Five Reasons Why Joint Accounts May Be a Poor Estate Plan

Many people, including seniors, view joint ownership of investment and bank accounts as a cheap and easy way to avoid probate since joint property passes automatically to the joint owner at death. Joint ownership can also be an easy way to plan for incapacity since the joint owner of accounts can pay bills and manage investments if the primary owner falls ill or suffers from dementia. These are all benefits of joint ownership, but three potential drawbacks exist as well:

Risk. Joint owners of accounts have complete access and the ability to use the funds for their own purposes. Many elder law attorneys have seen children who are caring for their parents take money in payment without first making sure the amount is accepted by all the children. In addition, the funds are available to the creditors of all joint owners and could be considered as belonging to all joint owners should they apply for public benefits or financial aid.  Many elder attorneys have seen their clients' accounts embroiled in creditor claims and nasty divorces against their clients' children. 

Inequity. If a senior has one or more children on certain accounts, but not all children, at her death some children may end up inheriting more than the others. While the senior may expect that all of the children will share equally, and sometimes they do in such circumstances, but there's no guarantee. People with several children can maintain accounts with each, but they will have to constantly work to make sure the accounts are all at the same level, and there are no guarantees that this constant attention will work, especially if funds need to be drawn down to pay for care.

The Unexpected. A system based on joint accounts can really fail if a child passes away before the parent. Then it may be necessary to seek guardianship to manage the funds or they may ultimately pass to the surviving siblings with nothing or only a small portion going to the deceased child's family. For example, a mother put her house in joint ownership with her son to avoid probate and Medicaid’s estate recovery claim. When the son died unexpectedly, the daughter-in-law was left high and dry despite having devoted the prior six years to caring for her husband's mother.

Disputes. Planning based upon individual accounts really does nothing to inform your family regarding your ultimate wishes.  Do you ultimately want to prefer one family member over another?  If the effect of planning using individual accounts results in an inequality to family members, was it intended or anticipated?  Of course, the resulting ambiguity is the cause of lawsuits, claims, disagreements, and hard feelings.  

Fraud.  Asset transfers late in life are particularly troubling, if they work to defraud your heirs and/or are not a reflection of your wishes.  A plan based upon individual assets and accounts does little to protect your family.  On the other hand, a comprehensive plan involving a trust or well-drafted will can better protect your family from late-in-life transfers by informing your family and authorities of your estate planning objectives.  

Joint accounts do work well in two situations. First, when a senior has just one child and wants everything to go to him or her, joint accounts can be a simple way to provide for succession and asset management. It has some of the risks described above, but for many clients the risks are outweighed by the convenience of joint accounts.

Second, it can be useful to put one or more children on one's checking account to pay customary bills and to have access to funds in the event of incapacity or death. Since these working accounts usually do not consist of the bulk of a client's estate, the risks listed above are relatively minor.

For the rest of a senior's assets, wills, trusts and durable powers of attorney are much better planning tools. They do not put the senior's assets at risk. They provide that the estate will be distributed as the senior wishes without constantly rejiggering account values or in the event of a child's incapacity or death. And they provide for asset management in the event of the senior's incapacity.

For more information review the previous post regarding direct transfer designations, such as Transfers on Death (TOD) and Payable on Death (POD) designations.  Joint ownership, TODs and PODs share many of the same disadvantages.   

Albert Pujols is a Champion for Kids with Special Needs

Los Angeles Angels of Anaheim designated hitter Albert Pujols is one of the greatest sluggers in baseball. In April, he hit home run number 500, putting him in some elite company. And as the 2014 season has progressed, Pujols has kept hitting home runs — climbing the all-time list (he’s currently at number 21 with 515 dingers) and helping his team reach the top of the American League West.

But Pujols’ accomplishments on the field are nothing compared to what he has done off it. His daughter Isabella has Down syndrome, and since his days as a St. Louis Cardinal Pujols has been an active advocate for kids and adults with special needs. He has partnered with the Down Syndrome Association since 2001, and in 2005 he founded his own non-profit organization, the Pujols Family Foundation, with his wife, Deidre. The foundation promotes awareness of special needs issues and helps kids and families living with Down syndrome both in the US and his native Dominican Republic. 

Pujols’ is also helping raise awareness by being the cover model for Toys “R” Us’ 20th annual Toy Guide for Differently-Abled Kids. The guide launched today, and it’s a resource for anyone looking for a great toy for the special needs kid in their life.

To read the full article posted on SIKids.com, go here. 

Hospitals Referring to Fewer SNF's

According to Jeff Terkowitz, senior manager with Avalere, between 2009 and 2012 – the most recent year for which CMS has released comprehensive Medicare data – there was an increase in the average number of SNFs that received a volume of patient referrals from hospitals. However, that trend may be slowing; the .3% increase in average number of SNFs to which hospitals discharged patients in 2012 came after increases of .7% and .9% per year from 2009-2011.

In 2009, short-term acute care hospitals discharged patients who were admitted on average to just over 37 different SNFs following the hospital stay.  In 2010 and 2011, that number grew, with hospital patients going to just under 38 and just under 39 SNFs, respectively.  By 2012, that number reached 39.14, a slight increase from 2011.

Hospitals, therefore, are still sending patients to many different SNFs, indicating, according to Terkowitz, that referral networks may not be well established.  But, he suspects that even though the total number of SNFs is still going up, there is a higher concentration of patient volume at a smaller number of facilities. He notes, for example, that between 2009 and 2012, there was a slight increase in concentration during which time the average hospital went from having just over nine SNF partners who received 10 or more patients to having 9.54 partners receiving that higher volume. 

He warns that the environment is rapidly changing, though; "there are many examples of hospitals moving towards tighter, more coordinated post-acute care networks." 

Diagnostic Related Group Codes or DRGs

DRGs were first developed at Yale University in 1975 for the purpose of grouping together patients with similar treatments and conditions for comparative studies. On October 1, 1983, DRGs were adopted by Medicare as a basis of payment for inpatient hospital services in order to attempt to control hospital costs. Since then, the original DRG system has been changed and advanced by various companies and agencies.  DRG represents a rather generic term.  

ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD), a medical classification list by the World Health Organization (WHO). It contains codes for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases.   ICD-10-CM contains over 68,000 codes. 

Surprise? Researchers Find that Hospice Use Not Increasing Despite Record Use of Advance Directives

According to an article published in McNight's Long Term Care News, seniors are completing advance directives in record numbers, but this is not having the expected effect of shifting people from hospitals to hospices in their last days, say researchers from the University of Michigan and the Veterans Affairs Ann Arbor Healthcare System. 

About 47% of elderly people had completed a living will as of 2000, and that increased to 72% by 2010, according to data from the Health and Retirement Study, a national survey done by the University of Michigan Institute for Social Research, on behalf of the National Institute of Aging.  During that same period, hospitalization rates increased in the last two years of life, the investigators found. The proportion of people dying in the hospital did decrease from 45% to 35%, but the researchers determined this had little to do with advance directives. This could be because directives focus more on the type of care rather than the setting where it is provided, they surmised.

“These are really devices that ensure people's preferences get respected, not devices that can control whether a person chooses to be hospitalized before death,"  researcher Maria Silveira, M.D., MA, MPH told McNight.

The article reports that among those who have completed a living will, most have both explained their treatment preferences and appointed a surrogate to make care decisions for them, according to the findings in the Journal of the American Geriatrics Society.  Advance directives commonly cover extreme decisions such as use of feeding tubes, but they do not provide much guidance for “gray area” end-of-life choices, such as when to administer antibiotics, another recent study found.

There is, of course, another possible explanation:  hospitals routinely transfer patients from a hospital to a skilled nursing facility at the end of a Medicare benefit, in order to continue Medicare covered treatment. These transfers are often made without advice, or informed consent after exploring alternatives.  Perhaps the disparity is best explained by institutions perpetuating institutional care and treatment.

Empowering Nurse Practitioners Could Reduce Hospitalizations From SNFs

According to an article in McNight's Long Term Care News, granting more authority to nurse practitioners (NPs) can help reduce hospitalization of skilled nursing facility residents.

The article reports the results of studies demonstrating that States that allow NPs to practice to the fullest extent of their training without a supervising physician have lower hospitalization rates across a range of groups in addition to SNF residents. These groups include inpatient rehabilitation patients and dual-eligible Medicare and Medicaid beneficiaries.

The American Association of Nurse Practitioners tracks state laws that allow NPs full, reduced or restricted scope of practice. There were 17 states allowing full practice as of January 2013.

Though there exists a correlation, the findings do not prove that allowing full scope of practice causes SNF hospitalization rates to improve, study authors pointed out. However, previous research also has shown that full scope of practice is associated with fewer hospitalizations, lower healthcare costs and better outcomes, they noted. Their findings contradict the American Medical Association and other physician groups, which have said care quality is likely to decline when a nurse practitioner, rather than a doctor, takes a lead role.

The results of this study should encourage nursing groups and other stakeholders to press for full scope of practice laws, the researchers concluded. They recommended that NPs form coalitions with nursing home associations and other groups to advocate for these policies.

This blog post is dedicated to a client NP who only recently provided me a solution to a persistent eye condition that defied treatment by two other physicians.

   

Ohio Ranks Poorly on Long-Term Care Services Scorecard

A new report ranks states on the quality and accessibility of their long-term care services and concludes there is a lot of room for improvement. The 2014 State Long-Term Services and Supports Scorecard finds that quality of care varies enormously across the states, but affordability is a big issue nationally.

The scorecard, a collaboration between the AARP, The Commonwealth Fund, and The SCAN Foundation, measured states’ long-term care system performance in five areas: affordability and access, choice of setting and provider, quality of life and quality of care, support for family caregivers, and effective transitions between care settings. Minnesota, Washington, Oregon, and Colorado ranked the highest while Kentucky, Alabama, Mississippi, and Tennessee ranked the lowest. The groups conducted a similar study in 2011.

According to the report, even in the highest-ranking states the cost of long-term care is unaffordable for middle-income families. The report notes that "on average, nursing home costs would consume 246 percent of the median annual household income of older adults."

States with a Medicaid system that functioned as an adequate safety net – reaching those with low and moderate incomes -- ranked higher on the scorecard, indicating that state public policy is important to improving care overall. The scorecard concludes that while some progress is being made, it is not enough to meet the needs of the growing elderly population.

The state of Ohio ranked 44th overall, ranking 42nd in affordability and access, but faring slightly better, 39th, in quality of life and quality of care.  Given these poor rankings, it is fortunate, perhaps, that Ohio's highest ranking came in securing effective transitions, which in part, considers the effectiveness of the state in avoiding unnecessary institutionalization.  

To see where each state ranks, click here.

5 Tips on Deciding Whether to Buy Long-Term Care Insurance

Alliance for Health Reform

One of the most difficult decisions in long-term care planning is whether to purchase long-term care insurance (LTCI) and which of the wide variety of products to purchase.

On the one hand LTCI premiums are high, they may be raised in the future, and  if you are purchasing policies in your 50s and 60s, the need is probably many decades in the future. Traditional LTCI also pays nothing to your family if you pass away without needing long term care, and may not even be there when needed if future price increases make keeping the policy impossible. On the other, many are saved by their LTCI, able to choose their own care setting rather than rely on what is covered by Medicaid in their state, more comfortable hiring necessary help if doing so doesn't mean dipping in to their savings, and able to protect an inheritance for their children and grandchildren.

Here are a few tips that should help you make the decision whether to purchase LTCI and what products to consider:

1. Can you afford LTCI? Can you "self-insure"? There are a few rules of thumb that can help determine whether you are in the target market for LTCI. You need to have enough savings and income to afford the premiums but not so much that you can easily pay your costs of care. If you are a couple whose net worth is more than $1 million but less than $3 million, or a single person with half these amounts, you are a candidate for LTCI. (Some LTCI brokers will tell you that there's no upper limit since even wealthy people may prefer to use LTCI rather than dip into their savings.) You could also look at this from the point of view of income. If you can pay the premiums without affecting your style of living or dipping into savings, then you can afford LTCI.
2. Decide now once and for all. Unless your financial situation is likely to change in the future, the best time to purchase LTCI is now. Every year you wait, you will face higher premiums and run the risk that a health care event will make you ineligible for LTCI.
3. Assess your own feelings. First, if you or your spouse were to need care at home, would you be reasonably comfortable using up some of your savings to pay for care? Or would you exhaust yourself providing the care yourself instead, whether due to fear of running out of funds or wanting to leave an inheritance? If you can do this thought experiment, in the end, would you feel worse having paid premiums over the years for insurance you did not use or paying out-of-pocket for care that could have been covered by insurance?
4. Use an LTCI specialist. LTCI is one of the most complicated insurance products available, with policies offering a variety of benefit levels and conditions for payment. Some insurance companies have raised premium rates on existing policies while others have not. Some honor claims readily and others have put up difficult roadblocks. And there is a proliferation of hybrid policies that merge LTCI with life insurance. You need someone who specializes in the field to guide you through all of these options.
5. Read up. You may have noticed that this article hasn't addressed actual insurance policies and benefit choices. In part this is because, as noted above, you need an expert. But before meeting with the expert, do a little of your own research. Start with ElderLawAnswers' collection of articles on LTCI, such as "Questions to Ask Before Buying Long-Term Care Insurance" and "How Much Long-Term Care Insurance Should You Purchase?" 

While these tips won't completely eliminate the difficult decision that all baby boomers are facing, we hope that this framework will help focus its consideration.

Caregiver Weds Man Then Depletes His Estate Leaving His Family Nothing

Proper planning for single seniors includes protecting the estate from control by third parties. A recent case illustrates how difficult it can be to protect a loved one from finacial abuse. Frank Calcaterra was in his 80s in 2008 when his family hired a home care company to help the former metro Detroit funeral home owner look after his ailing wife Jonnie, who had dementia.  Kentucky-based ResCare sent Tangie Coleman, who, at the time, had a warrant out for her arrest, records show.  It was later discovered that she lied on her application with ResCare.

Jonnie’s jewelry soon began to disappear.  When Jonnie Calcaterra died in a nursing home in January 2012, Coleman and her mother were living in Frank Calcaterra’s lakefront home in Waterford and he was sleeping in the basement.

A few months later, Coleman married Calcaterra in Ohio, without his family’s knowledge. Frank Calcaterra’s sizable fortune soon disappeared.  Estimates from court filings put the loss at anywhere from $500,000 to more than $1.5 million.  On Oct. 25, 2012, when Coleman, who was 35, and Frank Calcaterra, who was 86, were married in Ohio, at least two complaints alleging financial exploitation had already been filed against Coleman with the Michigan Department of Human Services’ division of Adult Protective Services.

When Frank Calcaterra’s daughters removed him from his home, less than a year later, he was 10 pounds lighter and destitute. He did not have a single bank account maintaining a positive bank balance or a valid credit card. Coleman was driving him to a check cashing storefront with his monthly Social Security check.

The case highlights what experts say is a significant and growing problem in the U.S. — financial exploitation of elderly people by caregivers. Many cases go unreported and accurate estimates are hard to pin down, but studies suggest there are at least tens of thousands of such cases each year.

In May of this year, a judge appointed a conservator for Calcaterra, citing fraud and financial exploitation, which Coleman denies.  Calcaterra’s court-appointed conservator, is seeking to annul the marriage, alleging it was a fraud Coleman perpetrated “solely for her financial gain.”

Calcaterra’s daughters are looking for answers and accountability, too. They’re unhappy the state failed to act and that it has been difficult to get police agencies to launch criminal investigations, with some officials saying the 2012 marriage mades the case a civil matter.

“Our concern is that no other family ever go through this,” said Calcaterra’s daughter Charlotte Knutson, who lives in Minnesota told a reporter for the Detroit Free Press.

Sgt. Brent Ross of Waterford Police recently closed a criminal investigation.  “There is still no evidence that Tangie ever forged a specific check although it may be inferred,” Ross reportedly explained to the family throught their attorney via email. “Perhaps the checks were forged, but they could have been forged by anyone.”

Coleman, who declined to discuss her history with Calcaterra during a brief encounter with a Free Press reporter, denied wrongdoing in an answer she filed to the annulment/divorce petition.  She claims Calcaterra gave her permission to sign his name to checks and his daughters are biased against her because she is black.  “Frank always gave me stacks of money ... and always promised to take care of me,” said Coleman, whose Facebook page featured photos of her fanning a stack of $100 bills.

“They kidnapped my husband,” Coleman said in a court filing. “I want him back.”

Records show Coleman was married when she was hired to help Calcaterra, but got divorced on Oct. 11, 2012 — two weeks before her marriage to Calcaterra. Of the many checks drawn on Calcaterra’s bank account in 2011, more than 20 totaling more than $10,000 were payable to Coleman’s husband at the time, for services such as painting, lawn care and moving.

Calcaterra, who spoke to a Free Press reporter with his daughters present, said Coleman told him she needed to marry him in order to receive a significant legal settlement resulting from a lawsuit she brought against an Oakland County police department for an alleged police assault against her. Calcaterra had earlier given her money to hire a lawyer.

“They went to court and got a settlement,” Calcaterra said. But Coleman told him officials told her she is a spendthrift, and in order to be paid the settlement she first had to get married so she would have someone to watch over how she handled the money.  “That’s why we got married,” Calcaterra said. “I don’t think there ever was a police report of this ever happening.”

There also is no record of any such lawsuit.

As might be expected, the family has filed a lawsuit against ResCare.

Text messages and handwritten notes exchanged between Calcaterra and Coleman show he was smitten with her. And Calcaterra pushed back hard when his daughters tried to convince him he was being used.

To read the full USA Today article, which includes practical precautions family members can implement, go here.

To read the Detroit Free Press article, go here.

Update: CMS May NOT Force the Dying to Spend Their Final Days Jumping Through Hoops to Get Needed Medications

Following an outcry from patient advocates, the Centers for Medicare and Medicaid Services (CMS) has revised earlier guidance that required hospice patients covered by Medicare Part D plans to get prior authorization of all their drugs.

As previously reported on May 14, 2014, Part D plans sometimes pay for medications that should be covered under Medicare’s hospice benefit.  In an effort to prevent this, in March CMS issued guidance requiring Part D plans to initially deny payment for all prescribed medications for hospice patients, forcing dying patients or their families to appeal the denials in order to get Part D payment for their medications, many of which they were taking before they enrolled in hospice. 

“This burden-shifting to the dying patient is illogical and immoral,” concluded the Center for Medicare Advocacy.  On June 11, the Center joined 26 other organizations in calling on CMS to replace its guidance with a more suitable solution.

Their concerns were heard.  On June 25, 2014, CMS met with a number of these groups to discuss the implementation of the guidance, and on July 18 the agency issued new guidance that supersedes portions of the earlier guidance.  Now, rather than requiring prior authorization for all medications, CMS will only “strongly encourage” Part D programs to place prior authorization requirements on four categories of prescription drugs that are typically used to treat symptoms during the end of life: analgesics, antinauseants, laxatives, and antianxiety drugs.  In making the change, CMS said “we recognize that the operational challenges associated with prior authorizing all drugs for beneficiaries who have elected hospice to determine whether the drug is coverable under Part D have created difficulties for Part D sponsors and hospice providers, and in some cases, barriers to access for beneficiaries."

“This action by CMS will bring marked relief to hospice patients and their providers who have been dealing with the previous policy under which all drugs processed through Part D for hospice patients were subject to prior authorization,” said Andrea Devoti, board chair of the National Association for Home Care & Hospice, said in a press release.

However, the Center for Medicare Advocacy was somewhat more restrained in its praise.  While calling the replacement guidance "significantly better than the original," the Center said CMS still “relies upon the good will and prompt diligence of hospice providers, pharmacies, and Part D Plan Sponsors to ensure Medicare beneficiaries do not lose access to medications necessary to prevent pain, nausea, constipation, and anxiety.”  The Center also expressed concern that there are no time frames to ensure that these players act expeditiously, and there is no real appeal process for terminally ill patients whose medications are not meeting their needs. 

For the CMS memorandum containing the new guidance, click here.