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Nursing Home Arbitration Clauses Can Be Difficult

Mandatory arbitration clauses are being worked more and more into nursing home contracts and those clauses aren't aimed at helping the patient.

According to the fine print, any dispute between the consumer and the company are handled under contract by arbitration if the company has its say. Nursing homes and other elder care facilities are increasingly inserting similar arbitration clauses into their contracts.

Companies are quick to note that arbitration is normally faster and cheaper than going to court. However, consumer advocates and elder law attorneys point out that these clauses do not necessarily benefit consumers. In reality, arbitration can make it more difficult for consumers to prevail and remedies that might be available in court are sometimes not available in arbitration.

The Wills, Trusts & Estates Prof Blog reports that a court in Arizona recently refused to enforce the arbitration clause in one nursing home's contract in "Arizona Court Overturns Home Arbitration Agreement."

In this case, the man who signed the contract on behalf of his mother did not have any legal authority to bind her to arbitration. He was not her power of attorney.

Going further, the court also signaled that such a ruling could apply more broadly. According to the court, the arbitration clause could be seen as an unenforceable contract of adhesion.

As the article notes, in many states consumers have a legal right to strike out the arbitration clauses before signing the contracts.

Before you sign any contract about nursing home care it would be beneficial to consult with an elder law attorney.

Reference: Wills, Trusts & Estates Prof Blog (Feb. 2, 2016) "Arizona Court Overturns Home Arbitration Agreement."

Please visit our website for more information on estate planning.

States Evaluate Importance of Estate Taxes

Since wealthy elderly residents have been known to relocate to states with more favorable estate tax laws, a clear trend has developed with more and more states reducing or eliminating estate taxes.

A dilemma has been presented to state governments facing revenue declines. They can raise tax revenue by taxing the estates of the wealthy but they then risk their own residents relocating to more lenient states before they pass away.

When such citizens move away that means these state governments with estate taxes do not receive income or capital gains taxes from those wealthy people. In the end, such states must determine which taxes are more important to them and their budgets.

Kiplinger's Personal Finance reports in "More States Giving Heirs a Break on Estate Taxes" that the majority of states have chosen to keep their citizens rather than impose an estate tax.

So, how many states still have an estate tax? At present, this number includes only 14 states and the District of Columbia. Tennessee is the latest state to do away with its estate tax and six other states have increased their estate tax exemptions recently.

Although it might be tempting to say this trend is clear evidence that estate tax revenue is not as important as other revenue, there probably is not enough definitive evidence to make that claim. The political controversy surrounding the estate tax might play some role in this trend amongst the states.

It will be worth watching if the states still imposing the tax continue to face pressure to repeal it to keep the wealthy from fleeing to other states in their retirement years.

An estate planning attorney could be helpful in guiding you through these important issues.

Reference: Kiplinger's Personal Finance (February 2016) "More States Giving Heirs a Break on Estate Taxes"

Please visit our website for more information on estate tax or to register for a free living trust seminar.

Trump's Actions Involving Father's Estate Spark Media Attention

Family disagreements can sometimes rise into public view as seen in Donald Trump’s campaign for president.

Given presidential candidate Donald Trump’s temperament for blunt, off-the-cuff comments, it should come as no surprise that a challenge to his father's will caused Trump to act out of anger and he is now answering questions about it.

Trump's older brother was not interested in the family real estate business. He instead became a pilot until alcoholism forced him out of the sky. He died from the disease in 1991.

When Trump's father passed away in 1999, Fred Trump III, Donald's nephew from his brother, spoke at the funeral. That night Fred III's child was born with cerebral palsy. Donald Trump pledged that the Trump family would take care of the child's medical needs.

However, when his father's will was read it was discovered that his brother's family was cut out of the will.

Donald Trump had helped create the will.

His nephew's family claimed Donald and his other siblings had unduly influenced their father who suffered from dementia. They challenged the will. This angered Trump and he cut off support for the child with cerebral palsy.

The Daily Mail has more on this story in "Donald Trump admits cutting off medical treatment for his nephew's sick baby after will dispute with alcoholic brother's family."

Undoubtedly this story will be used for political reasons as long as Donald Trump remains a presidential candidate.

There is, nevertheless, a non-political lesson in all of this.

When families feud over estates, the feuds have a way of affecting others, like the medical treatment of a sick child.

Contacting an estate planning attorney could possibly help avoid such issues.

Reference: Daily Mail (Jan. 3, 2016) "Donald Trump admits cutting off medical treatment for his nephew's sick baby after will dispute with alcoholic brother's family."

Please visit our website to learn more about handling estates with special needs or to register for a free living trust seminar.

A Headache Can Accompany Long-Term Care Insurance

The possibility of acquiring a long-term care insurance policy can bring confusion, a waste of time and a headache.

The cost of nursing home care can be extreme and more and more people are looking at possible solutions to paying those costs. An industry arose to answer those concerns and insurers began offering policies to cover those costs. While it sounds like it might be a simple solution to a difficult problem, it appears the process isn't so simple.

Recently, The New York Times discussed the complexities in an article entitled "Long-Term Care Insurance Can Baffle, With Complex Policies and Costs."

The key thing to understand is that 90% of the companies that offered long-term care policies in the past no longer do so. These companies discovered it is very difficult for insurers to make money on the policies.

Those companies still in the market offer a confusing array of policies with benefits and costs that are not always easily understood. It can be migraine-inducing for people to figure out what they are getting if they purchase a policy.

It can also be a complete waste of time for a couple of reasons.

First, 40% of people who apply for the policies are turned down for health reasons. Second, the policies do not offer life coverage. They are short term policies and if your need for coverage exceeds the policy term then the money spent on premiums is wasted.

If you are looking into long-term care insurance it might be wise to seek independent advice such as from an estate planning attorney or elder law attorney to be sure the policy is of value to you and what benefits you would actually receive.

Reference: The New York Times (Dec. 18, 2015) "Long-Term Care Insurance Can Baffle, With Complex Policies and Costs."

Please visit our website for information on estate planning.

The Charitable IRA Tax Break Is Now Permanent

A popular tax break since 2006 has been the IRA charitable rollover exclusion for seniors and their favorite charities and it has now been made permanent.

Seniors have often used donations to charities as a method to reduce the size of an estate for tax reasons as well as philanthropic reasons.

In 2006, Congress made it much easier for many people over 70½ to make donations. They could donate up to $100,000 directly from their traditional IRAs to charity without facing income tax penalties. However, as Congress so often does this charitable rollover exclusion was not made a permanent part of the tax code. It required periodic reauthorization.

It has recently been made permanent retroactive to Jan. 1, 2015 as reported by the Wills, Trusts & Estates Prof Blog in an article entitled "Congress Makes Permanent IRA Charitable Rollover Exclusion." Of course, this does not mean the exclusion cannot be taken out of the tax code by Congress later. It just means that it does not need reauthorization to stay in the code.

While this is a great benefit for elderly people trying to spend down their estates, it is important to remember not to start the spend down process without first consulting an estate planning attorney. Dealing with the estate tax and reducing the size of an estate should be handled as part of a larger estate plan.

The charitable rollover exclusion is the best option for some people but it is a wise course of action to consult with an estate planning attorney for all options available.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 20, 2015) "Congress Makes Permanent IRA Charitable Rollover Exclusion."

Please visit our website for more information on charitable donations.

Just How Healthy Are Elderly Baby Boomers?

The baby boomer generation may be living longer than previous generations but a real concern has arisen over health issues the generation may face.

As the last of the baby boomer generation becomes eligible for Medicare in 2030, the average life expectancy is expected to be an additional 20.1 years but health issues may present major challenges.

A recent study suggests that those elderly people who will live longer will do so in poorer overall health than the elderly people from previous generations. It appears, in part, this is because medical science has done such a great job of finding treatments for diseases that often kill people early, such as cardiovascular problems. As people will be living longer, however, they will get other diseases, such as cancer and Alzheimer's, in greater numbers.

The Bangor Daily News reported this story in "Baby Boomers are more likely to spend their last years in worse health than past generations."

This has important implications.

While an individual cannot know for certain whether he or she will be one of the people who live longer and suffer from disease, individuals can play it safe and plan ahead.

Baby boomers should consider getting estate plans that include powers of attorney and advanced health care directives so if they become sick or incapacitated, the people handling their affairs will have been chosen by them.

Reference: Bangor Daily News (Dec. 29, 2015) "Baby Boomers are more likely to spend their last years in worse health than past generations."

Please visit our website for more information on estate planning.

Wealth Needs a Deep Bench of Talent

Managing and growing wealth requires a deep bench of skilled and trusted advisors. Among millionaire investors, a third are comfortable with having two advisors, while 36 percent prefer to work with three advisors. Interesting that those prefer two advisors are mostly Baby Boomers, while half of those who prefer the trusted trio are Gen X-ers, ages 36- 44. When asked, members of the Ultra High Net Worth households ($5 million to $25 million) prefer three advisors.

Whether you are a millionaire or an aspiring millionaire, a recent Millionaire Corner article, “Financial Planning--Who's On Your Money Team?,” describes the professionals that should be on your financial team.

CERTIFIED FINANCIAL PLANNER™ Practitioner. Along with your estate planning attorney, this player is responsible for helping you paint the “big picture.” This perspective allows you to identify your financial goals and prepare for a financially secure retirement. This will include money management, investing advice, estate planning, insurance planning, business planning, and other strategies to help you get ready for retirement and the ability to enjoy your senior years in comfort.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Accountant. An accountant or an attorney experienced with tax matters is also an essential player on your team. It’s good to have an accountant or lawyer who will prepare your taxes and offer appropriate tax shelter recommendations.

Insurance Broker. This person will help navigate the wide range of available products and determine which best suits the needs of you and your family. If they team with your estate planning attorney, you can be sure that all of your objectives are met and that everything works towards the common goal of placing you in the best position when you retire.

Estate Planning Attorney. This is the “pivotal” money team member. This is your clean-up batter or your quarterback. The attorney is crucial and will assist you with the creation of your estate plan. He or she will help you draft essential estate planning documents like a will, living trust, a health care directive and a power of attorney. Your quarterback will make sure that your assets are protected and your estate is settled according to your wishes.

Huddle up with your quarterback and make sure you have a winning game plan for your estate planning. Don’t get blind-sided by not preparing!

Reference: Millionaire Corner (August 18, 2015) “Financial Planning--Who's On Your Money Team?”

For more information on how to protect your wealth, please visit our website.

Will Your Money Work Hard Enough When You Retire?

You are working hard in your pre-retirement years to max out your retirement funds. And while your money should always work, when you do retire your money is going to need to work even harder. It’s time for you to demand more from your money!

If you think of your money as a partner in your retirement plan, the idea that it should work hard for you makes a lot of sense. Consider these “demands” on money that appeared in “Seven demands retirees should place on their money,”from MoneyWatch:

• Growth: Make      sure you still have a growth component in your portfolio so that you aren’t      faced with attempting to live with an income that no longer covers your      costs.
• Safety: Keep      your money in a safe place and in the care of a reputable custodian who is      not part of the investment company. Two words of warning: Bernie      Madoff.
• Tax      Efficiency: Remember what Mom used to always say,      “It's not about how much money you make, but how much money you keep.”      After tax cash flow is a must.
• A      Healthy Long-Lasting Income: Ask your financial planner      to conduct a cash-flow analysis to see how your money shakes out in five,      ten, twenty and thirty years. Get help creating a plan that takes taxes      and inflation into consideration and one that increases the probability      that you’ll receive an income for the rest of your life.
• Control: Have      some control over the access to your investments. What if there's an emergency?
• Access: Set      some money aside for an emergency fund or rainy day fund, in case you have      an unforeseen expense.
• Effective      Estate Planning: Make sure that your estate plan lets      your loved ones inherit your estate in the least-taxed, most      cost-efficient wa y.

Make your money work hard! Speak with a qualified estate planning attorney.

Reference: MoneyWatch (August 3, 2015) “Seven demands retirees should place on their money”

For more information on how to protect your money, please visit our website.

Arbitration in Nursing Home Contracts are Enforceable Nationwide

In 2012, a U.S. Supreme Court ruling made it legal for nursing homes in New York State to use and enforce arbitration agreements in admission contracts. Until that decision, patients and nursing homes with disputes had no option but to litigate – expensive and time consuming for all parties. Buffalo attorney Julie Bargnesi brings a unique perspective to this issue; currently an attorney who represents health care providers, she was formerly a nurse in a hospital where she advocated for patients.

In most states, arbitration agreements are standard in nursing home admission contracts, except for New York State. Patients and providers did not enjoy the benefits of arbitration, having to instead go through the expensive and lengthy litigation route, as detailed in a recent Buffalo Law Journal article, “Nursing home arbitration enforceable in NYS.”

In New York, as well as several other states, the law did not allow for arbitration agreements to settle incidents that happened in nursing homes. These states refused to enforce arbitration clauses in nursing home admission contracts. Disputes went to court.

However, in 2012, the issue reached the U.S. Supreme Court in Marmet Health Care Center v. Brown. That decision struck down any state law that didn’t permit an arbitration provision in the nursing home matter. The ruling held that the Federal Arbitration Act (FAA) overrules any state law that says arbitration clauses in nursing home contracts aren’t enforceable for lawsuits stemming from injury or death.

Despite the Supreme Court’s decision in 2012, the topic still isn’t well-known, the article explained. But nursing homes have started adding the clause into patient contracts, and the majority of families and residents are signing them. With the rise in litigation, the article says that it’s at least a tool that nursing home owners can use to give them some protection from costly verdicts.

Patients will still have protection, as cases can still be challenged in courts, and arbitration agreements can be struck if they aren’t properly constructed.

The arbitrator is like a judge who sees both sides and may say, “He’s kinda right and she’s kinda right, so I’m going to make everyone happy and split the baby.” Arbitration tends to be fairer.

Just like any contract, the article says that a court can review the arbitration agreement to make sure it is legal. A contract can’t take advantage of the resident or his or her family, and a nursing home can’t deny admission based on whether the arbitration agreement in the contract is signed.

The article urges patients and family members to be aware of this arbitration agreement, which will arbitrate all potential claims and waive litigation.

An Elder Law attorney can give you more information about these arbitration clauses and how they are handled in your state.

Reference: Buffalo Law Journal (July 27, 2015) “Nursing home arbitration enforceable in NYS”

For more information on estate planning, please visit our website.

Guidelines for the First-Time Executor

Being an executor of an estate is not an easy task, especially when it is for the first time. When you are named as an executor and the person has died, knowing what to do and how to prioritize the tasks can be challenging. In the best case scenario, the person has had a chance to speak with you at length about their wishes and shared information with you. That does not always happen. Even if you have had that conversation, you may still be a little anxious about taking on the role of executor.

When you have been named an executor and the person passes away, the task may seem overwhelming. But there are certain things that need to be done first. In “Five Things an Executor Should Do Right Away,”the first and most time sensitive tasks are outlined.

Where do you begin?

Every situation is different, but these five suggestions will help the executor get going in his or her new role.

1 - Locate the Will and read it as soon as you can. See if it includes any funeral wishes, such as whether the person wants to be cremated, where they wish to be buried or interred, and if he or she would prefer donations to be made to a specific charity instead of flowers. These items may all be in the will. Since you will need to act quickly and make decisions about the remains after death, you will want to know exactly what the will says about these arrangements.

2 - See if they have any Funeral or Burial Plans. Funeral homes will typically plan a funeral with someone and keep those wishes until the person dies, even if he or she didn’t prepay. The executor needs to ensure that those wishes are followed. When a funeral was paid for in advance, the article advises to make sure estate money isn’t used to pay for it again. If the will doesn’t speak to this issue, see if the family knows about any pre-arrangements. Also, talk to the deceased’s estate attorney to see if he or she is aware of any plans or wishes.

3 - Secure the Deceased’s Home and Property. It’s very important to arrange for someone to stay at the home during this time and/or install a security system. Unfortunately, when someone passes away, the funeral arrangements are typically accessible to all. People will know that the deceased’s home will be empty during visitation and funeral hours, if not at other times, especially if the person lived alone. Also, you need to be aware of any home maintenance issues and have them repaired.

4 - Talk to the Beneficiaries and the Deceased’s Family. The article suggests that as you manage and close an estate, you may be in close contact with the family and beneficiaries. It helps to map out a basic plan of action with them. This will give an idea about expectations on both sides and if they’ll be helpful in the process. It’s a way to connect with them and show that are going to be honest and transparent in your actions.

5 - Spend Some Time Grieving. Finally, it’s important to prioritize and remember to take time to grieve. Remember to have patience, too.

As a new executor, the article says you might be stressed out and overwhelmed about how to proceed. There’s a ton of stuff to do — it is not an easy job.

You may wish to consider calling on the counsel of an experienced estate planning attorney to guide you through the process.

Reference: Philly.com (July 24, 2015) “Five Things an Executor Should Do Right Away”

The attorneys at Vacek, Freed & Thain, PLLC are here to help during this overwhelming process.  Please visit our website for information.