. Please call 866-529-ELDR or locally, in the metro-Detroit area, at 586-264-3756 to schedule your free consultation.

Are you residing in Macomb, Oakland, Wayne, Ottawa or Kent County? Do you have a loved one or family member residing at a nursing home? Does he or she currently receive benefits from the State of Michigan in the form of long-term care Medicaid for nursing home care?

If the answer is “yes”, you may be exposed to estate recovery. Michigan adopted Estate Recovery, retroactively, for seniors that received Medicaid benefits. Estate Recovery is a law that entitles the State of Michigan to recover assets from an applicant’s estate if he or she received nursing home Medicaid benefits during his or her lifetime.

Although exemptions exist, the common target and biggest asset in an estate is a home. Homes are a protected or “non-counted” asset at the time of Medicaid application, but, now, following death, a home can become a target of recovery. The current statute, which may change, provides that the State may, effectively, lien the home through the probate process.

The law specifically provides that the state can recover up to half the value of a home capped at half of the mean value of a home in the geographic area it resides. Although the law seems to be specific, the Department of Human Services (DHS), and, the state fail to provide guidance in application of the formula to determine value. In fact, a separate independent agency serves as the state’s collection arm.

For now, the collection agency simply mails a questionnaire to assess the value of an estate that may be exposed to estate recovery. The questionnaire is flawed pursuant to creditor/debtor law and probate law, but still must be completed, to some degree.

If you have received a questionnaire or a letter of inquiry, do not panic. Often, the questionnaire will not apply as most homes and assets will escape the probate process through joint ownership, beneficiary designation, or effective estate planning; and, ultimately, will escape estate recovery. But the best advice is still to:

Call first… Act second.

The attorneys at Serafini, Michalowski, Derkacz and Associates, P.C. are ready to help. Serving southeast Michigan and metro-Detroit in Macomb, Oakland and Wayne County, through its Sterling Heights office; and, west Michigan in Kent and Ottawa County through its Zeeland office.

Free consultation, by appointment only, (586) 264-3756, (616) 931-3670, or, 1 (866) 529-ELDR.

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Confused about Estate Recovery in Michigan? Apparently, so is the State of Michigan.

After several years of thumbing its nose at CMA, the State of Michigan finally adopted an estate recovery program. The legislature enacted law requiring estate recovery for long term care Medicaid recipients. The end result is that estate recovery will effect any nursing home recipient who received benefits prior to May of 2011. Although estate recovery was not formally accepted as a regulation within the state’s Medicaid system until July 2011, it is apparent that the State implemented the new law effective May of 2011.

Even more confusing than the effective date of the new law, its implementation is even more puzzling. The State has contracted with an outside agency, HMS, to collect debts from the estates of Medicaid recipients. The forms and procedures used by HMS are confusing to everyone, including attorneys and the agency itself.

Despite the confusion, it is clear that, in its current form, estate recovery in Michigan, only applies to Medicaid recipients that pass away leaving an estate to probate.

If you are a current long term care Medicaid recipient, or the family member of a Medicaid recipient and have questions, please call (586) 264-3756 to discuss your options.

Our firm has the knowledge and experience to assist you with Medicaid planning.

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In November of last year, the State of Michigan adopted a new estate recovery law. For those of you unfamiliar with the concept, “estate recovery” is a term that describes the State’s ability to recover funds from people that have been approved to receive Medicaid benefits for nursing home care. For many Medicaid applicants this means that the State would have a right to file la lien against a Medicaid recipients estate. Primarily, the target of these recovery acts are the Medicaid recipients’ homes.

Following the enactment of the Deficit Recovery Act of 2006, the federal government made it clear that all states seeking funds for Medicaid programs needed to adopt an estate recovery statute. Seemingly, this provision targets Michigan, as it remained as the only state without such a law.

Michigan’s legislature slowly implemented such a law last year. The only remaining issue for it to be implemented was federal approval. At the end of October, we received word that the federal government rejected Michigan’s proposed estate recovery law. As a result, Michigan remains as the only state without an estate recovery law. For the time being, Medicaid applicant’s homes are safe.

What does this mean to those seeking Medicaid benefits for long term care? No one really knows for sure. Presently, the best advice is to consult with an elder law attorney in Michigan to discuss your options if you or a family member are facing long term care decisions.

Related Posts: Michigan Estate Recovery and Your Home, Michigan Long Term Care Planning for Non Veterans Part 2, Flag Day, Michigan Estate Recovery