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Keep Beneficiary Designations Updated in Line with Your Estate Plan

By Contributor
Law

A Critical Consideration

 

By Amanda R. Carpe, Esq.

 

Planning for the future is an essential part of life, and one of the most critical aspects of this process is estate planning. Having a comprehensive estate plan ensures that your assets are distributed according to your wishes and minimizes confusion and conflicts among your loved ones after you’re gone.

While drafting a healthcare proxy, power of attorney, and will, along with creating trusts, are crucial steps, many people overlook another vital aspect: updating beneficiary designations.

 

Avoid Unintended Consequences

Beneficiary designations supersede the instructions laid out in a will or trust. If you’ve named specific beneficiaries on your retirement accounts, life-insurance policies, or other financial accounts and have not reviewed or updated them in a while, it’s possible that they no longer reflect your current wishes.

Outdated designations may lead to unintended consequences, such as leaving assets to an ex-spouse, a deceased individual, or someone with whom you no longer have a close relationship. You may also unintentionally exclude one or more children if the account was established prior to the birth of all your children and has not been updated.

 

Ensure Smooth Asset Distribution

Your estate plan is designed to provide a clear roadmap for the distribution of your assets. By keeping your beneficiary designations current, you ensure that your assets will be transferred efficiently to your chosen beneficiaries and the distributions align with the rest of your estate plan. This process can help your loved ones avoid delays, legal complexities, and potential disputes, ensuring that your hard-earned assets are put to good use without unnecessary hindrances.

 

 

Accommodate Changes in Life Circumstances

Life is ever-changing, and so are your circumstances. Major life events like marriage, divorce, the birth of children, or the passing of a loved one can significantly impact your estate plan and beneficiary designations. By regularly reviewing and updating your beneficiaries, you can adapt to these life changes and guarantee that your financial arrangements align with your current family dynamics and relationships.

 

Maximize Tax Efficiency

Ineffective beneficiary designations can have tax implications. For instance, certain retirement accounts may offer different tax benefits based on the age of the beneficiary. By updating beneficiaries strategically, you can maximize tax efficiency, potentially allowing your beneficiaries to benefit from tax-deferred growth or minimizing their tax burden upon inheriting your assets.

 

Preserve Privacy

Unlike a will, which becomes part of the public record after probate, beneficiary designations typically bypass this process and remain private. By keeping your beneficiary designations updated and accurate, you help maintain the privacy of your beneficiaries and the details of their inheritances.

 

 

Avoid Intestate Distribution

Failing to designate beneficiaries or keeping them outdated can lead to the assets falling into intestacy. In such cases, the Commonwealth’s laws will determine how your assets are distributed, which may not align with your wishes. By actively managing your beneficiary designations, you retain control over who receives your assets, ensuring your legacy is preserved according to your desires.

 

Bottom Line

Estate planning is a responsible and thoughtful way to ensure your loved ones are taken care of after you’re gone. To make your estate plan truly effective, it’s crucial to regularly review and update your beneficiary designations. By doing so, you’ll not only prevent unintended consequences, but also provide your loved ones with a smoother process for asset distribution and avoid unnecessary complications.

Stay proactive, meet with an experienced estate-planning attorney to develop a cohesive estate plan, and keep your beneficiary designations in line with your current wishes — your loved ones will undoubtedly thank you for it.

 

Amanda Carpe is an associate attorney with Bacon Wilson, where she specializes in estate planning, elder law, and estate/probate administration.

An Update on Compliance and Reporting for Provider Relief Funds

By Contributor
Banking and Financial Services

Know the Rules

By James T. Krupienski, CPA

 

At the start of the COVID-19 pandemic in the early parts of 2020, the concern of business survival was the number-one thought of countless businesses, with each industry having its own struggles. The medical industry was not without its own real concerns at that time, particularly given its role in the pandemic fight. People would continue to get sick, require treatment, and see their physicians, but how could it be done safely?

Recognizing the financial crisis that was about to overtake this industry, along with how detrimental it was for the industry to remain open and accessible to patients, the federal government took dramatic steps. In addition to Paycheck Protection Program (PPP) loans, for which medical practices were eligible, the Coronavirus Aid, Relief and Economic Security (CARES) Act also allocated funds directly to the medical industry through the Department of Health and Human Services (HHS) and the newly created Provider Relief Fund (PRF).

James T. Krupienski

James T. Krupienski

“While the COVID-19 relief provisions, as part of the CARES Act, provided a lifeline for many medical, dental, and other healthcare-related practices during the pandemic, that support was not without certain compliance requirements and reporting.”

The first round of funding, which was completely unexpected to many, occurred in early April 2020, when $30 billion was deposited directly into the accounts of eligible practices. Throughout 2020, additional funds were later rolled out in phases 2 and 3, as well as through targeted distributions to specific industries, such as rural providers and skilled-nursing facilities. Of importance is that, for all practices receiving these funds, there are several rules to be followed.

While the COVID-19 relief provisions, as part of the CARES Act, provided a lifeline for many medical, dental, and other healthcare-related practices during the pandemic, that support was not without certain compliance requirements and reporting, which we will dive into within this article.

 

Attestations

First, within 90 days of receipt of the funds, each provider was required to attest to certain terms of use. For those electing to return the funds, it was required to be done within 14 days of this attestation. Attestations were required for receipt of funds in all phases and were to be completed through use of a portal with the HHS (www.hhs.gov/coronavirus/cares-act-provider-relief-fund/for-providers/index.html#how-to-attest).

 

Reporting

As part of the attestation process, any provider receiving more than $10,000 in payments through the PRF would be required to report on use of the funds. While the specifics on the exact reporting took months to be finalized and continued to be reworked by the HHS, the general guidelines were known. Barring no future changes, PRF dollars are to be applied in the order of:

1. Certain qualifying expenses that can be directly attributable to coronavirus; and

2. Lost revenues.

Of greatest importance is the understanding that the use of these funds must be kept separate and distinct from the use of other coronavirus-relief aid. For example, if you report on the use of a personnel or payroll related expense, it cannot also be tied to dollars used in applying for PPP loan forgiveness. Essentially, a practice cannot ‘double-dip.’

Initially, reporting was set to begin back in the summer of 2020, which was then pushed to the fall of 2020 and then again to Jan. 15, 2021. However, because of updated legislation and a change in administration, reporting had been delayed even further. In late June 2021, the reporting requirements were finalized, and the reporting portal is now open to many, depending on when funds were received (see chart).

For all recipients of the fund, it is important to continue to monitor this process so that a reporting deadline is not missed. To stay on top of this process, the HHS has been updating its site (www.hhs.gov/coronavirus/cares-act-provider-relief-fund/reporting-auditing/index.html) with current regulations.

 

Audit Requirement

One stipulation, not known to many, is that a government single audit is required if the combined federal funds (PRF and other federal assistance) received were more than $750,000. Note that PPP funding does not count towards this total.

A single audit would be required of an organization that has $750,000 or more in federal awards. While typically, federal funding is awarded to not-for-profits and governmental organizations, the HHS PRF has opened many organizations, including for-profit medical practices, to these compliance requirements. If a practice has received combined federal awards though the Provider Relief Fund in excess of $750,000, a single audit will be required.

While the majority of relief programs under the CARES Act (such as the Paycheck Protection Program) are subject to reporting requirements, the PRF has its own distinct rules to navigate. If your healthcare practice took advantage of the PRF in any amount, it is highly encouraged that you speak with an advisor as soon as possible to fully understand the compliance requirements. Navigating federal compliance can be intimidating and confusing, especially if this is your first time doing so. Speaking with an advisor can demystify this process and help ensure that you understand the regulations.

 

James T. Krupienski, CPA, MSA, is a partner in the Healthcare Services niche for Holyoke-based Meyers Brothers Kalicka, certified public accountants and business strategists; (413) 536-8510; www.mbkcpa.com

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