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

Thursday, December 17, 2009


WASHINGTON, Dec 16 (Reuters) - An effort by Democrats to stop the repeal of a tax on wealthy estates in the United States has failed in the Senate, as Republicans blocked a renewal of the tax that expires in 15 days.

Senate Finance Committee Chairman Max Baucus failed on Wednesday in a procedural move to introduce a measure that would have extended the tax for two months, to give lawmakers more time to work out a deal.

Without action, the 45 percent tax on estates after a $3.5 million exemption disappears for a year and then jumps to 55 percent, with an exemption of $1 million, in 2011.

The tax has divided Democrats, with conservatives from the party teaming with Republicans to propose a lower tax with a greater exemption level.

"Americans, even after informed that the estate tax may not apply to them, object to it on principle," argued Senate Minority leader Mitch McConnell as he blocked Baucus's effort.

Democratic leaders had hoped to permanently extend the tax, and the House of Representatives passed a bill to do that earlier this month.

But the Senate is mired in its health-care debate, so floor time is scarce.

"We're a little concerned that if it's allowed to disappear (for a year), some lawmakers will be more tempted to make that permanent," said Steve Wamhoff, legislative director for Citizens for Tax Justice, a group that calls for a more progressive tax system.

Once the tax expires, those inheriting estates after Dec. 31 will have to pay capital gains taxes on any asset sold. The cost will be based on the original price of the property, which could mean record-keeping headaches and bigger tax bills for some people.

"If we do not extend our estate tax law, all taxpayers, all heirs will be subject to massive, massive confusion in trying to determine the value of their underlying asset," Baucus argued on the Senate floor.

The estates of about a quarter of 1 percent of Americans would be subject to the tax under the House bill, according to the the Brookings Institution-Urban Institute Tax Policy Center.

Thursday, December 3, 2009


UPDATE to our last newsletter entitled:
“House Reportedly Set to Vote on Estate Tax Bill Permanently Setting 2009 Levels”

By a vote of 225-200 the House has just passed H.R. 4154, which would make “permanent” the current $3.5 million exemption and 45% maximum estate tax rate.

Wednesday, December 2, 2009


The U.S. House of Representatives will vote during the week of November 30th on a bill recently introduced by Rep. Earl Pomeroy (D-N.D.) That would make permanent the 2009 estate tax rules.

The House vote will come Wednesday, December 2nd, “at the earliest,” according to Dow Jones Newswires. It is assumed that by “The House” the news service is referring to the House Ways and Means Committee, to which the bill was referred when it was introduced November 19.

Pomeroy’s Permanent Estate Tax Relief for Families, Farmers and Small Businesses Act of 2009 (H.R. 4154), which is backed by the Obama administration, would set the exclusion amount at $3.5 million and freeze the estate and gift taxes rate at 45 percent. H.R. 4154 is Rep. Pomeroy’s second legislative initiative aimed at fixing the federal estate tax. H.R. 436, which he introduced in January 2009, would also extend the 2009 rules indefinitely but in addition would have a “far reaching effect on gift and estate tax valuation,” according to a paper by Jonathan Blattmachr and Scott Nammacher. Emory law school professor Jeffrey N. Pennell has reportedly said that “H.R. 436 is ‘garbage.’ It has been introduced in the last two Congressional sessions, has no other sponsors, and has gone absolutely nowhere.”

The new Pomeroy bill would cost $233 billion more than current law over the next 10 years. Dow Jones reports that “In addition, there are enough opponents of the Pomeroy bill to block action in the Senate.”

Source: www.elderlawanswers.com

Monday, November 9, 2009

Representative Berkley Introduces H.R. 3905 to

Under current law, the estate tax is slated for one year of repeal in 2010 (approximately two months from now), with a return in 2011 at the rates and exemption level that were in effect in 2001 ($1 million exemption). Recently introduced H.R. 3905 would eliminate 2010's one-year repeal, and would gradually increase - over a 10-year period - the Federal estate and generation-skipping transfer tax exemptions to $5 million. The bill also would reduce - again over a 10-year period - the maximum rate of tax (now 45%) to 35%. The deduction for state death taxes would be phased out over the same period. In a bipartisan effort, H.R. 3905 was introduced by Rep. Berkley (D-NV) who was joined by co-sponsors Brady (R-TX), Davis (D-AL) and Nunes (R-CA).

The increase in the amount of the Federal estate tax exemption would be phased in at the rate of $150,000 per year as follows:
2009 $3,500,000
2010 $3,650,000
2011 $3,800,000
2012 $3,950,000
2013 $4,100,000
2014 $4,250,000
2015 $4,400,000
2016 $4,550,000
2017 $4,700,000
2018 $4,850,000
2019 and thereafter $5,000,000

In the case of any decedent dying after 2019, the $5,000,000 exemption amount would be indexed for inflation. The amendment would apply to estates of decedents dying and gifts made after December 31, 2008.

The maximum estate and gift tax rates would be reduced at the rate of 1 percent per year over 10 years as follows:
2009 45%
2010 44%
2011 43%
2012 42%
2013 41%
2014 40%
2015 39%
2016 38%
2017 37%
2018 36%
2019 and thereafter 35%

The deduction for state death taxes would be phased out over 10 years by reducing the allowable percentage of the current deduction over that period as follows:
2009 100%
2010 90%
2011 80%
2012 70%
2013 60%
2014 50%
2015 40%
2016 30%
2017 20%
2018 10%
2019 and thereafter 0%

It remains to be seen if this will pass. We’ll keep you posted!

Friday, October 16, 2009


There has been much discussion about the temporary repeal and reinstatement of the federal estate tax. Here is a brief summary of some of the current proposals.

Right now, there are three major bills in Congress:

Senate Bill 722
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption (the gift tax exemption is $1 million in 2009)
• Indexes the exemption for inflation
• Allows for exemption portability (i.e., allows the transfer of a decedent’s unused exemption to his or her surviving spouse)

House Bill 2031
• Makes permanent the exemption level at $2 million
• Establishes top tax rates of 45% for estates valued between $2 million and $5 million to $10 million, and 55% for estates valued over $10 million
• Reunifies the estate and gift tax exemption
• Indexes the exemption for inflation
• Allows for exemption portability
• Restores the state death tax credit

House Bill 436
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption
• Limits the valuation discount for family limited partnerships (FLPs)
• Provides strict valuation rules for the transfer of non-business assets

And, the Congressional Budget Office has modeled these four options for Congress:

Option 1
• Makes permanent the exemption level at $5 million
• Establishes the tax rate to equal the top rate on capital gains (currently 15% in 2010 and 20% thereafter)
• Indexes the exemption for inflation
• Disallows the deduction for state death taxes

Option 2
• Makes the same changes as Option 1, but a two-tiered rate would be used – the first $25 million of taxable assets would be subject to the top capital gains rate, then taxable transfers above $25 million would be taxed at 30% (and the $25 million threshold would be indexed for inflation)

Option 3
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate

Option 4
• Repeals the estate tax in 2010
• Retain the $1 million gift tax exemption
• Institutes a carryover basis regime state

We’ll continue to pass along timely, relevant information as it materializes.

Source: Forefield, 10/15/09.

Monday, October 5, 2009


A proposal to establish a new national long-term care insurance program that would offer basic help to the elderly and disabled is under attack by the insurance industry. Although the proposed program is still included in major health reform bills in both the House and Senate, it is unclear whether it will make it to the final legislation.

“It’s got a long way to go to survive,” says Brian W. Lindberg, Policy Advisor to the National Academy of Elder Law Attorneys; an organization that Lawrence Davidow has been involved with since its inception and recently held its highest position of President.

Proposed by the late Sen. Edward M. Kennedy, the Community Living Assistance Services and Supports (CLASS) Act would set up a voluntary, federal long-term care insurance program. Those who wish to participate would pay a premium of roughly $65 per month, far less than the typical cost of private long-term care insurance. After they had contributed for at least five years, participants would be eligible for benefits of either $50 or $100 per day, depending on degree of impairment. While the benefit would be modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people stay in their homes. The CLASS Act was first introduced in 2007 by Sen. Kennedy, then-Sen. Barack Obama and current Senate Finance Committee Chairman Max Baucus (D-MT).

The CLASS Act is part of the Senate Health, Education, Labor and Pensions (HELP) Committee’s health care reform bill. This measure will eventually be merged with legislation coming out of Baucus’s Finance Committee that is being finalized and does not contain the CLASS Act. On the House side, the House Energy and Commerce Committee approved an amendment by Rep. Frank Pallone (D-JN) to add a bare-bones version of the CLASS Act to the House health reform legislation, HR 3200, which has not yet been passed by the full House.

As reported earlier, the Obama administration has thrown its support behind the CLASS Act, but that support may not be enough. As The Disability Policy Collaboration reports in its latest Action Alert, the insurance industry has recently launched what the Collaboration calls “a full-scale attack” on the CLASS plan. The American Council of Life Insurers (ACLI), the major trade group representing life insurers (including the leading providers of long-term care insurance), has gone on the offensive against the CLASS Act, which could cut into the sales of its members’ private long-term care products. ACLI argues that the CLASS Act’s; modest benefit will not adequately protect Americans who need nursing home care or 24-hour home health care services.

ACLI is missing the point, counters The Disability Policy Collaboration, which is a partnership of The Arc and United Cerebral Palsy. “By focusing on these extreme ends of long-term care, the industry is mischaracterizing the typical needs of most people with disabilities and older Americans,” the Collaboration states in its Alert. “What they most need is some assistance with things like getting up the stairs or getting dressed so that they can stay at home and not enter nursing homes or obtain full-time care before they truly need it. The CLASS plan’s cash benefit of about $27,000 per year can go a long way to meeting this need by paying for things like ramps and railings or a few hours a day of a home health worker.”

ACLI is also concerned that the CLASS Act will give consumers a false sense of security and further discourage sales of long-term care insurance. (Many consumers already mistakenly believe that Medicare will cover their long-term care needs.) “Simply put, the federal government should not get into the business of providing long-term care insurance. It sets the stage for doing more harm than good to consumers,” said ACLI President and CEO Frank Keating.

The Disability Policy Collaboration, is urging individuals to “take on the insurance industry” by calling or faxing their Senators and Representatives.

Source: www.elderlawanswers.com,9/28/09.

Friday, September 25, 2009

Pre-Need (Pre-Paid) Funeral and Burial Plans

1. Advantages and Disadvantages of Prepaid Plans
One way to plan in advance for the end of one's life is to sign a formal contract called a "preneed funeral plan." With this plan, money to pay for a funeral and/or burial is held in a trust, in an escrow account or paid through an insurance policy on the life of the person desiring the plan. Parts of or all of the funeral service and burial are designed in advance and pre-funded in advance and the family has little to do but show up.
This type of planning has become very popular in recent years. A survey conducted by the AARP in 1999, found that two out of five people over age 50 had been approached to pre-purchase funerals and burial goods and services. An AARP survey in 1998 indicates that 32% of all Americans over age 50, roughly 21 million people, have prepaid some or all of their funeral and or burial expenses (but not necessarily through a formal preneed plan). Breaking that down; about 25% of the over age 50 population have prepaid for their burials (cemetery plot, mausoleum or niche), 18% have prepaid for headstones, urns, caskets , grave liners or vaults, opening and closing of graves and so on and 13% have prepaid for goods or services from a funeral home or funeral director. The same survey indicates that over $25 billion is being held in preneed trust funds. Roughly another $25 billion is waiting to be paid out in life insurance benefits. Prepaid or preneed funerals and burials are big business.
Funerals and burials funded privately by the family, or paid from an individual life insurance policy and arranged informally through a funeral home or funeral director are generally not subject to state regulation. Any formal arrangement through a second party or involving a contract is subject to regulation in all states. Each state has adopted different rules as to who can sell these plans, what the plans can provide, what contract provisions must be, how the plan is to be funded and what recourse purchasers might have in the event of fraud or default. All states call these regulated plans "preneed" funeral and burial arrangements.
Here are some advantages as to why one would want to buy a preneed plan for funeral and burial services and goods.
It provides peace of mind knowing these arrangements have been made in advance.
It avoids the burden on family members to make decisions when they are most vulnerable to manipulation.
It allows one to virtually control from the grave by determining in advance the funeral products, funeral services, burial products and burial services that one would prefer having for final arrangements.
It helps the family to avoid taking loans, arranging finance plans, raiding savings or selling assets to pay for a funeral and burial.
It guarantees (for many contracts) that if products and services currently purchased are not available in the future, equivalent substitutes will be provided at no additional cost.
It locks in guaranteed prices (available with some contracts) forever.
It allows for inflation in future costs (for those contracts that do not guarantee prices) by investing money in an interest-bearing account or buying life insurance that increases in value over time.
Depending on the contract, it may allow for transfer to another funeral home or for partial or full refund.
Unfortunately, there are also problems with prepaid, preplanned final arrangements.
With some trust fund and insurance funding options there may be no refund if someone wants to cancel the plan in the future.
If a purchaser moves to another state there may be no transfer options or there may be different rules governing the funding option.
In some contracts, interest earnings on investments resulting in excess money not needed for the plan may be retained by the funeral home or funeral director.
On installment plans interest may be charged but not credited to the account.
In certain insurance funded contracts, the ownership or death benefit may be irrevocably assigned to the contract holder (funeral home), preventing the purchaser from enjoying ownership rights in the policy.
In certain insurance funded contracts, a growth in the death benefit over time that exceeds the cost of the preneed plan services and goods may be pocketed by the contract holder (funeral home) instead of being refunded.
If the contract provider goes out of business or fails to secure 100% of the funds for future payment, there may be no recourse to get all of the money back that was put in.
If certain services or goods that were purchased initially are not available in the future, but more expensive versions might be, the family may be forced to pay extra for those items.
In certain insurance funded plans, if the insured dies too soon, there may have been a waiting period in which few or no benefits are paid at death, thus forcing the family to pay out of pocket for the funeral.
Certain unscrupulous providers may have failed to provide an itemized list of services and goods or failed to identify properly, specific services and goods, thus allowing the provider in the future to substitute less expensive items or to leave out services and goods that were originally anticipated in the agreement.
What Services and Goods Can Be Prepaid?
All states allow for prepaid plans for funeral services and merchandise. This would include such things as picking up the body, embalming and restoration, rooms or chapel for viewing and funeral services, casket, vault or grave liner, transportation, permits, death certificates, obituaries and so forth. Almost all states allow for prepaid burial services and merchandise as well. Only about six states do not allow it. Burial services and merchandise might include opening and closing the grave, grave markers, vaults or grave liners, mausoleums or niches. Cemetery plots are excluded from prepaid plans in all states.
The AARP has excellent information for consumers on planning for funerals. Quoting from the AARP:
"Most states have a licensing board that regulates the funeral industry. You may contact the board in your state for information or help. If you want additional information about making funeral arrangements and the options available, you may want to contact interested business, professional and consumer groups."

Source: www.planforcare.org

Wednesday, August 19, 2009

Governor Paterson Signs Legislation to Make Health Insurance More Affordable and Improve Access to Health Care

Governor David A. Paterson signed into law three Governor’s Program bills that will make health insurance more affordable and improve access to health care for New Yorkers. The first extends the period of time for COBRA (Consolidation Omnibus Budget Reconciliation Act of 1985) coverage from 18 to 36 months; the second permits families to cover their young adult dependents through age 29 under their job-based insurance; and the third enacts a series of managed care reforms to make health insurance work better for consumers and permit timely access to necessary health services. The Governor signed the legislation at the University of Rochester Medical Center and was joined by members of the Senate, Assembly and community.

“By enhancing access to group health insurance, these reforms will make health insurance more affordable for everyday New Yorkers. More than 2.5 million of our residents do not have health insurance, partly because of the high cost of coverage,” said Governor Paterson. “We must take the necessary steps to improve our broken health care system. By making insurance coverage more accessible, we bring people into the system before they need emergency treatment, reducing the overall cost of health care to the State.”

The bills signed into law will:

• Expand COBRA for Employees to 36 months: this law will increase the period for employees who lose their jobs to continue their health insurance under COBRA from 18 to 36 months. Workers who lose their jobs can continue purchasing group health insurance provided by their former employers’ group health plans for limited periods of time under certain circumstances for themselves and their families. Federal COBRA generally applies to employers with 20 or more employees, while the State’s “mini-COBRA” law requires that smaller employers - those who have fewer than 20 employees - offer the same continuation coverage. This allows employees to maintain health insurance at a lower cost than if they had to buy it independently on the open market. The Governor’s new law will allow New Yorkers who lose their jobs to extend their health insurance coverage for a longer period of time, which is particularly important in the current economy with its record high level of unemployment.
• Insure Dependents through Age 29: This law, outlined by the Governor in his State of the State address, requires insurers to allow unmarried children through age 29 - regardless of financial dependence - to be covered under a parent’s group health insurance policy. Young adults ages 19 to 29 represent 31 percent of uninsured New Yorkers. They often become ineligible for coverage under their parents’ policies at age 19 or upon high school or college graduation, find themselves in entry-level jobs that do not provide employer-based health insurance, and cannot afford to pay premiums for individual insurance policies - which are much more expensive than group policies. Under the new law, premiums will be paid for by families, not employers, and would cost less because coverage is under group policies rather than individual policies. The law also requires insurers to offer employers an option to purchase coverage that includes young adults as dependents in family policies through age 29.
• Managed Care Reform: This bill will implement reforms that help consumers receive the care they need and cut some of the red tape that results in inappropriately delayed or denied claims. There are many protections that will now benefit consumers, some of which include: prohibiting insurers from treating in-network providers as out-of-network providers because the referring provider was out-of-network; reducing prompt-pay time frame from 45 days to 30 days; requiring HMOs and providers to give providers notice of adverse reimbursement changes to provider contracts so that they may have the opportunity to cancel and much more. For the complete list, go to http://www.ny.gov/governor/press/press_0729095.html .

The bills signed into law on July 29, 2009 build upon other initiatives aimed at increasing the availability and affordability of health insurance. In March, Governor Paterson signed into law his Program Bill to help New Yorkers who lost their jobs at small businesses take advantage of a COBRA subsidy made available under the Federal American Recovery and Reinvestment Act (ARRA). In addition, the 2009-10 budget eliminated certain barriers to enrolling in public health insurance coverage such as face-to-face interviews, finger imaging, and asset tests and authorized the Department of Health to seek federal support for expanded coverage for low-income adults. Moreover, as of September 1, 2008, all of New York’s uninsured children became eligible for moderate or no-cost health care coverage under Child Health Plus.

Source: 7/29/09 Press Release, www.ny.gov

Thursday, August 6, 2009


You have signed your last will and testament or revocable trust, created a special needs trust for your child with disabilities and selected an appropriate trustee to manage assets and make necessary trust distributions for your child's care. Now you are done, correct? Not exactly, because ensuring your child's financial future is only one facet of a comprehensive plan designed to care for your child with special needs.

An important companion piece to a special needs trust is a "letter of intent" or "letter of instruction." This is a document that actually ensures your trustee knows your child's functional abilities, routines, interests, and particular likes and dislikes. In addition to describing your special child, the letter of intent identifies specific doctors, services and resources that will help your child enjoy the highest level of independence and self-reliance. The document is a valuable tool that communicates knowledge only parents may know, including specific hopes and desires for their child's future well being, to the very people who will be caring for the child after the parents no longer are able to do so. After all, who knows a child better than a parent?

The letter of intent serves as the foundation of any comprehensive life-plan for a child with special needs. By compiling as much information as possible, parents are equipping future care providers with the knowledge and insight needed to increase the likelihood of good choices in order to maximize the child's quality of life and avoid the need for caregivers to learn by trial and error. A child also may participate in creating the letter of intent so that his or her own wishes are acknowledged and recorded.

A well thought out letter of intent often includes a medical component and a practical piece and, at a minimum, should contain the following:
A family history, including where and when parents were born, raised, and married, as well as a description of siblings, grandparents, other relatives and special friends, with current contact information for all.
Resources that provide assistance to persons with disabilities in your child's local area, including public agencies, churches, individuals and private organizations.
Residential care needs for your child, including past and present accommodations and expected future needs.
Educational information, including past records, current enrollment, specialty teachers, future educational goals, special interests and talents, extra-curricular activities, as well as types of educational emphasis, for example, vocational, academic or communication.
Employment guidance, including the work your child may enjoy, sheltered workshops, activity centers and companies that provide employment in the community which may be of interest to your child.
Social, behavioral and personal relationships that are important to your family and child, including relatives, special friends, teachers and care providers.
Social and recreational activities your child enjoys, including sports, dance, music or movies. Parents also might want to mention whether their child should have his or her own spending money.
A typical day in the life of your child, including his or her favorite foods, music, books, television shows and routines.
Medical information, including current doctors, therapists, clinics, hospitals, current medications and therapies. The parents should explain how the medications are given and for what purpose and describe medications that have not worked in the past.
Parents' final expression of love, hope and desires for their child.
Parents should not be inhibited when writing a letter of intent, and a clear, conversational voice that avoids legalese is best. In addition, the document should be reviewed periodically to reflect any changes. Below is an excerpt from an actual letter of intent, published with a client's permission, to help other families with their own drafting:

"...Bill can dress himself, but needs some help picking an appropriate outfit for the weather. Once his clothes are laid out he can dress himself. May need some help with buttons or other fasteners. He prefers pullover shirts and t-shirts rather than shirts with buttons. He prefers athletic pants that he can pull up such as track pants rather than jeans or slacks. He can put on his own socks. He struggles with tying shoes and we have switched exclusively to zip up or pull-on shoes. He is able to zip his own coat, but may need help at times. Using zippers, snaps and buttons are a continuous goal for him to work on manipulating them independently.

He needs to be reminded to brush his teeth and wipe his face, but can do these tasks independently both in the morning and at night. He hates mint toothpaste and uses the kids' flavors. Right now he is using Kids Crest- Sparkle Fun flavor. He hates getting a lot of water on his face and needs a washcloth and wipes all over his face and then rinses with a damp cloth. He can do all this himself, but hates it and needs supervision and verbal prompts/encouragement. Bill is doing well with taking showers. It has been a long process. He can wash himself fairly well with the washcloth and can now wash his own hair. He continues to need someone checking in on him and providing verbal cues to wash and rinse his hair well. He gets upset if a lot of water goes on his face so rinsing his hair is an issue..."

Although writing a letter of intent may be an emotional experience, once the process is complete, parents may rest easier knowing they have left a detailed road map for later care providers and trustees to ensure the highest quality of life for their child and the fewest interruptions in his or her daily routine.

Source: www.specialneedsalliance.com, 6/09, Vol. 3 Issue 6

Thursday, July 23, 2009

Marketing of Reverse Mortgages Lacks Adequate Consumer Protections

As the economy has slowed and housing values have dropped, reverse mortgages have become even more attractive to seniors looking for ways to use the equity in their homes without moving. But a new study by the Government Accountability Office (GAO) raises concerns about the adequacy of consumer protections for reverse mortgage borrowers, who are sometimes subjected to misleading marketing and inappropriate cross-selling of other financial products that may be unsuitable for them.

A reverse mortgage allows homeowners 62 or older to convert the equity in their home to a flexible cash advance that does not have to be repaid until the homeowner moves, sells, or dies. Almost all reverse mortgages are made under the Home Equity Conversion Mortgage (HECM) program, which is administered by the Department of Housing and Urban Development (HUD). In the first quarter of 2009, HUD backed about $7.8 billion worth of reverse mortgages, the largest amount in any quarter since the agency launched the program in 1988, the Washington Post reports.

While reverse mortgages look like no-lose propositions at first glance, they are complex products that have significant downsides for some. For example, these loans carry large insurance and origination costs, they may affect eligibility for government benefits like Medicaid, and they are not ideal for parents whose major objective is to safeguard an inheritance for their children.

GAO reviewed marketing materials used by reverse mortgage lenders and found some claims that were "potentially misleading because they were inaccurate, incomplete, or employed questionable sales tactics."

GAO also found evidence that potentially unsuitable financial products like annuities are being sold in conjunction with reverse mortgages. The Housing and Economic Recovery Act of 2008 is intended to restrict this inappropriate cross-selling, but HUD is still in the early stages of developing regulations.

To help seniors make informed decisions about whether to obtain a reverse mortgage, Congress requires prospective borrowers to obtain adequate counseling by an independent third party. As part of its investigation, the GAO employees went undercover to receive such counseling. While the GAO found that the counselors generally conveyed accurate and useful information, none of the counselors covered all of the topics required by HUD and in nearly half the sessions the counselors did not discuss required information about alternatives to reverse mortgages.

The GAO concludes that these issues pose "emerging consumer protection risks" for reverse mortgage borrowers and the agency makes a number of recommendations to improve consumer protections.

Source: www.elderlawanswers.com; 7/3/09

Thursday, July 9, 2009


President Barack Obama has given his support to a proposal for new national long-term care insurance program that would offer basic help for the elderly and disabled. The President's support could be key to making long-term care coverage a part of the final health reform legislation.
1. Proposed by Sen. Edward M. Kennedy (D-MA) as part of his health care reform bill, the plan would set up a new, voluntary social insurance program to help people insure against the high costs of long-term care. Americans would pay a premium of roughly $65 per month, although the Congressional Budget Office has said the premium could end up being as much as $110 a month -- still far less than the typical cost of private long-term care insurance. After participants had contributed for at least five years, they would be eligible for a benefit of not less than $50 a day to cover long-term care costs.
While the benefit is modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people remain in their homes. All working Americans would automatically be enrolled in Kennedy's plan, known as the Community Living Assistance Services and Supports (CLASS) Act, but they could choose to opt out. Students and the poor would pay only $5 a month.
In a letter to Kennedy, Health and Human Services Secretary Kathleen Sebelius said that President Obama considers the long-term care program an "innovative" idea that should be "part of health reform."
"Enactment of this important legislation would expand resources available to individuals and families to purchase long-term services and supports to enable them to remain in their own homes in the community," wrote Sebelius.
For many middle-income Americans, the Kennedy plan could be just enough to allow them to stay at home or to afford assisted living care. Medicaid "waiver" programs that offer home health services often have long waiting lists in the states that offer them. Many elderly or disabled individuals end up in nursing homes at government expense when all they actually need is help around the house or home nurse visits.

Source: www.elderlawanswers.com, 7/9/09

Monday, June 22, 2009

Redo your Estate Plan Before you Remarry

Redo your Estate Plan Before you Remarry
If you are getting remarried, you obviously want to celebrate, but it is also important to focus on less exciting matters like redoing your estate plan. You may have created an estate plan during your first marriage, but this time it will probably be more complicated – especially if you have children from your first marriage or more assets. The following are some pointers for ensuring your interests are taken care of when you remarry:
• Take an inventory. The first thing you and your partner should do is each take an inventory of your assets and debts and share it with the other person. Don’t forget to include life insurance policies and retirement plans in your inventories. It is important to be open and honest about money if you want to prevent bad feelings in the future.

• Decide how you want to handle finances. Once you know what you are dealing with, then you need to decide if you want to combine (or not combine) assets when you are married. For example, if one partner is selling a house and moving in with the other partner, will he or she contribute to the cost of the house? If one partner has significant debt, you may not want to combine finances or make any joint purchases. These decisions need to be made up front so everyone is clear on what to expect.

• Decide what you want to happen when you die. You and your future spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a complicated discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property. Even if you don’t have children, there may be family heirlooms or mementos that you want to keep in your family. Again, open discussions can prevent problems in the future.

• Consult an elder law or estate planning attorney. Even if you don’t have a lot of assets, you should consult an attorney, especially if you have children. You will definitely need to update your will. You may also need to update or create other estate planning documents such as a durable power of attorney and a health care proxy. If you have significant assets, a prenuptial agreement may be appropriate. In addition, the attorney can help you decide if a trust is necessary to protect your children’s interests.

• Change your beneficiaries. You may want to change the beneficiaries on your life insurance policy, annuity, and/or retirement plan. If you are divorced, however, you may not be able to change some of the beneficiaries. Bring your divorce decree with you to the attorney so he or she can make sure you do not violate the decree. If you can’t change your beneficiaries, you may want to buy additional life insurance or retirement plans that will include your new spouse.

The most important thing to remember is to be open and honest with your future spouse and your family members about your wishes.

Source: www.elderlawanswers.com

Friday, May 29, 2009

The Top 10 Health Care Mistakes Made by the Elderly

The Top 10 Health Care Mistakes Made By the Elderly

Americans are living longer than ever before, but many older Americans could better deal with their health problems, according to the Institute for Healthcare Advancement (IHA). To help the elderly stay healthier longer, the IHA has identified the 10 most common mistakes older Americans make in caring for their health.

The Institute is a non-profit organization based in La Habra, California, that demonstrates innovative health care practices and educates health care professionals and consumers.

The IHA's 10 most common health care mistakes made by the elderly are:

Driving when it's no longer safe
The elderly often associate mobility in a car with their independence, but knowing when it is time to stop driving is important for the safety of everyone on the road. Decisions about when to stop driving should be made together with a family physician because chronological age alone does not determine someone's fitness to drive.

Fighting the aging process and its appearance
Refusing to wear a hearing aid, eyeglasses or dentures, and reluctance to ask for help or to use walking aids are all examples of this type of denial. This behavior may prevent the senior from obtaining helpful assistance with some of the problems of aging.

Reluctance to discuss intimate health problems with the doctor or health care provider
Older Americans may not want to bring up sexual or urinary difficulties. Sometimes problems that the individual thinks are trivial, such as stomach upsets, constipation, or jaw pain, may require further evaluation.

Not understanding what the doctor told them about their health problem or medical treatment plan
"I could not understand the doctor," or "He told me what to do, but you know me, I can't remember what he said‚" are typical complaints. Reluctance to ask the doctor to repeat information or to admit that they do not understand what is being said can result in serious health consequences.

Disregarding the serious potential for a fall
Falls result in fractures and painful injuries, which sometimes take months to heal. To help guard against falling, the elderly should remove scatter rugs from the home and have adequate lighting in the home and work areas. They should wear sturdy and well-fitting shoes, and watch for slopes and cracks in sidewalks. Participating in exercise programs to improve muscle tone and strength is also helpful.

Failure to have a system or a plan for managing medicines
Missed medication doses can result in inadequate treatment of a medical condition. By using daily schedules, pill box reminders or check-off records, seniors can avoid missing medication doses. Because health care providers need to know all of the medicines that an elderly patient is taking, patients should maintain a complete list of all their prescription and over-the-counter medicines, including dose and the reason that the medicine is being taken.

Not having a single primary care physician who looks at the overall medical plan of treatmentHealth problems may be overlooked when a senior goes to several different doctors or treatment programs, and multiple treatment regimens may cause adverse responses. The patient may be over- or under-treated if a single physician is not evaluating the full medical treatment program.

Not seeking medical attention when early possible warning signs occur
Reasons for such inaction and denial may include lack of money or reduced self worth due to age. "I am so old it doesn't matter anymore." Of course, such treatment delays can result in a more advanced stage of illness and a poorer prognosis.

Failure to participate in prevention programs
Flu and pneumonia shots, routine breast and prostate exams are examples of readily available preventive health measures that seniors should utilize to remain healthy.

Not asking loved ones for help
Many older Americans are simply too stubborn to ask for help, whether due to an understandable need for independence or because of early signs of dementia. It's important that elderly people alert family members or other loved ones to any signs of ill health or unusual feelings so that they can be assessed before the problem advances.

In an effort to help older Americans become less fearful of medical conditions and more empowered about their health, the IHA has published What To Do For Senior Health, an easy-to-understand, self-help medical book for senior citizens. For more information or to order the book, call (800) 434-4633 or go to www.iha4health.org.

Source: www.elderlawanswers.com

Thursday, May 7, 2009

Why Not Just Use an Off-the-Shelf Power of Attorney Form?

A durable power of attorney is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your "agent" or "attorney-in-fact") if you become incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian or conservator, which is an expensive and time-consuming process.
There are many do-it-yourself power of attorney forms available; however, it is a good idea to have an attorney draft the form for you. There are many issues to consider and one size does not fit all. Working with an attorney from the Elder Law and Estate Planning firm of Davidow, Davidow, Siegel & Stern ensures that you will be covered.
The agent's powers
The power of attorney document sets out the agent's powers. Powers given to an agent typically include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. They may also include the power to consent to medical treatment. Some powers will not be included unless they are specifically mentioned. This includes the power to make gifts and the power to designate beneficiaries of your insurance policies.
The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid planning on your behalf in the event you need to enter a nursing home, then the power of attorney must give the agent the power to modify trusts and make gifts. The wording in a power of attorney can be significant, so it is necessary to consult an attorney.
Springing or immediate
The power of attorney can take affect immediately or it can become effective only once you are disabled, called a "springing" power of attorney. While a springing power seems like a good idea, it can cause delays and extra expense because incapacity will need to be determined. If the power of attorney is springing, it is very important that the method for determining incapacity is clearly spelled out in the document.
Joint agents
While it is possible to name more than one person as your agent, this can lead to confusion. If you do have more than one person named, you need to be clear whether both parties need to act together or whether they can each act independently. It might make more sense and be less confusing to name an alternative agent to act in case the first agent is unable to.
Appointing a guardian
Another use of a power of attorney can be to nominate a guardian in case guardianship proceedings become necessary. Including your preference for a guardian can allow you to have some say over who will be managing your affairs. Usually, the court decides who will be chosen as a guardian, but in most circumstances, the court will abide by your nomination in the durable power of attorney.
Executing the power of attorney
To be valid a power of attorney must be executed properly. Some states may require a signature, others may require the power of attorney to be notarized, and still others may require witnesses. It is important to consult with an estate planning attorney in your state to ensure your power of attorney is executed properly.
Accepting a power of attorney
Even if you do everything exactly right, some banks and other institutions are reluctant to accept a power of attorney. These institutions are afraid of a lawsuit if the power of attorney is no longer valid. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute the forms offered by the institutions with which you have accounts. According to a MarketWatch.com article, you need to be careful that you don't sign a bank's document that inadvertently restricts a power of attorney's ability to deal with other assets, and you should check that any documents you sign with a bank match the original power of attorney.

Source: www.elderlawanswers.com

Tuesday, April 21, 2009

Tips for Preventing, Detecting and Reporting Financial Abuse of the Elderly

As the economy worsens, incidences of elder financial abuse are reportedly on the rise. The elderly are particularly vulnerable to scams or to financial abuse by family members in need of money.

A recent study found that up to one million older Americans may be targeted yearly. Family members and caregivers are the culprits in 55 percent of cases, although financial losses are higher with investment fraud scams.

While it is impossible to guarantee that an elderly loved one is not the victim of financial abuse, there are some steps you can take to reduce the chances. One option is to have more than one family member involved in caring for the loved one. You can also encourage the elder to get involved in community activities to ensure he or she has a wide range of support. Using direct deposit as much as possible is also helpful. And of course you should always screen caregivers carefully and verify references.

Financial abuse can be difficult to detect. The following are some signs that a loved one may be the victim of this kind of abuse:

- The disappearance of valuable objects
- Withdrawals of large amounts of money, checks made out to cash, or low bank balances
- A new “best friend” and isolation from other friends and family
- Large credit card transactions
- Signatures on checks look different
- A name added to a bank account or newly formed joint accounts
- Indications of fear of caregivers

If you suspect someone of being financially abused, there are several actions you can take:

- Report the crime by calling your local Adult Protective Services and state attorney general’s office. File a police report.
- Explore options at your local probate court if your state has such courts. The court can intervene if someone in the family is misusing a power of attorney or their role as guardian or conservator.
- Contact advocacy organizations. The National Center on Elder Abuse offers guidance on how to investigate and seek justice for elder abuse. State laws vary, but some have elder abuse statutes and may be able to get restitution for breach of fiduciary duties.
- Try to get a temporary restraining order from a court while building your case.

Source: www.elderlawanswers.com, 4/6/09

Thursday, April 2, 2009

New York State Approves New Type of Combination Life and Long Term Care Insurance

You may be interested to know that a new combination Life Insurance/Long Term Care policy has been approved in New York State. This policy differs from other combination policies in some important aspects. They are as follows:

1. The underwriting for the policy is based on mortality as opposed to morbidity. This means that someone who was denied for a normal LTC or combination policy may be approved for this policy.

2. Once the policy is activated, cash will become available without regard to actual LTC expenses. Other policies reimburse only for actual documented expenses.

3. There are no restrictions on how the cash is used. A typical LTC policy only covers certain types of expenses.

4. Annual cash benefits are available up to IRS limits ($102,200 in 2009).

This policy provides you with a way to obtain long-term care insurance for those clients who either are not able to obtain insurance due to underwriting issues or for those who view LTC insurance as “lost” premiums if they don’t use it.

Source: Craig Marcott, Inc., East Patchogue, 3/23/09 newsletter.

Friday, March 20, 2009

Five Star Rating System for Nursing Homes

The Centers for Medicare and Medicaid Services (CMS) has unveiled a one-to-five star rating system for nursing homes to help consumers evaluate a nursing home’s quality when selecting a facility. The ratings appear on the agency’s Nursing Home Compare Website at www.medicare.gov/NHCompare. A five-star designation means the facility ranks “much above average,” four-star indicates “above average,” three means “about average,” two is a “below average” ranking, with a one indicating that a facility ranks “much below average.” The rankings, which will be updated monthly, are based on a nursing home’s performance in three areas: quality measures, nurse staffing levels and health inspection reports.

In this first round of quality ratings about 12-percent of the nation’s nursing homes received a full five-star rating while 22-percent scored at the low end with one star. The remaining 66-percent of facilities were distributed fairly evenly among the two-, three- and four-star rankings. The ratings indicate that non-profit nursing homes deliver a higher quality of care than for-profit facilities, according to an analysis by USA Today (www.usatoday.com/news/health/2008-12-18-nursinghome_N.htm). When the rating system was announced earlier this year, Toby Edelman, senior policy attorney with the Center for Medicare Advocacy (www.medicareadvocacy.org/), said that two of three criteria CMS uses for the ratings – staffing data and quality measures – are “...self-reported by nursing facilities and are inaccurate.” Edelman said, “Relying on nursing homes to describe accurately how well they are doing...just doesn’t make sense.”

The National Citizens’ Coalition for Nursing Home Reform issued a statement (www.nccnhr.org/uploads/File/Ombudsman_statement_on_Five-Star-Release.pdf) saying it commends CMS for providing a new tool for long-term care consumers but urging consumers to “...not oversimplify nursing home selection.”

“In reviewing the Five-Star rating for a particular nursing home, consumers should compare the rating with their own experience during a personal visit to the home,” the Coalition warned. “For example, staffing data that is used for the rating system is based on the two weeks prior to the nursing home’s annual regulatory survey, an insufficient period of time to represent the usual staffing pattern of the home. Consumers should visit the home and review staffing data that is required to be posted for every shift, every day.”

For its part, the nursing home industry is not pleased with the rating system. In an opinion piece in USA Today, Bruce Yarwood, president of the American Health Care Association (www.ahcancal.org/Pages/Default.aspx), a long-term care industry trade group, called the new rating scheme “...a complex and inaccurate system that fails to provide the consumer with an appropriate tool to measure quality of care in our nation’s nursing homes.”

Source: 50+ Lifestyles, February 2009.

Elder Law and Estate Planning Seminars: TIME IS RUNNING OUT!
Thursday, March 26th at 10am at The Miller Place Inn OR Tuesday, March 31st at The Milleridge Inn. Call 631-234-3030 to reserve your seat for the seminar and lunch.

Monday, March 16, 2009


When creating an estate plan, an important decision is who to name as your fiduciary. A fiduciary is a fancy legal term for the person who will take care of your property for you if you are unable to do it yourself, such as the executor of an estate, the trustee of a trust, or an attorney-in-fact under a power of attorney. Your first instinct might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.

When naming a fiduciary, it is important to be able to trust the individual, which is why people often name family members as fiduciaries. However, problems can arise when a parent with two or more children names one child as a fiduciary. According to Tim O’Sullivan, an attorney from Wichita, Kansas, who spoke on the issue of family harmony at a recent conference for elder law attorneys, a child is often not the best fiduciary for several reasons:

- It is hard for a child to be completely objective.
- Children often disagree over many things, including how long the estate should take to complete, the selling of assets and the division of personal property.
- Children often don’t communicate with each other well.

O’Sullivan says that, in his experience, when one child is named as the fiduciary, problems arise between family members about one-quarter to one-third of the time.

An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank with trust powers, a certified public accountant, or a trust company. The attorney who is drafting your estate planning documents can recommend a good one in your area. A professional fiduciary will charge a fee, but the fee should be explained ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.

To ensure that your family has some input, you an include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.

Source: www.elderlawanswers.com, 2/3/09

Friday, March 6, 2009

VA to Repay Vets for Care

The Department of Veterans Affairs, stung by criticism that its slow action has forced some severely disabled veterans to spend themselves into poverty, has moved to implement a two-year-old law requiring it to reimburse such veterans for the cost of care at state-run nursing homes.

The VA sent letters to the nation’s 137 state veterans nursing homes – including ones in Stony Brook and St. Albans, Queens – saying they expect to begin processing reimbursements within 90 days. A bill signed into law by President George W. Bush in 2006 required the VA to reimburse the full cost for veterans with a 70 percent or greater service-connected disability who require nursing home care.

But although Congress specified that the law be implemented by March 21, 2007, the VA still has not begun issuing payments. A VA spokesman said no one was available to explain the two-year delay. The holdup has forced some elderly veterans to spend away their life savings before they could qualify for Medicaid payments to cover the $250-per-day cost of care at the Long Island State Veterans Home at Stony Brook University.

At least eight patients at Long Island State Veterans Home who would have been covered under the law have been forced to pay for some or all of their care out of pocket, according to Sen. Charles Schumer, who visited the nursing home last month. Two of the veterans have died while waiting for the law to come into effect.

About 80 percent of patients at the nursing home are on Medicaid, a hospital official said.

Some 4,800 Long Island veterans are more than 70 percent disabled and become increasingly likely to require nursing home care as they get into their 80s and 90s.

Long Island State Veterans Home director Fred Sganga said he was encouraged, but remains cautious. “We’ve been promised this won’t take more than 90 days,” he said. “But it’s not over until it’s over.”

Source: Martin C. Evans, Newsday, Wednesday, March 4, 2009

Davidow, Davidow, Siegel & Stern is dedicated to educating veterans to their rights and entitlement options in an effort to finance their long term care. As we read about the circumstances detailed in the above article, we can’t help but feel that this could have been avoided. Forcing a veteran, that has other options available, to spend themselves into poverty to finance their long term care is completely unnecessary. This is the reason we have been committed to getting the word out on another type of Veteran pension benefit that could also finance long term care. This under-used, special monthly pension benefit called Aid and Attendance, upon eligibility approval, could provide veterans with up to $1949 a month to help pay for long term care either at home or in an assisted living facility. Many veterans do not know this pension exists! We are accredited through the Veterans Administration to guide veterans and their families through the complicated process of obtaining this benefit. Come in to find out how we can help make a difference in a veteran’s life.

Friday, February 13, 2009

Bill Introduced to Freeze Estate Tax at 2009 Levels and to Eliminate Discounts on Nonbusiness Assets - Part II

Valuation discounts (particularly of the minority and marketability type) can significantly reduce what might otherwise have been the estate and gift tax values of transferred property. In contrast, the IRS often takes the position, on audit and in litigation, that application of these discount reductions should not be available for estate and gift tax purposes. For example, the Revenue Service has argued that a taxpayer may make gifts to a child of minority interests in property and incorrectly (in the Service’s view) claim lack-of-control discounts under the gift tax even though the taxpayer or the taxpayer’s child controls the property being transferred. The Service has also contended that a taxpayer, who contributes marketable property (such as publicly-traded stock) to a partnership (such as a family limited partnership) or other entity that he or she controls, may (when interests in that entity are transferred through the estate) inappropriately claim marketability discounts even though the heirs may be able to liquidate the entity and recover the full value by accessing the underlying assets directly.

H.R. 436 presents a standard for gift and estate tax purposes, with respect to discounts, that is sympathetic to those IRS articulated positions. Under the bill, in the case of the transfer of any interest in an entity, other than an interest which is actively traded:

“(A) the value of any nonbusiness assets held by the entity shall be determined as if the transferor had transferred such assets directly to the transferee (and no valuation discount shall be allowed with respect to such nonbusiness assets), and

(B) the nonbusiness assets shall not be taken into account in determining the value of the interest in the entity.”

The bill also contains a 10% “look-through” rule. Under this rule, if a nonbusiness asset of an entity consists of a 10% interest in any other entity, the bill would disregard the 10% interest and would treat the entity as holding directly its ratable share of the assets of the other entity. This rule would be applied successively to any 10% interest of the second entity in any other entity, thus seeking to prevent the circumvention of the “nonbusiness asset” discount disallowance through the use of a holding company structure.

Finally, the bill attacks “minority interest” discounts by providing that, in the case of the transfer of any interest in an entity other than an interest which is “actively traded,” no discount shall be allowed by the reason of the fact that the transferee does not have control of the entity if the transferee and members of the family of the transferee have control of the entity.

The Pomeroy bill’s proposed effective date is “date of enactment.”

The Association for Advanced Life Underwriting expects other proposals respecting the estate, gift and generation-skipping transfer taxes will follow this Pomeroy proposal. We will report promptly on them as they arise.

Source: AALU Bulletin No: 09-10, 1/23/09.

Friday, February 6, 2009

Bill Introduced to Freeze Estate Tax at 2009 Levels and to Eliminate Discounts on Nonbusiness Assets - Part I

House Ways and Means Committee member Pomeroy (D-ND) has introduced H.R. 436, “Certain Estate Tax Relief Act of 2008,” a bill that would freeze the lifetime estate tax exemption at $3.5 million per decedent (the 2009 level) and would retain the 2009 estate tax rate ceiling at 45%. The “carryover basis” rules that would have taken effect upon the repeal of the estate tax are themselves repealed under the bill. In addition, H.R. 436 would reduce the availability of valuation discounts for gift and estate tax purposes and, through a “clawback” provision, would effectively impose a higher rate on estates over $10 million. The Association for Advanced Life Underwriting strongly supports sustainable estate tax reform which can enable clients to plan with certainty; for example, reform with an exemption level of $2.5 to $3.5 million, a top rate of 45% and a reunification of gift and estate tax exemption levels. Some of the provisions have to be closely examined for potential negative impact on clients.

The bill contains a provision that would phase out the effect of the graduated estate tax rates and unified credit on estates over $10 million. Although the bill does not address directly the generation-skipping tax exemption (currently $3.5 million), the fact that the GST exemption is tied to the estate tax exemption would also raise the GST exemption under this bill. The bill would implement an idea that discounts to the value of an entity holding “nonbusiness” assets (including most assets not used in the active conduct of a trade or business) should be eliminated for transfer (estate, gift and GST) tax purposes.

Under current law, transfer taxes are imposed on the “fair market value” of the property transferred, which is generally defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” In the case of non-publicly traded interests, a hypothetical “willing buyer” would take into account numerous factors, including the degree of control of the business represented by the equity interest being acquired., as well as any limits on his or her ability to dispose of the interest in the future. Recognition of the existence of these factors by the courts has resulted in the allowance of often steep minority interest and marketability discounts to the value of such property. Other discounts include those applicable to transfers of partial interests in property and built-in capital gains. Next week, in Part II, we will go on to list some of the other provisions included such as Valuation Discounts.

Source: AALU Washington Report, 1/23/09


On January 27th, Governor Paterson signed new power of attorney legislation as Chapter 644 of the Laws of 2008. This law makes dramatic changes, including a new statutory short form, to be notarized, and if a principal wants to authorize gifts, a new form that must be witnessed rather than notarized. As enacted, the law has a March 1, 2009 effective date, but we are hopeful that the date will be extended to at least September 1, 2009 by separate legislation, that is, by a chapter amendment. Look for subsequent newsletters as developments warrant.

Friday, January 30, 2009

10 Reasons to Create an Estate Plan NOW

Many people think that estate plans are for someone else, not them. They may rationalize that they are too young or don't have enough money to reap the tax benefits of a plan. But as the following list makes clear, estate planning is for everyone, regardless of age or net worth.

1. Loss of capacity. What if you become incompetent and unable to manage your own affairs? Without a plan the courts will select the person to manage your affairs. With a plan, you pick that person (through a power of attorney).

2. Minor children. Who will raise your children if you die? Without a plan, a court will make that decision. With a plan, you are able to nominate the guardian of your choice.

3. Dying without a will. Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state's laws of intestacy (dying without a will). Your family members (and perhaps not the ones you would choose) will receive your assets without benefit of your direction or of trust protection. With a plan, you decide who gets your assets, and when and how they receive them.

4. Blended families. What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would wish. With a plan, you determine what goes to your current spouse and to the children from a prior marriage or marriages.

5. Children with special needs. Without a plan, a child with special needs risks being disqualified from receiving Medicaid or SSI benefits, and may have to use his or her inheritance to pay for care. With a plan, you can set up a Supplemental Needs Trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.

6. Keeping assets in the family. Would you prefer that your assets stay in your own family? Without a plan, your child's spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, pass to your grandchildren.

7. Financial security. Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard. With a plan, life insurance can mean that your family will enjoy financial security.

8. Retirement accounts. Do you have an IRA or similar retirement account? Without a plan, your designated beneficiary for the retirement account funds may not reflect your current wishes and may result in burdensome tax consequences for your heirs (although the rules regarding the designation of a beneficiary have been eased considerably). With a plan, you can choose the optimal beneficiary.

9. Business ownership. Do you own a business? Without a plan, you don't name a successor, thus risking that your family could lose control of the business. With a plan, you choose who will own and control the business after you are gone.

10. Avoiding probate. Without a plan, your estate may be subject to delays and excess fees (depending on the state), and your assets will be a matter of public record. With a plan, you can structure things so that probate can be avoided entirely.

Source: www.elderlawanswers.com

Friday, January 9, 2009

What does the Recession mean for Long-Term Care?

Certainly, the current economic downturn is not going to affect the needs of some seniors for help with activities of daily living. But it could affect where that help is provided -- at home, in assisted living or in a nursing home. And it could affect who provides the care -- a family member or someone who is hired.

Here are a few likely trends:

Most nursing home care and, increasingly, care at home as well, is covered by Medicaid. This is a joint state-federal health care program for people who are "poor" under its complicated rules. Even before the current recession, Medicaid was growing and straining the ability of states to pay the cost. This has caused states to restrict eligibility for benefits. Such restrictions are likely to tighten further.

With fewer people working, more will be available to care for family members at home, perhaps delaying or avoiding the move to assisted living or a nursing home.

With money becoming scarcer for just about everyone, families will be more reluctant to pay for nursing home, assisted living or home care. This may result in more beds and services being available and a decrease in costs. In fact, according to the 2008 MetLife Market Survey of Nursing Home & Assisted Living Costs, over the past year the cost of semi-private rooms in nursing homes increased just 1.1 percent and the cost of private rooms did not change, in contrast to increases that substantially exceeded the inflation rate in most recent years.

We are likely to see bankruptcies of nursing homes and assisted living facilities if they cannot fill their beds as anticipated and if Medicaid and Medicare reimbursement rates are insufficient to cover their expenses. Facility shut downs will be very disruptive to residents as well as to their families.

With alternative jobs less plentiful, the supply of qualified care providers should grow.

Planning ahead is even more important, whether purchasing long-term care insurance, protecting assets to qualify for Medicaid, or simply making one's wishes known ahead of time.

Even prior to the onset of the recession, many more alternatives to nursing home care were being developed, including assisted living, new home care models, community partnership programs, and increased Medicaid coverage of care provided in the community. Anyone providing care for a senior needs to do much more research about the alternatives available.
These changes are not all bad. Fewer Americans working quite as hard as most adults have in recent years should allow more time for us to care for our loved ones and to find the right solutions among the increasing number of care choices available.

A qualified elder law attorney can help your family explore care alternatives and how to pay for them.

Source: www.elderlawanswers.com