Disability Integration Act to be Introduced in the Senate

A bill entitled, Disability Integration Act, is scheduled to be introduced in the Senate very soon.  Sponsored by Sen. Charles Schumer, the bill hopes to keep families together and make life accommodating and comfortable for disabled adults.  Basically, it would require health insurance companies to pay for services for disabled adults in their homes.

Although health insurance provides disabled people with care while in an institution, it should do the same if they and their family decide to stay at home; it should be their right to choose where they want to receive care.  Some have even commented that the need for residential options amounts to nothing less than a "crisis."

Years ago, housing people in institutional care models was the norm, but we cannot revert back to those days.  Schumer also mentions that "we cannot expect that everyone will live with their parents forever."  He feels that disabled adults should be allowed to be as independent as they can and caring for someone in their own home would actually cost less than an institution.

Senator Schumer is optimistic that a law requiring insurance companies to changes their polices can get passed but he knows it's going to take some time to get it done.  No one should want to break up families or even friendships within a community because they are forced to leave their home for care.  He's confident that many will realize how important it is to pass this bill because it's a system that's obviously flawed.  

Governor Cuomo Signs the Care Act into Law

New York State legislature has passed the Caregiver Advice, Record and Enable (CARE) Act.  It was signed into law by Governor Andrew Cuomo on October 26, 2015 and will take effect in April, 2016.  The primary focus of this new law is to offer assistance to patients and their caregivers after they are discharged from the hospital.

Upon being discharged from the hospital, there are many concerns as to how the patient’s care will be continued at home.  This makes an already challenging situation even more stressful for the patient as well as the caregiver who is responsible for providing that care.  That care does not only include assistance for the activities of daily living, such as eating, dressing, and bathing, but for more involved procedures such as medication administration, the handling of medical equipment and possibly even wound care.

The first thing a patient will be required to do is to assign someone to be their family caregiver.  Once this is done and the hospital is alerted to the patient’s choice, they will then be obligated to notify that caregiver 24 hours prior to discharge.  They will then also be required, by law, to provide the caregiver with all the necessary information and if necessary, training, that would be necessary to properly care for the patient upon their release.

Seeing the value of this Act, AARP is an enthusiastic advocate to get this passed throughout the country.  New York is now the 18th state that has passed a version of the Act.  Part of the reason for AARP’s participation in getting this passed, is the knowledge that nearly 40 million caregivers throughout the United States currently provide unpaid care for a family member.  As startling as that is, what’s even more upsetting is that the number of caregivers that will be available in the coming years is expected to dramatically decrease leaving many people unassisted in the most fragile time in their lives.

The main purpose of passing this Act is to help alleviate the stress and concern of patients when they are being discharged and require further care.  It will allow them to choose their caregiver, and have the hospital train that caregiver thereby eliminating a lot of worry.  In addition, by educating caregivers with clear instructions within the discharge plan, it will most likely decrease the need for that patient to have to enter another facility for their aftercare.

Helping Patients Deal with End of Life Decisions

Medicare announced plans this month to reimburse doctors for talking with patients about what treatments they want -- and don't want -- toward the end of life.  This sensible, long-overdue proposal is likely to have a very wide impact.  About 80 percent of people who die in the United States each year are covered by Medicare, and Medicare policies are often followed by private insurers, some of which already pay for these advance-planning conversations.

The need for such talks was made even clearer by disturbing new evidence in a study in the July 9th issue of JAMA Oncology, a journal of the American Medical Association, that many cancer patients, who often face difficult choices over whether to have chemotherapy or radiation, don't receive the care they want at the end of life.

Researchers at the Johns Hopkins School of Medicine in Baltimore used a national survey containing exit interviews with the next of kin of nearly 2,000 cancer patients who died between 2000 and 2012.  Patients who had end-of-life discussions with doctors and those who created living wills, which describe the kind of care a person should receive, were most able to avoid having treatments that they did not want imposed on them.  Patients who relied solely on designated health care proxies to make decisions if they were incapacitated were often subjected to aggressive last-minute care.

The lesson seems clear.  End-of-life discussions involving all parties -- doctors, patients and surrogates -- are crucial to ensure that people's preferences are specified and understood by everybody.

Medicare's proposal, which is part of the agency's physician fee schedules for 2016, was welcomed by major medical organizations but faces opposition from right-to-life and disability rights groups that say advance-care planning persuades people to reject lifesaving treatment.  The talks, however, are voluntary, and many patients and families are eager to have them.

The payment rates for doctors and other health professionals who meet with patients about end-of-life care will be decided by November 1st, when the plan is expected to become final.  Virtually all experts agree that medical professionals will need additional training.  Many doctors are uncomfortable talking to patients about planning for death.

The proposal would end further delays on an important issue.  In 2009, a similar plan was floated to pay for end-of-life discussions under the Affordable Care Act only to be derailed by Sarah Palin's bogus cry about "death panels" that would cut off care for helpless patients.  In 2010, Medicare tried to pay for voluntary advance care planning as part of annual wellness visits only to have its efforts overturned by similar political pressure.  This year the opposition seems more muted, and more patients may finally be able to talk to their doctors and gain more control over the care they receive in their final days.

Source:  The New York Times, July 2015.

Updating your Estate Plan after Divorce

Almost everyone who has been divorced or is ending their marriage needs an estate planning checklist for divorce. It’s imperative they revisit their estate planning documents to avoid inadvertently giving their ex control over their estate. While the divorce process attempts to equitably divide assets, it usually falls short of addressing the estate planning needs of clients. In addition, it is prudent to revise estate planning documents during a divorce to ensure your wishes are carried out, as a contentious divorce can often last many years.

Updating of all estate planning documents should obviously be carried out. There are two areas, however, that deserve special attention - pension plans & minor children.
In most states, if you get divorced, a state statute automatically treats the ex-spouse as being pre-deceased in your documents.  This means if you named a former spouse as a personal representative, executor, or as a beneficiary of your estate, they will be automatically removed. Many people believe they can rely on such a statute to handle their estate planning documents. There are multiple problems with this approach. First, the statute only goes into effect upon divorce (if you pass during a multi-year divorce battle, everything may pass to your spouse regardless). Second, certain retirement plans governed under a portion of Federal Law called the Employee Retirement Income Security Act also known as ERISA (such as 401K's and pension plans) will preempt the state statute from taking effect. Therefore, your ex-spouse may still inherit your retirement plan even after a divorce is final.

Another common issue we see is when a Decedent leaves all their assets to a minor child. Most state laws require a guardianship until the minor is 18. This is an expensive process and one of the unanticipated circumstance people fail to recognize is that the ex-spouse usually is appointed guardian. While this may be acceptable under some circumstances, most individuals balk at the thought of their ex-spouse getting control over all the assets. Therefore, it is strongly recommended that a client dealing with or already divorced set up a trust to handle any assets that may pass for the benefit of a minor.

In addition, some states such as Florida have unique restrictions on the devise of homestead. For example, if you have minor children, you may be required to leave your homestead to them regardless of what your Will provides. Just imagine the irony, you pass away leaving everything to your minor child, and then your ex-spouse moves into your home as the nominated guardian of your minor child.

Proper planning by anyone leaving you assets may also mitigate the effects of a future divorce. By leaving assets in trust, it may be possible to ensure they are not counted against a party for equitable division. It is important to see an attorney well versed in this area, as this is a constantly evolving area of the law.

These are just a few of the circumstances we often encounter when dealing with the estate of an individual who is in the process of a divorce or who has failed to update documents after a divorce. Here is a quick checklist to address some of the most prevalent issues:

1. Update your Will and/or trust;
2. Update your Durable Power of Attorney, Living Will, or Health Care Surrogate;
3. Update your beneficiary designations on all accounts and insurance policies;
4. Review how your cars are titled;
5. Update and/or nominate a guardian for any minor children and for yourself;
6. Ensure your house is properly titled and/or devised in your will;
7. Review the titling of all financial accounts;
8. Revoke all prior estate planning documents and powers of attorney;
9. Ensure all post-divorce settlement requirement are handled (i.e. life insurance); and
10. Speak with relatives (i.e. parents) to ensure their estate plans take into consideration your divorce. 

Written by D.W. Craig Dreyer, Esq.

ABLE ACT PASSES

Following years of national grassroots advocacy efforts, the community of individuals with special needs and their family members will have at their disposal a new tool with which to maintain a private fund of assets while preserving certain  

government benefits. On December 19, 2014, the President  

signed the Achieving Better Life Experience Act, commonly 

known as the ABLE Act. The Act, modeled after Internal Revenue 

 

Code Section 529 Plans, provides a mechanism to fund an 

 

account in the name of an individual, and allow the funds in that  

account to accumulate income tax-free. More meaningful than 

 

the tax benefit is the new-found freedom given to a person with 

 

disabilities, who can retain public benefit eligibility while controlling 

 

assets in excess of the $2,000 SSI and Medicaid resource cap  

from one month into the next.

PRIOR TO PASSAGE THE ACT HAD MANY FORMS 

ABLE was first introduced in Congress in 2008. As originally drafted, the Act amended Section 529 of the Internal Revenue Code and provided for thresholds tied to that section's permitted amounts in each state. This meant that, in states with high Section 529 limits, a person could potentially have funded their ABLE Act Account with hundreds of thousands of dollars. Advocates wanted a simple and easy way to provide independence without having to place those funds in trust, and without the need to hire professionals or have court intervention. But, as is typical in politics,the anticipated costs for such an approach exceeded the political will to pass it in its original form.

The bill was amended several times over three different congressional sessions, while continually gaining bi-partisan support of a vast majority of the members of both houses. The most dramatic changes occurred during the mark up of the bill at a committee hearing in July of 2014. Fiscally, those amendments reduced the anticipated expense of the bill by $17 billion. Politically, the changes allowed supporters in Congress to attach the bill to a large end-of-session tax package bill under which it passed. The Act, as finally approved, is a shell of its former self, providing far more limited benefits than many with special needs,their families, and advocates had originally hoped.

WHAT DOES ABLE ACTUALLY LET A PERSON DO?

After years of hearing what the ABLE Act might do, it is essential to understand what a person can do under the final version of the Act that the President signed into law. 

At this point, the passage of the Act alone does not allow a person to do anything, at least not yet. State action is necessary for the Act to be implemented in all 50 States. Remember, the Act is tied to each state's 529 plans. So, the actual opening of an ABLE Act account for a person will not likely occur until the latter part of 2015, and, in some states, may not occur until 2016, depending on the speed of action at the state level. Once it is finally implemented in your state, what will happen?

Under the terms of the new law, in order to be eligible for an ABLE account, the onset of the individual's disability must have occurred prior to age 26. Each calendar year, you, or another person for your benefit, can deposit cash up to the federal annual gift tax exclusion amount, presently $14,000, into an account in your name to be reported under your Social Security number. These contributions are not tax-deductible. Total contributions into the ABLE account are capped at each state's limitations for 529 accounts and the first $100,000 in an ABLE account will not adversely affect the individual's eligibility for SSI. So long as you only use the funds in that account for permitted government approved disability-related expenditures, the account will be permitted to accrue value income tax-free. 

Although the Medicaid and SSI resource eligibility cap is $2,000 in most states, the funds in the ABLE Act account will be ignored as an available resource in the same way that a properly drafted and administered special needs trust (SNT) is not counted. Each person is allowed to have only one ABLE Act account, so if you open one, family members cannot open separate ones and fund more. Thus, in any calendar year, $14,000 is the most permitted to be set aside for your benefit, whether you are funding it or someone else is. The account may be added to each year, but once the value exceeds $100,000, you will lose your SSI eligibility. Notably, you may still be eligible for Medicaid, so you would keep your medical coverage, but lose your monthly income supplement.

MEDICAID PAYBACK

On the death of the beneficiary of the ABLE account, funds remaining in the ABLE account must first be used to repay the Medicaid program for expenses incurred. This is very similar to a first party SNT. First party SNTs are funded by a person's own assets and (other than

pooled trusts) must be created by a court, a parent, grandparent or guardian. In contrast, third party SNTs are created by someone other than the beneficiary with disabilities, and the assets going into the SNT are those of the third party, not the beneficiary. Third party SNTs are the most common tool utilized by special needs planners for individuals with special needs and their families.

The singularly most important difference between a first party SNT and a third party SNT is that under a first party SNT, if there are any funds remaining in the trust at the time of the beneficiary's death, then the federal and state government must be named as the primary remainder beneficiary. The government effectively seizes those funds to repay the amount of Medicaid (but not SSI) benefits allocated to the individual during his or her lifetime. The final figure repaid to Medicaid could wipe out the amount left in the first party SNT, leaving nothing to the surviving family members.

With a third party SNT, there is no Medicaid payback requirement. The trust funds can pass to another family member or whomever the creator of the trust originally intended, rather than going to the government.

Unfortunately, the ABLE Act accounts mimic first party SNTs, meaning that they require a Medicaid payback. This holds true even if the money contributed to the ABLE account came from a parent or other third party. This is a major distinction between an ABLE account and a third party SNT, which has no Medicaid payback. Thus, in many family situations, a third party SNT may be a more useful and appropriate tool than an ABLE Act account.

WHERE DO WE GO FROM HERE?

ABLE Act accounts were supposed to reduce the need for court intervention and to make it easier for individuals with special needs to increase their independence while retaining more funds in their own names. Simplicity was the goal. But Congress's limiting the contributions to $14,000 per year and requiring proof of disability onset by age 26, changed the dynamic entirely. Most inheritances and lawsuit awards, which previously created the need for an SNT, will still require an SNT going forward. Further, there are complicated rules as to permitted expenditures. If funds are not managed and spent properly, both the tax benefit and the Medicaid eligibility may be lost entirely. Simplicity was not achieved.

Those receiving public benefits and their loved ones must be diligent in preserving their benefits. In some situations, an ABLE Act account will be another tool towards that objective.  For individuals trying to progress to work, or who are turning 18 and have had family members who previously funded more than $2,000 into a Uniform Gift (or Transfer) to Minor's Account on their behalf, the ABLE Act provides an advantageous alternative to obtaining court approval to create a first party SNT. But for most folks, the funds at issue exceed $14,000, so an ABLE Act account, alone, will not resolve all the issues. 

Estate and financial planning for individuals with special needs is complex. While the ABLE account is a welcome addition to the tool box, it should not be set up in a vacuum. Each family's particular circumstances should be taken into account in deciding what is best for them. This can only be achieved with the guidance of competent professionals who will be able to offer practical solutions to meet your family's needs.

Source:  Written by Robert F. Brogan and Bernard A. Krooks who are members of the Special Needs Alliance (SNA).  February 2015, EP Magazine, eparent.com.

SOME THINGS YOU COULD THROW AWAY

Our clients often look over the piles of paper (old financial records, mostly) accumulating in their homes, and ask us whether they really need to keep all that stuff. Is it important to hold on to all those documents for legal, tax or other reasons?

Sometimes, by the way, the question comes from clients who are cleaning out their parents’ homes. True story: when my own mother moved from her home of almost fifty years a few years ago, I helped clean out closets of old files and records. I found my parents’ check register from the month I was born (and, of course, months and months before and after). Excited, I figured I could find out how much they paid the doctor. Not having found an entry, I am now mostly worried about being repossessed.

But back to our question. What do you need to keep? Here are a couple things to keep:

• Tax records for the past seven years. Why seven years? Because the federal statute of limitations for taxes is generally six years (that’s not quite right, incidentally, but assuming you are not committing tax fraud you can rely on that figure), and keeping one extra year makes sure you have documentation if something does come up. But before we move on, let’s make a couple points here: your old bank statements, cancelled checks for non-deductible items like utilities for your home, and an awful lot of the paper people tend to throw into the “tax” file are simply not important for tax purposes. And keeping what you do keep in an electronic format is perfectly fine. So you can probably clean out quite a bit of that “tax” file, too.
• Original documents with independent significance. What do we mean by that? Wills, trusts, powers of attorney, deeds, auto titles, birth certificates, marriage licenses, death certificates — all of these can be needed to prove the date and circumstances of the underlying events, or to effect your wishes. Keep them. Copies can mostly be discarded (with a couple exceptions — see the next point).
• Copies of important documents if you don’t have the original. Don’t have an original death certificate for a parent or spouse who died years ago? OK — then keep that photocopy. It won’t be useable as a copy, but it will be helpful in the effort to get a new certified copy. Also keep copies of wills, trusts and powers of attorney if you don’t have the originals — copies of your trust and powers of attorney might be just fine, and even a copy of your will can be used if your heirs can convince the court you lost the original, rather than tearing it up. By the way, if you can’t find the original of your will, that might mean it’s time to make an appointment to update your estate plan. But that’s a different issue.
• Receipts showing payments for improvements to your home. Not a big deal for most people, but this one can make a difference. If the gain on your home is going to be substantial, or you will sell it more than five years after you move out, then you will want to be able to show how much you spent on improving the house. This won’t make a difference for most people, but it will for a few.
• Electronic copies of at least some of the things you plan on throwing away. Don’t bother to scan everything, but you might make a pile of documents you think you might regret destroying later, and scan that pile.

That’s not a complete list, but it does include most of the things you actually have to keep. For more detail and some other suggestions, consider the federal government’s suggested list of things to hold on to. We like their description of a process (collect all your papers from around the house and make three piles — “Active File,” “Dead Storage” and “Items to Discard”) but we think following their advice will still leave you awash in unnecessary paper.

So what can you actually throw away? Maybe it will help if you start with the stuff you just don’t need to keep any more. We have some suggestions for the discard pile, but first we want you to think about creating two separate piles of documents you’re not going to keep: one for the trash (or recycling), and the other to be shredded. Anything with an account number (even a closed account) or any personal information should go into the “shred” pile.

Things you could throw away or shred, as appropriate:

• Old bank records. By “old” we mean not likely to be needed for tax returns, so anything seven years old is safe to shred. Even more recent records can be shredded if you’re a little selective. Bank statements more than three years old are safe to shred, as are most cancelled checks. Does your bank make statements available online? Then shred them all.
• Unnecessary copies of important documents. Do you have your original will, trust, house deeds at hand? Put them in a safe place and shred all the copies you have lying around. They are more likely to confuse your family and heirs than to be helpful. But keep track of those originals, please — and keep the copies (of current documents ONLY) if you have already misplaced the originals.
• Appliance manuals. We know — the federal government is very clear about keeping these documents so long as you have the appliance. That is probably because the federal government has not heard about the internet. And when you finally replace your refrigerator, will you remember to pull out the ten-year-old manual and send it with the appliance? Of course not. OK — keep the current ones if you want, but throw out the ones for appliances you have discarded over the years. At the same time you might hunt for that pile of now-useless remote controls and plug adapters, and throw them out, too.

This is a good topic, and we will probably revisit it on another occasion. In the meantime, maybe you have your own suggestions for things you think people hold on to too long. But let us just make one more point about that federal government list of things to hold on to: we think the idea of writing down all your passwords and keeping them in a safe place is a mistake. And that’s another topic for a future entry.

Source:  Written by Robert Fleming, Fleming & Curti PLC, Legal Issues Newsletter, 8/4/14.

Avoid Problems of Do-It-Yourself Estate Planning

Many people only find out when it's too late that their estate plans contain costly errors. Mistakes aren't necessarily limited to lay people using do-it-yourself kits; inexperienced estate planners make mistakes too. Here are some overlooked issues that may occur without the advice of a practiced estate planning attorney.

Non-probate asset titling has increased in popularity over the years. The benefits of joint titling of assets and beneficiary designations are often overlooked when planning one's estate without professional help. For example, assets allowed to pass to designated beneficiaries upon the death of a principal include life insurance, trusts, joint tenancy with right of survivorship (JTROS) accounts, pay on death (POD) accounts, annuities and 401K/IRA accounts. These are all non-probate assets. However, virtually any asset, including a homestead, can be set up as a non-probate asset.

Though the documents are completely different, confusing a Will for a power of attorney and a Living Will is a common mistake. A Will expresses who will inherit your assets, and it goes into effect after you die. A power of attorney appoints an agent of your choosing to handle your financial affairs during your lifetime, and upon your death it becomes invalid. While modern medicine has increased longevity, diseases like Alzheimer's, Parkinson's and Dementia are creating financial hardships for many families. Having a properly drafted and executed POA, before mental capacity is lost, is essential for a family to be able to access and restructure assets when seeking eligibility for long-term care benefits. A Living Will, also known as a Directive to Physicians, is a document that controls decision making involving the use of life support.

Low cost estate planning kits offered on television commercials or Internet websites present a host of problems potentially costing a family thousands to hundreds of thousands of dollars. These kits contain one-size-fits-all forms into which you fill in the blanks. Using these documents jeopardizes the choices you thought you had carefully made. Here are a few issues that could arise.

Even if enforceable by the court, because of the document's form or phrasing, what you intended is open to challenge;
What you intended may not be enforceable by the court;
You did not intend what may otherwise be enforceable by the court;
Though the document is correctly drafted and enforceable at the time of signing, the document may not account for changes in circumstances that would alter your intentions, making it potentially unenforceable;
Though the document is correctly drafted and enforceable at the time of signing, you may be unaware of options, such as certain types of trusts, that would better protect your assets or reduce taxes;
When you die, your Will could be challenged by an unhappy relative, forcing your heirs to hire an attorney in a costly probate battle.

Estate plans should be reviewed annually for updates and changes in the law, or, upon major life events, including birth, death, marriage and divorce, disability and large asset gains.

Don't put your life and your hard-earned assets into a cookie-cutter plan. Seek advice from an experienced estate planning attorney before you make some of the most important decisions of a lifetime.

Source:  By Wesley E. Wright and Molly Dear Abshire, as published in the Houston Chronicle on June 18th, 2014

Casey Kasem's End-of-Life Drama: A Lesson for the Rest of Us

NEW YORK (Reuters Health) - The dysfunction and drama of the final months of Casey Kasem, a radio personality who died recently from complications of dementia, captured the interest of generations who listened over the years as he counted down the nation’s top pop.

But what Kasem did for four decades on the radio, says end-of-life planning expert Nancy Berlinger, is what he failed to do with his own family before dementia rendered him unable to communicate.

Kasem’s advance directive, stating he did “not desire any form of life-sustaining procedures, including nutrition and hydration,” assigned his daughter as surrogate healthcare decision-maker.

His daughter’s authority, however, was contested by her stepmother, Kasem’s wife. Allegations of kidnapping and starvation played out in courtrooms. Kasem’s wife performed a dramatic interpretation of a Biblical scene for news cameras, throwing raw meat in the street in exchange for her husband “to the wild rabid dogs”- her stepchildren.

Kasem’s situation was “a doozy of a case,” added Berlinger, lead author of The Hastings Center Guidelines, a framework for end-of-life decisions.

Kasem did take “two steps most people don’t,” Berlinger told Reuters Health. “He authorized a proxy decision-maker, and he gave specific information about treatment preferences.”

But, she pointed out, broadly-stated medical options in advance directives often require further considerations about real-life issues. “There may have been the assumption the document would have magically taken care of everything,” Berlinger said.

Kasem’s directive stated his wish for no life-sustaining treatment if it would “result in a mere biological existence, devoid of cognitive function.”

Berlinger said preferences should prompt patients and families to discuss points at which life loses individual meaning; examples include an inability to communicate or address hygiene. Those changes in condition can signal times when life-sustaining measures may be suspended. Without conversation, preferences may be unclear. “What does it mean to have ‘no cognitive function’?” Berlinger asks.

The way to answer that is to ask the patient directly, said Daniel Johnson, a Kaiser Permanente Care Management Institute palliative care specialist. “It’s not uncommon for people making decisions to do it alone,” Johnson told Reuters Health. “The problem is the best-laid plans depend not only on medical infrastructure, but infrastructure of the family.”

Johnson gathers key loved ones involved in patient care, so designated surrogates and those not selected understand reasons and values behind preferences. “When people take time to have discussions with family to ask the right questions with all important parties, you almost never see this,” he said.

Such dialogues are particularly vital in families like Kasem’s - involving second marriages and stepchildren, says elder law and estate planning attorney Michael Amoruso. “It’s not just blending family that is important, but ensuring relationships maintain themselves during stressful times,” he says. “If you don’t discuss, you are deferring the problem to a later day.”

That later day came for the Kasem clan, and it arrives even for the most “functional” of families, said Robert Fleming, an attorney and author of The Elder Law Answer Book. “I can drudge up one similarly emotionally fraught case for every year in 38 years of practice,” he told Reuters Health.

Conflict often arises between adult daughters- common choices, he says, for surrogate decision-makers. “The oldest blows into town and says ‘I can’t believe Mom ever meant that, and if I had talked to her she wouldn’t have done that,’” Fleming offers as a common scenario. “She thinks Mom assigned the youngest daughter because she stuck a form in front of her when she was over having coffee.”

These conversations should be initiated periodically by every responsible adult, Fleming said. He suggests a time-frame of every five years, as well as a dialogue to accompany every life change- whether it be in health status or a new spouse.

“There are some levels of family dysfunction that cannot be taken care of, but it certainly would have helped if Kasem had clearly expressed his preferences in a document shared in advance,” Fleming said.

Source:  Reuters, by Randi Belisomo, June 16, 2014.s

IRA Rollover Ruling

Uncle Sam's Tax Court just ruled that the one-rollover-per-yea​r rule applies to all of a taxpayer's IRAs rather than to each IRA separately. And that ruling, experts say, is in direct conflict with IRS Publication 590, the bible for IRAs.

"Industry leaders, financial advisers, and everyone else who handles IRAs are stunned," said Denise Appleby, the editor and publisher of The IRA Authority.

According to Appleby, there are two ways to move money between IRAs:

1. Transfers, which are not reported to the IRS and not reported on a tax return. The IRA owner never touches the money. You can do this as often as you like, whenever you like, Appleby said.
2. And rollovers. With this method, the IRA owner takes the money as a distribution and they have 60-days to rollover (put back) the amount in an IRA. And this, you can do only once per 12-month period, said Appleby.

According to Appleby, the IRS, through their publications and regulations, has said for at least 20 years that the rollover method applies on a "per-IRA" basis. In other words, if you have 10 IRAs, you can do 10 rollovers for the year (12-month period), as long as an IRA does it only once (or the year). 

Here's the guidance found in Publication 590, which everyone viewed as gospel: 

Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a one-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same one-year period, from the IRA into which you made the tax-free rollover.  The one-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA.

The IRS gives this example: You have two traditional IRAs, IRA-1 and IRA-2. You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA.

However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. This is because you have not, within the past year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2.

Enter Alvan and Elisa Bobrow, who had a few IRAs.

In 2008, Alvan rolled over two distributions from his IRAs and took the position that the rollovers were valid because they were done in a timely manner, and involved different IRAs, Appleby wrote in her analysis of the court case. His position was that he had not broken any rules, as explained by the IRS in their publication for the past 20 years.

The IRS disagreed and determined that only one of the two rollovers was valid. So, Uncle Sam and the Bobrows went off to court. And the Tax Court — much to the surprise of all IRA experts — agreed with the IRS.

The mistake cost the Bobrows an additional $51,298 in income tax and a penalty of $10,260. Maybe they should be thankful; it could have cost them $31,000 more, according to Appleby. You can read the gory details in Bobrow v. Comm’r, T.C. Memo. 2014-21.

So what was the bottom line? In essence, only one of the Bobrow's distributions was eligible for rollover during the 12-month period. In fact, that Tax Court concluded that the Internal Revenue Code Section 408(d)(3)(B) limitation — the relevant section of the federal tax code — applies to all of a taxpayer's retirement accounts and that regardless of how many IRAs he or she maintains, a taxpayer may make only one nontaxable rollover contribution within each one-year period.

In other words, we've all been operating under the impression that what was written in Publication 590 — you know, the IRS’ very own publication — was correct. But it's not.

In fact, the Bobrow case highlights, according to Appleby, an important rule that we sometimes overlook: "If conflicting information is provided in multiple sources, one must consider the hierarchy and reliability of such sources. In this case, Publication 590 is not authoritative and is not considered official guidance. The Tax Code is the more authoritative, and supersedes any other guidance in the event of conflict."

So what now?

Well, according to Appleby, the IRS will be changing its publications, changing what they have been saying for 20-plus years. The IRS will implement this change for everyone -- everyone except the Bobrows who have to pay those penalties, starting Jan. 1, 2015.

You should plan ahead so that — starting in 2015 — you avoid making two or more IRA-to-IRA rollovers during a 12-month period. This 12-month (one-year) period is not determined on a calendar-year basis. Instead, it starts when the IRA owner receives the distribution, Appleby said.

And, check with your IRA custodian. According to Appleby, they need to change their IRA agreements, because those agreements say what the IRS has been saying for years — which means they are wrong.

And finally, Appleby said individuals should start moving money via transfers and not rollovers. "There are too many pitfalls with rollovers and none with transfers," she said.

Source:  www.money.msn.com, 4/4/14.

Senate Bill Updates SSI and Would Help Elder Poor

WASHINGTON, DC – The Supplemental Security Income Restoration Act of 2014 was introduced in the U.S. Senate by Senators Sherrod Brown (D-OH) and Elizabeth Warren (D-MA). The bill, championed by the National Senior Citizens Law Center (NSCLC),would fix key elements of the Supplemental Security Income (SSI) program that currently make life difficult for millions of low-income older adults.

“Millions of vulnerable Americans who struggle just to get by depend on Supplemental Security Income to help take care of their families, but inflation has significantly decreased the ability to qualify for SSI benefits, hurting seniors, the disabled and blind, and more than one million children,” said Sen. Brown. 

“SSI is a critical program that helps millions of our poorest and most vulnerable citizens keep their heads above water,” said Senator Warren . “I’m very pleased to join Senator Brown to introduce the SSI Restoration Act, which will help strengthen SSI for families who rely on these essential benefits.”

The legislation would update rules such as one that recognizes the value of past work by disregarding the first $20 of Social Security Retirement or other monthly income when determining SSI eligibility, a rule that hasn’t been updated in more than 40 years.  The SSI Restoration Act will increase the disregard to $110 to account for inflation.  The bill also increases the amount of resources an SSI recipient can retain from $2,000 to $10,000 so that they can respond to emergencies such as a home repair or the replacement of an old car. The bill also eliminates the harsh provision that reduces the monthly benefit whenever someone receives food or housing for less than fair market value from another person, including family members.

“We hear many stories from consumer advocates about elderly SSI recipients who cannot pay for food, or needed medical care because they exceeded the resource limit or received too much support from a family member and lost part or all of their benefits,” said NSCLC Executive Director Kevin Prindiville.  “Sadly, some poor seniors face homelessness when they lose even some of the already meager income SSI provides.”

An identical bill, H.R. 1601, was introduced in the House last April by Rep. Raul Grijalva (D-AR) and has 13 co-sponsors. The House bill has been endorsed by 50 national and local organizations, including NSCLC.

“Recipients, their families and all of us owe Sen. Brown and Sen. Warren many thanks for advancing one of the most important fixes we can make to this program,” Rep. Grijalva said. “This shouldn’t be a political football. Everyone agrees it can be improved, and they agree on how badly it’s needed. The full Senate should take this bill up and pass it as soon as possible, and the House should do the same.”

SSI provides subsistence-level income to two million older adults with very limited financial resources who are either age 65 or over or cannot perform substantial work because of a severe disability. More than two thirds of older adults receiving SSI payments are women and one out of every three applying for the program has a primary language other than English.

“We hope that many others in the Senate will join Sens. Brown and Warren as co-sponsors to help make these needed changes into law this year,” Prindiville said. 

Source:  National Senior Citizens Law Center

Estate Administration

Estate administration is the process of managing and distributing a person’s property (the “estate”) after death.  If the person had a will, the will goes through probate, which is the process by which the deceased person's property is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered among many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. (One exception: Social Security should be notified within a month of death. If checks are issued following death, you could be in for a battle.

When you're ready, but not a day sooner, meet with an attorney to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.

The exact rules of estate administration differ from state to state. In general, they include the following steps:

1. Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.

2. Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory," with the probate court. It's generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an state or federal estate tax return is needed---generally if the estate exceeds $1 million in value---it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.

Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

www.elderlawanswers.com

Century of Giving Philanthropy Contest Concludes for 2013

Century of Giving Philanthropy Contest Concludes for 2013

       

Long Islanders have voted for the final time in 2013, and have selected the Suffolk County Chapter of the AHRC as the winner of the Century of Giving contest, sponsored by Davidow, Davidow, Siegel & Stern.

"We are grateful to all Long Islanders who cast ballots online and endorsed these three deserving non-profit organizations," declared Lawrence Davidow, Senior and Managing Partner of the firm.  AHRC Suffolk will be awarded $5,000 from the law firm.

"We are pleased to have been nominated for the Century of Giving initiative, and our recognition as a recipient is deeply gratifying," announced Director of Development, J. Andreassi.  "The award will be used to continue to support individuals and families impacted by intellectual and other developmental disabilities."

Mr. Davidow added that the other two Century of Giving nominees are essential to supporting Long Islanders with special needs and their families.  "The Long Island Advocacy Center and the Viscardi Center both serve thousands of families and individuals impacted by special needs," stated Mr. Davidow.  "Their contribution to our community is outstanding, and we wish to recognize their support.

The Century of Giving initiative was created by the Law Firm of Davidow, Davidow, Siegel and Stern to celebrate the law firm's centennial on Long Island.  The firm designed a philanthropic celebration to recognize non-profits that mirror the firm's mission: serving seniors and special needs populations.

The final phase coincided with the celebration of "Special Needs Law Month", a recognition offered by the National Academy of Elder Law Attorneys, of which the law firm is a member.  The previous two phases of Century of Giving recognized organizations serving Long Island seniors, and awarded $5,000 to two of the non-profits that were selected by Long Islanders.

Century of Giving Promotion Announces Phase III Nominees

The Law Firm of Davidow, Davidow, Siegel and Stern (DDSS) announced the Phase III nominees for “Century of Giving”, a philanthropic endeavor created to recognize and reward Long Island charities for the good works performed for local seniors and individuals with special needs.  

Managing Partner Lawrence Davidow stated, “It is our privilege to recognize the wonderful contributions of the following three non-profits, and to single them out as eligible nominees within the Century of Giving program: The SuffolkAssociation for the Help of Retarded Children (AHRC); The Long Island Advocacy Center; and the The Viscardi Center and School.”

Mr. Davidow added, “These three non-profit organizations have made a difference in the lives of so many individuals with special needs and their families on Long Island. While we can only select a single final recipient for the $5,000 award within the category of ‘organizations serving those with special needs’, we appreciate and acknowledge the good works performed by all our nominees.”The Century of Giving promotion celebrates the law firm’s centennial anniversary by recognizing worthy charities, and permits the public to vote for the charity which most deserves the $5,000 award donated by DDSS (vote at Davidow Century of Giving). The organizations have been selected with the expertise and guidance of the Long Island Community Foundation (LICF), and the pool of nominees serves the same populations as DDSS: seniors or those with special needs.

The promotion has been funded by DDSS, with LICF managing the fund and providing a comprehensive review of each nominee. “This is a wonderful philanthropic endeavor created by the 100 year-old law firm, and we were pleased to be the stewards of this initiative,” stated David M. Okorn, Executive Director of LICF.

The promotion has three phases: phase I, conducted in April and May, recognized select non-profits that have provided a range of human services for seniors; phase II – nominated organizations that combat specific health conditions among senior populations; and currently phase III nominates those organizations that have helped special needs populations.

Mr. Davidow concluded, “There is no more appropriate celebration for our hundred-year anniversary than one which recognizes organizations that share in our mission of helping seniors or individuals with special needs here on Long Island.”

Century of Giving Phase II Winner Announced

Celebrating 100 Years  1913-2013

Davidow, Davidow, Siegel & Stern, LLP

The votes are in, and Long Islanders have declared the Alzheimer's Disease  Resource Center of New York to be the winner of the second phase of the 2013 Century of Giving philanthropic contest.

"We are pleased to announce that Alzheimer's Disease Resource Center of NY has received the most votes within our category of 'Helping Seniors with Specific Health Conditions', and will be awarded $5,000 from the law firm of Davidow, Davidow, Siegel & Stern," announced Managing Partner Lawrence Davidow.

"It is our pleasure to accept the Century of Giving recognition and the donation," declared Mary Ann Malack-Ragona, Executive Director of the Alzheimer's Disease Resource Center.  "We are honored to have been selected, and we look forward to using these funds to support additional Long Island families impacted by Alzheimer's Disease."

Mr. Davidow added that the other two Century of Giving nominees also have assisted Long Island seniors in significant ways.  "The Arthritis Foundation of Long Island and The American Parkinson Disease Association's Information & Resource Center on Long Island are renowned for historic assistance provided to Long Island's elder populations with health concerns.  We salute them for their inspiring efforts and encourage support of these worthy charities," he noted.

The competition will conclude with a new Phase III nomination of other local non-profit organizations that are focused on Special Needs.  Stay tuned to find out the latest nominees and then log on to the Century of Giving website and vote!

Google Develops 'digital will'

Google has a way to ensure your data dies when you do.

The international tech giant, best known for its much-used search engine, has launched an Inactivity Account Manager, a "digital will" of sorts that allows users to determine what to do with their online "digital assets" once it's no longer needed.

The account manager, which can be activated by a new setting on a Google account page, will also allow the user to have their data expunged after three, six, nine or 12 months of inactivity and users can also designate "trusted contacts" to receive the data.

"Not many of us like thinking about death - especially our own.  But making plans for what happens after you're gone is really important for the people you leave behind.  So today, we're launching a new feature that makes it easy to tell Google what you want done with your digital assets when you die or can no longer use your account," product manager Andreas Tuerk wrote in a posting on Google's publicity blog.

"We hope that this new feature will enable you to plan your digital afterlife - in a way that protects your privacy and security - and make life easier for your loved ones after you're gone," Tuerk added.

In the same vein, but with a twist, a new online app allows people to keep tweeting posthumously.  LivesOn makes it possible by tweeting for you after you've died.

The Twitter app, which came out in March, examines your tweets to learn about your tweeting patterns and creates tweets of its own in your, uh, memory.

It examines your tweets while you're alive, learns about your tweeting patterns and then generates its own to match after you're gone.

An executor, named by users before their demise, notifies the server and then takes control of the account.

Source:  www.thestar.com/life/technology; written by Bruce DeMara, 4/12/13

As you can see, there are many aspects of your life that need to be considered when it comes to advance planning.  We have stressed for years how important it is to plan early so that you can get everything in order the right way, the first time.  Working side by side with our firm will provide you with great peace of mind and eliminate uncertainties and mistakes that can destroy a family, not only financially, but emotionally.

If you have completed your planning, we salute you and remind you to check in with us every now and then as life's circumstances continuously change.  If you haven't, we invite you to begin the process.  Start with attending one of our upcoming free seminars!

Your Special Needs Trust ("SNT") Defined

You have a special needs trust— or you have been designated as the trustee of a special needs trust— or your child has a special needs trust. What is a trust? What is a trustee? What is a beneficiary? What are all these terms you've never used before even though your first language is English? This article provides you with an overview of the more common terms found in your special needs trust. What is a Trust? A trust is a legal arrangement in which a person or a financial institution, called the trustee, holds and manages assets for the beneficiary (see definition below). The trust document explains the trustee's authority, how the trust is to benefit the beneficiary, and how and when the trust is to terminate. There are many types of trusts, but this article is focusing on a specific type of trust—a special needs trust. A special needs trust (SNT) is a trust that will preserve the beneficiary's eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI). Because the beneficiary does not own the assets in the trust, he or she can remain eligible for benefit programs that have an asset limit. As a general rule the trustee will supplement the beneficiary's government benefits but not replace them. Examples of supplemental needs are costs for sitters, companions, and dental or medical expenses not covered by Medicare or Medicaid. A first-party SNT, also referred to as a "self-settled" or "(d)(4)(A) trust," is funded with assets or income that belong to an individual with a disability (see definition below) and who is the beneficiary of the trust. In order for the assets of this type of trust not to count for Medicaid or SSI purposes, federal law requires that the beneficiary must be under the age of 65 when the trust is created and funded; the trust must be irrevocable and provide that Medicaid will be reimbursed upon the beneficiary's death or upon termination of the trust, whichever occurs first; and the trust must be administered for the sole benefit of the beneficiary. Typically the funding comes from a personal injury settlement or inheritance the beneficiary receives directly. A third-party SNT, frequently referred to as a supplemental needs trust, is funded with assets belonging to a person other than the beneficiary. In fact, no funds belonging to the beneficiary may be used to fund the trust. Typical funding comes from gifts, an inheritance from parents or grandparents, and proceeds of life insurance policies. This trust has no provisions to pay back Medicaid upon the trust's termination; rather, the person creating the trust decides how the trust estate is distributed when the beneficiary dies. The following terms are commonly found in first-party and third-party special needs trust agreements: Grantor — A grantor is the person who creates and funds the trust. This person is also commonly referred to as a settlor or trustor. In first-party SNTs, the grantor is actually the beneficiary because the law requires that the trust be funded with the beneficiary's own money, but that it be established by a parent, grandparent, legal guardian or a court. In third-party SNTs, the grantor is anyone other than the beneficiary, usually a parent or other family member. Trustee — A trustee is the person or entity who manages the trust assets and administers the trust provisions. A trustee can be a family member, friend or colleague of the beneficiary, a professional, or a combination of the two. A professional trustee generally is a corporate trust department or an attorney. It is common for more than one person to serve as trustee at the same time. Successor Trustee — A successor trustee is nominated in the trust agreement and is the person or entity to take over when the initial trustee is no longer able to serve. The trust agreement usually has specific requirements that the successor trustee must satisfy before assuming the trustee role. Beneficiary — A beneficiary is the person for whose benefit the trust is established. In first-party SNTs, the beneficiary must be a person who is classified as disabled by the Social Security Administration (SSA). In some states, the beneficiary of a third-party special needs trust must also be a person with a disability. Remainder beneficiary — When the trust ends (usually upon the beneficiary's death), the remainder beneficiaries are the individuals who will receive any remaining trust assets. In first-party SNTs, the state's Medicaid division is typically the first remainder beneficiary (note that in some states, Medicaid is not considered a beneficiary but rather a creditor). After Medicaid is reimbursed for the services it provided to the beneficiary, if trust assets still remain, they usually pass to the beneficiary's estate, or in some cases to persons named as remainder beneficiaries in the trust instrument. In third-party SNTs, the grantor of the trust decides who the remainder beneficiaries are. Medicaid should never be named as a remainder beneficiary of a third-party SNT. Compensation — Unless the trust agreement states otherwise, trustees are usually entitled to compensation for their services. Compensation is usually set forth in state law. If a corporate trustee is serving, it usually receives a fixed amount, based upon the value of the trust estate. All compensation is reportable as taxable income to the trustee. Trust Estate — The trust estate consists of assets placed into the trust and managed by the trustee for the benefit of the beneficiary. It also includes income earned from invested trust assets. Schedule A — Also known as a schedule of assets, Schedule A identifies all of the assets owned by your trust. It is important for the trustee to keep this schedule up to date. Irrevocable — An irrevocable trust is a trust that cannot be revoked or changed. All first-party SNTs must be irrevocable. A third-party SNT can be either irrevocable or revocable. Revocable — A revocable trust is a trust in which the grantor can revoke or change the trust terms at any time. Only third-party SNTs can be revocable. Revocable trusts usually become irrevocable no later than the death of the grantor, if not sooner. Testamentary — A testamentary trust is a trust created under a last will & testament and is not funded until the death of the person who created the will. A testamentary trust can only be a third-party SNT. Inter vivos — "Inter vivos" is a Latin term that means "among the living" or "during life." An inter vivos trust is a trust established during the lifetime of the person creating the trust. All first-party SNTs are inter vivos. An inter vivos third-party SNT can be revocable or irrevocable. Disability — The beneficiary of a first-party SNT must have a disability recognized by section 1614(a)(3) of the Social Security Act. You can visit http://www.ssa.gov/disability/professionals/bluebook/ for a complete list of SSA-recognized disabilities for adults and children. Bond or Surety — At times, a trustee is required to obtain a bond, which provides protection to the beneficiary against the possibility of fraud, negligence or loss of trust assets by the trustee. A bond is similar to an insurance policy in that if the trustee negligently or fraudulently lost trust assets, the bonding company agrees to pay a specified amount of money to reimburse the trust. Frequently when family members are serving as trustee, courts or Medicaid will require the trustee to obtain a bond. Accounting — The accounting is an explanation of the trust activity for a specified time period (usually a year). The accounting is prepared by the trustee, or an accountant or attorney hired by the trustee to prepare the accounting on the trustee's behalf. The accounting can be simple or very detailed. It is important to review the language in the trust agreement to know what the accounting requirements are. For example, in addition to providing the accounting to the beneficiary, the trustee may need to file the accounting with the court, the Social Security Administration or the state Medicaid agency. Special needs trusts are complex. The language used in special needs trusts can vary greatly from one trust agreement to another and from state to state. It is essential for trustees and trust beneficiaries to understand the terms in the written trust agreement. A legal professional experienced in special needs planning can ensure that the trust document will meet the needs of the trust beneficiary, the person who is funding the trust and the trustee who is administering the trust.  "Reprinted with permission of the Special Needs Alliance - www.specialneedsalliance.org."