New Guides Help Those Appointed to Manage Someone Else’s Money

Have you been officially asked to manage someone else’s money? For example, have you been named as an agent under a power of attorney or appointed trustee of a trust? As our society ages, more and more people are being asked to take on these roles, but they come with both powers and responsibilities, and problems can arise.

If you’re not a lawyer (and even if you are), the responsibilities of these positions can seem daunting. Luckily, the federal Consumer Financial Protection Bureau – the only federal office dedicated to the financial health of Americans age 62 and over — recently released four guides for people who have been given the responsibility of managing money or property for someone else. The guides, which are free, are collectively called “Managing Someone Else’s Money.”

The Managing Someone Else’s Money guides are designed to help non-lawyers; they walk you through your new responsibilities, teach you how to protect the person in your care from financial exploitation, and give you links to additional resources. For example, the guides tell you, the agent, what to do to avoid problems with family and friends who think you are doing a bad job. The guides also help you coordinate with other agents who may have been assigned to work with you and any outside professionals whose help you may need (such as lawyers, brokers, and financial planners).

The guides include help for agents under a power of attorney, court-appointed guardians of property and conservators, trustees under a revocable living trust, and representative payees and VA fiduciaries (a person who manages someone else’s government benefit checks). All four types of agents are fiduciaries, which means they owe four special duties to the people for whom they are managing money or resources: the duty to act in the individual’s best interest, the duty to manage the individual’s money and property carefully, the duty to keep the individual’s money and property separate from their own, and the duty to keep good records. Every guide includes detailed information about these four duties.

If you have been assigned to be an agent for someone, that assignment should come with a document (power of attorney, trust document, court order, etc.) that will tell you what you can and cannot do. It is important to stay within the limits that document sets for you.

These four guides, which were developed for the Bureau by the American Bar Association Commission on Law and Aging, are not a substitute for legal counsel, but they can help keep you on the straight and narrow.

To download one or more of the guides, go to: http://www.consumerfinance.gov/blog/managing-someone-elses-money/

Understanding the Differences Between a Will and a Trust

Everyone has heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.

One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.

A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.

Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.

Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. Your elder law attorney can tell you how best to use a will and a trust in your estate plan.

If you would like further information about planning your estate or would like to schedule a free consultation please contact the Law Office of Jason A. Jenkins, P.A. at (954) 256-9192 or Jason@jajlawfirm.com.

New Jersey Joins Florida in Ruling that Medicaid Planning by Non-Lawyers is the Unauthorized Practice of Law

Joining the states of Florida, Ohio, and Tennessee, the Supreme Court of New Jersey has found that non-lawyers who apply the law to a Medicaid applicant’s specific circumstances are engaging in the unauthorized practice of law.

The state Supreme Court had received complaints that non-lawyers retained by families or nursing homes to assist with the Medicaid application process were providing erroneous or incomplete law-related advice, and a state attorney ethics hotline had received reports that non-lawyers have charged “clients” large sums of money for faulty Medicaid-planning legal assistance, causing the elderly victims significant financial loss.

Asked by the state Supreme Court for an opinion specifying what activities non-lawyers may engage in and what activities are the unauthorized practice of law, the Committee on the Unauthorized Practice of Law has concluded that while non-lawyer Medicaid advisors may provide limited services, “[a]pplying the law to an individual’s specific circumstances generally is the ‘practice of law.’ A Medicaid advisor or Application Assistor may provide information on insurance programs and coverage options; help individuals complete the application or renewal; help them with gathering and providing required documentation; assist in counting income and assets; submit the application to the agency; and assist with communication between the agency and the individual. But the advisor may not provide legal advice on strategies to become eligible for Medicaid benefits, including advice on spending down resources, tax implications, guardianships, sale or transfer of assets, creation of trusts or service contracts, and the like.”

If you would like further information about Medicaid Planning or would like to schedule a free consultation please contact the Law Office of Jason A. Jenkins, P.A. at (954) 256-9192 or Jason@jajlawfirm.com.

SSI and Special Needs Trusts

The contents of most trusts you create for yourself will be considered available to you in determining your eligibility for SSI. On the other hand, assets of most trusts that someone else creates and names you as a beneficiary of will not be considered to belong to you for purposes of determining your SSI eligibility. If you created and funded an irrevocable trust for your own benefit prior to January 1, 2000, it will be grandfathered, and in most cases its assets will not be considered to belong to you.

Trusts designed to aid a person with special needs are commonly known as “special needs trusts.”  There are three main types of special needs trusts: the first-party trust, the third-party trust, and the pooled trust. All three name the person with special needs as the beneficiary, but they differ in several significant ways.

A first-party trust is designed to hold a SSI beneficiary’s own assets, but it must be created by the beneficiary’s parent or grandparent, or by a court, even though the beneficiary’s assets are going to fund the trust. While the beneficiary is living, the funds in the trust are used for his benefit, and when he dies, any assets remaining in the trust are used to reimburse the government for the cost of his medical care. These trusts are especially useful for beneficiaries who are receiving SSI and come into large amounts of money, because the trust allows the beneficiary to retain his benefits while still being able to use his own funds when necessary.

The third-party special needs trust is most often used by parents and other family members to assist a person with special needs. These trusts can hold any kind of asset imaginable belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect an SSI beneficiary’s access to benefits and the funds can be used to pay for the beneficiary’s supplemental needs beyond those covered by government benefits. But a third-party special needs trust does not contain the “payback” provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in her trust can pass to other family members, or to charity, without having to be used to reimburse the government.

A pooled trust is an alternative to the first-party special needs trust.  Essentially, a charity sets up these trusts that allow beneficiaries to pool their resources for investment purposes, while still maintaining separate accounts for each beneficiary’s needs. When the beneficiary dies, the funds remaining in her account reimburse the government for her care, but a portion also goes towards the non-profit organization responsible for managing the trust.

Given the complexity of this field, any trust should be drafted by an experienced attorney knowledgeable about SSI matters.

If you would like further information about special needs trusts and SSI please contact the Law Office of Jason A. Jenkins, P.A. at (954) 256-9192 or Jason@jajlawfirm.com.

Key Elder Law Numbers for 2016

Below are figures for 2016 that are frequently used in the elder law practice or are of interest to clients.

Medicaid Spousal Impoverishment Figures for 2016

These figurs are unchanged from 2015.  The minimum community spouse resource allowance (CSRA) is $23,844 and the maximum CSRA remains $119,220. The maximum monthly maintenance needs allowance is $2,980.50. The minimum monthly maintenance needs allowance will be $1,991.25 ($2,490 for Alaska and $2,291.25 for Hawaii) until July 1, 2016.

Medicaid Home Equity Limits

Also no change from 2015: Minimum: $552,000; Maximum: $828,000

For the CMS document announcing the 2016 impoverishment and home equity figures, click here.

Income Cap

The income cap for 2016 applicable in “income cap” states remains $2,199 a month.

Gift and estate tax figures

Federal estate tax exemption: $5.45 million for individuals

Lifetime tax exclusion for gifts: $5.45 million

Generation-skipping transfer tax exemption: $5.45 million

The annual gift tax exclusion remains at $14,000.

Long-Term Care Premium Deductibility Limits for 2016

The Internal Revenue Service has announced the 2016 limitations on the deductibility of long-term care insurance premiums from taxes. Any premium amounts above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year Maximum deduction
40 or less $390
More than 40 but not more than 50 $730
More than 50 but not more than 60 $1,460
More than 60 but not more than 70 $3,900
More than 70 $4,870

Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $340 per day (for 2016), whichever is greater.

For these and other inflation adjustments from the IRS, click here.

Medicare Premiums, Deductibles and Copayments for 2016

  • Part B premium: $104.90/month (unchanged)
  • Part B premium for beneficiaries not “held harmless”: $121.80
  • Part B deductible: $147 (unchanged)
  • Part B deductible for beneficiaries not “held harmless”: $166
  • Part A deductible: $1,288 (was $1,260)
  • Co-payment for hospital stay days 61-90: $322/day (was $31)
  • Co-payment for hospital stay days 91 and beyond: $644/day (was $630)
  • Skilled nursing facility co-payment, days 21-100: $161/day (was $157.50)

Premiums for higher-income beneficiaries:

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

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

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

For “Medicare 2016 costs at a glance,” click here.

Social Security Benefits for 2016

Most Social Security figures remain unchanged.  The monthly federal Supplemental Security Income (SSI) payment standard stays at $733 for an individual and $1,100 for a couple.

Estimated average monthly Social Security retirement payment: $1,341 a month (was $1,328) for individuals and $2,212 (was $2,176) for couples

Maximum amount of earnings subject to Social Security taxation: $118,500 (unchanged)

For a complete list of the 2016 Social Security figures, go to: https://www.socialsecurity.gov/news/press/factsheets/colafacts2016.html

If you are in need of legal services and would like to schedule a consultation, please call us at (954) 256-9192 or e-mail us at office@jajlawfirm.com

Durable Power of Attorney

For most people, the durable power of attorney is the most important estate planning instrument available — even more useful than a will. A power of attorney allows a person you appoint — your “attorney-in-fact” or “agent” — to act in place of you – the “principal” — for financial purposes when and if you ever become incapacitated.

In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship, your representative may have to seek court permission to take planning steps that she could implement immediately under a durable power of attorney.

A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.

In Florida, a durable power of attorney takes effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated.

However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.

If you are in need of legal services and would like to schedule a consultation, please call us at (954) 256-9192 or e-mail us at office@jajlawfirm.com

Help Paying for Medicare

Medicare is not free; there are premiums and deductibles. If you don’t qualify for Medicaid and can’t afford a Medigap policy, you may be able to get help paying for the costs of Medicare.

There are four Medicare assistance programs, called Medicare Savings Plans:

  • Qualified Medicare Beneficiary (QMB): The QMB program pays for Medicare Part A deductibles, Medicare Part B premiums and deductibles, and coinsurance and deductibles for Part A and Part B.
  • Specified Low-income Medicare Beneficiary (SLMB): The SLMB program pays for Medicare Part B Premium.
  • Qualifying Individual (QI-1) Program: The QI-1 program is an expansion of the SLMB program that you must apply for each year. It pays for Medicare’s Part B Premium.
  • Qualified Disabled and Working Individuals (QDWI) Program:The QDWI Program helps pay for Medicare’s Part A premium.

To qualify for these programs, you must be eligible for Medicare Part A (even if you are not enrolled) and have limited income and resources. The income and resource requirements can vary from state to state, so check with your state before applying. In general the following limits are applied.

Program Income Limits
QMB Monthly income must be at or below 100 percent of the poverty level. To find the current poverty guidelines, click here.
SLMB Monthly income must be between 100 percent and 120 percent of the poverty level. To find the current poverty guidelines, click here.
QI – 1 Monthly income must be between 120 percent and 135 percent of the federal poverty level. To find the current poverty guidelines, click here.
QDWI Monthly income must be below 200 percent of the federal poverty level. To find the current poverty guidelines, click here.

Personal assets, including cash, bank accounts, stocks and bonds must not exceed $4,000 for an individual and $6,000 for married couples. Your house and car do not count as personal assets. Some states allow additional resources above these figures; for example, New York has no resource limits for the QI-1 Program.

If you are in need of legal services and would like to schedule a consultation, please call us at (954) 256-9192 or e-mail us at office@jajlawfirm.com

What is Medicaid?

Medicaid (called “Medi-Cal” in California, “MassHealth” in Massachusetts, and “TennCare” in Tennessee) 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.

In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid.

As for home care, Medicaid has traditionally offered very little — except in New York, which provides home care to all Medicaid recipients who need it. Recognizing that home care costs far less than nursing home care, more and more states are providing Medicaid-covered services to those who remain in their homes.

Although their names are confusingly alike, Medicaid and Medicare are quite different programs. For one thing, all retirees who receive Social Security benefits also receive Medicare as their health insurance. Medicare is an “entitlement” program. Medicaid, on the other hand, is a form of welfare — or at least that’s how it began. So to be eligible for Medicaid, you must become “impoverished” under the program’s guidelines.

Also, unlike Medicare, which is totally federal, Medicaid is a joint federal-state program. 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.) This complicates matters, since the Medicaid eligibility rules are somewhat different from state to state and they keep changing. This most recently occurred with the passage of the Deficit Reduction Act of 2005 (the DRA), which significantly changed rules governing the treatment of asset transfers and homes of nursing home residents. To be certain of your rights, consult an expert. He or she can guide you through the complicated rules of the different programs and help you plan ahead.

If you are in need of legal services and would like to schedule a consultation, please call us at (954) 256-9192 or e-mail us at office@jajlawfirm.com

The Need for Medicaid Planning

One of the greatest fears of older Americans is that they may end up in a nursing home. This not only means a great loss of personal autonomy, but also a tremendous financial price. Depending on location and level of care, nursing homes cost between $40,000 and $180,000 a year.

Most people end up paying for nursing home care out of their savings until they run out. Then they can qualify for Medicaid to pick up the cost. The advantages of paying privately are that you are more likely to gain entrance to a better quality facility and doing so eliminates or postpones dealing with your state’s welfare bureaucracy–an often demeaning and time-consuming process. The disadvantage is that it’s expensive.

Careful planning, whether in advance or in response to an unanticipated need for care, can help protect your estate, whether for your spouse or for your children. This can be done by purchasing long-term care insurance or by making sure you receive the benefits to which you are entitled under the Medicare and Medicaid programs. Veterans may also seek benefits from the Veterans Administration.

Those who are not in immediate need of long-term care may have the luxury of distributing or protecting their assets in advance. This way, when they do need long-term care, they will quickly qualify for Medicaid benefits. Giving general rules for so-called “Medicaid planning” is difficult because every client’s case is different. Some have more savings or income than others. Some are married, others are single. Some have family support, others do not. Some own their own homes, some rent. Still, a number of basic strategies and tools are typically used in Medicaid planning.

If you are in need of legal services and would like to schedule a consultation, please call us at (954) 256-9192 or e-mail us at office@jajlawfirm.com