Maine Elder Law Updates

New Maine Probate Code Effective September 1, 2019

The new Maine Uniform Probate Code adopted in 2018 becomes effective September 1, 2019. The Maine Uniform Probate Code is a sweeping overhaul of the more than forty- year old probate statute for Wills, intestacy, probate, and guardianship and conservatorship, among other related areas of law. The law applies to all ongoing proceedings and Wills in existence with some exceptions. Clients and estate planners will have to consider the application of the new Maine Uniform Probate Code on existing documents and proceedings, as well as advising clients on new opportunities for non-probate transfers.

The new Maine Uniform Probate Code takes a united approach to Wills, Trusts, and other non-probate instruments, and focuses on the intent of the decedent. The statute now permits the Probate Court to consider evidence outside of a Will to determine the testator’s intent, and a Will or other governing instrument, such as a beneficiary designation, may be reformed to correct mistakes in limited circumstances.

The new Maine Uniform Probate Code contains many provisions to unify the rules of construction for Wills and non-probate transfers, such as Trusts, payable on death accounts and beneficiary designations of retirement accounts and life insurance policies.

The laws on intestacy, which identify which family members take from a decedent who died without a Will, has been modified. The elective share statute, which is the amount a surviving spouse is entitled to demand absent a valid pre or post marital agreement, has been increased based on the length of the marriage. Exempt property and allowances have increased.

The amount eligible for collection of personal property by affidavit has increased from the current $20,000 to $40,000 and will now be adjusted for inflation each year.

The new Code also adds the Uniform Real Property Transfer on Death Act, which permits transfer-on-death deeds, a revocable beneficiary on a deed for real property which becomes effective upon death. These provisions will allow owners of real estate to pass their property to beneficiary(ies) at death without the need for a probate.

The most substantive changes to the laws are found in the new Maine Uniform Guardianship, Conservatorship and Proceedings Act. Maine is the first state to adopt the Uniform law and modified the Uniform law in some significant helpful areas. One of the underlying objectives is to make guardianship/conservatorship laws more person-centered and provide more guidance and monitoring to guardians and conservators. Supportive decision making and less restrictive alternatives are now front and center for every guardianship or conservatorship. Guardians and conservators appointed on or after September 1 and existing guardians and conservators by court order have new annual and interim reporting requirements and new limitations in regard to moving a person or restricting access to a person under guardianship or conservatorship. Guardianships and conservatorships will be more complicated and will require more counsel and advice for the guardians and conservators to meet their duties.

Change to Maine’s Estate Tax Effective January 1, 2016

After the Legislature voted to override Governor LePage’s veto, the 2016-2017 biennial budget bill became law on June 30, 2015. One of the provisions of the 693-page budget bill was a very significant amendment to the Maine Estate Tax. See P.L. 2015, Chapter 267, Part I, amending 36 M.R.S.A. § 4102, et seq.

Under the current law, federal estate tax may be incurred on decedents who die with taxable estates over $5.43 million, and Maine imposes its own separate estate tax on estates of decedents who die with taxable estates of over $2 million. The budget bill changes Maine law for estates of decedents who die on or after January 1, 2016 to provide that the Maine tax will fall only on the estates of decedents whose taxable estates at the time of death exceed the amount that is excluded from federal estate tax. For this year, that number is $5.43 million, but the exclusion amount is adjusted each year for inflation. Beginning in 2016, therefore, Maine will not have a separate exclusion amount from the federal exemption, and many more estates will not be subject to any estate tax at all, federal or state.

For those with larger estates above the federal exclusion amount, Maine’s estate tax will be set at 8% on the amount between the federal exclusion amount and $3 million more than that amount. The rate will increase to 10% for amounts between the exclusion amount plus $3 million and the exclusion amount plus $6 million, and to 12% on the amount that is more than $6 million over the exclusion amount.

Social Security Administration Review of Special Needs Trusts

The Social Security Administration has recently created regional review teams to review all trusts for persons on Supplemental Security Income (SSI). These teams are not reviewing trusts for persons on Social Security Disability Insurance (SSDI). Because Social Security recently adopted new instructions regarding these trusts that conflicts with prior practice, trusts previously reviewed and approved by Social Security may receive adverse rulings when reviewed by the new regional review teams. Clients with special needs trusts benefitting SSI recipients should contact our office if they receive any adverse notice from Social Security regarding an existing trust.

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The Nelson-Reade Law Office, P.C. has extensive experience in advising clients on estate tax planning, and can assist in determining a plan that best meets the individual needs of its clients and their families. Please contact us at 207-828-1597 if you would like to set up an appointment to review how the changes in Maine law may affect your estate planning needs.