Monthly Archive for January, 2008

Larry King and Ohio Substitute House Bill 404

Published on January 30, 2008 in Estate Planning and Recent Cases worth noting. 0 Comments

A while ago I blogged here (with an update here) on Larry King suing an adviser of his for a life settlement Mr. King apparently didn’t like (or at least regretted afterwards).

In this article in Columbus’ Business First we learn that “Ohio insurance regulators are taking aim at a method of buying life insurance policies from consumers, which they argue is hurting the industry in the state.”

The Ohio Department of Insurance is pushing Substitute House Bill 404, introduced in November, to tighten state law related to what are known as viatical settlements. The practice involves buying someone’s life insurance policy for less than its face value, taking over premium payments until the insured person dies, then collecting the full payout.

The practice offers the terminally ill or aged access to cash to pay medical bills or other expenses. For investors, viaticals hold out the promise of profits if the insured individual dies before the premium payments outstrip the payout.

As noted, in my update, a viatical settlement is different from Mr. King’s problem (which is technically a life settlement) but it appears he is not the only one who is apprehensive of using existing life insurance policies as investment opportunities by betting on the (sometimes waning) life of the original owner.

Stay tuned for updates.

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“Living Trust Mills Update”

Published on January 26, 2008 in Estate Planning and Recent Cases worth noting. 0 Comments

The Connecticut Elder Law Blog picked up on Dave Goldman’s post here listing recent Living Trust Scam Articles and resources on his blog. Its a great list that I’m very glad David took the time to put together. David emailed me after I posted here to thank me for linking to his original article on the same subject.

So David kind of started this ball rolling and then wrapped it up nicely with his list… And other estate planning bloggers out there are starting to pick it up…

The Connecticut Elder Law Blog wrote about David’s post here to add his two cents:

[T]here certainly are a lot of people who could benefit greatly from living trusts, specifically if the focus is avoiding the probate process. But I would argue that they are not documents that everyone needs. Perhaps these living trust marketers genuinely believe that living trusts should be as widespread as living wills. But I don’t agree, particularly since trusts are much more expensive than wills and require much more leg-work in regards to re-titling assets into the name of the trust. And I don’t believe in counseling my clients to take on the added expense and hassle if they truly don’t need to do so.

Well said Michael.

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New Poverty Guidelines Will Affect Medicare/Medicaid Eligibility

Published on January 26, 2008 in Estate Planning, Medicaid and SSI/SSDI/Medicare. 0 Comments

As if it wasn’t bad enough already for those relying on Medicare/Medicaid:

New federal poverty level (FPL) guidelines published January 23, 2008 will affect eligibility levels for many public benefits, including health benefits for older people and people with disabilities. 73 Fed. Reg. 3971, (January 23, 2008).

The best part is that “the new numbers are effective when published, but each program that relies on them may use a different effective date.” I don’t know what that means either.

According to Professor Kim Dayton of The Elder Law Prof Blog in this post:

The published poverty levels merely state a dollar figure for different sized family units. They do not address issues of what income is included, what deductions from income are allowed, who is included in a family unit or other use issues. These questions are addressed by the individual programs relying on the poverty guidelines. The amounts given below apply to the 48 contiguous states and Washington, DC. Rates for Alaska and Hawaii are slightly higher. A complete list of FPLs is available here.

Professor Dayton did the research already in her post – check it out here.

Thanks Professor.

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Pet Trusts In California

Published on January 26, 2008 in Estate Planning. 0 Comments

Professor Beyer writes here about SB 685 being considered by the California legislature.

At one time, California was a leader in the pet trust field when it passed Probate Code § 15212 providing that “[a] trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration.”

Although this statute authorizes trusts for the benefit of pets, it does not make them enforceable. In other words, pet trusts [in California] are merely honorary.

Thats nice and all, but most of us want some kind of security when planning for events after our deaths… This bill appears to do just that:

  • This bill would repeal the provisions regarding domestic or pet animal trusts and would provide instead that a trust for the care of a designated domestic or pet animal is for a lawful noncharitable purpose and terminates when no living animal on the date of the trustor’s death is covered by the trust, unless otherwise provided in the trust and subject to certain requirements.
  • The bill would require a court to liberally construe a pet trust to bring it within the bill’s provisions, to presume against an interpretation that would render the disposition a mere request or an attempt to honor the pet, and to carry out the general intent of the trust.
  • The bill would provide an order of disposition of trust property upon termination of the trust and would provide authority for the court to name a trustee and to transfer trust property, as specified.
  • This bill would permit a person interested in the welfare of the pet animal or any nonprofit charitable organization whose principal activity is the care of animals to apply to the court for appointment as trustee or for removal of a trustee.
  • The bill would provide a process for an accounting of the trust, to be waived if the value of the pet trust assets do not exceed $5,000.
  • The bill would require termination of a trust for the care of a covered domestic or pet animal that has a life span of 21 years of age or greater when that animal dies.
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    A Different Set of Tax Rules for Non-U.S. Citizen Spouses

    Published on January 26, 2008 in Estate Planning. 0 Comments

    Thanks to Michael Keenan of the The Connecticut Elder Law Blog for this post warning those couples who are not both US residents.

    When you have two spouses who are both U.S. citizens, then upon the death of the first spouse there is never any tax regardless of how large your estate is. [This is called the Marital Deduction and it can be found in §2056(a) of the IRS Code. Its unlimited as to both the amount of assets and the kind.] It’s upon the death of the second spouse when estate tax can become an issue if the surviving spouse dies with an estate that exceeds the federal exemption amount (currently $2 million).

    But…if one spouse is a U.S. citizen and one is not, and the U.S. citizen spouse dies first, then estate tax could become due at that point and the government is not going to wait until the death of the second spouse before collecting a tax. Why not? Because the government is worried about that foreign spouse high-tailing it back to his or her home country and dying there, in which case the U.S. government can’t collect a single penny of estate tax. So the government has decided to tax while the taxing is good…while that non U.S. citizen spouse is still here in the country.

    And he’s right! Kinda crappy isn’t it!

    So how do you get around this? (‘Cause you know there’s a way right…):

    Its called the Qualified Domestic Trust or QDOT. Basically a QDOT is a trust used to postpone the estate tax due when the first spouse dies when more than the amount of the individual federal estate tax exemption is left to a non-U.S. citizen spouse by the first-to-die where the first-to-die was the US citizen.

    A QDOT works by making the amount of money passed to it taxable in the estate of the surviving non-US resident spouse. However, the deferred tax is calculated using the tax rates in effect at the time of death of the first decedent. This differs from the approach used with the ordinary marital deduction trust in that the combined estates are taxed at the rates in effect when the surviving spouse dies. In a normal marital deduction trust, the decedent’s estate is added to that of the surviving spouse and tax at the higher marginal rate is imposed. However, with a QDOT, the decedent’s estate is run through the lower brackets as is the estate of the surviving spouse.

    QDOT Provisions

      1.The trust must have at least one U.S. trustee who is a U.S. citizen or domestic corporation.
      2.The trust document must provide that a distribution must not be made unless the U.S. trustee is permitted to withhold tax as required.
      3.The trust provisions must insure that there are proper provisions for the collection of the tax as provided for in the Treasury Regulations; and
      4.A QDOT election is made on the decedent’s estate tax return. §2056A(a).

    Basically, what I’m saying is: If you’re spouse is a non-US resident, then please contact an estate planning expert near you. As with all estate planning, you will have to pay the lawyer a little bit now, but it will save you even more later.

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    Elder Abuse Roundup

    Published on January 25, 2008 in Gaurdianships/Conservatorships and Recent Cases worth noting. 0 Comments

    No one wants to talk about it but it happens all the time… Much more than is actually reported. Loved ones of residents need to be constantly on the look-out for signs of abuse as reflected by their behavior.

    The growing issue of elder abuse in [Western North Carolina]

    This article contains some good (and scary stats).

    In 1997, 12 percent of the population in North Carolina was older adults, and the projection for 2020 is that the number will grow to 18 percent. To contrast, the 2000 Census states that persons over 65 make up 19.6 percent of Haywood County, 13.9 percent of Jackson County, 22.8 percet [sic] of Macon County and 16.7 percent of Swain County.

    In a recent survey of professionals who work with the elderly in the seven western counties, 72 percent suspect that abuse is going on in their communities and 91 percent believe that elder abuse goes underreported.

    Barnet acts to prevent elder abuse

    Over 280 health and social care staff attended an innovative event staged this week by Barnet Council to train them to prevent the abuse of vulnerable adults.

    At the event actors from AFTAThought acted out case scenarios featuring the types of situations that staff encounter in their day to day work. Staff then had opportunity to discuss and share their views in relation to the scenarios presented.

    This particular article mentions the government’s Dignity Challenge which, frankly, was news to me. More info here. In a nutshell its a challenge to service providers, “commissioners” (whoever they are), and the public espousing laudable aspirational goals for those concerned with Elder Care.

    Two Caregivers Arrested In Elder Abuse, Exploitation

    TALLAHASSEE, FL – Attorney General Bill McCollum today announced that the owner and operator of a Santa Rosa County Adult Family Care Home has been arrested and charged with exploiting an elderly resident of the facility.

    Apparently, after his caregivers went out of town, the victim was placed in the Tolbert Adult Family Care Home. After being forced to sleep on a couch for weeks and being constantly harassed by the owner, a despicable human being named Marian Tolbert, the victim eventually altered his life insurance policy to name Ms. Tolbert a beneficiary.

    “[U]p to five years imprisonment and a $5,000 fine” hardly seems enough.

    In another case Shirley Burch, an employee of South Florida State Hospital was arrested on charges that she abused a disabled resident of the hospital who is suffering from schizoaffective disorder by pushing her to the ground. “Burch was arrested by law enforcement officers with the Attorney General’s Medicaid Fraud Control Unit. Witnesses reported that Burch, 51, often became angry at a 68-year-old resident and on at least two occasions pushed him hard enough to cause him to fall. The elderly victim sustained multiple facial lacerations as a result of the abuse.”

    Burch was subsequently terminated from her employment at the hospital.

    Good riddance.

    Grim pattern to reports of abuse

    The details about John R. Riems’ alleged assaults against nursing home residents seem grimly familiar to social workers. They say assaults against mute and helpless victims fit a pattern.

    [...]

    A fact sheet on elder sexual abuse from the Maryland Coalition Against Sexual Assault says perpetrators are most likely to be male, and victims most often are women older than 70 who are “totally dependent or functioning at a poor level.”

    Riems, recently fired from his position as a nurse at Concord Care and Rehabilitation Center, is accused of raping a 55-year-old man unable to talk or see because of a stroke.

    Sexual abuse cases in Ohio verified by the Ohio Long-Term Care Ombudsman office:

      2007: 15
      2006: 9
      2005: 7

    Because this blog is public I’ll refrain from listing the preferred treatments that should be forced on this cockroach for the duration of his sad life.

    Thanks to Kim Dayton of the Elder Law Prof Blog.

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    9 Out of 10 CPAs Say Their Clients Are Concerned About…

    Published on January 25, 2008 in Estate Planning. 0 Comments
      1. Retirement
      2. Health Care Costs
      3. Education Costs

    In responding to an open-ended question, nine out of 10 CPAs surveyed said their individual clients were concerned about retirement. Costs associated with health care and education were ranked by respondents as the second (59 percent) and third (47 percent) financial concerns of clients.

    “Many Baby Boomers are discovering their retirement kitty is not as big as it needs to be to fund a comfortable retirement and that they are going to have to work longer than they had intended,” said James Metzler, AICPA vice president.

    The results of the poll were released today at the AICPA’s 2008 Advanced Personal Financial Planning Technical Conference in Las Vegas.

    According to this story about AICPA’s most recent Survey of CPA Financial Planners.

    The American Institute of Certified Public Accountants is the national, professional association of CPAs, with more than 350,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies; federal, state and local governments; and non-profit organizations. It develops and grades the Uniform CPA Examination.

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    Not Trusts & Estates But…

    Published on January 25, 2008 in Uncategorized. 0 Comments

    … it is about Ohio… and blogging… And blogging in Ohio.

    The Ohio State Journal of Criminal Law has its own blog now.

    You can find it here.

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    Living Trust Scams/Trust Mills/Elderlaw Planning Seminars – STAY AWAY!

    Published on January 21, 2008 in Estate Planning and Recent Cases worth noting. 0 Comments

    A living trust scam is typically where [older] couples are drawn to a seminar (of some kind) at which they are sold a one-size-fits-all estate plan that almost always involves some kind of a trust. However, there is no such thing as a one-size-fits-all estate plan.

    Ohio has a history with these “Trust Mills” but ever since Cleveland Bar Association v. Sharp Estate Services, Inc. et. al. (2005) 107 Ohio St. 3d 219; 837 N.E.2d 1183, (Decided December 14, 2005) it has been more difficult to find one of these shops. Thankfully.

    But they’re still out there…

    On January 17, 2008, Professor Beyer linked to this story by The State Bar of Texas called “Living Trust Scams and the Senior Consumer.”

    Living trust sales are a growing area of consumer fraud. Con artists make millions of dollars every year selling unnecessary trusts. Each year thousands of consumers lose from $500 to $5,000 through the purchases of living trusts. Often families face potentially greater costs after the consumer’s death, resulting from problems associated with the trusts.***

    Here are some of the suggested ways to avoid being a living trust scam victim:

  • Take time when making your decision. Do not fall victim to high-pressure, “act immediately” sales tactics.
  • Seek the advice of someone trustworthy and knowledgeable. Contact your accountant, estate planning attorney, banker or financial advisor.
  • If you conclude that a trust may be right for you, deal directly with a licensed * * * attorney who has substantial expertise in estate planning.

    • And David M. Goldman of Florida and Florida Estate Planning Lawyer Blog, writes here about a Texarkana, Arkansas class action suit against these scurrilous con-artists:

    A number of Texarkana residents have filed suit against sellers of living trust documents in a class action accusing the salesmen of exploiting senior citizens. [...]

    A Plaintiff says he purchased a living trust after attending a lunch presentation at a restaurant. He states the document was misrepresented and that if he dies with only these estate-planning documents, his estate will still need to be probated because the living trust failed to factor in his real property in Arkansas.

    The living trust sellers are facing allegations of “masquerading as qualified financial advisers, estate planners, lawyers, and paralegals” to “exploit and prey” upon senior citizens with the creation and selling of “unnecessary and often useless” living trusts.

    Defendants are accused of fraud, unauthorized practice of law, negligence, breach of fiduciary duty and conspiracy. The suit alleges that the defendants created and sold the living trusts as part of a scheme to gain access to senior citizens’ financial information in order to sell annuities and other financial products.

    According to the original complaint, the scheme begins with advertisements that persuade senior citizens to attend a free lunch or dinner. At these meetings, the “unlicensed” living trust defendants conduct presentations and distribute materials that misrepresent the impact of probate fees and estate taxes in order to create fear that the senior citizens need to buy a trust to prevent heirs from losing their estate.

    These presentations include references to celebrities such as Elvis and describe the large amounts these celebrities have paid in estate taxes. The plaintiffs state these presentations do not include information about the federal estate tax exemption, the sliding scale of the exemption amount, or the possibility of the elimination of future estate taxes.

    Read the rest of David’s post here.

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    Legacy Trusts For The EveryMan/Woman/Couple

    Published on January 19, 2008 in Estate Planning. 0 Comments

    This NYT Article by Hillary Chura on January 5, discusses the benefits of legacy trusts for “regular people” – aka, those of us who don’t have millions of dollars:

    ONCE only for the superrich, dynasty trusts now provide a way for the rest of us to leave money to loved ones, preserve wealth for future generations and even control how an inheritance is used once donors die.

    There are a record nine million households in the United States worth $1 million or more, excluding their primary residences, according to the Spectrem Group, a consulting firm specializing in the affluent and retirement markets. Therefore many more parents, kindly uncles and loving grandparents now have the wherewithal to use their lifetime of savings to enrich their children’s lives without destroying them.

    “The philosophy is that you leave them with enough to do something but not enough to do nothing,” said Richard A. Lehrman, a Miami Beach lawyer, underscoring a common sentiment among wealth managers.

    But, while one’s assets are important to consider when deciding how complex your estate plan should be, these trusts also allow one to “parent from the grave” by placing conditions, both positive and negative, on a beneficiary’s receipt of their share of the trust.

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