Sunday, September 26, 2010

9 Mistakes Retirees Make: Advice from a Certified Elder Law Attorney

Retirees often make legal and financial mistakes that cost them or their families thousands of dollars.  Here is a listing of some of the most common financial and estate planning mistakes that I see being made by retirees.

1.  Power of Attorney - Failing to have an effective Power of Attorney document.  Does your Power of Attorney adequately cover the following issues?
a.     Asset Protection provisions - Does the document give your agent the gifting powers you desire for tax or asset protection purposes?
b.     Are there adequate back-up Agents?
c.     Do you have a health care Power of Attorney?  A living will is not enough. It only deals with the treatment you want if you are terminally ill. Who will speak for you if you are not terminally ill but unable to make medical decisions for yourself? Name that person in your health care power of attorney.  

2.  Beneficiary Designations - Failing to periodically review and update the beneficiary designations on:
a.    IRAs and other Retirement Plan Accounts;
b.      Life Insurance Policies.
c.      Annuities
Make sure that not only are the primary beneficiaries correct, but that you have named contingent (secondary) beneficiaries in the event of a primary beneficiary death.  Here is an example. John has two children, Midge and JoAnn. Midge has children of her own, but not JoAnn. If Midge predeceases John, should her ½ of his IRA go to her children or to JoAnn? John needs to document his decision on this important issue on the beneficiary designation form he files.     

3.  Giving Away the Wrong Assets
a.     It is usually a mistake to give away your home - can result in your heirs paying unnecessary taxes.
b.     It may be a mistake to give away appreciated stock or land.
c.     Life insurance is often a good asset to give away.
d.     Misunderstanding the $13,000 (formerly $10,000) annual exclusion for gifts. In additional to annual exclusion gifts, and gifts for tuition and health care, individuals can actually give away $1 million dollars during their lives without having to pay federal gift taxes. Gifts can save lots for your heirs, but you should make them cautiously after getting expert tax and estate planning advice.   


4.   Failing to plan for Long Term Care costs.
     a. Not doing effect planning in advance with appropriate Powers of Attorney, Asset Protection Trusts, and Gifts that can protect assets.
     b. Thinking nothing can be done after a Nursing Home Admission has already taken place. Assets can usually be protected even at this late date. All of a married couples’ assets may be able to be protected though the use of a DRA compliant annuity 
     c. Listening to poor advice (relying on nursing home personnel, friends, or lawyers or other professionals who are not experts in nursing home asset preservation planning). Get advice from a certified elder law attorney. You can find one in your location at http://www.nelf.org/.
     d. Not considering the purchase of long term care insurance when you are healthy enough to qualify.

5.   Confusing Probate with Taxes.
     a. Retirees often do not understand the probate process.  They try too hard to avoid probate. They buy expensive and unnecessary living trusts and annuities with the goal of avoiding probate. They create transfer on death accounts or survivorship accounts that throw off their estate disposition scheme and leave inadequate funds in their estate to pay taxes and expenses.
     b. Believing sales pitches for Living Trusts and trusts to get VA pension benefits. Sometimes a living trust is appropriate planning. But often, it is not. Be especially aware when a non-lawyer is suggesting you pay to have a living trust prepared. Before buying a living trust, read ALiving Trust, Living Hell@ by Professor John P. Huggard.

6.   Tax Saving Bypass Trust.
Married couples with a combined taxable estate of over $1 million should include a tax-saving bypass trust in their estate planning documents. This kind of trust can avoid federal estate taxes for your children while protecting the financial security of your surviving spouse.


7.   Trying Too Hard to Avoid Income Taxes.
     a. Seniors often keep old Series E bonds after their final maturity of cash them in at the wrong time.
     b. Buying tax-deferred annuities; especially when your tax bracket is modest.
     c. Withdrawing too much from retirement plans (e.g. IRAs).

8.   Having only fixed income investments (e.g. CDs).
     a. Too much ordinary income may increase income taxes and Medicare premiums and cause Social Security benefits to be taxed.
     b. May limit eligibility for public benefits
     c. Fails to provide for growth to keep up with inflation.
     d. It is dangerous not to diversify.

9.   Not getting Expert advice and assistance.
     a. Failing to understand that rules and planning may be too complicated for non-experts. For elder law issues, seek the advice of a certified elder law attorney. Retirees in Northcentral and Northeastern Pennsylvania can seek advice from one of the 5 certified elder law attorneys at Marshall Parker & Associates.  
     b. Failing to seek the highest quality advice.  Being Apenny wise and dollar foolish@.
     c. Waiting until a crisis arises to seek the help of an elder law/estate planning specialist.


DISCLAIMER: This general information is not intended, and should not be construed as legal advice. This posting does not create any attorney client relationship. Its author is licensed to practice law in Pennsylvania. He is certified as an elder law attorney (CELA) by the National Elder Law Foundation under authorization by the Pennsylvania Supreme Court. For specific advice about your particular situation, consult a lawyer who is licensed to practice in your jurisdiction.



Saturday, September 25, 2010

Can the Nursing Home Take my Mother’s Home

I recently answered a question on AVVO and thought the answer might be of interest to readers of this blog because it addresses a common misunderstanding. Many people think that the nursing home takes your home if you run out of money to pay for your care. But that is not correct.  Read the question and my answer below.   
The AVVO inquirer said:
“My 50 year old sister is the care-taker of my 87 year old mother. They live together in the home which my mother owns. In the event my mother becomes ill and requires a stay at a nursing home can the nursing home "go after" my mother's house for the costs which exceed her insurance, forcing my sister to move?”
My answer was as follows:
A nursing home can't "go after" a person's home or other assets. The way it works is that when a person goes into a nursing home they have to pay for the cost of their care. Most private insurance (except special long term care insurance) have limited or no nursing home benefits. Medicare has very limited nursing home benefits.

So, your mother would need to find some way to pay for the cost of her care. Most people in nursing homes eventually qualify for assistance from the Government Medicaid program to help pay for the care they need. But Medicaid requires that a person only have limited assets before it will pay for care. This means that a nursing home resident has to "spend down" their available income and assets before Medicaid will pay for their nursing home costs.

However, there are a number of assets that are excluded from spend down under Medicaid rules. One of them is a home of modest value. Medicaid will disregard the nursing home resident's primary residence as long as the home owner (or someone acting on their behalf) says that they intend to return home if that ever becomes possible. This means that, in most cases, a nursing home resident can keep their residence and still qualify for Medicaid to pay the nursing home expenses. The nursing home doesn't (and cannot) take the home.

Note that special rules apply if the Medicaid applicant owns a home that is worth more than $500,000.

So, Medicaid would pay for your mother's nursing home care even though she owns the home, as long as the home isn't worth more than $500,000. It is protected during her lifetime. This likely means that your sister could continue to reside in the home during your mother's lifetime. However, there is a program called Medicaid Estate Recovery that could put the home in jeopardy after your mother's death, to the extent she received Medicaid benefits during life.

Your mother and sister may be able to avoid Medicaid Estate recovery in several ways. For example, since your sister has been caring for your mother, she may qualify as a "caregiver child." If she does, your mother could transfer an interest in the home to your sister that would protect the home no matter what happens to your mother.

The rules are complex but a qualified elder law attorney in the state where your mother resides should be able to advise your mother and sister of the options that are available. They can find a list of certified elder law attorneys in their area at
www.nelf.org. The Medicaid rules vary somewhat depending on the state, and your family really should get some expert guidance as soon as possible.

Thursday, September 23, 2010

How to find competent legal help for Senior issues

Older persons face many complicated legal issues.  Planning for possible incapacity and long term care can be particularly complex and requires expert legal help.  But it is difficult for the consumer to be able to identify lawyers who have the training and experience required to provide the expert guidance needed.      
Planning for senior issues like incapacity and long term care is an important aspect of the services provided by what have become known as “elder law attorneys.”   Unfortunately, in most states any lawyer can say he or she practices elder law or hold themselves out as being an Aelder law attorney@ even if the lawyer has little or no experience with senior issues. This means seniors must be particularly cautious in choosing a lawyer and carefully investigate the lawyer before hiring.  This article contains some tips you can use to find a lawyer who can provide seniors with high quality legal services.   
A Certified Elder Law Attorney (CELA) is a lawyer who has met the rigorous standards for certification in the field of elder law set by the National Elder Law Foundation (NELF).  In Pennsylvania, where I practice, the Supreme Court has approved the NELF certification process and permits lawyer who have been certified by the Foundation to state that they are certified elder law attorneys.  

Lawyers who have not met these rigorous standards are not permitted to refer to themselves as CELAs. This means that the CELA professional designation provides a measure of assurance that the lawyer has an in-depth working knowledge of the legal issues that impact the elderly, including long term care.  This is somewhat akin to Board Certification for Physicians. 
There are CELAs located in most areas of the country. A listing of those attorneys can be found on the NELF website at www.nelf.org.  But some geographic areas are unrepresented. There are presently only 35 CELAs in Pennsylvania.
What can you do to find qualified elder law help if there no CELAs in your community? How can you find lawyers who have the knowledge and experience required?
You may want to start by seeking recommendations from friends who have received professional help with senior planning issues.  Who did they use?  Were they satisfied with the services they received?  Hospital social workers, Alzheimer and other support groups, accountants and other financial professionals can also be good sources of recommendations. 
To have an issue addressed properly, the senior planning client needs a lawyer who devotes a substantial part of his or her practice to issue of concern.  Experience is a critical platform for quality services in most professional areas, especially law. So, If your family member needs long term care planning, you shouldn’t hesitate to ask the lawyer what percentage of his practice involves long term care planning.  Or, you could ask how many new long term care planning cases the law office handles each month.  There is no correct answer.  But there is a good chance that a law office that assists with two nursing home placements a week is likely to be more up to date and knowledgeable than an office that helps with two placements a year. 
Ask whether the lawyer is a member of any Elder Law planning organizations.  Is the lawyer involved with committees of state bar organizations that have to do with senior issues?  If so, has the lawyer held a position of leadership or authority on the committee?   Does the lawyer lecture on the issue of concern?  If so, to whom?  (For example, if the lawyer is asked to teach other lawyers about elder law and long term care planning, that is a pretty good sign that the lawyer is considered to be an expert in those areas by people who should know.)  If the lawyer lectures to the public, you or a family member might try to attend one of the presentations. This should help you decide if this is the lawyer for you.
The leading national organization of elder law attorneys is the National Academy of Elder Law Attorneys (NAELA).  Its website, www.naela.org contains a listing of its members.  NAELA has thousands of members and there is a good chance that there will be one or more members of NAELA in your geographic region.  While mere membership in the Academy is open to any lawyer and provides no assurance that the attorney is an experienced elder law practitioner, membership does at least show that the lawyer has some interest in the field. 
In addition, NAELA (and many state bar associations) run educational sessions to help lawyers stay current on the latest aspects of elder law and issues like long term care planning.  Attending these sessions takes time and commitment on the part of the lawyer and is a good sign that the lawyer is attempting to stay up to date on nursing home issues. You may want to look for an attorney who is a member of NAELA of your state bar Elder Law Committee or Section and has recently attended one or more of its educational sessions.  If the attorney has been a speaker at one of the NAELA or State Bar sessions, that is an even better sign of recognized competency in the field. 
Finally, the internet has become an incredible resource for finding just about anything you need.  This includes an elder law attorney. By now most lawyers have websites.  Do a search on “elder law” and your city and you are likely to find quite a few lawyers show up in the listing. You can then check out the lawyer’s website.  Many lawyer websites are just glossy advertisements written by marketing firms, but some have content actually written by the lawyer. At the very least, you can read the lawyer bio page to get some useful information.

There are quite a few lawyer rating sites available on the internet.  These include AVVO, Super Lawyers, Best Lawyers in America, and Martindale Hubbell.  The internet is filled with ratings, of course. Google assigns a PageRank score to every Web site it indexes, CNET rates software, Amazon rates books, Standard & Poor's rates stocks and bonds, etc. But rating lawyers is tricky and subjective, and information can be stale. I once represented the family of a lawyer who had suffered for many years from Alzheimer’s. 7 years after he retired from practice he still was being given the top rating possible by Martindale Hubbell.  I checked his ratings again, 3 years after his death – he still had an “A” rating from Martindale.  
So, while online lawyer ratings services can provide some useful information (for example, AVVO tells you whether a lawyer has ever been disciplined for misconduct), they should be viewed with a measure of caution.
Bottom line: When you need legal help with a senior issue, it is critically important that you find a qualified lawyer who is experienced in dealing with the particular issue of concern. Be smart and don’t fall into the trap of thinking that all lawyers are equally knowledgeable about your issue.  They are not. Do some homework before choosing your attorney.
Lawyers love Latin terms and there is one that you should remember as you search for an elder law attorney - “Caveat Emptor” – which means “Buyer Beware.”      

Wednesday, September 22, 2010

Critical issues in Long Term Care revealed in Fact Sheets

Elder law differs from traditional estate planning in the depth and intensity of the attorney’s involvement in issues related to long-term care. Most certified elder law attorneys spend a lot of their time helping families plan for and deal with the need for long term care. 

Long-term care refers to the assistance that people need when a chronic condition or a disabling physical or mental illness limits their ability to accomplish basic tasks of everyday life, such as eating, bathing, dressing, toileting, and transferring. These basic tasks are commonly referred to as “ADLs” for “activities of daily living.” Long-term care also involves assistance with other activities such as help with household chores, shopping, money management, medication management, and transportation.

Long-term care services are not usually intended to cure the condition or illness, but rather to allow an individual to attain and maintain a high level of functioning and quality of life.

Over 12 million individuals nationwide need help with long-term care. An estimated 746,000 Pennsylvania residents need long-term care.


Long-term care is of particular concern to seniors. Two-thirds of the recipients of long-term care are over the age of 65. At age 65 Americans have a 60-70% chance of needing long-term care at some point in their remaining lives. And the older they become, the greater the risk they will need long-term care.

The Scan Foundation has just released a number of “fact sheets” about long term care in America that should be of interest to anyone who has an interest in this subject. Entitled “Six National Fact Sheets Highlight Critical Issues on Long-Term Care” the fact sheets cover
The information is fascinating. For example, the fact sheet on “Who Needs and Uses Lon-Term Care reveals that:
 Over 12 million Americans need longterm care to assist them in daily activities; 58% of these individuals are age 65 or older.
Roughly 70 percent of those turning age 65 will have longterm care needs at some point in their lives.
 Adults age 65 are estimated to need an average of 3 years of longterm care. Twenty percent are projected to need longterm care for five years or more and 5% are projected to spend more than five years in a nursing facility.
 The rate of need for longterm care services is four times higher among adults, age 85 and older, compared to adults age 65 to 84.
 Nationally, almost 82% who are in institutional settings (e.g., nursing homes) are age 65 and older the proportion of individuals who are in institutional settings increases with age.
 The median age for individuals receiving longterm care in institutional setting is 82 years.
 About 67% of individuals receiving care in institutional setting are women.
Over 60% of those living in the community and have a need for longterm care services are 65 and older.
69% of home care users are 65 and older and 16% are 85 and older.
 Among older adults in 2007, 41 percent had at least one disability; 11 percent had a cognitive disability in addition to another type of disability.
More than half of older adults have more than one chronic condition and 11 million live with 5 or more chronic conditions.
Almost 20 percent of older Americans suffer from a mental illness.
An estimated 5.1 million Americans age 65 and older have Alzheimer’s Disease.

Those concerned with planning for long term care may also want to review the resources on the Marshall, Parker & Associates website which is loaded with helpful information. One of the most visited pages on the website is The Pennsylvania Nursing Home Guide which guides the reader through  How to Find the Right Nursing Home… How to Get Good Care There… And How to Pay for it.

Another website of note for Pennsylvania residents with children or other family members who need long term care is http://www.paspecialneedslaw.net. It is filled with great planning information.

Tuesday, September 21, 2010

Making Good Health Care Decisions: What is a “Pink Card” and Should You Have One?

 Imagine that you have been injured in an accident and are unable to make important medical decisions for yourself. Who should make those decisions for you? How will the Doctor and Hospital know who is authorized to speak on your behalf? The law allows you to name your spokesperson, but most people have never made that vital choice. 

In 2006, a Williamsport Pennsylvania  physician, Dr. Alexander Nesbitt, set out to make his community different.   

The first step was to develop procedures to make sure that health providers were effectively communicating patient wishes between themselves. The result was the adoption of a POLST Form (Physician Order for Life Sustaining Treatment) by local hospitals and nursing facilities.

Melissa Bottorf and I of Marshall, Parker & Associates got involved with Dr. Nesbitt's efforts at this point. Under the guidance of Dr. Nesbitt, and with the help of Roseanne Pelleschi, Cathy Stopper, and a number of other local leaders, a county-wide task force was created to come up with ways to ensure that local residents receive the care they want when they are not able to speak for themselves. 
 
It was only natural for the task force to move on from health professionals and POLST documents to advance directives for all the residents of the community.  The problem was – how to provide an easy and no cost way for adults to designate the person they want to be their health care spokesperson. 

With the help of grant money from the First Community Foundation, The Lycoming United Way, and the Blue Ribbon Foundation, the task force developed the concept of “Pink Cards.”

Pink Cards are a free and easy way for Pennsylvania residents to appoint their health representative. Your Pink Card names the person you have chosen. This person will be authorized to guide your treatment if you ever lose the ability to make decisions. The Pink Card can be carried in your wallet or purse so that your doctor and other health care professionals will know who is in charge and how to contact that person. 

Planning in advance is an important task for all of us, whether young or old, healthy or facing challenges. By carrying a Pink Card, Pennsylvania residents of all ages can now make their choices known about who will guide their health care in the event of an emergency.

You can obtain a free “Pink Card” and explanatory booklet in any one of the following ways:
  1. By calling Linkage Lycoming at 570-323-8555.
  2. By visiting the Linkage Lycoming website: http://www.stepcorp.org/linkage/linkage.htm
  3. Many doctors and other health care professionals in Lycoming County Pennsylvania are making Pink Cards available to their patients.
  4. Pink Cards are available at community events where members of the Task Force are staffing information booths.
Designating your representative is an important first step in ensuring that the right medical decisions will always be made for you.  In addition to distributing Pink Cards, the Northcentral Pennsylvania Advance Care Planning Task Force is also available to help individuals and groups in Lycoming County understand the process of advance care planning. Its goal is to help area residents control their health care by becoming more knowledgeable about options, discussing their views with their family and other caregivers, and documenting their decisions. Contact the Task Force through Linkage Lycoming at 570-323-6555 for more information. 

DISCLAIMER: This general information is not intended, and should not be construed as legal advice. This posting does not create any attorney client relationship. Its author is licensed to practice law in Pennsylvania. For specific advice about your particular situation, consult a lawyer who is licensed to practice in your jurisdiction.

Public Hearing on PA Long Term Care Insurance Legislation

On Thursday, October 7, 2010 there will be a Joint public hearing with the Pennsylvania House Insurance and Aging Committees on House Bill 2538 (Mundy) at 11:00 A.M. at Luzerne County Community College’s Education Conference Center (located at 1333 South Prospect Street, Nanticoke, PA 18643).  House Bill 2538 provides consumer protections for long-term care insurance policyholders in terms of premiums paid and benefits derived.    
  
If enacted HB 2538 would require that long-term care insurance rates be calculated to increase based solely on their duration. The issuance of long-term care insurance based upon ability to purchase the policy or certificate is provided and the purchasing of a non-forfeiture benefit is detailed. Also a definition of "group long-term care insurance" is provided.