July 14, 2017

NAELA Take on Senate HealthCare Bill

Dear NAELA members,

Yesterday, the Senate released its initial version of the American Health Care Act, called the Better Care Reconciliation Act.

I appreciate that the Senate heard NAELA’s concerns regarding the provision in the House passed American Health Care Act that would have imposed new restrictions on how much home equity states could exclude when an individual applied for Medicaid. This provision would have been particularly harmful to individuals with disabilities in high-cost areas who wished to remain at home.

Unfortunately, the Senate version of the American Health Care Act makes even worse the House’s radical changes to Medicaid by capping the federal government’s commitment to individuals with disabilities and low-income seniors, putting their health and well-being at risk. Then, starting in 2024, it limits federal payments to the states based on the growth of the Medicaid inflation, which, over time, could be insufficient to keep up with the cost of care. This could not come at a worse time, as the population of Americans over the age of 85 grows rapidly.

As members of the National Academy of Elder Law Attorneys (NAELA), we represent individuals faced with significant long-term care needs. These are some of our nation’s most vulnerable people. Many require assistance to perform the most basic life functions. Their families are emotionally, physically, and financially exhausted from the process. They have had their dignity stripped and lost their life savings as a result of illness and disability.

Many of us cannot imagine ourselves in such a situation, but disability and disease can happen to anyone. For many people, including most middle-class and working-class Americans, it’s Medicaid, not Medicare, that provides them with care in these situations.

Changing Medicaid’s financial structure for the worse without addressing many of the underlying issues in the program only exacerbates these problems. Take just one example: Providing services at home is optional while more costly institutional care is mandatory. States under new budget constraints from the per-capita cap may keep the mandatory and jettison the optional. So the change in financial incentives puts Americans, such as those with dementia, a spinal cord injury, or children with developmental disabilities, at risk of being institutionalized when they could otherwise receive care in a less restrictive, less costly, more comforting setting.

The Senate also continues with the House’s repeal of Medicaid’s three-month retroactive coverage. Without retroactive coverage, the families of seniors discharged to a nursing home after a traumatic accident could be liable for tens of thousands of dollars of nursing home costs, which facilities may then deny them entry because they lack sufficient funds.

Medicaid can be improved upon so that individuals with disabilities and older Americans can receive the long-term care they need, without having to become destitute to do so, without having to put unneeded stress on their families. The Better Care Reconciliation Act, as proposed by the Senate, does not do that. It simply makes an already bad situation worse.

I urge all members to call their senators and ask them to vote against this legislation. NAELA will be making talking points and contact information available for you on Monday to do so.

Sincerely,

Hy Darling, CELA, CAP
NAELA PresidentAC

July 13, 2017

How Long Can You Put Off Estate Planning?

When it comes to estate planning, Americans procrastinate. However, it can only be put off for so long.

Even people who like to make detailed plans about everything else, are often tempted to put off estate planning for as long as possible. It is just human nature to prefer not to think too much about what will happen to our worldly possessions, after we pass away.

It can be difficult to imagine our things and our loved ones having a life after us. This leads to estate planning procrastination.

Truthfully, that is never a good idea. You do not know when you will pass away. It can happen suddenly and sooner than you want.

However, if you do procrastinate when it comes to your estate planning, you should know that the procrastination needs to end at some point.

This point was made by the Twin Cities Pioneer Press in "3 moves you should make in the first 3 years of retirement."

If you have managed to put off estate planning until after you have retired from work, then now is the time to stop putting it off.

With any luck, you will still live many more years. On the other hand, estate planning is about more than just deciding what happens to your possessions and assets after you pass away.

It is also about securing your own final years and making sure you have powers of attorney and advanced health care directives in place, should you ever need them.

In the end, estate planning gives you peace of mind in knowing that your family will be okay after you pass away and that you will also be okay, should you ever need help.

If you have retired and still have no estate plan, then talk to an estate planning attorney as soon as you can.

Reference: Twin Cities Pioneer Press (June 17, 2017) "3 moves you should make in the first 3 years of retirement."

July 12, 2017

You May Not Know What You Think You Do

People have a lot of false ideas about estate planning and how wills and trusts work. They should seek out people who do know what is correct.

We do not all like to admit it, but the truth is that we are all often wrong. Many of the things we thought were right, we later learn were incorrect.

Logically, that means many of the things we are “sure” about now, we will only learn to be less so later on.

There is no shame in this.

We cannot be experts in everything.

A physicist cannot be judged too harshly for getting the details of macroeconomics wrong, for example.

One area that many people are often very wrong about is estate planning, as pointed out in TCPalm in "Misconceptions about wills and trusts."

The article mentions several things people are often wrong about when it comes to estate planning. What is specifically mentioned in the article, however, is not as important as understanding that you are probably wrong about estate planning.

You might not be wrong about everything that has to do with estate planning, but you are almost certainly wrong about more things than you think you are.

This suggests that you should not do your own estate planning.

You are wrong about some aspects of estate planning and you do not even know which aspects you are wrong about.

Consequently, you should seek out people who are experts in estate planning and those people are estate planning attorneys. Let them help you with your estate plan.

That would be the wisest thing to do, just as it would be wise for estate planning attorneys to seek out your advice in your line of expertise.

Reference: TCPalm (June 16, 2017) "Misconceptions about wills and trusts."

July 11, 2017

New Zealand Trusts

Changes to New Zealand's foreign trusts laws might show that using offshore trusts to hide assets is more prevalent than previously thought.

For many years, New Zealand has been thought of as a great place to hold foreign assets in trust. The nation had lax laws and allowed foreigners to have tax-free trusts with little oversight.

When the Panama Papers, the leaked emails of a law firm in Panama, were released, all that changed.

It was revealed that New Zealand was being used by some very wealthy people to hide assets from their own governments. This created some international pressure on New Zealand by other governments, as those other governments do not appreciate avoidance of their taxes.

In response to this pressure, the New Zealand government changed its trust laws. All foreign trusts were required to register, declare who controlled the trusts and declare who the beneficiaries of the trust were.

It was assumed this move would not be a burden for most foreign trusts, since there are many reasons someone might want to have a tax-free trust in New Zealand other than tax avoidance.

However, most foreign trusts have failed to register under the new law and many have fled the country, as the Wills, Trusts & Estates Prof Blog reports in "Trust the Kiwis."

This suggests that using foreign trusts to hide assets is more common than previously thought.

Accordingly, government regulators will look for other ways to crackdown on trusts and make tax avoidance more difficult.

Reference: Wills, Trusts & Estates Prof Blog (June 20, 2017) "Trust the Kiwis."

July 10, 2017

Model’s Estate Sues Chiropractor

The estate of a former Playboy model is suing a chiropractor for wrongful death.

One of the many tasks that the executor of an estate has, is to assess whether anyone owes the estate any money or could be determined to owe the estate money, if sued. If the answer to either question is yes, then the executor has a duty to act accordingly and try to collect on behalf of the estate for the benefit of the heirs.

A recent example of this comes from the estate of Katie May, a former Playboy model. May apparently suffered injuries during a photo shoot and went to a chiropractor for treatment.

The chiropractor worked on her neck. She later died.

The coroner determined the treatment injured her artery and cut off blood flow to her brain, as TMZ reported in "Playboy Model Katie May Estate Sues Chiropractor…Your Treatment Killed Her."

May's executor and the father of her child is suing the chiropractor for wrongful death on behalf of the estate. Even if he did not personally believe the coroner's report that the chiropractor was responsible for May's death, he would likely have an obligation to sue.

While this is an unusual case in that it features a Playboy model and an apparent death at the hands of a chiropractor, it illustrates something important. Executors have duties to the estate and some of those duties can be challenging.

It is for this reason that executors are advised to get the assistance of estate attorneys to help carry out their duties.

Reference: TMZ (June 14, 2017) "Playboy Model Katie May Estate Sues Chiropractor…Your Treatment Killed Her."

July 5, 2017

Forgotten Estate Taxes

Many people who think that there is no reason that they need to plan for the estate tax, will have estates that face large estate tax bills because they have not thought about state estate taxes.

When most people think about estate taxes, if they think about them at all, they think about the federal estate tax. That is the estate tax that receives most of the attention in the national media.

For most people that is the only estate tax they do need to worry about. It is the only one that could apply to their estate.

Most people do not need to worry too much about it, since their estates will be below the historically high estate tax exemption at the federal level.

Nevertheless, there are other forgotten estate taxes that can create problems as the Wills, Trusts & Estates Prof Blog points out in "Don't Underestimate State Estate Taxes."

Maryland and the District of Columbia have their own estate taxes, in addition to several other states.

These state taxes often have much lower exemptions than the federal government.

The estate of someone who has planned only for the federal estate tax, might have to pay a large and unexpected bill to these states to cover the state taxes.

As is the case when the federal estate tax has not been adequately planned for, not planning for state estate taxes can create problems for estates that have few liquid assets and thus no simple way to pay the bill.

Fortunately, planning around state estate taxes can be done with the help of an experienced estate planning attorney.

Reference: Wills, Trusts & Estates Prof Blog (June 8, 2017) "Don't Underestimate State Estate Taxes."

July 3, 2017

Tax Court Rules against Minnesota

The tax court has ruled against the state of Minnesota and declared its income tax statute unconstitutional, as it applies to some trusts created in that state.

Minnesota has an unusual way of taxing trusts. The state's income tax statute makes 100% of a trust's assets taxable in that state, if the trust became irrevocable when the settlor was a resident of Minnesota.

This rule applies regardless where the trust beneficiaries reside or where any trustees reside.

Fortunately, the tax court has decided this method of trust taxation is unconstitutional, according to the Wills, Trusts & Estates Prof Blog in "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional."

The court looked at trusts that had an out-of-state trustee, beneficiaries who lived in Minnesota and beneficiaries who lived in other states.

It determined that these trusts could not be considered resident trusts of Minnesota and, therefore, the state could not tax intangible assets. Presumably, the same logic could be applied to some other trust situations.

This ruling could lead to refunds for some trusts.

However, those refunds may not come in the near future, since it is expected that the state will appeal this ruling to the Supreme Court, which could render a different decision.

Reference: Wills, Trusts & Estates Prof Blog (June 7, 2017) "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional

Building Legacies that Last Estate Planning and Elder Law

Month: July 2017