Inherited IRAs Not Protected in Bankruptcy

Misty A. Watson

By Misty A. Watson



Co-authored by Misty Watson and Samantha Maerz

If you directly inherited an IRA and are facing bankruptcy, these funds are no longer protected from creditors.

In Clark v. Rameker (In re Clark), No. 13-299, the U.S. Supreme Court unanimously ruled that inherited IRAs do not qualify under the “retirement funds” bankruptcy exemption. As a result, non-spouses inheriting an IRA may no longer protect the funds from creditors after filing bankruptcy and spouses have more incentive to “roll over” inherited IRA funds.

Before the Supreme Court decided Clark, there was a split between the 5th and 7th Circuit Courts of Appeals regarding exactly what the “retirement funds” bankruptcy exemption covered. In Chilton v. Moser, the 5th Circuit previously held that inherited IRAs were exempt from the bankruptcy estate because the “retirement funds” exemption never stated that the retirement funds had to be the debtor’s. In Clark v. Rameker, the 7th Circuit disagreed and held that inherited IRAs were not exempt because they were an “opportunity for current consumption, not a fund of retirement savings.” The disagreement stemmed from the interpretation of what “retirement funds” included. Continue reading »

All Married Couples in Missouri Filing Joint Federal Returns Must Also File Joint State Returns

Misty A. Watson

By Misty A. Watson



Married couples in Missouri who file joint federal tax returns, including those not recognized as married by the state but recognized as married in other states, must also now file jointly in the state of Missouri.

Governor Jay Nixon issued the executed order clarifying that, under Missouri law, couples filing joint federal income tax returns must also file joint state returns.

Click here to read more.

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

Lack of Guidance Leaves Married Gay Couples in Uncertain Tax Position

Misty A. Watson

By Misty A. Watson



Almost every expert out there is weighing in on the legal implications of last month’s Supreme Court decision striking down the Defense of Marriage Act (DOMA). Unfortunately, the IRS has not issued guidance regarding how married couples treat income in states that do not recognize their marriage, whether the IRS will allow income tax returns to be amended for the previous three years, or whether the IRS will allow married couples to file as married in states that do not recognize the marriage.

While IRS guidance is likely on the way, affected couples may have to sort through a confusing minefield of regulations for some time yet.

For more information, contact a qualified tax advisor, and go to “For some gays in America, a legal victory becomes a tax headache.”

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

 

New Family and Medical Leave Act Guidance for Families of Adult Children with Disabilities

Misty A. Watson

By Misty A. Watson



Families now have clarification on when parents may use leave to care for an adult child with a mental or physical disability.

On January 14, 2013, the Wage and Hour Division of the Department of Labor issued additional guidance to help employers determine eligibility of employees to take leave under the Family and Medical Leave Act (FMLA) when the employee has an adult child with a mental or physical disability incapable of self-care due to a serious health condition.

Generally,  entitlement to FMLA leave ends when a child is 18 years old. “Incapable of self-care” means that the individual requires active assistance or supervision to provide daily self-care in three or more of the “activities of daily living” or “instrumental activities of daily living.” Continue reading »

Financial Exploitation of the Elderly and Disabled Crime Modified to Include Undue Influence

Misty A. Watson

By Misty A. Watson



Senior citizens and the disabled in Missouri will soon have additional protection from financial exploitation.

On July 11, 2012, Missouri SB 689 was signed by Governor Jay Nixon. SB 689 modifies the crime of financial exploitation of the elderly to include “undue influence.”

“Undue influence” is defined under the bill as:

“… influence by a person who has authority over the elderly or disabled person in order to take unfair advantage of the person’s vulnerable state of mind, neediness, pain, or agony. It includes improper use of various types of fiduciary authority.”

Under the bill, the Department of Social Services may now release the income and asset information of an individual in a licensed nursing home facility to the prosecuting attorney for purposes of investigation or prosecution of financial exploitation.

Continue reading »

Survivor Benefits for Unborn Children: Supreme Court Ruling Sides With State Law

Misty A. Watson

By Misty A. Watson



The Supreme Court ruled on May 21, 2012 in Astrue v. Capato that twins conceived through in vitro fertilization after the death of their father were not eligible for survivor’s benefits through the Social Security Administration, upholding the Social Security Administration’s previous determination. According to the Court’s opinion, Mr. Capato lived in Florida at the time of his death. Under Florida law, the children do not qualify for inheritance through intestate succession (the children are not considered heirs of their father’s estate) and are ineligible to receive survivor benefits.

Florida law requires that in order for children to qualify for an inheritance, they must be born or conceived prior to the death of the parent. Because the Capato children were born 18 months after the death of their father, they were not considered to be his children for inheritance purposes under the law. Consequently, the Social Security Administration determined that the children were not eligible for survivorship benefits.

Unlike Florida, Missouri statute provides that all posthumous children (children born after the death of a parent) inherit as if they were born during the lifetime of the deceased parent, as do grandchildren and further descendants. However, other heirs, such as siblings or cousins, must be born and capable to take their share, prior to the death of the deceased.

Continue reading »

IRS Publishes Guidelines for Domestic Partners and Same-Sex Spouses

Misty A. Watson

By Misty A. Watson



The IRS has published guidelines for domestic partners in community property states and same-sex spouses in California.

Each year, many LGBT couples must complete two separate and completely different tax returns. For states recognizing same-sex marriage or allowing the registration of domestic partners, the couple may be able to file jointly for their state tax return. Then, due to the provisions of the federal Defense of Marriage Act, the couple must individually complete separate federal tax returns.

The IRS guidelines help with couples in which an individual may be eligible for head of household status and clarify that each member of the couple must file a separate tax return.

For more information, click here:Questions and Answers for Registered Domestic Partners in Community Property States and Same-Sex Spouses in California.”

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

Back to School Time for Children with Special Needs

Misty A. Watson

By Misty A. Watson



The Illinois Suburban Journal has posted a great article on “Unique first day pressures face kids with special needs.”

Changes in routine can be upsetting for any child with special needs, especially a child with autism.

Prior to the first day of school, if you have a child with special needs, it’s probably a good idea to communicate with the school to set up a time for you and your child to meet the new teacher and see the classroom. The teacher should spend enough time with you and your child to walk through what the new routine will be this school year.

Spending time establishing a relationship with your child’s teacher will help you, your child, and the teacher understand better how to ease your child into that first day of school. If your child’s teacher learns about your child’s special triggers and sensitivities before the first day of school, it can make the transition much better. It can also help the teacher help prepare better for your child if special preparation needs to be made, such as extra visual charts for the class schedule, as suggested in the Journal article.

Once school is underway, your child’s special services will begin. When your special needs child attends public school and is receiving special educational services, the school is required to provide your child with an individualized education plan (IEP). An IEP must be updated yearly to ensure that a child is receiving the necessary services to achieve that child’s goals. It will be important to educate yourself about the IEP process and what can and should be included in your child’s plan.

When you have a child with special needs, you will have to continue to advocate for your child throughout his or her educational process. At times, it will feel like a never ending battle with the school to ensure that your child is receiving necessary services.

But in the end, it is up to you to stay on top of your child’s educational process. Consult the experts, attend seminars your school district provides, and be your child’s educational advocate.

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.  

Special Needs Kids: Autism Elopement

Misty A. Watson

By Misty A. Watson



CNN released an article today titled “‘Eye on the door’: Life with autism wandering” about children with autism who tend to wander off. Whether you are in public or at home, the thought of your child wandering off can be terrifying for any parent. Parents of a child with any diagnosis that causes the child to have more of a tendency to attempt to escape parental supervision should take extra precautions.  Here are a few ideas from the article:

  1. Make sure you have your child fingerprinted by your local law enforcement agency. Often the police department will have kits parents can obtain to fingerprint and list other vital information.
  2. Contact your local law enforcement agency and see if they have a registration program. Many municipalities are instituting programs for the elderly with dementia or Alzhemeir’s in the event they are found but cannot remember where they live. See if the municipality has a similar program or advocate for the implementation of such a program in your neighborhood.
  3. Educate your neighbors regarding your child’s diagnosis and tendency to run away. Let them know where you live and how to contact you in the event that see your child unsupervised.
  4. Be aware of dangers in your neighborhood. If the child has a strong interest in water, such as the child in the article, make sure you know who has swimming pools in the neighborhood and whether those pools have fences. If moving to a new neighborhood, make sure to check the code requirements for swimming pools and know whether the neighborhood required a proper fence.
  5. Install alarms on your windows and doors that alert you if a door is opened.
  6. Finally, GPS tracking devices are now sold in bracelet and necklace form. For a child that will tolerate wearing one, these can be an excellent device to locate a wandering child.

Whatever steps you take to secure your child from escaping parental supervision, make sure you educate yourself about the resources in the community and be aware of the potential dangers in your neighborhood.