Thursday, March 28, 2013

Son must pay mother's nursing home bill - Supreme Court will not hear appeal



The Pennsylvania Supreme Court has declined to hear the appeal of a son seeking to avoid personal liability for his mother’s nursing home costs. Lower courts had held John Pittas responsible for his mother’s unpaid nursing home bill of nearly $93,000. The Supreme Court’s action leaves the lower Superior Court ruling in the case (HCRA v.Pittas) as the guiding precedent in Pennsylvania. 

Under Pennsylvania’s support laws children have the responsibility to care for and maintain or financially assist parents who become unable to pay for their care.  (23 Pa. C.S.A. §§ 4601-4606, “Support of the Indigent”). These laws are sometimes referred to as “filial support laws.” Using the statute, nursing homes and other providers of care in Pennsylvania have been successfully suing children for the unpaid costs of the services provided to their parents.

Further details of the specific set of facts in Pittas can be found in my earlier post regarding the case. It is noteworthy that there was no finding that Mr. Pittas was responsible for his mother’s inability to pay her nursing home bill. This was not a case of liability being based on transfers of assets or other planning which enriched the son. 

Many states have some type of law which could be used to hold a child liable for the cost of their parent’s care. But these laws seem to be rarely utilized except in Pennsylvania. Pennsylvania’s law specifically authorizes suits by third parties such as nursing homes and other health care providers.  

Now that the Pittas case is final, there may be some movement on legislative attempts to repeal or otherwise modify the statute. Bills have already been introduced in the Pennsylvania Senate (SB 70) and House (HB 224) to repeal the filial support law. However, both bills were introduced by Democratic legislators in a Legislature controlled by Republicans, and their future is uncertain. 

Holding children liable for the costs of their parents’ care is an undoubtedly controversial approach to dealing with our nation’s long term care financing crisis. It will be interesting to see how the Pennsylvania legislature deals with this issue.  

Professor Katherine Pearson, the pre-eminent expert on filial responsibility laws, will be speaking on the topic at the Marshall, Parker and Weber Professional Update on May 1st and May 2nd. More information on attending this free session is available here.

For More Information on the Pittas Case and Filial Responsibility:

HCRA v.Pittas (2012 Pa. Super 96, May 7, 2012)

 



AARP's list of states with filial support laws

Saturday, March 23, 2013

File and Suspend to help Maximize Social Security Benefits



Are you old enough to be eligible for Social Security retirement benefits, married, and still working? If so, you need to know about the Social Security file and suspend strategy.

You probably know that your Social Security benefits will increase if you postpone taking them. For example, if you are still working after your full retirement age (currently 66) you can delay claiming your Social Security retirement benefit until you are age 70. This can mean a significant increase in the monthly amount you will eventually receive (and the widow’s benefit your spouse may someday get). 


Your monthly benefit will be higher because you acquire delayed retirement credits. You acquire a credit for each month you postpone taking benefits after you reach full retirement age. You can continue to acquire credits until you attain age 70. If you delay taking your benefits until age 70 your monthly check should be 32% higher than if you had started at age 66. 


But what if you are married and your non-working or low earning spouse has also attained full retirement age. For the reasons noted above, you don’t want to start your benefits now. But the problem is that under Social Security rules, the worker spouse has to claim his or her Social Security benefits in order for the non-worker spouse to receive spousal benefits under the worker’s record. 


What can you do? 

File and Suspend:


The answer is to use the “file and suspend” strategy which is authorized under the “Senior Citizens Freedom to Work Act of 2000.” In this way a non-working or low earning spouse can get his or her spousal benefits at full retirement age while the worker continues to postpone until age 70.


Let’s say Jeff’s is already 66 and his wife Marian will reach age 66 in a few months. Marian worked for a few years but then stopped in order to concentrate on raising the couple’s children. Marian never worked the 40 quarters needed for her to qualify for Social Security on her own work record. She would like to claim spousal benefits based on Jeff’s work record. But Marian can only make a claim for spousal benefits after Jeff has applied. 


Here what they need to do:


1st step: Jeff applies for Social Security.

2nd step: Marian applies for her spousal benefit;

3rd step: Jeff applies to suspend his benefit. 


The result is that Marian will start receiving spousal benefits, and Jeff will be able to continue to receive delayed retirement credits until he reaches age 70. In addition, if Jeff dies first, Marian will receive an increased widow’s benefit that includes Jeff’s delayed retirement credits.


Although the above three steps are required, you may be able to accomplish them all during one visit to your local Social Security Office. (Set up an appointment in advance and tell Social Security that you intend to file and suspend).  


The file and suspend strategy can be utilized anytime the working spouse has attained full retirement age and the low earner spouse is over age 62. But it is critical that the low earner spouse claim their benefits no later than at full retirement age - because there is no increase in the spousal benefit after the full retirement age the spouse.


Contact Social Security three months before the date you want spousal benefits to start in order to get the application ball rolling.   


Social Security is complicated. It is wise to seek professional advice about your Social Security benefits as you approach eligibility age. Your elder law attorney or CPA may be able to help. You can also get information by calling the Social Security Administration at 1-800-772-1213 or at its website, www.socialsecurity.gov

Don’t be discouraged if the first person you talk with at Social Security is unfamiliar with the file and suspend procedures. Be persistent in order to get the benefits to which you are entitled.  
  

Further Reading:






Social Security for Two (Journal of Accountancy)


Tuesday, March 19, 2013

Good Advice on Medicaid and Nursing Homes from Chicago Tribune



Sometimes newspaper advice columnists do give good advice. But good advice is particularly hard to come by when the subject is Medicaid and nursing homes.  So, I was pleased to read the following in a column in the Chicago Tribune of March 18th, written by Jackie Glass. Glass is a lawyer and former district court judge from Las Vegas, Nevada.

Dear Jackie,

I've just gotten my husband approved for Medicaid. He has Alzheimer's, and I need some help with him. I've been told that if my husband predeceases me, Medicaid will come to me for reimbursement of funds that they have spent for him. Is that true? I've been advised that, because of that, I should change my house deed to my children's names so it won't be in jeopardy. Do you have any advice about this situation? -- Marian from Hampton, Va.

Hi, Marian,

You are smart to check into this because there are things you might do to destroy your husband's Medicaid eligibility. There are ways to split assets and get some protection. This is a tricky field and only someone who specializes in Elder law should be advising you. Do not take advice from anyone else but an experienced Elder law attorney. Here is the link to the website for the Virginia Academy of Elder Law Attorneys: http://www.vaela.org. Go to the website, and click on the "For the General Public" tab. This is a nonprofit organization, and their purpose is to educate their members and others about issues just like yours.

Here’s a link to the Chicago Tribune column: http://tinyurl.com/d8tlk93

Judge Glass’s response is right on the mark. She clearly understands that Medicaid rules vary from state to state. When your spouse or parent is in a nursing home, you need to get expert advice from “someone who specializes in Elder law” in your state.
 

When you need advice about paying the cost of long-term care and Medicaid, it is so important that you speak with an experienced elder law attorney. To find one, you can check out the website of the elder law attorney association that exists in your state. In Pennsylvania, it’s the Pennsylvania Association of Elder Law Attorney at www.paela.info. Give special attention to the lawyers with “CELA” after their names. They have been certified to be experts in the field of elder law.

To find a certified elder law attorney in your geographic area, you can also check out the website of the National Elder Law Foundation which lists all the CELAs in the United States by location.

Saturday, March 16, 2013

Finding lost life insurance benefits and other unclaimed property



Recently, Consumer Reports published an article on “Finding Lost Life-Insurance Policies.” (Consumer Reports, February 2013). The article noted that at least “$1 billion dollars in benefits from misplaced or forgotten life-insurance policies are waiting to be claimed by their owners.” That may not be a lot of money to the Government. But it sure is to ordinary people.

Until recently, most major insurance companies were not trying very hard to locate the beneficiaries of life insurance policies. When an insured dies, companies require policy beneficiaries to file a claim for benefits. (The attorney handling the estate can help you with this). 

But claims may never be filed, especially if the policy was lost or if the beneficiary doesn’t know that a policy exists. Insurance companies have no incentive to find beneficiaries. In some cases, insurance companies will just use the cash value in a policy to continue paying the premiums until the cash is gone and the policy is cancelled.  

Fortunately for consumers, state insurance regulators began looking into the practices of large life insurers. With strong leadership from Pennsylvania, a task force of the National Association of Insurance Commissioners started pressuring insurers to become more proactive in getting policy proceeds to the rightful owner.   

Major Insurance companies like AIG, Nationwide, Prudential and Met Life have now reached settlements with states including Pennsylvania in which the companies have “agreed to step up their business practices by implementing more robust searches to locate life insurance beneficiaries." (See Pennsylvania Insurance Department Press Release of October 22, 2012.)

But, life insurance is only one small part of the lost wealth waiting to be claimed by owners. One in eight people in the United States are owed money according to the National Association of Unclaimed Property Administrators (NAUPA). According to NAUPA, $41.7 billion is waiting to be returned by state unclaimed property programs. (The NAUPA website has links you can use to learn if money if some of those funds are yours.) 

And the figure rises to $58 billion when you include funds being held by the federal government and other organizations.

So, it may be worth checking to see if any of that unclaimed property belongs to you. Last year, a Connecticut resident claimed $32.8 million according to CNN.

Here are a couple of tips about lost insurance policies and other unclaimed property.

  • If you are the insured, let your beneficiaries know about any life insurance policies on your life. Be sure to keep a copy of the life insurance policy where it can be found by your heirs. Give life insurance related information, either a copy of the policy or the name of the company, the policy number and the policy value to your elder law and estate planning attorney.  And make sure your beneficiaries designations are up to date.


  • Go to www.missingmoney.com (the website of NAUPA) for links to search the unclaimed property records for many states in a combined database.

  • Don’t fall for scams. Con artists will call consumers and offer to help them obtain unclaimed property in return for an upfront fee.  There are legitimate companies that will help reunite you and your money for a percentage of the amount you receive, but they don’t charge an upfront fee. In any event, you may be able to find the life insurance policy or other unclaimed property yourself through the NAUPA and/or your state government website.   

Further Information
Making Sure Beneficiaries Get Life Insurance Money, New York Times, October 25, 2012.

Tips for finding missing policies, The American Council of Life Insurers.

$58 billion unclaimed: Is some of it yours? CNN Money, January 27, 2013.

Thursday, March 14, 2013

Do you have a Comprehensive Estate Plan?


Many people think legal estate planning is about dying.  But these days it may be more about living. Those of us who are over 50 should be putting a legal plan together for what may be our extended life span.   

In 1900 most people died young rather than during old age. The average life expectancy in the US was only 46 years. The leading cause of death was influenza and pneumonia. Early and sudden deaths from accidents, infections, and childbirth meant that few people would live long enough to develop Alzheimer’s. 

Today the average life expectancy at birth is 79 years.  If you have reached age 65, you can expect to live beyond age 84. Given the astonishing developments in medical and scientific technology it is to be expected that life expectancy will expand even more over the next decade. 

The reality is that we are all more likely than not to live into old age. Isn’t it sensible to plan to be old? Doesn’t it make sense to do what we can to protect ourselves and our families from the legal and financial burdens that may accompany our aging? That is the goal of comprehensive estate planning.

Traditional estate planning is focused on what happens to the things we own after you die. It helps ensure that the right people get the right things at the right time with a minimum of expense and dispute. It’s important. But given our prospects for long life, we also need to plan for our extended life. 

Lifetime planning focuses on protecting and preserving the things we own and preserving our autonomy during our lifetime. “Comprehensive estate planning” combines estate and lifetime planning. It is the form of legal planning needed by people who are over age 50 to protect themselves and the people they love.     

Comprehensive estate planning allows you to:
∙         ensure that your values will be respected and your intentions followed in the event  of your illness;

∙         permit your trusted family members to manage finances and have access to needed health information if you are incapacitated;

∙         protect your family from the cost of your health care and long-term care expenses;

∙         provide for family members with special needs such as a disability;

∙         avoid family disputes;

∙         protect and provide for your family after you are gone.    
                             
Creating a Comprehensive Estate Plan

Comprehensive planning starts by planning for the remainder of your life. You need to create a life plan that will protect your lifestyle and financial security and help you attain your goals during the rest of your lifetime.

Especially important is planning for the possibility of your incapacity.  Who should be authorized to step in and manage your finances if needed?  Who should have access to your personal medical information?  What financial and medical decisions should they be authorized to make?   

What if you need long-term care?  What can you do to make sure you are able to stay at home rather than in a nursing facility?  What if you need care in an assisted living facility or nursing home?  Nursing home costs are staggering - now over $97,000 a year in Pennsylvania for a semi-private room, with an average stay of 2 ½ years. This can quickly destroy your family's financial security. With advance planning you can protect your family from this risk. 

If you are married, a comprehensive estate plan will help ensure that your spouse will be able to live his or her remaining years with dignity and financial security. At your death, it can preserve an inheritance to pass along to your family in a manner that will not be squandered because of inexperience, illness, or a marriage gone bad. 

Created with the help of your elder law lawyer, a comprehensive estate plan will allow your assets to be best utilized for your benefit during your life and then ultimately protected and preserved for the benefit of your intended beneficiaries. 

Implementing Your Plan

Once you have devised your plan, it needs to be implemented.  Implementation usually involves a number of legal, financial, and health care documents, such as the following:

 ∙           Power of Attorney
For most people there is no legal document that has the potential to become as important in their lives as a power of attorney.  In the event of your incapacity, a power of attorney can help ensure that the desired decisions will be made for you by the people you choose. 

A well-drafted power of attorney will increase the likelihood that your values will always be respected and that you and your family will be protected from your health care costs. 

A power of attorney can be the key that opens the door to effective asset protection planning and the preservation of your family's financial security. The document, however, must be carefully crafted in order to authorize this type of planning. The absence of appropriate authorizations in a power of attorney can seriously jeopardize your family's financial security. And a poorly drafted power of attorney can be a license to steal.

 ∙           Health Care Directives and Authorizations
The health care power of attorney and the living will are documents that give you some measure of control over the medical treatment you will receive if you ever become incompetent.  The health care power of attorney is more flexible because it is not limited to just terminal illness situations.  Federal privacy laws can deny your family access to your health information and participation in your care.  You need to authorize the right family members to have access to your information and provide them with the authority to serve as advocates and decision makers for you.  

 ∙           Asset Protection Documents
In addition to an asset protection power of attorney, specialized deeds, trusts, and other agreements may help protect your assets in the event that you (or your spouse) should ever require long term care either at home or in a nursing facility.   

 ∙           Last Will and Testament
In this document, you can give important instructions regarding how your property should be distributed after your death, authorize protection and care for your children and other loved ones, and much more. Your will helps assure that your assets will be distributed to the persons you want in the right amounts and at the right times. Your will can help reduce or eliminate the taxes that will be levied against your estate, avoid family conflicts, and provide for religious, educational, or other charitable causes. If you have young children, your will is the legal document you use to name a guardian for them.  

∙           Ownership & Beneficiary Designations
At your death, the transfer of some of your property will likely occur without regard to the provisions of your will. Joint accounts, life insurance, annuities, IRAs and other retirement plans, and other assets for which beneficiaries have been named are all distributed without regard to what your will says. You need to create a plan that covers all of your assets.  Comprehensive estate planning requires a coordinated review and update of all of your ownership and beneficiary arrangements.

 ∙           Trusts
Trusts are particularly useful if you have a family member with a disability.  Specialized trusts can be used to hold funds to enhance the beneficiary's life without jeopardizing their eligibility for government benefits.  Individuals and married couples can set up trusts that will protect their assets from the cost of care in the event of a future disability. In addition, trusts can sometimes be used to minimize taxes.

Make sure your estate plan is comprehensive

The benefits of comprehensive estate planning are compelling. In addition to protecting you and your loved ones from whatever the future may hold, and preserving your personal and financial autonomy, a comprehensive plan will provide you with the peace of mind of knowing that you have done what you can to prepare. 

Since the future is so unpredictable, its never too early to get started with your estate planning. Just make sure that the plan you and your lawyer create is comprehensive!