New Rule Modifies Some ACA Protections

Although the United States spends more on healthcare than other high-income countries, it has the lowest life expectancy and highest suicide rate.[1] No doubt, the quest to improve healthcare has been a hot topic in recent years. President Obama, in one of his signature pieces of legislation, signed The Patient Protection and Affordable Care Act (ACA) into law into 2010. This sweeping new law sought to improve the healthcare system. It provided for government subsidies for health insurance, expanded the federal Medicaid program, and instituted protections for certain groups of Americans. This latter change has been in the courts recently, as the current Administration seeks to reverse or limit these protections. Before the ACA was passed, it was perfectly legal for an insurance company to deny someone coverage, charge someone more for insurance coverage, or delay access to care simply because they had a certain characteristic. The ACA put a stop to this practice and mandated that insurance companies could no longer discriminate on the basis of race, color, national origin, sex, age, or disability in health programs that received federal financial assistance. Discrimination against those with limited English proficiency (LEP) was also prohibited. Why did the government feel the need to step in and protect these classes of folks? Racial and ethnic minorities made up 23% of older adults in 2016; this number is expected to rise to 28% by 2030. [2] Research shows that there are differences in the kind and quality of care received by different racial groups.[3] Nearly 3 million folks over age 50 identify as lesbian, gay, bisexual, transgender, queer, plus (LGBTQ+).[4] A recent study found that the rate of suicide amount LGBTQ+ individuals decreased by as much as 50% in states that prohibited gender identity discrimination by private health insurance companies.[5] Patients who have LEP experience higher rates of medical errors, resulting in worse clinical outcomes than those patients who are English proficient. [6] In 2016, the Department of Health and Human Services (HHS) completed a three-year study and issued a final rule that implemented Section 1157 of the ACA. That section prohibited discrimination on the basis of race, color, national origin, sex, age, or disability. Women could not be treated differently than men in the healthcare they received. For disabled folks, the rule ensured that all programs and activities be provided in an accessible format, buildings were physically accessible, and non-discrimination practices were in place. This 2016 rule also clarified the obligations of health care providers with respect to transgender and LEP patients. At the time, HHS proffered “that a fundamental purpose of the ACA is to ensure that health services are available broadly on a nondiscriminatory basis to individuals throughout the country,” and that “[e]qual access for all individuals without discrimination is essential to achieving this goal.” This 2016 rule applied to any health program or activity that received federal funding, any health program that HHS administered, and health insurance companies and marketplaces. Now, the Centers for Medicare & Medicaid Services (CMS) and HHS have issued a new final rule that may undermine some protections for these protected classes under the ACA. Here are a few of the changes, as outlined in the new 2020 final rule: The ACA rule defined discrimination “on the basis of sex” to encompass discrimination on the basis of gender identity. The new 2020 rule removes that assumption and lets states decide whether gender identity is included in the definition of “sex,” in accordance with the plain meaning of federal statutes. In essence, the new rule removes protections for transgender patients. The new 2020 rule also limits whom the ACA non-discrimination provisions apply to. A covered entity must comply with the ACA and new rule. However, the new rule limits the scope of what entities are considered covered. A covered entity is one that is “principally engaged in the business of providing healthcare.” The new rule confirms that this does not include health insurance companies. This means that private health insurance companies can discriminate against patients and not be in violation of the law. Covered entities must “take reasonable steps to provide meaningful access to each individual with limited English proficiency.” Under the 2016 rule, covered entities must notify patients of certain information, including information regarding the entity’s non-discrimination policies, the entity’s requirement to provide interpreters to those who have LEP, and how to file a complaint that alleged a violation of the law. The new 2020 rule removed these requirements; a covered entity must no longer notify patients with LEP of these things. The new 2020 rule eliminated the requirement that a covered entity with 15 or more employees must have a compliance coordinator and a grievance process to address complaints about violations of the law. Of the new rule, CMS and HHS state that it “will better comply with the mandates of Congress, address legal concerns, relieve billions of dollars in undue regulatory burdens, further substantive compliance, reduce confusion, and clarify the scope of Section 1557 in keeping with pre-existing civil rights statutes and regulations prohibiting discrimination based on race, color, national origin, sex, age, and disability.”[7] The new rule was supposed to become effective on August 18, 2020. However, litigation has ensued. A coalition of LGBTQ+ organizations filed suit a few weeks after the final rule was published.[8] One of the advocates, Lambda Legal, stated “The proposed rule would carve-out LGBTQ people from the Affordable Care Act’s non-discrimination protections, and invite health care workers, doctors, hospitals, and health insurance companies that receive federal funding to refuse to provide or cover health care services critical to the health and wellbeing of LGBTQ people, such as gender-affirming and reproductive care. The proposed rule would also limit the remedies available to people who face health disparities, limit the access to health care for people with Limited English Proficiency (LEP), and dramatically reduce the number of health care entities and insurance subject to the rule.” Interestingly, the Supreme Court of the United States, just a few days prior to the issuance of the new 2020 rule, issued an opinion concluding that Title VII of the Civil Rights Act of 1964 prohibited discrimination against LGBTQ+ employees.[9] The court interpreted “sex” in that statute as encompassing more than just biological sex; it encompassed gender identity. Meaning, transgender employees were covered under Title VII and couldn’t be discriminated against in the workplace. The new rule issued by CMS and HHS seems to run counter to this Supreme Court decision and their analysis of “sex” in federal statutes. Early on, two transgender women filed suit against HHS. The women claimed that they had previously been discriminated against. The District Court for the Eastern District of New York issued a preliminary injunction staying the new rule. This means that the new rule would not become effective, pending the lawsuit. Thereafter, 23 Attorneys General filed another lawsuit. The states and districts listed as plaintiffs in the suit include California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington D.C., and Wisconsin. The Complaint states, “The 2020 Rule also guts the robust language access provisions of the 2016 Rule, including eliminating requirements that covered entities notify LEP individuals of their rights and reducing entities’ obligations to ensure that LEP individuals are afforded appropriate language access services while seeking and obtaining health care.”[10] The State of Washington has also filed a lawsuit to keep the new rule from becoming effective.[11] While the various lawsuits will likely draw on for the foreseeable future, advocates can rest knowing that the new rule may not immediately take effect. Whether one is for or against the new rule, the courts will analyze the law and issue their conclusion. The new rule may stand in its entirety, be struck down and later modified by CMS and HHS, or scrapped altogether. [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] Read More
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The Impact of COVID-19 on…

The Impact of COVID-19 on the Senior Community

The Impact of COVID-19 on… Around the first of the year, the lives of Americans changed forever. A new virus, CODIV-19, began to spread across our country. The virus, part of a worldwide pandemic, spread quickly and silently. Virtually all aspects of life changed – businesses closed down, social distancing became a new norm, and toilet paper and hand sanitizer were suddenly scarce. In this issue of ElderCounselor, we will take a look at how the COVID-19 outbreak has affected the lives of seniors and how we can lessen the impact on our senior community. Susceptibility to Coronavirus Symptoms of the Coronavirus include coughing or shortness of breath and at least two of the following symptoms: fever, sore throat, chills, headache, muscle pain, or loss of taste or smell.[1] Older adults, seniors, and those with underlying medical conditions are at a higher risk of developing more severe complications from COVID-19.[2] Early data showed that seniors over 85 years old have a mortality rate of 10% to 27%; seniors aged 65-85 had a mortality rate of 3% to 11%; and those aged 55-64 had a mortality rate or 1% to 3%.[3] The general public quickly became keenly aware of the senior population’s increased likelihood of more serious complications, should one contract COVID-19. As a result, there were many interruptions for seniors – including interruptions in family and community ties, finances, and legal services. Interruption in Family and Community Ties Well-meaning family members quickly realized that they were putting their beloved seniors at greater risk of contracting COVID-19 by physically visiting with them. No more stopping by to say hello or help out with a task. No more Friday night puzzles, Sunday brunches, or Monday movie night. Visits with family came to a halt. Likewise, other community ties were cut short. Senior centers ceased operations, rec centers closed down, quilting bees quit meeting, and pretty much every other gathering was put on hold. Without family visits and community engagement, seniors were left to stay home. Many seniors live alone, and so the impact of quarantining has left those seniors in total isolation. Seniors who reside in assisted living facilities and nursing homes were suddenly not allowed to have visitors. In fact, the government banned all visitors from such facilities, with exceptions for compassionate care. [4] Also, all group activities and communal dining within nursing homes ended.[5] Residents were stuck in their rooms. For some, technology was a lifesaver – FaceTime and Skype allowed a window to the outside world. For others who could not access technology, isolation became a heavy weight to bear. Humans are social creatures. While alone time is often needed to get our thoughts in order and get our minds centered, no one wants to be completely alone all the time. Social isolation can lead to a compromised immune system, a significantly higher rate of heart disease, and a 50% increased risk of dementia.[6], [7] But social isolation was already a problem before COVID-19. Before the policies of self-quarantining became the norm, about 25% of people over 65 who lived independently were considered previously socially isolated; 43% of those over aged 60 reported feelings of loneliness.[8] Let’s help seniors fight social isolation during quarantine. Here are some tips on how seniors can battle loneliness during the pandemic: Use technology – find classes online, join discussion groups via conference calls, join a virtual gym, or solve puzzles with friends via games and apps. Take advantage of religious or spiritual offerings online. Attend a service, engage in small groups, or join a meditation hour. Have a small family gathering in the front yard while staying at least 6 feet from others. A family member who has tested negative for the virus and maintains a self-quarantine policy can become a designated visitor. For residents in nursing homes, a family member can come to a closed window and talk via telephone. statement Interruption in Financial Health Many seniors have had a major interruption in their financial health. Many businesses have temporarily or permanently closed down, laying off employees. With unemployment rates surging and no certain end in sight, seniors who rely on a steady paycheck to pay their bills have likely felt the economic crunch. In addition, the stock market has been very volatile in recent months due to the economic effects of the pandemic. Seniors who once had a nice retirement fund may now find themselves with a depleted account. While younger folks may have time to wait out the stock market decline and hope for better days, those who need their investments now may see a poorer return on investment and a compromised retirement. In an effort to prop the American economy up, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, 2020. The legislation included: Direct payments: Each individual may be eligible for a direct payment from the federal government, up to $1,200 for each individual plus $500 for each child. Eligibility for the payment depends upon the income levels as reported on either the 2019 or 2020 1040 tax return. Seniors that didn’t file tax returns because their only income was Supplemental Security Income or Veterans benefits and thus didn’t meet the income threshold for filing tax returns, will begin to receive their stimulus checks in early May, if they are eligible. Unemployment benefits: If a senior has lost their job and files for unemployment, they will likely receive an increased amount over the usual state benefit, up to an additional $600 per week for up to four months. Retirement account changes: The Required Minimum Distribution (RDM) rule that says distributions from IRAs and 401k plans must be taken by age 72 has been suspended. Also, there is a new type of hardship withdraw allowed throughout 2020 – a COVID-19-related withdrawal will not be subject to the customary 10% penalty and it may be repaid over a three-year period. The maximum amount withdrawn for this purpose is $100,000 per plan participant. Interruption in Legal Services Some seniors quickly realized the need for legal documents – a will, trust, Healthcare Power of Attorney, or living will. A will informs the court who the senior wants to inherit their property at their death. A trust is similar to a will in that it designates beneficiaries of property upon the senior’s death, but it also holds property during the senior’s life. A Health Care Power of Attorney designates who will make health care decisions for them in the event they are unable to. A living will delineates what the senior’s wishes are regarding certain types of care, such as life support. But with some law offices closed down and the need to stay away from people, how would these seniors get these important documents? In addition, there are requirements that must be fulfilled when executing some documents, such as witness and notary requirements. How could these requirements be fulfilled? For documents that simply need signatures but do not have a notary or witness requirement, besides the obvious snail mail, there was already a technological solution – documents can be signed via electronic means (e-signed). There are two acts that govern e-signing documents: Electronic Signatures in Global and National Commerce Act (ESIGN) Is a federal law: legal in every state or territory where federal law applies 2. Uniform Electronic Transactions Act (UETA) Adopted on a state-by-state basis: has been adopted by all states except Illinois, New York, and Washington Both acts are substantially similar in what constitutes a valid electronic signature. However, UETA requires a disclosure of consent to conduct electronic business. Wills are expressly excluded in both of the above acts from being eligible for e-signing. However, this could be a solution for the execution of other documents, such as admission documents or fee agreements. In response to COVID-19, many states enacted emergency orders, legislation, or rules that would allow for remote witnessing or remote notarization of documents. Some orders authorize one or the other; some authorize both; and some authorized neither. The acts that did authorize one or the other usually modified the presence requirement to allow for the inclusion of those who were present via audio-video technology. For states that did not allow for remote witnessing or remote notarization, attorneys and their senior clients were left with the task of figuring out how to get these important documents in place. One solution was to mail the documents to the senior and have them execute the documents at a 3rd party site that offers notary services – such as a bank or UPS. Another solution was to offer drive-up signings – the senior and any required witnesses would drive to the attorney’s location and the attorney would have a notary ready. All parties would execute the document while the senior could stay in their vehicle. A mobile notary was another solution. The mobile notary and any required witnesses could meet the senior in their front yard. Conclusion The far-reaching effects of CODIV-19 have likely yet to be seen. Seniors in particular are susceptible to the mortality rate of the virus. Because of this, many seniors have been under self- or government-imposed quarantine. For how long will this be the new norm? Will life ever return to the way it was? It is important to help seniors battle social isolation, and to keep the interruptions in their community ties to a minimum. Be creative and figure out how to interact with seniors without putting them at risk of contracting the virus. Also help seniors minimize the interruption to their finances – help them figure out how to get their stimulus check, file for unemployment, or seek help with retirement planning. It is also important for seniors to get their legal documents in order. Everyone needs to detail instructions regarding their health care wishes and who will carry out those health care decisions in the event they are incapacitated. Without these documents in place, a guardianship court proceeding may become necessary. This can be costly and time-consuming, and the court is in control of those decisions, not the senior. And of course, everyone should have a plan in place for their finances upon their death. Who does the senior want to inherit their property? Does the family even know what property the senior owns? Does the senior have any burial instructions? Hopefully the COVID-19 pandemic will soon come to a close with a medical breakthrough or by other means. All that will remain is the lessons that we have learned and the resolve to move forward. Let’s help seniors transition through this difficult time by strengthening family and community ties, decreasing the financial impact of the pandemic, and getting their legal documents in place. [1] [2] [3] [4] [5] [6] [7] [8] Read More
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How Immigration Status Af…

How Immigration Status Affects Elder Law

How Immigration Status Af… Most elder law practitioners and caregivers want to help any senior that walks through their doors. But what happens when that senior isn’t a United States citizen? What special rules and circumstances must be considered? How does this impact their case and their care? Current Immigration Climate The topic of immigration remains one of heated debate in the United States. Some take the stance that our land is of finite resources and so should be conserved for citizens. Others argue that we are all immigrants, and we should more freely open our borders. The purpose of this writing is not to promulgate either viewpoint, but rather to report on the current status of the laws and policies affecting our senior immigrant population. There are several public benefit assistance programs to help the needy of our population: Medicaid, which provides medical care and long-term care benefits; Supplemental Nutrition Assistance Program (SNAP), which provides food stamps; Temporary Assistance for Needy Families (TANF), which provides financial assistance; Supplemental Security Income (SSI), which provides financial assistance for low-income seniors and certain disabled individuals; and Children’s Health Insurance Program (CHIP), which provides health care benefits for children. Are those who reside within the United States but not United States citizens able to receive these public benefits? Generally, the answer is no. Undocumented immigrants are not eligible to receive most forms of public benefits, except to protect their life in an emergency situation, such as access to emergency Medicaid or access to certain nutritional programs such as Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). However, once an immigrant has obtained their green card and has passed a 5-year waiting period, they are usually eligible for most federal public benefits. The inaccessibility of most federal government assistance programs for non-citizens stems from the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which was passed under Clinton’s presidency. The new law created two categories of immigrants. Qualified immigrants are those with a green card, or those with humanitarian needs, such as refugees. Unqualified immigrants are those who don’t meet the definition of a qualified immigrant, such as some temporary workers, those on a student visa, and undocumented immigrants. However, even after the passage of this new law, the door was still left open for states to offer benefits to non-citizens through state public benefits. Forty states and the District of Columbia currently offer some sort of public benefits to certain immigration populations. Only ten states have neither offered their own programs nor participated in any federal-state options to expand eligibility. Those ten states include Alabama, Florida, Idaho, Indiana, Kansas, Mississippi, Missouri, North Dakota, South Carolina, and South Dakota. California has been one of the leaders in offering benefits to all citizens, regardless of documented status. Back in 2015, California began to offer medical benefits to children in the country illegally. In January 2020, California became the first state to offer Medicaid benefits, called Medi-Cal, to young adults who were illegal immigrants. Now, California lawmakers have announced their intentions to include undocumented seniors in Medi-Cal eligibility. This would allow seniors who met the program’s financial eligibility criteria to receive long-term care benefits, regardless of immigration status. One-third of Californians are already covered under Medi-Cal benefits. Opponents of the new rule cite the strain on public resources as a detractor from including undocumented seniors in Medi-Cal eligibility. Public Charge Rule The Public Charge Rule allows U.S. consulate officials to deny an individual entry into the U.S., or deny a change of status for those already present, if it is determined that the individual is likely to become dependent on certain government support or benefits. Until October 15, 2019, a slew of various benefits was not counted against the applicant. After the public charge rule became effective, many of the previously non-detrimental forms of government assistance became negative factors in the eligibility determination. The Public Charge Rule was set to become effective on October 15, 2019. However, litigation ensued and an injunction was issued. Multiple federal courts struck down the rule. However, the Supreme Court of the United States ruled in January 2020 that the Public Charge Rule could be enforced. The rule became effective nationwide on February 24, 2020. Now, officials use a totality of the circumstances approach when considering entry into the United States; any certain factor will not necessarily make a potential entrant ineligible. The new rule will still approach each individual situation on its own. The major difference with the new rule is that many previously accepted forms of assistance will now be considered negative factors. Newly negative considerations include SNAP benefits, most forms of Medicaid assistance, and various housing assistance programs. There remains an exemption from ineligibility for enlistees in the armed forces, those in the Ready Reserves, and their families; refugees; those granted asylum; and others who are seeking certain types of visas. Other types of benefits not considered are Medicaid benefits provided under the Individuals with Disabilities Education Act and under emergency medical conditions, benefits provided to youth under 21, and benefits provided to pregnant and post-partum women. How are seniors and those with disabilities affected by this new rule? Age and health are considered factors in the eligibility equation as well. Considering the age and financial status together, the working life of a potential entrant or current alien is an important factor. The repercussions of these changes may only further undermine the potential contributions that could be made in our country by aged or disabled immigrants. In evaluating these applicants, the negative scores on their report compound simply due to their age or infirmity. If an immigrant has several disabilities but is otherwise a productive member of society, their application could get denied even if they don’t currently have a need for public benefits. It is not only the actual receipt of these conversely considered benefits, but also the likelihood of the need presenting itself in the future. Because the aged and disabled populations are often financially disadvantaged, the common perception is that they will surely need the government to aid them. This is not an accurate reality for many individuals in these groups – yet, the appearance is enough to be held against them. Retirement Pipe Dream Many things can increase one’s likelihood of living in poverty – marital status, geographic location, education, and social status. Add to that list immigration status. Immigrant seniors are more likely than U.S-born seniors to have income below the poverty line[1]. Because of this, many poor elderly immigrants must continue working in low paying jobs indefinitely. Often, these jobs are physically demanding as well – housekeepers, vendors, and caregivers. So, retirement for many senior immigrants is a dream never realized. Can immigrant seniors collect social security benefits? Some can. Immigrants must accumulate the necessary 40 work credits to qualify for benefits, unless there is a totalization agreement in place. A totalization agreement is an arrangement between the United States government and the immigrant’s country of origin to allow work credits earned in either country to be combined to qualify for benefits. The United States government currently has a totalization agreement with 26 countries. While Canada is on the list, Mexico is not. In fact, no country in South America is on the list. It is estimated that undocumented workers are paying $13 billion per year in social security taxes[2]. Shortage of Caregivers It is estimated that there are roughly 10.5 million unauthorized immigrants in the United States, which is about 3.2% of the population[3]. This is a decline in numbers, from the 2007 peak of 12.2 million. The amount of immigrant workers has also declined during this time period, to the tune of roughly 625,000 workers. What are the effects of this decline in the workforce? A possible shortage of caregivers for our aging and disabled populations. About one in four care workers are immigrants. When taking into account direct care workers (hired via an agency) and indirect care workers (hired directly by consumers), the total immigrant workforce totals roughly 1 million[4]. The states with the highest number of caregivers being immigrants are New York, California, New Jersey, Hawaii, and Florida. If there is a decrease in immigration, then it would be reasonable to conclude that the caregiver workforce would decline as well, leading to a shortage of caregivers. This could leave seniors and those with disabilities without the care they need. Or, will citizens step in and fill these roles? Conclusion Immigration policy is a highly contested topic among Americans. Most would agree that changes need to be made to the system – but what changes? Should our policies be more conservative or liberal? Should seniors and those with disabilities be more scrutinized or given more leniency? If we decrease the number of immigrants, what affect will that have on our society? These are tough questions that have been lingering for decades. And the answer seems to change with any conversion in the White House. For now, under the Trump administration, immigration policies have been constrained. Under the Public Charge Rule, which has recently been upheld by the Supreme Court of the United States, many factors can be taken into account when determining if a potential immigrant should be allowed entry into the United States, or if a current undocumented immigrant can apply for a green card. The main question is determining the likelihood that the individual may need public benefits in the future. This means considering the person’s health status, financial status, and age. And it seems like the more restrictive approach to immigration policy is working. There has been a decrease in the number of immigrants into the United States since its peak in 2007. Where is immigration policy headed in the future? For now, that is unsure. But if recent years are any indication, a more restrictive methodology is likely as the Public Charge Rule takes effect. [1] [2],-not-criminals [3] [4] Read More
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No Clawbacks Allowed: Wha…

No Clawbacks Allowed: What Does This Mean for You and How to Take Advantage of This Gift

No Clawbacks Allowed: Wha… The 2017 Tax Cuts and Jobs Act doubled the gift and estate tax exclusion amount—i.e., the amount that can either be excluded from your estate when determining if your estate will owe any taxes when you pass away or the amount you can gift to individuals during your lifetime without owing any taxes—which had previously been $5 million (adjusted each year for inflation) per individual. The exclusion amount for 2020, including the adjustment for inflation, is $11.58 million. However, the increase in the exclusion amount is temporary and, unless Congress extends it, will expire on December 31, 2025. This has caused concern that if taxpayers made gifts of the additional $5 million (adjusted for inflation) between January 1, 2018 and December 31, 2025, the benefit could be “clawed back” in the calculation of their estate taxes if they died on or after January 1, 2026—i.e., after the expiration of the increased exclusion amount. This concern arose because gift and estate taxes are calculated together, as a unified calculation. The determination of whether any tax is due is made by applying a credit based on the basic exclusion amount. The credit is first applied against the gift tax, and to the extent that any credit remains at death, it is applied against the estate tax. Some worried that if the exclusion amount at death is lower than the amount of the exclusion when lifetime gifts were made, this could create a difficult situation in which tax could be due at death, but no money would be left to pay it, because it had been given away during the taxpayer’s lifetime. Special Rule In November 2019, the Internal Revenue Service (IRS) released final regulations providing that taxpayers who take advantage of the higher gift and tax exemption available between 2018 and 2025 will not lose the tax benefit of the higher exclusion amount upon their subsequent death on or after January 1, 2026, when the exclusion amount is set to decrease to the pre-tax reform level. Instead, the new IRS regulations adopt a special rule allowing an estate to compute its estate tax credit using the greater of the exclusion amount applicable to gifts made during an individual’s lifetime or the exclusion applicable on the date of death. Use It or Lose It The IRS also clarified that the increased exclusion amount is a “use or lose” benefit available to an estate only to the extent that a person who dies on or after January 1, 2026 has actually used it by making gifts during the increased exclusion period (between January 1, 2018 and December 31, 2025). In Example 2,[1] the IRS provided an illustration of this situation. If Terry, who has never been married, makes gifts of $4 million between January 1, 2018 and December 31, 2025, and Terry dies after December 31, 2025, during a period when the inflation-adjusted amount of the exclusion has reverted to $6.8 million, the credit to be applied for purposes of computing Terry’s estate tax credit is based upon the $6.8 million exclusion amount applicable as of the date of death: That is, the $4 million dollars actually used is treated as the exclusion amount for the period from January 1, 2018 to December 31, 2025, rather than the higher amount (for example, $11.58 million if the gifts were made during 2020) Terry could have utilized, but did not, during the increased exclusion period. As a result, because Terry, now-deceased, only made lifetime gifts of $4 million, the greater of the two exclusion amounts that should be used to calculate the estate tax credit is $6.8 million. Application to Spousal Portability The IRS regulation also addresses how the use by a surviving spouse of a deceased spouse’s unused exclusion amount, otherwise known as the portability option, will apply if the increased exclusion amount sunsets as expected at the end of 2025. The portability option allows an estate to elect to transfer any unused portion of the last deceased spouse’s unused gift and estate tax exclusion (DSUE) to the surviving spouse, who can apply it to cover any gift or estate tax liability arising from later lifetime gifts or transfers at death. The new IRS regulation makes clear that if an estate elects to transfer any DSUE to the surviving spouse between January 1, 2018 and December 31, 2025, when the increased exclusion amount is effective, it will not be reduced as a result of the sunset of the increased exclusion amount. In Example 3, the IRS illustrates that if Whitney died between January 1, 2018 and December 31, 2025, at a time when the exclusion amount was $11.4 million, and Whitney had not made any taxable gifts and did not have a taxable estate, the executor of Whitney’s estate could elect to allow his surviving spouse, Robin, to use his $11.4 million exclusion amount. If Robin, who does not make any lifetime gifts and does not remarry, dies after the sunset of the increased exclusion amount at a date when the exclusion amount is $6.8 million, the credit to be applied in computing Robin’s estate tax is $18.2 million ($11.4 million, the unused portion of the gift and estate tax exclusion amount applicable on Whitney’s date of death, plus $6.8 million, the exclusion amount applicable on Robin’s date of death). Take Advantage of the Tax Savings While You Can Here are a few of the strategies we can implement to help you take advantage of the higher exclusion amount available until December 31, 2025 (unless Congress decides to either extend the increase or make it permanent), whose application is now clarified by the IRS’s anti-clawback regulations. Lifetime gifts. You can benefit the most from the higher exclusion amount by making lifetime gifts. Lifetime gifts typically result in transfer tax savings (assuming the assets gifted do not decline in value). Individuals have the opportunity to remove $11.58 million and married couples can remove a combined $23.16 million from their taxable estates by making lifetime gifts in 2020. You can transfer appreciating assets to your children or loved ones—or preferably to a trust for their benefit, which can provide asset protection for your beneficiaries and direction regarding distributions. Spousal lifetime access trusts. If a gift of $11.58 million is too large for you to comfortably make without retaining some of the benefits of that money, you can make a completed gift to a spousal lifetime access trust (SLAT), based on the temporarily increased exclusion amount. Your spouse can be a beneficiary of the trust, providing you with indirect access to the trust money and property if you need them. A properly drafted SLAT will ensure that the assets of the trust, including any growth of the assets, will not be subject to estate tax liability when you and your spouse pass away. Grantor trusts. Using a grantor trust, you can make a gift to the trust, taking advantage of your increased exclusion amount, but also pay the income tax, enabling the beneficiaries you have named to eventually receive assets that have grown with no reductions resulting from income tax payments. You can reduce your taxable estate both in the amount of the assets transferred to the trust and the amount of income tax paid on the trust assets. We Are Here to Help Let us help you take advantage of the significant tax savings provided by the increased gift and estate tax exclusion amount during the current window of opportunity. We look forward to working with you to create the most advantageous estate plans for you and your family, designed with your unique circumstances in mind. Give us a call today to set up a meeting. [1] Treasury Decision 9884 (which sets forth the final regulations) states that although the proposed regulations included examples that did not reflect the annual inflation adjustments to the exclusion amount, “the examples in the final regulations reflect hypothetical inflation-adjusted [basic exclusion] amounts.” Read More
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Ageism: The Next Generati…

Ageism: The Next Generation of Discrimination

Ageism: The Next Generati… Discrimination comes in various forms – race, religion, color, national origin, sex, disability, and even age. Age-related discrimination has become more and more apparent with the growing number of baby boomers inching into the class eldest to our population. The attention to the mounting presence of ageism has triggered a renewed concern with the discrimination of our aging population. What is Ageism? Ageism is yet another form of discrimination. Compared to disability discrimination, racism, and sexism, ageism is another appearance-based stereotyping of individuals. The President and CEO of the International Longevity Center, Dr. Robert Butler, identified four types of ageism: personal ageism, institutional ageism, intentional ageism, and unintentional ageism. Personal ageism is the ideas and attitudes on the personal level of an individual that results in biases against another person due to age. Institutional ageism is the rules and practices that result in age discrimination. Intentional ageism is just what it sounds like – the person discriminating knows they are engaging in discrimination and still chooses to do so. Unintentional ageism is the opposite – the person engaging in age discrimination is unaware they are doing so. Among other things, ageism affects dating, job searching, promotions, and general well-being. Much of the age discrimination conversation focuses on the workplace. Age discrimination often affects our older generation from securing employment later in life. So much so that, in 1973, Congress enacted a law prohibiting the discrimination of employees based on age. Today, advocacy groups are rallying behind our aging population, once again, to bring attention to the continued injustices that our elder population suffers. Who is at risk? Theoretically, ageism can affect any person. Generally, though, it is understood to affect those older than the person exhibiting discrimination. For example, an 18-year-old could discriminate against a 30-year-old counterpart simply because they are perceived as too old to partake in the same activities. Traditionally and legally, it has generally been understood to apply to the effect on those over age 40. The older the person becomes, the more susceptible the person is to such treatment. Eventually, we are all at risk for age-related discrimination. We will all age – our bodies will break down over time; we will lose abilities that once sustained our independence; we will all become old someday. It is this reality that has ignited a movement drawing attention to age-related prejudices and discrimination. Focusing on education, these advocacy groups hope to combat the stereotypes of aging by exposing their inaccuracies – not every aged individual resides (or should) in a long-term care facility, that many of our elders are healthier and more capable physically and mentally than those half their age, and that age alone does not determine what an individual is capable of accomplishing. What can one do to battle it? In an article by the American Psychological Association, it is suggested that as youths, we adopt stereotypes about the older population and over time, as we age, we “self-stereotype.” In other words, our judgments of our elders as young people become our negative view of ourselves once we become an elder. Such a way of thinking is neither programmed nor mandatory – it is an attitude that can be contested. Just as easy as adopting these negative views of ourselves is the ability to laugh at how wrong our perceptions were when we were young. The conviction we once held that our parents were so old at 40 – until we became 40; or how ancient our 65-year-old grandparents seemed when we were a child – until we found ourselves heading toward retirement. We are laughing because once we reach that milestone, we find that we still feel young! Younger individuals often harbor stereotypes for how elders are supposed to behave, their capabilities, their intellectual aptitude, and, most often, their ability to perform work-related tasks and responsibilities. Elders, senior citizens, grandmas and grandpas are often imagined to be feeble elderly individuals, relying on their tennis ball-donned walkers, sharing butterscotch candies and stories of the world from their “back in my day” perspective. Today, with the advances in medications, accessibility to activities and groups for like-minded individuals, a person’s ability to stay active, “young,” and able well into retirement is the new reality. Not surprisingly, though, the perceived age in which one becomes old differs depending upon the age of the person queried; old age comes earlier according to a younger individual, for example. Such disparities in the perception of age create a prime territory for disagreement, unequal treatment, and biases toward individuals outside of one’s generational grouping. Our aged population becomes disadvantaged by incorrect assumptions their younger counterparts harbor toward the aged. Are there any legal protections? Protecting employees – past, current, and future – from discrimination started with the Civil Rights Act of 1964, which prohibited discrimination based on race, color, national origin, sex, and religion. Next came the protections for our aging population. Interestingly, the legal protections addressing discrimination against elders in the workplace were passed six years before those established for the disabled (for those in federal positions), and twenty-three years prior to private sector employment for the disabled. The Age Discrimination in Employment Act of 1967 (ADEA) protects employees 40 years of age or older from discriminatory employment practices based on age. According to the U.S. Equal Employment Opportunity Commission (EEOC), “the ADEA applies to private employers with 20 or more employees, state and local governments, employment agencies, labor organizations, and the federal government.” ADEA allows employers to provide preferential treatment to protected employees to the detriment of younger employees – even those who are also covered under the act. Courts have established a basic requirement that the discrimination must originate from a person that is more than a year or two younger than the individual claiming age-related discrimination. The EEOC can also grant exceptions beyond those in the ADEA when deemed appropriate. The Older Workers Benefit Protection Act of 1990 (OWBPA) amended the ADEA to prevent employers from denying certain benefits to aged employees. Employers are prohibited from denying elder employees benefits that younger employees are afforded – such as life or health insurance, pensions, or retirement benefits. Although in certain cases, when an employer would suffer an unreasonable financial hardship by providing the same benefits to an older employee and a younger worker, it would be satisfactory to spend the same amount for each class, even if that means the older employee would receive fewer benefits. Recent age discrimination cases In August 2019, a Los Angeles Times employee was awarded $15.4 million in damages in an age and disability discrimination case. Mr. Simers had worked at the publication for 22 years as a columnist when he was demoted to a writer after developing health problems. Simers claimed that the newspaper engaged in constructive termination, which is when an employee feels they must leave their job due to a hostile work environment. In December 2019, a judge overturned the case, citing misconduct on the part of Simers’ attorney and stated that the award was excessive. A new trial as to damages will ensue in 2020. Google has had issues with its “culture of youth” for a long time. In 2010, Google was sued by Mr. Reid, the company’s Director of Operations and Director of Engineering. At the time of the suit, Reid was fifty-two years old. Reid claims that after some time on the job, he was transferred to manage a team of engineers but was given no budget or staff. He left Google two years later and was replaced by two much younger employees. Reid claimed that he was told his ideas were “obsolete” and “too old to matter.” He was called “slow,” “fuzzy,” and “lethargic.” Coworkers joked that he was an “old man.” Reid sued based on age discrimination; the settlement amount was undisclosed. Apparently, Google did not learn their lesson. They were recently sued in a class-action lawsuit with 227 plaintiffs who claim that Google engages in systematic discrimination by not hiring applicants over the age of 40. Ms. Fillekes was the initial plaintiff, claiming she was interviewed four times by Google, starting at age 47, but was never hired. The plaintiffs were awarded $11 million. As part of the settlement agreement, Google must train employees about age bias, create a committee on age diversity, and ensure that age discrimination complaints are given proper investigation. Food for thought Age-related discrimination affects our elders – but what about the emerging eighteen-year-old adults sprouting up each day? Just as often are jokes made of the perils of older age as are the inexperience and ignorance of our youth. Will ageism grow to encompass the discrimination against young employees, too? Only a few states consider age discrimination to be possible for the young or old. Will there be eventual protections for the nineteen-year-old that was refused promotion due to his perceived inexperience and arbitrarily alleged lack of maturity – despite the potential opposite? Will there ever be a point that young, able-bodied, native, non-ethnic, non-religious individuals find themselves disadvantaged because any established law is not protecting them? To Conclude Ageism is not a new concern. However, due to the influx of the (currently) largest generation of individuals reaching old age, attention has been renewed to the more frequent injustices these individuals are facing. Older Americans are finding themselves outed by company restructuring and eliminating jobs, only to find the company retitled the position and hired a younger employee at a far-reduced wage. Some elders are forced into early retirement. Others are refused promotions or initial hiring – why not hire a younger person so that the position will not need to be refilled in a few short months or years when an elder retires or becomes unable to perform? Those over 40 years old have federal protection against discrimination in the workplace, and some at the state level – but this does not mean the injustices have miraculously halted. Each day our elder workers are frustrated by their inability to advance, retain, and find employment. Advocacy groups hope to educate younger generations of the misguided attitudes held for elders generally, their capabilities, and their potential. Hard workers can be found in any generation. Age alone is not a compelling factor for determining how much a given employee can benefit a company – qualifications, not age; diligence, not age; loyalty, not age; commitment, not age; are the sensible factors to consider. Read More
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Millennials, You Need an…

Millennials, You Need an Estate Plan Too

Millennials, You Need an… As millennials (born 1981 to 1996), you are well known for your distinctiveness as a group. Your generation has followed paths and set goals that are decidedly different from those chosen by previous generations. You are highly diverse, better educated, more socially conscious, and wait longer to have families than your parents and grandparents. But one thing you have in common with other generational groups is the need for estate planning. Unfortunately, a startling 79% of millennials do not have basic estate plans in place. Your needs and goals may vary, but having an estate plan in place is crucial for every adult, including millennials. You do not know what the future holds, and we can help you make sure that plans are in place that not only provide for your own future needs but also those of your loved ones and pets. Will and/or Trust As a millennial, you may not have accumulated as much wealth as members of older generations, but it is important for you to make sure that your money and property will go to the family members or loved ones you have chosen if something happens to you. If you do not have a will or trust, your money and property will pass to the person designated by state law, which may not be the person you would want to inherit your prized possessions and money. In addition, if you are married and have young children, you need to take steps to ensure that your spouse and children are provided for. A trust is often the best solution: If your spouse inherits your money and property outright under a will, and your spouse eventually remarries, your assets could go to the second spouse instead of your children. In addition, the inheritance will be vulnerable to claims made by your spouse’s creditors. A trust can avoid these results by allowing you to choose who receives your property and money, as well as the timing and size of the gifts. Pet trust. If you are one of many millennials, especially those who live in large urban areas, who chose either to delay having children or to remain childless, you may have adopted pets that you love and dote upon just as you would a child. Especially if you are single, you should consider a pet trust to provide for your pet’s care if something happens to you. The pet trust can allow you to make arrangements for your pet if you die or are physically unable to care for them yourself. The pet trust can not only specify a caregiver for your pet, it can also provide care instructions and set aside funds sufficient to care for your pet’s needs (medical care, grooming, exercise, etc.). You also have the ability to name an additional person to manage the money you have set aside for your pet, if you would rather have someone other than the caregiver in charge of the money. Charitable remainder trust. Millennials are well known for being socially conscious and wanting to make a positive difference in the world. If you want your money and possessions to support a charitable cause when you pass away, you may be interested in establishing a charitable remainder trust, which enables you to benefit from a stream of income for your own life, with the remaining money in the trust going to a charity you have selected upon your death. Planning for Student Loans or Credit Card Debt As the cost of college tuition continues to increase, the level of debt millennials have begun their adult lives with is startlingly high. The average student loan debt of adults aged 25 to 34 is $33,000 per borrower. Federal student loans typically are forgiven upon the borrower’s death, but the estates of borrowers who obtained private loans can be pursued by those lenders. In addition, high credit card debt is prevalent among millennials. If you have incurred substantial debt, life insurance sufficient to cover income tax on the cancellation of debt in the case of a federal student loan or to cover the debt itself if a student loan is owed to a private lender or money is owed to a credit card company may be a good solution if you are concerned about the burden your debt could place on your loved ones upon your death. Digital Assets If you are like many millennials, who are the first generation who grew up using the internet, you have likely amassed a much greater quantity of digital assets than members of previous generations. These assets may include social media accounts, blogs, photographs and videos, financial accounts, and email accounts, among many others. A comprehensive list of these of these assets, which may be among your most prized possessions, as well as the accompanying usernames and passwords, and instructions for their management, is essential to ensure that your wishes are honored if you pass away or become too ill to manage them on your own. Depending upon your wishes, you can appoint a separate person to wind up (or continue managing, e.g., in the case of a blog) these assets and accounts, or you can choose to have your executor or trustee handle this aspect of your estate. The list, which can be incorporated by reference into your other estate planning documents, should be stored in a secure place along with your will and/or trust. Powers of Attorney Medical power of attorney. If you are a younger millennial, you may not realize that your parents no longer automatically have the right to make medical decisions on your behalf if you become too ill to make them on your own or if you are unable to communicate your wishes. Even if you are married, your spouse may still need to be properly named in a medical power of attorney to make decisions for you when you cannot. It is also important to designate a trusted person to act on your behalf if your spouse is unavailable. If you fail to have a medical power of attorney prepared, a court proceeding may be necessary to appoint someone to fill that role if, e.g., you are in an automobile accident and are unconscious. You should also consider completing a living will spelling out your wishes regarding medical treatment you want–or don’t want–at the end of your life or if you are in a persistent vegetative state. Financial power of attorney. Another document that is essential for your care if you were to become unconscious or too ill to make your own financial decisions is a financial power of attorney. It allows a person you have named to pay bills, take care of your home, manage your accounts, and make other money-related decisions for you. Even if you are married, a financial power of attorney is important because any bank accounts or other property that are not jointly owned cannot be managed by your spouse without it—unless your spouse goes to court and asks to be appointed as your guardian, causing unnecessary stress in an already distressing situation. A financial power of attorney can also be helpful if you do a lot of international travel and may occasionally need someone to handle your financial matters while you are out of the country. Let Us Help You Prepare for the Future You may think that estate planning is only for the elderly. However, even if you are young, an estate plan is crucial, regardless of whether you have accumulated much money or property. A properly executed estate plan provides not only for the well-being of your family, loved ones, and pets, but also allows you to put plans in place in case you become ill or are severely injured and cannot make medical and financial decisions for yourself. Call us today to prepare for the future. Read More
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Is Your Estate Plan Proba…

Is Your Estate Plan Probate-Proof?

Is Your Estate Plan Proba… Why Proactive Estate Planning with Your Attorney Is the Smartest Way to Avoid Probate Here’s an important question to consider: When was the last time you had an estate planning attorney perform a full review of your long-term plans for your financial affairs, your family, and your legacy? For that matter, have you ever sought out such a review? Have you taken the necessary steps to keep your estate out of probate when you pass on? Many individuals believe their estates are protected against probate. But thanks to changes in your finances over time – and perhaps misconceptions you hold about the probate process and what triggers it – that protection can erode or disappear entirely. In fact, many people are blissfully unaware just how vulnerable their estates are to probate. This lack of awareness can have serious consequences for the next generation and any charities and causes you support. If you fail to identify these issues, your family may discover them at the worst possible time. So, what can you do to stay current and complete? The answer is simple: conduct periodic strategic reviews of your estate plan to ensure that it’s probate proof and otherwise up to date. Understanding the probate process Technically speaking, probate is not a bad thing. The process is simply the government’s way of making sure your property is distributed in the right directions when you pass away. This process includes proving the validity of your will (if you left one), evaluating your property, paying off your taxes and debts, and disbursing whatever is left to your heirs. Most people understand that if someone dies without a will (or “intestate,” in legal circles), that person’s belongings will go through probate. Perhaps fewer people realize that creating a will in itself does not protect their property from probate. The process can move more smoothly when you have left a will stating your intentions for your belongings, but any part of your estate that is titled solely in your name at the point of your death is subject to probate, regardless of the existence of a will. Why probate is generally something to avoid Probate can be costly. The total cost of probate can be anywhere from 5 percent to 15 percent of the total value of the estate, varying in cost from state to state. These costs are deducted from the estate, which means your beneficiaries will never see that money. Probate can be time-consuming. Even for a modest-size estate, probate can last between 6 months to a year, providing there are no complications. Your heirs won’t receive their inheritance until probate is complete. Some places do have “independent” or “summary” administration rules that speed probate up, but they still cost money and are a public process. Probate is public. One of the biggest drawbacks to probate is that it makes private matters public. When your estate is probated, your financial information, identities of your heirs and other personal information all become a matter of public record, accessible to anyone who wants to look it up, possibly even online depending on the court system where your estate is probated. Strategies for probate-proofing your estate The good news is that probate is quite easily avoidable, and there are a number of effective planning tools that can help you. Since probate only applies to assets listed solely in your name, the primary goal of your estate-planning strategy might simply be to make sure you’re not the sole owner of those assets when you pass away. The safest way to create a probate-proof estate plan is to work with an estate planning attorney to devise a customized solution. Then update that plan regularly to reflect any changes that occur in the future. For now, let’s look briefly at two general strategies for probate-proofing your estate, and the pros and cons of each. Strategy 1: The “Piecemeal” Approach This strategy involves going through all your assets one by one and structuring them so that they are either joint-owned with one or more of your heirs or transferred immediately upon your death. For example, for any real estate holdings, you might add one or more beneficiaries as a joint owner, or insert a Transfer on Death (TOD) clause that immediately transfers ownership to the other party when you pass away. You can also establish joint ownership on bank accounts, or insert a Payable on Death (POD) provision; and for insurance policies and certain other assets, designating a beneficiary may be sufficient to protect them from probate. PROS and CONS: For simpler or smaller estates, the piecemeal approach can be an effective and affordable strategy to bypass probate, at least for your largest and most important assets. On the other hand, this approach requires constant, vigilant updating, and in many cases these updates can be overlooked. To illustrate, let’s assume you have an estate valued at $400,000, which includes a home worth $200,000, a life insurance policy for $100,000 and $100,000 in savings. You decide to divide your estate equally among your four children, so you list two children as transfer on death recipients on the deed to the house and one child as the sole beneficiary on the insurance policy; and you create joint ownership on your savings account for the fourth child. A few years pass, during which time you sell the house and reinvest the proceeds into some stocks listed in your own name. You also cancel the life insurance policy due to rising premiums, but you haven’t yet opened a new one. If you pass away suddenly under these circumstances without updating your estate plan, what happens? The child on the life insurance policy now has no inheritance; neither do the two children who were going to inherit the house, because you sold the house and forgot to create a TOD for them on the stocks you purchased. The only child with a secure inheritance is the one co-listed with you on the savings account. The stocks go into probate, where the other three children might eventually get a cut of them once the fees, debts and taxes are paid. Strategy 2: Creating a trust A more thorough and highly effective strategy to protect against probate is to create a revocable trust that encompasses all your holdings. A trust is a legal structure in which your property is held on behalf of your beneficiaries, to be managed and appropriated by an appointed trustee. In a living trust, you can name yourself the trustee until you pass away or become unable to manage the trust, at which point an appointed successor takes over. Under this arrangement, you have the same access to your property as you did before, with the exception that it is no longer exclusively in your name and is therefore exempt from probate. When you pass away, the holdings in the trust pass to your beneficiaries per your instructions with no interruption or interference from the probate courts. PROS AND CONS: This arrangement requires some time, effort and cost to initiate and fully fund so that it covers all your property, but once established, it is easily adaptable to changes in your family and financial situation, and equally easy to keep updated. A trust can also handle almost any asset and easily accommodate advanced tax planning, unlike the piecemeal approach. This approach provides greater asset protection in the case of disputes, and you can even continue to grow your wealth on behalf of your beneficiaries after you die. Perhaps most importantly, a trust that is properly constructed and managed is your best protection against probate. We can help you probate-proof your estate. The advantage of hiring a skilled estate planning attorney to help with your estate plan is that an attorney has a holistic understanding of estate and tax laws. We can thus advise you on the most appropriate strategies and structures to preserve and grow your wealth. If you haven’t reviewed your estate plan in a while, now is the best time to make sure your estate is probate proof. Call our offices today for an appointment; we’re happy to help you! Read More
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9 Financial Resolutions F…

9 Financial Resolutions For A Happy New Year!

9 Financial Resolutions F… As the year new year starts, it’s an excellent time to begin making plans for growth. While many people avoid making New Year’s resolutions for fear that they will only break them, more than half of people who made financial New Year’s resolutions ended the year in better financial shape than when they began. To that end, below are 9 financial New Year’s resolutions designed to help you grow your wealth. Enjoy! Set realistic, reachable financial goals. If it seems a bit ironic that our first resolution or goal is to have goals, that’s because this is where most people fail at the outset. Either they don’t have specific financial goals in mind, or they set the bar so high that their goals are virtually impossible to reach, causing them to lose heart and give up. Don’t let the perfect be the enemy of the good: Set your benchmarks now. Prepare for changes in the tax laws. If you haven’t already done so, talk to us, your financial advisor, and your tax advisor now to strategize about changes to your estate, financial, and tax plans. Review your investment portfolio. The beginning of a new year and the last few days of the old year are good times to take a detailed look at your investments, to see which investments are performing well, which are not, and where to reinvest and diversify. Review and track your income and expenses and look for ways to get your budget under control. Examine your income and expenses for the past year so you know your starting point. Then, throughout the new year pull year-to-date reports so you can identify and correct problem areas before they become out of control. Analyzing your expenses regularly helps you identify when money is being spent on things that have less importance to your long-term goals. Look for creative ways to increase income. If you own or operate a business, are there new strategies you could implement to reach untapped markets or otherwise increase revenue? If you work as an employee, are you due for a raise this year? Do you own any intellectual property you’re not currently exploiting for royalties? Brainstorm, and use your imagination to find additional ways to increase your personal income. Deal firmly with debt. Debt is dead weight and the interest charges can be an anchor on an otherwise good financial plan. Bite the bullet, and get on a debt reduction or elimination plan in the new year. Review your life insurance coverage. Your policy may be out of date and not have features now commonly available on insurance policies. Worse yet, you may be underinsured if your family’s financial needs have changed. Put the coverage under the microscope to build an action plan. Once you’ve decided on changes with your insurance advisor, coordinate the beneficiary designation with us, so it completely aligns with your estate planning goals. Review your retirement plan. If you have a 401(k) or an IRA, how is it performing? Is it time to increase your contributions? Should you roll over to a different plan? If you don’t have a retirement strategy, start now, and get to it. Now’s also a great time to verify that your beneficiary designation coordinates with your estate plan. We’re here to help if you have questions. Plan for your heirs. If you don’t have a trust, consider working with us to establish one. If it’s been more than three years since your trust was last looked at, it’s time for a checkup. Are there any life changes (e.g., marriage or divorce) that need to be considered and incorporated into your plan? Even if your assets are modest, a trust prepared by a qualified estate planning attorney can provide privacy for your family as well as protect your heirs and legacy from the IRS, creditors, and court interference. “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki This quote reminds us of a couple of important concepts: first, wealth doesn’t come without a plan; and second, we don’t accumulate wealth just for ourselves. Make a commitment in 2017 to set solid financial goals and craft an estate plan that successfully passes on your financial legacy to the next generation. We are here to help. Call today to schedule an appointment. From our family to yours, have a safe and Happy New Year. Read More
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Arbitration Agreements an…

Arbitration Agreements and Long-term Care Facilities

Arbitration Agreements an… When a loved one enters a long-term care facility, it is often a tumultuous time. Maybe there was a catastrophic medical event. Or, the resident is feeling overwhelmed with the move. Whatever the circumstances leading up to the transition, families are often stressed out. Then, families must deal with the inundation of paperwork from the facility. What are the terms of the arrangement? What kind of care will the resident receive? Who will pay for care? It is during this time that families are often presented with an arbitration agreement. In this article, we will discuss what an arbitration agreement is, how one can impact the signor at a later date and some new rules that will soon be emerging regarding their use by long-term care facilities. What are Arbitration Agreements and Why are They Controversial? Arbitration is similar to mediation. In both instances, disputing parties use a third-party (an arbiter or mediator) to settle their dispute. When mediating parties are not happy with the result, they can pursue other remedies, including a lawsuit and court proceeding. However, in arbitration, the result is binding. If arbitration is sought, then a judge or jury cannot be later availed to redress the grievances of the injured party. An Arbitration Agreement makes arbitration mandatory. The injured party does not have a choice in how they seek to remedy their harm. There are some benefits of arbitration – the result is usually obtained much faster than through a court proceeding, and it is kept private. However, in cases of arbitration with nursing homes, this privacy could shield the facility from public scrutiny regarding the facility’s practices. The facility may have less motivation to correct a problem if it can keep the problem in the shadows. Facilities may be more motivated to take greater care of residents when civil lawsuits risk repercussions on reputations and licensing. Rules of evidence and procedure don’t apply to arbitration. These rules were adopted by courts because they better facilitate justice. If these rules don’t apply to arbitration, a nursing home can present hearsay as evidence, for example. The protections that our legal system have adopted through rules of evidence could be thwarted in arbitration. Also, it is almost impossible to appeal an arbitration decision. Our court system permits appeals in the interest of justice, and this right is lost through arbitration. Signing a mandatory arbitration agreement should be something that one considers thoroughly. When a new patient is being admitted into a nursing home, do they contemplate the document in detail? Usually not; it is just another piece of paper in a stack that requires a signature for admission. So does the resident understand if the arbitration agreement is optional or mandatory? Probably not. Advocates for nursing home residents became concerned that residents were being taken advantage of through the use of arbitration agreements. Not only were residents not likely fully grasp the meaning of the arbitration agreement, but sometimes, these agreements were mandatory for admission into the nursing home. So the resident really didn’t have a choice – if they didn’t sign the agreement, they could not receive needed care. This didn’t seem equitable, or, the nursing home didn’t make it clear that signing the agreement was voluntary. Because of these concerns, the use of arbitration agreements by long-term care facilities became a hot topic in the senior advocate community. CMS Issues New Proposed Final Rule The use of arbitration agreements by long-term care facilities was banned by The Centers for Medicare & Medicaid Services (CMS) in October 2016. A few days later, the American Health Care Association and a collection of nursing homes filed suit. They were awarded an injunction. In response, in June 2017, CMS published a new proposed final rule regarding the use of arbitration agreements by nursing homes. CMS opened the requisite comment period and collected thoughts and suggestions from the public. As of July 2019, CMS has revised the rule, based on the consideration of those public comments, and has issued a new proposed final rule regarding the use of pre-dispute, binding arbitration agreements by long-term care facilities. The new rule takes effect on September 16, 2019. While arbitration agreements are now allowed, there are several restrictions on them. The proposed final rule includes: A nursing home may not, as a condition of admission to the nursing home (or as a condition to continued care), require a resident to sign a binding arbitration agreement. A nursing home must explicitly notify the resident of their right not to sign the agreement, and the agreement must explicitly state that the resident is not required to sign it. The agreement must explicitly provide that the resident has the right to rescind the agreement within 30 calendar days of execution of the agreement. The arbitration agreement must be explained to the resident in a language in which they understand. If a resident chooses to sign the pre-dispute, binding arbitration agreement, the nursing home must ensure that the resident acknowledged that he or she understands the agreement. The agreement cannot contain any language that dissuades the resident from communicating with state or federal officials regarding any matter. The arbitration agreement must specify that if arbitration is entered into, a neutral arbitrator will be agreed upon by both parties. If arbitration is sought, the venue must be convenient to both parties. If a nursing home facility and a resident enter into arbitration, a copy of the binding decision must be retained by the facility for five years, and make that decision available for inspection by CMS. Any rule that applies to a resident also applies to his or her legal representative. A representative of CMS stated, “The overall impact of this final rule is to provide transparency in the arbitration process in nursing homes to the residents, his or her family and representatives, and the government.” The proposed rule is a part of CMS’s five-part plan to overhaul the oversight of nursing homes. Seema Verma, Administrator of CMS, has indicated she intends to strengthen oversight, enhance enforcement, increase transparency, improve quality, and put patients above paperwork. Should a Resident Sign an Arbitration Agreement? Under the new rule, a nursing home can ask a resident to sign an arbitration agreement. However, should the resident or their loved one, sign this agreement? While that decision is personal to each individual, careful consideration should be given before signing the agreement. It might be prudent to review the arbitration agreement with an elder law attorney to ensure it conforms to pertinent laws and is in the best interest of the signor. Remember – even in the absence of such agreement the parties can always agree to arbitration at a later date. If a resident hasn’t already committed to mandatory arbitration, then they have more options down the road, should harm occur. Others Things to Beware of in Nursing Home Admission Agreements Besides arbitration agreements, what are some other things that new residents should beware of in nursing home admission agreements? Responsible Party A nursing home may try to get a loved one to sign an agreement naming him or her as a responsible party. Nursing homes are prohibited from requiring third parties to personally guarantee payment for a loved one’s care. However, the loved one could always agree to this arrangement of their volition, and a long-term care facility may not make it clear to the third party that this is voluntary. Waiver of Rights A nursing home cannot ask a resident to waive certain rights, including waiving the nursing home’s liability for lost or stolen property. A nursing home cannot ask a resident to waive the nursing home’s liability for the resident’s health. If a resident requires extra care, then the nursing home must provide it. Visitation Hours A nursing home resident has the right to be visited by friends and family at any time; a nursing home cannot restrict visitation rights. Often, a facility will post visitation hours or contain this language in the nursing home admission agreement. Residents and visitors may not know that they can visit each other at any time. Resident’s Income A nursing home cannot force a resident to assign their income to the facility. A nursing home cannot require residents to deposit their income into the facility’s financial account. For example, an admission agreement cannot state “I authorize Facility to be named Payor on Resident’s Social Security checks.” Conclusion While an outright ban of pre-dispute, binding arbitration agreements was a total win for nursing home residents and their families, it was unable to withstand legal scrutiny and be upheld within the court system. This new rule, while it does allow the use of arbitration agreements, will give a patient the ability to say “no” and not be denied services. New nursing home residents and their families are understandably strained during the admissions process. But it is paramount that proper attention is given to the admission paperwork presented by the facility, as certain rights are obligations are exchanged. It might be prudent for nursing home residents and their families to seek the guidance of an experienced elder law attorney, to ensure the paperwork they are signing contains legal terms and is in the best interest of the signing parties. Read More
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Caregivers, You’re Not…

Caregivers, You’re Not Planning Just for Yourself

Caregivers, You’re Not… As a caregiver, you spend much of your time, money, and energy taking care of the needs of others. Those who have taken on the role of caregivers for ill or disabled spouses, aging parents, children, or other loved ones with special needs are typically selfless and giving individuals who may not stop to consider their own needs. Your job is invaluable, but it may exact a heavy toll if you do not seek out the help of others. We want you to know that you are not alone: There are resources available that can make your job as a caregiver easier. It is important to seek out the emotional support of others, either family members or other caregivers, who can understand and empathize with both the rewards and the physical, emotional, and financial burdens associated with caregiving. There are also programs that provide respite care or adult daycare that can allow you to take a much-needed and well-deserved break. State or federal aid and tax credits or deductions may be available to help ease your financial burden as well. Care for Yourself and Your Loved Ones by Creating an Estate Plan As your estate planning attorneys, we are another resource you can look to for support. If you are caring for aging parents or other family members with disabilities, it is essential to ensure that you not only address your own emotional and financial health, but that you have an estate plan in place that addresses both your needs and the needs of those you care for. We can provide you with the peace of mind that comes from knowing not only that a plan is in place for your future, but also the future of the loved one under your care. Knowing that your loved one will continue to receive loving care, even if something happens to prevent you from continuing to acting in the role of caregiver, will help ease any concerns you have about your loved one’s care. Name a Guardian If you are a parent who is acting as a caregiver for a special needs child, you should name a guardian—and more than one alternative—in your will to serve in the role of physical caregiver if you pass away or are no longer able to care for your child. Otherwise, the decision about who will act as a guardian will be left to the court, which may not reflect your wishes. If the care recipient is an adult, you must ask a court to name you as your loved one’s guardian and/or conservator to be able to make decisions about their health care, living arrangements, and finances. If you are providing day-to-day care, you may want another trusted person who can handle your care recipient’s financial matters to act as conservator. What happens if you are no longer able to act in the role of guardian for your adult care recipient? State law varies regarding the designation or appointment of a successor guardian for an adult. Some states allow a standby guardian to be appointed at the same time the first caregiver is appointed or to be designated in the initial guardian’s will or in another written document, as long as it is properly witnessed. If anything happens to you, the standby guardian can immediately step in to begin providing care. Some states allow a standby guardian to serve for a brief time but require approval by a court before being appointed as the permanent guardian. Still, other states have laws enabling the court to consider an individual you nominate in your will as a successor guardian when the court is making the decision about who is the best person to take on that role. We can help you determine the best course available for you. Consider a Special Needs Trust A will alone is unlikely to adequately address the needs of your care recipient. If you leave money outright to the person for whom you are caring or to another caregiver, it could be spent in a way that is contrary to your wishes, and will now be vulnerable to creditors of the recipient. In addition, it could make your loved one ineligible for government benefits or aid. A special needs trust is an estate planning tool that may be very beneficial for your care recipient. A special needs trust can help preserve the beneficiary’s eligibility for government benefits, name a well-qualified trustee to manage the trust funds, designate a care manager, and preserve your loved one’s quality of life. Along with your financial advisor, we can help determine which of your resources can be used to fund the special needs trust or if a life insurance policy may be needed to ensure that there are sufficient funds available to provide for the beneficiary’s care. We can help you create a trust that sets aside, protects, effectively manages, and distributes assets for your care recipient’s lifetime, and equally important, designates a trusted individual to act as an advocate for your loved one if you cannot. We Are Here for You It is important not only to recognize your own emotional needs and develop the skills needed to deal with the stresses of caregiving, but also to reach out for help when you need it. As a caregiver, it is crucial to ensure not only that your own future is secure, but to also create plans that provide for your family and care recipient if something should happen to you. Take the time to create an estate plan, or if you have a plan in place, to reevaluate it at regular intervals to address changing life circumstances and laws. Please call us today to set up a meeting. We can help put your mind at ease by designing a plan that provides security for you, your family, and your care recipient. Read More
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