Friday, May 25, 2018

Dementia Depletes Life Savings

The financial and non-financial impact of dementia is undeniable, but is most tangibly recognizable in its tragic elimination of life savings. It is vital that everyone involved in planning for seniors recognize and appreciate the limits of Medicare, which only covers health care based on a diagnosis of illness or injury. The San Jose paper, the Mercury News ran an important story describing this phenomenon, aptly titled,"How dementia can drain a family’s life savings."  The subheading to the article offers this stark warning: "Medicare offers no help for the high costs of dementia caregiving."

The article explains:
”Medicare is a lifeline for seniors and the disabled, paying for “medically necessary” costs such as hospitalization, surgery, chemotherapy, transplants, medications, pacemakers and other interventions... A dementia diagnosis demands none of that. What it does require, however, is around-the-clock “custodial care,” such as help with eating and dressing, and constant supervision. That’s not covered by Medicare. And it’s extraordinarily expensive, according to a report released last month by the Alzheimer’s Association...Families’ out-of-pocket costs for a patient with dementia are 80 percent higher than the cost for someone with heart disease or cancer, according to a 2015 study in the Annals of Internal Medicine.
According to a report from the Alzheimer's Association, families can expect to spend sixty billion dollars ($60,000,000,000) caring for those with dementia!  The study apparently does NOT include those who suffer from early onset Alzheimer's.  The number of Americans living with Alzheimer's is growing — and growing fast. An estimated 5.7 million Americans of all ages have Alzheimer's.

An estimated 5.7 million Americans of all ages are living with Alzheimer's dementia in 2018. This number includes an estimated 5.5 million people age 65 and older and approximately 200,000 individuals under age 65 who have younger-onset Alzheimer's.
  • One in 10 people age 65 and older (10 percent) has Alzheimer's dementia.
  • Almost two-thirds of Americans with Alzheimer's are women.
  • Older African-Americans are about twice as likely to have Alzheimer's or other dementias as older whites.
  • Hispanics are about one and one-half times as likely to have Alzheimer's or other dementias as older whites.
As the number of older Americans grows rapidly, so too will the numbers of new and existing cases of Alzheimer's. Today, someone in the United States develops Alzheimer's every 65 seconds. By mid-century, someone in the United States will develop the disease every 33 seconds.

Mortality from Alzheimer's is shockingly high, but mortality so often comes with a steep cost for lifetime suffering.  Alzheimer's disease is the only top 10 cause of death in the United States that cannot be prevented, cured or even slowed.

Alzheimer's disease is the sixth-leading cause of death in the United States, and the fifth-leading cause of death among those age 65 and older. It also is a leading cause of disability and poor health.
Although deaths from other major causes have decreased significantly, official records indicate that deaths from Alzheimer's disease have increased significantly. Between 2000 and 2015, deaths from Alzheimer's disease as recorded on death certificates increased 123 percent, while deaths from the number one cause of death (heart disease) decreased 11 percent.  Among people age 70, 61 percent of those with Alzheimer's are expected to die before the age of 80 compared with 30 percent of people without Alzheimer's — a rate twice as high.

There are tragically few options for those suffering from conditions with this diagnosis.  Long Term Care Insurance (LTCI) can help, but paying privately is the option selected by the vast majority of those who will spend down assets in order to qualify for Medicaid.  Medicare does not help unless there is a hospitalization, and the benefit is limited. The article notes that families with dementia can forget home care or memory care because Medicare does not cover these treatments or care. 

The challenge of financial planning with dementia in mind is not new. The challenge is certainly becoming a bigger issue with the significant number of Boomers, and the dwindling options available to consumers. The wise seek early legal and financial counsel. The unwise risk losing everything.

Thursday, March 8, 2018

More Adults Now Share Living Space As More Parents Live With Adult Children

The Pew Research Center has posted a new report  indicating that more adults are sharing  a home with other adults with whom they are not romantically involved. This arrangement, which Pew identifies as “doubling up” or shared living, gained notice in the wake of the Great Recession.  Nearly a decade later, the prevalence of shared living has continued to grow.
While the rise in shared living during and immediately after the recession was attributed in large part to a growing number of Millennials moving back in with their parents, the longer-term increase has been partially driven by a different phenomenon: parents moving in with their adult children.
In 2017, nearly 79 million adults (31.9% of the adult population) lived in a shared household – that is, a household with at least one “extra adult” who is not the household head, the spouse or unmarried partner of the head, or an 18- to 24-year-old student. In 1995, the earliest year with comparable data, 55 million adults (28.8%) lived in a shared household. In 2004, at the peak of homeownership and before the onset of the home foreclosure crisis, 27.4% of adults shared a household.
A shared household is defined somewhat differently from a multigenerational household (although the two can overlap), as shared households can include unrelated adults and adult siblings. More adults live in shared households than multigenerational households: In 2014, 61 million Americans (including children) resided in multigenerational households.
The nearly 79 million adults living in a shared household include about 25 million adults who own or rent the household. An additional 10 million adults are the spouse or unmarried partner of the head of the household. Another 40 million, or 16% of all adults, are the “extra adult” in the shared household. This share living in someone else’s household is up from 14% in 1995.
Adults who live in someone else’s household typically live with a relative. Today, 14% of adults living in someone else’s household are a parent of the household head, up from 7% in 1995. Some 47% of extra adults today are adult children living in their mom and/or dad’s home, down from 52% in 1995. Other examples of extra adults are a sibling living in the home of a brother or sister, or a roommate.
In 2017, only 18% of extra adults lived in a household in which the head was unrelated (typically a housemate or roommate). Living with nonrelatives has become less prevalent since 1995, when 22% of extra adults lived with a nonrelative.
Regardless of their relationship to the household head, young adults are more likely than middle-aged or older adults to live in someone else’s household. Among those younger than 35, 30% were the extra adult in someone else’s household in 2017, up from 26% in 1995. Among 35- to 54-year-olds, 12% were living in someone else’s household, an increase from 9% in 1995. Today 10% of 55- to 64-year-olds are an extra adult, up from 6% in 1995. The only adult group that isn’t more likely than before to live in another adult’s household is those ages 75 and older (10% in both years).
The rise in shared living may have implications for the nature of household finances – that is, how income and expenses are shared among members.  The complexity of the interpersonal relationships, together with interrelated financial relationships complicate estate planning  solutions.  Often, these relationships beg for planning to clarify, crystallize, and memorialize expectations arising from the relationships.   
In addition, the increase in “doubling up” is offsetting other social trends bearing on the nature of the nation’s households and demand for housing. While Americans are less likely to be living with a spouse or unmarried partner in their household, the rise in doubling up means more adults are living with nonrelatives and with relatives other than romantic partners. As a result, the average number of adults per household has not declined since 1995, and consequently, the number of households per adult has not increased.
In fact, household formation, or the number of households for every 100 adults, has recently fallen to very modest levels for several age groups. For example, in 2017 there were 31 households headed by an adult younger than 35 for every 100 adults in that age bracket (adjusted for the age bias in head-of-household status), among the lowest rate of household formation for this age group since the early 1970s. Decreased household formation is not confined to young adults. Last year there were 61 households headed by a 65- to 74-year-old for every 100 65- to 74-year-olds. While this marked a slight statistical increase from 2014, the last time household formation rates were that low among this demographic was 1972.
The rise in shared living is likely not simply a response to rising housing costs and weak incomes. Nonwhite adults are much more likely than white adults to be doubled up, mirroring their greater propensity to live in multigenerational households. Nonwhite adults are a growing share of the adult population, and thus some of the rise in shared living arrangements is due to longer-running demographic change.  

Regardless of the causes of these trends, families are well-advised to consider their specific circumstances when designing, drafting and implementing individual financial and estate plans.  Experienced counsel and advisers will ordinarily consider these relationships in the fact-finding portion of planning.  Individuals must, however, fully advise their advisers of such relationships, and their expectations in order to ensure full consideration of goals and objectives.     

Friday, February 23, 2018

Ohio Bill to Remedy Third-party Refusals to Accept Lawful Powers of Attorney


According to a special editorial published in the Akron Legal News, proposed state legislation may make General Durable Powers of Attorney (POAs) more effective, by prohibiting third parties such as banks, insurance companies, and financial institutions from baseless refusals to accept the planning instruments.  A power of attorney document gives authority to an agent to act on behalf of another in legal or financial matters. Elder law and estate planning attorneys commonly use POAs as a tool to plan for the incapacity of their clients.

Ohio has enacted a Uniform Power of Attorney Act, which lays out the mandatory language that must be incorporated into these planning instruments in order to comply with Ohio law. In most cases, a power of attorney specifies that it will continue after the incapacity of its maker; such instruments are known as a durable power of attorney.

Democrat Rep. John Rogers of Mentor-on-the-Lake has championed a bill that addresses the growing problem of third-party institutions rejecting lawful Ohio powers of attorney.  House Bill 446 would prohibit a person from refusing to accept an acknowledged power of attorney for a transaction or requiring an additional or different form for any authority granted in a statutory power of attorney.  The measure would be subject to specified exceptions and provide sanctions for a person who fails to comply with the bill's provisions.  This blog contains several articles discussing how powers of attorney can be rendered impotent as a planning tool.  For example, consider the 2014 article, The Impotent Power of Attorney, available by clicking here

Rogers told the Akron News that he has had a number of POAs refused to be honored in recent years in both his personal life, and in his professional capacity:

Reasons that these legal documents have been rejected include the document having been prepared more than six months prior to the presentation date and a successor agent was named on the document.
"Attorneys who draft documents are subject to malpractice if documents they have prepared were done so contrary to law." Rogers said. "Consider the grave consequences that could ensue to a denied client."
*    *    *
Rogers shared with members of the House Civil Justice Committee the circumstances of a now-deceased client.
"This senior was wheelchair bound and scheduled a 'Dial-A-Ride' service through the local public transit authority to take him to his financial institution," Rogers began. "Once there, he presented his POA to a (bank) employee, who after reviewing the document advised my client that his POA was not to be honored in its present form.
"Specifically, my client was told that having named a second adult child as a successor agent was not permitted. The employee proceeded to advise my client that the document needed to be redrafted according to their specifications and offered to refer my client to someone in house to help, if necessary."
Rogers recounted when his client called him after the incident and requested Rogers draft another power of attorney.
"I offered to contact the institution on his behalf, but he asked that I redraft the document in accordance with the bank's instructions," the lawmaker said. "I did so, at no expense, but in my opinion, what had happened was unconscionable."
HB 446 would prohibit a person from refusing to accept an "acknowledged" power of attorney - one defined as verified before a notary public or other individual authorized to take acknowledgments - for a transaction or requiring an additional or different form of power of attorney for any authority granted in a statutory form power of attorney unless any of the following applies:

  • The person has actual knowledge of the termination of the agent's authority or of the power of attorney;
  • The person in good faith believes that the transaction is outside the scope of the authority granted to the agent in the power of attorney;
  • The person in good faith believes that the power of attorney is not valid.

"In keeping with our desire to cut unnecessary and duplicative red tape in business transactions, this bill will eliminate the need for citizens to pay for two POAs when only one is needed," HB 446 joint sponsor Rep. Bill Seitz, R-Cincinnati, said in the press release quoted by The Akron Legal News [the press release was not yet publicly available on Rep. Seitz's archive of press releases.  "Pride of authorship is an insufficient reason to reject a POA that was properly prepared by a different Ohio attorney."

A failure to comply with the law would result in sanctions with liability to the dishonoring institution for reasonable attorney fees and costs to confirm or mandate the acceptance of the properly prepared and executed document, the lawmaker duo said during testimony.  

Eight fellow House members have signed on as cosponsors of the bill, which had not been scheduled a second hearing at time of publication.

Whether this bill becomes law remains to be seen.  There is, of course, a powerful bank lobby that may frustrate the bill's passage.  The bill, at least as presently written, does not appear to contain a release from liability for institutions, such as banks, that accept an instrument  based upon the representations of the presenter and the notary before which the instrument is signed and acknowledged.  That means that institutions like banks might remain liable for damages when accepting forged or fraudulent instruments despite being encouraged to do so by the penalty for refusing to accept the instrument.  One can imagine that this situation might put the institution in a precarious Catch-22 or dillemma.  

Regardless, the bill is a welcome acknowledgment by at least some lawmakers regarding the weakness of the instrument as a planning tool.  Since most people employ a power of attorney for the expressed purpose of avoiding resort to a more cumbersome legal process through the courts, it is unfortunate that third parties so easily frustrate this objective without cause.   

Tuesday, February 20, 2018

Massachusetts High Court Reminds Reverse Mortgage Holders- Foreclosure IS possible; Rules that Lenders Don't Have to Spell Out Foreclosure Risk to Consumers

The Supreme Judicial Court of Massachusetts ruled in favor of a reverse mortgage lender in a foreclosure case earlier this month, finding that mortgagees don’t have to explicitly spell out their legal right to foreclose in their paperwork.

The case involved James B. Nutter Company and three reverse mortgage borrowers, all of whom secured Home Equity Conversion Mortgages in 2007 and 2008. Within the span of a few years, two had died and the third became too ill to remain in the home; J.B. Nutter then moved to foreclose by bringing actions against the borrowers or their executors in local land court.

But the case was delayed due to an objection over the company’s ability to foreclose on homes under state law. In Massachusetts, the Supreme Judicial Court (SJC) wrote in its opinion, foreclosures can proceed without a judge’s confirmation as long as the mortgage itself gives the lender “the power of sale” in such situations.

The problem stemmed from some imprecise language in J.B. Nutter’s standard reverse mortgage paperwork. The company informed borrowers that it “may invoke the power of sale and other remedies permitted by applicable law … At this sale, Lender or another person may acquire the Property. This is known as ‘foreclosure and sale.’ In any lawsuit for foreclosure and sale, Lender will have the right to collect all costs allowed by law.”

The disclosure, though left unresolved issues.  The form language  fails to directly refer to the “statutory power of sale,” which was insufficient to justify the lender’s power to foreclose after the death of a borrower or his departure from the property.

But despite the lack of legal specificity, the SJC found that “no reasonable borrower” could assume that a reverse mortgage lender did not have the power to sell his or her property in the event of a foreclosure.

“It matters that this is a contract for a reverse mortgage, rather than a traditional mortgage, where the borrower makes no monthly payments of principal or interest, where the lender cannot hold the borrower personally liable for the debt, and where the lender’s only recourse on default is to obtain repayment through a foreclosure sale,” the court wrote in its opinion.

“Without a power of sale, the only way that a lender can recover the principal of the loan, not to mention interest and fees, is through foreclosure by entry — a process that would take three years — or foreclosure by action, ‘a method rarely used’ in Massachusetts.”

The court also noted that J.B. Nutter would still have to abide by all other rules regarding foreclosures in the state.

Interestingly, the court had some words of praise for the reverse mortgage product in general — while also citing a controversial report from the Consumer Financial Protection Bureau that advised consumers against taking out the loans to delay Social Security payments.

“For many retirees, one of the most reliable potential sources of income in later life is the accrued equity in their homes,” the court wrote by means of introduction.

Like many financial products and strategies, a reverse mortgage has a specific purpose, and specific circumstances justify its use.  Unfortunately, like most financial products, consumers do not always understand fully these purposes or circumstances and find themselves suffering disadvantage or harm when they are misused. The consequences can be devastating

As discussed preciously on this blog, these financial devises can be particularly troubling for elderly couples that do not plan carefully.  See the articles posted here and here, for example. 

Sunday, February 18, 2018

New Budget Deal Reinstates Protections for Personal Injury Awards from State Claims

The budget deal signed into law by President Trump on February 9, 2018 permanently and retroactively restored protection of personal injury recoveries from State claims.  Under the new law, States can only make claims against the medical expense reimbursement portion of personal injury judgments and settlements, protecting the rest of such recoveries, such as the portions representing compensation for pain and suffering from such claims.
The new law represents a permanent and retroactive repeal of the law that overturned the Supreme Court decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn 547 U.S. 268 (2006).  Ahlborn had been overturned by Section 202 of the Bipartisan Budget Act of 2013 (BBA), which expanded states’ access to entire personal injury settlements and awards to recoup Medicaid costs spent on a beneficiary’s behalf.  Originally set to take effect on October 1, 2014, it was twice delayed before finally coming into force late in 2017.  The current bill eliminates the 2013 language that nullified Ahlborn.
In 2006 the Supreme Court issued its Ahlborn decision, finding that under the anti-lien restrictions of the Social Security Act states had a right to recover only from the portion of a settlement or award that was allocated to medical expenses. The remainder of the settlement went to help cover the recipient’s expenses not covered by Medicaid.  Seven years later, in Wos v. E.M.A. 568 U.S. 627 (2013), the Court struck down a state statute imposing a mandatory Medicaid lien on up to one-third of a recovery, reiterating that "[a]n irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act's clear mandate that a State may not demand any portion of a beneficiary's tort recovery except the share that is attributable to medical expenses." 

Following Wos, and without warning, Congress used the BBA to erase the protection Ahlborn and Wos afforded personal injury recoveries.  The 2013 budget bill amended the Social Security Act to give states the right to recover from Medicaid beneficiaries' entire settlements.  The BBA also gave states the right to place a lien on those settlements or awards. 
From the beginning, the American Association for Justice (AAJ) has vigorously fought to eliminate the BBA provision.  It managed to twice delay implementation -- first to October 2016, and then again to October 2017.  Ever since last October’s delay expired, the AAJ has worked for repeal.  “We believe this is a great victory that will ensure Medicaid recipients retain access to the courts,” said Linda Lipsen, AAJ’s Chief Executive Officer.  

Sunday, February 11, 2018

Federal Court Holds Long-Term Care Insurance Company Breached Policyholder's Contract by Raising Premiums


A U.S. court of appeals has ruled  that a long-term care insurance company breached its contract with a policyholder who purchased a "Reduced-Pay at 65" policy when it raised her premiums after age 65. Newman v. Metropolitan Life Insurance Company (U.S. Ct. App., 7th Cir., No. 17-1844, Feb. 6, 2018).  The case represents a rare holding in favor of policy holders against long term care insurance companies pursuing claims arising from dramatic premium increases. 
The plaintiff, Margery Newman, purchased a long-term care insurance policy from Metropolitan Life Insurance Company when she was age 56. 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 claims. 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. The U.S. district court granted the company's motion to dismiss, ruling that the contract permitted the company to raise Ms. Newman's premium. Ms. Newman appealed.
The U.S. Court of Appeals, 7th Circuit, reversed, holding that the company breached its contract when it raised Ms. Newman's premium. According to the court, "none of the four references in the policy to [the company's] right to change premiums sufficed to disabuse a reasonable person of the understanding that purchasing the Reduced-Pay option took her out of the class of policyholders who were at risk of having their premium increased after their post-age-65 anniversary." The court also allowed Ms. Newman's claims for fraudulent and deceptive business practices to proceed.  The Court ruled that Ms. Newman showed sufficient evidence that the company's marketing of the policy was deceptive and unfair to proceed with those claims.
Although it is possible, an appeal to the United States Supreme Court is unlikely.  

Monday, February 5, 2018

Study Finds that POLST (Physician Ordered Life Support Treatment) Orders Meet Patient Goals

The News section of the National POLST Paradigm posted the following article:
"The Progression of End-of-Life Wishes and Concordance with End-of-Life Care,” a brief report authored by Jennifer Hopping-Winn, LCSW, Juliette Mullin, MPH, MBA, Laurel March, MA, Michelle Caughey, MD, Melissa Stern, MBA, and Jill Jarvie, RN, MSN, was published in the Journal of Palliative Medicine (January 2018, ahead of print). Using in-depth chart reviews from patients who had participated in the Kaiser Permanente Northern California (KPNC) advance care planing program, the study found that 290 out of 293 (99%) patients were found to have received goal-concordant care if a POLST was completed up to 12 months before they died. In 7 of 300 cases, concordance could not be determined.
Since 2013, KPNC has used an advance care planning program to elicit, document and honor the care treatment preferences of patients near the end of life. This study aimed to determine whether patient wishes were actually respected at the end of life, with a hypothesis that patients’ wishes would be their ultimate care preferences if the conversation occurred within 12 months of their death and that the patient would receive care concordant with those POLST-documented care preferences ~95 to 98% of the time, an estimate based on two previous studies on the concordance rate of the Respecting Choices advance care planning program.
In this study, the research focused on patient who had participated in the KPNC’s Life Care Planning (LCP) Advanced Steps (AS) program, modeled on the Respecting Choices’s Last Steps program. Patients are referred to LCP AS if their physicians estimate they are in their last year of life. An AS facilitator helps the patient discuss their preferences in the presence of their designated decision maker (DDM) about the patient’s preferences for end-of-life care.
Three LCP experts at KPNC conducted the in-depth chart review to determine goal concordance per patient. Concordance was defined as documentation that care received in setting before death was either consistent with documented wishes on patient’s POLST form or inconsistent with POLST selections, but consistent with the DDM’s or patient’s verbal guidance. Study authors noted that a particular strength of this study was the researchers’ accessibility to a breadth of information in order to determine care preferences and the final care received, made possible by the Kaiser Permanente integrated health system’s electronic health record that includes records from a wide variety of clinical settings.
The researchers randomly selected 300 of the 3701 patient who had participated in the AS program and died in 2015. How close in time the conversation took place before death varied from one day to more than 2 years, with an average time of about 10 months.  Among the 300, 253 had completed a POLST Form; among the 253 who had completed a POLST Form, 48 (19%) revised their care preferences at some point. Patients were more likely to change their preferences over time if the AS conversation was not recent or if they returned to the hospital for care. Most (85%) of the time, the patient of DDM opted for less intensive care when changing care preferences, and in most of these cases, the DDM made the change on behalf of the patient, generally when the patient’s condition deteriorated significantly and the patient could no longer speak for him or herself.
The study confirmed a very high level of respect for patients’ wishes across care settings. Only in three of the 293 cases were care decisions made by clinicians found to be in conflict with the patient’s wishes; one case occurred in a hospital emergency department, one in a community dialysis clinic, and one in a community skilled nursing facility. In each of these 3 cases, the DDM was not immediately available, leaving the decision to the clinician. The researchers noted that clinicians should not have to depend on the presence of a DDM in order to follow patient wishes; when accessible, the POLST Form should serve to help guide and communicate patient preferences when the patient or DDM is unable to do so.
The conclusion:
“A skillful, facilitated advance care planning conversation is a worthwhile approach for eliciting patients’ wishes, and the POLST form is a valuable tool. When patients’ preferences about medical care are made known in this way, they overwhelmingly receive concordant care. However, our findings highlight the need for comprehensive, continuous conversations across all care settings, even after a POLST is completed. As the U.S. healthcare system continues to improve end-of-life care, more research on the documentation and progression of care preferences is needed to fully understand how healthcare providers can best identify and act on patients’ wishes, especially when a DDM is unavailable.”

Friday, January 26, 2018

Dementia Specific Advance Directives More Prevalent

An increasing number of people will experience dementia. Worldwide, the number of people living with dementia is projected to increase from 47 million in 2015 to 132 million by 2050.

Family members and clinicians are often unsure whether the care they provide for patients suffering dementia is the care that patients would have chosen. Across the care spectrum, including skilled nursing facilities, hospital wards, intensive care units, and outpatient clinics, family members and clinicians commonly encounter this dilemma.  

In light of this concern, Paula Span has penned an excellent article One Day Your Mind May Fade. At Least You’ll Have a Plan in the New York Times as part of the New Old Age Series.  The article discusses advance directives for those with dementia.  The article follows a recent article published in the Journal of the American Medical Association (JAMA).  

According to these articles, existing advance directives are not particularly helpful for those with dementia because of the way dementia progresses over time with corresponding diminishing cognitive function.  The New York Times article explains:
"Although [dementia] is a terminal disease, dementia often intensifies slowly, over many years. The point at which dementia patients can no longer direct their own care isn’t predictable or obvious. ... Moreover, patients’ goals and preferences might well change over time. In the early stage, life may remain enjoyable and rewarding despite memory problems or difficulties with daily tasks."
The dementia-specific directive describes the person's wishes  as "goals of care" and offers four options for each stage of dementia, directing the person to "[s]elect one of the 4 main goals of care listed below to express your wishes. Choose the goal of care that describes what you would want at this stage."  The directive divides dementia into three stages, mild, moderate and severe.

The purpose of the dementia-specific advance directive is to express your wishes based on the specific "phase" of dementia you may enter in the future.  The website for this directive is here from which the 5-page directive may be downloaded.  The NY Times article describes that the directive:
"...in simple language...maps out the effects of mild, moderate and severe dementia, and asks patients to specify which medical interventions they would want — and not want — at each phase of the illness."
There are already a number of types of advance directives, with recent pushes for Physician Ordered Life Support Treatment (POLST) and other initiatives, such as the Conversation Project, and the Five Wishes.

Wednesday, January 17, 2018

FINRA and SEC Adopt New Rule to Help Curb Elder Financial Fraud

FINRA, the Financial Industry Regulatory Authority, Inc. (a private corporation that acts as a self-regulatory organization (SRO)). has released a series of questions and answers designed specifically to address elder financial exploitation. Frequently Asked Questions Regarding FINRA Rules Relating to Financial Exploitation of Seniors (FAQ's)  explains new rules that take effect on February 5, 2018.

The SEC recently approved: (1) the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; and (2) amendments to FINRA Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person (“trusted contact”) for a customer’s account. FAQs Nos. 1 and 2 deal with temporary holds, No. 3 deals with trusted contacts, and No. 4 with disclosures.  The FAQs are available here.

FINRA Rule 2165 allows a FINRA member firm that reasonably believes financial exploitation may be occurring or has occurred to place a temporary hold of up to fifteen (15) business days on the disbursement of funds or securities from the account of a “Specified Adult” customer.  A Specified Adult is either (a) a person aged 65 or older; or (b) a person, aged 18 or older, who the firm reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interest.

Rule 2165 also establishes additional recordkeeping requirements in order to comply with the rule including identification, escalation and reporting of matters related to the financial exploitation of Specified Adults.

Further, Rule 2165 requires a member firm’s supervisory procedures to identify the title of the person authorized to place, terminate or extend a temporary hold.  The person specified at the member firm must serve in a supervisory, compliance or legal capacity.

The rule allows member firms to exercise discretion in placing temporary holds on disbursements of funds or securities from the accounts of Specified Adults.  The rule serves as a safe harbor from violations of other FINRA rules, but Rule 2165 raises the question as to whether a stockbroker is qualified to pass judgment on the mental condition of his or her clients.

Additionally, the rule requires members to develop and documents training policies or programs reasonably designed to ensure that associated persons comply with its requirements to aid in identifying tell-tale signs of elder financial abuse.

Monday, November 27, 2017

Agent Under Power of Attorney Liable for Damages to Nursing Home for Breach of Contract

Nursing homes have devised numerous strategies to legally seek reimbursement from residents' family members in light of federal and state laws prohibiting them from demanding that family members personally guarantee payment of  a resident's nursing home bill. The Nursing Home Reform Act (NHRA), for example, which governs skilled nursing facilities and nursing facilities accepting Medicare and Medicaid assisted residents facilities cannot “require a third party guarantee of payment to [its] facility as a condition of admission (or expedited admission) to, or continued stay in, [its] facility.” 42 U.S.C. § 1395i–3(c)(5)(A)(ii); 42 U.S.C. § 1396r(c)(5)(A)(ii); see also 42 C.F.R. § 483.12(d)(2).  

Nursing Home admission agreements are, therefore, filled with alternate provisions, such as those requiring that family member or agents assist in obtaining Medicaid or other government assistance, or those requiring family member agents to ensure that the resident's assets are spent down on nursing home care.  Planners are concerned that these provisions might negate or interfere with otherwise lawful spend down strategies, such as spending assets for improvement of a home, or for purchase of a car for a resident's spouse.  

Supporting these efforts to find alternative reimbursement is a recent decision by an Ohio Court of Appeals.  The Court ruled in favor of a nursing home suing a resident's agent for breach of contract, holding that the nursing home is entitled to damages if the agent had control of liquid assets at the time the nursing home invoice came due even though some of the assets were paid to maintain the resident's home. Classic Healthcare Systems, LLC v. Miracle (Ohio Ct. App., 12th Dist., No. CA2017-03-029, Nov. 13, 2017).

David Miracle was his mother's agent under a power of attorney. When his mother entered a nursing home, he signed the admission agreement on her behalf and agreed to use his mother's finances to pay the facility. Mr. Miracle paid the nursing home infrequently, and his mother owed more than $100,000 by the time she was discharged.

The nursing home sued Mr. Miracle for breach of contract. Evidence showed that Mr. Miracle used $56,486.63 of his mother's resources to maintain her real estate and spent an additional $12,971.54 on payments not related to his mother. The trial court found that the additional payments were unauthorized and awarded the nursing home damages in that amount. The nursing home appealed, arguing that it was also entitled to the money that was used to maintain Mr. Miracle's mother's home.

The Ohio Court of Appeals reversed and remanded the case to the trial court.  The Court held that the nursing home is entitled to damages for breach of contract if Mr. Miracle "had control over liquid assets at the time an invoice came due." The court ruled that the trial court improperly looked at the entire nursing home stay as one transaction. According to the court, if Mr. Miracle "had control of [his mother's] liquid assets on the due date that were not paid to [the nursing home] then that amount constitutes damages properly payable to [the nursing home]."

For the full text of the opinion, go here


Saturday, October 28, 2017

Skipping the 401(k) RMD Without Penalty For Those Continuing to Work After Age 70


More than ever, workers are continuing to work into their 70s and beyond.  The general rules governing retirement accounts require nearly every individual account owner to begin taking Required Minimum Distributions (RMDs) by April 1 of the year following the year in which the owner turns 70½.  There exists a notable exception for employer-sponsored 401(k) accounts owned by employees who continue working past age 70½.


If the plan allows, an owner who leaves funds in the 401(k) can avoid RMDs if s/he remains employed with the employer who sponsors the plan.  Moreover, the owner can also continue to make contributions to the 401(k)! 

This exception has some significant requirements, though.  The current employer must sponsor the 401(k);  an owner cannot change employers and defer RMDs beyond age 70½.  In other words, if a former employer sponsors the relevant 401(k), the owner must take RMDs even if continuing to work for another employer that also sponsors a 401(k).  If the owner has more than one 401(k) and the plans allow for rollovers, however, it may be possible to roll all 401(k) funds into the 401(k) of a current employer and delay RMDs on all of the funds if the still working exception applies. Combining accounts will also simplify RMD planning once the owner stops working, because the RMD on each account would have to be determined separately.

The plan, too, must permit the exception.  Because not all 401(k) plans permit the exception, even though permitted by law, an account owner must ensure that his/her plan actually does allow the funds to remain in the plan to avoid a steep 50 percent penalty that apply to missed RMDs.

The exception does not apply if the plan is an IRA (whether a traditional, SEP or SIMPLE IRA).  As an aside, remember that RMDs do not apply to Roth IRAs during the original account owner's lifetime.   

Despite these carefully prescribed and limited conditions, the last condition, that the owner continues to work for the employer, is without a concrete definition, and therefore, may permit flexibility.  Because the IRS does not provide a provides a concrete definition of what it means to continue working past age 70½, it may be possible for an owner to continue working on a reduced-hours or consulting basis and still defer his or her RMDs past the traditional required beginning date.Of course, if special arrangements are crafted by an employer and employee, it is advisable to consult an attorney to document the special relationship in order to ensure that it won't be deemed a sham or fraudulent  arrangement by the IRS.

While an account owner may generally avoid taking RMDs from his or her 401(k) as long as s/he continues working past age 70½, many small business owners are not permitted to take advantage of this exception, because the exception does not apply to participants who are five percent owners of the business sponsoring the retirement plan.  Plan participants  who own a portion of the business sponsoring the 401(k) must also be aware of the constructive ownership rules that apply when determining whether s/he is a five percent owner; interests held by certain members of the owner's family (e.g., spouse, children, parents, etc.) and by certain entities which the owner controls  will be added to the ownership interest of the participant/business owner in determining whether the 5 percent threshold has been crossed.



The above article is based upon an article  published by ThinkAdvisor, which in turn was drawn from Tax Facts Online, and originally published by The National Underwriter Company, a Division of ALM Media, LLC, as well as a sister division of ThinkAdvisor. 

Monday, October 2, 2017

Nursing Home Complaints Rose by 33% over Four Years

From McKnight's Long Term Care News: complaints filed against nursing homes between and including the years 2011 and 2015 were up by a third, according to a federal report. 

In 2011, there were 47,279 complaints, which had risen to 62,790 by 2015, notes the new report from the Office of Inspector General Report from the Department of Health and Human Services.  More than half were prioritized as high priority or resulting in immediate jeopardy, triggering  onsite investigations within 10 working days. A third of complaints were substantiated, according to the OIG.

The increase in complaints may not reflect declining care quality, authors suggested, but instead, may reflect better options for filing and  tracking the reports.  For those concerned with care quality, however, the increase in complaints suggests that, even if care quality is not decreasing, care quality remains a significant challenge.  More than half of complaints related to quality of care/treatment or resident/patient/client neglect. Examples given included a lack of blood glucose strips for a patient with high blood sugar who was later found deceased, and a resident who called for assistance after a bowel movement and wasn't helped until three and a half hours later.

The summary of the Report reads:
"State survey agencies must conduct onsite investigations within certain timeframes for the two most serious levels of complaints-those that allege serious injury or harm to a nursing home resident and require a rapid response to address the complaint and ensure residents' safety. However, previous reports by OIG and the Government Accountability Office found that States did not conduct onsite investigations within the required timeframes for some of these complaints.
Each year, half of all nursing home complaints were at the level of seriousness that requires a prompt onsite investigation, and the most common allegations among these related to quality of care or treatment. During the period we reviewed, States conducted nearly all the required onsite investigations. Although almost all States conducted most of their onsite investigations within required timeframes, a few States fell short. Furthermore, almost one-quarter of States did not meet CMS's annual performance threshold for timely investigations of high priority complaints in all 5 years. Lastly, States substantiated (i.e., verified with evidence) almost one third of the most serious nursing home complaints.
Tennessee accounted for most of the immediate jeopardy complaints in the five-year period, the report says. Additionally, Tennessee, Arizona, Maryland and New York accounted for almost half of the high priority complaints not investigated onsite within 10 working days.

To read the Report, click here.  To read the OIG's summary and explanation of the Report, click here.

To learn how your estate plan might facilitate "Aging in Place," click here

Monday, September 25, 2017

Aging in Place: Use of Inappropriate Psychotropic Medications More Likely in SNFs with Over-Worked Staffs

New evidence suggests a link between overwork staffs in nursing facilities and the inappropriate use of psychotropic and antiphsychotic medications. Dutch researchers recently reported the results of a new study designed to identify possible patient and non-patient causes behind prescribing psychotropic drugs. The study included a sample of nearly 350 nursing home residents with a psychotropic drug prescription and dementia, according to an article published in McKnight's Long-Term Care News.  

The findings, published in International Psychogeriatrics, showed that the more patients and years of experience a physician had, as well as the higher the nursing staff's workload, the more likely the patient was to receive inappropriate psychotropic drug prescriptions.  Less appropriate prescriptions were also identified when residents had more severe anxiety, a diagnosis of dementia other than Alzheimer's, and more time spent with a physician.

Older residents and those with more severe aggression, depression and agitation were more likely to receive appropriate psychotropic prescriptions. 

The link between more pronounced symptoms and more appropriate prescribing “implies that physicians should pay more attention to the appropriateness” of prescriptions when symptoms are less obvious, the researchers said. The researchers also acknowledged that some of their findings may seem counterintuitive, and require more research before concrete recommendations are made.

Of course, this new evidence only supports the argument for planning to "Age In Place." For more information regarding Aging in Place planning, and the use of an Aging in Place suitable estate plan, go here.  

For more regarding negative health outcomes of the use of such medications in skilled nursing facilities, see Antipsychotics and Psychotropic Drugs Increase Fall Risks in Nursing Homes.

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