Low Cost Medicare Supplement Available in Ohio

A new low-cost Medicare Supplement insurance policy is now approved for sale to seniors in Ohio. The Ohio Department of Insurance has approved a very low-cost Medicare Supplement insurance plan for seniors and Ohio is among the first states in the nation to allow this supplemental insurance plan to be offered to its citizens. The State of Arizona, too, recently approved a policy for sale there.  The availability of this low-cost supplemental plan for Ohio seniors was announced by State Mutual Insurance Company of Rome, GA, and reported by Business Wire Inc.

State Mutual President and CEO, Dee Yancey III, characterize the policy as one of the lowest cost Medicare supplement insurance plans available anywhere in the nation.  State Mutual Insurance Company allows Medicare-age consumers to apply for the supplemental Medicare insurance policy online without having to talk with an insurance agent.

According to Business Wire, Inc., a quick random comparison of Medicare supplement policies available in a number of states shows that the State Mutual policy is generally the lowest-cost in most categories, and in some cases, costing less than half the price of the most expensive policies for the same coverage. 

The online program allows an interested customer to review and select a policy, see a price quote, submit an application, receive confirmation of coverage and receive his or her policy in a few minutes of online time. 

According to the company's website, the the low cost of the State Mutual Insurance Company policy is achieved by empowering the customer to go online for most, if not all, of the information and application phase of obtaining Medicare supplement insurance:

Our products are low-priced because we have eliminated much of the marketing costs by not having an agent come to your home.  We have reduced our operating expenses by making policy issuance and administration more efficient.  

The website promises the consumer:

• Low Premiums on All Plans.

• Anonymous Rate Quotes.

• No Waiting Periods.

• No Agent Calls.

• Online Approval and Immediate Policy Access.

It is welcome news that Ohio seniors are getting a lower cost alternative.  Of course, reliance on an online solution may not be in your best interest.  Medicare Supplement policies, are, however, fairly standardized, and comparison of policies is, as a result, easier than comparison of other types of insurance policies.    Nonetheless, if you have a trusted adviser, it merits discussion before blindly accepting online comparisons and representations.  

Beware Lapse of Insurance for Vacated Rental Property- A Cautionary Tale about the Demise of the Trusted Professional Adviser

Elder Abuse and Exploitation Rampant

New research from Cornell University's medical college suggests that the incidence of elder abuse and exploitation is far greater than experts had expected.

The study, which is not available online, compared the number of cases reported to law enforcement  agencies that serve the aging and other authorities with those mentioned in 4,000 random phone surveys of people 60 and older.  One would expect that some cases would go unreported, and thus it is generally understood that such offenses are unreported.

The extent of  unreported offenses was, however, shocking.  According to the study, for every elder abuse case reported to a mandated enforcement agency, the survey found, 23.5 unreported cases actually occurred. What's more, for each case of financial abuse of elders reported to authorities, 43.9 actually occurred.  Finally for each reported case of neglect of an elderly person, 57.2 cases of neglect actually occurred. One can only be shocked that such a vast array of offenses against the elderly go completely unreported.

The extent of unreported cases helps to explain why abuse, financial fraud, and neglect are so prevalent among the elderly. Aside from what may be a natural vulnerability among some segments of the elderly population, it is obvious that perpetrators can repeat offend with relative impunity.  Imagine for a second how prevalent convenience store robberies would be if only one out of every 57 store owners  victimized even reported the crime! 

Read more: http://www.sacbee.com/2010/12/31/3291158/fraction-of-elder-abuse-cases.html#ixzz1AHH0aMqp

Thirty Thousand Seniors To Get Default Notices from Reverse Mortgage Lenders

About 30,000 seniors will receive tough "dun" letters from their reverse mortgage lenders. This largest batch of mortgage delinquency notices in U.S. history will demand payments in 30 days and threaten foreclosures of the homes.

These 30,000 homeowners over age 62 are behind on property taxes or have not paid homeowners' insurance. Both overdue items violate terms of the reverse mortgages and trigger foreclosure.

Lenders are required to mail the letters to the seniors between now and April 29, 2011. The massive collection effort was ordered by the Federal Housing Administration (FHA) which insures most reverse mortgages under its "HECM" program - Home Equity Conversion Mortgage.

Estate Tax Uncertaintly Continues

The most common question I have been asked as we start the year 2011, is whether the new tax law ends the uncertainty regarding estate taxes.  Unfortunately, despite the new law reducing the federal estate tax, uncertainty continues as a planning variable. 

For most of the year 2010, we expected 2011 to usher in a fifty-five percent (55%)  federal estate tax on all assets over one million dollars. Toward the end of 2010, President Obama signed legislation reducing this exorbitantly high death tax to thirty-five percent (35%) on assets exceeding five million dollars in value.  However, the reduction only applies for the years 2011 and 2012.

If you plan on dying in the next two years, you are probably relieved. If you plan on living well past 2012, uncertainty regarding the marginal rate and exemption amount remains.   Unless changes are made to the law,  the estate tax rate for 2013 will revert to fifty five percent (55%), with only a one million exemption amount.

When planning, although we hope for the best, we must plan for the worst.  The worst case planning scenario, then, would assume that you survive until January 1, 2013, at which time you pass and realize a fifty-five percent (55%) tax on all assets (including the value of life insurance payable as a consequence of your death), in excess of one million dollars in value. 

So, here are my rules of thumb (my thumb, my rules :-)).   I generally recommend that my clients consider setting up an Irrevocable Life Insurance Trust (ILIT) for all life insurance policies over two hundred and fifty thousand dollars ($250,000.00) and consider setting up a Bypass or Credit Shelter Trust for all marital estates that exceed one million dollars. A fifty-five percent (55%) tax means a substantial loss of wealth, and a substantially reduced inheritance.  Most people will want to plan to reduce that tax burden as much as possible. 

As the estate laws change, I will continue to update you so that you may better serve your clients and protect yourself and your family.

GAO reports on Guardianship Abuse

When an individual, often a senior, becomes unable to manage his or her finances and personal decisions, and has not created a legal structure for trusted surrogates to take over decision-making (through a power of attorney, health care directive and a trust) a state court may appoint a guardian or conservator (depending on the state law and the powers to be granted) to step in and take care of the incapacitated person.  In most cases, this responsibility falls on a family member who has the relative’s best interest at heart.   These court-appointed guardians are bound by law to act in the best interest of their ward, so even if the responsibility falls upon a person that is not a family member who has the best interest of the ward at heart, the guardian is supposed to behave as if he or she does does.

But, a recently-issued report by the Government Accountability Office (GAO) suggest that this is not always the case.  The report, surveying selected guardianship cases over a twenty year period, disclosed finding instances where family and non-family members alike have been appointed by courts, and subsequently abused or neglected the persons they were appointed to protect.  The GAO identified hundreds of allegations of physical abuse, neglect and financial exploitation by guardians in 45 states and the District of Columbia between 1990 and 2010.

PainSAFE™ to aid in Pain Management and Care

Medical professionals and caregivers working with chronic pain patients, and chronic pain sufferers have a new tool. The American Pain Foundation (APF) today announced the launch of PainSAFE™ (Pain Safety and Access for Everyone), a new educational initiative designed for people with pain and health care professionals. The mission of PainSAFE is to provide education surrounding the appropriate and safe use of pain management therapies for people affected by pain and health care professionals, thereby, helping to reduce risk and improve access to quality pain care.

PainSAFE is a web-based program that provides up-to-date information, programming and practical resources and tools to help educate consumers about pain treatment options and their use.  PainSAFE also provides health care providers with a central hub of evidence-based information and practice-based tools to focus on safety and reduce the risks associated with various pain treatments.

For the Family Caregiver, the Perfect Holiday is a State of Mind

The holidays are always a wonderful time of year for family gatherings, reflection on what we have and the spirit of giving. The television is packed with specials showing relationships and families coming together for the holidays.

But the holidays can also be a time of stress and sadness for those who are caring for family members that are struggling with health problems, frailty, dementia, disability, or recent loss. Those who care for these individuals may feel overwhelmed, frustrated, depressed or resentful as they watch “perfect” families enjoying the holidays. There are many surveys and studies suggesting that caregivers are highly susceptible to such feelings. If you are a caregiver, there are measures you can take to avoid succumbing to these feelings and emotions.

PBS's "Frontline" Confronts End-of-Life Planning

A recent edition of PBS's FRONTLINE online, and an accompanying web page, discuss the hard choices we face regarding health care near the end of life.  The synopsis of the program is chilling and profound:  "How far would you go to sustain the life of someone you love, or your own? When the moment comes, and you're confronted with the prospect of "pulling the plug," do you know how you'll respond?"

In "Facing Death," FRONTLINE gains extraordinary access to The Mount Sinai Medical Center, one of New York's biggest hospitals, to take a closer measure of today's complicated end-of-life decisions. In this intimate, groundbreaking film, doctors, patients and families speak with remarkable candor about the increasingly difficult choices people are making at the end of life: when to remove a breathing tube in the ICU; when to continue treatment for patients with aggressive blood cancers; when to perform a surgery; and when to call for hospice."

"What modern medicine is capable of doing is what 20 years ago was considered science fiction," Dr. David Muller, dean of medical education at Mount Sinai, tells FRONTLINE. "You can keep their lungs breathing and keep their heart beating and keep their blood pressure up and keep their blood flowing. ... That suspended animation [can go] on forever. [So] the decisions at the end of life have become much more complicated for everyone involved."

"There are clinical situations where the odds are so overwhelming that someone can['t] survive the hospitalization in a condition that they would find acceptable, then using this technology doesn't make sense," says Dr. Judith Nelson, an ICU doctor at Mount Sinai. "And yet, in my clinical experience, for almost everybody involved, it feels much more difficult to stop something that's already been started." Dr. Nelson continues: "Nobody wants to die. And at the same time, nobody wants to die badly. And that is my job. My job is to try to prevent people from dying if there's a possible way to do it that will preserve a quality of life that's acceptable to them, but if they can't go on, to try to make the death a good death."

At every turn in the program, the importance of advance planning is obvious and palpable.  The educational materials accompanying the program explain:

Business Succession Planning Neglected

Transitioning a business to the next generation or to new ownership is a reality that affects most business owners.  Ideally, business owners should begin developing a succession plan five to ten  years before exiting the business.  Of course, one cannot know for sure when succession will take place.  Those that plan for business succession, often plan only for retirement.

Health concerns, however, can compel succession earlier than expected.  A business owner's incapacity, incompetency, or disability may render the owner incapable of transitioning a business to a successor.  But, death is unquestionably the most severe of the reasons compelling succession of a business. Given the risk that a poorly planned succession might rob the business owner's heirs of a substantial inheritance, and risk otherwise guaranteed inheritance by burdening an estate and heirs with debts and obligations, one would assume that most business owners consider carefully succession of their business. 

Many, however, aren't thinking about it at all.

Young Adults to Have Expanded Health Insurance Access

An Ohio law that allows unmarried children or stepchildren up to age twenty-eight (28) to remain or be added to their parent’s insurance coverage becomes effective July 1, 2010.   As a result of the new law, parents should evaluate the opportunity and the cost of this new coverage.  The Director of the Ohio Department of Insurance, Mary Jo Hudson, wrote in a release that [a]n estimated 20,000 additional young adults, who are more likely than any other age group to be uninsured, will now be eligible for coverage."  The statement continued: “These changes, combined with our work to implement the recently passed federal reforms, are granting more Ohioans access to coverage and decreasing the number of uninsured Ohioans." The state reform will work in tandem with the federal law dependent age change that becomes effective September 23, 2010. Previously, only dependents up to age 19, or up to 23 years old if they were still in school, were eligible to receive coverage under their parents’ policies.

Ohio Pet Trusts

In Ohio, Pet Trusts (sometimes called Pet Care Trusts) are a relatively new legal tool used to provide for the care and maintenance of a companion animal should its owner die or become disabled. The primary purpose of a Pet Care Trust is to ensure that your beloved pet is cared for and protected as you would wish.

Millions of Americans consider their dogs, cats, exotic birds, and other pets more than just animals, and certainly much more than just personal property. Pets are often trusted friends and companions.  Pets provide emotional support, comfort, security, happiness, joy, satisfaction, and purpose. The close connections between pet owners and their pets often causes owners to desire protection, care, and consideration of the needs of their animal companions in the event they are unable to provide that care.

The law generally views pets as personal property, despite the fact that many individuals with companion animals view them quite differently than other possessions.   In fact, many people consider their pets as family members or children.     A 2005 study found that seventy-three percent of dog owners and sixty-five percent of cat owners “consider their companion animals to be akin to a child or other close family member.”  

Although many pet owners assume that a member of their family will take care of their pets after they die, the family members often do not want responsibility for the pet.  The harsh reality is that a significant number of the four to six million animals euthanized in the United States every year are pets left without care when their owners die.   Others end up in shelters and rescue charities. Some universities with veterinary schools have responded to this issue by “offering perpetual pet care programs that promise student care, including all necessary medical needs, for pets when the owner becomes disabled or dies.”  However, to avail oneself of the program an owner must make some type of donation to an “appropriate school-associated foundation.”  

Pet Trusts have, as a result, become quite popular.  One author wrote, "[t]he pet trust has earned wide acceptance despite its unique non-human and noncharitable nature and has been adopted relatively quickly compared to other novel types of trusts." 

A Pet Trust can be crafted as a stand-alone trust or as part of a another trust that you create. Pet Trusts require someone to fund them called a Grantor or Settlor. A Pet Trust will typically set aside enough money or property to care for a pet(s) during the lifetime of the pet. The Grantor selects a trustee to manage the money for the benefit of the pet, and a caretaker to manage the pet's care. The trustee should be someone trusted, who is financially responsible and cares about the pet. The caretaker should be someone who knows and loves the pet, who can provide a comfortable home and who is willing to accept the responsibility for the pet's welfare. While the same individual can act as both trustee and caretaker, it  sometimes advisable to use separate individuals to ensure proper care for a pet.

A Pet Trust will  often specify instructions regarding care of the pet. The most commonly included details are:

• identification of the pet;
• food and diet instructions;
• grooming instructions;
• Veterinary care instructions;
• compensation for the caregiver and trustee;
• how the caregiver must document expenses;
• how the trustee is to monitor the caregiver’s services;
• whether and how the trust will cover liabilities should the pet bite or injure someone or damage property;
• final burial or cremation instructions.

Many Pet Trusts address the issue of euthanasia of a pet, particularly for convenience, or reasons other than profound health concern, disability, or impairment.

Because a Pet Trust can be incorporated into the design and drafting of a revocable or irrevocable trust, the cost for many clients is minimal.  A Pet Trust can be incorporated into a Last Will and Testament, but typically has a cost separate and apart from, particularly, a simple Last Will and Testament.     

Noteworthy Changes to Coverdell Accounts Demand Consideration

Families interested in opening a Coverdell Education Savings Account this year for college savings should consider doing so before April 15. That would allow them to invest as much as $4,000 in one of these tax-advantaged accounts this year—twice the maximum for annual contributions—since money deposited before April 15 can be counted against the previous year's limit.

But families planning to use a Coverdell account to pay for pre-college education expenses should think twice about opening or contributing to an account this year. Starting next year, withdrawals from Coverdells to pay expenses from kindergarten through 12th grade will no longer be tax-free, unless Congress acts to extend that benefit, which is far from certain.

Another prospective rule change would lower the limit on annual contributions to $500 starting next year, making Coverdells less useful for college savings. Already, the $2,000 limit has made Coverdells much less popular than 529 college-savings plans, which offer similar tax benefits for college costs and a roughly $300,000 limit on contributions overall. But even some people who are putting away more than $2,000 a year for college have included Coverdells in their savings plans, because Coverdells offer a greater range of investment options than 529 plans, and more freedom to switch investments.

Another benefit that could expire at year's end is the ability of an investor to claim a Hope or Lifetime Learning tax credit for education in the same year they use Coverdell funds, as long as the tax credit and Coverdell money aren't used for the same expense. For example, an investor can take a tax credit for tuition in the same year s/he is using Coverdell money for books.  This benefit is scheduled to sunset at the end of this year,  resulting in the two tax benefits becoming mutually exclusive. 

Avoiding Sham Trusts and Trust Scams: Part I - Sham Trusts

Legitimate trusts are tools used by qualified estate planners and their clients to achieve certain objectives, including, but certainly not limited to, controlling the disposition of assets, avoiding probate, reducing administration costs, saving estate taxes, and preserving family wealth for future generations. Unfortunately, trusts are often used for improper purposes. Lurking in the shadows are con artists who promote sham trusts and trust scams for their own gain. These con artists rely on the ignorance of the public, and only education and information can prepare you for their pitch.

Sham trusts and trust scams are usually sold at high pressure seminars, by door-to-door salesmen, and on the internet. In some cases, they are recommended by well meaning but poorly informed CPA's, financial advisors, friends, or business acquaintances. The marketing techniques can be persuasive, and are aimed at all classes of people.

What is a Sham Trust?

A sham trust is any trust created for an improper or illegal purpose. For example, "trusts" or "contracts" which purport to avoid, or significantly reduce, all taxes, including all income taxes, for individuals and, in some cases, businesses, are almost always sham trusts. These often use a complex structure that involves the "irrevocable" transfer of your assets to one or more business or trust entities which you control. The promoters claim that the arrangement will significantly reduce or eliminate state and federal income taxes.

Although there are legitimate estate tax objectives that may be accomplished with trust planning, income tax planning is quite a different matter. Generally speaking, someone is going to have to report taxable income, as well as pay income taxes thereon. While there are legitimate credits, deductions, and exemptions available under state and federal law, there is no trust or business entity into which you can convey all of your property and thereby avoid all income taxes. These trusts sometimes come with seductive names. Moreover, when the justification for the trust somehow involves the unconstitutionality of the IRS or of income taxes, you are best advised to seek additional or alternate legal counsel.

Avoiding Sham Trusts and Trust Scams - Part II - Trust Scams

Although trusts are excellent tools used by legitimate professionals to accomplish a variety of worthwhile objectives, there are a wide variety of con artists who prey upon the public using the lure of trust planning. These con artists rely on the ignorance of the public. They generally provide poorly conceived and implemented estate plans, poor service, and often do more harm than good to their customers. These schemes are usually encountered at high pressure seminars.

What is a Trust Scheme?

Several years ago, the Supreme Court for the State of Ohio fined a company and a group of individuals including several attorneys one million dollars for selling unnecessary and potentially damaging legal services to seniors. Several years later, the State of Ohio fined a pre-paid insurance company and a group of attorneys for similarly cheating seniors. The State of Texas is currently investigating a Ponzi scheme in which seniors are alleged to have lost tens of millions of dollars. What these schemes have in common is that each involved the marketing and sale of living trusts.

Living trusts are so advantageous and so readily accepted by the general public that scam artist will often sell a living trust as a front for selling some other illegitimate scheme or investment. Once confidence of the public is attained, the sham artist will sell the client stock in companies that do no exist, unregistered and risky securities, poorly capitalized limited partnership interests, and just about any fraudulent investment or business scheme imaginable. Promising returns that are usually too good to be true, the scam artist assures their clients that the investment is safe. The scam artist is almost never an attorney, and the trust is almost always incidental to their "product." Moreover, the investments that they offer are almost always unwise.