Mar 2, 2015

Estate Planning for Childless Couples: Matters of Life, and Death

Search the web for "estate planning" and you'll find a vast number of articles directed at married couples who have children. But what if you are  married and do not? You might think that not having "lineal heirs" would would simplify the estate planning process, but that's not necessarily so. 

Whether or not they have children, spouses usually appoint each other as health care agent and power of attorney. But in the absence of adult children, who will serve as backups? Even if your spouse is alive, incapacity may prevent him/her from being able to make your financial and health care decisions, so backups are always necessary in order to protect yourself from becoming the subject of a court guardianship. 

Designating a backup health care decision-maker and financial decision-maker can be confounding without children in the picture, so much so that on numerous occasions I have reviewed old documents that still name a spouse who has been deceased or incapacitated for many years! So who should the backups be if you have no children? A trusted niece, nephew, cousin or family friend are possibilities. If this is not an option, a lawyer, CPA, a clergy person, or even a geriatric care manager, as long as the person understand the job duties and is willing to act.

Just because there are no children in the picture doesn't mean you don't care where your assets end up after you're gone. To make sure they go where you wish, you need a suitable estate plan. For example, my married clients without children often want to name a niece, nephew, sister or brother from their own side of the family as beneficiary(ies), and that makes an estate plan a must. If you pass away intestate, under Florida law your spouse will get all the probatable assets. Then, if your spouse dies intestate, his side of the family will inherit everything.   

Contact our qualified Florida estate planning attorneys to set up your estate plan. Everyone needs one!

Feb 24, 2015

Management of Bobbi Kristina Brown's affairs - in life and death - turns on whether she was legally married

Another day, another high-profile estate dispute. Another demonstration of why good planning is necessary to protect families from falling into disarray following the disability or death of a loved one. 

This time, the sad incident centers on Bobbi Kristina Brown, the only child of rapper Bobby Brown and his late wife, singer Whitney Houston. Brown was found unconscious January 31 in the bathtub of her Atlanta home. The 21-year-old has been hospitalized since then. Her ventilator was removed last week and she remains unconscious, in a medically induced coma. Her recovery is uncertain. 

At the time she was found, Bobbi Kristina was romantically involved with Nick Gordon, the man her mother took into her home and raised throughout his teens, but never officially adopted. In fact, in January, Bobbi Kristina announced that she and Gordon had been married. Brown's father denies they were legally wed, though. If he is right and they were not married, in the apparent absence of any written advance directives from Kristina, that leaves her father, her closest living relative, in charge of decisions about her medical treatment and continuing life support. He and Gordon have not been on good terms and to date he has not permitted Gordon to visit his daughter in the hospital. No marriage also means that if she passes away, her father is on track to inherit the $20 million his daughter is to inherit from her late mother. For his part, Gordon has accused Brown of managing the entire sad affair so he can get his hands on his daughter's fortune.

Stay tuned. There will surely be much, much more, and it does not look like it will be pleasant.

Most of us come from homes and families far less complicated, and far less wealthy, than Brown's. Even so, even the strongest of relationships can be tested when there is competition for an inheritance or differing opinions about who makes the decisions for an incapacitated loved one. Learn more about making plans to avoid these disputes in your own family with advance directives, and Florida estate planning.

Feb 19, 2015

Personal service contracts needed for paid family caregivers so that Medicaid eligibility not jeopardized

A recent article in US News and World Report, Five Ways to Ease the Financial Strain of Caregiving, notes that 43 million Americans provide some form of caregiving  to a person over age 50. The challenges that accompany caregiving are not limited to the emotional and physical; they are often financial, too.  For example, a child may be forced to trim work hours to attend to a parent, or leave the workforce entirely. The reduced income can impact a caregiver's immediate finances, as well as his/her ability to save for retirement. 

It is no surprise, then, that increasing numbers of parents are actually paying their adult children for help. Payment can help cushion a child's financial losses. However, in order to avoid jeopardizing the parent's future eligibility for Medicaid benefits for long-term care, payments must be well documented through a formal personal services agreement. A personal services contract must be structured carefully, conform to Florida Medicaid law, and have complete integrity. The caregiver must actually furnish the specified number of hours and scope of help as required by the contract. The caregiver must declare the income on his income tax return. Self-employment tax must also be paid. 

The recent case of Widley David v. Louisiana Department of Health and Hospitals is instructive. Widley David was unmarried and had no children. He entered a nursing home in 2008. For the following three years his nephew and his nephew's wife provided him with substantial assistance, driving him to doctor's appointments, visiting daily, paying his bills, and purchasing food, clothing and other items for him. The assistance was so extensive that the nephew quit his job to better attend to his uncle's needs. To compensate him, Mr. David wrote six checks to his nephew over the three-year period, for a total of $49,100.  However, no formal personal services agreement was ever established.

When Mr. Widley applied for Medicaid benefits in 2010, Medicaid deemed the payments to the nephew to be gifts, i.e., transfers for less than fair market value. The case went to court and eventually, Medicaid prevailed. A penalty period of fourteen months was imposed on Mr. Widley, during which time he was ineligible for benefits.

Would-be caregivers should also consider how their own Social Security benefits may be impacted if they receive payment for their assistance. For instance, I was consulted last year by a 51-year-old woman and her elderly father, who asked me about drawing up a personal services contract. They were surprised when I advised them that her Social Security Disability income would be lost if her father paid her. More recently, I spoke with a 62-year-old woman who was contemplating retiring from her job to care full-time for her frail mother. She thought it would be the perfect answer for both of them - until I pointed out that for  every two dollars over $15,720 (the 2015 cap) she would earn from caring for her mother, she would lose $1 in Social Security income. (If you have attained full retirement age, there is no limit on your earnings, however.)
Paying a relative for caregiving can ease the financial burden on the caregiver as well as provide the best possible care for a loved one. However, these arrangements always require careful planning and a thorough consideration of all the ramifications. Contact our law office for assistance

Feb 12, 2015

Do you need to give your doctors your Social Security number?

Anthem, the nation's second largest health insurance company, was recently hacked. Cyber-thiefs got away with millions of Social Security numbers, employment information and other personal data. Anthem is the umbrella for insurers including Blue Cross/Blue Shield, Amerigroup and Healthlink. 

Every day, with every new corporate data breach, there is more reason to be genuinely concerned about the integrity of our personal data. Most troubling of all is the theft of Social Security numbers, for they are truly the "key to the kingdom" for anyone who wants to steal your identity.

How ironic, then, that doctors' offices and other health care providers still routinely ask patients to supply their Social Security numbers. HIPAA (the Health Information Portability and Accountability Act) sets forth protocols that providers must follow to protect patient privacy, and most offices adhere zealously to those rules. In fact, I always include a HIPAA waiver in certain documents because without it, an individual's authorized agents can hit a brick wall if they need to get the client's medical information from health care providers.

Why then do so many doctors and other providers still ask for your Social Security number? According to a recent article in Consumer Reports, there's no logical reason. Consumers advises that you don't give it out. If your health care provider pressures you to do so, politely inform the office that you will do so only if there is a compelling legal reason it is needed.

Of course, if you are a Medicare recipient, you don't have that option, since your Medicare number IS your Social Security number. Your health insurer, too, has a right to the number, since it must be reported to the federal government in order to combat fraud and duplicate payments.

Let's hope that as the months and years roll on, security controls start keeping pace with our ever-expanding technologies. Until then, you cannot be too careful. 

Feb 11, 2015

ABLE Act allows people with disabilities to save and still keep government benefits

The recently passed ABLE Act ("Achieving a Better Life Experience") amends section 529 of the IRS code, allowing people with disabilities to save for the future and remain eligible for means-tested federal benefits. Prior to passage, special needs individuals who accumulated over $2,000 in assets would lost vital benefits such as Medicaid and SSI. Under the new ABLE act, these people will no longer be forced to keep themselves effectively impoverished.

The law allows for the establishment of tax-advantaged savings accounts for the benefit of a disabled individual. The funds in an ABLE account, just like the funds in a Special Needs Trust, may be used only for those services and items not provided by the government, for example, special therapies, housing, transportation, job training, assissive technologies, etc. Any number of people may contribute to the account, but a disabled individual may have only one such account. The accounts do have certain limitations, though:
  • Any amount in excess of $100,000 in the account may cause a reduction in government benefits.
  • No more than $14,000 may be deposited into the account annually.
  • The beneficiary's disability must have developed before the beneficiary reached the age of 26.
  • Upon the death of the beneficiary, the funds in the account must be used to repay Medicaid.

Given its limitations, the ABLE account can serve as an adjunct to, rather than a substitute, for a special needs trust or pooled trust

The accounts will become available when each state works out its administrative apparatus to comply with the new law.

Feb 6, 2015

Watch out for IRS scams

Tax filing season brings with it a spike in scams designed to steal personal information from taxpayers. As these scams become increasingly sophisticated, so must you! The bad guys are out for your identity and your money.

One scam involves sending a taxpayer a "phishing" email that seems authentic. The email states either that you owe money, or are entitled to a refund and may direct you to an "IRS" website that looks very much like the real thing. But remember, the IRS will not contact you by email, phone text or social media. If you receive an email that purports to be from the IRS, don't open it. Don't click on any links or attachments. Don't provide any information. Instead, alert the IRS by forwarding the message to:
Phone fraud is another potential problem. In fact, fake IRS phone calls top the list of the agency's "Dirty Dozen" tax scams for 2015. The caller will claim to be from the IRS, and the caller ID information may lead you to believe he's telling the truth. The caller often demands money or will leave an "urgent" message requesting that you return the call. Don't call back, and provide no personal information. Report the call to the Treasury Inspector General for Tax Administration at 800-366-4484 or at its website.

For more information on how to protect your personal information from tax scams, click here

Feb 4, 2015

Robin Williams' family tangles over his estate

Millions of dollars. Many marriages. Several children from those marriages. Mix in a dash of estate plan ambiguity, stir well and voila: The perfect recipe for an estate battle. It occurs in middle class families after the death of a loved one. But when it happens in the family of the rich and famous, headlines ensue. And that is just what is happening now in the family of the late Robin Williams.

The comedic genius and award-winning actor died by his own hand in August 2014. Family members are now butting heads over his assets, and in the process making public the details of his trust that otherwise would have remained private.

Williams is survived by three children from two prior marriages, and his third wife, Susan Schneider Williams, whom he married in 2011. She reportedly signed a prenuptial, but its provisions are unknown. Williams' will refers to a trust he set up that gives his three children the bulk of his estate, including most of his personal effects and memorabilia from his long entertainment career. Those items include bicycles, fossils, jewelry, photos, sports memorabilia, graphic novels, action figures, statuettes for his Oscar, Golden Globe and Emmy wins, and his famous "Mork and Mindy" suspenders. The trust also calls for his widow to continue to reside in the Tiburon, California home they shared. The actor owned a second, larger home in Napa, California, which is to go to the children. 

In December Schneider-Williams petitioned the court, asking for clarification on just what personal effects and memorabilia she was entitled to. She alleges that the trustee for the children's trust entered her Tiburon home just days after Williams' death and removed many items that were not intended for the children. She contends that since Williams wanted her to continue residing in the home, its contents should pass to her. Only items related to Williams' career in entertainment, and those located in the Napa home, should go to the children, she argues.

The children fired back in January. They claim that Schneider-Williams is acting against their father's wishes "by challenging the plans he so carefully made for his estate,” and attempting to "prevent them from receiving what their father wanted them to receive." The children contend that their father placed no geographical restrictions on the personal items he wanted to pass to them.

The two sides also differ on how to identify the items that are specifically related to Williams' career. While the suspenders that were part of his "Mork and Mindy" costume are indisputably related to his career, what about his collection of action figures and other toys? Did those items spark his imagination and contribute to his success as a performer - and might it be reasonably argued that they are related to his career? 

We do not know how the conflict will be resolved, or when. My guess is that we will hear much more about it in the months, and possibly even the years to come. The conflict serves as a valuable reminder that your estate planning documents must express your intentions with unassailable precision. Ambiguity may be tolerable when you can clarify yourself, but it has no place in your estate plan, which must speak for you when you are gone. Any provision that is open to interpretation might just be the match that ignites a family feud.

Feb 3, 2015

Florida digital assets law: update

I discussed estate planning for digital assets in November 2014, noting the obstacles fiduciaries often confront when trying to access a disabled or deceased person's digital assets. Because of  federal privacy laws and a hodgepodge of digital companies' own terms of service, getting access to such assets can be frustrating, and often, futile. 

Digital assets include on-line bank accounts and brokerage accounts, Ebay stores, domain names, etc. They also include accounts that may not have actual monetary value, such as an online photo book or email account. An American Bar Association article on this issue published this month notes that 168 million emails are sent, 695,000 Facebook status updates are posted, 100 people join LinkedIn, 320 new Twitter accounts are created, 600 digital videos are added to YouTube, and 6,600 photos are added to Flickr - every second.

The gap between today's digital reality and today's laws are clearly demonstrated by Bill and Kristi Anderson's experience, which I mentioned in my November post. Their son Jake, a Minnesota college student, was found dead of hypothermia after leaving a party in 2013. His parents, trying desperately to understand the circumstances of their son's death, have been trying since that time to access his phone records. They have had no success, even though his phone was in their name. The Andersons recently appeared before Minnesota lawmakers to argue their case. You can read their story here. 

In our state, the Florida Bar Real Property, Probate and Trust Law Section is currently taking steps to make Florida the first state to adopt the most recent version of the National Uniform Fiduciary Access to Digital Assets Act. Adopting the act would give fiduciaries in Florida the same access to digital assets as they have to physical assets. J. Eric Virgil, the head of the Digital Assets committee, calls the current situation "chaos," adding, “We’re not changing any property laws at all, only giving access to fiduciaries. We’re not trying to do anything to how people own their digital assets, just how people access those digital assets.” You can read more about the proposed legislation here.

In the meantime, the best you can do is make a list of your digital assets, logins and passwords, put it in a safe place, and let your trustee, personal representative and/or agent under your durable power of attorney know where it is. Keep checking this blog for updates on the progress of the proposed legislation.  

Feb 2, 2015

ALERT: Criminal penalties for non-lawyers engaging in Medicaid planning -- and maybe, for those who hire them!

The Florida Supreme Court on January 15, 2015 ruled that a non-lawyer is guilty of the unlicensed practice of law if the individual engages in Medicaid planning activities for clients leading up to the application. These activities may include: 
  • Giving legal advice regarding the implementation of Florida law to obtain Medicaid benefits.
  • Drafting personal services contracts.
  • Preparing and executing qualified income trusts 
    You can read the Supreme Court's advisory opinion here.  

Many non-lawyers who claim to do Medicaid planning purport to have a relationship with lawyers who prepare the necessary paperwork. But according to the Supreme Court ruling, they are still guilty of the unlicensed practice of law, unless the client separately retains and pays an attorney. 

At this writing, the Supreme Court has yet to issue its final writing. However, the public should be wary. The unlicensed practice of law is a felony, punishable by five years in prison. Moreover, the person who make a referral to a non-lawyer - as well as the person who hires a non-lawyer - may be considered to be aiding and abetting the crime, and therefore may be subject to criminal penalties him/herself. 

The Supreme Court took up this matter because of the many Floridians victimized by those who claim to do Medicaid planning but who lack the required credentials. In some cases, the planning process failed and the families ended up paying the nursing home out-of-pocket anyway. Others have been blindsided by income tax liability no one told them they would face. In other cases, clients have even been charged with fraud because of mishandled planning and applications.

Hiring a non-lawyer to handle Medicaid planning, while perhaps less expensive at the front end, can be a costly mistake. Now, it may also be considered a criminal activity.  It is always prudent to seek advice from a Florida Bar Certified Elder Law Attorney. Contact our office for assistance.

Jan 27, 2015

V.A. proposes look-back, penalty periods for aid and attendance benefits

Applicants (or applicants and their spouses) are not eligible for V.A. Aid and Attendance benefits if they have a net worth in excess of $80,000. At present there is no look-back period for asset transfers, as there is for Medicaid benefits, which have a five-year look-back. 
I noted in prior posts that a V.A. look-back period could be on the horizon. My April 2014 post reported the Senate's failure to pass SB 1982, which would have established a three-year look-back. I also warned that the V.A. has the authority to amend its regulations without going through Congress. And that is what is happening now. 
The January 23, 2015 Federal Register includes a proposal by the V.A. to establish, among other regulations, a three-year look-back for transfers, and corresponding penalty periods during which V.A. pension would not be available, even if the veteran qualifies in all other respects. You can read the proposal here. Comments on the proposal are due by March 24, 2015.
Keep checking this blog and my website for updates on this issue. You can also subscribe to my monthly e-newsletter here
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