The CARES Act recently passed by Congress in response to the COVID-19 threat it is the largest economic stimulus bill in modern history. The Act includes certain provisions which will be helpful to many individuals who have retirement accounts:
- Minimum Required Distributions Suspended for 2020. Individuals with defined contribution plans – 401(k)s, 403(b)s, 457(b) plans and IRAs – who have reached their required beginning date will not be required to take a minimum required distribution for 2020. This will be helpful to persons who reached age 70 1/2 before 2020 or who turn age 72 in 2020 and would prefer not to take a distribution from their plan in 2020.
- No Penalty for Early Distributions Up to $100,000 in 2020. An individual taking a distribution from their retirement plan prior to age 59 1/2 usually must pay a 10% early withdrawal penalty in addition to regular income tax on the distribution. The 10% early withdrawal penalty is eliminated for total distributions of up to $100,000 taken in 2020 provided the account owner or their spouse is diagnosed with COVID-19 or experiences adverse financial consequences due to the pandemic (such as being quarantined, laid off, furloughed, childcare issues and other reasons).
By default, the taxable income from distributions which qualify for the 10% penalty exception is spread over 3 years, but the income may be treated as received all in 2020 if desired. It may also be possible to repay the distribution to your retirement plan within 3 years if you wish.
Prior to taking an early distribution from your retirement plan you should speak with your investment or tax advisor about how these special rules impact on your specific situation.
Contact a trust and estate attorney at Crary Buchanan if you would like to discuss these matters in further detail.
WHY YOU NEED AN ADVANCE DIRECTIVE REGARDING HEALTH CARE
by Robert A Shaffer
You may or may not be happy with the result of the application of Florida law in the event you do not have an advance directive. If more than one proxy is appointed under Florida law, will the proxys be able to agree or reach a majority decision? If you have only two children, will they be able to agree about your medical decisions? Will there be a drawn out court proceeding while you are in the hospital? All of these issues can be avoided by simply preparing an advance directive.
What is an Advance Directive
An advance directive is a written document in which instructions are given by an individual regarding their desires concerning any aspect of their health care or health information. This can include the designation of a health care surrogate, living will or an anatomical gift.
Section 765.101(1), Florida Statutes.
A living will is typically a written document that directs the “providing, withholding, or withdrawal of life-prolonging procedures in the event that such person has a terminal condition, has an end-stage condition, or is in a persistent vegetative state.” Section
765.302, Florida Statutes.
Florida Law When There is no Advance Directive
Florida law provides for a default proxy to make health care decisions in the event you do not have an advance directive. Under Florida law the following persons, in the order indicated, would make health care decisions on an individual’s behalf, including the withdrawal of life-prolonging procedures:
- The patient’s spouse;
- An adult child of the patient, or a majority of the adult children if there is more than
one adult child;
- a parent of the patient;
- the adult sibling of the patient, or a majority of the adult siblings if there is more
The statue continues to list individuals to act as a proxy and even includes the appointment of a social worker to make health care decisions. Section 765.401, Florida Statutes.
Although Florida law provides for a default proxy regarding the providing, withholding, or withdrawal of life-prolonging procedures on behalf of a patient, many issues can arise if you rely on the default proxy.
The withholding or withdrawal of life-prolonging procedures can be a heavy decision and can be quite difficult, especially when the patient has not expressed their desires regarding life-prolonging procedures. Is this something the default proxy would be able to handle?
Benefits of an Advance Directive
One of the main reasons to have an advance directive is to address your living will and to make a declaration regarding your desires about life-prolonging procedures in the event you have a terminal condition, an end-stage condition, or are in a persistent vegetative state. You make the decision in advance and take the decision away from your proxy or health care surrogate.
It is also standard to appoint a health care surrogate in your living will to act as your proxy. This will avoid the issues of relying on the default proxies under Florida law. You can select a surrogate that will be able to handle difficult medical decisions while avoiding the concern that multiple proxies may be appointed and have difficulty reaching a majority decision.
© 2020 Robert A. Shaffer. All Rights Reserved.
This publication is designed to provide accurate and authoritative information in regard to the subject matters covered. It is published with the understanding that in this publication the author is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a committee of the American Bar Association and a committee of Publishers and Associations.)
Last revision: May 8, 2020