Tailoring a Will and Power of Attorney for Multiple States

If you own property — whether houses, bank accounts, or vehicles — in more than one state, do you need estate planning documents for each state? The answer is probably no, but you need to do some planning if you want to avoid going through probate in each of the states.

A lawyer can generally draft a will that is generic enough to be probated in any state except Louisiana, which has very specific rules. However, real property in another state is subject to probate in that state even if you don’t live there. If you aren’t careful, your estate may have to go through probate in every state you have property in.

To avoid multiple probate actions, you may want to use probate avoidance techniques for the property that is out of state. If your estate is under the estate tax limit and you don’t have family complications, you may hold your property jointly with your spouse. Joint property will pass to your spouse without going through probate. If holding property jointly won’t work, you can put your property into a revocable trust. Property in a revocable trust will pass to whoever is named in the trust. It does not come under the jurisdiction of the probate court and its distribution won’t be held up by the probate process.

A power of attorney — which allows a person you appoint to act in your place for financial purposes if you ever become incapacitated — is an important estate planning document for anyone, including individuals with property in multiple states. One power of attorney should work in multiple states as long as it is written generally enough, but states may have different rules for what makes a valid power of attorney. State laws usually recognize a valid power of attorney created in another state, but you should check with an attorney in the state to make sure it will be recognized. Even if the power of attorney complies with state law, a bank may not accept it. You should let the bank know about your power of attorney and make sure there are no specific forms that the bank requires.

Contact your attorney to make sure your estate planning documents will work in multiple states.

Brookdale East Bay Senior Resource Fair

Amy Stratton was invited to participate in Brookdale East Bay’s Senior Resource Fair on Saturday, April 28, 2018. She met with residents of Brookdale East Bay, their families and the community. Amy emphasized the importance of having an updated plan, particularly an updated health care proxy and durable financial power of attorney.  It was a fun and informative event!

Contact Amy Stratton to learn more about why an updated plan is so important.

MSW Women Featured in Providence Monthly

Moonan, Stratton & Waldman partners Kristen Moonan and Amy Stratton were recently featured in Providence Monthly as “Leading Ladies.” See the article below.

“We guide our clients through the maze of life, business and beyond, and we do it with compassion and respect,” say Kristen Moonan and Amy Stratton, partners at Moonan, Stratton & Waldman, LLP, a third generation law firm in Richmond Square. The firm is a boutique practice focused on estate planning and administration, and business law. “We listen to our clients and take a collaborative approach to resolving an issue,” they say. “As a women-managed firm, we offer a unique perspective to our clients. We are creative and craft customized solutions for out clients, whether in the business world or on the personal planning level.”

The firm has long history of helping the community with various business and personal matters. “We are proud to offer a full spectrum of transactional services for our clients, from wills and trusts to business contracts to complex estate and trust administration, and even real estate closings,” they say. Despite it’s small size, the firm offers decades of combined experience and is uniquely able to offer big firm service in a comfortable, accessible and personalized setting.

Contact Kristen Moonan and Amy Stratton.

Are Medicare Advantage Plans Steering Enrollees to Lower-Quality Nursing Homes?

A new study has found that people enrolled in a Medicare Advantage plan were more likely to enter a lower-quality nursing home than were people in traditional Medicare. The study raises questions about whether Medicare Advantage plans are influencing beneficiaries' decisionmaking when it comes to choosing a nursing home.

Medicare Advantage plans, an alternative to traditional Medicare, are provided by private insurers rather than the federal government. The government pays Medicare Advantage plans a fixed monthly fee to provide services to each Medicare beneficiary under their care, and the services must at least be equal to regular Medicare’s. While the plans sometimes offer benefits that original Medicare does not, the plans usually only cover care provided by doctors in their network or charge higher rates for out-of-network care.

The study, conducted by researchers at Brown University School of Public Health, examined Medicare beneficiaries entering nursing homes between 2012 and 2014. Using Medicare’s Nursing Home Compare website as the measure of quality, the study found that beneficiaries in Medicare Advantage plans tended to enter lower quality nursing homes than beneficiaries in original Medicare. This was true even when the researchers took into account the beneficiaries' distance from the nursing home and other decision factors. Even beneficiaries enrolled in highly rated Medicare Advantage plans were more likely to enter a low-quality nursing home compared to original Medicare beneficiaries.

The study does not draw any conclusions about whether the Medicare Advantage beneficiaries fared worse than original Medicare beneficiaries, only that they tended to enter facilities that had higher re-hospitalization rates and worse outcomes. The study concluded that Medicare Advantage plans may be influencing beneficiary decisionmaking around nursing home selection. According to Skilled Nursing News, one of the study’s authors speculated that a Medicare Advantage plan “might be incentivized to send patients to a given nursing home regardless of what the quality ratings are, because of a relationship with that nursing home or because they have a lot of patients in that nursing home and can better manage their care.”

Information on exactly why this is happening is “of vital policy importance,” according to the study's authors. They recommend gathering more information about Medicare Advantage nursing home claims and re-hospitalization rates and requiring Medicare Advantage plans to be more transparent about the quality of nursing homes in their networks.

To read the study, which was also published in the January issue of the journal Health Affairs, click here.

How to Appeal a Medicare Prescription Drug Denial

If your Medicare drug plan denies coverage for a drug you need, you don't have to simply accept it. There are several steps you can take to fight the decision.

The insurers offering Medicare drug plans choose the medicines — both brand-name and generic — that they will include in a plan's “formulary,” the roster of drugs the plan covers and will pay for that changes year-to-year. If a drug you need is not in the plan's formulary or has been dropped from the formulary, the plan can deny coverage. Plans may also charge more for a drug than you think you should have to pay or deny you coverage for a drug in the formulary because it doesn't believe you need the drug. If any of these things happens, you can appeal the decision.

Before you can start the formal appeals process, you need to file an exception request with your plan. The plan should provide instructions on how to request an exception. The plan must respond within 72 hours or 24 hours if your doctor explains that waiting 72 hours would be detrimental to your health. If your exception is denied, the plan should send you a written denial-of-coverage notice and a five-step appeals process can begin.

  1. The first step in appealing a coverage determination is to go back to the insurer and ask for a redetermination, following the instructions provided by your plan. You should submit a statement from your doctor or prescriber that explains why you need the drug you are requesting, along with any medical records to support your argument. If your doctor informs the plan that you need an expedited decision due to your health, the plan must notify you within 72 hours. For a standard redetermination, the plan must notify you within seven days.
  2. If you disagree with the drug plan's decision, you have the right to reconsideration by an independent board. To request reconsideration, follow the instructions in the written redetermination notice you receive from the insurer. You have 60 days from the redetermination notice to request reconsideration. An independent review entity (IRE) will review the case and issue a decision either within 72 hours or seven days. If you receive a negative decision, you can keep appealing.
  3. The third level of appeal is to request a hearing with an administrative law judge (ALJ), which allows you to present your case either over the phone or in person. To request a hearing, the amount in controversy must be at least $160 (in 2018). The amount in controversy is calculated by subtracting any allowed amount under Part D, and any deductible, co-payments, and coinsurance amounts applicable to the Part D drug at issue, from the projected value of the drug benefits in dispute. Your request for a hearing must be sent in writing to the Office of Medicare Hearings and Appeals (OMHA). The ALJ is supposed to issue an expedited decision within 10 days or a standard decision within 90 days.
  4. If the ALJ does not rule in your favor, the next step is a review by the Medicare Appeals Council. The appeal form must be filed within 60 days after the ALJ's decision. You will need a statement explaining why you disagree with the ALJ's decision. The appeals council will issue an expedited decision in 10 days or a standard decision within 90 days.
  5. The final step is review by a federal district court. To be able to request review, the amount in controversy must be $1,600 (in 2018). Follow the directions in the letter from the appeals council and file the request in writing within 60 calendar days.

 

 

Long-Term Care Insurance Policyholder Wins Suit Against Company for Hiking Premiums

A long-term care policyholder has successfully sued her insurance company for breach of contract after the company raised her premiums.

At age 56, Margery Newman bought a long-term care insurance policy from Metropolitan Life Insurance Company. She chose an option called “Reduced-Pay at 65” in which she paid higher premiums until she reached age 65, when the premium would drop to half the original amount. The long-term care insurance contract set out the terms of the reduced-pay option. It also stated that the company could increase premiums on policyholders in the same “class.” When Ms. Newman was 67 years old, the company notified her that it was doubling her premium.

Ms. Newman sued MetLife for breach of contract and fraudulent and deceptive business practices, among other things. In its defense, the company argued that the increase was imposed on a class-wide basis and applied to all long-term care policyholders over the age of 65, including reduced-pay policyholders. A federal district court dismissed Ms. Newman’s suit, ruling that the contract permitted MetLife to raise her premium. Ms. Newman appealed.

The U.S. Court of Appeals for the Seventh Circuit reversed the lower court's decision and held that MetLife breached its contract when it raised Ms. Newman's premium (Newman v. Metropolitan Life Insurance Company, U.S. Ct. App., 7th Cir., No. 17-1844, Feb. 6, 2018). According to the court, reasonable people would believe that signing up for the reduced-pay option meant that they were not at risk of having their premiums increased. The court also allowed Ms. Newman's fraudulent and deceptive business practices claim to proceed, ruling that she showed evidence that the company's marketing of the policy was deceptive and unfair.

To read the court's decision, click here.

Choosing Retirement Account Beneficiaries Requires Some Thought

While the execution of wills requires formalities like witnesses and a notary, the reality is that most property passes to heirs through other, less formal means.

Many bank and investments accounts, as well as real estate, have joint owners who take ownership automatically at the death of the primary owner. Other banks and investment companies offer payable on death accounts that permit owners to name the person or people who will receive them when the owners die. Life insurance, of course, permits the owner to name beneficiaries.

All of these types of ownership and beneficiary designations permit these accounts and types of property to avoid probate, meaning that they will not be governed by the terms of a will. When taking advantage of these simplified procedures, owners need to be sure that the decisions they make are consistent with their overall estate planning. It’s not unusual for a will to direct that an estate be equally divided among the decedent’s children, but to find that because of joint accounts or beneficiary designations the estate is distributed totally unequally, or even to non-family members, such as new boyfriends and girlfriends.

It’s also important to review beneficiary designations every few years to make sure that they are still correct. An out-of-date designation may leave property to an ex-spouse, to ex-girlfriends or -boyfriends, and to people who died before the owner. All of these can thoroughly undermine an estate plan and leave a legacy of resentment that most people would prefer to avoid.

These concerns are heightened when dealing with retirement plans, whether IRAs, SEPs or 401(k) plans, because the choice of beneficiary can have significant tax implications. These types of retirement plans benefit from deferred taxation in that the income deposited into them as well as the earnings on the investments are not taxed until the funds are withdrawn. In addition, owners may withdraw funds based more or less on their life expectancy, so the younger the owner the smaller the annual required distribution.  Further, in most cases, withdrawals do not have to begin until after the owner reaches age 70 1/2. However, this is not always the case for inherited IRAs.

Following are some of the rules and concerns when designating retirement account beneficiaries:

  • Name your spouse, usually. Surviving husbands and wives may roll over retirement plans inherited from their spouses into their own plans. This means that they can defer withdrawals until after they reach age 70 1/2 and take minimum distributions based on their age. Non-spouses of retirement plans must begin taking distributions immediately, but they can base them on their own presumably younger ages.
  • But not always. There are a few reasons you might not want to name your spouse, including the following:
    • He or she is incapacitated and can’t manage the account
    • Doing so would add to his or her taxable estate
    • You are in a second marriage and want the investments to benefit your first family
    • Your children need the money more than your spouse
  • Consider a trust. In a number of the above circumstances, a trust can solve the problem, providing for management in the case of an incapacitated spouse, permitting assets to benefit a surviving spouse while being preserved for the next generation, and providing estate tax planning opportunities. Those in first marriages may want to name their spouse as the primary beneficiary and a trust as the secondary, or contingent, beneficiary. This permits the surviving spouse, or spouse’s agent if the spouse is incapacitated, to refuse some or all of the inheritance through a “disclaimer” so it will pass to the trust. Known as “post mortem” estate planning, this approach permits flexibility to respond to “facts on the ground” after the death of the first spouse.
  • But check the trust. Most trusts are not designed to accept retirement fund assets. If they are missing key provisions, they might not be treated as “designated beneficiaries” for retirement plan purposes. In such cases, rather than being able to stretch out distributions during the beneficiary’s lifetime, the IRA or 401(k) will have to be liquidated within five years of the decedent’s death, resulting in accelerated taxation.
  • Be careful with charities. While there are some tax benefits to naming charities as beneficiaries of retirement plans, if a charity is a partial beneficiary of an account or of a trust, the other beneficiaries may not be able to stretch the distributions during their life expectancies and will have to withdraw the funds and pay the taxes within five years of the owner’s death. One solution is to dedicate some retirement plans exclusively to charities and others to family members.
  • Consider special needs planning. It can be unfortunate if retirement plans pass to individuals with special needs who cannot manage the accounts or who may lose vital public benefits as a result of receiving the funds. This can be resolved by naming a special needs trust as the beneficiary of the funds, although this gets a bit more complicated than most trusts designed to receive retirement funds. Another alternative is not to name the individual with special needs or his trust as beneficiary, but to make up the difference with other assets of the estate or through life insurance.
  • Keep copies of your beneficiary designation forms. Don’t count on your retirement plan administrator to maintain records of your beneficiary designations, especially if the plan is connected with a company you worked for in the past, which may or may not still exist upon your death. Keep copies of all of your forms and provide your estate planning attorney with a copy to keep with your estate plan.
  • But name beneficiaries! The biggest mistake many people make is not to name beneficiaries at all, or they end up in this position by not updating their plan after the originally-named beneficiary passes away. This means that the plan will have to go through probate at some expense and delay and that the funds will have to be withdrawn and taxes paid within five years of the owner’s death.

In short, while wills are important, in large part because they name a personal representative to take charge of your estate and they name guardians for minor children, they are only a small part of the picture. A comprehensive plan needs to include consideration of beneficiary designations, especially those for retirement plans.

 

Be on the Lookout for New Medicare Cards (and New Card-Related Scams)

The federal government is issuing new Medicare cards to all Medicare beneficiaries. To prevent fraud and fight identity theft, the new cards will no longer have beneficiaries' Social Security numbers on them.

The Centers for Medicare and Medicaid Services (CMS) is replacing each beneficiary's Social Security number with a unique identification number, called a Medicare Beneficiary Identifier (MBI). Each MBI will consist of a combination of 11 randomly generated numbers and upper case letters. The characters are “non-intelligent,” which means they don't have any hidden or special meaning. The MBI is confidential like the Social Security number and should be kept similarly private.

The CMS will begin mailing the cards in April 2018 in phases based on the state the beneficiary lives in. The new cards should be completely distributed by April 2019. If your mailing address is not up to date, call 800-772-1213, visit www.ssa.gov, or go to a local Social Security office to update it.

The changeover is attracting scammers who are using the introduction of the new cards as a fresh opportunity to separate Medicare beneficiaries from their money. According to Kaiser Health News, the scams to look out for include phone calls with callers:

  • claiming to be from Medicare looking for your direct deposit number and using the new cards as an excuse,
  • asking for your Social Security number to verify information,
  • claiming Medicare recipients need to pay money to receive a temporary card, or
  • threatening to cancel your insurance if you don't give out your card number.

There is no cost for the new cards. It is important to know that Medicare will never call, email or visit you unless you ask them to, nor will they ask you for money or for your Medicare number. If you receive any calls that seem suspicious, don't give out any personal information and hang up. You should call 1-800-MEDICARE to report the activity or you can contact your local Senior Medicare Patrol (SMP). To contact your SMP, call 877-808-2468 or visit www.smpresource.org.

For more information about the new cards, click here and here.

Proving That a Transfer Was Not Made in Order to Qualify for Medicaid

Medicaid law imposes a penalty period if you transferred assets within five years of applying, but what if the transfers had nothing to do with Medicaid? It is difficult to do, but if you can prove you made the transfers for a purpose other than to qualify for Medicaid, you can avoid a penalty.

You are not supposed to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for Medicaid on Wednesday. So the government looks back five years for any asset transfers, and levies a penalty on people who transferred assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.

The penalty period can seem very unfair to someone who made gifts without thinking about the potential for needing Medicaid. For example, what if you made a gift to your daughter to help her through a hard time? If you unexpectedly fall ill and need Medicaid to pay for long-term care, the state will likely impose a penalty period based on the transfer to your daughter.

To avoid a penalty period, you will need to prove that you made the transfer for a reason other than qualifying for Medicaid. The burden of proof is on the Medicaid applicant and it can be difficult to prove. The following evidence can be used to prove the transfer was not for Medicaid planning purposes:

  • The Medicaid applicant was in good health at the time of the transfer. It is important to show that the applicant did not anticipate needing long-term care at the time of the gift.
  • The applicant has a pattern of giving. For example, the applicant has a history of helping his or her children when they are in need or giving annual gifts to family or charity.
  • The applicant had plenty of other assets at the time of the gift. An applicant giving away all of his or her money would be evidence that the applicant was anticipating the need for Medicaid.
  • The transfer was made for estate planning purposes or on the advice of an accountant.

Proving that a transfer was made for a purpose other than to qualify for Medicaid is difficult. If you innocently made transfers in the past and are now applying for Medicaid, consult with your elder law attorney. 

 

 

New Federal Law Puts Focus on Preventing Elder Abuse

A new federal law is designed to address the growing problem of elder abuse. The law supports efforts to better understand, prevent, and combat both financial and physical elder abuse.

The prevalence of elder abuse is hard to calculate because it is underreported, but according to the National Council on Aging, approximately 1 in 10 Americans age 60 or older have experienced some form of elder abuse. In 2011, a MetLife study estimated that older Americans are losing $2.9 billion annually to elder financial abuse.

The bipartisan Elder Abuse Prevention and Prosecution Act of 2017 authorizes the Department of Justice (DOJ) to take steps to combat elder abuse. Under the new law, the federal government must do the following:

  • Create an elder justice coordinator position in federal judicial districts, at the DOJ, and at the Federal Trade Commission
  • Implement comprehensive training on elder abuse for Federal Bureau of Investigation agents
  • Operate a resource group to assist prosecutors in pursuing elder abuse cases

The law requires the DOJ to collect data on elder abuse and investigations as well as provide training and support to states to fight elder abuse. The law specifically targets email fraud by expanding the definition of telemarketing fraud to include email fraud. Prohibited actions include email solicitations for investment for financial profit, participation in a business opportunity, or commitment to a loan.

The law also addresses flaws in the guardianship system that have led to elder abuse. The law enables the government to provide demonstration grants to states' highest courts to assess adult guardianship and conservatorship proceedings and implement changes.

“Exploiting and defrauding seniors is cowardly, and these crimes should be addressed as the reprehensible acts they are,” said Senator Chuck Grassley (R-Iowa), a co-sponsor of the legislation, adding that the legislation “sends a clear signal from Congress that combating elder abuse and exploitation should be top priority for law enforcement.”

For more information about the law, click here and here.