Income-Only Trust Upheld Notwithstanding Trustee Power to Purchase Annuity

The Massachusetts Court of Appeals recently ruled that the state Medicaid agency erred when it determined that the assets in an irrevocable income-only trust were countable because, in the agency's opinion, the trustee's ability to purchase an annuity with trust assets allowed the trustee to distribute trust principal to the beneficiary.  Heyn v. Director of the Office of Medicaid (Mass. App. Ct., No. 15-P-166, April 15, 2016).

Everlenna Roche transferred her home into an irrevocable income-only trust in 2003.  In 2011, Ms. Roche moved to a nursing home and began receiving Medicaid benefits.  Two years later, the Office of Medicaid terminated Ms. Roche's benefits after determining that the assets of the trust should be considered a countable resource.  Although the trust allowed the trustee to distribute only trust income, not principal, to Ms. Roche, the Office of Medicaid took the position that the trustee's ability to purchase an annuity with trust funds, in effect, allowed the trustee to distribute to Ms. Roche the principal used to purchase the annuity, rendering the trust countable.

Ms. Roche passed away and her estate appealed the Office of Medicaid's decision, but the appeal was rejected at an administrative level and upon review by the Superior Court.  On appeal to the Appeals Court, Ms. Roche's estate argued that state law prohibited the trustee from changing principal payments from the annuity into income and that the returned principal payments from the annuity were required to be retained in the trust. 

The court agreed with Ms. Roche's estate's claim that state law prohibits an allocation of principal to income that would circumvent the trust's prohibition on principal distributions.   The Court also went out of its way to reject two other alternative arguments even though the trial judge did not rely on them: (1) that the ability of the trustee to distribute principal to Ms. Roche’s children made the trust assets countable, and (2) that Ms. Roche’s power under the terms of the trust to direct a substitution of assets made the trust assets countable.  The Court determined that both arguments lacked support in law or logic, as neither would allow for distribution of principal to Ms. Roche which was the only relevant issue.

The Massachusetts Court of Appeals overturned the Office of Medicaid's decision.  The court wrote that:

"[o]ut of each annuity payment, only the investment income portion would be available for distribution to the grantor from the trust; that portion of each payment representing a return of capital would be required by the trust instrument to be retained in the trust.  The income portion available for distribution in such circumstances would be no different in character than interest earned on a certificate of deposit . . . In all events, the trust principal is preserved in the trust, and is not available for distribution to the grantor under the governing provisions of the trust."

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One in Five SNF Residents Abused By Another Resident

McKnight's reports the results of a new study which reveals that at least one in five seniors living in nursing homes has experienced some sort of resident-on-resident abuse:

Researchers tracked reports of resident-to-resident mistreatment over a one-month period at five urban and five suburban New York nursing homes through resident and staff interviews, observations and incident reports. Of the 2,011 residents included in the study, 407 — or more than 20% — said they had experienced at least one abusive event over the course of the month. The study was released Tuesday in Annals of Internal Medicine [hyperlink added].

The most common forms of resident-on-resident mistreatment were verbal at 9.1% and miscellaneous instances, including invasion of privacy or menacing gestures, at 5.3%. Physical and sexual abuse incidents followed at 5.2% and 0.6%, respectively. 

Factors such as a resident's level of cognitive impairment, whether the residents resided in a dementia unit and higher nurse aide caseload were linked to higher rates of resident-on-resident mistreatment, results showed.

The findings indicate that traditional efforts to curb nursing home abuse may be disproportionately aimed at staff mistreatment instead of resident-on-resident events, researchers noted. 

In an editorial article accompanying the study, XinQi Dong, M.D., Ph.D., with the Rush Institute for Health Aging, pointed out that while further research is needed to develop “evidence-based, culturally appropriate” interventions for resident-on-resident mistreatment, providers and government entities “cannot wait” to advocate for better protections for residents. 

“We must recognize that residents may be both victims and perpetrators of [elder abuse], and avoid blaming victims or resorting to interventions of convenience, such as the use of chemical sedation or physical restraints,” Dong wrote. 

Providers also should look into ways that technology like cameras and data collection can help measure and prevent abuse, Dong added.

Resident on resident abuse has recently made headlines in Kentucky, where a resident of a residential care facility was charged with another resident's murder, in Texas, where a nursing home changed its name in the wake of a resident-on-resident double homicide, in New Hampshire, where a resident suffering from Alzheimer's strangled and killed another during an assault, and in Florida, where a resident died from injuries inflicted by another resident suffering from dementia.  In 2014, a female resident in Georgia strangled and killed her resident roommate, and in 2006, a resident in a Toledo, Ohio, nursing home beat and killed his roommate in a dispute over sleeping arrangements.  

Paramedics Often Obstructed, Provided Insufficient Information On Nursing Home Calls

McKnight's reported recently the results of a new survey which finds that paramedics often receive little direction from nurses or medical records when handling end-of-life situations at nursing homes.  Results published in the Emergency Medical Journal conclude that the lack of direction was heavily associated with a lack of clarity in residents' wishes. Paramedics said records providing residents' end-of-life preferences are uncommon and are typically limited to resuscitation. 

Without proper records, paramedics are forced to make decisions based on perceived preferences when a patient is incapable of making a decision.  Differing opinions on how to handle end-of-life situations also were reported to have contributed to paramedics' uncertainty.

Researchers said several paramedics spoke of situations where nursing staffs attempted to influence the paramedics on whether to hospitalize residents. One paramedic mentioned that once he arranged for a patient to be treated at a nursing home and the “staff were unhappy because it meant they had to provide one-to-one care and actually look after someone dying.”

Another paramedic told researchers of a situation where a relative's opposition contributed to a patient being submitted to the hospital against her wishes.  Differing opinions and directives have lead to several deaths, including a 2015 incident in Minnesota, where an unconscious nursing home resident died after her husband told paramedics not to take her to the hospital. Firefighters attempted to resuscitate the resident, and were about to transport her to the hospital when her husband arrived and requested they stop their efforts. The woman was taken back into the nursing home, where she died 20 minutes later, resulting in a police investigation whether the emergency responders met legal requirements when they stopped trying to resuscitate the resident since she did not have a “do not resuscitate” directive. 

Simple Advanced Directives, such as a Living Will, are not enough for patients who are seriously ill of nearing the end of their lives.  Susan Tolle, director of the Oregon Health and Science University Center for Ethics in Health Care agrees, telling Reuter's Health that “[p]atients nearing the end of their lives who wish to set limits on treatments need to turn preferences into action with orders on a POLST,” or Physician Orders for Life Sustaining Treatment.  This is particularly true in Ohio, where Advanced Directives specifically require physician certification of a patient being either permanently unconscious or terminally ill as those terms are defined under Ohio law, in order to permit withholding or withdrawing life sustaining treatment, including CPR.   

"It's important for all nursing homes to clarify residents' preferences regarding resuscitation and intubation,” The Hastings Center research scholar Nancy Berlinger told Reuters. “Even more important: a facilitated discussion of values and goals that can be transcribed into instructions for every employee.”  “It is owed to the patient, the family and to that aide at three o'clock in the morning. It is owed to the paramedic,” Berlinger added.

The survey was conducted by Georgina Murphy-Jones of the London Ambulance Service NHS Trust and Professor Stephen Timmons of the University of Nottingham.

Care Providers for the Disabled Get Reprieve From New Wage Rule

Disability providers are getting extra leeway as the Obama administration moves forward with a new rule that many worried could force service cuts for people with special needs.

The U.S. Department of Labor said this week that it’s finalizing a rule that will require far more American workers to receive extra pay for working over 40 hours per week.

Currently, salaried workers earning at least $23,660 are exempt from overtime pay. Under the new rule, which will take effect Dec. 1, that threshold will double to $47,476 with automatic increases in the future.

But heeding widespread concerns from providers of home and community based services to people with developmental disabilities, the administration is committing to delay enforcement of the new mandate for such providers through March 17, 2019.  The Labor Department said that the non-enforcement period will apply to providers of Medicaid-funded services to people with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.

The special exemption comes after intense lobbying by the American Network of Community Options and Resources, or ANCOR, a trade group that represents over 1,000 private agencies providing disability services across the country.

The group argued that the new rule could prompt service cuts for people with developmental disabilities, because many of the agencies’ workers would be newly eligible for overtime under the rule.  Medicaid payments, however, which account for the agencies’ main source of income have not adjusted to account for the new wage mandate. 

For more information, click here. 

Parents May Be Refused Details of Adult Child's Medical Care

Michelle Andrews, from Kaiser Health News, has penned an excellent article explaining why many adult children should execute health care powers of attorney and a HIPAA release in favor of a parent or parents.  The article, entitled, "Parents May Be Refused Details of Adult Child's Medical Care," was recently reported by Health News from NPR:

When Sean Meyers was in a car accident on a November evening three years ago, he was flown by air ambulance to the emergency department at Inova Fairfax Hospital, in Northern Virginia. With his arm broken in four places, a busted knee and severe bruising to his upper body, Meyers, 29, was admitted to the hospital. Though he was badly hurt, his injuries didn't seem life threatening.

When his car went off the road, Meyers had been on his way to visit his parents, who live nearby in Sterling. They rushed to the hospital that night to wait for news and to be available if Sean or the hospital staff needed anything. But beyond the barest details, no one from the hospital talked with them about their son's condition or care, not that night nor during the next 10 days while he was hospitalized.

"All the time he was there, the hospital staff was very curt with us," says Sam Meyers, Sean's dad. "We couldn't understand why we were being ignored."

After leaving the hospital, Sean moved into his parents' spare bedroom temporarily to continue his recovery. About a week later, he was in their kitchen one evening with his girlfriend when suddenly he collapsed. He was rushed to the nearest hospital, where he died. An autopsy revealed that he had several blood clots as well as an enlarged heart.

For Sean's parents, the results were particularly wrenching because there's a history of blood clots on his mother's side of the family. How much did the hospital staff know?

"It might have saved his life if they'd talked to us," Sam Meyers says. 

 A spokeswoman for Inova Fairfax says, "We cannot comment on specific patients or cases." But she noted that information about a patient's care can be shared in a number of circumstances.

These days when people think about patient privacy problems, it's usually because someone's medical record has been breached and information has been released without his consent. But issues can also arise when patient information isn't shared with family and friends, either because medical staff decides to withhold it or patients themselves choose to restrict who can receive information about their care.

The federal Health Insurance Portability and Accountability Act of 1996 — HIPAA — established rules to protect the privacy of patients' health information while setting standards for hospitals, doctors, insurers and others sharing health care information.

Stepped-up enforcement in recent years and increased penalties for improper disclosure of patient information under HIPAA may lead hospitals and others to err on the side of caution, says Jane Hyatt Thorpe, an associate professor at George Washington University's department of health policy and an expert on patient privacy.

"For a provider who's uncertain about what information a provider may or may not be able to share, the easiest and safest route is to say no," Thorpe says.

Go here to read the remainder of the article.

In Ohio a Medicaid Lien Can Be Placed Against a Life Estate to Real Property Even After the Death of the Medicaid Recipient

An Ohio appeals court recently ruled that a deceased Medicaid recipient's life estate does not extinguish at death for the purposes of Medicaid estate recovery. Accordingly, the state may place a lien on the property after the death of the life tenant. Phillips v. McCarthy (Ohio Ct. App., 12th Dist., No. CA2015-08-01, May 16, 2016).

Lawrence Hesse transferred ownership in his farm to his three daughters, retaining a life estate for himself. Mr. Hesse later moved to a nursing home and received Medicaid benefits for one year before he died. After his death, the state filed a lien on the property for Medicaid benefits paid on Mr. Hesse's behalf.

Mr. Hesse's daughters filed a quiet title action against the state, arguing that because Mr. Hesse's life estate extinguished when Mr. Hesse died, the state could not assert a lien against the property after his death. The trial court granted summary judgment to the state, and Mr. Hesse's daughters appealed.

The Ohio Court of Appeals affirmed, holding that the state could place a lien on the property after Mr. Hesse died. According to the court, with regard to Medicaid estate recovery "a life estate interest held by a Medicaid recipient does not extinguish upon his or her death. Rather, for purposes of Medicaid recovery, a life estate interest endures post mortem and represents a quantifiable asset which the state may encumber by virtue of a properly filed lien."

Although this holding might seem irrational, it was the obvious intent of House Bill 66 passed in 2005.  I wrote about the effects of this "seemingly" innocuous change in the law over eleven years ago:

The new law also expands the State’s rights to place liens on property. As part of the State Budget bill passed on June 30, 2005, the State of Ohio now has authority to place a lien on the assets of the Medicaid recipient or the recipient's spouse...The liens, which are being placed on these properties, are akin to the "Liens for the Aged" process which was in place in many states in the 1950s and 1960. These laws were ultimately rejected by courts on various constitutional grounds. There is no guarantee that a challenge to the current law will meet with similar success. More importantly, for every family that challenges these liens, other families will simply repay the state, or the spouse will sell the family home which may result in insufficient funds to continue living independently. 

The new law also turns upside-down traditional property rights. Traditionally, right and title to property held jointly with a right of survivorship or pursuant to a transfer on death designation [or conveyed subject to a life estate] vested in the survivor (or beneficiary as the case may be) at the time of death. This “vesting” is apparently thought to create a hardship for the state, since it could undermine its lien rights. As a result, in order to prevent the vesting at death, the statute actually redefines death as follows:

• “Time of death” shall not be construed to mean a time after which a legal title or interest in real or personal property or other asset may pass by survivorship or other operation of law due to the death of the decedent or terminate by reason of the decedent's death.” See O.R.C.§5111.11 (A)(5).

So, for the purposes of the State of Ohio, a person does not "die" upon physical demise, and property interests that traditionally "vested" in and to another person upon death never really vest so long as the State also has an interest in the property.  

I have for more than a decade encouraged clients to adopt modern and more effective property transfers utilizing irrevocable trusts.  "I told you so," rings hollow and ominous given the consequences for Ohioans that want to pass to their heirs the assets they have worked so hard to protect.  

Hospice Owner Accused of Instructing Nurses to Kill Patients by Overdose

McKnight's reports that the owner of a Texas hospice company has come under fire for allegedly encouraging employees to overdose patients and hasten their death in order to avoid the federal reimbursement cap for hospice stays.

Brad Harris, 34, owner of Novus Health Care Services Inc., allegedly told a nurse to overdose three patients on drugs such as morphine, and instructed another employee to give a patient four times the maximum dose allowed, according to an FBI affidavit obtained by a Dallas television station. In another instance, Harris texted an employee of the Frisco, TX-based company “you need to make this patient go bye-bye.”

The FBI affidavit was written in February, but not publicly released until this week. No charges have been filed against Harris or Novus as of press time, and Harris remains free. The FBI declined to comment on the investigation, the Dallas Morning News reported.

The affidavit also accuses Harris of telling other healthcare executives that he sought out “patients who would die within 24 hours,” and of making comments like “if this f— would just die.” While at least one employee refused to comply with Harris' instructions, it's unclear if any patients were harmed.

The FBI's affidavit says Harris was motivated to find patients whose hospice stays were forecasted to be short, or even speed up patients' deaths, in order to skirt the payment caps placed on hospice care by Medicare and Medicaid.

Another employee said Harris would frequently decide which patients would be moved to and from home care, despite not being medically certified; Harris is an accountant by trade. Harris would have employees sign transfer papers with the names of doctors employed by the company, according to the affidavit.

"If a patient was on hospice care for too long, Harris would direct the patient be moved back to home health, irrespective of whether the patient needed continued hospice care,” the affidavit reads.

Horrific. 

Senior Supplements Safety-Survey Suggests More Than 15% of Seniors Taking Potentially Fatal Combinations of Prescriptions and Over-the-counter Supplements and Medications

Emily Mongan, Staff Writer for McKnight's, citing a recent study, warns that one in six seniors are ingesting prescription or over-the-counter drugs and dietary supplements, with potentially deadly results

Researchers at the University of Illinois at Chicago interviewed thousands of seniors in 2005 and 2011. They found more than 15% of seniors took potentially fatal combinations of prescription medications, over-the-counter drugs and supplements in 2011, compared to 8.4% in 2005.

The study also found the number of older adults taking at least five prescription drugs increased more than 30% over the six years. Use of over-the-counter medication among seniors dipped slightly from 44% to 38%, while the use of dietary supplements increased from 52% to 64%.

The growing use of multiple prescription drugs and supplements brings a “hidden, and increasing, risk of potentially deadly drug interactions” in seniors, lead researcher Dimo Qato told HealthDay.

Many of the dangerous interactions involved heart drugs and dietary supplements, like omega-3 fish oil, which are more widely used today than they were five years ago, Qato said. Other drugs, including some blood thinners, heart drugs and tranquilizers, may be negatively impacted by supplements like St. John's wort, which is often taken for depression.

Results of the study were published online in JAMA Internal Medicine.

Hospice Patients in SNFs Less Likely to be Visited by Professional Staff the Last Two Days of Life

Medicare patients who received hospice care in a nursing home setting were less likely to be visited by professional staff in the last two days of life, according to a new study.  The study, published online in JAMA Internal Medicine, found that 16.5% of hospice patients in nursing homes had no visits from professional hospice staff in the last two days of life, compared to 10.6% of patients not in nursing homes.  Smaller hospice programs, and those based in nursing homes, were less likely to provide visits in the last two days of life, the study found. 

 Researchers also noted differences in visits based on patient characteristics. Close to 15% of black patients had no visits on their last two days, compared to 12% of white patients. One in five patients who died on a Sunday also did not have a visit from professional hospice staff in their last two days of life.

The authors noted that their study did not take into account the severity of the symptoms of the hospice patients, or family preferences for visits. The results still pinpoint disparities in hospice care, researchers said, which is especially relevant as the Centers for Medicare and  Medicare Services evaluates reforms.

Source: McKnight's.

Beware Social Security Scam

The Social Security Administration posted  a warning on its blog about a scam involving phishing.  According to the post, the scam begins with an email misrepresenting itself as a government-sponsored program "protecting" consumers from identity theft and financial fraud. 

According to the blog:

The subject line says 'Get Protected,' and the email talks about new features from the Social Security Administration (SSA) that can help taxpayers monitor their credit reports, and know about unauthorized use of their Social Security number. It even cites the IRS and the official-sounding 'S.A.F.E Act 2015.' It sounds real, but it’s all made up.

The blog post offers a couple of tips to identify communications a scam. If the email ended up in your junk folder, it could be a scam. Also, the post suggests you mouse over the URL and see if it is really from SSA, or from a .com site instead.

Always remember-if in doubt, don't click on the link and don't provide personal information.

Filial Responsibility Laws Lead to Chaos

Filial responsibility laws often lead family chaos to spill-over into the legal system. A recent Pennsylvania case, involving a claim by one child against his brother and sister illustrates the ensuing chaos, and the case does not involve Medicaid!  

Joseph Eori is the attorney-in-fact for his mother, Dolly Eori, who requires 24-hour care.  Mr. Eori lives with his mother and provides management of her care and resources.  Mr. Eori testified that his mother's medical and caregiving expenses exceeded her income.  Although Ms. Eori had not filed for Medicaid, and apparently did not require Medicaid assistance, and was on no other form of public assistance, Mr. Eori filed a complaint on behalf of his mother seeking filial support from his brother, Joshua Ryan, and from his sister Paulette Rush.  The daughter entered into a consent order to pay her mother $400.00 per month in filial support before trial. 

Mr. Ryan, however, objected to paying anything on behalf of his mother on a number of grounds.  He lost at the trial court, and the Court entered an Order for Filial Support requiring Ryan to pay his mother Dolly Eori $400 per month in support.  Ryan appealed the judgment against him.  

Mr. Ryan first argued that his mother was not legally indigent because she did not have outstanding medical bills.  The court ruled against him, even though her medical and other bills were wholly satisfied.  The court, refusing to resort to receipts and detailed checking account statements as demanded by Mr. Ryan,  relied upon the testimony and documents submitted by the caregiving son.  The court recounted the testimony:

Plaintiff [the caregiving son] testified that his mother is diagnosed with cancer, dementia and Alzheimer's disease and requires twenty-four hour care. During the day, she goes to Senior Life adult day care. For the remaining hours, Plaintiff is responsible for ensuring that someone is available to care for his Mother. There are currently three individuals that provide that care, and he pays each of them in cash. He pays them a total of $1,722 per month for the care. According to Plaintiff's testimony, he has not been able to obtain care for his mother on weekends because she cannot afford it. Therefore, the total amount is not even reflective of the full care that Ms. Eori needs.

In addition to the caregiver costs, Plaintiff estimates that Ms. Eori spends an additional $1,000 per month on hygiene items, cleaning expenses, and diapers. The electric bill is an additional $250 per month and there is a deduction evidenced on her bank statements for Verizon at approximately $95 per month. These basic needs already total more than Ms. Eori's monthly income, and the bank statements submitted by Defendant evidence additional expenses for medical needs, such as a payment of $773 to Prime Medical Group in July 2012 and another $115 payment in September 2012. To further show the disparity between Ms. Eori's income and expenses, Plaintiff admitted a bank statement for January 2014 showing a deposit of $1789 and a withdrawal of $1779.67.

Based on the evidence and testimony presented, the Appellate Court determined that Ms. Eori did in fact satisfy the common law definition of "indigent." The appellate court agreed that "[a]lthough she is not extremely destitute, she has sought financial assistance in the past and does not have sufficient income to provide for her maintenance and support."  The appellate court continued:

...the definition of indigent does not state that outstanding debt is necessary for an individual to qualify as indigent. It just requires an inability to provide for ones [sic] own maintenance and support with the income received. The mere fact that Ms. Eori has been able to remain out of debt does not eliminate her from the definition of an indigent person. One does not have to be "helpless" or in "extreme want." Therefore, the Court did not err in finding Ms. Eori indigent merely because there was no evidence of unpaid or outstanding medical bills or other liabilities.

Ryan next argued that the Trial Court committed error in failing to consider the fact that Plaintiff, as power of attorney for Ms. Eori, claimed her as a dependent on his 2013 Federal Income Tax return. Federal law required the Plaintiff to be responsible for at least fifty percent of Ms. Eori's expenses in order to claim the deduction. The court held that while this may be true for federal income tax purposes, it failed to see how that impacted the determination that Ms. Eori is indigent. The court wrote: "[i]f her son has to provide at least fifty percent of her expenses to maintain her daily needs, then she, on her own, is clearly indigent."  The court failed to determine whether the son, in fact, contributed such sum, and failed to consider the benefit the son derived from the deduction, a fact that will later demonstrate why these matters are so poorly resolved by legal means. 

Ryan next argued that the Trial Court erred in failing to consider the amount Plaintiff contributes to Ms. Eori's support. The court agreed that from 2012 to 2014, Ms. Eori's bank account has never had a negative balance. However, the positive balance was not, according to the Plaintiff, the result of Ms. Eori's income. Plaintiff testified that he used his personal money to maintain a $2800 balance in case of an emergency,  and because there are no burial plans for his Mother.  The court did not, however, consider and recount the actual amounts contributed by the caregiving son, noting simply that his occasional need to support his mother evidenced her legal indigence.

Ryan finally argued that he had been estranged from his mother and that he had an abusive childhood.   Ryan was initially sued as Russell Eori. Although his birth name was Russell Eori, Russell Eori obtained a legal name change to Joshua Ryan.  The record was unclear whether the childhood abuse played any role in his name change.  Pennsylvania's filial responsibility law negates the support obligation if the parent abandoned the child for a 10-year period.  The court ruled that his testimony was legally insufficient to constitute a defense to his support obligation.  The court explained:

The term "abandoned" is not defined in the act itself. However, the Custody Act at 23 Pa. C.S.A. §5402 defines "abandoned" as "left without provision for reasonable and necessary care or supervision." Defendant testified that he did not have the greatest family growing up and he wanted to get away. (N.T. 6/5/14 pg. 66, lines 8-13). He testified that his grandmother cared for him more than his Mother; however, they were never far apart because he testified that his grandmother either lived with Mother or beside Mother. (N.T. 6/5/14 pg. 61, lines 21-25 and pg. 62, lines 1-7). Although he testified that Mother was abusive, left and caused them to move many times, and was either gone or fighting, he never established that she left for a ten year period. He did not provide details or time periods on any of the testimony presented. Therefore, it was not clear from his testimony that Mother ever left for a ten year period without provision for his reasonable and necessary care or supervision. Although it may not have been an ideal childhood, there was no evidence of abandonment to release Defendant from his obligation to support Mother.

The Pennsylvania Superior Court affirmed, holding that Mr. Ryan is required to provide support to his mother. The court agreed with the trial court's decision that the filial responsibility law doesn't require a showing of unpaid bills or liabilities to justify a claim. In addition, the court affirmed the trial court's ruling that while Mr. Ryan may not have had an ideal childhood, there was no evidence that his mother abandoned him.

There was no explanation regarding the $800.00 in ordered support, and whether that bore any equitable relationship to the occasional financial support provided by the caregiving son, or whether any financial support was even necessary under the statute since he performed non-monetary services.  The court did note that the caregiving son might also be responsible for financial support, but failed to address the issue since it was subject of the lawsuit.  The court did not explain whether the caregiving son would, in fact, need to sue himself before the court would consider such an argument, or whether refusing to consider the care giving son's potential liability left the other children responsible for their mom's care. In fact one might conclude, as did Ryan, that the son benefited financially from providing services to his mother (in that he received a tax deduction, a place to live, and meal and transportation opportunities) which benefits were not considered by the court.

One can expect more lawsuits under filial responsibility statutes and laws.  

For the full text of this decision, click here.  

Court Invalidates Pocket Deed As Fraudulent Effort to Defraud the Surviving Spouse

[The following is reprinted from my former newsletter, Your Estate Matters.]

A recent case from Tennessee illustrates the dangers inherent in using "pocket deeds." Pocket deeds are executed during the owner's life, but recorded after the owner's death.  While they are rarely used by attorneys or serious planners, they still find their way into the plans of individuals who may devise the schemes without legal advice.  

The case concerns the marriage of Ancie Lee Maness  and Jewell Maness,  When they married, he already had three grown sons and a 330-acre farm in Henderson County, Tennessee. He and Jewell both worked outside the farm.  Her income paid for food, utilities and household bills, but his  income was mostly used to pay expenses on the farm.

Mr. Maness ran a small herd of cattle at the farm, and allowed his sons to keep a few head of their own on the property. At different times, Mr. Maness even gave each of his sons an eight-acre parcel on the edge of the farm. It was clear, however, that Mr. Maness operated the farm, with only occasional help from his sons. Until 1992, the farm income, and Mr. Maness’ wages, went to pay off a mortgage on the farm as well.

Shortly after Mr. Maness’ death in 1993, one of the sons informed Mrs. Maness that he had transferred the farm to them nearly ten years earlier. When she investigated, she discovered that Mr. Maness had signed a deed to the property, conveying it to his three sons, and had given the deed to his son Willie. He had instructed Willie and his wife not to tell anyone about the deed, and to hold it in their safe deposit box.  They had removed it and recorded it three days after Mr. Maness’ death, and the title now appeared to be in the sons’ names.

Mrs. Maness sued to set aside the transaction, alleging that it was fraudulent because it had the effect of depriving her of her statutory right to inherit a portion of her husband’s property. In Tennessee, as in most states, a surviving spouse is entitled to at least a share of the deceased spouse’s estate, and Mrs. Maness argued that the transaction deprived her of that right.

Noting the secrecy with which the deed was cloaked, the Tennessee Court of Appeals agreed with Mrs. Maness. The court also noted that even by a conservative estimate the farm constituted nearly two-thirds of the value of Mr. Maness’ estate, and Mr. Maness’ behavior in hiding the transaction from his wife indicated that he had intended to defraud her of her inheritance rights. 

To read the entire case go here: Maness v. Estate of Maness, Tenn. Court of Appeals, November 12, 1997.

Medicare Premiums and Deductibles for 2016

The Centers for Medicare and Medicaid has announced the Medicare premiums, deductibles, and coinsurances for 2016. As expected, for the third year in a row the standard Medicare Part B premium that most recipients pay will hold steady at $104.90 a month.  However, about 30 percent of beneficiaries will see their Part B premium rise to $121.80 a month.  Meanwhile, the Part B deductible will increase for all beneficiaries from the current $147 to $166 in 2016. 

The Part B rise was supposed to be much steeper for the 30 percent of beneficiaries who are not “held harmless” from any increase in premiums when Social Security benefits remain stagnant, as will be the case for 2016.  But the premium rise was blunted by the Bipartisan Budget Act signed into law by President Obama November 2.  Medicare beneficiaries who are unprotected from a premium increase include those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who receive both Medicare and Medicaid benefits. For beneficiaries receiving skilled care in a nursing home, Medicare's coinsurance for days 21-100 will go up from $157.50 to $161.  Medicare coverage ends after day 100.  

Here are all the new Medicare figures:

• Basic Part B premium: $104.90/month (unchanged);
• Part B premium for those not “held harmless”: $121.80;
• Part B deductible: $166 (was $147);
• Part A deductible: $1,288 (was $1,260);
• Co-payment for hospital stay days 61-90: $322/day (was $315);
• Co-payment for hospital stay days 91 and beyond: $644/day (was $630);
• Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50).

Higher-income beneficiaries will pay higher Part B premiums:

• Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $170.50 (was $146.90);
• Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $243.60 (was $209.80);
• Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $316.70 (was $272.70);
• Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $389.80 (was $335.70).

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

• Those with incomes between $85,000 and $129,000 will pay a monthly premium of $316.70 (was $272.70);
• Those with incomes greater than $129,000 will pay a monthly premium of $389.80 (was $335.70).

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premiums. So the income reported on a beneficiary's 2014 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2016. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary's MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements.  The average Medicare Advantage premium is expected to decrease slightly, from $32.91 on average in 2015 to $32.60 in 2016.  

For Medicare’s press release announcing the new  figures, click here.  

For Medicare's "Medicare costs at a glance," click here. 

Resident Who Transferred Assets and Applied for Medicaid Breached CCRC Contract

A New York appeals court held that a continuing care retirement community (CCRC) resident is required to spend the assets disclosed in the CCRC’s admission agreement on nursing home care before applying for Medicaid. Good Shepard Village at Endwell Inc. v. Yezzi (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 520621, Nov. 5, 2015).  The decision means that CCRC resdidents should proceed cautiously with Medicaid eligibility planning.

Hazel and Peter Yezzi moved into a CCRC after signing an admission agreement that disclosed their assets. The contract with the CCRC provided that that the Yezzis could not transfer their assets for less than fair market value if it would impair their ability to pay their monthly fees. Mrs. Yezzi entered the nursing home, transferred her assets to Mr. Yezzi, and applied for Medicaid. The CCRC refused to accept the Medicaid payments.

The CCRC sued Mr. Yezzi (Mrs. Yezzi died in the nursing home) for breach of contract and fraudulent conveyance, arguing that the Yezzis were obligated to use the funds disclosed in the CCRC admission agreement before applying for Medicaid. The trial court granted the CCRC summary judgment, and Mr. Yezzi appealed.

The New York Supreme Court, Appellate Division, 3rd Dept., affirmed, holding that Mrs. Yezzi's transfer of assets for less than fair market value constituted a breach of contract. According to the court, under federal and state law the CCRC "could require a resident to first spend the resources identified upon admission before applying for Medicaid" because "the essence of the CCRC financial model requires a tradeoff between the resident and the facility, in which the resident must disclose and spend his or her assets for the services provided, while the facility must continue to provide those services for the duration of the resident's lifetime even after private funds are exhausted and Medicaid becomes the only source of payment."

Social Security Claiming Rules Changed to Eliminate Beneficial Strategies

President Obama has signed the Bipartisan Budget Act of 2015 which includes important changes to the Social Security retirement system.  Among these changes are Rules that are designed to close "unintended loopholes" in the Social Security Act. These "loopholes" are the "file and suspend" and "restricted application" claiming strategies. These strategies are used by applicants to provide necessary income, but permit social security benefits to continue to grow, permitting later claiming of benefits at larger benefit amounts.  

Under the new law, some groups of Social Security claimants are wholly unaffected, while others will lose all access to available claiming strategies.  If you are not already implementing a claiming strategy, you may find that the strategy is no longer available to you.  

The new law adversely impacts the following groups:

1. Divorcees who were born in 1954 or later;
2. Couples where the person who was previously planning to claim a spousal benefit first then switch to their own benefit later under a restricted application strategy was born after 1953;
3. Couples who are planning to pursue a file and suspend strategy, but wait more than six months to file and suspend.

Divorcees born after 1953 will be able to claim either a spousal benefit or their own retirement benefit (whichever is larger), but they will not be able to switch from one to the other at a later time.  Claimants born after 1953 will not be able to claim one benefit and then switch to another benefit later under the new law, affecting those who intended to employ a restricted application strategy.

The new law allows people to file and suspend for another 180 days after the law goes into effect. If someone waits more than six months, they will not be able to use this strategy. They will be able to pursue a restricted application strategy if the person who claims the spousal benefit was born in 1953 or earlier.

The new law does not affect claiming strategies for the following groups:

1. Single people;
2. Widowers;
3. Divorcees who were born in 1953 or earlier; and
4. Couples who are already pursuing a restricted application claiming strategy (These are couples where the primary beneficiary has already claimed his/her benefit and the spouse has claimed a spousal benefit. The spouse will still be able to switch to their own benefit at a later date.);
5. Couples who are already pursing a file and suspend strategy (These are couples where the primary beneficiary has already filed and suspended, and the spouse has claimed a spousal benefit. The spouse will still be able to claim their own benefit at a later date. The primary beneficiary will also be able to claim his/her own benefit at a later date.);
6. Couples who are planning to pursue a restricted application strategy and the person who plans to claim a spousal benefit was born in 1953 or earlier (These are couples where the primary beneficiary plans to claim his/her benefit in the future- or has already claimed a benefit- but the spouse has not yet claimed a spousal benefit. As long as the spouse was born in 1953 or earlier, the spouse will be able to claim a spousal benefit after reaching 66 and then claim their own benefit later.);
7.  Couples who plan to pursue a file and suspend strategy before sometime in late April or early May of 2016, and the person who plans to claim a spousal benefit was born in 1953 or earlier (The new law provides a window of 180 days after the law becomes effective where couples can still use the file and claim strategy).

Previously Recommended Strategies

If you have received a written strategy, plan, or analysis from a professional, you will need to consult with the professional before implementing the plan.  Generally,  however, the following are suggestions for helping to determine whether previous recommendations are valid:

• If a scenario recommends “file and suspend” it is probably no longer a valid recommendation, unless the the claimant can can sensibly file and suspend no later than about May 1, 2016 (The precise cut-off date is 180 days after the law becomes effective, which appears to be 11/2/15.);
• If the scenario recommends a “restricted application” (and no file and suspend strategy is involved), it is almost surely a valid recommendation if the claimant is born in 1953 or earlier. If a claimant is born in 1954 or later, a recommendation to file a restricted application is no longer valid. NOTE: Whether this statement also applies to ex-spouses is presently unclear.

If you have already implemented a strategy, it is best for you to consult with your financial adviser or professional to ensure that future actions pursuing the plan are not foreclosed by the new law.

The bottom line for those who may be retiring is that the government has now made it more difficult for you to comfortably forestall claiming social security at a later age, where the benefit paid to you is higher and more valuable over your life.  The effect will be that millions will continue to claim social security at the first availability, leaving the government responsible for paying less in social security benefits.