The Legacy Advisor

Summer 2017

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Planning Ahead

Julie Graf Skinner – Funeral Planning Specialist, Funeral Director, Busch Funeral and Crematory Services

We exert a great deal of energy in effort to protect our loved ones from the possible misfortunes of life. We protect our property with insurance in case something unfortunate happens. Just as often we exert a great deal of energy trying to avoid or ignore those things in life that are certain. In my career, I’ve come to understand that like taxes, death is certain.

As a funeral director, I often meet with families and quickly realize that they have never had a meaningful conversation about their funeral wishes. This lack of planning forces survivors to make decisions of necessity rather than decisions of choice. Unfortunately, this is sometimes intensified by survivors that don’t have great working relationships with one another or are emotionally and financially ill prepared to make appropriate decisions.

I would challenge you to take the steps that are necessary to have a meaningful conversation about your wishes with your loved ones and to discuss your funeral planning options with a professional. Planning ahead, before a difficult day, provides many valuable benefits:

  1. Allows for many urgent tasks and decisions to be handled before a time of emotional upheaval
  2. Eliminates doubts for survivors about funeral preferences and disputes about expenses
  3. Provides peace of mind that your wishes are expressed
  4. Ensures that funeral expenses have been addressed
  5. Allows for necessary legal documents to be gathering and filed with a funeral professional

I would encourage you to have a meaningful conversation with a funeral professional to record your personal information, funeral preferences and plans related to funeral expenses. Many people are unaware that they can make plans, record their wishes and learn about the many funding options that are available. I believe the hardest part of this process is making the call to talk to a professional. It takes a great deal of energy to avoid something and often people find out it is easier than they imagined. The most common comments I hear at the end of a planning session include: “That was so much easier that I imagined”, “I didn’t realize that I would laugh as much as we did today”, “I had no idea that I could make payments on my funeral”, “I feel so much better knowing that that this will be easier for my children”.

Once again, I encourage you to take the next step, make the call to set an appointment. I would be honored to help you.


Preparing for Incapacity – Part Two

In our previous newsletter, we discussed how proper estate planning involves not only planning for the distribution of your assets at death, but also preparing for the management of your financial affairs during your lifetime if you become incapacitated. We noted that without adequate legal planning, someone would have to apply to the probate court to be appointed guardian for the management of your property and financial accounts. Accordingly, we explored the benefits of a well drafted Power of Attorney. In a Power of Attorney, an individual (referred to as the “principal”) designates someone (referred to as the “agent”) who is given the legal authority to conduct financial transactions on their behalf. The authority of the agent continues to be effective even if the principal subsequently becomes incapacitated.

Although a Power of Attorney is a very useful legal document, it does have some disadvantages. Some financial institutions refuse to recognize the authority of an agent under a Power of Attorney. They are fearful of incurring legal liability if the agent uses the Power of Attorney in a manner that causes financial harm to the principal. There have been many instances in which agents have improperly used their authority to benefit themselves to the detriment of their principals. In such cases, the family members of a principal often file lawsuits against both the agent and any financial institutions that have followed the agent’s instructions.

Some financial institutions will only recognize an agent’s authority if it is granted pursuant to a Power of Attorney form provided by the financial institution. Unfortunately, an agent often learns of this fact only after the principal has become incapacitated and is unable to legally execute the financial institution’s form.

The problems associated with a Power of Attorney can be avoided through the use of a Living Trust. A Living Trust is simply a legal agreement pursuant to which a person (referred to as the “grantor”) transfers legal title of property to another person (referred to as the “trustee”), who is obligated to hold and manage the property in accordance with the terms of the agreement. The crucial distinction between a Trust and a Power of Attorney is that the trustee of a Trust actually holds legal title to the Trust property. Thus, the trustee has complete legal authority to manage the property transferred to the Trust.

Generally, the grantor will serve as the trustee of their Trust as long as he or she is living and competent. However, if the grantor becomes incapacitated, the trust agreement will designate someone to act as a successor trustee. Like the original trustee, a successor trustee will hold legal title to all of the assets transferred to the Trust. Accordingly, a financial institution cannot refuse to follow the instructions of the successor trustee with respect to the Trust assets. In addition, a Trust agreement often provides specific instructions concerning the administration of the Trust property if the grantor becomes incapacitated. By using a Trust, a grantor can insure that, in the event of incapacity, his or her assets will be supervised by a person whose authority must be recognized by a financial institution or other third party.

Although every adult should have a well drafted Power of Attorney, additional legal planning is often necessary to ensure that you are fully prepared for incapacity.

Please feel free to share the articles provided in these newsletters with your family and friends. Call our office to obtain more information about planning for incapacity or any other estate planning topic.


Exercise and Senior Health

 

It’s hard to believe that nearly 67% of the elderly population is inactive for an average of 8.5 hours each day. Doctors are starting to see an increase in metabolic disorders and other diseases as a result. They are strongly urging the senior community to improve activity levels. Here are ten areas of wellness that are dramatically impacted by having a regular exercise regimen..

 
  1. Insomnia: Lack of sleep can lead to many other health problems. Certain medications and stress are just a few causes of insomnia. Exercise helps to exhaust the body, making it easier to rest when it is time for bed.
  2. Dementia: This condition affects many senior citizens and can be disabling. There are several ways to prevent Dementia, but exercise is proven to help slow the mental decline.
  3. Quality of Life: This is probably the most important. Maintaining their independence is something all older adults strive for. 30 minutes of exercise per day can help achieve this by improving strength and balance.
  4. All-Cause Mortality: Keeping the body healthy and moving is known to decrease death from all causes. A recent study showed a 30-80% decrease in all-cause mortality in those who exercise on a regular basis.
  5. Cancer: Studies have shown a 30-40% reduction in cancer among men and women who perform moderate to regular exercise.
  6.  
  7. Type II Diabetes and Obesity: Maintaining proper body weight, glucose and insulin levels can decrease the risk of metabolic dysfunction. Exercise helps to make the body more efficient.
  8. Arthritis: Exercise is a necessity when it comes to arthritis management. It helps to lubricate the joints and greatly reduces pain and stiffness.
  9. Hypertension: 30 minutes of exercise per day can help lower blood pressure. Lowering blood pressure also reduces the risk of stroke.
  10. Depression: Healthy body=healthy mind. Period.
  11. Heart disease: Heart disease is the leading cause of death in the United States. You can reduce the risk of heart disease with exercise, which helps to manage blood pressure, glucose levels, and cholesterol.
 

Exercise should be performed on a regular basis in order to develop a long term routine. The health benefits from long term fitness are endless.


The Legacy Advisor

Winter 2017

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A Gift for you, a Gift for Your Family

Loretta Heindrichs – Personal Historian and Legacy Advisor, www.KeepsakeVM.com

As maturity creeps up on us, we begin to see the value of passing along our memories to the next generation.

When we were young our time was occupied with education, jobs, careers, and child rearing. We think only old people talk about the past. Then one of our beloved elders passes away and we want to say “Wait, there are questions I wanted to ask you.” “If only I had known…….” “What was it that Dad said about…….”

Health professionals tell us that there are physical benefits to telling our stories: improved immune systems, reduction in depression and anxiety, and lowering of blood pressure. In addition there are emotional benefits: we make meaning and sense of experience, we gain perspective on life, we remember and will be remembered.

In addition to sharing facts, we can also share with future generations our life lessons, wisdom and values. So you can see that this is a gift for yourself, and also a gift for generations to come, a gift that becomes more valuable with each passing year.

Don’t know where to start? There are many possibilities with today’s technologies for do-it-yourselfers. If you want ideas and guidance, work with a personal historian. A personal historian can ask questions that bring your memories flooding back and help you tell your stories your way. The possibilities are endless.

Loretta Heindrichs is a personal historian who offers the following services:

  • Video Biographies
  • Video Memoirs – recollections of portions of a life such as, for example, a career
  • Your life story in photo books that can include titles and text
  • Books of vacation photos
  • Videos or books showing special events such as, for example, 75th birthday
  • Photos and the story behind the object such as jewelry and family heirlooms
  • Ethical wills or legacy letters. These convey your life lessons, values, and messages of love to your family to cherish for decades to come. They can be recorded on video or in letter or small book form.

Mark Twain once said: “There was never yet an uninteresting life. Such a thing is an impossibility. Inside the dullest exterior, there is a drama, a comedy, and a tragedy.”

Preparing for Incapacity – Part One

Many people believe estate planning deals only with the disposition of assets upon death. However, comprehensive estate planning involves not only preparing for death, but also planning for the proper care and management of your assets in the event of incapacity.

Most of us don’t like to contemplate the possibility of becoming incapacitated, but this is an issue that should not be ignored. Incapacity can result from a number of circumstances such as an auto accident, a work-related mishap, or simply getting older. In fact, 50% of those between the ages of 80 to 85 are suffering from some form of dementia. A person who becomes incapacitated loses the legal ability to manage their own assets. Without proper legal planning, a guardian for an incapacitated person must be appointed by the local probate court. This is a time consuming, expensive, and burdensome process. In addition, the guardian will be subject to the ongoing supervision of the probate court and will be required to submit periodic accountings showing how the incapacitated persons assets have been managed.

In order to avoid the appointment of a guardian, every adult should have a well-drafted Power of Attorney. A person who creates a Power of Attorney, generally referred to as the “Principal,” designates an individual, referred to as the “Agent, who is granted the legal authority to conduct financial transactions on behalf of the Principal. While the Principal is competent, both the Principal and the Agent are legally empowered to engage in financial transactions. The authority of the Agent remains in effect even after the incapacity of the Principal.

A Power of Attorney should be prepared by an attorney experienced in estate planning and elder law. It is imperative that the document be drafted to grant the Agent the powers necessary to engage in Medicaid planning on behalf of the Principal in the event the Principal ever requires nursing home care. The Power of Attorney forms found on the internet or prepared by an attorney who does not specialize in elder law are often inadequate to allow the Agent to engage in complex long-term care planning for the Principal.

Because a Power of Attorney is a very powerful legal tool that provides the Agent with broad authority over the assets of the Principal, it is essential that the Agent be someone who is completely trustworthy. Although the Agent is under a legal duty to act only in the best interests of the Principal, there have been many instances of Agents enriching themselves at the expense of their Principals.

While a Power of Attorney is a very valuable legal tool, there are limits to its usefulness. A number of major banks and brokerage firms will not recognize an Agent’s authority under a Power of Attorney. These institutions are afraid of incurring liability in the event the Agent uses their authority for an improper purpose. Family members of a Principal may say sue a financial institution for permitting an Agent to carry out a transaction that results in a financial loss to the Principal. Because of the chance that certain financial institutions may not recognize a Power of Attorney, it is good practice for a Principal and their Agent to bring their Power of Attorney document to their bank or brokerage firm for review to ensure that they will accept the authority granted to the Agent.

In our next issue we will discuss other legal methods of preparing for incapacity.

Some tips to help with preparing to move a lifetime of memories!

Laura Armbruster, Senior Move Manager www.smoothtransitions4u.com

Moving is one of the most stressful transitions in our lives and it is not easy to decide what to do with the lifetime of memories that have accumulated over the years. Many of our clients have lived in their homes for 30+ years, and have accumulated many memories and treasures during this time. The task of downsizing can be overwhelming, both emotionally and physically, and it can difficult to determine where to begin.

Our advice is to take the time to sit down and make a list of your goals, and set the timeframe to accomplish each goal. This will lay the foundation, and help dictate the amount of time you must spend each week on these tasks. The next piece of advice is to start small, and with a space that you are not particularly emotionally attached to, such as a closet or bathroom. Start on one side of the room, and work methodically around it. Resist the temptation to jump around, and make sure to finish that space/room before going to the next. While de-cluttering the room, it is helpful to have boxes set aside for those things that you may want to give to family or friends, and items that can be gifted or donated.

Whenever a donation organization says a truck will be in your neighborhood and asks if you have anything to donate, make it a goal to always say “yes”. The week or so lead-time will give you enough warning and motivation to sort through some things. Every bagful of things you can donate before you move will be items you will no longer have to worry about.

Utilize the services that your particular city offers. Each city typically has at least one ‘shredding’ day in which you can bring a certain number of bags or boxes to be shred to a location. Look up this date, add it to your calendar, and work on going through your office and filing cabinets in preparation for this date. Also, look up any bulk trash days or recycling offered by your city, and start making use of these opportunities to start to clear out.

The process of going through the memories in your home can be taxing; make sure to keep up with your routine wherever possible. Continue to take care of yourself, eat properly, and get adequate sleep and exercise. Also, do not hesitate to reach out to friends or family for help. Sometimes it is easier to work with an outside party who is not emotionally involved with your move.

Senior Move Managers are trained to help with planning, organizing, de-cluttering, packing, and unpacking related to your move. In our 12 years of experience with helping individuals through this process, we have come up with solutions for many of the situations that may arise, as well as recommendations for trusted outside help. We understand that it is more than just a move, but rather a household of memories!

Smooth Transitions was started in 2004, and has been helping older adults and their families with the overwhelming demands of moving, downsizing, and estate dispersal for the past 12 years. Accredited by the National Association of Senior Move Managers, and part of the Circle of Service, and Diamond Society, Smooth Transitions adheres to a strict code of ethics. We are licensed and bonded, and cover all of Northeast Ohio. If you have any questions, or want to find out how to get started, please do not hesitate to call and schedule an initial consultation. It is never too early to get started!


Medical Professionals, Elder Law Attorneys and Their Older Patient/Clients All Benefit When the Professionals Work Together

ElderCounselor – Volume 7, Issue 5

There are often situations in which an older person needs the services of an attorney and medical professionals. A recent article in Bifocal, a publication of the American Bar Association, highlighted six scenarios in which such a collaboration would be beneficial to the older patient-client’s well-being, as well as the professionals. This issue of ElderCounselor will summarize these situations.

Decisional Capacity Issues

When provided with adequate information, most older individuals retain sufficient cognitive and emotional ability to make autonomous, valid decisions about important aspects of their own lives. Sometimes, however, an older person’s capacity to make and express valid choices about personal (including medical or residential) or financial matters is questionable and/or questioned by others.

Working Together

The elder law attorney needs involvement from medical professionals to help recognize when decisional capacity may be compromised and to quantify the existence, degree and reversibility or alterability (for example, through medication management) of decisional impairment. The physician and other medical professionals could benefit by working with an elder law attorney who can identify and accurately describe the potential legal implications of the person’s decisional impairment. The attorney can then evaluate possible interventions such as guardianship, supported decision-making arrangements or reliance on previously created or implied advance directives or other instructions.

Elder Mistreatment

Many older individuals, especially those with cognitive decline, are at risk of physical, psychological and financial mistreatment at the hands of family members and others. In addition to abuse and exploitation, elder mistreatment may occur in the form of neglect, often occurring in the older person’s home or that of a relative with whom the older victim resides.

Compounding the problem is the reluctance of many older persons to cooperate in reporting and investigating their own mistreatment. They may accept physical or emotional abuse, financial exploitation or neglect of basic needs like hygiene or medications by a family member out of fear that making a report might result in being removed from the home and placed in a nursing home.

Working Together

Medical professionals are generally the first to recognize, evaluate and medically treat signs and symptoms of elder neglect, exploitation or abuse. Their input is essential in considering and effecting legally permissible options or required actions. Health care professionals often have a responsibility to monitor the quality and safety of home care provided by family caregivers or others, and a duty to report instances of suspected abuse to authorities. An elder law attorney can help both the medical professionals and the older patient/client by providing legal advice pertaining to the professionals’ responsibilities to report, confidentiality considerations, legal ramifications of failing to report, and legal immunities attached to reporting or other interventions.

Self-Neglect

A significant percentage of older adults, mainly living alone, do not regularly attend to their own needs or well-being when it comes to health care, hygiene, nutrition and other matters. The majority of cases reported to Adult Protective Services (APS) by health and social service professionals and family members are triggered by suspected self-neglect, and the health care system expends considerable efforts trying to intervene in these situations to prevent increased rates of hospitalization, nursing home placement and even death.

Working Together

In these situations, the medical professional’s role is vital in determining the potential problem, nature and seriousness of the risk, and identifying viable intervention strategies. Decisional capacity issues (addressed above) almost always arise in these cases. An attorney can advise the medical professional about legal reporting requirements or options, as well as legal boundaries for interventions that can be designed and conducted in a way that best respects the older person’s dignity and autonomy while still protecting the person from foreseeable and preventable self-generated harm.

Medical Payment Issues

When attaining appropriate medical and rehabilitative care for older patients, it is imperative to make sure that payment for needed services will be available. For most people age 65 and over, this means working with not only Medicare but potentially with state-specific Medicaid programs and/or private insurance companies.

One common problem concerns older patients who have entered hospitals through emergency departments and held for observation, instead of being admitted as in-patients, before being transferred to nursing facilities. This practice, as well as hospital discharge and readmission practices, may jeopardize coverage for subsequent rehabilitation services. Other issues may involve the interpretation and application of Medicare rehabilitation payment policy regarding the standard of need for services instead of continuing potential for benefit. There are also issues with coordinating benefits under Medicare with services covered concurrently in whole or in part by other third-party payers.

Working Together

The elder law attorney trying to obtain payment for the older patient’s medical care or rehabilitative care needs assistance from the patient’s medical professionals in order to document, clarify and argue questions about the older person’s medical condition, needs and prognosis. Conversely, the medical professional may need assistance from an elder law attorney to assert and advocate for the rights of the older person.

Family Issues

Families often act as caregivers, sometimes paid but more often as volunteers, for older relatives who are not fully independent. Family members may also be acting as surrogate decision makers for those with reduced decisional capacity, making choices on behalf of the older person, or as helpers to a person who is capable of making decisions with support. In cases of self-neglect, the family may find an older loved one who refuses to acknowledge mental decline and the need for help. And sometimes, families have interests that conflict with those of an older person and seek to put their own interests first, to the detriment of the vulnerable older person.

Working Together

Medical professionals are important in recognizing when the caregiver’s burden is at risk of endangering both the caregiver and the person dependent on their caring. An elder law attorney can inform all parties about public or private sources of financial and other support for family caregivers, including benefits under the federal Family and Medical Leave Act and state counterparts.

For medical decision making, whether for surrogate decision makers when the person has reduced decisional capacity or for those who help the older person make decisions, medical professionals provide information, recommendations and support in the process. An elder law attorney may work with individuals who are currently capable of decision-making and their families in the advance health care planning process. The attorney may also clarify for medical professionals the legal authority of surrogate decision makers. The attorney and medical professionals may also work together to present cases to an ethics committee or consultant when there are serious disagreements among family members, or to act as a mediator and/or patient advocate when there are disagreements about the patient’s best interests.

In cases of self-neglect, the attorney and medical professionals working together can often recommend options that will benefit both the family and the loved one.

When a family is acting on its own interests to the detriment of the older person, a medical professional will usually be the one to notify the individual’s attorney of the conflict. The attorney may initiate or threaten legal action to protect the rights and welfare of the older person in a way that also protects the ethical and legal interests of the medical professional.

Confidentiality

Medical professionals and attorneys have concerns about the permissible handling of personal information they learn about a particular older patient/client solely as a result of the formal relationship between professional and patient/client. For example, a medical professional may wonder about the confidentiality ramifications of his/her suspicions that an older patient is being neglected, exploited or abused.

Working Together

A medical professional can educate the attorney about the health care information collected on an individual patient, how and where the information is documented and stored, how to interpret it, clinical uses to which it is applied, and who has access to the information. The attorney can educate and counsel the medical professional about legal parameters of information collection, maintenance and sharing under common law confidentiality principles, state statutes and regulations, the federal Health Insurance Portability and Accountability Act (HIPAA) and other legal provisions. The attorney can also explain different expectations and rules for protecting patient privacy as they apply to members of different professions. For example, a social worker employed as staff in an elder law office who suspects elder mistreatment may be subject to reporting requirements while the attorney is not.

Inter-professional communication about confidentiality can also be beneficial to the older patient/client. Accurately informed medical professionals and attorneys are well-positioned to protect the autonomy and privacy interests of older persons to whom they owe fiduciary duties, while at the same time allowing the sharing of relevant information to authorized recipients so that services for the older person can be maximized.

Conclusion

There are, of course, other situations when it is advisable and beneficial for medical professionals and elder law attorneys to work together for the safety and well-being of their older patients/clients. For example, it might be necessary to manage a situation involving unsafe driving by an older person who resists voluntarily restricting personal use of an automobile.

Generally speaking, elder law attorneys and the medical professionals who care for older patients/clients often have a genuine calling to work with the elderly. And when the professionals work together to serve their older patients/clients, everyone benefits. If you know of someone who could benefit from the advice of an elder law attorney, please contact us. We are ready to help.


To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.


The Future of Long Term Care and How to Finance It

ElderCounselor – Volume 7, Issue 2

Long-term care is becoming an important issue for our nation to address. We have 78 million aging baby boomers. The costs of long-term care to these baby boomers can be catastrophic and few people have sufficient resources to pay for needed long- term care.

In an effort to deal with this growing concern, the Long-Term Care Financing Collaborative (the “Collaborative”) began meeting informally in 2012 for the purpose of finding a solution. They have since become a formalized group made up of a variety of national experts and stakeholders with varying ideological stances. Their common goal is to improve the way Americans pay and prepare for non-medical care (Long-term supports and services) needed by the elderly and those living with disabilities. On February 22, 2016, the Collaborative announced its third and final set of recommendations.1

ABOUT THE COLLABORATIVE

The diverse group2 is made up of policy experts, consumer advocates and representatives from service providers and the insurance industry. In addition, the group consists of senior executive branch officials in both the Democratic and Republican administrations, former congressional aides, and former top state health officials.

THE COSTS INVOLVED

The statistics surrounding long-term care or long-term supports and services (“LTSS”) are eye opening. According to the Collaborative, there are between 10 and 12 million adults today who require LTSS and that number is expected to double by the year 2030. More than two-thirds of older adults will need some assistance before they die and nearly half will have a high enough need that they will be eligible for private long-term care insurance or Medicaid to pay the bill. More than 6 million older adults need that level of care today and nearly 16 million will need it in 50 years.

The Collaborative defines Long-term supports and services (“LTSS”) as non-medical assistance. This would include help with such things as food preparation, personal hygiene, assistive devices and transportation, bathing, eating and the like.

Cost to the Elderly or Disabled:

The elderly or disabled persons who find themselves in need of LTSS try to pay for it out of their savings or income from their retirement along with help from family members. Often, this is insufficient to cover the costs and many people have to turn to Medicaid for help. The overall spending on LTSS is expected to double by 2050, which will cause even more people to depend on Medicaid to pay for it.

Few people have saved sufficiently for LTSS. In fact, the Collaborative reports that a typical American between the ages of 65 and 74 has financial assets of $95,000 and about $81,000 in home equity. This does not include retirement savings, which vary widely across the country. To pay for one’s lifetime medical expenses with a 90% certainty requires savings of about $130,000 and an additional $69,500 for LTSS costs. With this in mind, it is easy to see how people are running out of money.

Over all, individuals pay for about 55% of LTSS expenditures; Medicaid pays about 37%; and Private LTSS insurance pays for less than 5%.

Cost to Family and Friends:

In addition to the financial stress this places on the elderly and disabled, it also significantly affects their families. The Collaborative estimates that in 2013, family and friends provided 37 billion hours of uncompensated LTSS to adults. This care calculates to up to $470 billion, which is three times the amount Medicaid spent on LTSS the same year.

When family members provide caregiving to a loved one, it often comes at the cost of their job or a portion of their job. On average, the Collaborative reports, a woman in her 50s who leaves a job to care for her aging parents does so at a cost of $300,000 of income over her lifetime. The Collaborative states that “unpaid family caregivers lose an estimated $3 trillion in lost lifetime wages and benefits.”

Cost to Employers of Family and Friends:

The Collaborative reports that employers experience a loss of $17.1 to $33 billion in productivity due to absenteeism alone. In addition, they state that “costs of turnover and schedule adjustments for caregiving workers add an additional $17.7 billion in costs.”

THE COLLABORATIVE’S RECOMMENDATIONS

The Collaborative was able to agree to five key recommendations in three key areas. This final set of recommendations focused significantly on: 1) A need for universal catastrophic insurance; 2) Private market initiatives and public policies to revitalize the insurance market to help address non-catastrophic LTSS risk; and 3) Enhanced Medicaid LTSS for those with lower lifetime incomes.

The Collaborative calls for a strong government role in the solution. The group considered voluntary and universal insurance programs and came to the conclusion that universal was the only viable, long- term solution as it spread the risk across the entire population and avoided challenges of adverse selection. The Collaborative noted in the report, “As a result, universal insurance appears to offer broad-based insurance at a comparatively low lifetime cost.”

In addition to recommending universal catastrophic insurance, the Collaborative also recommended taking some actions to revitalize the private insurance market. These included suggestions of employers offering long-term care insurance as part of their benefits packages. In addition, the group suggests that regulatory changes in the insurance industry, creating more standardization in policies, would save costs to consumers. The specifics of the regulatory change suggestions include increasing premiums and benefits as the individual ages. There is also a suggestion that this type of insurance be sold in conjunction with Medicare supplemental programs. Finally, the group suggests that policymakers continue to encourage and support efforts by the insurance industry to experiment with more hybrid products, combining long-term care insurance with other products.

Another recommendation given by the Collaborative was to encourage increased private savings for retirement. This encouragement might come in the form of ease of enrollment through employers’ benefits programs, expanded retirement products, tax subsidies and education.

Of note was a recommendation made by the Collaborative was to modernize Medicaid financing and eligibility. This recommendation is really one to expand Medicaid coverage to include more people, in more settings, for more care. Eligibility would be based on a functional assessment and a needs assessment rather than requiring an institutional level of care.

CONCLUSION

The Collaborative leaves us with a final recommendation to provide more education about LTSS. Many people are in denial about the possibility that they may need it some day and do not plan. While it is encouraging that the nationwide issue is being studied more and taken more seriously now, the problem is far from resolved. Until there is a firm solution, individuals must take responsibility and plan ahead.

If you or someone you know has questions about how to plan for the costs of long-term care, please feel free to contact our office.

ABOUT THE COLLABORATIVE

The diverse group3 is made up of policy experts, consumer advocates and representatives from service providers and the insurance industry. In addition, the group consists of senior executive branch

1 Full report: A Consensus Framework for Long-Term Care Financing Reform

2 For a list of members of the collaborative

3 For a list of members of the collaborative

Download a copy of the February Elder Counselor newsletter above: Elder Counselor Volume 7 Issue 2 March 2016


WHY WE FAIL TO PLAN FOR LONG-TERM CARE

ElderCounselor – Volume 6, Issue 5

Introduction

Most Americans do not know, or refuse to accept, the facts surrounding their potential need for long-term care and the costs associated with it. This was reconfirmed recently in a telephone survey of 1,735 Americans over the age of 40, funded by the SCAN Foundation and conducted by the Associated Press (AP) – NORC Center for Public Affairs Research (“survey”).1 This survey highlights many of the misconceptions Americans have about long-term care, including: the potential that a loved one may need some sort of long-term care within the next five (5) years; lack of knowledge of the positive impact of “person-centered care” practices; lack of understanding of coverage of long-term care services by Medicare, Medicaid and private insurance; and an increase in lack of concern over failure to plan for the costs associated with long-term care.

Who Will Need Long-Term Care

According to the Genworth Cost of Care Survey of 2015 (“Genworth Survey”)2, seventy percent (70%) of Americans over the age of sixty-five (65) will eventually need some type of long-term care. In addition, by the year 2040, twenty-two percent (22%) of the population will be over the age of sixty-five (65), which is a ten percent (10%) increase from the year 2000. Yet, this survey showed an increasing number of people over the age of forty (40) refusing to believe they will ever need long-term care.

Quality of Long-Term Care

The survey defined person-centered care as “an approach to health care and supportive services that allows individuals to take control of their own care by specifying preferences and outlining goals that will improve their quality of life.” This approach points to the consideration of coordinated care. Coordinated care involves communication among various medical providers to reduce overlap, misdiagnosis or other medical oversights. Because many people are avoiding thinking about their golden years, they are missing out on the benefits provided by this approach and the survey shows a lack of appreciation for the improved quality of life it can provide.

According to the survey, over sixty-five percent (65%) of adults over the age of forty (40) have two or more doctors that they see on a regular basis. Twenty-nine percent (29%) of those report that their providers do not communicate well or at all. Further, the lack of understanding of the person-centered care approach is evident in that twenty-three percent (23%) of those individuals who don’t participate in it reported that it would not improve their quality of care.

Cost of Long-Term Care

The study showed a lack of understanding by many of coverage for long-term care by Medicare, Medicaid and private health insurance. The truth is that Medicare does not pay for ongoing long-term care (although it will pay for intermittent stays at nursing facilities). Yet, thirty-four percent (34%) surveyed thought Medicare would pay for long-term care while twenty-seven percent (27%) were unsure. Furthermore, Medicare doesn’t typically pay for care in the home. However, thirty-six percent (36%) of those surveyed thought it would and twenty-seven percent (27%) reported that they were unsure.

As for private insurance, most health insurance plans will not cover long-term services like a nursing home or ongoing care provided at home by a licensed home health care aide. Yet, eighteen percent (18%) of Americans age 40 and older believe that their insurance will cover the costs of ongoing nursing home care. While, twenty-five percent (25%) believe their plan will pay for ongoing care at home. About 1 in 5 people surveyed were unsure of the coverage provided for these types of long-term care services.

Medicaid is the largest payer of long-term care services.3 Medicaid is a federally and state funded needs- based benefit that will provide for various types of long-term care depending on the state’s regulations. In 2013, Medicaid paid for fifty-one percent (51%) of the national long-term care bill totaling $310 billion. However, fifty-one percent (51%) of Americans age 40 and older reported that they don’t expect to have to rely on Medicaid to help pay for their ongoing living assistance expenses as they age.

The actual costs for long-term care are staggering. The Genworth Survey reported that, nationwide, the average bill for a nursing home is approximately $80,300 and for home health care, approximately $44,616 with a variety of options among and in between these levels of care.

Planning for Long-Term Care

Despite the availability of this information, most Americans are unprepared for the costs associated with long-term care. For example, the results of the survey showed that only one-third of adults were “very or extremely confident” in their ability to pay for long-term care. Fascinatingly, while many individuals reported being concerned over leaving family with debt or becoming a burden on loved ones, many do little to alleviate their concern in the way of planning. In fact, just over thirty percent (30%) of those over the age of sixty-five (65) reported being concerned with this. And, finally, two-thirds of Americans over the age of forty (40) reported doing no planning for long-term care.

The survey results lead to the conclusion that many Americans are reluctant to face the possible loss of independence related to aging. Apparently, this plays a role in the unwillingness to plan for the possibility of needing assistance later in life. As an example, there was an interesting difference in the number of people surveyed who had planned, or talked to loved ones about, their funeral arrangements (nearly sixty-five percent (65%)), in those who had discussed care preferences with family (about forty- two percent (42%)) and in those who had saved money for long-term care (approximately thirty-three percent (33%)). Some things, including how we want to be memorialized are just easier to think about than how we may end up dependent on others.

Conclusion

Although not a popular topic among Americans over the age of forty, long-term care is an increasingly important one. We are in the business of providing options for people in planning for their potential long-term care needs. If you, a loved one or a client needs help figuring out their options, please think of us. We can help and we are always happy to hear from you.

2 See Long-term Care in America: American's Outlook and Planning for Future Care

2 See Compare Long Term Care Costs Across the United States

3 See Medicaid and Long-Term Services and Supports: A Primer

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.

Download a copy of the September 2015 Elder Counselor newsletter above: Elder Counselor Volume 6 Issue 5 September 2015


Updates in the Special Needs Planning Area

ElderCounselor – Volume 6, Issue 4

The special needs community and its advocates are making headway as of late. Last month, the IRS proposed regulations for the new state-sponsored ABLE accounts. In addition, the Special Needs Trust Fairness Act was reintroduced to Congress earlier this year and appears to be making progress. As advocates for those with special needs, we celebrate these minor, but important accomplishments and can use them as inspiration as we continue to fight for the rights of this special community.

ABLE Act

ABLE Accounts

A recent edition of the ElderCounselorTM newsletter explained the recently passed ABLE Act. The Act was passed in December 2014 and allows states to opt into state-sponsored savings accounts. These accounts are similar to the educational 529 savings accounts in terms of tax implications. So long as an individual is deemed disabled (as defined by the Act), and such disability occurred prior to the age of 26, that person may become the owner and designated beneficiary of an ABLE account. An amount less than or equal to the annual gift tax exclusion amount (currently $14,000) can be contributed to the account each year without causing the individual to be disqualified for SSI or Medicaid benefits. Any distributions used to pay for qualified disability expenses are made tax free (see below for a discussion of qualified disability expenses).

IRS Proposed Regulations (State-Sponsored ABLE Accounts):

On June 19, 2015, the IRS proposed regulations to the state ABLE Act programs. The regulations provide guidance of several aspects of the Act. Following is an explanation of a few of the regulations.

Eligibility

While the ABLE Act states that the individual with special needs is to be considered the owner and the designated beneficiary of the account, the regulations clarify that where an individual is unable to open an account for himself or herself, “the eligible individual's agent under a power of attorney or, if none, his or her parent or legal guardian may establish the ABLE account for that eligible individual.”1

Disability Determination

The proposed regulations allow the states flexibility with regard to determination of disability. The regulations state that an individual may be deemed disabled under the ABLE Act so long as an impairment meets or is “equal in severity and duration to the severity and duration” of any disability used in the SSA’s listing.2

Change in Eligible Individual Status

The regulations seek to clarify situations where a disabled individual becomes no longer disabled for a period of time and then regains eligibility at a later date. In these circumstances, the regulations state that the individual may maintain the ABLE account. However, during a period where the individual is not deemed disabled under the Act, no contributions or tax-free distributions may be made. Upon becoming disabled again, the individual may resume making contributions and taking distributions as before.

Contributions to the ABLE Account

The ABLE Act allows contributions of less than or equal to the annual gift tax exclusion amount each year. These contributions must be made in cash. Finally, the total contributions may not exceed the state's limit for aggregate contributions under its qualified tuition program. Any contribution amount that causes the account to exceed these limits must be returned to the contributor. The regulations provide guidance in these situations. They provide a formula by which the income attributable to a certain contributed amount may be calculated. Therefore, any contribution amount over and above that allowed by the law plus its accrued income may be returned to the contributor.

Qualified Disability Expenses

The ABLE Act allows distributions from these accounts to be made tax free so long as they are used on a qualified disability expense. Such expenses include, but are not limited to, expenses for education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, oversight and monitoring, funeral and burial, and other expenses that may be identified from time to time in future guidance published in the Internal Revenue Bulletin.

The IRS states that qualified disability expenses should be defined broadly and should include household expenses rather than being limited to medically related expenses. The regulations require the programs to establish safeguards in order to distinguish qualified disability expenses from other expenses. In addition, the regulations require implementation of a process to determine distributions made for household expenses as defined by the SSA for purposes of the SSI program.

Distribution on Death of Beneficiary

The ABLE Act provides that upon the death of the designated beneficiary of the ABLE account, the remaining balance must be used to first reimburse the state for any amounts paid out for Medicaid benefits.

For tax purposes, the proposed regulations provide that upon the death of the designated beneficiary, all amounts remaining in the ABLE account are includible in the designated beneficiary's gross estate for purposes of the estate tax.

Reporting Requirements

The proposed regulations set forth the reporting requirements for the ABLE accounts. The regulations require an ABLE program to maintain records regarding all contributions, distributions, returns of excess contributions or additional accounts, income earned, and account balances for any designated beneficiary's ABLE account. Also, establishment of each ABLE account must be reported.

Comments to Proposed Regulations

The IRS is accepting comments on the proposed regulations through September 21, 2015. Comments may be submitted electronically, by mail, or hand delivered to the IRS. A public hearing is scheduled for Oct. 14, 2015, at the IRS Auditorium, 1111 Constitution Ave. NW, in Washington.

Special Needs Trust Fairness Act

Congress established first-party special needs trusts (SNTs) in 1993 with the intent to allow individuals with disabilities to remain eligible for public benefits, such as SSI and Medicaid, when receiving a lump- sum settlement or inheritance, or otherwise. Normally, receipt of a large sum of money would disqualify these individuals from the means-based governmental benefit.

SNTs generally may not pay for food, clothing, or shelter, which is what Social Security Income is designed to pay for. The SNT is used to supplemental the individual’s needs by paying for expenses such as physical therapy, medications, medical treatment, transportation, education, furniture, etc. Direct payments to the beneficiary should never be made.

Currently, an SNT may only be established by a parent, grandparent, legal guardian, or court. The Special Needs Trust Fairness Act of 2015 would allow the individual to establish an SNT as well. The Act purports to correct an oversight of the original law and would allow an individual who has capacity to establish this type of trust.

This Act was first introduced in 2013 and did not pass. It has been reintroduced this year and, as advocates for those with special needs, we are hopeful it will gain support. If you wish to contribute and show your support, visit NAELA’s website where the organization has outlined ways you can get involved:

NAELA™ Leading the Way in Special Needs and Elder Law - Public Policy Information

Summary

The special needs community is making some progress as these two legal issues progress. As advocates for people with special needs, we hope that this progress will stimulate more concern and attention to the issues of this community. If you, a client, or a loved one has a need for a special needs planning attorney, or you have any questions or comments about the issues raised in this Newsletter, please reach out to us. We are always happy to hear from you.

1See Explanation of Provisions - Qualifications as an ABLE program

2 See Subpart P — Determining Disability and Blindness

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.

Download a copy of the July 2015 Elder Counselor newsletter above: Elder Counselor Volume 6 Issue 4 July 2015


Sex and the Elderly with Dementia

ElderCounselor – Volume 6, Issue 3

Introduction

Sex and the elderly (specifically those with dementia) is getting a lot of attention lately due to the Iowa case involving Henry Rayhons. This case raises some important questions regarding personal relationships of those who develop memory debilitating diseases and their loved ones.

State of Iowa v. Henry Rayhons

In May 2014, the State of Iowa charged Henry Rayhons with sexual assault of his wife, a felony. He faced a possible ten (10) year sentence if found guilty.

Henry Rayhons and Donna Rayhons were married in 2007. It was a second marriage for both of them and they both had adult children. According to friends and family, they were very much in love. Donna was diagnosed with Alzheimer’s and was eventually placed in a nursing home by her adult daughters.

According to various news reports that covered the trial, Donna was evaluated by a facility doctor for a number of reasons, including capacity. Upon Donna’s daughters’ request, the doctor advised Henry that Donna did not have capacity to consent to sex. Eight days after being advised of this doctor’s opinion, Henry visited Donna in the facility, which she shared with an 86 year old female roommate. While there it was alleged that he engaged in sexual acts with his wife based on a report made by Donna’s roommate and physical evidence gathered at the scene.

The Verdict

In order to prove its case, the prosecution had to prove two facts beyond a reasonable doubt: (1) that Henry and Donna Rayhons, engaged in sexual relations on the night in question; and (2) that Donna Rayhons, was unable to consent to those activities. A jury determined that the prosecution did not prove these two facts and found Henry “not guilty.” The exact reasons for the jury’s decision are unknown, only that they rendered a verdict of not guilty.

Lingering Questions

Regardless, the case brought up many concerns and questions for all of us. One of the main concerns this case brings up is the necessity of physical touch and intimacy for all people, especially as we age and even more so for those with dementia. Human contact can come in many forms and it is vital for all of us. Sexual intimacy is one form of human contact that many adults take for granted. However, when one goes to live in an assisted living or nursing home facility, that right may be taken away or altered.

The Hebrew Home is a well-known nursing home facility located in New York. It is considered one of the best in the country. Twenty years ago, it became the first facility to implement a “sexual expressions” policy for its residents. However, few facilities have followed suit. In fact, most facilities do not have a policy concerning their resident’s rights to have sex with a spouse or any other person. The conversation started by the Rayhons case may encourage facilities to look into implementing such a policy.

Another question that was thrust into the national spotlight by the Rayhons case is whether a patient with dementia can consent to sex, or at what point a person with dementia is no longer able to consent. In the Rayhons case, the prosecutor focused on the incapacity of Donna Rayhons. The prosecutor compared Donna to a twelve-year-old child who is unable to consent simply because the child lacks capacity to consent. Similarly, the prosecution argued, Donna Rayhons’ Alzheimer’s disease made her incapable of consenting to sex whether she “wanted” to or not. This question of how to determine whether an adult can no longer consent to sex, especially with a spouse, is a difficult one.

The fact that dementia patients have varying levels and moments of capacity makes it even trickier. Many suffering from dementia have “good” days and “bad” days – even “good” hours or minutes and “bad” hours or minutes. So, how do we measure capacity? Is it best to say that once a person has been diagnosed with dementia and has moments of lacking capacity they should no longer be able to consent to sexual activity? Even if we determine that dementia patients do continue to have a right to consent to sex even though they have the disease, the questions don’t stop there.

Unfortunately, there may come a point when a person with advanced Alzheimer’s may be unable to recognize a spouse or loved one. This is excruciating for the unrecognized loved one and we imagine it is confusing, frustrating and isolating for the patient. What if that same patient begins to find another patient at the facility attractive, begins to flirt or even “fall in love”? Some of you may recall the national news reports several years ago when a similar situation occurred with Justice O’Connor’s husband who suffered from advanced dementia. A New York Times article written at the time suggested that sexual activity among older adults is an issue nursing homes will be forced to face.

Many couples who now face this situation may have never discussed how they would like it handled. The Rayhons case has brought the issue of intimate contact to light and now gives couples an opportunity to discuss and decide how they would like the other to proceed if one later develops dementia or any other mentally disabling disease.

Legal Solutions

There are legal documents that can be added to the planning done for seniors that address many of these issues. For example, additional provisions can be added to a durable power of attorney or health care document that address issues of companionship, facility choice, and personal relationships. “Compassion contracts” are also being discussed as a possibility for couples to consider. With a “compassion contract” a couple can agree in advance that each will allow and hold the other harmless for seeking companionship from a third party when one of them no longer recognizes the other. Any variation of such an agreement can be made by the couple to guide them in this unfamiliar territory.

While there are no clear-cut answers to the questions that have been raised by the Rayhons case, it has given the Elder Law community an opportunity to seek better solutions for all. If you or someone you know would benefit from speaking to an Elder Law attorney about the issues raised in this newsletter or any other legal issues, please do not hesitate to contact us. We are always happy to hear from you.


Past Elder Counselor Newsletters in PDF format:

March 2015 Elder Counselor Volume 6 Issue 2 March 2015

January 2015 Elder Counselor Volume 6 Issue 1 January 2015

November 2014 Elder Counselor Volume 5 Issue 6 November 2014

September 2014: Elder Counselor Volume 5 Issue 5 September 2014

July 2014: Elder Counselor Volume 5 Issue 4 July 2014

May 2014: Elder Counselor Volume 5 Issue 3 May 2014

March 2014: Elder Counselor Volume 5 Issue 2 March 2014

January 2014: Elder Counselor Volume 5 Issue 1 January 2014