Beware Asset Protection Plan Scams

The following excerpt is reprinted from an excellent article written by Forbes contributor, Todd Ganos, and posted online here.  I am a firm believer in asset protection strategies as part of a comprehensive estate, financial, and/or business succession plan.  That being said, the number of dubious mass marketed and mass produced  "asset protection plans" is troubling. 

 I advise my clients that anything called an asset protection plan or asset protection trust should be considered critically and carefully.  Many of these mass marketed plans cannot survive scrutiny.  Remember, if it sounds too good to be true, it probably is. Remember also, that keeping your asset protection strategies secondary to other legitimate estate, financial, or business succession objectives is key to their success.  In this regard, see my article, "Asset Protection Planning- "Keep it Secret; Keep it Safe." 

Mr. Ganos writes:

Recently, a friend attended a seminar on asset protection.  Based on information that my friend provided to me, the seminar seemed to be what has become a disturbing trend.

To be certain, asset protection is an important discipline within the field of wealth management.  Asset protection might also be called risk management.  As one might imagine, there are a number of ways to implement asset protection/risk management.  And, it is not uncommon for asset protection/risk management issues to intertwine with other disciplines, such as estate planning and tax planning.

So, how might a seminar on asset protection be a scam?  Perhaps you have heard the saying: if all you have is a hammer, everything looks like a nail.  What typically occurs in one of these seminars is that the presenter whips up fear about gold-diggers filing frivolous lawsuits attempting to get at your hard-earned money.  Typically, the presenter’s solution is not an interdisciplinary approach to an individual’s circumstances.  Instead, the presenter’s solution seems to always lead to a family limited partnership, a Nevada “secret” company, or an asset protection trust in a favorable jurisdiction . . . which is what the presenter specializes in.  And, whatever the solution is, it is cloaked in an aura of “only the elite know about this.”

Son Liable for Mother's Nursing Home Bill Under Filial Responsibility Law

A Pennsylvania appeals court has held a son liable for his mother's $93,000 nursing home bill under the state's filial responsibility law. Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012).

John Pittas' mother entered a nursing home for rehabilitation following a car crash. She later left the nursing home and moved to Greece and a large portion of her bills went unpaid. Mr. Pittas' mother filed an application for Medicaid, which is still pending.

The nursing home sued Mr. Pittas for nearly $93,000 under the state's filial support law, which requires a child to provide support for an indigent parent. The trial court entered a verdict in favor of the nursing home, and Mr. Pittas appealed. Mr. Pittas argued that the trial court improperly put the burden of proving his inability to support his mother on him and that the court should have considered alternate forms of payment, such as Medicaid and his mother's husband and her two other adult children.

The Pennsylvania Superior Court affirmed, holding that Mr. Pittas is liable for his mother's nursing home debt. The court agreed with Mr. Pittas that the nursing home had the burden of proving that Mr. Pittas' ability to support his mother, but it ruled that the nursing home submitted enough evidence to meet that burden. The court also held that the law does not require it to consider other sources of income or to stay its determination pending the resolution of the Medicaid claim.  It notes that if Mr. Pittas had wished to share his support burden with other family members, he could have joined them in the case.

Imagine trying to explain to your brother or sister at Thanksgiving that suing them wasn't personal; "Just sharing the burden."  

Ohio Nursing Homes Receive Favorable Ratings

The  Guide contains useful information about
nursing homes and residential care facilities

Families of nursing-home residents across the state reported overall satisfaction with the care being provided to their loved ones in 2012, according to results of a state study.

In the latest survey, 25 facilities scored higher than 94 percent. The statewide low was 66 percent for an overall rating, and the high was 97.5 percent.

The satisfaction ratings are available on the Ohio Long-term Care Consumer Guide.   The Consumer Guide includes other information about nursing homes and residential care facilities, including inspection results, a list of available services, staffing levels, results of resident surveys and more.

"Selecting a nursing home that can provide the right care in the right ways for ourselves or a loved one is one of the most important choices we may have to make in our adult lives. This survey and Ohio's Long-term Care Consumer Guide are important tools for families who expect, and deserve, excellence," said Bonnie Kantor-Burman, director of the Ohio Department of Aging. "The survey and the guide emphasize our commitment to quality care. Consumers must be fully informed about their options if we are to expect that they will, in turn, demand excellence for themselves or their family members."

The family satisfaction survey was conducted between May and December 2012 by the Scripps Gerontology Center of Miami University in Oxford, Ohio, on behalf of the Ohio Department of Aging and under the direction of the Office of the State Long-term Care Ombudsman. More than 27,000 family members and 948 homes participated. Of the 721 participating homes with statistically significant results, 387 scored above the state average and 229 scored 88 or better, which earns them an additional "quality point" in a reimbursement formula used by the Office of Medical Assistance (Medicaid) to reward quality in nursing homes. Survey costs are supported by a fee charged to nursing homes by the state.

This year, the department revised the survey to better capture the needs and ideas of families. For this reason, Kantor-Burman cautioned against directly comparing the survey results with those from previous years. "This survey reflects our increased focus on person-centered care and caring and our new quality-based reimbursement formula. We expected that these changes may have an impact on the statewide average. We are especially pleased with the larger than usual response rate and are gratified by the number of families who are so involved with their loved ones' care."

"In addition to assisting families in choosing quality, person-centered nursing homes, this survey also is a tool to help long-term care administrators and staff improve the care and services they provide," added Beverley Laubert, the State of Ohio Long-term Care Ombudsman. "Staff, residents, families, advocates and state leaders continue to work together to ensure choice, respect and self-determination for all, regardless of where they call 'home.'"

The survey asked family members their opinions on activities, administration, admission, choices, direct care and nursing, laundry, meals and dining, social services, therapy and general satisfaction. Researchers identified two key questions that sum up the respondent's perception of the home: "Overall, do you like this facility?" and "Would you recommend this facility to a family member or friend?" Seven facilities scored 100 on both questions:

• Edgewood Manor of Greenfield I, Greenfield, Highland County
• Glenmont, Hilliard, Franklin County
• Morrow Manor Nursing Center, Chesterville, Morrow County
• Mount Notre Dame Health Center, Cincinnati, Hamilton County
• Saint Angela Center, Pepper Pike, Cuyahoga County
• Ursuline Center, Toledo, Lucas County
• West View Manor Inc., Wooster, Wayne County

The most recent family satisfaction data complements the 2011 resident satisfaction survey results on the Consumer Guide site. The department will survey resident satisfaction again in 2013.

Top 25 Ohio Nursing Homes for Family Satisfaction

Facility Name	City	County	Overall Score*
Bradley Bay Health Center	Bay Village	Cuyahoga	97.49
Saint Angela Center	Pepper Pike	Cuyahoga	97.23
Glenmont	Hilliard	Franklin	96.93
Willow Brook Christian Home	Columbus	Franklin	95.93
Morrow Manor Nursing Center	Chesterville	Morrow	95.87
Little Sisters of the Poor	Oregon	Lucas	95.63
Kendal at Oberlin	Oberlin	Lorain	95.51
Deupree Cottages	Cincinnati	Hamilton	95.41
Rest Haven Nursing Home	McDermott	Scioto	95.18
House of Loreto	Canton	Stark	94.98
Mount Notre Dame Health Center	Cincinnati	Hamilton	94.93
Morris Nursing Home	Bethel	Clermont	94.88
Sarah Jane Living Center	Delphos	Van Wert	94.82
Alois Alzheimer Center	Cincinnati	Hamilton	94.48
Cherith Care Center at Willow Brook	Delaware	Delaware	94.47
Hampton Woods Nursing Center, Inc.	Poland	Mahoning	94.44
Apostolic Christian Home, Inc.	Rittman	Wayne	94.24
Mother Angeline McCrory Manor	Columbus	Franklin	94.16
Ursuline Center	Toledo	Lucas	94.13
Worthington Christian Village	Columbus	Franklin	93.92
Putnam Acres Care Center	Ottawa	Putnam	93.84
Twin Oaks Care Center	Mansfield	Richland	93.83
Bethany Nursing Home, Inc.	Canton	Stark	93.81
Kimes Nursing & Rehab Center	Athens	Athens	93.80
Mother Margaret Hall Nursing Home	Mount Saint Joseph	Hamilton	93.76

Affordable Health Care Act Tackles Tooth Decay in 2014

The following is an abstract from Kaiser Heath News: 

Tooth decay is the most common chronic health problem in children. By the time they enter kindergarten, more than a quarter of kids have decay in their baby teeth. The problem worsens with age, and nearly 68 percent of people age 16 to 19 have decay in their permanent teeth, according to the Centers for Disease Control and Prevention. 

Starting in 2014, the Affordable Care Act requires that individual and small-group health plans sold both on the state-based health insurance exchanges and outside them on the private market cover pediatric dental services. However, plans that have grandfathered status under the law are not required to offer this coverage.

The requirement also doesn't apply to health plans offered by large companies, although they are much more likely to offer dental benefits than small firms. Eighty-nine percent of firms with 200 or more workers offered dental benefits in 2012, compared with 53 percent of smaller firms, according to the Kaiser Family Foundation's annual survey of employer health plans. (Kaiser Health News is an independent project of KFF.).

The changes in the health law apply specifically to children who get coverage through private plans. Dental services are already part of the benefit package for children covered by Medicaid, the state-federal health program for low-income people. But many eligible kids aren't enrolled, and even if they are, their parents often run into hurdles finding dentists who speak their language and are willing to accept Medicaid payments.

The health law encourages states to expand Medicaid coverage for adults, which advocates say will have the added benefit of probably bringing more children into the system. Despite the challenges, advocates say they anticipate that many low-income children will gain dental coverage.

Dental health advocates say they're pleased that pediatric dental services (along with other pediatric care) were included among the 10 "essential health benefits" that new health plans must cover in the exchanges and the small-group and individual markets under the law.

Go here to read the entire article.  

American Taxpayer Relief Act Brings Estate Tax Relief

After some last minute political posturing, in the wee hours of January 1, 2013 the U.S. Senate passed the American Taxpayer Relief Act ("ATRA") by a margin of 89 to 8. The U.S. House of Representatives, after initially balking at the provisions of ATRA, which does not include any significant spending cuts, ended up passing the bill around 11 p.m. on January 1 by a margin of 257 to 167. Shortly after the House passed ATRA, President Obama made a public statement in support of it and then within 30 minutes was whisked away to his Hawaiian vacation home, where he signed the bill into law using an autopen on January 2, 2013.

Now that we have been delivered from the precipice of the so-called fiscal cliff, below is a summary of what ATRA means for American taxpayers in 2013 as well as some retroactive changes for 2012.

Initially, though, you will probably hear more about what ATRA did NOT change. The temporary reduction of the Social Security payroll tax that went into effect in 2011 and was extended for 2012 was not addressed by ATRA, so in 2013 the share of the Social Security payroll tax paid by workers will increase from 4.2% to 6.2% for employees and 10.4% to 12.4% for those who are self-employed.  This increase will likely result in actual take-home pay remaining the same for many taxpayers, despite wage increases for 2013. Since this is the most effect of ATRA that most taxpayers will realize, many taxpayers won't see ATRA as real "relief.'    

Estate Tax, Gift Tax and Generation Skipping Transfer Tax

ATRA makes the rules governing estate taxes, gift taxes and generation skipping transfer taxes that went into effect under the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 ("TRUIRJCA") permanent for 2013 and beyond, with one exception - the maximum tax rate for each of these taxes is increased from 35% to 40%. Since TRUIRJCA unified the estate tax, gift tax and generation skipping transfer tax exemptions and provided for inflation indexing of these exemptions beginning in 2012, the 2013 exemption for each of these taxes is $5,250,000.

"Portability" of the Federal Estate Tax Exemption Becomes Permanent

 In addition, TRUIRJCA introduced the concept of portability of the estate tax exemption between married couples, and so ATRA has made portability permanent.In 2009 and prior years, married couples could pass on up to two times the federal estate tax exemption by including "AB Trusts" in their estate plan. TRA 2010 eliminated the need for "AB" Trust planning for federal estate taxes in 2011 and 2012 by allowing married couples to add any unused portion of the estate tax exemption of the first spouse to die to the surviving spouse's estate tax exemption, which is commonly referred to as "portability of the estate tax exemption."