Thursday, June 30, 2016

Wish Social Security had a Senior Citizen Inflation Rate.....

Our senior clients suffered a big disappointment in January – after years of getting a “raise” in their social security benefit, alas, there was no cost-of-living increase for 2016.
And just why was the cost-of-living adjustment withheld this time? As Jonathan Peterson writes in the AARP Bulletin, “The consumer price index for urban wage earners and clerical works did not rise between the third quarter of 2014 and the third quarter of 2015.”  In fact, Peterson adds, lower gas prices pushed the index into negative territory.

“Hey!” critics are shouting.  “That’s fine for workers, but what about the effect of rising prices on retirees?”  The sample on which the measurement is based excludes families whose main source of income is Social Security or private pensions.

Older consumers spend more than younger people do, Peterson emphasizes, on three critical items:
  • Health care
  • Food
  • Housing

Older consumers spend less on:
  • Education
  • Clothes
AARP’s position is that Social Security should use an inflation index that more accurately reflects the spending patterns of older consumers.  Instead of relying on the CPI-W (the index based on wage earners and clerical workers), Social Security ought to use the experimental index CPI-E, which places more weight on healthcare and housing.

The CPI-E has increased at .2% a year faster than the CPI-W, and, had it been considered this time around, would have resulted in a .6% increase in benefits for 2016, around $100 a year for the average senior retiree.

The purpose of the COLA, the Social Security Administration explains, is to ensure that the purchasing power of Social Security benefits is not eroded by inflation. But, what if the definition of inflation doesn’t fit senior citizens? That, says AARP, is the question!

- by  Corinna A. Smith of Rebecca W. Geyer & Associates

Monday, June 27, 2016

Are Retirement Withdrawal Calculations Different for Same Sex Couples?

With the legalization of same-sex marriage, there have been many changes with regard to estate and retirement planning for same sex couples. While married couples have certain estate rights and obligations by law, unmarried individuals in committed relationships with domestic partners need to have estate planning documents that permit them to be decision makers for one another.  Without that documentation, a same-sex partner would not have any legal authority to handle finances or make medical decisions for the partner, nor, without planning, inherit from that individual.

At Geyer & Associates, our estate planning attorneys often explain that our document “tools” for same sex-couples fall into two general categories: “Lifetime documents”, which govern events during life up until the individual’s death, and “Post-life documents”, which govern what happens with the individual’s assets after death. 

Lifetime documents for same-sex couples include:
  • Durable Power of Attorney
  • Health Care Power of Attorney
  • Visitation Authorization
  • Living Will
  • Funeral Planning Declaration
  • Domestic Partnership Agreement (for unmarried couples)
At Geyer & Associates, we’ve found that in serving same-sex couples by putting “lifetime documents” in place, we create peace of mind for our clients.  This aspect of estate planning is about expressing what you want while you’re alive, both as individuals and as a couple.
Even planning how to make retirement funds last can be different for same-sex married couples as opposed to unmarried same-sex couples, according to John B. Mitchell, who writes about same sex couples in the Journal of Financial Planning.

Married same-sex couples can take advantage of spousal rollover rules for retirement plans, deferring the withdrawal of funds in the retirement account and payment of income tax on the distribution until the surviving spouse reaches 701/2.  Unmarried same-sex couples may only take advantage of inherited IRA rules for non-spouses which require distributions to be taken from retirement plans the year after the retirement plan participant dies.

Now that same-sex marriage is legal, new questions are arising in financial planning discussions:

  • If women live, on average, five years longer than men, shouldn’t same sex female married couples use a lower retirement withdrawal rate in order to be sure the money lasts for life? If a male couple, shouldn’t we be able to use a higher retirement withdrawal rate?
Mitchell cites statistics for male-male, female-female, and male-female couples, with the rate of decrease in male same-sex couples’ longevity being the greatest.  However, he concludes, the differences are not large, and same sex couples can reliably use withdrawal rates recommended for heterosexual couples. 

The goal for all couples, of course, is to protect against “failure”, meaning running out of money.  The best protection is to ensure proper planning is in place which coordinates the couple’s assets with their estate planning documents.

- by  Ronnie of the Rebecca W. Geyer blog team

Thursday, June 23, 2016

Elder Abuse Earns Headlines, Not Always Court Time

Elder abuse has changed from a subject rarely discussed to a national dilemma that gains media headlines, Jonathan Golding writes on the National Consumer Law Center website. Unfortunately, Golding notes, when an elder abuse case reaches the courtroom, a juror’s task may be particularly difficult. Given the inherent privacy and secrecy surrounding elder abuse, these cases often lack physical evidence and corroborating witnesses.

In fact, most incidents of elder abuse are never brought to the judicial system in the first place, as Lori Stiegel observes on the American Bar Association website. That’s lamentable, as courts could play a critical role in protecting victims from abuse and enabling them to recoup financial losses they have suffered.

There are numerous reasons victims of elder abuse do not seek relief or compensation, Stiegel points out, including these:
  • Not wanting to get the abuser in trouble
  • Dependence on the abuser
  • Fear of further abuse or retaliation
  • Fear of being placed in a nursing home or other institutional setting
  • Difficulty traveling to a lawyer’s office or courthouse
  • Lack of available substitute caregiver
  • Physical evidence and witnesses may be unavailable

Despite all these obstacles, there has been significant growth in case law related to elder abuse, Stiegel notes. No longer is elder abuse viewed as solely a social problem to be addressed by human-service agencies and aging organizations; we are now beginning to view abuse as a legal problem to be addressed through legal action.

This change is due to many factors, Steigel posits, including:
  • There are more older people
  • There are more incidents of elder abuse
  • Our society has become more litigious
  • Several states have enacted elder abuse statutes

According to Indiana Adult Protective Services, “There are almost one million people in Indiana aged 65 and over, and that number is growing. Each year, more than 40,000 cases of elder abuse and neglect occur in Indiana, and it is estimated that only 1 in 14 cases are reported.

“It is estimated that 80% of the care provided for the elderly is given by family members. Ironically, the abuser is often a family member who takes on the responsibility of care with the best of intentions, but due to the inevitable financial or emotional stress of the situation, loses control. National studies show that before the first abusive act, the caregiver typically has been caring for the elderly for 9 years, often with very little recognition or help.”

As elder care attorneys, we realize that long term care planning can help families cope with the many issues and questions surrounding the care of elder family members.  Planning often includes investigating:
  • The availability of veterans’ aid benefits
  • Care option in each stage of the aging process, including options under Medicaid
  • Guardianship for incapacitated/incompetent loved ones
  • Special needs planning for disabled loved ones to ensure continued receipt of government benefits
While no magic bullet exists that can address all the financial and emotional stress of elder care, advance financial and legal planning can go a long way, we believe, towards preventing elder abuse before it ever reaches a courtroom.

- by  Ronnie of the Rebecca W. Geyer blog team

Tuesday, June 21, 2016

Can Responsible Party be Held Rosponsible for the Bill?

If a son or daughter signs a nursing home admission form for a parent as “Responsible Party”, does that mean the adult child is responsible for paying the bill if the patient runs out of money? An interesting 2014 ruling in the Indiana Court of Appeals provides a partial answer to that question.

When a certain woman was being admitted to a Trilogy Health Services nursing home back in 2012, her daughter signed the papers as a “Responsible Party”. After Mom died later that year, it was discovered her estate lacked sufficient funds to pay her bills for bed hold charges and respiratory equipment she had used. Trilogy sued the daughter for repayment.  While the trial court initially ruled that the daughter was responsible to pay the nursing home from her own funds, the Court of Appeals overturned that judgment, noting that:
  • Both federal law and state regulation prohibit a nursing facility from requiring someone other than the resident to be guarantor of payment.
  • A nursing facility can require that a person with legal access to a resident’s income or assets (as power of attorney or trustee) sign a contract to provide payment from the resident’s funds.
  • The Appellate Court noted that a relative who volunteers to be a guarantor, can later be held liable.
As elder law attorneys, we always caution adult children about signing on behalf of a parent who is being admitted to a nursing home. Exactly how you sign can make a tremendous difference in liability later on.

You may mean to be signing for Mom or Dad (meaning as his or her agent under a power of attorney), but it’s crucial to avoid signing as “guarantor” of payment (meaning pledging to use one’s own assets for repayment should the parent run out of funds).

The typical nursing home admission agreement contains different signature blocks:
  1. Legal representative – this is a third party, such as an attorney-in-fact under a valid power of attorney, the resident’s conservator or guardian, or a representative payee.
  2. Responsible party - a third party who has access to and agrees to use the resident’s income and assets to pay for the resident’s care. 
  3. Guarantor - a third party who agrees to be personally liable for the resident’s liabilities.
“Reviewing and understanding a nursing home admission agreement before it’s signed can prevent unpleasant surprises down the road if the resident runs out of money to pay the nursing home bill,” says Susan T. Peterson of Bench & Bar of Minnesota. 

At Geyer & Associates, we assist families with the review of admission agreements to ensure costly mistakes are not made.

- by  Rebecca W. Geyer

Saturday, June 18, 2016

Good Estate Planning Helps Keep it All in the Family

A recent trip to the Clabber Girl museum and restaurant in Terre Haute, Indiana reminded me just how fine an example the Hulman family is of succession and estate planning gone right.

“The 100th running of the Indianapolis 500 brings inevitable questions about the long-term future of the race and its famous track,” Anthony Schottle writes in the Indianapolis Business Journal. “But,” sources told IBJ, “thanks to a savvy tax-avoiding maneuver made long ago by late track owner Anton “Tony” Hulman, Jr., his grandchildren and great-grandchildren appear poised to lead the Indianapolis Motor Speedway into the next era.”

Decades ago, a highly-tax-advantaged strategy called a generation-skipping trust was set up by Tony Hulman, into which he placed his family businesses. And, while the Tax Reform Act of 1976 changed the law so that a transfer tax is imposed at least once in every generation, the measure “grandfathered” earlier trusts, which were allowed to continue under the old rules, continuing for generations of beneficiaries with estate and gift tax deferred. 

The point of generation-skipping trusts is to protect a family’s assets while they appreciate in value.  Heirs receive income in the form of dividends, but the assets themselves remain in the trust.

One source commented to IBJ’s Schottle that the Hulman generation-skipping trust should remain valid for 21 years after the death of Mari Hulman George’s last living child.

“Business succession planning should include some form of estate planning,’ writes G. Matthew Loftin of the Family Business Resource Center. Here at Geyer & Associates, we’ve often found that business owners are so busy developing their business that they do not have time to address the legal issues necessary to ensure their continued success, much less their succession planning. As we advise clients on proper organizational structure, the use of buy-sell arrangements, corporate restructuring and other planning, two goals are often:
  1. preserving the business
  2. reduction or elimination of costly taxes
Not always is the next generation interested in becoming involved in the family business, of course.  But when the next generation of family members wants to stay involved, good estate planning helps keep the business in the family!

- by Ronnie of the Rebecca W. Geyer $ Associate blog team

Friday, June 17, 2016

Sisters Versus Daughter in Heirship Dispute

There’s nothing like a true story when it comes to teaching a lesson, we believe, and a recent case that reached the Indiana Court of Appeals is a good example.

If only the father in the story had executed a will spelling out his wishes, there probably would have been no need for a court challenge or for bitter feud that developed between his daughter and her aunts. Fact is, as we estate planning attorneys so often explain to our clients, leaving one’s affairs for others to figure out is a sure recipe for conflict and disaster.

D. was born out of wedlock, and her mother listed no father on her birth certificate. D.’s father (whom we’ll call F.) lived with her mother and eventually married. During all the years D. was growing up, Father acted like a dad, told D. she was his daughter and introduced her to others as his daughter. Eventually, Father requested to be added to her birth certificate.  Shortly thereafter, F. and D.’s mother were divorced. In 2014, F. died, leaving no will.

F.’s sisters claimed they were his next of kin, but the court ruled in favor of D. as being the direct descendant of the deceased.  The sisters appealed, but the Indiana Appellate Court upheld the ruling and D. remained the sole heir to F.’s estate.

There were various twists and turns to the case:

  • D.’s mother had another child who had also lived with D. during her mother’s marriage to F., but that son laid no claim to F.’s estate.
  • The divorce papers listed no children of the marriage.
  • Indiana Code provides that children born out of wedlock are treated as if their parents had been married.
All these complications notwithstanding, the court ruled that the daughter was F.’s only direct heir.  There is, of course, no way to know whether that’s what F. would have wanted.

A will would have ruled.  In the absence of a will, Indiana law determined the result.

- by  Ronnie of the Rebecca W. Geyer $ Associate blog team

Monday, June 13, 2016

The Indiana Long Term Care Insurance Program

“Has a long term care insurance policy been put into place?” At Geyer & Associates, we know the answer to that question is going to make a big difference in our clients’ overall estate planning.  “While most Americans don’t believe they’ll need long term care,” observes AARP, “70% of those turning age 65 can expect to use some form of long term care during their lives.”

AARP lists three parties who benefit from long term care:
  1. Families who want to help protect their loved ones, lifestyle, and assets
  2. Retirees and pre-retirees wanting to preserve the money they’ve worked hard to save
  3. Individuals who many not have someone to care for them or enough assets to pay for care
As Indiana elder law attorneys, we’re proud of the fact that our state was one of the first states to create a Long Term Care Partnership program to help our residents protect their savings from the cost of long term care. And, while quite a number of insurance carriers offer long term care insurance, only a few offer policies under the Indiana Long Term Care Partnership Program.

The Partnership program was formed in 1993, with the two partners being:

1. The State of Indiana
2 Private insurance companies
Each of the parties agrees to do certain things:
  • The insurance companies agree to provide coverage for home and community-based care, including assisted living facility and nursing home care, that meets more stringent requirements of the plan.
  • The state, in turn, agrees to two things: a) guarantees that buyers will receive protection from Medicaid spend down (they can be eligible for Medicaid benefits and still keep assets) and b) allows the estate of the insured to keep assets at least equal to the amount of benefits used, without having to pay back the Medicaid dollars the insured received.
As part of our work with clients, therefore, Geyer & Associates takes note of the current Indiana Partnership policy requirements.  For 2016, for example, those are:

$115 minimum daily benefit
$336,927 total lifetime assets protection (If you are interested in preserving all your assets, your LTC policy must conform to those minimum amounts.)

Doesn’t traditional long term care (not Partnership) insurance protect assets?  Yes, in the sense that the benefits of the policy pay expenses so you don’t need to.  However, the asset protection from Medicaid spend down is available only with Partnership policies.

Indiana is in partnership with long term care!

- by  Corinna A. Smith of Rebecca W. Geyer $ Associates

Friday, June 10, 2016

Trusts Can Be As Complex as ABC

Married couples had better learn their alphabet as they create estate plans designed to keep assets in the family and away from the tax man. Alphabet-savvy trust planning is particularly important if spouses have different sets of final beneficiaries in mind.
Many people believe that AB and ABC trusts are a benefit only to the very wealthy, but the truth is, anyone can benefit.  AB and ABC trusts allow a couple to utilize both spouses estate tax exemptions.  In addition, the trusts are irrevocable, so that assets owned by A, B, and C trusts will be:
  • Protected from a divorce settlement in case the widow or widower remarries and later divorces
  • Available to the surviving spouse, yet preserved for the benefit of children
  • Subject to a deferral of estate taxes, which might well be significantly reduced in the future
The AB trust document became a standard estate planning document in the years prior to 1981. The basic goal was to reduce estate tax to zero on the death of the first spouse, leaving the assets available to support the surviving spouse. A second goal was to avoid appreciation in the estate so that there would be little or no tax due on the surviving spouse’s death.

The A trust is known as the Survivor’s Trust, and it holds the assets of the surviving spouse.  The B trust (also known as the Residual Trust, The Credit Shelter Trust, or Bypass Trust) holds the first-to-die spouse’s share of the estate (equal to the estate tax exemption amount).

With the Estate Tax Reform Act of 1981, a new category of trust property was created, namely the C portion of the ABC arrangement.  Also known as a QTIP (Qualified Terminable Interest Property), the trust would provide income to the surviving spouse, but upon the second death, it was fixed in advance who would inherit the assets. The “big deal” about the Bypass Trust is that it is not subject to estate tax when the surviving spouse dies.

What our estate planning attorneys find useful about the ABC arrangement is that, if it is properly structured, assets can pass down two generations without being subject to estate tax – no matter how large that trust grows to be!

The Complete Book of Wills, Estates & Trusts offers an example of a situation where ABC trust planning might be appropriate:
  • John and Mary each have children from a previous marriage.
  • Each wants to provide for the other, but want to be sure their estates will ultimately pass to their own children.
  • If John were to leave his entire estate to Mary, there would be no tax (because she’s his spouse), but later, when she died, there would be tax on the combined amount.
  • The ABC arrangement provides for the survivor’s needs but assures that the final beneficiaries will be both sets of children, while at the same time saving estate tax.
Trusts can be as complex as ABC!

- by Kimberly Lewis of Rebecca W. Geyer $ Associates

Wednesday, June 8, 2016

Elder Lawyer Cautions Clients About Elder Scams

There’s a reason why, as far back as 2013, TV stations, including WTHR in Indianapolis, were warning their viewers of senior scams. (The Federal Trade Commission Consumer Sentinel network database contained almost 124,000 individual consumer complaints that year alone from victims identified as aged 60 or older.) There’s a reason why the Office of the Indiana Attorney General now devotes numerous pages on its website to help seniors protect themselves from common scams.
And there’s a reason that, as elder law attorneys in Indiana, we at Geyer & Associates are constantly “preaching” about the need for vigilance in fighting financial scams aimed at parting seniors and their hard earned financial resources.
Some of the more common scams mentioned on the site include:
  • Phony sweepstakes and lotteries. You receive a notice by mail that’s you’ve won the Canadian Lottery, asking for a “small” amount to cover the tax on your winnings.
  • Charges for home repair services you’ve not initiated.
  • Promises to return lost money, charging a fee for recovery.
  • Property tax exemption offers for seniors.
  • Phony offers of medical devices or other products.
  • Calls or emails purporting to be from a relative or friend in trouble who needs money sent immediately.
The FBI website adds even more scam types to the watch-out-for list:
  • “Nigerian letter” scams
  • Ponzi schemes
  • Funeral and cemetery care fraud
  • Fraudulent anti-aging products
  • Reverse mortgage scams
  • Unnecessary lab tests (“rolling labs”)
“State legislators have become increasingly concerned about financial crimes against seniors and vulnerable adults,” Jenni Bergal of the PEW Charitable Trust wrote in 2014.

The FBI is on alert as well, and the agency’s Common Fraud Schemes web page provides specific tips for seniors (and for their concerned adult children) for avoiding different categories of fraud:

Avoid healthcare fraud by:
  • Never signing bank forms
  • Reviewing bills
  • Providing insurance and Medicare ID information to only providers of services
  • Keeping records of all healthcare appointments

Avoid telemarketing fraud by:
  • Obtaining salespersons’ mailing address, telephone number, and license numbers before transaction business
  • Not paying for services in advance
There’s a reason that we as Indiana elder law attorneys join the Indiana Attorney General and the FBI in constantly preaching the need for vigilance in fighting scams targeting seniors!
- by Corinna A. Smith of Rebecca W. Geyer & Associates

Monday, June 6, 2016

In Estate Planning, Reasonable Assumptions May No Longer Be Enough

“Times have changed.  Make sure your planning has changed, too,” New Jersey estate planner Martin Shenkman advises financial planners. Estate planning, Shenkman says, is much too often built upon assumptions that may no longer be true.

Charitable giving
What continues to be true is that clients at the highest and the lowest income levels give the most to charity. It’s easy to understand the first group – they can afford to give more. But, until now, planners have assumed lowest-income taxpayers give a lot because of religious considerations. But there may be a different reason altogether: the wealth effect. Those "low-incomers" actually have a lot of wealth relative to income. Advisors – including estate planning lawyers - need to understand that charitable giving may have nothing to do with getting tax deductions and everything to do about expressing  societal beliefs.

Charitable planning for wealthy clients used to center on avoiding federal estate tax. But with the estate tax exemption for a married couple now nearing $11 million, Shenkman explains, most estates will never face the tax.  Advisors, therefore can guide clients to make donations while alive, providing an income tax deduction.

Irrevocable trusts
Until recently, courts and laws have viewed irrevocable trusts as carved in stone. Today, as Shenkman points out, many states permit the “decanting” of trusts (merging old trusts into new ones). Trusts can now be updated to give clients a better result.

One example Shenkman cites is an old trust set to distribute all assets to children upon their reaching age 25.  A longer trust term could provide better asset protection and divorce protection.

Revocable trusts
Revocable trusts, largely used in the past to avoid probate, can be amended to protect clients against adverse actions by a trustee. As clients continue to live longer, revocable trusts can be redesigned to protect clients from identity theft and elder financial abuse.

In providing in-depth counseling to individuals and families, the attorneys of Rebecca W. Geyer & Associates take a lifetime planning approach, which by definition includes making changes as the laws change – and as circumstances change.

We know that Martin Shenkman is right – planning cannot be built on assumptions that may no longer be true!

- by Ronnie of the Rebecca W. Geyer blog team