Health Care Ageism And Senior Profiling

Those of us who regularly work with and for the elderly are painfully aware of pervasive latent ageism that often adversely impacts decision-making  concerning them.   Dr. Val Jones has penned an excellent article in the blog, better health warning of ageism in the health care industry.  Dr. Jones is  board certified in Physical Medicine and Rehabilitation,  and serves as a traveling physician to hospitals in 14 states.  She is a graduate of Columbia University College of Physicians and Surgeons and an award-winning writer.  She writes:

 Over the years I’ve become more and more aware of ageism in healthcare – a bias against full treatment options for older patients. Assumptions about lower capabilities, cognitive status and sedentary lifestyle are all too common. There is a kind of “senior profiling” that occurs among hospital staff, and this regularly leads to inappropriate medical care.

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Hospitalized patients are often very different than their usual selves. As we age, we become more vulnerable to medication side-effects, infections, and delirium. And so, the chance of an elderly hospitalized patient being acutely impaired is much higher than the general population. Unfortunately, many hospital-based physicians and surgeons — and certainly nurses and therapists — have little or no prior knowledge of the patient in their care. The patient’s “normal baseline” must often be reconstructed with the help of family members and friends. This takes precious time, and often goes undone.

Years ago, a patient’s family doctor would admit them to the hospital and care for them there. Now that the breadth and depth of our treatments have given birth to an army of sub-specialists, we have increased access to life-saving interventions at the expense of knowing those who need them. This presents a peculiar problem – one in which we spend enormous amounts of resources on diagnostic rabbit holes, because we aren’t certain if our patients’ symptoms are new or old. Was Mrs. Smith born with a lazy eye, or is she having a brain bleed? We could ask a family member, but we usually order an MRI.

My plea is for healthcare staff to be very mindful of the tendency to profile seniors. Just because Mr. Johnson has behavioral disturbances in his hospital room doesn’t mean that he is like that at home. Be especially suspicious of reversible causes of mental status changes in the elderly, and presume that patients are normally functional and bright until proven otherwise.

Dr. Jones gives examples of ageism impacting elderly care.  She describes the plight of an elderly woman admitted to a local hospital where it was presumed, due to her age, that she had advanced dementia. Hospice care was recommended for the woman at discharge. The woman had been leading an active life in retirement, serving  as the chairman of the board at a prestigious company, and caring for her disabled adult son.  She was physically fit , and an "avid Pilates participant."   It turns out that a new physician at her practice recommended a higher dose of diuretic, which she dutifully accepted, and several days later she became delirious from dehydration.  Dr. Jones concludes, "All she needed was IV fluids." 

Dr. Jones explains her recent treatment of an attorney in her 70’s who had a slow growing brain tumor that was causing speech difficulties. The attorney was written off as having dementia until an MRI performed to explore the reason for new left-eye blindness revealed the tumor.  The patient's tumor was removed successfully, but she was denied brain rehabilitation services because of her “history of dementia.”

Another patient, an 80-year-old male, was presumed to be an alcoholic when he showed up to his local hospital.  The patient, had, in fact, suffered a stroke.

These cases, and the countless cases like them, underscore the importance of good health care planning as part of a comprehensive estate plan.   I recommend that every client select and appoint a  trusted primary care physician, by name, in his or her estate planning documents.  I recommend that this person be given the authority to render decisions regarding competency and capacity.  I urge clients to develop a healthy on-going relationship with this physician, so that the physician will be aware of the client's lifestyle, speech patterns, comportment, and the like.  I urge clients to nurture this relationship even during periods during which the client is healthy, and without need for acute care.  Too often, the first time that a medical professional is evaluating a patient is immediately after an acute event or occurrence, inviting erroneous presumptions and judgements.  

Particularly for my clients hoping to Age in Place, this lifetime planning is vitally important. Inviting or acquiescing to a set of circumstances that result in health care decisions being made by professionals without knowledge or experience about you, only increases the possibility that institutional  long term care is your outcome.  Most of my clients work with legal counsel, their families, and their health care professionals to prevent unnecessary and avoidable long term institutional care.  

For more information regarding Aging in Place planning, go here.  For more information regarding LegalVault®, a system through which health care and legal documents are stored, protected and made available to health professionals upon demand, twenty-four hours a day, seven days a week, 365 days a years, go here.  

Filial Responsibility Laws Complicate Estate and Financial Planning

Warning of the challenges created by state filial responsibility laws, Jamie Hopkins, co-director of the New York Life Center for Retirement Income at the American College of Financial Services, has penned an excellent article for advisers entitled,  Family-Responsibility Laws Could Cost Your Clients: Be Aware of Laws Aiming to hold Family Members Financially Responsible for Other Family Members.

The article explains filial responsibility laws which "aim to hold family members financially responsible for other family members," by providing that "children can be held responsible for their mother and father’s nursing-home costs."   The article warns that although these laws have not been applied often because of the prevalence of social programs like Social Security, Medicare, and Medicaid, "with more and more retirees unable to meet their expenses, some providers have turned to filial laws for payment of debts."  

The article continues:

"The most widely cited recent application of filial law is 2012’s Pennsylvania case, Health Care & Retirement Corporation of America v. Pittas, in which the court held that a son was liable for a $93,000 nursing-home bill owed by his mom.

Since 2012, some care facilities have begun using filial laws to entice children of nursing-home residents to make payments or to ensure that the Medicaid application process is properly completed. However, there has not yet been a major uptick in lawsuits applying filial laws to recover unpaid bills.

Perhaps more interesting than the Pittas case is Eori v. Eori, in which the Superior Court of Pennsylvania upheld a monthly filial-support obligation of $400 from one brother to another in order to pay for long-term-care support for their seriously ill mother. The plaintiff son, who himself provided a lot of the care at home, was able to demonstrate that his mother could not pay all of her costs and needed financial assistance.

This case helps show the far-reaching potential of filial-support laws, as siblings can be required to help support their parents even if they are not in a nursing home or other professional facility.

This blog last warned about filial responsibility in the article Filial Responsibility Laws Lead to Chaos.  Many conclude that it is not a question of whether filial responsibility laws will find widespread application to long term care cases, it is a question of when.

To read more about filial responsibility, go here,  go here, here, here, here, and here.  

Beware Direct Transfer Designations (TODs and PODs)

If you are planning to Age in Place, you should not rely upon direct transfer designations, like POD's (payable on death designations) and TOD's (transfer on death designations), or simple beneficiary designations as a primary component of your estate plan.  These designations are mechanisms by which an account or other asset is transferred or paid on the death of the owner to a beneficiary. They are often recommended by the administrator of the account, such as a bank, broker or life insurance company. While these can be very effective and inexpensive means by which to avoid probate and transfer assets at death, they are not without their risks and challenges. A lack of careful consideration of the risks and rewards of these mechanisms can be disastrous. A carefully prepared estate plan will consider, and resolve, all of the risks and challenges they present.

Benefits of Direct Transfer Designations

Direct transfer designations have several benefits. The most important benefit is that they are inexpensive and relatively easy to employ. Most institutions will permit you to make such designations as a service, for no additional fee. They are simple to create, and there is no need for an attorney or other professional. Most of these designations are made by account owners without legal or professional advice or counsel. Particularly because of this simplicity, they are very popular.

The second benefit is that the payment or transfer is more or less immediate and direct. Where there is a need to make cash or other liquid assets immediately available to a child or grandchild for some purpose, a TOD or POD appears attractive at first glance. Beneficiary transfers, however, typically require claim forms, and documentation in support of the claim. In reality, the process may take more time and effort than succession of ownership (such as through a living trust or joint tenancy with right of survivorship). Nonetheless, it is the assumption that funds are available immediately that often causes folks to choose direct transfer designations.

Unquestionably, direct transfers can have unique benefits as a result of direct payment to a beneficiary, whether or not immediate. For example, if you are widowed and want the bulk of your estate to pass to your children, but still desire a particular asset, fund, account or benefit to pass to a significant other or second spouse, without involvement of your children, a direct transfer seems suited for this purpose. Of course, such circumstances are specific, unique, and situational. The proper method for accomplishing an intended result depends upon first carefully considering all options to ensure that the proper tool is selected.

The third benefit is that a direct transfer designation may avoid probate, provided, however, that the beneficiary is alive at the death of the account holder or owner, and there is no intervening circumstance that interrupts direct payment to the living beneficiary; a beneficiary's disability, need for government benefits eligibility, creditors, marital disputes, and the like, may frustrate an effort to protect assets from legal or court administration. 

If the beneficiary passes before or after, the asset may be probated. Particularly because the avoidance of probate may not be effective, TOD's and POD's are of limited utility in a carefully planned estate. Not surprisingly, because they are available at little or no cost, they are often used for the sole purpose of avoiding probate - an inexpensive substitute for more comprehensive planning. Make no mistake--these devices are NOT substitutes for comprehensive plans or living trusts. If you have utilized TOD's or POD's in your estate plan, particularly if you have done so without professional guidance, you may want to consider carefully the many possible disadvantages of these tools, and consider a more appropriate planning technique.

These designations simply do not, at least effectively, accomplish goals best achieved by proper estate planning. For example, these devices do not avoid estate taxes, reduce the risk of guardianship, protect assets from control by a court-appointed guardian, or permit in and of themselves management of assets during periods of incompetency or incapacity. They may not even avoid probate of the asset.

Additionally, there are several potential drawbacks to such devices, particularly if they are used without careful consideration or the advice of counsel. The biggest drawback to these plans is that they do not and cannot plan for contingencies. Additionally, use of such designations can cause illiquid estates, lead to or cause unintended disinheritance, lead to lawsuits or disputes, and can facilitate or encourage guardianship.

Proceeds from Direct Transfer Designations Do Not Have to be Used as Intended

Among the most common mistakes is to leave an account to a particular person, usually the person you intend to be the executor of the estate, for a specific purpose such as paying your funeral bill, or satisfying a mortgage. Unfortunately, the beneficiary is not required to use the funds for your intended purpose.  This can result in one of your children receiving a windfall, by pocketing the account, and having the obligation to be paid from other estate assets. 

Consider the following example:

Mrs. Smith leaves a twenty thousand dollar ($20,000.00) CD payable upon death to her daughter Patty, her executor, so that Patty will have immediate funds available to pay the funeral bill.  Mrs. Smith directs her home and her bank and savings accounts, worth a combined one hundred and fifty thousand dollars ($150,000.00) to her three daughters by way of a Last Will and Testament. 

Although she intended each daughter to receive an equal amount, or fifty thousand dollars ($50,0000.00), this is not the result. Patty keeps the twenty thousand dollars ($20,000.00) as her own.  Patty acts as executor of the estate, and pays the ten thousand ($10,000.00) funeral bill as an expense of the estate. Patty pays six thousand five hundred dollars ($6,500.00) in medical and other bills, and expenses from the estate.  Patty is paid six thousand dollars ($6000.00) as the executor, and an attorney is paid seven thousand five hundred dollars ($7500.00) in attorneys fees, costs and expenses. The resulting net estate is one hundred thirty thousand dollars ($130,000.00), resulting in each daughter receiving an equal approximately forty-three thousand dollars ($43,333.33).  Patty received total distributions from her mother in the amount of sixty three thousand dollars ($63,333.33), twenty thousand more than her sisters. Additionally, Patty also received an executor's fee for the work that she performed in settling the estate.  

Direct Transfer Designations Do Not Avoid Estate Tax

If you have any incident of ownership in or to an account or other asset, it will be included in your taxable estate for estate tax purposes. Consequently, direct transfer designations are not appropriate tools for estate tax planning.  If you intend to remove the value of the asset from your taxable estate, you must do more. Generally, unless some other reason for excluding the account exists, the account will be included in your taxable estate notwithstanding the direct transfer designation.

POD's and TOD's May Not Avoid Probate

There are numerous instances where these techniques have been used to avoid probate, and yet the assets of the estate are nonetheless probated. Transfer upon death designations are not typically made for personal property, and may in fact be unavailable to transfer such assets. If there are sufficient assets to probate, the other assets will pass through probate, even if liquid or other property avoids probate.

Moreover, these designations do nothing to protect assets from administration by a guardian or conservator in the event of incompetence or incapacity. They also do not prevent challenges to a will, appointment of executor, or other legal disputes which may ultimately be resolved by the probate court.

Finally, these designations will not avoid probate if the beneficiary passes away either before or after the account or asset owner. A probate administration may be necessitated, whereas property passing by way of trust will not need to be probated in the event of the death of an heir, whether that death occurs before or after death of the owner.

Direct Transfer Designations Do Not Aid In Aging in Place

Aging in Place is the desire of almost every senior.  For some, it is only a  hope, desire, or aspiration.  For others, it is a fundamental objective forming the basis of a comprehensive estate and financial plan. Direct Transfer Designations do nothing to aid in a plan designed to enable you to Age in Place.  Simply, because these designations only "work" after you have passed, they are incapable of aiding in your efforts to Age in Place.  

Moreover, to the extent that the use of such designations abandons more comprehensive plans that, for example, change traditional fiduciary duties to permit use of assets for more expensive alternatives to institutional care, they indirectly frustrate your Aging in Place plans.  For more information regarding Aging in Place, go here.    

Direct Transfer Designations Do Not Avoid Guardianship

Direct transfer designations do nothing to protect assets from administration by a guardian or conservator in the event of incompetence or incapacity. Failing to protect yourself and your estate from guardianship impairs any plan to Age in Place.  For more information regarding the danger of guardianship generally, consider the Open Letter to Congress, drafted by the National Association to Stop Guardian Abuse, or review Guardianship over the Elderly: Security Provided or Freedoms Denied?, Hearing Before the Special Committee on Aging, United States Senate.

 Direct Transfer Designations May Create Illiquid Probate Estates

One potential drawback to these designations, particularly when placed on all liquid checking, savings, and investment accounts is that an estate can be made illiquid. Lack of liquidity can be a problem where there is real estate, personal property, or other assets that must be probated. Probate administration and estate taxes must be paid, and if the probate estate is insufficient to do so, heirs may be required to return cash to the estate, or property may be sold at fire sale prices to satisfy obligations. It is important to consider that ad hoc asset level planning to avoid probate often leaves assets to be probated.

Direct Transfer Designations Do Not Plan For Contingencies

The biggest disadvantage is that these devises are usually limited, and do not provide for contingencies. These plans very rarely answer the "what if?" questions considered by a carefully prepared estate plan. For example, what if the transferee or payee dies shortly before or after the owner? In most cases, the designation will simply pay the estate of the deceased transferee or payee. If, for example, the payee is your son, and he dies before you, without a will, the account or asset will be paid in whole or part to your daughter-in-law. You may desire that no part of your estate pass to the spouses of your children, in order to protect your grandchildren in the event of remarriage. Moreover, if you intended to avoid probate of your assets, you may fail in your efforts.

There are numerous examples of contingencies that a living or even a testamentary trust can address which are not typically addressed by POD's and TOD's. What if the property passes intentionally or unintentionally to a minor? Do you want the property to be distributed to the minor upon his or her reaching age eighteen or obtaining emancipation, or would you prefer to protect minors from their inexperience and lack of wisdom in managing assets?  Did you anticipate that a guardian for the minor may need to be appointed in the probate court to oversee the assets, with the attendant burden, cost, and expense, even if you trust the minor's parents to manage the assets? 

What if the heir has financial difficulties, lawsuits, judgment liens, tax liens, or similar problems at the time of your death? If you do not intend your assets to pay the claims of third parties against your heirs, you should consider an alternative to a simple TOD or POD.

What if your heir is undergoing a divorce, dissolution, separation, or other marital difficulty? A TOD or POD may or may not be involved in such a dispute, depending upon a number of factors and your state law.

What if an heir is handicapped mentally or physically at the time of your death. If you want to protect that heir, you may want more than a simple TOD or POD.

What if an heir suffers from a substance abuse or other dependency that could affect their ability to manage their affairs? TOD and POD clauses rarely protect a family from such contingencies.

What if an heir joins or becomes a member of a religious organization, cult, or other organization pursuant to which your heir agrees to surrender or deliver all of the heir's assets? You may not want your worldly possessions to facilitate or benefit the organization or cult.

What if there is a dispute, contest, or lawsuit? How is the dispute to be resolved, and on what basis?

Regardless which "what if" question concerns you now, you should consider many possible contingencies. As a result, a carefully considered and well drafted estate plan will consider and provide solutions to all of these and many more. TOD's and POD's simply have no solutions, because they are not, in and of themselves, "plans."

Direct Transfer Designations Can Lead to Unintended Disinheritance

Another disadvantage of direct transfers is that they can lead to unintended disinheritance. This occurs because folks often use these to segregate accounts. In other words, a person will select one account with a TOD or POD designation for one heir, and another account for another heir. This is often done to keep confidential account balances which may favor one heir as against another. These can be disastrous in an estate plan. Consider the following example:

Mrs. Smith has three children and three CD's. Two CD's are worth ten thousand dollars ($10,000.00), but the third is worth twenty five thousand dollars ($25,000.00). Smith's oldest daughter lives very near, is often helpful in Smith's day-to-day activities, and is Smith's designated attorney-in-fact/agent. Smith makes the larger CD payable upon death (POD) to the oldest daughter, but makes the others payable to the other children. Unfortunately, Smith suffers a stroke and undergoes lengthy period of convalescence, including a stay in a nursing home. The expenses require the daughter, now acting through power of attorney, to liquidate one of the smaller CD's, and to liquidate the larger CD to cash, of which she spends ten thousand dollars ($10,000.00). Assuming the only asset remaining at Smith's death is the checking account, which is now worth only approximately fifteen thousand dollars ($15,000.00), and the remaining CD which is worth ten thousand dollars ($10,000.00), you can see how the POD failed to effectuate her wishes. The checking account is divided equally between the children (five thousand dollars ($5000.00) each. Widow Smith probably assumed like many people that the checking account would only have a nominal amount of money in the account, which may not be true as the family deals with medical or other crises. Instead of the oldest daughter receiving twenty five thousand dollars ($25,000.00), she receives only five thousand ($5000.00). One of the other children receives fifteen thousand dollars ($15,000.00). It is obvious the results were not in keeping with the intentions of Widow Smith.

An Attorney-in-Fact May Change Your Wishes

Most people who have utilized direct transfer designations assume that their estate plan is set, and their wishes will be followed. Sadly, nothing could be further from the truth. A direct transfer designation is typically a contractual right, which can be changed by an attorney-in-fact. Moreover, an asset can be transferred, and the designation "undone" by any person with authority over you or your estate, such as a guardian or conservator. Bottom line? A beneficiary designation is simply not an adequate estate plan for most people.

Direct Transfer Designations May Lead to Lawsuits Or Disputes

For all of the foregoing reasons, and countless others, direct transfer designations may cause your estate to be contested, and may encourage, rather than discourage lawsuits and litigation.  Particularly because these designations may create expectations in the minds of heirs, and because their use certainly does not discourage, and may encourage disputes, reliance on these in your estate plan might even encourage a guardianship application by an otherwise well-meaning heir as he or she seeks to protect their inheritance from others.

Guardianship proceedings may be necessitated by assets passing to contingent beneficiaries, as well, such as underage grandchildren. Since the goal of such designations is primarily probate avoidance, careful and limited use of such designations in an estate plan is warranted.

There is no substitute for a carefully considered and well drafted trust to ensure that your wishes are expressed and carried out.

[Note: This article is largely based upon another, earlier article written by Attorney Donohew, which article can be found here.]  

Most Procrastinating on Planning; Those That Plan Don't Protect Their Plans

A BMO Wealth Management survey finds 52% of adults have no will, 40% of parents have not discussed estate intentions with children, and only 28% of adults know their parents' legacy wishes. 

For those who have an estate plan in place, the survey indicates that most are not making an effort to notify heirs regarding the location of important estate planning documents.  Only one in three respondents said that their heirs were aware of the locations of estate planning documents such as a will or powers of attorney.  For married adults who had a will and powers of attorney, 25% responded that only their spouse knew where the documents were located. 

BMO sponsored the survey of 1,008 Americans age 18 and older in December.  For a more complete discussion of the survey results, go here.

BMO found that most respondents planned to leave each of their heirs equal portions of their assets, and that spouses and children were most often indicated as heirs. Yet some planned to distribute their estate unequally (between 5 percent and 15 percent, depending on marital status) or not leave an inheritance at all (between 7 percent and 20 percent).  As a result of the survey, BMO warned that such plans could cause division within families if not properly communicated to heirs ahead of a client’s death. 

Only 28 percent of the respondents said that they had estate planning discussions with their parents. Perhaps as a result, 40 percent of those surveyed felt that the distribution of their parents’ estates was unfair.

Of course, these survey results only underscore the many studies confirming what we know: most people do not plan, and those who do plan make too little effort to protect their plans.   This blog contains numerous similar reports, including the recent  New York Times report illustrating the major problems with advance directives, including that the existence of these legal documents is often not known about by medical professionals or loved ones (and even if it is, the physical location of these might not be known). 

Our clients have a convenient system that protects their wishes by vaulting them, and making them available to medical professionals and family members when necessary. LegalVault® is a great tool which allows you to securely store your advance directives and estate planning documents. Here’s how it works:

• The client executes an up-to-date General Power of Attorney for Health Care, and Advanced Directive/Living Will;

• Each document is electronically scanned, and an electronic image of each document is made (which is far superior to a copy);
• Each  client is given a secured LegalVault® account;
• Our firm uploads the image of the  documents to the client's LegalVault® account;
• LegalVault® sends out an Emergency Access Wallet Card which contains instructions for healthcare providers on accessing healthcare-related documents online or via a 24/7 fax back service;
• Once an account has been created, the LegalVault® physician notification system sends a notice to the primary care provider informing him or her of this invaluable service and the storage of advance directives, ensuring that these important planning documents never fall to the back of a medical chart where they go unnoticed for weeks; 
• Clients control what information is available to health care providers, and can quickly update the account with up-to-date documents or information (such as medications or allergies) from their home computer or smart phone;
• With the client's permission, images of other estate planning documents (Wills, Trusts, Powers of Attorney, etc.) are uploaded to the client's LegalVault® account; 
• Clients can log in to their accounts to share other non-healthcare-related documents with our firm, or even upload copies of family keepsakes (photos, home videos, letters to children, family trees, intellectual property, copyrighted materials, publications, art) to ensure these are safely secured and passed down to younger generations;
• Clients can keep or maintain important legal and financial records such as insurance policies, annuities, savings bonds, stock certificates, leases, contracts, and other instruments, potentially lost, stolen, discarded, or destroyed by third parties at a time of death or disability;
• Clients can alert authorities of significant needs or concerns, such as "disabled child at home," "pets at home," or the like;
• A separate vault, inaccessible to our firm, accessible only to the client, and an executor, successor trustee, or personal representative, can store passwords to online accounts;
• Upon renewal of the LegalVault® account (every 3,5, or 7 years) updated documents are executed, ensuring that the documents are never out-of-date.

There is no limit to the storage space available for estate planning documents, pictures, letters, financial documents, and the like.  The cost of such a service is probably less than you might imagine. Contact us if you want to add this valuable service to your estate and/or financial plan. We include the service with many new estate plans at no additional charge for the first three years.

Aging in Place: CMS Reports Success in Reducing Medicare Cost for Long-term Care Residents by Reducing Hospitalizations

Infringing on the autonomy of Medicare patients to seek quality care is paying off in massive dollar savings for the federal government.   This blog previously reported on the controversial sign-off rule that prevents Medicare patients discharged from hospitals to nursing facilities from returning easily to the hospital for necessary care.  Before the rule, if you were discharged to a nursing home, but later felt that hospital care was necessary, you could simply ask to be transported back to the hospital.  Your wife, your health care proxy, or the nursing home could transport you back to the hospital.

After implementation of the rule, not even the nursing home, if it believes the hospital  is better able to care for you, can return you to the hospital, unless there is a life-threatening condition, or a doctor first examines you and "signs off" on the the transfer.   The nursing home industry objected to this hard-to-justify restriction on its authority and discretion. 

Since 1984, the federal policy of reducing the hospital stays of Medicare patients, which some have characterized as "quicker and sicker," has increasingly transitioned elderly health care from hospitals to highly regulated skilled nursing facilities in order to reduce the cost of Medicare.  There is increasing evidence that there are significant resulting adverse outcome outcomes.  Now, the federal government implies that these same facilities cannot be trusted to make decisions regarding choice of care. Physicians are relegated to gatekeepers for more expensive care, even where necessary. 
   

In the first assessment since the controversial rule was implemented, the Centers for Medicare & Medicaid Services (CMS) reported that the rate of potentially avoidable hospitalizations among dual-eligible long-term care residents fell by nearly a third in recent years.  In a data brief posted on the CMS blog, officials documented the “real progress” made in reducing cases of potentially preventable hospitalizations among long-term care residents over the last decade. Overall, the hospitalization rate for beneficiaries eligible for both Medicare and Medicaid — including those outside of long-term care facilities — fell 13% between 2010 and 2015.

In that same five-year timespan, the rates of hospitalizations among dual-eligible long-term care residents caused by potentially avoidable conditions, such as dehydration, urinary tract infections and skin ulcers, dropped 31%. That decrease was widespread, with improvement documented in all 50 states. In total, the decrease meant dually-eligible residents avoided 133,000 hospitalizations between 2010 and 2015.  The brief does not, however, report that the overall incidence of avoidable conditions decreased — only that hospitalizations for the conditions decreased.    In fact, the only reported reduction in incidence (i.e., improvement in actual health outcomes), appears to have come from the Agency for Healthcare Research and Quality (AHRQ) Safety Program for Long-Term Care, which "significantly reduced catheter-associated urinary tract infections in hundreds of participating long-term care facilities nationwide."  This 2001 project helped prevent a recognized cause of hospitalizations in residents of these facilities.  One can assume that the absence of reported reductions in other potentially avoidable conditions means that there was no significant reduction attained.

CMS is applauding its ability to reduce expensive hospitalizations, but is tacitly acknowledging that these weren't achieved by better quality care, but rather from impediments and disincentives to more expensive, higher quality care. There is nothing in the recent report that suggests overall  improvements in healthcare outcomes for the nation's elderly.     

Blog authors Niall Brennan, chief data officer for CMS, and Tim Engelhardt, director of CMS' Federal Coordinated Health Care Office, attributed the decrease to the “committed work by those who directly serve older adults and people with disabilities,” as well as programs such as the agency's “Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents.” The post also highlighted CMS' Hospital Readmission Reduction Program, Accountable Care Organizations and bundled payments as drivers behind the hospitalization rate drop.

This article was inspired by an article in McKnights, the original of which can be found here.  

National Health Care Decisions Day: Conflicting State Laws Interfere with Patient's Health Care Choices

The results of a new study underscore the importance of advanced directives and health care proxies in routine estate and health care planning.  The researchers concluded that the ability of medical professionals to understand and honor patients' medical decisions is made more difficult by conflicting state laws, a problem anticipated to only grow along with the nation's booming senior population.

The study of medical decision-making rules,  is the first  of its kind.  Researchers with Beth Israel Deaconess Medical Center, the Mayo Clinic, and the University of Chicago reviewed laws from all 50 states regarding the medical choices of patients. Their findings, published Thursday in the New England Journal of Medicine, show a conflicting system of rules that is difficult to navigate.  The complexity and conflicts may impede professionals ihonoring patients' wishes.

Fewer than 30 percent of Americans have “advance directives” or legal documents outlining their treatment preferences that can also grant someone power to make medical decisions on their behalf. These documents are often necessary, and when available, used when a patient is unconscious, incapacitated or unable to speak for him/herself.  Such documents cam dictate how to treat – or not treat – anything from a minor illness to a life-threatening injury. On average, 40 percent of hospitalized adults cannot make their own medical decisions. In some intensive care units, that figure reaches 90 percent.

Erin Sullivan DeMartino, MD, a pulmonary and critical care medicine physician at Mayo Clinic in Minnesota who led the study as part of a fellowship with the University of Chicago’s MacLean Center for Clinical Medical Ethics, explained in a release accompanying the publication of the study:

“Decisions about withdrawing or withholding life-sustaining care are incredibly emotional and challenging.  But when there is ambiguity about who is responsible for decision-making, it adds much more stress to that moment.

*     *     * 

We have medical technology we didn’t have 50 years ago, so we have a whole group of people who – transiently or sometimes permanently – can’t communicate with us and can’t participate in their own life-and-death decisions."   

Thirty states require the “alternative decision makers” of patients to have an ability to make difficult medical decisions, such as withdrawing a feeding tube or other life-sustaining treatment. But there's no way to assess that ability, the review said. Thirty-five states employ a “surrogacy ladder,” which creates a hierarchy of people able to make medical decisions when patients don't have a power of attorney. But even those systems vary when it comes to the types of decisions surrogates can make.

"One important message from this study is that, in the absence of a clearly identified spokesperson, the decision-making process for incapacitated patients may vary widely depending on where they live,” said senior researcher Daniel B. Kramer, M.D., MPH, in a release on the study.

The study also found states varied in how they defined an appropriate decision maker. Some require surrogates to have an in-depth knowledge of a person's beliefs, while others only require the decision maker be an adult.  The biggest takeaway from the review, according to the research team, is that despite ongoing disputes in healthcare facilities about patients' decisions, no nationwide standard or guide exists for family members or providers.

It is unclear whether the variation in statutes impacts clinical care, according to the research team.  One thing is certain: disputes about medical treatment are happening on a regular basis inside hospitals and hospice programs, and there’s no national standard or benchmark to guide families or physicians.  The more an individual plans, and reduces their decisions to writing, the more likely the individual's decisions will be implemented. 

National Health Care Decisions Day is April 17, 2017.  Throughout the week, August 17-21, our office, and the offices of legal and health care professionals will assist you at no charge in putting in place Durable Powers of Attorney for Health Care and Living Wills (Advance Directives).  If you, a family member, or friend don't have, and need these, please call our office at 877-816-8670.   

Pocket Deeds Are Horrible Planning Instruments

I recently discussed with an estate planner the advisability of using a “pocket deed” to fund a revocable trust.  A pocket deed is a deed that is signed during a person’s life, but "pocketed," that is, not recorded, until after the person dies. Pocket deeds were traditionally used to transfer proper to heirs, but apparently in a more modern approach, it is now sometimes used to transfer property to a trust.  

This technique is usually intended to accomplish two goals:

1. Control – Unrecorded deeds allow the property owner to retain control of the property during his or her lifetime. Since the unrecorded deed is not a matter of public record, the owner remains the record owner of the property.  If the deed stays in the owner's possession )a bid assumption), the owner can destroy the deed if the owner changes his or her mind.
2. Probate – The recording of the deed after the owner's death is usually intended to avoid probate.  If it works (a big assumption), the transfer is treated as being effective when the deed was signed and the property won’t be included in the owner's probate estate.

The biggest objection I have to the modern approach is that it fails to appreciate the advantages of the trust.  In fact, advising a person not to record the deed  suggests that there is some disadvantage to transferring the property to the trust. If the trust is a revocable trust, and you are the trustee, you control the property before and after the transfer.  Since the purpose of the trust is to avoid probate, and transferring the property during your life accomplishes that, why not record the deed?

Pocket Deeds Frustrate Good Planning

Regardless, unrecorded pocket deeds are just a bad idea.  They are inconsistent with the fundamental bases of good planning, which assumes the worst, and on that basis implements a plan before the worst happens to derail the plan.  Worst cases include house fires, lost documents, improperly executed or authenticated documents, scrivener (drafting) errors, and the like. Implementing your plan today means that you will solve and resolve these problems.  Pocketing a deed for recording after your death means that these risks may frustrate your plan.  

Consider the following examples:

• A deed is prepared based upon the prior deed.  The County Engineer subsequently changes property description rules, and refuses to accept for recording property descriptions using historic references.  Years later the owner dies, leaving a signed deed that is not recordable given the subsequent changes.  The property must be probated. If the deed had been recorded when prepared, it would have been owned by the trust at the owner's death, and there would be no probate.  

• The result in the previous situation would be the same if there was an error in the title owner's name, or if the notary forgot to affix a seal, or the signature of the owner was defective, or the property description was defective.  If the deed is presented for recording and rejected by either the County Engineer or County Treasurer while the owner is alive, the owner simply corrects the deed and submits the corrected deed for recording.  If the deed is rejected after the owner has died, there is no one but the executor of the owner's estate that has authority to fix, correct, or amend the deed.  

• A deed is prepared and pocketed by placing the deed in a drawer.  After the owner's death, the family cannot find the deed, or inadvertently disposes of it when cleaning the drawer of other miscellaneous unnecessary paperwork.  Perhaps the person who finds the deed destroys it intentionally, in order to create mischief or opportunity (read on for an example how this might create opportunity).  A lost or destroyed pocket deed is unable to serve any purpose. The property must be probated. 

• A deed is prepared transferring several properties, each to a different child.  The deeds are placed in the family's home safe.  Several years later, one child finds the deeds while retrieving other paperwork from the safe.  He removes the deed transferring the property to himself and records it.  At a minimum the owner no longer controls the property.  More, the owner suffers the risk of loss realized by the child.  If the child declares bankruptcy, for example, the property may be lost to satisfy creditors.     

The foregoing examples simply describe how use of a pocket deed can result in the frustration of your estate plan.   But, that isn't the worst of the pocket deed story; pocket deeds can have significant adverse consequences.  The last example demonstrates how conveying property can create risks.  By the way, none of the examples are problems for an owner who simply conveys his or her real property to his or her trust.

Unrecorded Deeds Can Create a Cloud on Title

Under the laws of most jurisdictions, a deed is not effective until it has been properly signed and delivered.  The delivery requirement is important. Just signing the deed is not enough to complete the transfer.  Delivery of the property is presumed if the deed is publicly recorded.

In ordinary real estate transfers, the deed is delivered and recorded at the time of the conveyance.  But with pocket deeds, the deed is not recorded. There is no proof of delivery during the life of the owner.  This raises a number of questions.  Was the deed delivered to the transferee at all? Can delivery be proved? If delivery was not made, is the failure evidence that the owner changed his or her mind?  If the property is not delivered before the death of the owner, the transfer may be void or voidable.  If the transfer was a gift, meaning that no consideration changed hands, the transfer is not legally enforceable by the transferee.

Questions like these can create a cloud on title, meaning that title insurers will not write a policy on the property without some legal action to clear the title. The transferee would have every incentive to claim that the deed was delivered before the owner died, and the owner is not able to say otherwise. In these circumstances, title companies may be reluctant to simply accept the transferee’s word that the deed was properly delivered prior to the owner's death.  This is especially likely if the deed has remained in pocket (unrecorded) for years before the owner's death.

If the deed recording occurs shortly after execution of the deed, a title company will simply presume that there was valid delivery. But a conservative title company may require a declaratory action to quiet title before it will issue a policy on the property.  An action to quiet title will convert statements regarding delivery to legal testimony in a legal proceeding, after publication and notice to anyone who may claim otherwise. A title company can then be sure that there aren’t any competing claims to the property.

If a title company will not write a policy on the property without a declaratory action, the title to the property is unmarketable. The trustee or new owner will be unable to sell, mortgage, or otherwise deal with the property until the title issue is resolved.  The legal fees for bringing an action to quiet title are usually more expensive and time consuming than proper planning on the front end, and may result additionally in probate.

Unrecorded Deeds Can Give Creditors a Lien on the Property

An unrecorded deed does not put third party creditors on notice that the property has been transferred. This means that the transferor’s creditors (including creditors of his or her estate) may put a lien on the property. This leaves the transferee open to a claim by the transferor’s creditors. If that happens, the transferee would need a legal action to deal with the lien.

Unrecorded Deeds Can Create Tax Issues

Assuming that the owner does not have an estate that is taxable for Federal Estate Tax purposes (i.e., assuming the owner’s estate is worth less than $5.25 million under current law), it is usually better from a tax perspective for the owner to hold onto the property until death. This will give the new owner a full stepped-up basis in the real estate, effectively erasing any appreciation that accrued while the owner was alive. This can result in a significant income tax savings upon sale of the property. This tax planning opportunity is forfeited when a pocket deed is signed during the owner's lifetime.

Property gifted during the owner's life does not receive a step-up in basis.  The transferee would be forced to pay capital gains taxes on the sale of the property using the owner's original basis to determine the taxable gain.

In addition, the transferor is required to file a federal gift tax return (Form 709) for any transfer of property that exceeds the annual exclusion amount (currently $14,000). Since most real estate is worth more than $14,000, the transferor is usually required to file this return when the pocket deed is actually signed. The hassle and expense of filing the Form 709 can be avoided by holding the property until death.

The proponents of the modern version will correctly note that none of those opportunities apply when the property is transferred to a revocable trust.  But, the real nature of the transfer is nonetheless concealed until after the owner's death.  What if a taxing authority argued that the concealment suggested fraud (concealment is an indicia of fraud), and suggested the property was also actually conveyed to the heirs by an alternate pocket deed, which deed was destroyed upon the owner's death.  In this instance the parties conspire to structure a transaction so that it can be characterized in the most favorable way possible after the occurrence of one of several possible events.  In this way, the parties can "have their cake and eat it too."  This can result in the transfer being characterized so as to create a taxable event, and corresponding tax consequence, prior to death.  In other words, what would not have been taxable, can be made taxable by constructing the transaction is a suspicious way.

This danger is precisely why an Ohio senior should never prepare a pocket deed conveying the  home to a child.  The senior will likely claim a homestead exemption reducing the property taxes.  The homestead exemption is not available to the child, especially if the child is not living in the home.  When the the pocket deed is recorded after death, the child will be responsible for repaying the homestead exemption, since the senior was not entitle to the exemption after conveying the property to his or her child, together with interest and penalties for the unpaid taxes.      

Unrecorded Deeds May Invite Legal Challenge

Unrecorded deeds will not necessarily  avoid probate.  As explained above, anything that happens that prevents recording of the deed will necessitate probate of the property.  In addition, a pocket deed may create the opportunity for legal challenge or contest.

I once represented a child that was disinherited by his father's trust.  Of course, upon reviewing the trust, I advised my client that normally there would be little opportunity to contest the trust, and suggested he resign himself to the fact that the trust would be administered according to his father's wishes.  This was particularly unfortunate under the circumstances, because, although the son was once estranged from his father, the father and son had in the intervening years reconciled, and were for several year's before the death of the father on good terms.

Shortly after the father's death, a sibling shared the harrowing work the siblings were forced to perform in days before and after the father's death.  Apparently the deed was just one of many assets that were left out of the trust, until the father fell unexpectedly ill.  The new information breathed life into the son's claim under the trust.  Was it possible that the father has refused to fund the trust given reservations regarding the disinheritance?  If the trust was not an expression of the father's wishes through mistake or change in circumstances, the son would have a viable claim.  Although the matter could easily have been resolved in an expensive court action, it was resolved by settlement.  The settlement, regardless of the circumstances compromised the father's wishes; the son was neither disinherited nor treated the same as his siblings.  It is unlikely that is how the father intended his estate to be resolved.

A Last Will and Testament is more susceptible to challenge than is a trust.  If it is determined that the property is not owned by the trust, and the Will is successfully challenged, the distribution of the estate can be altered from what the owner intended.  If the probate estate is distributed intestate, i.e., without a Will, the estate is distributed according to the heirs at law.  Who the beneficiaries of the trust are is irrelevant to property being probated where there is no Will pouring the estate over into the trust.

In Ohio, perhaps the most famous case arising from a  contest to a deed recorded after death is the case Schueler v. Lynam, 80 Ohio App. 325, 75 N.E.2d 464 (App. 2 Dist. 1947). In that case, the court held that the pocket deed was null and void, in part because partys of the deed required completion after the death of the owner. 

But other states, too, have invalidated pocket deeds as perpetuating fraud. 

Unrecorded Deeds Surrender Intended Benefits of a Trust

Among the possible intended benefits of a trust are protection of the assets from court-appointed guardianship, protection from certain creditors after death, seamless management of the assets during periods of unavailability, incompetency, or incapacity.  These, and many other benefits of trust management are lost when assets are retained in the owner's individual name.  Quite simply, pocket deeds surrender any of the lifetime planning benefits of a trust.  Usually, this means that either the individual was not properly apprised of the benefits of trust planning, or if being directed by a professional representative (agent, financial planner, or attorney), the representative is unaware of the benefits, or is seeking to obtain some other objective.

Because pockets deeds don't always work, almost always take risks that could be avoided by simply implementing a plan, and have unintended consequences, like most attorneys, I do not recommend their use.  

Finally, if you  find an article written by an attorney concluding that pocket deeds are recommended and advisable, please send it to me.  If you are interested, there are many suggesting that pocket deeds should be avoided.  For example, go here, here, here, here, and/or here.