Marriage is supposed to be “until death do us part,” but after one spouse dies, is it possible for a court to declare a marriage invalid (annulled)? It can be happen, as a Nebraska widower recently learned, but only in certain circumstances.

Marriage provides benefits to a surviving spouse. When one spouse dies, the surviving spouse is entitled to receive an elective share of the deceased spouse’s estate. The amount of the share depends on state law, but it is usually around 30 percent. A spouse can claim an elective share even if there is a will that leaves the spouse fewer assets. This can lead to conflict between surviving spouses and other heirs.

If a spouse gets married shortly before he or she dies, questions can arise as to the legitimacy of the marriage. Heirs may attempt to invalidate the marriage to prevent the surviving spouse from recovering from the estate. The heirs can challenge a marriage after one spouse has died only if the marriage is considered “void.” A marriage is void if it wasn’t legally entered into in the first place. Examples of void marriages include cases in which:

• One or both spouses were legally married to someone else at the time of the marriage
• The spouses are too closely related to each other
• One or both of the spouses were under the legal age for marriage
• One or both spouses were mentally incompetent at the time of the marriage

A recent Nebraska case provides an instance of a marriage that was considered void due to incompetence (Malousek v. Meyer, Neb., No. S-20-470, July 30, 2021). Molly Stacey and Steven Greg Meyer began living together in 2009. In 2015, Ms. Stacey was diagnosed with cancer, which eventually spread and her condition deteriorated. Even though she had declared she never planned to marry Mr. Meyer, a few weeks before she died, they were wed. She also named him a joint owner on two bank accounts, changed the beneficiary designations on her other accounts to name Mr. Meyer and his son, and executed quitclaim deeds on her houses to leave them to Mr. Meyer on her death. At the time she was isolated from her children and incoherent.

After Ms. Stacey died without a will, her children went to court, seeking to have the marriage annulled and the property transactions declared void. The children argued that Mr. Meyer unduly influenced Ms. Stacey and that she lacked the mental capacity to make the transactions due to her illness. The Nebraska Supreme Court ruled that the marriage was void because Ms. Stacey was not mentally competent to enter into it. The court set aside the marriage and the financial transactions.

While void marriages can be set aside after one spouse dies, “voidable” marriages cannot. A voidable marriage is a marriage that can be annulled by one party if both spouses are still alive. Courts will generally not cancel these types of marriages after one spouse dies. Examples of voidable marriages, include cases in which:

• One or both spouses were under mental duress
• One spouse misrepresented him or herself
• One spouse was forced into the marriage
• The spouses were intoxicated at the time
• One spouse lied about his or her circumstances

To learn more, reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

No one wants to see a loved one become unable to make decisions for him or herself. If this happens, however, the court may appoint a substitute decision maker, often called a “guardian,” but in some states called a “conservator” or other term. A guardian is only appointed as a last resort if other, less restrictive, alternatives, such as a power of attorney, are not in place or are not working.

In most states, anyone interested in the well-being of an individual who may be incapacitated – called the “proposed ward” — can request a guardianship for that person (also called a “conservatorship” in some states). An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward’s county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward’s presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.

At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.

A guardian can be any competent adult — the ward’s spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). An individual may nominate in advance the person they would like to serve as their guardian by executing a durable power of attorney while they are still competent to do so.

The guardian need not be a person at all — it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be identified, courts in many states can appoint a public guardian, which is a publicly financed agency that serves this purpose.

In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward’s life — people who are both aware of and sensitive to the ward’s needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

Medicaid long-term care benefits traditionally pay mainly for nursing home care, but the federal government can grant “waivers” to states allowing them to expand Medicaid to include home and community-based services. The downside is that receiving care in a nursing home is an entitlement, while getting care at home is not.

Medicaid is a joint federal-state program that provides health insurance coverage to low-income children, seniors, and people with disabilities. In addition, it covers care in a nursing home for those who qualify. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. (The state picks up the rest of the tab.) A Medicaid waiver allows states to waive some of the federal rules with the intention of providing services to individuals who wouldn’t normally be covered by Medicaid. The waiver must be approved by the federal government.

The most common type of Medicaid waiver expands Medicaid to cover home care to individuals who need a high level of care, but who would like to remain at home rather than enter a nursing home. Care that may be provided by a waiver includes personal attendants, home health aides, medical supplies and equipment, respite care, counseling services, transportation, homemaking services, hot meal delivery, and more.

Each state sets up its own waiver program, so the rules and requirements vary widely. Usually, to qualify an applicant must need a level of care similar to what is needed to qualify for Medicaid coverage in a nursing home. The point of the waiver is to allow an individual who would normally need nursing home care to remain at home, which is typically a far less costly form of care. States may also target different health conditions, such as HIV, Alzheimer’s disease, diabetes, cystic fibrosis, among others. Each state also sets its own income and asset levels for its waiver programs, which may vary from state to state, and may be different from the income and asset levels used for Medicaid coverage of nursing home care.

The downside of state waiver programs is that waivers are not an entitlement, meaning that states are allowed to limit the number of people who qualify for services under a waiver. Just because an applicant meets the criteria for eligibility does not mean the applicant will be approved for the services. As a result, waitlists for filled programs can run for months or years.

To find out your Medicaid home care options, reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

To find and apply for a waiver program in your state, contact your state Medicaid office.

When you need someone else to care for money or property on your behalf, that person (or organization) is called a fiduciary.  A fiduciary is a person or entity entrusted with the power to act for someone else, and this power comes with the legal obligation to act for the benefit of that other person.

Many types of positions involve being a fiduciary, including that of broker, trustee, agent under a power of attorney, guardian, executor and representative payee. An individual becomes a fiduciary by entering into an agreement to do so or by being appointed by a court or by a legal document.

Being a fiduciary calls for the highest standard of care under the law. For example, a trustee must pay even more attention to the trust investments and disbursements than for his or her own accounts. No matter what their role is or how they are appointed, all fiduciaries owe four special duties to the people for whom they are managing money or resources. A fiduciary’s duties are:

• to act only in the interest of the person they are helping;
• to manage that person’s money or property carefully;
• to keep that person’s money and property separate from their own; and
• to keep good records and report them as required. Any agent appointed by a court or government agency, for example, must report regularly to that court or agency.

Remember, your fiduciary exists to protect you and your interests. If your fiduciary fails to perform any of those four duties or generally mismanages your money or affairs, you can take legal action. The fiduciary will probably be required to compensate you for any loss you suffered because of their mismanagement.

To learn more, reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

Most people want to pass their assets to their children or grandchildren, but naming a minor as a beneficiary can have unintended consequences. It is important to make a plan that doesn’t involve leaving assets directly to a minor.

There are two main problems with naming a minor as the beneficiary of your estate plan, life insurance policy, or retirement account. The first is that a large sum of money cannot be left directly to a minor. Instead, a court will likely have to appoint a conservator to hold and manage the money. The court proceedings will cost your estate, and the conservator may not be someone you want to oversee your children’s money. Depending on the state, the conservator may have to file annual accountings with the court, generating more costs and fees.

The other problem with naming a minor as a beneficiary is that the minor will be entitled to the funds from the conservator when he or she reaches age 18 or 21, depending on state law. There are no limitations on what the money can be used for, so while you may have wanted the money to go toward college or a down payment on a house, the child may have other ideas.

The way to get around these problems is to create a trust and name the minor as beneficiary of the trust. A trust ensures that the funds are protected by the trustee until a time when it makes sense to distribute them. Trusts are also flexible in terms of how they are drafted. The trust can state any number of specifics on who receives property and when, including allowing you to distribute the funds at a specific age or based on a specific event, such as graduating from college. You can also spread out distributions over time to children and grandchildren.

If you do create a trust, remember to name the trust as beneficiary of any life insurance or retirement plans. If you forget to take that step, the money will be distributed directly to the minor, negating the work of creating the trust.

To start planning now,  reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

Being asked to serve as the trustee of the trust of a family member is a great honor. It means that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands.  But being a trustee is also a great responsibility. You need to go into it with your eyes wide open. Here are six questions to ask before saying “yes”:

1. May I read the trust? The trust document is your instruction manual. It tells you what you should do with the funds or other property you will be entrusted to manage. Make sure you read it and understand it. Ask the drafting attorney any questions you may have.
2. What are the goals of the grantor (the person creating the trust)? Unfortunately, most trusts say little or nothing about their purpose. They give the trustee considerable discretion about how to spend trust funds with little or no guidance. Often the trusts say that the trustee may distribute principal for the benefit of the surviving spouse or children for their “health, education, maintenance, and support.” Is this a limitation, meaning you can’t pay for a yacht (despite arguments from the son that he needs it for his mental health)? Or is it a mandate that you pay to support the surviving spouse even if he could work and it means depleting the funds before they pass to the next generation? How are you to balance the needs of current and future beneficiaries? It is important that you ask the grantor while you can. It may even be useful if the trust’s creator can put his or her intentions in writing in the form of a letter or memorandum addressed to you.
3. How much help will I receive? As trustee, will you be on your own or working with a co-trustee? If working with one or more co-trustees, how will you divvy up the duties? If the co-trustee is a professional or an institution, such as a bank or trust company, will it take charge of investments, accounting and tax issues, and simply consult with you on questions about distributions? If you do not have a professional co-trustee, can you hire attorneys, accountants and investment advisors as needed to make sure you operate the trust properly?
4. How long will my responsibilities last? Are you being asked to take this duty on until the youngest minor child reaches age 25, in other words for a clearly limited amount of time, or for an indefinite period that could last the rest of your life? In either case, under what terms can you resign? Do you name your successor or does someone else?
5. What is my liability? Generally, trustees are relieved of liability in the trust document unless they are grossly negligent or intentionally violate their responsibilities. In addition, professional trustees are generally held to a higher standard than family members or friends. What this means is that you won’t be held liable if for instance you get professional help with the trust investments and the investments happen to drop in value. However, if you use your neighbor who is a financial planner as your adviser without checking to see if he has run afoul of the applicable licensing agencies, and he pockets the trust funds, you may be held liable. A well-respected Massachusetts attorney who served as trustee on many trusts used a friend as an investment adviser who put the trust funds in risky investments just before the 2008-2009 stock market crash. The attorney was held personally liable and suspended from the practice of law. So, be careful and read what the trust says in terms of relieving you of personal liability.
6. Will I be compensated? Often family members and friends serve as trustees without compensation. However, if the duties are especially demanding, it is not inappropriate for trustees to be paid something. The question then is how much. Professionals generally charge an annual fee of 1 percent of assets in the trust. So, the annual fee for a trust holding $1 million would be $10,000. Often, professionals charge a higher percentage of smaller trusts and a lower percentage of larger trusts. If you are doing all of the work for a trust, including investments, distributions and accounting, it would not be inappropriate to charge a similar fee. However, if you are paying others to perform these functions or are acting as co-trustee with a professional trustee, charging this much may be seen as inappropriate. A typical fee in such a case is a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). In any case, it’s important for you to read what the trust says about trustee compensation and discuss the issue with the grantor.

If after getting answers to all these questions you feel comfortable serving as trustee, then by all means accept the role. It is an honor to be asked and you will provide a great service to the grantor and beneficiaries.

Reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

 

The Senate Democrats’ proposal for a $3.5 trillion spending plan includes expanding Medicare to provide dental, vision, and hearing benefits. The proposal is now being negotiated in Congress.

Currently Medicare does not offer much in the way of dental, vision, and hearing benefits. Medicare Part A will cover certain emergency or necessary procedures that are received in the hospital. For example, if you are hospitalized after an accident and require jaw reconstruction, Medicare Part A will pay for the dental work required as part of that procedure.

Medicare Part B offers very limited coverage of some vision and hearing services. For example, while Medicare Part B won’t cover routine eye exams, it does cover yearly glaucoma screenings for people at high risk and cataract surgery, among a few other limited exceptions. Part B will also cover some diagnostic hearing and balance exams if they are ordered by a doctor, but it will not cover routine hearing exams or hearing aids. There is no coverage at all for routine dental work.

Many people choose Medicare Advantage plans, which are run by private insurers, instead of traditional Medicare because it is possible to get some dental, vision, and hearing benefits in most plans. According to the Kaiser Family Foundation, 79 percent of people in Medicare Advantage plans have vision coverage, 74 percent have dental coverage, and 72 percent have hearing aid coverage.

Under the Democrats’ proposal, Medicare beneficiaries would be able to receive dental, vision, and health benefits through traditional Medicare, making it more competitive with Medicare Advantage. The exact details of the proposal are unknown, but in a 2019 bill that passed the House, Medicare beneficiaries would have paid 20 percent of the cost for basic dental coverage and routine eye and hearing exams. Democrats want to pass the spending bill through the reconciliation process, which requires all 50 Democrats to agree to the plan. Negotiations are currently underway to craft a bill that has the support of all the Democratic senators.

For more information about the Democrats’ proposal, click here and here.

Or reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

Britney Spears’s legal fight to wrest back control over her personal and financial affairs has flooded the issue of guardianship in Klieg lights. While a full guardianship may be necessary for many individuals who are incapable of managing their own affairs due to dementia or intellectual, developmental or mental health disabilities, the Spears case underlines the option of more limited alternatives.

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions, the court will appoint a substitute decision maker, usually called a “guardian” or a “conservator,” depending on the state.

Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”). The guardian can be authorized to make legal, financial, and health care decisions for the ward. The National Center for State Courts says that about 1.3 million adults are living under guardianships or conservatorships with some $50 billion in assets.

The standard under which a person is deemed to require a guardian differs from state to state, and because guardianships are subject to state law, data on them is hard to collect and protections against abuse vary widely.  Netflix’s popular movie, I Care a Lot, spotlighted some weaknesses in the guardianship system that make it possible for an unscrupulous guardian to take control of an elderly person’s life and bleed their resources dry.

The Spears Case: An Unusual Situation

Britney Spears has been under a court-ordered conservatorship that has controlled her career and finances since 2008. Her father, Jamie Spears, was appointed her temporary conservator when the pop singer was allegedly struggling with mental health issues and had been hospitalized, and a Los Angeles court later made the conservatorship permanent.

On July 14, a Los Angeles judge approved the resignation of Spears’s court-appointed lawyer and granted her request to hire her own lawyer. The 39-year-old singer told the judge that she wants to end the long-running conservatorship that put her father in charge of her estimated $60 million fortune and business affairs, and others in control of such personal decisions as whether she can marry and have a baby. “I’m here to get rid of my dad and charge him with conservatorship abuse,” she said.

Whatever the merits of this controversial case, what makes Spears’s situation so unusual is the fact that she does not appear to be incompetent, at least when it comes to her professional accomplishments. In the 13 years since the conservatorship was put in place, she has continued her career as a pop star, earning millions from a four-year concert residency act in Las Vegas and serving as a judge on the television reality show “The X Factor.”

Another anomaly is the fact that until now Spears was represented by a court-appointed attorney who, she argued, did not represent her wishes or interests. However, while the media has given wide coverage to Spears’s side of the dispute, we have heard almost nothing from the professionals handling her affairs, who are constrained from publicly disclosing confidential information.

It’s easy to see why conservatorship, which takes away a person’s right to make decisions about significant aspects of his own life, is considered among the most restrictive legal remedies in the American judicial system. For this reason, courts are legally required to seek alternatives that will safeguard the ward’s finances and wellbeing but with the fewest restrictions, in an effort to protect that person’s rights.

Protections Without Total Loss of Control

In the case of an elderly person who may no longer be able to handle some or all of her own affairs, there are various approaches that provide protection without stripping that person of control over all decisions, as in Spears’s case.

Many people in need of help can make responsible decisions in some areas of their lives but not others (such as making major financial decisions). Families might consider setting up what’s called a “limited guardianship.” Most states allow judges to appoint guardians with limited powers that are specifically tailored to the alleged incapacitated person’s needs. For example, a court can appoint a guardian to oversee a person’s housing and health care, but not to manage the person’s bathing, eating, and socialization. Conservators can be appointed to handle the financial affairs of someone who is not good with money, without having any power to manage health care decision making—the options are almost infinite.

Alternatives to Guardianship

Sometimes, guardianship isn’t the answer at all. If a person can execute estate planning documents, she can also sign a durable power of attorney and a health care proxy, which allows someone to assist her with decisions without court involvement. “Supported decision making” is a growing alternative to guardianship in which trusted advisors like family, friends or professionals assist in making decisions, although the individual retains the ultimate right to make their own decisions.

Trying an alternative to guardianship can be important for several reasons. First, it prevents a court from ruling that someone is “incapacitated,” which carries with it a stigma and can be hard to undo, as Britney Spears is finding. Second, it puts the person in the driver’s seat. Third, it is much less expensive and time-consuming.

Another option is a revocable or “living” trust that can be set up to hold an older person’s assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.

Experts say that Britney Spears faces a long, difficult path if she seeks to terminate her conservatorship. She would need to file a formal petition, which would require presenting evidence in hearings and depositions. She could face objections at every stage from attorneys representing her father and others involved in her care. (Spears has indicated her unwillingness to submit to a mental evaluation or test in her effort to end the conservatorship.)

If you have questions about what type of guardianship may be right for your family member, or if you are currently under guardianship and are looking to gain control of your affairs, talk to your elder law attorney today.

For an article on what may lie ahead in the Britney Spears case, click here.

For an article by University of Virginia Family Law Professor Naomi Cahn on how guardianships can lead to abuse, click here.

Reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.

Medicare prescription drug (Part D) plans can have a coverage gap—called the “donut hole”–which limits how much Medicare will pay for your drugs until you pay a certain amount out of pocket. Although the gap has gotten much smaller since Medicare Part D was introduced in 2006, there still may be a difference in what you pay during your initial coverage compared to what you might pay while caught in the coverage gap.

When you first sign up for a Medicare prescription drug plan, you will have to pay a deductible, which can’t be more than $445 (in 2021). Once you’ve paid the deductible, you still need to cover your co-insurance (also called co-payment) amount (depending on your drug plan), but Medicare will pay the rest. Co-insurance is usually a percentage (for example, 20 percent) of the cost of the drug. If you pay co-insurance, these amounts may vary throughout the year due to changes in the drug’s total cost.

Once you and your plan pay a total of $4,130 (in 2021) in a year, you enter the coverage gap, aka the notorious donut hole. Previously coverage stopped completely at this point until total out-of-pocket spending reached a certain amount. However, the Affordable Care Act has mostly eliminated the donut hole. In 2021, until your total out-of-pocket spending reaches $6,550, you’ll pay 25 percent for brand-name and generic drugs. Once total spending for your covered drugs exceeds $6,550 (the “catastrophic coverage” threshold for 2021), you are out of the coverage gap and you will pay only a small co-insurance amount.

Once you are in the coverage gap, your yearly deductible and co-insurance payments count toward the amount you need to pay to reach catastrophic coverage. The amount of out-of-pocket costs that you have to pay to reach catastrophic coverage will vary, depending on the type of drugs you take. In the case of brand name drugs, you will pay only a certain percentage of the price, but the entire price will count toward the amount you need to qualify for catastrophic coverage. With generic drugs, only the amount you pay will count toward getting you out of the donut hole.

Bear in mind that only payments for drugs that are covered by your plan count towards the out-of-pocket threshold. Your premium and the portion of the drug cost that Medicare pays do not count toward reaching catastrophic coverage, either. Also, any help with paying for Medicare Part D costs that you receive from an employer health plan or other insurance does not count toward this limit.

Reach out to the MSW team: contact Amy Stratton or Kristen Prull Moonan.