New Tax Law Boosts Michigan ABLE Accounts for the Disabled.

A MiABLE account allows a disabled Michigan resident to save money in an account in their own name and not jeopardize eligibility for needs-based government benefits such as Supplemental Security Income (SSI) and Medicaid. Money can be withdrawn from the account to pay for “qualified disability expenses” and such expenditures will not be counted as income to the disabled individual to determine eligibility for SSI or Medicaid. Further, there is no income taxation of the gain in value of a MiABLE account.

The recently enacted Tax Cuts and Jobs Act includes two provisions that enhance the benefits of MiABLE accounts for disabled Michigan residents:

One provision of the new tax law allows families to roll over funds that they may have saved in a 529 college savings account to a MiABLE account, provided that the beneficiary is the same individual on both accounts. The money can be transferred from a 529 account into a MiABLE account and the individual may still enjoy the benefits of the account funds without jeopardizing their eligibility for government benefits. This can be an important benefit if a disability occurs after birth or is not readily apparent at birth, and it is not likely that the disabled person will not be able to attend college. For example, grandparents set up and contribute to a 529 account for their newborn grandchild. The grandchild is later diagnosed with autism at age 11. The money the grandparents have deposited into the 529 account can be transferred to a MiABLE account for the grandchild without penalty.

The second provision allows a working disabled individual to contribute more than the current annual contribution limit of $15,000 to a MiABLE account without jeopardizing their eligibility for government benefits. Many disabled individuals want to work and are able to, but are discouraged from doing so because they may lose their SSI or Medicaid benefits if they earn too much money from a job.

We Can Read Your Writing, We Can’t Read Your Mind

Lyle and his son, Steven, purchased a house in 2007, which became Lyle’s personal residence. The title to the property was conveyed to: “Lyle, a single man, and Steven, a single man.” Lyle passed away several years later. The Michigan Department of Health and Human Services (DHHS) filed a claim against Lyle’s probate estate for unpaid Medicaid bills in the amount of $48,084.95. DHHS sought to have the bills paid from Lyle’s share of the property.

Steven filed a petition to reform the deed to indicate a joint tenancy with rights of survivorship, arguing that Lyle intended to create a joint tenancy so that his interest in the property would pass to Steven upon his death – avoiding DHHS’s claim. DHHS responded arguing that by law, the ownership estate created by the deed between Lyle and Steven was a tenancy in common because there was no express language in the deed declaring an intent to create a joint tenancy or an intent to grant a right of survivorship.

The trial court agreed with Steven’s argument and found that the deed created a tenancy in common, but that a latent ambiguity existed regarding the survivorship right. On the basis of the ambiguity, the trial court reformed the deed to comport with Lyle’s intent to own the property with Steven as joint tenants with a right of survivorship. Under the trial court’s ruling, DHHS could not satisfy Lyle’s unpaid bill from Lyle’s interest in the property, because Lyle’s interest automatically passed to Steven upon his death. DHHS appealed.

The Court of Appeals reversed the trial court, holding that although the trial court was correct in finding that the deed’s granting clause (to “Lyle, a single man, and Steven, a single man”) created a tenancy in common between Lyle and Steven, the language of the deed, on its face, was not ambiguous and, therefore, the deed could not be reformed. The Court of Appeals ruled that based upon the clear and unambiguous language in the deed, Lyle’s interest in the property did not pass to Steven automatically upon his death and, therefore, DHHS could satisfy Lyle’s unpaid Medicaid bills from Lyle’s interest in the property.

Under Michigan law, a deed conveying title to two or more persons is presumed to create a tenancy in common unless the deed language expressly declares an intention to create a joint tenancy or a right of survivorship. As happened in Lyle’s case, the death of one co-owner under a tenancy in common does not extinguish the deceased owner’s interest in the property. That interest survives to his probate estate where creditors, like DHHS, can seize it to satisfy their claims. And the courts are powerless to help.

With any legal document, what you meant to say matters little – what matters is what your document actually says.  Deeds and other documents must be carefully drafted to clearly express and carry out your intentions.  Poor drafting can have disastrous consequences. In Lyle’s case, not having the correct language in his deed cost Steven tens of thousands of dollars ($48,084.95 to pay the DHSS claim, plus legal fees).

Work with competent legal counsel to ensure your documents are properly drafted. It can save you and your family a fortune in the long run.

The case is Steiner v DHHS, and you can read the opinion of the Court of Appeals here.

Tips for Navigating Medicare Open Enrollment

Medicare’s annual open enrollment period closes on December 7 this year.  During open enrollment, Medicare enrollees can shop for new prescription drug (Part D) or Medicare Advantage coverage. Medicare enrollees may be able to save hundreds of dollars on premiums and out-of-pocket costs by doing a checkup on their coverage and making necessary changes during the open enrollment period. Surprisingly, few enrollees bother to take advantage of this opportunity to review their existing coverage or make changes.

Morningstar contributor Mark Miller sat down for an interview recently at to discuss the potential benefits of annually reviewing your Medicare coverage, and he offers several useful tips to help navigate through the open enrollment period.

If you haven’t yet reviewed your Medicare enrollment options, or you weren’t even planning on doing so, it might help you to take a few minutes (about 8, in fact) and watch the interview to see if there might be something you can do to save money on your health care next year.  You can watch the full interview here.  I hope it helps!

Michigan Launches the MiABLE Account Program.

Michigan’s ABLE account program (“MiABLE”) has gone into effect. The program launched November 1, 2016.

MiABLE program accounts are modeled after 529 college savings accounts, and are meant to help persons with disabilities save money in their own names and allow tax advantaged distributions for certain expenses including housing, transportation, health and wellness, education and more, while maintaining eligibility for federal and state aid. Like 529 college savings accounts, if funds distributed from a MiABLE account are not used for qualifying expenses, any investment growth will be taxed at ordinary income tax rates, plus a 10% penalty. MiABLE account funds can be rolled over tax-free from one MiABLE account to another and the designated beneficiary can be changed from one disabled person in a family to another in the same family.

Some details for Michigan MiABLE accounts:

  • Six investment portfolio options are available, from conservative to aggressive portfolios.
  • Debit cards will become available to account holders in early 2017. This will make it easier for an account holder to access funds in their account.
  • A major benefit to a MiABLE account holder is the ability to post their account online, like GoFundMe accounts, to make it easier for third parties (parents, grandparents, siblings, etc.) to donate directly to the account.
  • MiABLE accounts will be charged an annual fee of $45.

More MiABLE account information, as well as online enrollment is available at

Short Term Care Insurance Becoming More Popular

According to an article at Financial Advisor online, more seniors are purchasing short-term care insurance policies to help with the costs of care. As the name implies, a short term care policy generally provides coverage for a maximum of 360 days, and can pay for assisted living, home care assistance and skilled nursing home care costs. Short-term care insurance helps seniors cover gaps in Medicare and can be an alternative to long-term care insurance when age, cost, or other factors are issues. The cost is substantially less than that of long-term care insurance. Over 90 percent of the purchasers of short-term care insurance are over the age of 60.

If you or a loved one are considering alternatives to paying for costs associated with care assistance or nursing home care, short-term care insurance may be an attractive option.  As with any insurance purchase decision, don’t invest unless you know how the policy works and fully understand its terms, including its exceptions and exclusions.

Please read the entire article here.