New Jersey Estate Planning & Elder Law Blog : New Jersey Estate Planning Lawyer & Attorney : Deirdre Wheatley-Liss : Fein Such Kahn & Shepard Law Firm : Elder Law, Tax Planning

New Jersey accounted for 30% of the most important court rulings on elder law issues in 2011. The crib notes version?  Stay within the line and intent of the law to get the results that you want. The courts are supporting Medicaid's ability to create a period of denial because of a transfer of assets to family members.  This is in line with one of the core principals of Medicaid eligibility - the state will pay for your long term care if you have a dire financial need, but not if you manufactured that need in the past 5 years by transferring assets to your family. 

The key takeaway - effective plans are put into place well before they are needed and fully conform to the law.

This "Top 10" list comes courtesy of elderlawanswers.com:

1. Medicaid Applicant's Penalty Period Does Not Begin Until Returned Assets Are Spent Down
The U.S. Court of Appeals, Third Circuit, rules that a New Jersey Medicaid applicant who transferred assets and then had some of the transfers returned cannot get credit toward her penalty period for the time before the transfers were returned that she was resource-eligible. Marino v. Velez (U.S. Ct. App., 3rd Cir., No. 10-2324, Jan. 10, 2011).  

What do you need to take away?  If you made a gift in the 5 years before you applied for Medicaid, and you lost the "bet" that you wouldn't need Medicaid for 5 years, the ENTIRE gift needs to be returned, and spent down, before you will qualify for Medicaid.  To be successful, you need to plan early so that you have a greater likelihood of not needing care for 5 years.

2. State Cannot Recover Assets That Were Transferred Before Medicaid Recipient Died
In a case pursued by ElderLawAnswers member attorney Peter C. Sisson, an Idaho district court rules that the state cannot recover assets from the estate of a Medicaid recipient's spouse that were transferred to the spouse before the Medicaid recipient died. In Re: Estate of Perry (Idaho Dist. Ct., 4th Dist., No. CV-IE-2009-05214, March 16, 2011).  

3. Federal Court Rules Ahlborn Does Not Bar Medicaid Recovery From Future Medical Expenses
A federal district court rules that a state Medicaid agency may recover the cost of a beneficiary's medical care from the portion of her personal injury settlement that was allocated to medical expenses, regardless of whether the funds were allocated to past or future medical care. Perez v. Henneberry (D. Colo., No. 09-cv-01681-WJM-MEH, April 26, 2011).  

4. Court Upholds Nursing Home Resident's Eviction Prior to Resolution of Medicaid Appeal
A Kentucky appeals court holds that a nursing home may evict a resident for nonpayment despite a pending Medicaid appeal. King v. Butler Rest Home, Inc. (Ky. Ct. App., No. 2010-CA-001467-MR, June 17, 2011).  

5. Payments to Caregivers of Dementia Patient Are Deductible Medical Expenses
The U.S. Tax Court rules that payments to caregivers of a dementia patient are deductible medical expenses, even though the caregivers were not licensed health care providers. Estate of Lillian Baral (U.S. Tax Ct., No. 3618-10, July 5, 2011).  

What do you need to take away?  This is a win for caregivers.  Catastrophic medical expenses in excess of 7.5% of your adjusted gross income are deductible. This may offset some of the costs of care.

6. Third Circuit Affirms That N.J. May Count Promissory Notes As Available Resources
In a long-running case that has bounced back and forth between two federal courts, the Third Circuit Court of Appeals rules that New Jersey's Medicaid agency may analyze promissory notes as trust-like devices and count the notes as available resources. Sable v. Velez (U.S. Ct. App., 3rd Cir., No. 10-4647, July 12, 2011). 

What do you need to take away?  While the court specifically advised that this case was not precedential, if you are making loans, they need to be real and fit within the requirements of the law.  They need to be in writing, actually repaid, and consistent with the law.

7. Transfer of Medicaid Applicant's House to Son Falls Within Caregiver Child Exception
A New Jersey appeals court rules that the transfer of a Medicaid applicant's house to her caregiver son is not subject to a Medicaid penalty period because it falls within the caregiver child exception. V.P. v. Dept. of Human Services (N.J. Sup. Ct., App. Div., No. A-2362-09T1, Sept. 2, 2011). To read the full summary, click here.

What do you need to take away?  The Medicaid applicant was successful because the caregiver child was able to prove that he actually provided a high level of care including walking, bathing, and cooking.  In short, he had good facts.  If you are a caregiver child looking to someday keep your home by taking advantage of this exemption, you will also need good facts. Start keeping a log of what you do now.

8. U.S. Court Rules Connecticut Likely Cannot Refuse Spousal Refusal Doctrine
Ruling that a state statute violates federal Medicaid law, a federal district court grants a preliminary injunction preventing Connecticut from denying Medicaid benefits to an applicant seeking to disregard his spouse's assets using the doctrine of spousal refusal. Fortmann v. Starkowski (D. Ct., No 3:10cv1562 (JBA), Sept. 28, 2011).  

9. Medicaid Applicant's Transfer to Daughter Created Trust-Like Device
A federal district court rules that when a Medicaid applicant transferred money to her daughter with the intention that the daughter pay for her care during the resulting penalty period, she created a trust-like device, so the money is still an available resource. Pfeffer v. AHCCCS (U.S. Dist. Ct., D. Ariz., No. CV-11-0891-PHX-GMS, Sept. 29, 2011). 

10. Irrevocable Trust Set Up by Medicaid Applicant's Children Is Available Asset
A Wisconsin appeals court rules that a Medicaid applicant who transferred funds to her children, who then put them in an irrevocable trust for her benefit, is ineligible for Medicaid because the trust is an available asset under state law, even though the transfer occurred 17 years before she applied for Medicaid. Hedlund v. Wisconsin Dept. of Health Services (Wis. Ct. App., No. 2010AP3070, Oct. 13, 2011).  

Image: Idea go / FreeDigitalPhotos.net

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A recent appeals court case underscores the importance in New Jersey of being able to factually prove that a child in fact provided care to a parent for the transfer of the home to that child to be an exception to the Medicaid transfer rules.

Generally speaking, a transfer of assets without compensation within 5 years of an application for Medicaid will cause a penalty period to be assessed.   One very important exception to this is the "Caregiver Child Exception". The Caregiver Child Exception basically indicates that if the child has (1) resided in the parent's home for at least 2 years, and (2) provided a level of care to the parent that allows the parent to stay at home and not have to enter into an assisted living or nursing facility, then the transfer of the home to that Caregiver Child does not create a penalty for Medicaid purposes. See N.J.A.C. 10:71-4.10(d).

The recent case of  V.P. v. Dept. of Human Services, decided by the New Jersey Appellate Division September 2, 2011, underscores the importance of being able to prove that the Caregiver Child actually provided assistance to the parent, which allowed the parent to remain at home instead of needing to enter a care facility. In this case, the Caregiver Child brought a variety of witnesses  to testify to the fact that the Caregiver Child actively helped the parent. The key lesson here is that if the family is planning on potentially using the Caregiver Child exemption to allow the caregiver child remain in the home after the parent needs to enter the nursing home, then the family must maintain credible and substantiated evidence of the fact that the child is in fact providing care to the parent.

Elderlawanswers.com has kindly provided a summary of this important case:

A New Jersey appeals court rules that the transfer of a Medicaid applicant's house to her caregiver son is not subject to a Medicaid penalty period because it falls within the caregiver child exception. V.P. v. Dept. of Human Services (N.J. Sup. Ct., App. Div., No. A-2362-09T1, Sept. 2, 2011).

V.P. lived with her son, R.P. Following a stroke, she entered a nursing home, transferred her house to her son and applied for Medicaid benefits. The state determined V.P. impermissibly transferred her home and was subject to a penalty period.

V.P. appealed, arguing her house was not a countable asset because the transfer fell within the caregiver child exception. At a hearing, several family members and V.P.'s doctor testified that R.P. helped V.P. walk, bathe, and cook, among other things. The administrative law judge (ALJ) found the witnesses credible and determined the caregiver child exception applied. However, the state's Medicaid director rejected the ALJ's decision and concluded V.P. needed only normal support services, so the transfer was not eligible for the caregiver child exception. V.P. appealed.

The New Jersey Superior Court, Appellate Division, reverses, holding that V.P. is entitled to Medicaid benefits with no penalty period. The court rules that the director did not demonstrate that the ALJ's findings were arbitrary and capricious. According to the court, "the credible evidence in the record supports the ALJ's finding that V.P needed, and R.P. provided, special care and attention essential to her health and safety."

For the full text of this decision in PDF, go to: http://www.judiciary.state.nj.us/opinions/a2362-09.pdf

 

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Stacey Crowell Maiden, Esq. was the speaker at the 2011-2012 opening meeting of the Estate and Financial Planning Council of Central New Jersey (EFPCCNJ) on September 7, 2011, presenting the topic: Guardianships & Conservatorships: Court Strategies When You Question Your Client’s Capacity.

The goal of the presentation was to educate estate and financial planners of the court procedures involved if a client’s diminished capacity prevents effective representation of the client.
We always encourage our estate planning clients to execute comprehensive Powers of Attorney and Living Wills/Advanced Health Care Directives to appoint surrogate decision makers of their choosing to handle financial and medical affairs during their life, along with their Wills, which address disposition of assets after death. If properly drafted, a Power of Attorney and Living Will/Advanced Health Care Directive can supply all of the authority required to obviate the need for a court proceeding to appoint a legal guardian.

However, the mere existence of a Power of Attorney does not bar the need for a legal guardian. Sometimes, the reasons are benign, such as the agent named has passed away and there is no successor agent named, or the Power of Attorney prepared in New Jersey does not comply with the requirements of another state. Other times, there are disputes among multi-party agents, e.g., son and daughter disagreeing as to how mom’s finances should be managed or spent. Unfortunately, there are also situations where the appointed agent under the Power of Attorney is not acting in accordance with the fiduciary standards imposed by New Jersey Statute or generally not in the best interests of the principal.

There is another legal aspect of a Power of Attorney, which may rise to the need for a guardianship. It is important to realize that executing a Power of Attorney does not mean that the person can not continue to act of his or her own behalf. That person may continue to enter into contracts, withdraw large sums of money from bank accounts, take out credit cards, purchase items, gift assets, and execute stock trades, to name just some of the transactions that a person with diminished capacity might engage in to potential personal and family harm. Comments from members of the EFPCCNJ indicated that this is not an uncommon issue. Even though a Power of Attorney is in place, a guardianship action still may be required to foreclose the client with diminished capacity from acting on his own behalf to the detriment of his or herself and family.  

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Besides the negative effect we are seeing in the market today from the S&P downgrade of the US credit rating, the debt deal may have far reaching consequences to seniors.  Medicare, Medicaid and Social Security are a huge proportion of the US budget.  Elderlawanswers.com has provided a summary of what seniors need to pay attention to:

Congress has agreed to allow the President to raise the debt ceiling in exchange for $2.4 trillion in budget cuts over 10 years. How this deal will affect the three major programs crucial to the elderly -- Medicare, Medicaid and Social Security -- may not be known until almost year's end, but the impact could be significant.

The agreement calls for two stages of spending reductions. In the first stage, which will pare $917 billion from the budget, "entitlement" programs like Medicare, Social Security and Medicaid are spared. Instead, the cuts are evenly divided between defense and non-defense "discretionary" programs. Some aging and poverty programs that the elderly rely on, such as heating assistance, could be hit with budget reductions, but so will defense programs.

In the second stage, a 12-member Congressional committee - six members from each party -- must agree on an additional $1.5 trillion in cuts by Thanksgiving, and Congress must vote on their proposal (with no modifications) by December 23. Here, Medicare, Medicaid, and Social Security will all be back on the table. In the case of Medicare, the powerful panel will be looking at changes like raising the eligibility age, increasing premiums for wealthy recipients, hiking deductibles and co-pays, and slashing payments to providers and drug companies.

To cut Medicaid, this joint committee will consider giving states more flexibility to reduce eligibility and benefits, meaning that it might become even tougher for elderly nursing home residents to qualify for Medicaid. The committee will also be looking at cutting payments to nursing homes, which just got hit with a more than 11 percent reduction. Nursing home residents could feel the impact in the form of reduced services and compromised care.

For Social Security, one thing the panel will undoubtedly consider changing is how the program's cost of living increase is calculated, which will result in lower benefits. Pushing back the eligibility age for future retirees could also be on the table.

Although President Obama will be pressing the joint committee to not just cut programs but to increase revenues by raising taxes on the wealthy and corporations, it is anybody's guess whether the panel's Republican members will agree to this.

"The future of the programs really hangs in the balance," said Joe Baker, president of the Medicare Rights Center, an advocacy group. "It could lead to deep cuts and irreversible changes to Medicare and Medicaid that shift costs to beneficiaries."

If the 12-member panel can't agree on a plan to pare at least $1.2 trillion from the budget -- or Congress votes down its proposal or President Obama vetoes it -- automatic spending cuts totaling that amount would kick in beginning in 2013. Medicaid, Social Security and veterans programs are among the programs that will be exempt from these mandatory cuts, but Medicare is not exempt. There would be a 2 percent cut to Medicare, although the savings would have to come from payments to providers like doctors and hospitals, not from beneficiaries. Such a reduction to providers would be on top of a 6 percent drop in provider payments already enacted to help finance health care reform. Doctors and hospitals would feel the impact initially, but Medicare beneficiaries would experience it soon enough as more providers refuse to treat Medicare patients, reduce services or go out of business.

There is, however, a strong incentive for the joint committee to avoid these automatic cuts and instead agree on a plan that Congress can pass and the President can sign: Along with the 2 percent automatic Medicare cut would be an automatic 8 percent reduction in defense spending, or nearly $500 billion. The thinking is that both Democrats and Republicans would view defense cuts of this magnitude as too damaging to their parties to contemplate.

Further reading:

"Five cuts the debt commission might make to Medicare, Medicaid" (Washington Post blog)

"FAQ: Debt Deal 'Super' Committee's Impact On Health Spending Explained" (Kaiser Family Foundation Health News)

"Tea Party groups see Medicare overhaul chance" (Reuters)

"Social Security, Medicare dodge bullet, but cuts loom" (Reuters blog)

"Debt Deal Triggers Nerves In Health Industry; Providers Brace For Cuts" (Kaiser Family Foundation Health News)

"What Does the Debt Ceiling Agreement Mean for Medicare?" (Center for Medicare Advocacy, Inc.)

 

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One of the biggest questions in determining Medicaid eligibility for long term care is what are the person's "Available Assets" our "Countable Assets".  The Countable Assets must be spent down to $2000/$4000 for Medicaid eligibility (depending on the program being applied for).  A new case decided today says that New Jersey can look at certain promissory notes as being Countable Assets.

Elderlawanswers.com reports:

In a long-running case that has bounced back and forth between two federal courts, the Third Circuit Court of Appeals rules that New Jersey's Medicaid agency may analyze promissory notes as trust-like devices and count the notes as available resources. Sable v. Velez (U.S. Ct. App., 3rd Cir., No. 10-4647, July 12, 2011).

A group of New Jersey residents lent money to close relatives in return for promissory notes. After the individuals applied for Medicaid, the state denied their applications, claiming that the promissory notes were trust-like instruments that qualified as available resources.

The residents filed suit in federal district court seeking to enjoin the state from counting the notes as available resources. The district court denied the request for preliminary injunction, holding that there was nothing in the Medicaid Act or the POMS that prevented the state from analyzing promissory notes as a trust-like device if the situation warranted it. The residents appealed to the U.S. Court of Appeals for the Third Circuit, which vacated and remanded, holding the district court committed legal error when it analyzed the notes as trust-like devices without first determining whether they would be counted as resources under the regular resource-counting rules. The court agreed with the plaintiffs' argument, which was based on the federal statutory requirement that the Medicaid program may not use eligibility rules that are more restrictive than those used by the SSI program (see 42 U.S.C. 1396a(a)(10)(c)(i)(III)).

The district court again denied the preliminary injunction, holding that the relationship of the parties and the terms, amount and timing of the loans indicated that the loans were not bona fide cash loans or promissory notes. The residents appealed.

In a ruling that is "not precedential," the U.S. Court of Appeals for the Third Circuit affirms, holding that the Medicaid applicants are not entitled to a preliminary injunction because they "failed to show that it was more likely than not that their notes would be considered cash loans or promissory notes under the regular SSI resource-counting rules or that their notes should not be considered trust-like devices."

 For the full text of this decision, go to: http://www.ca3.uscourts.gov/opinarch/104647np.pdf

 

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Elderlawanswers reports this week that congressional proposals to change Medicaid funding target cutting services to seniors.  The report takes the position that block funding of Medicaid will underfund Medicaid to the states.  The states will then have to cut back on services, which is disproportionately effect the elderly as they are the biggest users of Medicaid services.  I note that if Medicaid paid even a portion for home care as it does for nursing home care, it would likely cost less to care for our senior population, and more people could be cared for in their homes, which is where they would like to be in the first place.

The full text of the article with links is below:

After the fierce backlash against their plan to privatize Medicare, Republican strategists are focusing on their proposal to cut $750 billion from Medicaid. Ironically, policy experts say that scheme would have a much greater impact on today's elderly and near-elderly than the Medicare proposal ever would. A flurry of reports released by different groups paint an alarming picture of millions of nursing home residents and those who receive long-term care at home losing Medicaid coverage over the next decade if the Republican plan becomes law. "This is a huge deal for the nation's seniors, and it's been largely unrecognized," Jocelyn Guyer, the co-executive director of the Center for Children and Families at the Georgetown University Health Policy Institute, told the New York Times. The plans for Medicaid, part of the budget bill recently passed by the Republican-led House, would turn Medicaid funding to states into a "block grant," something proposed by George W. Bush in 2003 and by Newt Gingrich in 1995. Under the current system, the federal government matches every dollar that states spend on Medicaid, no matter how high the total goes. Under the House Republican plan, starting in 2013 states would receive a fixed amount every year, which would only increase with population growth and the overall cost of living, not health care costs. If a state's Medicaid costs are higher than its block grant will cover, the state would have to make up the difference, either by spending more of its own money or by restricting eligibility for Medicaid (including nursing home coverage), reducing covered services, or cutting payment rates to health care providers. The Republican plan would make it easier for states to cut benefits and limit eligibility by giving them more flexibility in designing their Medicaid programs than it now permits. According to the non-partisan Congressional Budget Office (CBO), the federal block grants would not come close to meeting states' needs. The Office predicts that by 2022 federal funding for Medicaid would fall 35 percent below what the federal government now is projected to provide states, and the shortfall would be 49 percent by 2030. Eight states -- including Florida, Colorado and Georgia -- would lose more than 40 percent of their federal funding for Medicaid over the next decade, according to a separate analysis by the Urban Institute released by the Kaiser Family Foundation. Relaxing or eliminating federal requirements would mean more uninsured or underinsured citizens. The Urban Institute predicts that between 31 million and 44 million fewer people would be enrolled in Medicaid in the next decade, and most would be left without insurance coverage. States desperate to cut Medicaid costs would likely turn first to services for the elderly and disabled because that's where the money is. Although only 23 percent of people enrolled in Medicaid in 2010 were elderly or disabled, they accounted for 64 percent of Medicaid spending, according to the CBO, and seven of 10 nursing home residents are on Medicaid. In its own report, titled "The High Cost of Capping Federal Medicaid Funding," the AARP says that the cumulative effect of giving states the option to change their Medicaid rules "could cause millions of poor -- as well as formerly middle-class people who have exhausted their life savings and rely on the Medicaid program -- to lose access to the long-term care services that Medicare does not provide." Based on of its long experience ensuring that states do not limit eligibility and benefits, the National Senior Citizens Law Center says that the result of block granting Medicaid would mean taking health care coverage away from millions of low-income older adults and people with disabilities. "In the name of 'flexibility' and state's rights, America's safety net could be ripped to shreds," the group warns in a new Policy Issue Brief, "Medicaid Block Grants: Attacking the Safety Net for Low-Income Older Adults." The Brief outlines eight ways that Medicaid block grants could hurt elderly Medicaid recipients or their families: It could be harder to qualify for benefits Coverage for long-term care services and supports could be threatened Access to nursing home care could be lost Availability of essential services could be eliminated Those with both Medicare and Medicaid could be at risk Spouses of Medicaid nursing home residents could be impoverished Nursing home consumers would lose protection Getting medical equipment and supplies could become difficult   Image: Ambro / FreeDigitalPhotos.net

 

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I am often contacted by friends and contacts to help with elder care issues for their parents who live in other states.  I wanted to share with you the resource that I use to find referals to elder law attorneys outside New Jersey.

The National Academy of Elder Law Attorneys or NAELA is the premier national elder law organization.  I think it is fair to say that anyone who is serious about practicing in the area of elder law is a member of NAELA.  

One of the services that NAELA offers is a listing of all of its members, searchable by location or zip code.  The question then arises "Well, I have a list of all of these attorneys, how do I figure out who to speak to?".  Here are some of the questions/criteria that I use:

 

• Is the person a CELA?  CELA  stands for Certified Elder Law Attorney.  The certification is only granted to those who pass additional testing and who focus a substantial part of their practice in elder law.  I think this is a key criteria because, as a CELA, I am aware of the high bar set for certification and recertification.  Also, I want to be speaking with attorneys who have invested in themselves to spend the time to earn the CELA certification and take the continuing education classes required to maintain it.

• What does the attorney’s website look like? Do they provide useful information about elder law and how they practice?  Are there articles or a blog?  I like to refer people to attorneys who take the approach that their role is to educate clients about the law and provide alternative solutions.

• Does the attorney hold an LL.M in tax or have a significant tax practice?  Many of the downsides of elder law planning involve the tax consequences. These need to be able to be thoroughly evaluated as the taxes are part of the potential cost of any plan of action.

• Does the attorney's experience match what you need them to do? For example, if you have a guardianship question, does the attorney have extensive guardianship litigation experience? I'm a transactional attorney – which means I work mostly with documents. The primary counsel on any guardianship matters in our office is Stacey C. Maiden, Esq., who focuses a significant part of her practice on guardianships. Similarly, if there is a contested litigation, I may have one of our experienced litigators act as primary counsel on the matter. An attorney can't be all things to all people, so make sure the your needs match the attorney’s experience.

• How will the attorney charge for their services? You are not going to find this answer on a website. Fees can and should change as a result of the uniqueness of the matter, the complexity, the timing, and the number of parties involved, among other things. Fees can be fixed, flat, or hourly, or some combination. You need to understand how the attorney is going to be compensated as a key part of moving forward in order to have a successful representation experience.

• Call the short-list attorneys to find out how they would approach your problem. An attorney isn't going to be able to solve your problem over the phone, and it's unrealistic to expect them to do so. Elder law issues are by their nature complex, and a variety of factors need to be evaluated. However, in a 10 min. conversation you can find out how the attorney approaches situations that are similar to yours. That should give you enough information to determine if you want to have a more detailed consultation with the attorney.

 

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It's not really a surprise, but a recent decision confirmed that trying to prove to New Jersey that a transfer was made within the Medicaid 5 year look back period for reasons "other than qualifying for Medicaid" is an uphill battle with a low probability of success.

Fellow New Jersey elder law attorney John Callinan represented A.M., who transferred $22,103 in September 2006.  A.M. had a sudden onset illness, and applied for Medicaid August 2009.  She was found eligible for Medicaid,but a transfer penalty was imposed due to the the gift.

Elderlawanswers.com provides details on A.M.'s appeal:

A.M. appealed, claiming that she transferred the money exclusively for reasons other than to qualify for Medicaid. She explained that she gave money equally to all of her children over the years, but she had set aside money for her son because he was addicted to cocaine and going through a divorce, and she transferred the money to him only after he had been rehabilitated. A hearing officer reversed the county's decision, determining A.M. had met her burden of proof. However, the director of the Division of Medical Assistance and Health Services reversed the hearing officer, holding that A.M. had not produced evidence to show why she suddenly transferred more than half her assets to her son. A.M. appealed to court (she died while the appeal was pending).

The New Jersey Superior Court, Appellate Division affirms, holding that A.M. did not establish that the transfer was done exclusively for reasons other than to qualify for Medicaid. The court notes that A.M. "failed to present any evidence as to how [A.M.] was allegedly able to live independently during the period between her substantial gift to her son and her admission to the nursing home."

For the full text of this decision in PDF, go to: http://www.judiciary.state.nj.us/opinions/a4789-09.pdf 

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Courtesy of ElderLawAnswers.com, below is a roundup of the most influential elder law court decisions of 2010, together with my thoughts as to how those cases might carry into New Jersey. The Medicaid Annuity is still generating decisions across the county, as well as questions as to when a penalty period created by a transfer begins to run.

1. Nursing Home Resident May Not Transfer Assets Beyond the CSRA to Spouse
A U.S. district court holds that under Medicaid law an institutionalized spouse may not transfer assets beyond the CSRA to a community spouse after the Medicaid recipient's eligibility has been determined. Burkholder v. Lumpkin (U.S. Dist. Ct., N.D. Ohio, No. 3:09CV01878, Feb. 9, 2010). To read the full story, click here.

(DWL – this is an unusual factual situation with a Medicaid recipient received inheritance after they were already nursing home and receiving benefits. Essentially, this maintains that the Community Spouse can only keep one half of the couple's assets up to a maximum of approximately hundred and $10,000, the Community Spousal Resource Allowance or “CSRA”)

2. Mass. Court Finds a Contract Transferring House Is Valid / California Court Finds that it is Not
A Massachusetts appeals court finds that a contract in which parents transferred property to their daughter so that they might avoid a Medicaid lien does not fail for lack of consideration because the daughter's promise to sell the property after her parents' death and distribute the proceeds to her sisters constituted valid consideration. Cascio v. D'Arcangelo (Mass. Ct. App., No. 09-P-1039, March 30, 2010). To read the full story, click here.

The Cascio summary is paired with a similar, and also much-read, case from California, Lizaso v. Lizaso.

(DWL – in the Lizaso case the court found the opposite, namely that a contract entered into solely for the purposes of obtaining Medicaid is void.)

3. Medicaid Recipient's Life Estate Is Part of Probate Estate
An Iowa court of appeals finds that a Medicaid recipient's life estate in her house is part of her probate estate for the purposes of satisfying debt, so the house does not pass directly to the remainderman. Escher v. Estate of Escher (Iowa Ct. App., No. 09-1198, April 8, 2010). To read the full story, click here.

(DWL - Here again, this case presents rather unusual factual circumstances in that the remainder person purchased life estate interest; normally, we do have a situation where a person makes a gift of the remainder interest while retaining a life estate. The point here was that the purchaser still needed to pay the agreed upon price for the life estate, which the purchaser has stopped paying upon the Medicaid recipients death)

4. Medicaid Applicant's Penalty Period Begins When Applicant Is Eligible for Medicaid
A federal district court determines that when imposing a penalty on a Medicaid applicant who made uncompensated transfers within the look-back period, the penalty period should begin to run when the applicant was otherwise eligible for Medicaid, not when the applicant is actually receiving benefits. Frugard v. Velez (U.S. Dist. Ct., D. N.J., No. 08-5119 (GEB), April 8, 2010). To read the full story, click here.

(DWL – This is a New Jersey case, and falls squarely within a plain language reading of the Deficit Production Act in that the penalty period begins to run at the later of (1) the date of the uncompensated transfer, or (2) when the applicant would have begun to receive Medicaid benefits if not for the transfer penalty).

5. Penalty Period Does Not Start Until Applicant Has Spent Down Returned Funds
A U.S. district court finds that the penalty period for a New Jersey Medicaid applicant who transferred assets and then had some of the transfers returned does not start running until the applicant has spent down the funds from the returned transfers to below the resource limit. Marino v. Velez (U.S. Dist. Ct., Dist. N.J., No. 10-911 (JAP), May 4, 2010). To read the full story, click here.
(A U.S. appeals court has subsequently affirmed this ruling.)

(DWL - this is another New Jersey case. This is similar to the other case New Jersey case in that it deals with when does the penalty period begins to run when there's been a transfer. Here, some of the money transferred was returned. The court found that plaintiff did not "become otherwise eligible for Medicaid" until she'd spent down the money that was returned her.)

6. Son Is Responsible for Medicaid Overpayment to His Father
A Pennsylvania trial court rules that the state may seek repayment of a Medicaid overpayment from the son of a Medicaid recipient rather than from the Medicaid recipient's estate. Maloy v. Dept. of Public Welfare (Pa. Commw. Ct., No. 1575 C.D. 2009, June 10, 2010). To read the full story, click here.

(DWL - Here, the Medicaid recipient’s son was his Guardian, and after the Medicaid recipient began to receive Medicaid, the son transferred some of Medicaid recipient’s assets to himself. The court found that Pennsylvania could pursue the son not only because it was legally allowed, but it was equitable in that son was the one who made the transfers to himself in the first place, thus making the father no longer eligible for Medicaid).

7. Payments Under Personal Service Agreement Are Compensated Transfers
A New York appeals court "annuls" a Medicaid determination that a nursing home resident's payments to his son pursuant to a personal services agreement were uncompensated transfers. In the Matter of Warren Kerner v. Monroe County Dept. of Human Services (N.Y. App., 4th Dept., No. TP 10-00197, July 2, 2010). To read the full story, click here.

(DWL - this upholds that a personal care contract, if properly drafted and reasonable, provides value to the recipient Medicare in terms of services, and as such is not an uncompensated transfer for Medicaid purposes, which would otherwise create a penalty period.)

8. Assets in Trust Created by Husband Are Available for Purposes of Determining Wife's Medicaid Eligibility
A Massachusetts appeals court holds that a trust created by the husband of a Medicaid applicant independently of his will is a Medicaid qualifying trust even though the bulk of the assets in the trust passed through the husband's will. Victor v. Mass. Executive Office of Health & Human Services (Mass. Ct. App., No. 09-P-1361, July 21, 2010) (unpublished). To read the full story, click here.

(DWL - this case turns on Massachusetts state law as to what is a Medicaid Qualifying Trust and what is not. In New Jersey, generally speaking, a discretionary trust created by a third party, with that third parties own assets for person’s benefit is not a countable asset for Medicaid qualification purposes.)

9. Income Stream from Annuity Is Not Asset for Medicaid Eligibility Purposes
In a case pursued by the ElderLawAnswers member firm of CzepigaDalyDillman, a U.S. district court holds that Connecticut cannot treat the income stream from an annuity as an available asset for the purposes of Medicaid eligibility. Lopes v. Starkowski (U.S. Dist. Ct., Dist. Conn., No. 3:10-CV-307, August 11, 2010). To read the full story, click here.

(DWL - under federal law, income and assets are separated in determining Medicaid eligibility. Here, Connecticut tried to argue that the income stream from annuity was an asset, not income. The court held that the income stream is just that, income."

10. Annuity Purchased Post-Eligibility Determination Is Available Resource
A federal district court rules that an annuity purchased by a Medicaid applicant's husband post-eligibility determination is an available resource. Morris v. Oklahoma Department of Human Services (U.S. Dist. Ct., W.D. Okla., No. CIV-09-1357-C, Sept. 24, 2010). To read the full story, click here.

(DWL - Here, a husband was determined Medicaid ineligible. In order to create eligibility, the wife purchased an annuity, thus transforming what had been his asset into an income stream for herself. The Oklahoma court found that the now annuity should still be treated as an asset, because to do otherwise would make the law required the spend down of assets totally superfluous. The purchase of the annuity would have been a successful transfer had it been done prior to the state determining Medicaid eligibility for the husband.)

Image: Idea go / FreeDigitalPhotos.net

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Oftentimes the oldest generation of Americans are seen as the most frugal - they experienced the Great Depression, they abhor debt, they saved their pennies, and while they may now be living off of social security, at least they don't owe anyone money.  

A New York Time blog post in The New Old Age challenges that picture today in the posting "Retirements Swallowed by Debt".  There are some bleak statistics in the article:

• growing numbers of elderly want or need jobs
• 30% of workers over 55 have more credit card debt than retirement savings
• average credit card debt for those 65 and older is $10,235

I think the critical take away from the article is how children seem to stumble across the problem as a surprise - not an issue being candidly discussed.  I know my clients often hide the debt, embarrassed by the situation.  Their kids are then shocked when no only are the dealing with a health care situation (which is what typically brings them into looking at the finances), but also a money management situation.

The solution - communication.  I am not advocating that anyone who is retired turn over their finances.  However, I think the question every once in while to mom and dad "are you doing OK financially - is there any way I can help" can open the door to talking about issues before they become problems.

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 I author this blog, quite simply, because I'm really passionate about what it is that I do.

I enjoy helping people find ways to pay their legally minimum required taxes. I think that the government's partnership in everything you earn shouldn't be a secret – everybody should know how tax law will affect their decisions.

I think that it's a shame that people who worked their entire lives, served in our military, and built the country that we know today are fearful of how they will be cared for or be able to stay in their own homes as they get older.  I feel good about showing families that there are steps that they can take today to be in a position of empowerment tomorrow.

I find other people's businesses fascinating – what's their growth strategy, what's their secret to success, what are their fears? I love working with business owners to find ways, through the legal arrangements that they enter into, to support those successes and minimize those fears.

I blog about these things because this platform is my soapbox, where I get to stand up and grab my virtual loudspeaker. So many of my clients have the same concerns, the same questions, are seeking the same information. This blog gives me an opportunity to educate a whole world of people that I haven't yet met about why they should be concerned about how the law impacts their daily lives, to answer questions that are commonly asked, and to give people information so that they have the ability take action in their own lives.

What was the inspiration for this soliloquy? I was recently interviewed by Lexblog (the company that hosts and supports this site) and it got me thinking about why this blog has been part of my life for the past five years. You can enjoy the interview here, or even listen to the podcast (a first for me).

Right now, all the ideas on the topics covered on this blog come from my head, out of conversations with my associates and partners, out of client meetings, or through what I'm reading in the news as I keep up with the ever-changing terrain of law. What I'd love to know is what kind of questions do you have that you'd like to see me addressing on my virtual soapbox?

 

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No surprise, but nursing home and assisted living costs are on the rise. MetLife has produced and published its annual "2010 Market Survey of Long-Term Care Costs". This is a great source to do a check of what is a good, reasonable, or high rate for care in your area (they have national and state-by-state analysis of the costs of nursing home, assisted living, and home health care, a break-down of costs by metropolitan areas within a state, and even an adult day care survey).

What are the costs of care in a nursing home versus assisted living versus home health care (certified aide or companion) in New Jersey? 

Nursing Home - Daily Cost of Care

Daily Cost of Care	Low	High	Average
Private Room	$156	$525	$307
Semi-Private Room	$131	$331	$277

Which translates to an average of:

• $9,030 per month for a private room or $108,360 per year

• $8,310 per month for a semi-private room or $99,720 per year 

 

Assisted Living - Monthly Cost of Care in NJ

Monthly Cost of Care	Low	High	Average
Assisted Living Facility	$2,000	$6,650	$4,286

Which translates to an average of $51,432 a year.

 

Home Health Care - Hourly Cost of Care

Hourly Rate	Low	High	Average
Home Health Aide	$17	$30	$21
Companion (Not certified)	$16	$26	$20

 Which translates to an average of: 

• $1,008 per month for 4 hours/3 days per week, or $12,096 per year

• $3,360 per month for 8 hours/5 days per week, or $40,320 per year

• $14,122 per month for 24/7 care, or $169,344 per year 

The study has lots of other great information about costs of care.  Some of these are summarized at caregiving.com in their article  "Costs of Long-Term Care Continue to Rise".  :

Private room nursing home rates rose 4.6% to $229 per day or $83,585 per year, while assisted living rose 5.2% on average to $3,293 per month, or $39,516 per year. These increases come on top of increases from 2008 to 2009 when both nursing home and assisted living costs were up 3.3%.

Costs for home health aides and adult day services were unchanged in the past year. Home health aide costs remain at an average price of $21 per hour, while adult day services costs are still $67 per day.

The highest average daily rates for nursing homes continued to be in Alaska, where rates are now $687 for a private room and $610 for a semi-private room. Costs are lowest in Louisiana, outside the Baton Rouge and Shreveport Metropolitan Statistical Areas (MSA), at an average of $138 per day for a private room.

For assisted living, the Washington, D.C., area had the highest average monthly base rate at $5,231, while Arkansas, outside of the Little Rock MSA, had the lowest average monthly rate of $2,073. 

Alaska is making New Jersey look good - a nursing home here is only $108,360 compared to $247,320.  I am guessing the number one piece of advise from elder care attorneys in Alaska is "move to the lower 48".

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Many times estate planning is focused on "what happens when I die"?  Often overlooked is the element of estate planning for while you are alive - namely designating and empowering someone to make decisions for you if you can't make them for yourself. Guest blogger Stacey Crowell Maiden, Esq. describes below why a Power of Attorney and Living Will/Health Care Proxy are so important, because the alternative, a Guardianship proceeding, can be so painful.

When a client consults with us to prepare an estate plan, we encourage the client to make sure he also has in place a Power of Attorney and Living Will/Health Care Proxy. While there are a number of reasons to have these documents, one that we stress particularly in conjunction with our Elder Law practice is their value in a potential Guardianship action.

The possibility of becoming mentally incapacitated is not something most people like to consider. But unfortunately, a decline or diminishment in cognitive abilities to the point of no longer having capacity to handle financial and medical affairs can happen gradually, such as with Alzheimer’s, or suddenly, as a result of a stroke for example. If the afflicted person has not appointed someone to act for him under a Power of Attorney of Health Care Proxy, then a Guardian must be appointed by the Court to act on his behalf.

A Guardianship action is brought by filing a Complaint in Court. Generally, two physicians must certify that the alleged incapacitated person is unable to handle medical and financial affairs and is in need of a legal guardian. An attorney is appointed by the Court to represent the alleged incapacitated person, and is paid from the incapacitated person’s funds. In most cases, a hearing is held in Court. Once a Judgment of Guardianship is entered, the guardian will have to post a bond, also paid from the incapacitated person’s assets. The guardian must account to the Court as to the finances and well being of the incapacitated person.

As you can see, a Guardianship action is costly, time consuming and a matter of public record. In addition to offering considerable cost savings, allowing for efficient administration of your affairs, and maintaining privacy, preparing a Power of Attorney and Living Will/Health Care Proxy allows you to control who you wish to act for you, rather than a Court.

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Will your taxes change if you make a gift of real estate subject to a life estate over a straight gift of real estate? Guest blogger  Stacey Crowell Maiden, Esq., Of Counsel to our Trusts and Estates and Elder Law Practice Group provides an explanation of this common, but non-intuitive planning technique.

In our estate planning and elder law practice, we sometimes incorporate the use of a “Life Estate Deed” to transfer real property.. Under a Life Estate Deed, the “life tenant” retains 100% of the present interest of the property. The future interest (which is defined as the full interest after your death) would be transferred to the “remainder persons.” When retaining a Life Estate in the property, you are not transferring or giving the entire interest in the property away. Instead, the remainder persons are given today the right to own the property after you pass away.

The life tenant is responsible for the payment of real estate taxes on the property. However, the Municipal Tax Office - on receiving a copy of the recorded Life Estate Deed from the County Clerk – will update its records, listing the remainder persons as the owners, which means the tax bills are then sent in the names of the remainder persons. This can be a source of confusion and concern for our clients, particularly as to whether they will lose any tax benefits related to ownership.

Guidance is found in the Internal Revenue Code and Regulations, New Jersey Statutes and the New Jersey Administrative Code to assure our clients that as life tenants, they continue to receive certain tax benefits provided to owners in New Jersey.

For example, life tenants retain the Income Tax Deduction for Real Estate Taxes. As the owner of the property by virtue of the life estate, a life tenant may continue to deduct the real estate taxes he pays on his federal income tax return. (I.R.C. §164(a); Reg. §1.164-1(a).

And, by reserving a Life Estate and paying the real estate taxes, the life tenant is entitled to continue to receive the New Jersey Homestead/New Jersey Saver Rebate (N.J.S.A. 54:4-8.58; 54:4-8.58a; 54:8.59); the Senior Citizen's Deduction (N.J.A.C. 18:14-1.1 and N.J.A.C. 18:14-2.8); and the Veteran's Deduction (N.J.A.C. 18:27-2.10).

Of course, there are other potential taxes (e.g. capital gains taxes) to be concerned with when transferring property pursuant to a Life Estate Deed, but the above tax benefits related to present ownership of the property remain in place for a life tenant who pays the real estate taxes.

Image: Simon Howden / FreeDigitalPhotos.net

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I came across an article "Protecting Your Future: Caregiver agreement protects assets" that reminded me how a simple, but effective, caregiver agreement can compensate a child who is assisting a parent, and perhaps lead to future family harmony.

The article give a good overview of how a caregiver agreement can be effective:

An example: Mom depends on daughter Janice for her care. If Mom gifts $100,000 to Janice, then goes into a nursing home in the next five years and applies for Medicaid, the gift to Janice will result in about a nine-month penalty period. Janice will have to give the $100,000 back to Mom to pay nursing home costs during the penalty period, or Mom will have to use other resources to pay.

Instead, using a caregiver agreement, Mom pays Janice $2,500 per month for caregiving services. If Mom moves to the nursing home in the next five years, the payments to Janice are compensation, not gifts.

A couple of details.  The agreement must be in writing and entered into before the compensated services are rendered (you can't say "Mom, give me $30,000 for care I gave you last year."  Also, since the caregiver child is getting "paid" they must report the income for tax purposes.  Also, the payment must be commercially reasonable to services a third party would provide - both in terms of hourly wage and fair room and board if the parent is living with you.

Since caregiver agreements transfer money over a period of time, they are better entered into sooner rather than later.  

If the child feels "funny" about taking money to care for mom and dad, a couple of points to consider:

• If someone else were caring for them/giving room and board, that person would get paid
• The child can save the money they have been paid to provide additional resources to mom and dad, or divide among their siblings if that seems "fair" to the family
• If mom and dad need to apply for Medicaid, money that the child could have been paid for legitimately caring for their parents will instead be paid to the nursing home as part of a Medicaid spend down.

 

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Clearly your parents can be dependent on you (an issue beyond the scope of any article) , but can you claim them  as dependents and get a tax deduction?

The answer - maybe (a lawyers stock in trade).  There is a 5 (possibly 6)  step test if you can claim a parent as a dependent and get a tax deduction.  You can find more details on the deduction in IRS Publication 501, although not necessarily more clearly explained.

What do you get if you can claim a parent as a dependent?  You receive an additional dependent exemption valued at $3650 and 2010.  This is the same standard deduction that you can claim for a dependent child, although with children there is not normally an analysis that you need to go through to see whether or not they qualify as dependents.

The 5 Step Test:

(1)  The person you're claiming as a dependent must be related to you or living with you.  This is generally going to include parents, grandparents, great grandparents, stepmother or stepfather, and an aunt or uncle.  Alternatively, the person must live with you all year as a member of your household. A person can be related to you and your dependent but not live with you   -- this is very important when a mother or father might still live in their own household, or reside in assisted living or nursing home.

(2) There are citizenship requirements.  The person must be a United States citizen, United States resident, or a citizen of Canada or Mexico.

(3)  The dependent person cannot file a joint return with any other person.  For example, if your mother is married to your stepfather, and they're filing a joint return, and you won't be able to claim your mother as a dependent.

(4) The dependent parent cannot earn more than  $3650 of includable income.  A great post from the New York Times "Ask an Elder Law Attorney: Claiming a Parent as a Dependent" explains this further:

Now, here come the tricky parts. The parent’s gross taxable income can’t exceed the I.R.S.’s personal exemption, which is set each year. It’s $3,650 for 2010. Social Security income, however, isn’t taxable unless someone receives more than $25,000 in total income. So if your mother’s only income is $6,000 of Social Security, then she meets this test.

(5) You, the child, and must provide at least 50% of the dependent parents support.  An example from the New York Times article.:

Let’s say your mother’s expenses for the year amount to $12,500 for food, lodging, clothing, medical and dental care, transportation and recreation — anything spent on her behalf. Your mother will collect $6,000 in Social Security benefits this year, so you have to spend more than that, at least $6,001, to claim her as a dependent.

This last point can be the most challenging to determine.  If you are paying all of your mother's bills directly, then it can be pretty easy to say if what you paid is greater than what she earned.  However, if your dad lives with you and you are buying your dad stuff (food, clothes, furniture) it can be more difficult to determine if you meet the 50% test.  You will need to look back to Publication 501 to determine the "fair rental value" of what you are providing.  There is a great article at Bankrate.com "Tax Help in Caring for an Aging Parents" that has more examples of how you can look at the support test.

Oh, and one last point.  If you are a "high income earner" the amount that you can take as a dependent deduction is reduced, and possibly eliminated.  If your Adjusted Gross Income (AGI) is more than $250,200 for joint filers, $166,800 for single filers, or $208,500 for heads of household (using 2009 figures), then the $3650 starts to reduce.  

Regardless of the complexities, the dependent parent deduction can put money in your pocket, so it is worth exploring if you are caring for older relatives.

Image: graur razvan ionut / FreeDigitalPhotos.net

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The Wall Street Journal recently ran "Reverse Mortgages Look Better" with the premise that the consumers position has changed from learning about reverse mortgages to shopping for the best product for them.  

Upfront fees on reverse mortgages have fallen substantially in recent months, giving homeowners interested in this product a new challenge: how to compare offers to find the best one.

"Quite a few of the lenders now have reduced the origination fees," says Barbara Stucki, vice president of home-equity initiatives for the National Council on Aging. "Some of them are getting rid of the origination fees. Some are willing to pay some of the mortgage-insurance premium fees upfront."

In my prior post "Reverse Mortgage Basics - A Tool to be Reconsidered" I pointed out the amount of the mortgage does not change from company to company - the amount you can get is fixed based on your age, interest rates, and the appraised value of the house.

What you can shop for is how much getting the mortgage is going to cost you.  This is where can you save huge dollars.  If you are considering a reverse mortgage, meet with brokers from at least 3 different companies.  Some of the questions to ask include "What are the fees, in detail".  For more information, AARP has a Reverse Mortgage Guide.

Thanks to Denis Ciklic at Bank of America for bringing the article to my attention.

 Image: jscreationzs / FreeDigitalPhotos.net

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I already tweeted this great post from South Carolina Nursing Home Blog,  but it has been sticking with me.  All seniors have done is work hard their whole lives, age, and not have planned to need to spend $10,000 a month on the care they need to stay alive - and for that they get institutionalized in a nursing home.  Criminals steal, maim and murder and they get 3 square and rights as inmates that are closely monitored and enforced.  Nothing is so simple just to compare the two situations on their faces, but the question "Do we treat convicts better than our elderly?" deserves consideration.

Food for thought:

Let's put the seniors in jail, and the criminals in a nursing home. This way the seniors would have access to showers, hobbies,and walks, they'd receive unlimited free prescriptions, dental and medical treatment, wheel chairs etc. and they'd receive money instead of paying it out.

They would have constant video monitoring, so they could be helped instantly, if they fell, or needed assistance.

Bedding would be washed twice a week, and all clothing would be ironed and returned to them.

A guard would check on them every 20 minutes, and bring their meals and snacks to their cell. They would have family visits in a suite built for that purpose.
They would have access to a library, weight room, spiritual counselling, pool, and education, simple clothing, shoes, slippers, P. J.'s and legal aid would be free, on request.

Private, secure rooms for all, with an exercise outdoor yard, with gardens.
Each senior could have a P. C., T. V., Radio, and daily phone calls.

There would be a board of directors, to hear complaints, and the guards would have a code of conduct, that would be strictly adhered to.

The "criminals" would get cold food, be left all alone, and unsupervised.
Lights off at 8pm, and showers once a week.

Live in a tiny room, and pay $5000.00 per month and have no hope of ever getting out. Justice for all.

 

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Are reverse mortgages great for every senior?  No.  However, they can be a very useful tool to many seniors that is often overlooked as the senior and their family have read and heard stories about bad experiences with reverse mortgages.  

A reverse mortgage itself is neither good nor bad - it is a tool that may or may not help fix a problem. In my experience "bad" reverse mortgages occurred where it was not the right solution for the problem - a reverse mortgage was "sold" to the senior instead of being presented as a solution to a problem after careful analysis.

A reverse mortgage can be a solution to a myriad of problems because it allows people over the age of 62 to tap into the equity in their homes without increasing their monthly expenses.  This equity can be used to pay for whatever you need - an addition, home health care, loan to your kids so they can buy a  house, a new house for you.

From a timing perspective, anyone who has looked at reverse mortgages in the past may want to take a second look now as the market as changed.  New players have entered the market, and have eliminated their up front fees.  Others have now done the same to stay competitive.  This means that $5000 - $12,000 of up front fees that might have existed 3 years ago have now gone to the wayside - proof that a little competition can be be good for us all. 

Derek Jensen of Jensen Law Office did a great blog post this week "Reverse Mortgage Loans" where he details the trusts and myths about reverse mortgages - it is a great read about a tool anyone concerned about the costs of living as you age should read.  In the article he includes the following:

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.

The proceeds from a reverse mortgage are tax-free and can be used for any legal purpose you wish:

daily living expenses
home repairs and improvements
medical bills and prescription drugs
pay-off of existing debts
education, travel
long-term care and/or long-term care insurance
financial and estate tax plans
gifts and trusts
to purchase life insurance
or any other needs you may have.

The amount of reverse mortgage benefit for which you may qualify, will depend on

your age at the time you apply for the loan,
the reverse mortgage program you choose,
the value of your home, current interest rates,
and for some products, where you live.

 

 

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Over the weekend the Wall Street Journal ran When Prepaid Funeral Plans Are Wealth Killers subtitled "Long Pitched to People of Lesser Means, the Controversial Deals Are Going Upmarket—and Now May Carry Bigger Risks".

Prepaid funerals at the heart are just what they say - you pay now for your funeral upon your death. Elder Law attorneys commonly advise clients who have a loved one in a nursing home and are spending down all their assets to consider purchasing a prepaid funeral.  The expense of a funeral will exist for the family whether their loved one has assets or not - such as in the case of a person who has needed spend down all their assets to qualify for Medicaid to pay for their long term care needs. The purchase of an irrevocable pre-paid funeral is a permissible spend-down before applying for Medicaid.  For many, it is a sensible choice to prepay the $10,000 a funeral averages than to pay another month privately to the nursing home - it is not as if a person who has qualified for Medicaid will have an estate with assets to pay the funeral costs.

A key point is that the payment must be made to in irrevocable funeral trust in New Jersey so that the amount of the prepaid funeral is not "countable" and thus must be liquidated and spent down before Medicaid can be qualified for.  Compare this to a "funeral insurance" life insurance policy, which is a countable asset for Medicaid purposes, and thus potentially must be liquidated and spent-down before a person qualifies for Medicaid.

The article takes issue with situations of potentially unscrupulous sales of pre-paid funerals, whether into trusts where the assets weren't there at the end, or the family didn't get the services they thought they paid for, or they ended up paying more in insurance premiums than the value of the policies.  It notes that " In November, New Jersey started requiring cemeteries to deposit all of the prepayments they receive for burial services into a trust fund for safekeeping."

Notwithstanding that a person always needs to be aware of the "small print" on any large purchase, prepaid funeral will remain in the Elder Law attorneys arsenal, and are a good solution for families who find themselves in a position of potentially having no estate to pay funeral expenses.

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The estate tax changes in 2010 are not only playing havoc with estate plans, but asset protection planning for those concerned with long term care costs as well. I came across this informative article "Which Pre-2010 Medicaid-Oriented Transfers of Homes Get a Step-up in Basis under the Modified Carryover Basis Rules?" by Massachusetts attorney Brian E. Barreira.

For deaths in 2010 there is not an automatic step up in basis (see my prior post on the impact of 2010 estate tax law changes on basis).  Instead, a decedent' estate can add $1.3 million (for a single person) or up to $4.3 million (for a married person) to the basis of inherited assets.  Brian describes the situation as follows:

Under the applicable 2010 tax law, known as the modified carryover basis rules, an estate can opt for a step-up in basis for certain assets, and to see whether these are eligible, Internal Revenue Code section 1022 applies. The most common types of transfers of the home that were made for Medicaid planning purposes in the past were (1) joint tenancy with right of survivorship, (2) a reserved power of appointment in a deed, (3) an irrevocable income-only trust, which often includes a reserved power of appointment, and (4) a reserved life estate, use-and-occupancy agreement or informal understanding. To qualify for the step-up in basis, an asset must be owned under Section 1022(d) and acquired under Section 1022(e), so each type of transfer must be analyzed.

Internal Revenue Code section 1022 (d)(1)(B)(i) allows at least a partial step-up for some joint tenancies; (d)(1)(B)(iii) denies the step-up for a reserved power of appointment, presumably only in a deed. Section 1022(e)(2)(B) allows the step-up for some irrevocable trusts, including a power to alter or terminate the trust, which would seem to include a reserved power of appointment in an irrevocable trust. "

Brian cautions however that a transfer with a reserved life estate may have a different result for deaths in 2010:

It has been questioned whether a life estate is entitled to a step-up in basis. Several blog commentators have written that a life estate is not eligible for the step-up, but many of them seem to be parroting each other and not displaying their analysis. Section 1022(e)(3) seems to include a reserved life estate but not a use-and-occupancy agreement or informal understanding. The language in (e)(3) includes “property passing from the decedent by reason of death to the extent that such property passed without consideration,” and where the property passes to the remainderpersons upon the life tenant’s death, that description could include a reserved life estate. Further, under Massachusetts law, the life tenant has exclusive possession of the entire property during the life tenant’s lifetime, and may therefore fit the ownership test in Section 1022(d). Thus, it appears to me that a Massachusetts life estate can be eligible for a step-up in basis."
 

NAELA (National Association of Elder Law Attorneys) is currently seeking guidance from the IRS that basis under Section 1022 can be allocated to property transferred as a result of a life estate.  

Image: Francesco Marino / FreeDigitalPhotos.net

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 US News and World Reports has ranked the best nursing homes in America for 2010.  Unfortunately, not an single one in the Top 12 is in New Jersey.  However, the data gathered to produce the Honor Roll of Nursing Homes is all available online for you to search rankings of all senior care facilities in your area.  There are reports on over 15,500 facilities including nursing homes, assisted living, independent living and continuing care communities.

Thank you to Elder Law Prof Blog for bringing this to my attention.

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The caregiver cares for the ill and needy, but who cares for the caregiver?  Family Fortress Estate Planning Blog has an interesting post this week about "Help For Caregivers: 10 Steps Toward Taking Care of Yourself".  A staggering statistic:

The number of people serving as caregivers has exploded in recent years, and according to PR Newswire the number of caregivers now tops 65 million people (29% of the population of the US.)  This includes people providing care for elderly adults, special needs children, young adults with disabilities, and more. 

Caregiving is exhausting - physically, financially and emotionally.  I have seen caregivers end up in the hospital, or not be able to retire because they never joined the workforce and don't qualify for social security.   All of this can be summed up as "Caregiver Burnout".  The question is how to recognize and deal with Caregiver Burnout.  The blog post provides some help sources:

 But there are ways to combat the onset of Caregiver Burnout. HelpGuide.org provides an entire section on how to recognize and prevent Caregiver Burnout, including tips for family caregivers and a list of some of the warning signs of Caregiver burnout.  And that’s not all, this article in PR Newswire offers 10 steps caregivers can take to ensure they take care of themselves financially.

 

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 A basic question in determining Medicaid eligibility is "Did you make a gift in the past 5 years?"  If the answer is "Yes" a penalty period will be assessed before a person qualified for Medicaid.

A key distinction is that a transfer for fair market value is not a gift.  If I give my son my car, that is a gift equal to the value of the car.  If I sell my car to my son for the Kelly Blue Book value, I have made a transfer of property, but I have not made a gift because I exchanged the car for cash. If I sell my car to my son for 50% of the Kelly Blue Book value, then I have done a part sale/part gift.  To the extent I got paid, it is a transfer for fair market value and does not create a penalty period.  To the extent I did not get paid, it is a gift in an amount equal to the difference in the fair market value and what I got paid.

To take advantage of the fact that a transfer for "fair market value" is not a gift, some seniors began to enter into Life Care Contracts with their children.  These contracts would be structured along the lines of "I parent give you child $150,000, and in return, you child agree to care for me for life". The theory was that the Life Care Contract was a transfer for fair market value and not a gift since the child was promising to provide services in return for the dollars.

In re E.S. v. DIVISION OF MEDICAL ASSISTANCE  AND HEALTH SERVICES, et al the Appellate Division upheld an prior Administrative Law Judge ruling that a Life Care Contract where mother made a lump sum transfer to daughter for future personal care services was a gift, and not a transfer for fair market value, and a penalty period should be assessed.

This ruling is not surprising.  Logic says that how can you be sure that the lump sum is equal to future care - what if mom dies in 3 months, or needs a nursing home in 6, or lives until 110?  A contract between two unrelated parties would not create a situation that allowed for either such a windfall (if mom dies earlier) or detriment (if mom dies later).

Note that this ruling does not address "pay as you go" personal care contracts where a child might contract with a parent to be hourly for caregiver services actually rendered.

Image: graur razvan ionut / FreeDigitalPhotos.net

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Over the weekend the Wall Street journal ran an article on elder law  planning entitled "Inoculating Estates From Health Costs". While I'm always happy to see an article about elder care planning in the news because it's such a critically important and mis-understood problem, in this article the Wall Street Journal missed the mark.

The article opens as follows:

Should you give away your nest egg to your heirs—and then stick Medicaid with your nursing-home tab when the time comes? Outrageous though it might seem, it is a perfectly legal estate-planning strategy.

 The author seems to think that this is what Medicaid asset protection planning is all about -- happily giving away millions in assets so you can "stick it" to the government should you get sick. This assumption couldn't be further from the truth.

The vast majority of clients I see who seek elder care advice from an attorney are not rich -- they typically have a modest home that they have owned for 40+ years which has appreciated in value primarily because of its location in Northern New Jersey. They may have $100,000 to $300,000 in savings - they may have less or none. They are generally living off of the fixed income of Social Security, a small pension, and income off their meager assets, in the most expensive state in the country. Real estate taxes for that modest home easily range between $6000 and $15,000 per year.  Given current interest rates, the income off of a $100,000 CD may be approximately $4000 a year (which might cover part of their real estate taxes).

The clients and audiences I speak to about elder care planning are retired -- they generally worked their whole lives for one company or a small business, and are falling further and further behind every year as promises made about pensions and healthcare are reneged upon, or the companies that they work for go out of business, while living expenses, and most dramatically health care expenses, spiral beyond their means. They typically have little or no debt, because it was always important to them to pay their bills. Many are veterans, because they cared enough to serve their country.  They're scared - scared that they might lose their house, scared that their spouse will not be able able to financially survive if they get sick, scared that their illness might bankrupt their children.

And let's talk about the author's assumptions about how "great" it is to be on Medicaid should you get sick.  In order to qualify for Medicaid, you must have less than $4000 of assets in your name. When was the last time you had less than $4000 of assets? Needing Medicaid means that you are stripped of all financial security whatsoever. Do you want to ask your kids for money whenever you need it? Well, neither do my clients.  Furthermore, under Medicaid, your choice of care is limited -- generally Medicaid only pays for care in an institutionalized setting (i.e. nursing home), and will not pay for you to be cared for in your home (even though that will cost less). So, not only have you been stripped of all your finances, but you are also stripped of the comfort and dignity of aging and dying at home. Gee, doesn't that sound like something you should "plan for"?

So why does it matter to plan to pay for long-term care for yourself? Well, nursing homes in New Jersey easily run at $10,000 after-tax dollars a month. That's four times as much as you might pay for tuition for a single year of a college education. Our seniors didn't plan for this -- heck, those of you reading this right now have not planned for this. It is mind-bogglingly expensive and could wipe you out financially.

So, should the result be to punish people for getting old and getting sick before they die?  Does a person "deserve" to be institutionalized because they didn't "strike it rich" during their working years?  Or, should our seniors be afforded the most dignity and security that they can in the face of a whole host of bad choices, each one worse than the one before it?

Sure, there are people out there who "game" the system -- but that's called fraud, and there are civil and criminal penalties to address that. The seniors that I talk to just don't want to be scared anymore -- they want to have a sense of security about their future, to know what it could cost them if they get sick, and to know how it is that they're going to pay for it. The Wall Street Journal article uses far too wide of a brush -- don't paint those seeking education to make informed decisions about a harsh reality as leeches on society.

Image: Maggie Smith / FreeDigitalPhotos.net

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The most important Elder Law decisions from around the country are summarized here.  Each case is relevant to New Jersey as elder law often involves Medicaid, which is subject to "supposedly uniform" federal regulation as jointly funded and administered by the federal and state governments. As a result, treatment of a question about Medicaid in one state may eventually become the law of the land in all states.  

Elderlawanswers.com has created this top 10 list from the popularity of the cases on its website - I have added topic heading and notes about what impact these cases might have in New Jersey.

 

1. Estate Recovery - State That Has Not Expanded Definition of Estate May Still Recover Non-Probate Asset

   A Missouri appeals court finds that the state may use an accounting statute to recover Medicaid benefits from a decedent's estate even though the only asset is a non-probate asset and Missouri has not expanded its definition of estate to include non-probate assets. In Re Estate of Jones (Mo. Ct. App., W.D., No. 69310, Jan. 13, 2009).  Note that NJ has an expanded estate recovery statute so that Medicaid can have a lien against assets passing by joint ownership or a beneficiary designation when a person dies.

2. Medicaid Annuity - Annuity Purchased to Benefit Community Spouse Is Available Resource

   A New Jersey appeals court holds that under the Deficit Reduction Act of 2005 (DRA) a state may consider the value of an annuity purchased for the sole benefit of the community spouse in determining whether the Medicaid applicant is eligible. N.M. v. Div. Medical Assistance and Health Servs. (N.J. Sup. Ct., App. Div., No. A-0828-07T1, Feb. 26, 2009). See prior posting for a full discussion of New Jersey treatment of Medicaid Annuities.

3. Promissory Note - Non-Saleable Promissory Note Is Improper Transfer

   The Ohio Court of Appeals finds that a non-saleable promissory note is a prohibited asset transfer for Medicaid eligibility purposes because the interest was deferred and it wasn't clear the note barred cancellation upon the loaner's death. Brown v. Ohio Dept. of Job & Family Servs. (Ohio Ct. App., 8th Dist., No. 92008, March 12, 2009). There is a current pending case on the question of the use of promissory notes in New Jersey.

4. Trusts as Countable Assets for Medicaid - Trust Is an Available Resource Despite Discretionary Language

   The Minnesota Court of Appeals finds that a trust's principal and income are both available resources for Medicaid purposes even though the trust's language requires only payments of income to the beneficiary and gives discretion to the trustee to distribute principal. In The Matter of the Stephanie L. Wilcox Trust (Minn. Ct. App., No. A08-1458, May 19, 2009).  The lesson here?  Trusts must clearly specify if the assets are not available to satisfy long term care needs.

5. Estate Recovery - Property Owned in Joint Tenancy Falls Under Estate Recovery Rules

   A Minnesota appeals court rules that the state may assert an estate recovery claim against property that was owned in joint tenancy at the time of a Medicaid recipient's death and that flowed into her surviving spouse's estate. In re the Estate of Grote (Minn. Ct. App., No. A08-1691, June 2, 2009).  Again, New Jersey has an expanded estate recovery statute, so Medicaid can recoup money it expended against joint assets when a person dies.

6. Trusts as Countable Assets for Medicaid - Irrevocable Trust Forbidding Distribution of Corpus Is Still Countable by Medicaid

   The Massachusetts appeals court finds that although an irrevocable, income-only trust expressly prohibits distributions of principal, other provisions in the trust could conceivably permit the trustees to invade trust assets, and thus the trust is countable for Medicaid purposes. Doherty v. Director of the Office of Medicaid (Mass. App. Ct., Essex, No. 08-P-939, June 18, 2009). Again - trusts must clearly specify if the assets are not available to satisfy long term care needs.

7. Trusts as Countable Assets for Medicaid - Property of Trust That Bars Distributions That Interfere With Medicaid Eligibility Is Available Asset

   An Illinois appeals court finds that a trust that prevented the trustee from making distributions if it would interfere with public assistance is an available asset for Medicaid eligibility purposes. Vincent v. Dept. of Human Services (Ill. Ct. App., 3rd Dist., No. 3-08-0096, June 18, 2009). Seeing a theme here? Trusts must clearly specify if the assets are not available to satisfy long term care needs.

8. Medicaid Annuity - Community Spouse's Post-DRA Annuity Purchase Is Not an Improper Transfer

   An Ohio appeals court holds that the purchase of a post-DRA annuity by a community spouse is not an improper transfer of assets. Vieth v. Ohio Dept. of Job & Family Services (Ohio Ct. App., 10th Dist., No. 08AP-635, July 30, 2009). I expanded on this case and how it might apply in New Jersey in a prior post.

9. Trusts as Countable Assets for Medicaid - 10th Circuit Reiterates: States Need Not Exempt (d)(4) Trusts From Asset Calculations

   Confirming an earlier decision, the 10th Circuit Court of Appeals rules that Congress left states free to count (d)(4)(A) and (d)(4)(C) trusts as available resources for Medicaid purposes. Hobbs v. Zenderman (10th Cir., No. 08-2099, Sept. 1, 2009). New Jersey considers so called (d)(4)(A) trust as non-countable assets so long as the State is the primary beneficiary upon death.

10. Medicaid Annuity - Annuity Purchase by Community Spouse Upheld in Federal Appeals Court Decision

    In a much-anticipated decision, the Third Circuit Court of Appeals affirms a U.S. district court ruling allowing a community spouse to purchase a DRA-compliant annuity to protect savings from the costs of her husband's nursing home care. Weatherbee v. Richman (3d Cir., No. 09-1399, Nov. 12, 2009). I blogged about this excited development in an earlier post as New Jersey is in the Third Circuit so this case applies to our clients.

      

Image: Salvatore Vuono / FreeDigitalPhotos.net

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I often have spouses or children expressing concern about a loved one driving.  This stems from a real fear that as a person gets older, suffers from dementia,  or is being treated for a medical condition, their reflexes and judgment may slow. While these conditions are difficult on their own, they can lead to tragedy if the person suffering from reduced abilities is behind the wheel of a car. They could damage property, or more importantly, injure or kill themselves or others.

What is a family to do?  In New Jersey a family member, physician, judge or police officer can request a Medical Review of the persons license and right to drive through the Medical Review Unit of the Motor Vehicle Commission (still the DMV in my mind).  

This is a serious step as it could lead to a person's loss of freedom of movement.  It cannot be done anonymously - the reported driver will be advised of who sent the letter.  However, it allows family members a means to partner with experts in determining if it is safe for a loved one to be driving.  

To request a Medical Review you must contact the Medical Review Unit in writing and provide them with the following information:

If you see these signs and want to request a medical review

• Write a letter to MVC (must come from a family member, physician, judge or police officer):
• Provide as much of the driver's information as possible: name, date of birth, address, driver license number and medical condition(s)
• Include your relationship to the driver
• Report the signs of impairment and safety concerns you have observed (see chart above)
• Anonymous reports cannot be considered. Upon request, drivers will be told who reported them
• If MVC's Medical Review Unit determines that a suspension or restriction is necessary, they will contact the driver by mail

 

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In a companion piece to "How to Talk Money with Mom and Dad" ,  in Money Magazine this month, the New York Times has an article "Taking Care of Parents Also Means Taking Care of Finances".

The article illustrates that "care" goes beyond health and safety - caregivers also have to look to where the money is coming from and how they, as caregivers, can have access to it.  I appreciate the article emphasizing caregivers to READ and UNDERSTAND their parents General Durable Power of Attorney.

As an Elder Law Attorney, I believe that a General Durable Power of Attorney is the single most important document for seniors to have and to update.  A General Durable Power of Attorney allows you to name an person to make financial decisions for you if you cannot.  

• Without any General Durable Power of Attorney should you become incapacitated, a court supervised Guardianship proceeding must take place (trust me, a circumstance to be avoided at all costs).  
• Without a complete and current General Durable Power of Attorney, a Guardianship may still be necessary because your attorney-in-fact is not clearly authorized to take some action (making gifts is a big one here in NJ).
• Without looking at State law, a General Durable Power of Attorney may be new and done, but not address all the issues of agency law in that state.  New York just substantially changed its General Durable Power of Attorney laws this month, and out of state forms (or Internet generated forms) may not be effective.

The article ends with great advice - search the National Association of Elder Law Attorneys Website for a attorney who can advise you if your General Durable Power of Attorney is working for or against you.

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Money is always a touchy subject - particularly when you are an adult child trying to see if your adult parents need help.  I was featured in an article in Money Magazine this month about this very subject: "How to Talk Money with Mom and Dad".  

The market plunge has not just effected you, but everyone around you.  For elderly parents, they likely won't make up 20% to 40% losses in their lifetimes. Their financial pie is smaller, but their potential long terms needs are only growing in cost.  Couple this with the fact that social security payments are not increasing this year, and likely not next , and mom and dad might be facing a financial bind.

One key to remember is that while your parents may be elderly, unless incompetent, they are still entitled to make their own decisions - even if that means they are making bad ones in your opinion (I suggest to adult children that  they think back to their teenage years when their parents supported their decisions - misguided or not).  Your role may be to educate your parents about risks they  may not be aware of (stairs in the house, need for a caregiver, risky investments, etc.) and suggest solutions to those risks.  To do that, you may need to educate yourself as to what are true costs of aging, and what might be hype (ie: if dad goes into a nursing home, mom will definitely lose the house).  At our office we facilitate these conversations by putting recommendations in writing to be circulated to all family members, and  having the parents and children attend at least one meeting (in person or on a conference call) to get everyone on the same page in terms of asset protection planning.

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In response to my post NJ Medicaid Key Figures - Starting July 2009 I received 2 questions if it was "better" to move to Florida for Medicaid purposes.  Not being a Florida practitioner, I cannot really compare Medicaid rules in the two states.  Note the Medicaid is federal law - so while it is implemented on a State by State level, the overarching rules are the same for everybody.  What I can do is give you the Florida Key Medicaid figures, courtesy of The Law Offices of Sean W. Scott, Esq.

 2009 Florida Medicaid Asset/Income Numbers.  

• Gross income for the applicant - Less than $2,022* per month
• Gross income for the spouse - Unlimited 

• Spousal income diversion - min. $1,750 max. $2,739
• Spousal excess shelter standard - $525 

• Assets** allowed for the applicant - $2,000
• Assets** allowed for a low income (less than $808 per mo.) $5,000
• Assets allowed for the well spouse - $109,560
• Transfer penalty divisor - 5,000

*If income is higher an income trust will be required.

**Assets must below the limit at least one day during each month the application is pending for approval.

If you need Florida specific legal counsel, search for Florida Elder Law attorneys through the Attorney Locator of the National Academy of Elder Law Attorneys.

 

 

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Did you know that as a veteran you may be eligible for additional benefits if you need a caregiver at home and you have financial need?  The Veterans Administration Aid and Attendance program provides an additional monthly benefit to Veterans and surviving spouse who need a caregiver to help them with things such as eating, bathing, dressing.  This care can take place at home or in a nursing home or assisted living facility. Per the Veteransaid.org "The A&A Pension can provide up to $1,632 per month to a veteran, $1,055 per month to a surviving spouse, or $1,949 per month to a couple."

The question of course is "How do I qualify for these benefits?".  My colleague Don Vanarelli this week posts on his blog "What Is The Resource Limit For Applicants Seeking VA Aid and Attendance Pension Benefits?"  In it, he notes that the VA Aid and Attendance Pension is a needs based benefit.  However, there is no clear formula to determine needs:

The VA considers an applicant’s income and resources (called the allowable “net worth” of the applicant), among other factors. However, there is no formula published by the VA used to determine the applicant’s allowable net worth. The factors considered in any net worth analysis include the total household assets, total household gross income, total household unreimbursed medical expenses, and the life expectancy of the applicant. Simply stated, this means that the older the applicant, the fewer total resources he or she can own.

Don points us to the The VA Claims Adjudication Manual M21-1MR for more information on evaluating net worth, with particular reference to M21-1MR, Part V, Subpart iii, chapter 1, section J.

 

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A new ruling out of New York raises questions about the efficacy of a Family Care Contract where a lump sum payment is made in return for promising a lifetime a care services.  Medicaid may find the Care Contract to really be a disguised gift and apply a penalty period.  

A Family Care Contract is an agreement whereby a parent might pay a child or other relative to provide care in lieu of hiring an outside third party to provide that same care.  While it is reasonable on its face that a daughter-in-law should be entitled to the same compensation dad would pay a caregiver (after all, you shouldn't be financially punished for being related), it is easy to see that these types of agreements could be abused. In making a Medicaid application, Medicaid will closely review these contracts to see if services were actually provided and a fair market rate was paid.  The concern is that a Family Care Contract could not be "real" and instead just a shield for gifts or transfers, which should generate a transfer penalty period.   To see what a Family Care Contract Should have, look to my prior post Caregiving Contracts Valuable Tool Between Family Members.

Some attorneys have taken the position of transferring a large sum to the caregiver child as an "advance payment" for future services.  New York in Matter of Barbato v. New York State  has recently looked at several cases where a large sum was given to a child to prepay for a lifetime of services under a Family Care Contract.  In those cases, the appeals court found that there was a transfer or gift from the parent to the child, and not a payment for services. This is a huge distinction.  A "transfer" causes a penalty period, where a person who otherwise is qualified for Medicaid cannot receive it (i.e.: in a nursing home and has no assets left).  A payment for services does not create such a penalty.

The New York court's approach is well reasoned - if the agreement does not set objective standards, it can be a windfall to the caregiver if either (1) less services needs to be provided, or (2) the person dies in a short timeframe.  And a windfall seems like a gift.  Anyone 

In the 5 Care Contracts at issue, all provided a large lump sum payment in return for a lifetime of care.  One said "15 hours a week of care" and others care "as needed".

The court found that the agreements didn't have standards to show that the "services" provided were at fair market value. Also, there was no refund provision if the person died before the dollars were reasonably spent.

For more detail, look to ElderLawAnswers.com.

 

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In an odd bit of news re elder care, a cat that offers comfort to nursing home patients in their final hours. While it is a touching story, it highlights for me how many seniors die alone, and how many have pets that are their constant companions in later life that will need continuing care and provisions when their owner passes away.

Cat plays furry grim reaper at nursing home: "PROVIDENCE, R.I. - Oscar the cat seems to have an uncanny knack for predicting when nursing home patients are going to die, by curling up next to them during their final hours." Click here for full article.

Many seniors are truly worried about what will happen to their feline and canine and other companions if they are no longer able to take care of them. A client may have adult children, grandchildren and even great-grandchildren who are settled and secure, but when they come to see me, they have stress about providing for the loved one in their life who can't provide for themselves. A couple of thoughts:

Put practicality first. Make sure people know you have a pet, and arrange for a family member or friend to agree to be responsible for "emergency care" if you fall ill. This person needs to be able to get to the pet (has keys to the house) and be aware of the pets needs.

Arrange for long term care for your pet in your Will. This can take a variety of forms, such as a direction as to who gets the pets, matched with a monetary bequest or not, or a pet trust, or making arrangements with a company that provides care for pets for the balanace of their lives when their owners have died.

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Category: Elder Law, Financial Planning

The appeal of a hybrid car is more than greater bang for your buck - it is about making an investment you feel good about. When it comes to Long Term Care insurance, the only people who seem to feel good about the investment are those who have been caregivers, and have seen the devastating costs of spending every single penny of a person's savings (or at least down to the few last pennies) and it still not being enough to cover the costs of care. However, with the US's aging population, many more families are going to find themselves in the position of caring for loved ones, and asking the question of: Where does the money come from?

Long Term Care Insurance may be a solution, but in many ways it has a bad reputation. The premiums seem very expensive, especially as the people looking at it tend to have just retired and are on a fixed income. Unscrupulous people have taken advantage of seniors with the product, tarring all long term care insurance professionals with the same suspicious brush. Another common thought is that if you never get sick, you just threw a lot of money down the drain.

A possible solution I was recently introduced to? Hybrid Long Term Care Insurance. The basic idea is that you take a lump sum of dollars and purchase Long Term Care Insurance. The dollars buy several things:

1. A total pot of greater dollars available to pay for long term care (a $100k investment might buy you $250k of long term care, depending on your age)
2. A death benefit greater then what you paid in that is "returned" to you heirs if you die and don't use the policy (A $100k investment might buy $200k in death benefity, depending on your age)
3. The ability to withdraw the lump sum you paid in at some point in the future if you need it (you get your $100k back)
4. A lump sum payment is a fixed investment - no need to pay ongoing premiums from your fixed income (you pay and "forget" it)

The cost? The loss of use of the lump sum and the growth on the lump sum unless you use the long term care benefits or the life insurance benefits.

The Street.com examined these hybrid polices in Hybrid Long-Term Care Might Be Right for You and highlighted some points to consider:

• You have significant liquid assets available. With a single premium payment ranging from $50,000 to $100,000, a hybrid policy is only for those with significant cash available that can be reallocated.
• You understand the risk to your portfolio. Once you have accepted that you may need care someday and that this care may be very expensive, the next step is to take a good look at what that will mean to your retirement portfolio.
• A stand-alone, long-term care policy is not an option. If you are not interested in paying premiums indefinitely on a policy you may never use, then the hybrid product -- with a death benefit built in -- may be an option.
• You have been planning to self-insure. If you haven't already recognized the financial risk of the cost of long-term care, you are not ready for this product.
• The ability to get something back for your premiums and retaining control of your money is important to you. You will, at minimum, get the use of your full premium either through long-term care benefits, a death benefit or by requesting a return of premium.
• Simplicity is important. While the long-term care portion of the policy contains the same framework of coverage as a stand-alone policy, there are fewer bells and whistles to add -- or to complicate the deal.

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Category: Elder Law

One of the biggest issues an Elder Law attorney faces is not how to plan for their elderly clients to reach their goals, but how to implement the plan with the dynamics of the family. Gender equalization not-withstanding, daughters (and daughters-in-law) bear most of the brunt of caregiving. Often times there are large financial differences between children, and accompanying differences in financial outlook and responsibility. And all of this occurs in the context of families - where resentments from years past have lingered or even festered.

What's an Elder Law attorney to do? Many times asset protection planning for seniors involves a transfer of assets. How can assets be transferred if children, or their spouses, do not appear trustworthy to the other siblings involved? Or, if one child feels he or she "deserves" more?

One solution that I commonly employ is for a transfer to be made to a trust, not to any one or more children outright. A group of the children, or a third party, can then act as a Trustee to safeguard the assets from waste, greed, etc. during the seniors lifetime, and then distribute them evenly at death.

Another creative solution I have been reading about is a "Sibling Contract". This came to my attention through the Louisiana Estate Planning and Elder Law Blog. In her post she cites a well done article "Caring for Pops: Put it in writing - Lawyer suggests sibling contract to avoid court case over aging parents" out of the Dallas Morning News, where Dallas lawyer Walter Hofheinz discusses how Sibling Contracts have evolved in his practice to avoid costly guardianship and probate disputes.

First came divorce agreements. Then there were prenuptial agreements. Now get ready for sibling agreements.

Dallas lawyer Walter Hofheinz knows from specializing in estate planning and probate law for 23 years that conflicts can erupt in even the most loving families when it's time to figure out how to care for an aging parent. Issues that should have been decided around the kitchen table escalate into disputes fought out in lawyers' offices and court. To manage that familial strife, Mr. Hofheinz has come up with what he calls a "memorandum of understanding" between siblings. The contract spells out each adult child's responsibilities and holds that person accountable for them.

"Ideally, an older person tells his children how he wants to be cared for, but that rarely happens," he said. Instead, the topic never gets discussed, and often something bad happens - the parent has a stroke, or his mind starts to fail. Suddenly, brothers and sisters argue over where Dad will live, how his savings will be spent and even how he will die.

"A little planning can avoid a lot of animosity and a lot of money in attorney fees on the back end," Mr. Hofheinz said.

Elder-law experts say the time is ripe for ideas like the Dallas lawyer's, because they're seeing more sibling disagreements grow into bitterly fought guardianship battles that land in probate courts and decimate families.

Read Entire Article Here

A Sibling Contract looks to be a necessary tool to get all the parties on the same page and focused on the real issue - how to best help the people who brought them into this world and raised them, instead of how to better themselves or get even for the slight that occurred 30 years ago. (guilt intended)

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A good and reasonable new law to help families of those suffering from dementia and other diseases is making its way through Trenton.

Baroni Silver Alert Legislation Approved by Committee New Jersey Senator Bill Baroni NJ District 14:

"The Senate Law and Public Safety Committee approved bill S1551/S1844, establishing a "Silver Alert System" for missing people who are believed to be suffering from dementia or other cognitive impairments."

"This emergency alert plan is based on the "Amber Alert" used by State Police to locate missing children. The alerts will include a description of the missing person and other information deemed appropriate by the State and local law enforcement agencies."

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Category: Elder Law

From Elderlawanswers.com - Put Caregiving Arrangements in Writing, Lawyers Advise. The article emphasizes some valuable points about the need for a Caregiving Contract.

"A formal caregiver contract can outline the responsibilities of a caregiver, and specify the payment he will receive for services rendered and expenses, the article states. A contract ensures that the cost of care is paid at the time it is received and is not left for family members to wrangle over as part of a later division of assets."

Importantly, in the New Jersey, without a Caregiving Contract in place, payments to the family member caregiver from the senior family member can be deemed a transfer/gift from the senior family member to the family member caregiver, and disqualify the senior family member from Medicaid.

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I can't seem to stop reading about this "bailout" or No Banker Left Behind Act. It is like watching a car wreck in slow motion - you would do something if you could, but you don't have the power to stop it.

Then, I came across the below that I think offers a better way to look at a bailout. Apparently, Sweden found itself in a strikingly similar bank credit crisis back in 1992:

The country was so far in the hole in 1992 -- after years of imprudent regulation, short-sighted economic policy and the end of its property boom -- that its banking system was, for all practical purposes, insolvent.

Sound familiar?

From the NY Times' How Sweden Solved Its Bank Crisis:

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

The article goes on to say that Sweden spent about the same percent of its GDP (4-5%) on is 1996 bailout of the banks, but took equity back so the out of pocket to the government (ie the taxpayers) was really only 2%.

I am thinking I am liking the Swedish plan much better than take all my money, do what you like, have no oversight, and no real change plan I see now - oh, and I really love that we have to do it NOW or life as we know it will end, when as we know it is already long past.

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Category: Elder Law, Tax Law and Planning

As many of us who work with seniors blogged about when the tax stimulus package came to pass , while great in theory, the need to file a tax return to get the stimulus payment had a big hole from an action plan standpoint. Many seniors don't need to file tax returns, and haven't done so in years. This small fact is easy to forget about because for working folks the tax stimulus payment came as a matter of course from filing the return.

The result? PressofAtlanticCity.com reports that: "About 156,800 New Jersey retirees and disabled veterans, including about 1,300 in Atlantic City alone, have not yet submitted paperwork to claim their stimulus payments, according to the IRS. The IRS is asking the public for help in reaching this population with information on how to file. While 74 percent of eligible members of the group have filed, a substantial minority have yet to be contacted. The IRS this week announced a new summer campaign to reach them."

So, for those who have seniors as neighbors, clients, congregation members, or otherwise, see if they got their tax stimulus payment. It is up t0 $600 for singles and $1200 for couples. For details see prior posting: Economic Stimulus Package Now Law.

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Category: Elder Law,

From NJ Biz.com, a report that the New Jersey Public Advocate has filed papers against Assisted Living Concepts Inc., operating eight assisted-living facilities in southern New Jersey, for "allegedly forcing out elderly residents once they have run out of savings and qualify for Medicaid."

In the Article Assisted-Living Co. Charged with Forcing Out Residents, Scott Goldstein reports that "The Public Advocate is investigating allegations that ALC is involuntarily discharging elderly residents, or threatening to discharge them once they have exhausted all of their own funds, or "spent down" their life savings, and therefore qualifies for Medicaid payments to cover the cost of their assisted-living apartment. "

The company under investigation "owns and operates eight assisted living facilities in New Jersey: Baker House in Vineland, Goldfinch House in Bridgeton and Maurice House in Millville, all in Cumberland County; Lindsay House in Pennsville, Salem County; Mey House in Egg Harbor Township, Atlantic County; Chapin House in Rio Grande, Cape May County; Granville House in Burlington, Burlington County; and Post House in Glassboro, Gloucester County."

Many nursing homes and assisted living facilities have a "key-money" requirement that essentially says that a person must spend $X of their own money before the facility will accept Medicaid for the costs of their care. So if a facility has a 12 month "key-money" requirement, and costs $5000 a month, then they will only accept a person who has at least $60,000 to pay for their care. After it is spent, if the person then qualifies for Medicaid, New Jersey will pay the cost of care, usually at a rate below the private pay rate. Here, the New Jersey Public Advocate appears to be alleging that ALC took the "key-money" and then maneuvered to have residents discharged when Medicaid took over payments.

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Category:Estate Planning

Joshua C. Tate, Esq., a professor at Southern Methodist University - Dedman School of Law; University of Pennsylvania Law School, writes a compelling new article about the need for revised thinking is testamentary planning to incorporate unequal distributions to reflect the contributions of a caregiver child.

Abstract: Almost all U.S. states allow individuals to disinherit their descendants for any reason or no reason, but most of the world's legal systems currently do not. This Article contends that broad freedom of testation is defensible because it allows elderly people to reward family members who are caregivers. The Article explores the common-law origins of freedom of testation, which developed in the shadow of the medieval rule of primogeniture, a doctrine of no contemporary relevance. The growing problem of eldercare, however, offers a justification for the twenty-first century. Increases in life expectancy have led to a sharp rise in the number of older individuals who require long-term care, and some children and grandchildren are bearing more of the caregiving burden than others. Recent econometric studies, not yet taken into account in legal scholarship, suggest a tendency among the American elderly to bequeath more property to caregiving children. A competent testator, rather than a court or legislature, is in the best position to decide how much care each person has provided and to reward caregivers accordingly. Law reform, therefore, should focus on strengthening testamentary freedom while ensuring that caregivers are adequately compensated in cases of intestacy.

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Category: Elder Law

A recent New York Times article "For the Elderly, Being Heard About Life's End" describes the benefits of of ""slow medicine," an approach that encourages less aggressive -- and less costly -- care at the end of life."

There is an institutionalized bias to give any and all medical care. However, when a person is in their late 80's or 90's this aggressive care may hinder their quality of life and control over the quality of that life.

Aggressive medical care is sometime an exercise is substituted decision making - I can, so therefore I will. What "slow medicine" seems to promote is the question of - you can, but should you?

The article advised that "slow medicine" is "Grounded in research at the Dartmouth Medical School, slow medicine encourages physicians to put on the brakes when considering care that may have high risks and limited rewards for the elderly, and it educates patients and families how to push back against emergency room trips and hospitalizations designed for those with treatable illnesses, not the inevitable erosion of advanced age."

And the irony to this. As a class of population, the treatments are the most expensive, although the results may be limited. "The costliest patients -- the elderly with chronic illnesses -- are the only group with universal health coverage under Medicare, leading to huge federal expenditures that experts agree are unsustainable as boomers age. "

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Category: Elder Law

Elder law is pressing for seniors and their families. The biggest barrier to planning is lack of information. I was happy to do my part this past Sunday in the Daily Record article "Parsippany lawyer's practice a senior matter".


Parsippany lawyer's practice a senior matter
She's one of 39 N.J. attorneys who specializes in elder law
By MARK KITCHIN • Daily Record • April 27, 2008

Deirdre Wheatley-Liss gets the same type of phone call several times a week. It's usually from a man, often a war veteran in his 60s. The house he bought 40 years ago for $4,000 is worth $400,000 now. He and his wife have spent their life raising their children and putting a little bit of money away for their retirement.

Now, one of them is sick and perhaps in need of long-term care and they are wondering, because of the skyrocketing costs of health care, if they will be able to keep their house.
"People call up thinking that their problems are so much different than everybody else," Wheatley-Liss said. "In reality, a lot of them are looking at the same problems."
And those problems are getting larger and more numerous.

Click here for the entire article.

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Category: Elder Law,

As I have blogged before in Nursing Home Admission Contracts, Be Aware, Be Very Aware, a careful review of these contracts is a must. A growing concern is that they are drafted to take advantage of a family in the direst of circumstances by using the terms of the the contract to limit their own liability. This can leave a family with no contractual recourse when their loved one does not receive the care they deserve. One example of this is a damages limitation clause to $10,000 - this is obviously inadequate to address damages from a sub-standard level of care. Another favorite is the mandatory arbitration provisions - which eliminates the family's right to go to court. Instead, any disputes are decided by a panel of industry experts. As J. Michael Young, Esq. points out in his posting Mandatory Arbitration, in his new blog Texas Probate Litigation not only can arbitration be much more expensive than litigation (you are paying the arbitrators as well as your attorney):

Apart from the cost issue, Defendants often prefer mandatory arbitration because the arbitrators are drawn from the industry and perceived to be more conservative than a jury in awarding damages. For that reason, mandatory arbitration clauses are often attacked as unfair, particularly when the parties are in positions of unequal bargaining.

These clauses are becoming increasingly favored by nursing homes trying to limit liability for substandard care. However,nothing would seem more unequal than an elderly patient "negotiating" with the management of a nursing home. The reason people are admitted to nursing homes is because of failing physical and/or mental
health. Not an ideal circumstance for well informed, arms-length negotiating.

As this article details, Congress has become concerned and a bipartisan bill in the US Senate would curtail the use of such clauses, particularly as a pre-requisite for care.
I imagine this bill has a decent chance of passage, but would likely face a veto from President Bush.

A senisble bill coming out of Congress - who would have thunk it? But note the veto forecast.

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Category: Elder Law, Miscellaneous Musings

We all complain about other drivers, particularly here in New Jersey where we probably have the most awful traffic, road conditions and convoluted traffic patterns (we can't just turn left - we have a lovely invention called jug-handles instead) in the country.

Elderly drivers tend to get much of the ire - for right or for wrong. In Japan, they are trying to entice "elderly" drivers to turn in their licences ("elderly" is in quotes as they define it as 65 - odd for the country with the one of the longest life expectancies). Yahoo News reports:

Tokyo businesses are to start offering benefits to elderly people who give up their drivers' licences, backing a police effort to cut back on the ballooning number of traffic accidents caused by drivers over 65.

Among more than 30 special offers, one small bank will give higher interest rates, while Mitsukoshi department store chain plans to provide free delivery from its Tokyo stores and a hotel will offer a 10 percent discount on meals in a program starting next month, Tokyo police said on their Web site.

"Have the courage to give up your licence," the police say on the site. "If you have lost confidence in your driving ... if your family says they are worried about you driving ... please think about handing in your licence."

What about some sort of accelerated re-licensing system instead after a certain age? And where does 65 come from (John McCain is 72 after all, and he claims to be spry enough).

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Category: Elder Law



In starting 2008, some key Medicaid figures for New Jersey:




Minimum Community Spouse Resource Allowance - $20,880.00

Maximum Community Spouse Resource Allowance - $104,400.00

Resource Allowance for an Individual - $2,000.00

Resource Allowance for a Couple (both husband and wife in a nursing home) - $3,000.00

Minimum Monthly Maintenance Needs Allowance - $1,711.25

Maximum Monthly Maintenance Needs Allowance - $$2,610.00

Monthly Personal Needs Allowance - $35.00

Shelter Standard - $514.00

Standard Utility Allowance -

$344.00 - heating
$210.00 - non-heating
$29.00 - telephone

Divestment Penalty Divisor - $6,655.00

Income Cap Amount - $1,869.00

Home Equity Limit - $750,000.00

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Category: Elder Law, Financial Planning

Just like in the mortgage market where making mortgages too cheap in years past is making them more expensive today, the Long Term Care insurance market is in the midst of an upward adjustment. While many people may think that Long Term Care insurance is expensive, having to pay out of pocket for long term care is much more so ($100k - $120k a year is not unusual in northern NJ). When insurance companies began underwriting Long Term Care Insurance policies 10-15 years ago, they didn't have a great pool of actuarial data to set the premiums. And unlike life insurance, where there is a fixed cost to the insurance company (the set death benefit), there is no known fixed cost to Long Term Care. Add to that the fact that insurance companies are in business to make money for their shareholders, it should come as no surprise that Long Term Care insurance premiums are on the rise.

What has come as a surprise to some people, however, is that even "guaranteed fixed premiums" are subject to change if the insurance company goes back to the banking and insurance commission of the state to show that all their underwriting assumptions were wrong. This can lead to either an unanticipated increase in premiums (hard to swallow on a fixed income), or a reduction in scheduled benefits.

What should you do? If you have Long Term Care insurance, call your insurance company and ask for a current benefits statement. Check that against your original policy so you can speak to the issuing agent about any discrepancies. If you don't yet have Long Term Care insurance, the price is only going to go up as you get older and the insurance companies readjust their prices.

For more, see Long-Term Care Insurance Giant Raises Premiums on Existing Customers for First Time at elderlawanswers.com.

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Category: Elder Law

Aging in place. It is no secret that most seniors want to stay in their homes. It is also no secret that long term care today has a bias towards institutional care, and not towards allowing a person the resources need to stay at home. From the New York Times is an uplifting report about communities of seniors banding together to buck the system and enjoy their golden years at home.

A Grass-Roots Effort to Grow Old at Home

On a bluff overlooking the Potomac River, George and Anne Allen, both 82, struggle to remain in their beloved three-story house and neighborhood, despite the frailty, danger and isolation of old age.

George and Anne Allen hope to continue living at their Washington home with help from a community group under development. Mr. Allen has been hobbled since he fractured his spine in a fall down the stairs, and he expects to lose his driver's license when it comes up for renewal. Mrs. Allen recently broke four ribs getting out of bed. Neither can climb a ladder to change a light bulb or crouch under the kitchen sink to fix a leak. Stores and public transportation are an uncomfortable hike.

So the Allens have banded together with their neighbors, who are equally determined to avoid being forced from their homes by dependence. Along with more than 100 communities nationwide -- a dozen of them planned here in Washington and its suburbs -- their group is part of a movement to make neighborhoods comfortable places to grow old, both for elderly men and women in need of help and for baby boomers anticipating the future.

click here for full story

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Category: Elder Law,

Admitting a loved one to a nursing home can be very stressful. In addition to dealing with a sick family member and managing all the details involved with the move, you must decide whether to sign all the papers the nursing home is giving you. Nursing home admission agreements can be complicated and confusing, so what do you do?

It is important not to rush, but rather to read. Read the agreement carefully because it could contain illegal or misleading provisions. If possible, try not to sign the agreement until after the resident has moved into the facility. Once a resident has moved in, you will have much more leverage. But even if you have to sign the agreement before the resident moves in, you should still request that the nursing home delete any illegal or unfair terms.

Two items commonly found in these agreements that you need to pay close attention to are a requirement that you be liable for the resident's expenses and a binding arbitration agreement.

Responsible party
A nursing home may try to get you to sign the agreement as the "responsible party." It is very important that you do not agree to this. Nursing homes are prohibited from requiring third parties to guarantee payment of nursing home bills, but many try to get family members to voluntarily agree to pay the bills.

If possible, the resident should sign the agreement him- or herself. If the resident is incapacitated, you may sign the agreement, but be clear you are signing as the resident's agent. Signing the agreement as a responsible party may obligate you to pay the nursing home if the nursing resident is unable to. Look over the agreement for the term "responsible party," "guarantor," "financial agent," or anything similar. Before signing, cross out any terms that indicate you will be responsible for payment and clearly indicate that you are only agreeing to use the resident's income and resources to pay.

Arbitration provision
Many nursing home admission agreements contain a provision stating that all disputes regarding the resident's care will be decided through arbitration. An arbitration provision is not illegal, but by signing it, you are giving up your right to go to court to resolve a dispute with the facility. The nursing home cannot require you to sign an arbitration provision, and you should cross out the arbitration language before signing.

Other provisions
The following are some other provisions to look out for in a nursing home admission agreement.
* Private pay requirement. It is illegal for the nursing home to require a Medicare or Medicaid recipient to pay the private rate for a period of time. The nursing home also cannot require a resident to affirm that he or she is not eligible for Medicare or Medicaid.
* Eviction procedures. It is illegal for the nursing home to authorize eviction for any reason other than the following: the nursing home cannot meet the resident's needs, the resident's heath has improved, the resident's presence is endangering other residents, the resident has not paid, or the nursing home is ceasing operations.
* Waiver of rights. Any provision that waives the nursing home's liability for lost or stolen personal items is illegal. It is also illegal for the nursing home to waive liability for the resident's health.

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Category: Elder Law, Estate Planning, Estate and Inheritance Tax, Business Law and Planning, Tax Law and Planning, Probate and Estate Administration, Financial Planning, Miscellaneous Musings

I am excited to be speaking at the Garden State Women Magazine 6th Annual Financial Conference & Networking Event on May 12 at the Park Avenue Club in Florham Park. This is an exciting day where New Jersey's top insurance, real estate, legal and financial professionals will provide women with the information and guidance needed to take charge of their financial future. Click here for more details.

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Category: Elder Law

NBC Nightly News has an ongoing series about caring for your parents. In the series, they focus on how some well known NBC personalties are taking on this responsibiliy. Links to informative clips are below:

• Click to share your stories
• Video: Dealing with dementia
• Video: Practical advice to care for parents
• Video: Vermont funds home nursing care
• A generation caught between two others
• Tom Brokaw: Having is easier than not
• Ann Curry: At 77, Dad embraces life
• Dr. Nancy Snyderman: A new chapter
• Tim Russert: It takes a team
• Brian Williams: A little help from angels

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Category: Elder Law

This article In Elder Care, Signing on Becomes a Way to Drop By from the New York Times describes a technology based alternative to home health care, assisted living, or nursing home care for seniors - instead of moving a senior to a safer location, why not make their home safer for them to live in alone?

CONNIE ARAPS, 57, of Delray Beach, Fla., thought that her father, Tom Araps, 87, was managing just fine on his own. But when he came to stay with her for a few months in 2005, she found that he was skipping meals, sleeping all morning and not taking daily walks.

To satisfy her father's desire to live alone, but to ease her mind about his safety, Ms. Araps found an apartment for him less than a mile from her home and had it equipped with QuietCare, a home health alarm system provided by ADT Security Services.

She drops by his apartment often, and logs into a Web site several times a day to check on him. Motion sensors track how often Mr. Araps opens the refrigerator, when he gets out of bed and how long he stays in the bathroom. If his normal patterns vary, the alarm company alerts her. One day, the company called her to say that no one had entered or left the apartment all day. It turned out that a home health aide had failed to show up, and her father had not received his diabetes medication. Ms. Araps rushed over and made sure that her father took his pills.

The article does recognize that this technology is no a cure-all - who will monitor it? can they respond effectively if a change is shown? what about privacy concerns? But for some families, this can be an effective and economical solution to satisfy both the parents and the children's concerns.

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