Unfortunately, many individuals, including many professionals, believe these two planning options are mutually exclusive and that one negates the need for the other. In fact, a carefully planned and cost-effective strategy to guard against the high costs of long-term care often includes both asset protection planning and long-term care insurance.

When used effectively, Medicaid planning can help individuals reduce prospective costs of long term care insurance, and long-term care insurance can provide certain services that New Jersey Medicaid doesn’t fund. What families need to know is which expenses are worthwhile and which can be cut.

Those looking for the simplest, least expensive asset protection plan must not forget that even partially implemented plans are often useless. Typically, individuals are concerned about protecting their residences from state liens and are willing to engage in legal planning for this purpose. Yet, on occasion, families are unwilling to take further steps that are necessary to protect stock accounts, IRA’s, CD’s, and other assets. Medicaid laws are extremely strict, and the financial requirements are definitive.

To qualify for benefits in New Jersey, an individual must not have countable assets in excess of $2,000, or, under certain programs, $4,000. A spouse’s assets are also subject to limitations. If an individual’s or couple’s liquid assets exceed the Medicaid resource limits, Medicaid will require that these be depleted before benefits begin. Therefore, as with long-term care insurance, certain costs of legal planning can be minimized while others cannot be compromised or the plan will be ineffective.

When engaging in asset protection planning, individuals must create a strategy that includes the possibility of remaining in one’s home and to the extent possible, receiving benefits to pay for in-home care. However, a large percentage of would-be Medicaid applicants are not eligible for in-home care subsidized by Medicaid in New Jersey because their monthly incomes are too high.

This year, the income limit to receive in-home care is $2,022 per month. Because many New Jersey residents are disqualified due to income level from Medicaid home care, individuals who anticipate reasonably high retirement incomes would be wise to purchase long-term care insurance with a home care rider, even if such an option results in somewhat higher premiums.

While trying to minimize costs, individuals cannot compromise certain aspects of the insurance and legal planning. For instance, insurance purchasers must not lose sight of the fact that the benefit amount they choose must cover the cost of care, taking prospective income and other expenses into account. Most of our clients are paying approximately $9,500 per month for a semi-private room in a nursing home and costs in excess of $6,000 in assisted living facilities. In trying to cut costs, purchasers must make sure they have ample coverage. Because the cost of nursing homes rises significantly and rapidly, inflation protection should be considered. Many policies offer this feature and allow the policy owner to pay the same premium over time while coverage increases.

While certain options should not be compromised, implementing a strategy that includes both long-term care insurance and asset protection planning can save individuals substantial assets in life savings and insurance premiums. While cutting the monthly insurance benefit amount is not recommended, individuals can save money on their long-term care insurance purchases by limiting the length of the benefit. Rather than choosing a policy that would pay out over the lifetime of the individual, individuals can still be adequately prepared to meet the costs of long-term care by selecting a policy that pays for nursing home care for a limited period of time.

Five years is an ample amount of time for the insurance benefit period because the Medicaid lookback period for a transfer of assets is set by federal law at 60 months. Those who consider long-term care insurance may wish to select an insurance benefit period of not more than five years. While the benefit period is occurring, the asset protection plan can be implemented and completed so that once the benefit payout ends, the Medicaid applicant can continue receiving the same level of care for which the insurance was paying and make a smooth transition to Medicaid benefits.

Even an insurance payout period as short as three years can make a large difference in clients’ abilities to protect their assets. Depending upon clients’ income and asset levels, many individuals can become eligible for Medicaid in less than five years from the time they first enter a facility. For those clients, a three year insurance payout term would still give a long-term care insurance policy owner ample time to protect savings through an asset protection plan and thereby still meet the primary goals of asset protection. A solid asset protection plan accounts for: reserving enough assets to meet care needs beyond the minimum for which Medicaid pays, protecting the spouse and helping maintain the family home and lifestyle, leaving an inheritance to children, and avoiding state liens.

Because federal law sets the Medicaid lookback period at five years, individuals must begin asset protection planning early to protect their savings. While many clients can become eligible for benefits prior to the expiration of five years from the time they begin asset protection planning, a majority of individuals would be well advised to begin legal planning when the possibility of nursing home care still seems extremely remote. On the other hand, individuals and couples that have purchased long-term care insurance have more flexibility as to when they might decide to begin asset protection planning since their savings will not recede as quickly as the accounts of individuals who are paying an average of $9,500 per month in nursing home care with no long-term care insurance.

Attorney Dana E. Bookbinder focuses much of her practice on elder law, and routinely recommends that clients investigate their long-term care insurance options. She practices with Begley Law Group, P.C., in Moorestown, Princeton, and Stone Harbor, New Jersey where clients seek her expertise in asset protection, disability planning, estate planning, and estate administration. However, when that option is foreclosed, she assists individuals in protecting their life savings through legal planning. When long-term care insurance and an asset protection plan are established in tandem at an early stage, these separate strategies will work together harmoniously to comprise a comprehensive, protective plan that maximizes savings for families.

Ms. Bookbinder has been certified as an Elder Law Attorney by the ABA accredited National Elder Law Foundation. She is a past Chair of the Elder and Disability Law Section of the New Jersey State Bar Association and past chair of the Burlington County Probate Committee. She has authored several articles on legal devices for asset, estate and tax planning in publications including the New Jersey Law Journal’s Financial Planning Supplement. She also lectures to civic and retirement groups and holds seminars sponsored by the New Jersey State Bar Association. She is also a member of NAELA and a life member of The National Registry of Who’s Who. Ms. Bookbinder is a member of the New Jersey State, Pennsylvania and District of Columbia Bar Associations. She received her bachelor’s degree with distinction from Cornell University and her juris doctor degree from The George Washington University Law School.

For more information:
Begley Law Group
http://www.begleylawyer.com
509 S. Lenola Road, Building 7
Moorestown, NJ 08057
Tel: 800.533.7227
Fax: 856.273.1062

With the cost of nursing homes now averaging approximately $9,500 a month for a semi-private room in New Jersey, this situation could be financially catastrophic. Because Medicare covers only an extremely limited amount of nursing home care, the cost of such care can devastate an estate, leave a spouse with inadequate assets to maintain the marital residence, or eliminate the chance of leaving an inheritance to one’s children.

Moreover, the stress of having a spouse in a facility and paying the bills for such care can ultimately impact the health of the spouse living at home. Those concerned about long-term care owe themselves the opportunity to investigate all options to protect their savings and current family financial situation.

All too often, couples who are seeking long-term care insurance find out they have begun their planning a little late when one of them learns that they can qualify for the insurance, but the other cannot. In the event that the spouse who is not covered by the insurance requires long-term care, both spouses’ estates will be dramatically impacted.

While being turned down by the insurance company is a disappointment and may encourage the spouses to consider how they can improve their health, the rejection in itself should not be allowed to lead the couple down a path of financial devastation. By being informed and proactive, couples can protect their savings even when one becomes sick. To maximize control over your financial future, keep the following in mind:

1. Begin early. When researching legal protection planning options and especially long-term care insurance, everyone must begin early. Generally, once an individual acquires a long-term illness, the person can no longer acquire long-term care insurance. This by no means suggests that the individual is unable to save substantial assets by engaging in legal planning, however. In fact, even after an individual enters a nursing home, the individual can still save substantial assets for his or her family through asset protection planning. Such legal planning is most effective when it is done early, usually before the prospective long-term care resident enters a facility. Every Medicaid application is also subject to a five-year lookback as established by federal law. Therefore, just as insurance premiums will be much lower the earlier one purchases the insurance, the savings through planning will be substantially greater. In addition, early planning gives families peace of mind and the security that generally comes from being proactive.

2. Select your advisor carefully. When purchasing insurance or considering legal planning, it is important to carefully select a provider. Increasingly, professionals are amassing more knowledge of Medicaid. However, the Medicaid asset transfer rules are complex, so partial knowledge of the subject is likely to place the client in a worse situation than if no planning had been done at all. Because many seniors discuss long-term care planning amongst themselves and with their trusted advisors, many myths abound. In New Jersey, for example, many professionals still try to sell annuities under the guise that these products will expedite Medicaid eligibility. While such claims may be true in limited cases, an annuity purchase by a senior citizen who is contemplating Medicaid eligibility is more likely to benefit the financial advisor than the purchaser. The most seasoned legal advisors to the elderly are likely to be members of the National Academy of Elder Law Attorneys (NAELA) or Certified Elder Law Attorneys (CELAs), accredited by the National Elder Law Foundation. Those seeking elder law advice should refer to www.naela.org.

Likewise, when choosing a long-term care insurance company, the selection must be done carefully. It is critical to choose a stable company that will be in existence for many more decades to come. Many insurance brokers agree that even a slight increase in premiums is worth the stability and security that a large company offers. Purchasers are best advised to select a broker who represents several companies so that they can review and compare different prices and features. Any long-term care insurance discussion should include a comparison of home care benefits to be paid out, including whether the policy has an inflation rider and a comparison of “elimination periods,” which show how long it will take before the policy begins to pay once the individual is incapacitated enough to trigger the benefit.

3. If one spouse is rejected from insurance coverage, consider both legal planning and insurance. In situations where one spouse is sick, the couple can plan for each of their care by purchasing long-term care insurance for the healthy spouse and engaging in asset protection planning for the ill spouse. This is commonly done, but couples are well advised to remember that Medicaid does look at the assets of the healthy spouse as well as the ill spouse when an application is filed. Therefore, while adequate insurance coverage will guarantee that the healthy spouse can retain assets and property in his or her name and still pay for long-term care if it is needed for him or her, a comprehensive asset protection plan is still necessary. Without legal planning, if the spouse without the insurance required institutionalization, the couple could be faced with an estimate of $9,500 of nursing home bills. On the other hand, through legal planning, the couple could convey the marital residence to the spouse who is covered by insurance and protect it if the other spouse ever requires Medicaid. They could also transfer certain other assets as consistent with state and federal law to the covered spouse, and in some cases to other family members, to minimize the financial impact of privately paying for care. Ideally, the spouse living at home can protect his or her standard of living, including being able to afford long-term care insurance premiums.

Attorney Dana E. Bookbinder counsels clients in asset protection, disability planning, estate planning, and estate administration. She has seen many clients that should be utilizing both a long-term insurance plan and asset protection plan to safeguard their life’s work and family. As a certified Elder Law Attorney at Begley Law Group, P.C. in Moorestown, Princeton, and Stone Harbor, New Jersey, she is skilled in helping individuals and families investigate their long-term care insurance options and plans for savings. The firm is highly respected for its successful track record and attention to their client’s needs to create a comprehensive, protective plan that maximizes a family’s savings and livelihood.

For more information:
Begley Law Group
http://www.begleylawyer.com
509 S. Lenola Road, Building 7
Moorestown, NJ 08057
Tel: 800.533.7227
Fax: 856.273.1062

Moorestown, N.J. – Estate planning for parents with disabled children is a very delicate and important proposition. During their lifetime, parents are able to provide emotional and financial support to their children. This support greatly enhances needs-based government benefits, which are frequently utilized by the disabled through supplemental security income and Medicaid.

But when parents pass away, these special children lose emotional support that can never be regained and are at crossroads financially as well. Without proper planning, these children could lose financial support and government benefits.

The Begley Law Group, PC will host a free presentation on special needs trusts on Tuesday, February 15 Tuesday, Feb. 15 from 7:30 to 9:30 p.m. at the NAMI Mercer Center in Lawrenceville, New Jersey.

“We will show you how to plan for the legal and support services so your loved one will have a good future,” said Thomas Begley III, New Jersey special needs planning lawyer at the Begley Law Group. “A properly designed and executed special needs trust will supplement public benefits such as SSI and Medicaid without jeopardizing eligibility.”

Begley Law Group, PC is very experienced in assisting clients with disabilities and helped start the Special Needs Alliance, a national group of accomplished attorneys who specialize in special needs planning and trusts. They are well versed in public benefits law, trust law, and the tax law affecting trusts and public benefits.

“Our goal is to ensure that your family and your disabled child has the best quality of life possible,” said Begley III, who also is the recipient of the Martindale-Hubbell Peer Review Rating of AV that is awarded to lawyers operating at the highest level of professional excellence and upholding the highest ethical standards and is recognized as a New Jersey Super Lawyer. “We get to know you and your family to tailor a plan specific to the needs and long-term care your child deserves as well as point out programs and documents that will help your child for life.”

Registration is required for the free session:

home@namimercer.org

609-799-8994

For more information:

http://www.begleylawyer.com

A person may be able to contest their loved one’s will if the person has good reason to believe that it is invalid. Contesting a will is a process that is based on a person’s firm belief that something is wrong with his or her loved one’s will or in the manner in which it was signed or procured.

A person should not contest a will simply because he or she thinks the loved one made a distribution of which he or she does not approve. Rather, one must have valid grounds to make the contest. To begin with, a will is presumed valid if it appears valid on its face, i.e. contains the signature of the loved one and the requisite signatures of disinterested witnesses in accordance with state law. In order to challenge a will, the challenger has the burden of coming forward with legally valid evidence that would justify a court of law in setting the will aside. There are only certain circumstances that would warrant a court doing so:

If the person can prove that the person making the will (also known as the testator) was suffering from mental incapacity to the degree that he did not know that he was making a will and/or did not know the nature or extent of his assets, nor the identity of his family, one may be able to establish that he lacked the requisite mental capacity to make a will. Evidence in this regard may include medical records, witnesses who had interaction with the testator and, possibly, the opinion of a forensic psychiatrist.

If a person believes that another person applied undue pressure upon the testator to change the distribution made in a prior will and/or to disinherit someone who would be the natural object of his bounty, that circumstance may perhaps show undue influence, which is often another basis to challenge a will.

Fraud is another basis to contest the will. For example, if a person can prove that the testator signed the will document without knowing or realizing that it was actually a will, or that he was given misinformation that caused him to sign the will in its present form or to change the distribution plan of a prior will, one may be able to establish that he was fraudulently influenced.

Further, if a person can show that the will was not properly executed according to state law, this may furnish another basis to contest a will. Example: the testator did not sign in the presence of the required number of disinterested witnesses, or that the actual signing was not properly witnessed.

“If you believe that your situation is similar to any of the above circumstances, you may wish to contact an attorney immediately to help you file a claim to ensure the proper distribution of your loved one’s estate,” said Gene L Osofsky, an elder law and estate planning attorney with the Law Offices of Osofsky Osofsky, with experience in trust administration and estate planning. “Also, be mindful of time limits. Usually a will contest must be filed before the will is admitted to probate. Speed may therefore be essential.”

To learn more about elder law and The Law Offices of Osofsky & Osofsky, visit http://www.lawyerforseniors.com/.

There are new changes in state law regarding California’s skilled nursing homes.

Nursing homes will now face fines if they do not maintain state-mandated staffing requirements under the reauthorization of AB 1629 signed by Gov. Arnold Schwarzenegger on Oct. 19. The state will now have new tools to enforce the existing staffing requirement of 3.2 nursing hours per patient per day, required of all nursing homes licensed in California that receive Medi-Cal or Medicare payments.

These changes were established for accountability’s sake to ensure that all nursing homes meet state requirements. They were designed to reinforce the Long Term Care Reimbursement Act of 2004, which increased funding for nursing homes to help them meet these staffing requirements. Until now, the 2004 act had not fully met its goal of improving patient care.

The new law will also increase the number of auditors investigating the nursing homes. It will also establish fines for those who are non-compliant.

“The reason for this legislation was to provide better enforcement of the required staffing ratios in nursing homes, in order to improve the quality of patient care,” said Gene Osofsky of the Law Offices of Osofsky and Osofsky, which specializes in elder law, estate planning and trust administration.

Skilled nursing homes and care facilities will face penalties and fines if they do not meet the staffing requirements as required by law. Although some nursing homes already staff at the state’s requirement, others will now be forced to comply through imposition of fines and penalties. “We hope that the new law will provide better enforcement of the required staffing and improve the quality of care for patients,” Osofsky said.

Gene Osofsky also gives tips on how to choose and evaluate a proper nursing care facility. Gene Osofsky is a lawyer who also deals with nursing care issues.

“What’s more important than a nice looking facility is the quality of care. One must look at how the residents in the nursing home are being attended to and how well they are being treated and respected. Try to visit a facility at a time that hasn’t been prearranged in order to get an unrehearsed version of how the place operates,” Osofsky said.

To learn more about elder law and The Law Offices of Osofsky & Osofsky, visit http://www.lawyerforseniors.com/.

Social Security turned 75 on August 14. While some celebrated its successes, the dominant narrative was instead that Social Security is in trouble. Politicians and pundits took note of Social Security’s anniversary amid renewed warnings about the dire challenges the program is facing.

In the political realm, discussion of Social Security has degraded more to the level of insult slinging and demagoguery than actual policy discussion. Democrats are accusing Republicans of trying to dismantle the nation’s most popular social insurance program (which they are) and Republicans are accusing Democrats of scare mongering about Republicans’ plans (which they are).

However, as is increasingly and unfortunately the case, the additional attention currently being paid to Social Security is not contributing to a better understanding of the program.

Debates about the health of Social Security are not new. Since President Roosevelt signed the Social Security Act in 1935, the program has never met a 75-year test for solubility. [1] Yet, 75 years later, Social Security is still paying all promised benefits to retirees and individuals with disabilities.

President George W. Bush made Social Security “reform” a key goal early in his presidency. However, even with non-stop media coverage and in some cases flat out fear-mongering, the idea of privatizing some or all of the nation’s Social Security program simply did not appeal to the majority of Americans. The inability to pass any changes to Social Security after making “reform” key to his agenda was one of President Bush’s larger legislative failures.

The debate over what, if any, changes should be made to the Social Security system was quieted during the later years of the Bush presidency, but has resurfaced with vigor as President Barack Obama approaches the midway point of his first term. The resurgence of the debate can be attributed to several factors. Republicans, pandering to an increasingly extreme base in the coming 2010 mid-term elections, are using public confusion about the program to foment an atmosphere of fear and panic over looming budget deficits. Ideology also plays a roll. Conservatives do not like Social Security. It is a popular, effective government program that runs counter to the dogma that government can do no good. Finally, some politicians and economists are engaged in a good faith effort to make sure seniors who rely on Social Security and workers who have been promised Social Security will continue to receive benefits into the foreseeable future.

One key group investigating the future of Social Security is President Obama’s deficit commission. In February, the president created the National Commission on Fiscal Responsibility and Reform, and tasked the commission with developing solutions to help maintain the nation’s long-term fiscal solubility. Social Security leads the commission’s agenda, and members are mandated to produce a series of recommendations by Dec. 1, 2010. [2]

From its inception, the commission has received criticism from the left for its conservative makeup, being comprised of Republicans and moderate- to conservative-leaning Democrats. In a recent Washington Post article, Ezra Klein scored the six Republicans and six Democrats on the commission using DW-NOMINATE rankings. He found that the Senate Democrats on the committee are more conservative than the average Senate Democrat and that the Senate Republicans on the commission are also more conservative than most of their Senate Republican colleagues. The result, in his view, being a committee evenly split in terms of partisan affiliation but right leaning in terms of ideology. [3]

Klein’s analysis of the commission follows a wave of criticism directed at its co-chair, former Republican Senator Alan Simpson. Simpson, proving himself out of touch with working Americans, described Social Security as a “a milk cow with 310 million tits.” In addition to showing a striking lack of tact (the quote coming from a letter written to the head of the National Older Women’s League), Simpson’s rant proves he either does not care about or does not understand the actual workings of the Social Security insurance program. Social Security, funded separately from rest of the federal budget, quite simply pays benefits to those who have paid in. In order to qualify to draw Social Security, an individual must work and contribute to the program for 10 years. Social Security is not means tested; benefits are paid progressively as a percentage of former earnings and contributions.

The mean Social Security benefit is around $14,000 a year, providing 40 percent of retirement income for the average American. [4] According to the Center on Budget and Policy Priorities, Social Security lifts 20 million Americans out of poverty. [5] And, according to a recent national survey commissioned by the AARP, 85 percent of adults oppose cutting Social Security and half of non-retired adults support paying higher payroll taxes to ensure the systems stays solvent. Younger Americans, while skeptical about the program’s future, are particularly supportive of the program. 90 percent of respondents aged 18 to 29 said they believe Social Security is important. [6]

However, while Social Security is popular, many Americans, particularly young Americans, are skeptical about its future. Much of this can be attributed to the misunderstandings and mistruths that are continuously perpetrated by some in Congress and in the media. Here are the truths behind some of the more common Social Security myths.

1. Social Security adds to the deficit.

Social Security, by law, cannot add to the deficit. It is a separate program, paid into through FICA contributions, with benefits paid only from the revenue it raises. If the trust fund were to be exhausted and current contributions were not adequate to pay benefits, Social Security could not borrow from the general budget. Federal law prohibits Social Security from borrowing.

2. Social Security is broke, and there is no “Trust Fund.”

Conventional wisdom among Social Security skeptics is that the program is out of money now and that there is no Social Security Trust Fund. This is fueled largely by the fact that Social Security did begin to pay more in benefits than it received in taxes earlier than was projected due to the depth of the 2008 recession. Regardless of this fact, The Social Security Trust Fund currently runs a $2.5 trillion surplus. The Economic Policy Institute estimates the surplus will peak at $4.2 trillion in 2024 [7]

Trust Fund intact, with no changes to the program, Social Security is projected to be able to pay 100 percent of benefits until the year 2037. After 2037, Social Security will still be able to pay 75 percent of benefits. [8] A program projected to meet costs almost 4 decades into the future with no adjustments is not a system in crisis. Other government programs would be hard pressed to meet such a standard.

3. The Trust Fund has been raided and is just full of IOUs.

Those who decry the vacuous trust fund, eliciting imagery of a big room with lonely piles of IOUs, are in reality making claims against the creditworthiness of the United States government. True, the Social Security Trust Fund is not sitting around in a lock box as Al Gore eloquently stated. The funds are invested in Treasury Bonds, “full faith and credit” notes that the government issues to many of its creditors. Since the federal government has never missed a payment on its debt, and is not expected to anytime soon, to claim the Trust Fund is full of useless IOUs is disingenuous.

4. The retirement age must be raised because people are living longer

The retirement age argument is tricky because two things are the case: more baby-boomers are soon to retire, and people, on average, are living longer. The argument seems logical on its face, but the reality is very different.

The crux of the issue surrounding the retirement age is that the rise in life expectancy since 1935 is largely due to lower infant mortality rates and is unevenly spread among income levels. Since 1972, life expectancy has increased by 6.5 years for top earners, but by less than two years for workers in the bottom half of the earnings bracket. [9] Because of this disparity, the less affluent, those who most need social security, will see the greatest benefit cut. It is not as difficult to imagine staying in a well-paying office job for a couple more years as it is to continue working lower-paying labor-intensive jobs until age 70.

In addition, the retirement age is already set to increase gradually, due to a 1983 law, until it reaches 67 for people born after 1959.

5. Benefit cuts are needed

To the extent that there will be shortfalls in the Social Security budget in the future, they are minor in relation to other budget expenditures, and can be corrected without cutting benefits. In 1983, when Social Security actually did run out of funds, a “deal” was made with workers to put Social Security back in the black. Payroll taxes were raised, significantly, on middle and lower income workers. The tax increase was highly regressive, but, coupled with a raise in the retirement age, was responsible for building the large surplus Social Security enjoys today.

The increase in taxes on lower income individuals also allowed Reagan to cut taxes on those earning higher incomes. At the time, implicit in the deal was the idea that lower income workers would overpay their taxes for 30 years, at which point higher income individuals would pitch in to relieve some of the burden and cover any funding shortfalls. After a period of overpayment of payroll taxes, the tables would turn, and middle and lower income individuals would begin to underpay payroll taxes with the difference being covered by a raise in income taxes on higher earners. [10]

Thirty years later, the second part of that deal has been conveniently forgotten. Without cutting benefits, and in the spirit of Alan Greenspan’s 1983 recommendations, creating new sources of revenue could increase funds. The cap on Social Security taxed-income, currently $106,800, could be raised or eliminated. Other taxes, like a proposed financial transactions tax, could be implemented. The 75-year projected Social Security deficit is roughly equal to the cost of extending President Bush’s tax cuts on those earning over $250,000 a year for the same period. [11]

The logic, as Paul Krugman stated, is that benefits have to be cut to avoid cuts in benefits. That logic does not add up. [12]

6. Social Security faces the same issues as Medicare and Medicaid.

Social Security often gets lumped in with Medicare and Medicaid as a problem “entitlement” program. It is true, Medicaid and Medicare do face funding problems, but much of this is due to the ballooning costs of health care. Social Security does not face the same problems as Medicare and Medicaid as payouts are not affected by rising health care costs.

Even with these realities, many watching the Social Security debate expect the deficit commission to offer a package of several cuts, including an increase in the retirement age. It is anticipated these cuts will be coupled with some sort of an increase in payroll taxes for wealthier Americans.

Current and future retirees would be well served if politicians would stop confusing the distinction between cuts in Social Security and cuts in the national debt. Mounting deficits are a legitimate concern, but can in no way be attributed to Social Security. Americans, both those receiving Social Security benefits, and those planning to receive benefits in the future, acknowledge the significance of the Social Security. A program that is so important to so many Americans deserves an honest debate.

SOURCES

1. http://www.epi.org/publications/entry/webfeatures_viewpoints_ss_myth/

2. http://www.fiscalcommission.gov/

3. http://voices.washingtonpost.com/ezra-klein/2010/08/the_republicans_on_the_deficit.html

4. http://www.huffingtonpost.com/mark-miller/its-time-to-bolster-socia_b_696327.html

5. http://www.cbpp.org/cms/index.cfm?fa=view&id=3260

6. http://www.aarp.org/work/social-security/info-08-2010/social_security_75th.html

7. http://www.epi.org/analysis_and_opinion/entry/fact_check_has_social_security_begun_tapping_its_trust_funds/

8. http://www.ssa.gov/OACT/TR/2010/index.html

9. http://voices.washingtonpost.com/ezra-klein/2010/07/more_on_raising_the_retirement.html

10. http://motherjones.com/kevin-drum/2010/08/deal

11. http://www.cbpp.org/cms/?fa=view&id=3262&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+cbpp%2FfYJq+%28Center+on+Budget+and+Policy+Priorities%29#_ftnref1

12. http://www.nytimes.com/2010/08/16/opinion/16krugman.html?_r=1&hp

This repeal has the potential to affect the estate plans of millions of Americans, as wills and trusts that were once properly prepared may no longer provide protection for spouses or other beneficiaries upon the death of a family member. The lawyers at Littman Krooks LLP have carefully studied the potential impact of the repeal of the Federal Estate Tax and encourage attendance for those who want to ensure that their estate plan is not obsolete.

The seminar will be offered in two sessions on Wednesday May 12, 2010, at the Duchess County Regional Chamber of Commerce in Poughkeepsie, NY. Registration for the morning session begins at 9:30 a.m. in Room 400. The morning session will be held from 10:00 a.m. to 11:00 a.m. Registration for the afternoon session begins at 3:30 in Room 400. The afternoon session will be held from 4:00 p.m. to 5:00 p.m.

For families whose loved ones die in 2010, the repercussions of the Federal Estate Tax repeal could only add to their grief at the passing of their loved one. The seminar will cover the challenges facing estate planning in 2010 and the consequences of this unusual appeal. This appeal has created unprecedented uncertainty in the world of estate planning, and the lawyers at Littman Krooks LLP wish to offer their guidance in these uncertain times.

Attendance to this event is limited, so those interested in attending must reserve a place by phoning Melissa Hayn at 845-896-1106 or emailing mhayn@littmankrooks.com.

For more information on the firm, visit www.littmankrooks.com. Littman Krooks LLP offers legal services in several areas of law, including elder law, estate planning, veterans’ benefits, special needs planning, special education advocacy, and corporate and securities.

Parents’ intentions regarding gifts to children should be made clear in their estate planning documents. A document could state, for example, that you are not making any adjustments based on gifts you have made. Doing so will make it clear that none of the children should receive a reduced share of the estate based on past gifts. On the other hand, you could list past gifts that have been made and carefully explain why one child is receiving a reduced share of the estate.

Loans made to your children should also be addressed in your estate planning documents. Verbal loans can be particularly tricky. You might, in this case, make a provision in your documents that classifies all verbal loans as gifts. If, however, there are verbal loans that you do not wish to have considered as gifts, you should state this in writing. If you wish to consider loans made to your children as advances on their inheritance, then this should also be specified in your estate planning documents.

Carefully considering and planning how you would like to deal with gifts and loans to your children will help avoid conflict among them in the future. You should consult an estate planning attorney to ensure that your legal documents provide guidance regarding your intentions.

Learn more at Littmankrooks.com.

The SEC’s adoption of amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940 (the “Amended Custody Rule”) and related changes to Form ADV are effective March 12, 2010.

The primary purpose of the amendments to the custody rule is to impose additional controls on registered investment advisers (RIAs) who have access to client funds and securities. RIAs have “custody” of client assets when they have: possession of client funds or securities, are authorized to withdraw client funds or securities maintained with a third-party custodian, or possess legal capacities that gives them legal ownership of, or access to, their client’s funds or securities.

These amendments are part of the SEC’s attempt to deter fraudulent activity, to restore the public’s faith in the investment advisory industry, and to restore their faith and confidence in the SEC.

The amended custody rule will now require an advisor with custody to complete the following actions:
submit to an unplanned, annual audit of all discretionary accounts administered by an independent public accountant registered with the Public Accounting Oversight Board (PCAOB) in order to verify client assets
the advisor or related person must obtain an annual written internal controls report from an accounting firm registered with PCAOB, unless these accounts are held at a third-party custodian
the advisor must send a notice to the client, if the advisor is opening an account on behalf of him/her with a qualified custodian. This notice must include contact information for the custodian as well as a statement encouraging the client to compare the account statements of the custodian and advisor.

the advisor must have a reasonable basis for believing that the custodian sends statements to clients on a quarterly basis.

While the adoption of these amendments may work to decrease fraudulent activity, adopting these measures will also impose significant costs on investment advisors without offering a proportionate benefit to their clients. In spite of the potential costs of these new amendments, all SEC-registered investment advisors are required to comply with theses updated custody rules by the effective date, unless other compliance dates have been specified.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit Littmankrooks.com.

On the other hand, an Intervivos Special Needs Trust is also meant to protect the future of the person with the disability but allows parents or caregivers to deposit money and other assets into the account and manage it while they are still living. Parents do not have to wait until the child turns 18 to establish this trust but can establish it at any time. An Intervivos Special Needs Trust offers several key benefits:

• The trust is completely separate from the family’s main estate.

• There is more freedom in managing the trust, as it is normally managed by the child’s parents.

• Using this account will help to keep a record of all the supplementary items that have passed government scrutiny. This will make it easier for the future trustees to know which items are appropriate and will provide a guide for them to use in the future.

• These types of trusts will allow family members to give money to the trust now, rather than just upon their deaths, where there may be significant tax issues that prevent them from donating as much money as they would like.

In creating an Intervivos Special Needs Trust, families will ensure a secure future for the person with the disability. This type of trust will continue to function without interruption in the event that parents have to go into a nursing home or die suddenly. Also, the trust allows for greater flexibility and the ability to build up assets over time.

It is important for family members to consult with an attorney who specializes in special needs planning, as they consider the benefits and drawbacks of each type of trust.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit Littmankrooks.com.

Elder abuse occurs when a victim is financially exploited, usually due to his or her diminished mental capacities. Financial elder abuse can take a number of different forms, including stealing money and other assets, forcing the elder to sell his or her property, and withholding money from the elder for daily living expenses. Taking an elder’s money and using it for purposes other than caring for or increasing the elder’s quality of life may be financial abuse.

Abuse of this nature is a crime, and it is often committed by someone who is close to victim– a family member, close friend, or even a service provider such as a doctor or therapist. Fraud, theft, forgery, extortion and the wrongful use of a Power of Attorney are other popular forms of financial abuse. This kind of exploitation may occur with or without the victim’s knowledge. Often, this kind of abuse may go unreported because of the elder’s inability to identify the situation, fear of the abuser, shame at the fact that he or she can’t control the situation, fear that he or she will not be believed, or a feeling that he or she is incapable of accurately describing the situation due to mental incapacitation.

Financial elder abuse also occurs when the victim is manipulated into signing legal documents, such as changing a Durable Power of Attorney, trust details, or Living Will. This practice commonly affects elders who have decreased mental capabilities, which makes it easier for them to be manipulated.

If you suspect this is happening to one of your elderly loved ones, there is something you can do to correct and even prevent it. Importantly, if the elder in question has any form of cognitive deficiency or he/she has been diagnosed with dementia, you can obtain a letter from the elder’s physician stating that the elder is no longer competent enough to handle finances. Without any medical or psychological evaluations of the elder, it is difficult to provide protection from financial abuse.

To prevent this kind of abuse, you may wish to consult an elder law attorney, who may be able to obtain permission from the court for an evaluation, even if the elder’s “agent,” does not wish to obtain such a test. An elder law attorney can help guide you through the process and help to secure your loved one’s health and happiness.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit Littmankrooks.com.

Same-sex couples are at a disadvantage when it comes to receiving 401(k) benefits. Same-sex surviving spouses, unlike the surviving spouse in a married union, cannot directly receive the balance of their deceased spouse’s 401(k) plans. Because they must begin making withdrawals on the balance right away, they face a higher tax rate than their married counterparts and experience the loss of accruing interest. In addition, a married person can transfer his or her deceased spouse’s 401(k) funds into an IRA without paying taxes, yet a gay or lesbian who inherits 401(k) funds may end up paying up to 70 percent of those funds in taxes and penalties.

Pension benefits also do not apply to same-sex couples in that way that they apply to married couples. If a worker passes away, most pension plans will pay survivor benefits solely to a legal spouse of the participant. As such, gay and lesbian partners are excluded from these pension benefits. Not receiving these benefits could cause significant financial problems for surviving same-sex spouses.

In order to better plan for their future, same-sex couples should consult with an attorney who specializes in estate planning.

While the current relief from estate taxes seems promising, the estates of those who pass away before the end of the year may not be given to their heirs free and clear. In fact, Congress may have the ability to reinstate estate taxes for this year and make them retroactive to January 1, 2010. If this happens, Congress may impose the rates from 2009 or they may increase these rates.

These changes in the estate tax law may significantly impact your estate planning documents. To learn more about how the change in estate tax affects you and your family, contact a lawyer who specializes in estate planning.

Same-sex couples are at a disadvantage when it comes to receiving 401(k) benefits. Same-sex surviving spouses, unlike the surviving spouse in a married union, cannot directly receive the balance of their deceased spouse’s 401(k) plans. Because they must begin making withdrawals on the balance right away, they face a higher tax rate than their married counterparts and experience the loss of accruing interest. In addition, a married person can transfer his or her deceased spouse’s 401(k) funds into an IRA without paying taxes, yet a gay or lesbian who inherits 401(k) funds may end up paying up to 70 percent of those funds in taxes and penalties.

Pension benefits also do not apply to same-sex couples in that way that they apply to married couples. If a worker passes away, most pension plans will pay survivor benefits solely to a legal spouse of the participant. As such, gay and lesbian partners are excluded from these pension benefits. Not receiving these benefits could cause significant financial problems for surviving same-sex spouses.

In order to better plan for their future, same-sex couples should consult with an attorney who specializes in estate planning.

While the current relief from estate taxes seems promising, the estates of those who pass away before the end of the year may not be given to their heirs free and clear. In fact, Congress may have the ability to reinstate estate taxes for this year and make them retroactive to January 1, 2010. If this happens, Congress may impose the rates from 2009 or they may increase these rates.

These changes in the estate tax law may significantly impact your estate planning documents. To learn more about how the change in estate tax affects you and your family, contact a lawyer who specializes in estate planning.