Personal Retirement Accounts

Richard W. Pingel (Associate, Updike, Kelly & Spellacy) has just published his Note entitled Should Social Security Retire? A Study of Personal Retirement Accounts in the American Probate System, 20 Quinnipiac Prob. L.J. 99 (2006).

Here is the introduction to this article:

This article examines the potential effect of the proposed privatization of Social Security on the probate court system while discussing the implications that privatization would have on inheritance, and the notion of individuality and freedom to give property away at death as one pleases–the backbones of the probate system. This article will first explore the history of Social Security, as well as its current status and future outlook. To address the predictions of insolvency in the foreseeable future, several plans have been proposed that would allow individuals to plan their own retirement by managing personal accounts. The assets of these personal accounts would be inheritable, unlike modern Social Security benefits. This article will next explore the implications that personal accounts will have for inheritance, and concomitantly, for the probate court system by examining the arguments of both proponents and opponents of personal retirement accounts. This article will discuss the policy goals and concerns associated with probate courts and, furthermore, whether personal Social Security accounts will align with the probate court system. Finally, this article will analyze the benefits and detriments of personal accounts with regard to the potential impacts on the probate courts.

And here is the conclusion:

The Social Security system, developed in 1935, is perhaps one of the greatest programs developed in the United States. Social Security has been a staple in the lives of the Nation’s elderly for seven decades. Unfortunately, the current model of Social Security has not kept pace and evolved with modern American society. As a result, the system is heading towards insolvency; without some type of reform, the system will ultimately fail. The proposals to allow personal retirement accounts would provide retirement security and potentially fix the problems with the current model. The models that utilize personal accounts are consistent with the American values that permit inheritance, ownership, control and choice. Likewise, these same values are echoed in modern probate court proceedings.

The effect on the probate courts is twofold; on one side, the personal accounts will properly align with the social policies of the court, yet on the other hand, the influx of such a new system could be detrimental to the efficiency of today’s probate courts. If Social Security is to change, so too must the structure of the probate courts. Such changes can be properly planned for and executed through thoughtful planning and adjudication when necessary. Allowing the use of personal accounts will more properly align the values of the United States Social Security System with the Probate Courts.