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Davidow, Davidow, Siegel & Stern, LLP
Long Island's Elder Law, Special Needs & Estate Planning Firm

Friday, December 24, 2004

Beware of Living Trust Scams

Unfortunately, it is becoming more and more common to hear about unscrupulous companies stepping up their efforts to market costly living trusts to older Americans, resulting in the jeopardizing of the buyer's economic security. According to the AARP, the Federal Trade Commission (FTC), and a number of state attorneys general, these high-pressure con artists have built an entire industry around older people's fears that their estates could be eaten up by probate costs or taxes, or that the distrubtion of their assets could be delayed for years. The solution, they claim, is a living trust. There is nothing wrong with the proper use of a living trust. Attorneys may recommend a living trust as an estate planning device for appropriate clients. However, salespeople masquerading as professional estate planners are working hard to try to convince older Americans that such trusts are for everyone. The problem is that many people don't need a living trust, a trust from a "kit" may not meet a particular client's needs and often these companies charge more than the service is worth. In addition, according to the FTC, some companies are using the living trust concept merely as a way to gain access to consumers' financial information and sell them other financial products, such as insurance annuities. Among the various dangers of "one-size-fits-all" living trusts, say AARP officials, is that in many cases they won't make the grantor and spouse eligible for Medicaid reimbursement of nursing home costs. In addition, some trusts improperly instruct the trustee to distribute property to beneficiaries immediately upon the death of the grantor. If creditors make a claim against the trust after asset distribution, the trustee becomes personally liable for any valid claims against the trust. According to an AARP study published in 2000, about four million people older than 50 with less than $25,000 in annual income may have purchased costly, unnecessary and potentially dangerous living trusts as a result of high-pressure sales tactics. The Federal Trade Commission has a checklist for consumers to go through before they sign any papers to create a will, a living trust or any other kind of trust. The Healthcare and Elder Law Programs Corp. (H.E.L.P.) has also created a website, annuitytruth.org to help make better decisions about annuities. Better yet, seek the advice of a qualified elder law attorney.

Thursday, December 9, 2004

Why You Need a Health Care Proxy and a Living Will

A recent Nassau County Supreme Court case highlights the importance of having a Health Care Proxy and a Living Will. A Health Care Proxy is the approved document in New York which appoints an agent to carry out your wishes for health care in the event you are not able to communicate your wishes to your doctor. It usually states that your agent knows your wishes but may or may not state those wishes in detail. Without such a document, you may be kept alive no matter what, even if it involves extraordinary measures including surgery, blood transfusions, etc. A Living Will is a document which articulates your wishes specifically and can be used as a backup to the Health Care Proxy in the event of a dispute.

In the instant case, Roger Russell brought an action to resume artificial nutrition for his aunt, margaret Russell, after her court appointed guardian authorized the withdrawal of her feeding tubes. Mrs. Russell was residing in a nursing home suffering from advanced Alzheimer's disease, breast cancer and the effects of a prior stroke. She was unable to express her wishes about her healthcare.

In 1999, Mrs. Russell executed a Health Care Proxy appointing her nephew to act as her agent to make health care decisions. In 1991, a previous proxy stated that she did not want "heroic measures" taken to save her life and did not wish to "receive artificially administered feeding or fluids". In 1995, Mrs. Russell expanded on the 1991 proxy by executing a Living Will stating she did not want cardiac resuscitation, tube feeding or antibiotics and wanted maximum pain relief. In January of 2000, appointment of Mr. Russell as Mrs. Russell's agent under her Health Care Proxy was revoked when the judge issued a restraining order against him for "financial and personal" abuse of Mrs. Russell.

Thereafter, authority to discontinue the feeding tube was given to Mrs. Russell's court appointed guardian. Mr. Russell brought an action to challenge the court's decision. Justice Frank S. Rossetti denied Mr. Russell's aaction and allowed the feeding tube to be discontinued based on a review of her wishes stated in both of her health care proxies and her living will.

This case highlightsthe interaction of Health Care Proxies and Living Wills and the importance of having both documents. It should be noted that states such as Florida honor Living Wills rather than Health Care Proxies. If you travel, copies of both should be taken with you. A knowledgeable Elder Law attorney can prepare these documents for you to ensure they will contain all appropriate language to effectuate your health care decisions.

Wednesday, December 8, 2004

Why You Need a Will

If you think wills are only for the rich, you're wrong. A will is an essential part of any estate plan. It is the primary document for transferring your wealth upon your death. If you die without a will, (intestate) state law controls the disposition of your property. Without a will, settling most estates is more troublesome and more costly. And, if you already have a will, you may need to make some changes to it. People's lives are rarely static and changes should be reflected in your will. There are many critical elements of an effective will, but here are three major provisions that your will should include: Guardian for your children - this deserves a lot of thought; name someone whose ideas on raising children are similar to yours. Also, be sure the person is willing to accept the responsibility. Creation of Trusts - All a will can do is direct the disposition of your estate. To accomplish longer term goals, such as funding a child's education or providing for a disabled relative, you must include instructions for the creation of trusts. Naming an executor - your executor is your personal representative after your death and has several major responsibilities, including administering and distributing assets to your beneficiaries, making tax decisions, paying any debts or expenses, ensuring life insurance benefits are received and filing the necessary tax returns and paying the federal and state taxes.