Florida Elder Law Blog - ElderLawAssociates.com

Marielle Hazen, Howie Krooks, and Harold Grodberg were quoted in Bankrate.com's "Parental Support and Nursing Home Bills."

Click here to read the whole article: http://www.bankrate.com/finance/insurance/parental-support-nursing-home-bills-1.aspx

Among all the changes you must make when you move to a new state -- driver's license, voter registration -- don't forget your will. While your will should still be valid in the new state, there may be differences in the new state's laws that may make certain provisions of the will invalid. In addition, moving is a good excuse to consult an attorney to make sure your estate plan in general is up to date.

Property laws can vary from state to state. It is especially important to have your estate plan reviewed if you move from a common law state to a community property state (Arizona, California, Idaho, New Mexico, Louisiana, Washington, Nevada, Texas, Wisconsin, and Alaska) or vice versa. In a common law state each spouse's property is owned individually, while in a community property state, property acquired during the marriage is considered community property. In addition, states may have different rules about when co-owned property may pass to the surviving owner and when it may pass under the will.

Other things to consider are whether there is any language you can add to the will to make it easier to probate in the new state and whether your executor still makes sense based on your new location. Other pieces of your estate plan may need updating as well. For example, the state may have different rules for powers of attorney or health care directives.

As always, please consult with an experienced South Florida Elder Law Attorney before making any final plans.

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Studies show that older Americans want to remain in their homes for as long as possible - even when they are struggling. For growing numbers of elders - and concerned family members - the solution to their struggle is a home aide.

If your family is considering hiring an aide, the first decision is what type of aide you need.  There are two basic choices: a home health aide or a home care aide.   Home health care aides provide personal care (bathing, grooming, etc.); assist with range-of-motion exercises and provide some medically-related care (empty colostomy bags, dress dry wounds, check blood pressure, etc.); and provide assistance with housekeeping and errands.  They are often referred to as personal care assistants.  Home care aides provide companionship and socialization and assist with meal preparation, housecleaning, laundry, shopping and errands.  They are also called homemaker or chore aides.

"The level of care the person requires determines who should be providing the home care and what it will cost," says Mary Hujer, MSN, a gerontological clinical nurse specialist in Cleveland, Ohio.

Getting Started

Before beginning the search for an aide, download the National Caregiver Library's Needs Assessment Checklist.  Not only will it help you determine the level of care a loved one needs, it will also help you write the aide's job description.  In addition, it may inform the decision of whether to hire independently or through an agency.

With an agency, the aide has been screened and trained, and they will be supervised, explains Byron Cordes, LCSW, a certified care manager and the current president of the National Association of Professional Geriatric Care Managers.   But, Cordes adds, there are other benefits of hiring through an agency: "Clients have access to all the resources the agency has.  They have back-up if the scheduled caregiver can't be there and the agency handles all the administrative responsibilities - reimbursement forms, payroll, taxes, workers' compensation, insurance, and background checks and bonding of the employee."

Hiring independently means you will be doing the screening and interviewing, supervision, coordination of care and all administrative paperwork.  But, says Hujer, it also means you are able to hire someone - a friend or relative-who may already know the person, "so the trust factor is higher...and you will usually be paying less, too."  (For more on making this choice, click here.)

To locate potential candidates, "cast a wide net," says Hujer.  Get suggestions from the older person's primary care physician or nurse; the local hospital's social work department; local social service and/or disease-specific organizations; your community's office on aging or senior center; the older person's minister or rabbi; and/or friends and neighbors who have previously used a home aide.

Labels: Florida Elder Care, florida elder law, Florida Elder Law Attorney, South Florida Elder Law Attorney

Article By: Tatiana Serafin
BARRON'S PENTA
 
It used to be that you would write out your will, name some trustees and hope for the best for all of eternity. But, increasingly, folks aren't leaving it to luck. They're appointing a "trust protector," someone given broad power to reshape your trust over time.

Say one of the beneficiaries you named grows up to be a spendthrift or a drug addict. If the trustees wanted to cut him out of the trust, they would have to petition a court, spending money and time and with no guarantee of success. A trust protector can simply step in and do the job. A protector could also replace a lazy trustee, move the trust to a state with new, more trust-friendly, laws or even dissolve the trust, distributing the assets to beneficiaries outright. In short, the protector can do almost anything to make sure your intentions are fulfilled.

The job clearly requires an individual who is both tough and respectful. If the protector is too aggressive, the trustees may get discouraged, which is dangerous. The trustees are supposed to provide diligent financial oversight from quarter to quarter and year to year.

Trust protectors, a post that first came into use for overseas trusts, have gained traction over the past two decades in the U.S. as trust vehicles have become more diverse and complex. Over the next year, wealth planners expect many high-net-worth individuals to take advantage of the $5 million gift-tax exemption, before it likely expires, and create long-term trusts for beneficiaries.

Right now, about half the states in the U.S. allow for trust protectors and more are joining. Eleven states, notably Alaska and Delaware, allow the creation of domestic "asset protection trusts," which call for trust protectors (or trust advisors) to be appointed and may spell out their roles. Another 18 states have adopted the Uniform Trust Code, which uses broad language to allow a trust grantor to authorize a third party to oversee trustees.

Already, JPMorgan Chase and U.S. Trust use the structure for more than a quarter of the trusts they set up. And some advisors, such as Jennifer Immel of PNC Wealth Management, always use it for irrevocable trusts. "A trust protector allows you to keep flexibility in the trust document," she says.

A good protector can come in handy almost right away. Immel recalls one executive who set up an irrevocable trust that, upon his death, would give his two children windfalls when they turned 35. As time went on, he realized his children needed more help managing money. So working with Immel, a senior wealth planner based in Naples, Florida, he asked his designated protector to change the terms of the trust so that the funds would not pass outright to his children but instead be held in a lifetime trust. That would have been all but impossible without provisions for a trust protector.

Deciding to appoint a trust protector is sometimes a no-brainer. Darryl Meyers, a senior wealth-management director at Wells Fargo Private Bank, cites the case of a father who left his three children a retail distributorship he had built up over his lifetime. Two of the children already had significant interest in the business and were active managers, the third received an ownership stake in the will and immediately wanted to sell the business. After much infighting, the two siblings managers bought out the business from the trust. To prevent the business from leaving the family, the family added a trust protector to a new trust for the next generation, with the explicit directions that the business not be sold to outsiders.

When a trust holds an asset such as a private company, a trustee may be inclined to recommend selling the company to diversify the trust's assets, but a trust protector focuses on the wishes of the grantor, says Meyers. The trust protector, unlike the trustee, doesn't typically have a fiduciary role to make the best investment decision. So while the trustee might be obliged to assess if it is worth keeping the private company, the trust protector can override the debate.

A TRUST PROTECTOR CAN BE especially valuable for irrevocable trusts, which, by definition, cannot be changed by a grantor or the trustees. "We don't know what the world will look like-what the relationship will be between trustees and beneficiaries or where beneficiaries reside. There are all sorts of possible nuances," says Gideon Rothschild of law firm Moses & Singer in New York.

Dynasty trusts, which can continue in perpetuity, may need a trust protector to make sure the grantor's wishes are followed. That's no easy feat, given the longevity of the trust; plenty can change when the time frame is "forever."

Naturally, provisions need to be made should a trust protector pass away. A successor should be named in the will or the trust protector should be given the responsibility of naming one.

There are some drawbacks. Because the concept of a trust protector is still new, there is little statutory or case law to define roles and responsibilities, specifically around whether a trust protector should be considered a fiduciary of a trust and what duties that implies. The fuzziness opens a trust protector to litigation, should a beneficiary or trustee believe the trust protector has erred.

Then there's the old problem of too many cooks in the kitchen. If a trust protector demands approval power over every distribution decision a trustee makes, which is allowed, that can prove cumbersome and lead to hard feelings. But if the cooks can work together, they might well produce a balanced meal for everyone.

Labels: Florida Elder Law Attorney, South Florida Elder Law Attorney, South Florida Estate Planning, South Florida Trust Attorney

Article By: Gilbert Fleming, Esq.

Two major life insurance companies, Aviva Life Insurance, and American Equity Insurance recently announced that they will not accept annuity business written in conjunction with marketing programs targeted at elders that promote qualification for Veterans Administration benefits.

I believe this is partially in response to an article in the AARP Bulletin entitled Taking Aim at Old Soldiers.The Author, Sid Kirchheimer, described "unscrupulous investment advisors" posing as "veterans' advocates" giving seminars to elderly veterans. They promise to get them "instant eligibility for benefits through a quick overhaul of their investments."

Mr. Kirchheimer goes on to say that the "quick overhaul of their investments" involves annuities, "which are long-term investments that are often considered inappropriate for older retirees...they are recommended because they generate high sales commissions."

American Equity, one of the insurance companies that is cracking down on this practice, stated, "there is a potential for these (prospecting strategies) not to provide adequate disclosure to

prospects. Without proper advice there is a possibility of adverse tax consequences...."

Adverse tax consequences due to a quick overhaul of a senior citizen's investments? You better believe it!

Recently, I received an e-mail to a seminar teaching how to use life insurance annuities to qualify veterans to receive benefits. As an Elder Law Attorney, I am constantly looking for ways to use VA benefits to help elders pay for their long-term care. I am open to learning about any tool available. I disclosed to the lady who took my credit card number that I was an attorney, and she happily billed me $800 to attend this class.

The class was taught by an insurance agent who called herself a multimillion dollar a year annuity producer. On the first day of the class, she taught us how to invite senior citizens to breakfast seminars. We were to memorize her power point presentation word for word. For example, we were NOT selling an annuity. We were selling a "VA acceptable income plan."

And mind you, when she said to memorize this word for word, she meant WORD FOR WORD! She claimed that her power point has been "reviewed... and approved by the VA Public Affairs Department." If we changed anything, we could face a "complaint" by the VA, which would send "plants" to our breakfast seminars and observe our presentations.

I'm not convinced that all of the attendees really UNDERSTOOD what was taught in the seminar, but they were certainly convinced to memorize it and repeat it word for word.

The next day, it became more interesting. Now we learned about the "quick overhaul" of a veterans investments.

The multimillion dollar producer explained that the VA would provide up to $1,949 per month in benefits, but only if the veteran's assets were less than a certain amount. She told us if a veteran was over 90 years old, they could only have $29,000 of assets in their own name. If they were over 85, they could have only $39,000. But it they were 84 and under, they could have $49,000. The remaining assets, including their home, must be taken out of their name.

I raised my hand and asked where she got these amounts. I said that I had never heard of such a rule. Did she get these amounts from a statute or a regulation or what? She smugly smiled and said it came from her sources at the Veterans Administration.

An attorney works with the multimillion dollar annuity producer. He writes lots of Irrevocable Veterans Trusts for $740 a piece. He said that elderly veterans must immediately put all of their excess assets into one of his Irrevocable Veterans Trust. The trust requires that the elderly veteran "have no power to control and direct payments out of the trust, to remove trust property, to alter, amend, revoke, or terminate the trust in whole or in part."

The attorney never gave me a chance to read his trust. But as I understand trust law, renouncing personal ownership of an individual's investments and placing them in an irrevocable trust very well may create unexpected income tax consequences.

I mentioned this to the attorney. I mentioned my father-in-law, a World War II veteran who just sold his home to help pay for his assisted living expenses. Thankfully, he did not have to pay any capital gains taxes at all, because it was his personal residence. Even in a down market, my father-in-law was able to get $200,000, tax free. This saved at least $30,000 of federal capital gains taxes.

I was quite surprised when the attorney didn't seem to know about this tax-saving strategy. And he didn't seem to know whether or not this tax savings would disappear if the veteran transferred his house into this irrevocable trust.

Finally, the multimillion dollar insurance producer used several hypotheticals to demonstrate how a "quick overhaul" of a veteran's investments can get him instant eligibility for benefits.

But let's just discuss the case of Mr. and Mrs. Smith. Their "quick overhaul" may have cost them $170,530 in federal taxes:

Mr. and Mrs. Smith are in their late 60's. One has severe diabetes, and the other has already had a stroke. It seems with their health issues, they could benefit from living in a nice assisted living facility. To receive the VA benefit of $1949 per month (which would help them pay for a nice assisted living facility), they can own no more than $49,000 in their own name (according to the insurance producer). But they own:

One house free and clear
I.R.A.'s totaling $317,000
One variable annuity, purchased in 1997, worth $325,000
 
The multimillion dollar producer recommended a "quick overhaul" of these investments by placing everything, including the home, in an irrevocable veteran's trust. Then they would sell all the assets and use the funds to purchase an annuity.

But she never suggested the tax ramification of this "quick overhaul".

Later, I ran this hypothetical through Turbo Tax. Turbo Tax told me that the Smith' tax bill, due and payable on April 15 of 2012, could be as much as $170,530.

For example, when Mr. and Mrs. Smith cashed in their Individual Retirement Accounts worth $317,000, this entire amount was added to their 2011 taxable ordinary income. An I.R.S. is meant to be taken out slowly over the years and taxed a little at a time. When they withdrew the entire I.R.A. in one year, they had to pay ALL the tax on the I.R.A. in that year. This almost certainly put them in a high tax bracket.

And consider the house: I used my father-in-law's house when i estimated this transaction and entered it into Turbo Tax. I realize that the value of houses varies wildly across the country. In some areas of the country, my father-in-law's house would not have fetched $50,000. In Beverly Hills or the Silicon Valley, it might be worth $1,000,000.

Finally, how do we compute the additional taxes on the variable annuity, worth $325,000, that Mr. and Mrs. Smith owned for 15 years? It would be helpful to have the amount they paid for it in 1997. Then we could calculate the gain over the last 15 years.

One of the benefits of a variable annuity is that the gain is not taxed as long as you leave the money in the variable annuity. It is only taxed when you begin to withdraw money. This is another asset which is meant to be taken out slowly over the years and taxed slowly. But when the Smiths withdrew the entire $325,000, they were taxed on ALL of the gain over the last 15 years in one lump sum. Due and payable on April 15th of 2012.

Did this annuity double in value over the last 15 years? I hope so. For Turbo Tax, I assumed that the annuity had doubled in 15 years. Mr. and Mrs. Smith paid $162,500, and had $162,500 taxable gain, to be paid on April 15, 2012.

And what about the annuity that the Smiths bought?

The multimillion dollar producer spoke highly of an annuity that had a 9 year surrender penalty, meaning they did not have full access to their money until they were in their late 70's. If there were an emergency, and they needed their money NOW, they would pay a 15% early surrender penalty in the first three years after they bought the annuity. In year five, they would pay a 13.5% early surrender penalty. The surrender penalty continued declining until it expired in year ten.

Mr. Kirchheimer, the author who wrote the piece for the AARP, describes the high sales commissions on annuity products. If the Smiths had bought the annuity, the salesman would get a commission of nine percent!

So in this hypothetical, hopefully a worst case scenario, Mr. and Mrs. Smith sell the house, their IRA, and their variable annuity. They create a pot of cash worth at least $840,000, and they buy an annuity. The salesperson gets a commission of $75,600.

But Mr. and Mrs. Smith get a tax bill, on April 15,2012, of $170,530.

Maybe the Smiths have no choice but to take the $170,530 out of their annuity to pay their tax. But they will suffer a 15% early withdraw penalty of $25,579.

True, the Smiths potentially get a VA pension as high as $1,949 per month, which equals $23,388 per year (tax free, indexed for inflation). But it takes over seven years for this payment to equal the 2012 tax bill and it takes an additional six years to pay for the early withdrawal penalty. Only after the year 2019 can Mr. and Mrs. Smith actually enjoy their VA benefit.

In summary, I am glad that life insurance companies like Aviva and American Equity are taking steps to curb this practice. I only hope that other life insurance companies follow suit.

Labels: Florida Elder Law Attorney, South Florida Elder Law Attorney, South Florida Estate Planning

It is sometimes claimed that reducing the amount of assets an individual can keep while qualifying for Medicaid would increase the purchase of private long-term care insurance coverage.

Now, two professors of economics have estimated that tightening Medicaid asset rules would do little to encourage the purchase of long-term care insurance policies. 

Although Medicaid recipients may keep only about $2,000 in assets in most states, their spouses may retain between $22,728 and $113,640, depending on their particular state.  The minimum and maximum are determined by federal law but individual states' limits may set their own limits within these parameters. 

In an article published in the Fall 2011 issue of the Journal of Economic Perspectives, Jeffrey R. Brown of the University of Illinois and Amy Finkelstein of the Massachusetts Institute of Technology estimate that a $10,000 decrease in the level of assets an individual and their spouse can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points.

"To put this in perspective," they write, "if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law, this would decrease average household assets protected from Medicaid by about $25,000. This, in turn, would increase the demand for private long-term care insurance by only 2.7 percentage points. While this represents a large increase in insurance coverage relative to the baseline ownership rate, the vast majority of households would still find it unattractive to purchase private insurance."

Overall, Brown and Finkelstein are pessimistic about the prospects for encouraging more Americans to buy long-term care insurance unless Medicaid is completely restructured or done away with altogether.  They note that long-term care insurance is a poor deal, particularly for men, who get back only about 33 cents on the premium dollar they spend, and that for a 65-year-old man of average wealth, 60 percent of the private insurance benefits would have been paid by Medicaid.  

But the authors say that even if the implicit Medicaid "tax" on long-term care insurance were eliminated, "other factors could still prevent the market for long-term care insurance from developing."  These factors include the availability of informal insurance provided by family members, the liquid assets in the home serving as a "buffer stock of assets," and the difficulty many individuals have in "making decisions about long-term, probabilistic outcomes."

For more information, please contact a qualified, experienced South Florida Elder Law Attorney.

Labels: Florida Elder Law Attorney, Florida Estate Planning Attorney, Florida Medicaid Planning, South Florida Elder Law Attorney, South Florida Estate Planning, South Florida Medicaid Attorney

Thousands of financial advisors market themselves as trained to provide investment advice to seniors, using authoritative-sounding titles like "certified senior advisor" or "certified retirement counselor."  But often these designations are nothing more than what are called "weekend" designations, obtained by attending a hotel seminar, and some don't even require a high school or college diploma.

The use of these misleading designations has become so widespread that now the brokerage industry's largest regulator has issued a warning regarding their use.  The group has also released the results of a survey of 157 of its member firms, revealing that most firms allow their advisors to use senior designations and that more than a quarter of these firms allow any designation at all.  For example, more than a third have advisors who are using the "certified senior advisor" designation, which involves little more than attending a three-and-a-half-day seminar and does not require a high school diploma.

"In certain instances, senior designations approved by firms or widely used by registered persons did not require rigorous qualification standards," the Financial Industry Regulatory Authority Inc. (FINRA) dryly notes in its warning, Regulatory Notice 11-52.

FINRA's survey found that 68 percent of firms allow the use of senior designations. A majority of firms (66 percent) that permit the use of senior designations require approval and verification of credentials before they are used, but 23 percent of firms require prior approval but do not verify the credentials. That leaves 11 percent of firms that do not require either approval or verification of credentials.

FINRA suggests that its member firms may want to put in place procedures that would permit their financial advisors to use only those senior designations "that instill substantive knowledge to better serve and protect senior investors."

Credentials like "certified senior adviser," "certified retirement counselor," "registered financial gerontologist," and "certified retirement financial adviser" imply expertise with senior and retirement investing, but they take only a few days to earn. Insurance companies often use graduates of these programs to sell insurance contracts to seniors--in particular deferred annuity contracts, which may not be in the best interest of the senior.

If you are looking for qualified financial advice, look for a "certified financial planner," "chartered financial consultant," or a "master of science in financial services (MSFS)." These programs actually involve years of study and require a college degree. Other ways to make sure you are getting good advice is to ask for references. You should also check with the Better Business Bureau and the National Ethics Association to make sure there are no complaints filed against the advisor.

Of course, if you do think you have an issue, please consult with a qualified South Florida Elder Law Attorney who is also an experienced South Florida Estate Planning Attorney.

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