The case, filed in Albany federal court on December 3, follows a Supreme Court decision from March that suggested individuals may have a constitutional right to possess Tasers and other stun guns in Massachusetts. New York and four other states — New Jersey, Massachusetts, Rhode Island and Hawaii — prohibit civilians from owning stun guns. The stun-gun ban in Washington D.C. was lifted in September after a lawsuit.

The latest complaint was brought by California-based national gun rights advocacy group the Firearms Policy Foundation and the Firearms Policy Coalition. Matthew Avitabile, the mayor of Middleburgh, New York, is also a plaintiff in the case.

According to the lawsuit, Avitabile originally wanted to buy a Taser for self defense. The complaint said, “Plaintiff would prefer to minimize the likelihood that he would have to resort to deadly force in the event he was forced to defend himself or his home from a violent criminal attack.”

Avitabile argued the Taser ban is unconstitutional and that nonlethal stun guns should be available for self defense like traditional firearms. The lawsuit claimed using a nonlethal form of self defense would spare the plaintiff from potential arrest in case he is forced to use a weapon while defending his property from intruders. In addition, the complaint said knives, pepper sprays and other weapons are not as effective as stun guns when it comes to self defense.

Passengers leaving from LaGuardia and John F. Kennedy airports are vulnerable to identity theft and price gouging. Uber said the fake drivers have been stealing cash and credit card information from people before they use the app to request a ride. The drivers are allegedly colluding with fixers who linger near arrival areas and aggressively solicit passengers. It is illegal for drivers to schedule or accept rides at airports without using the official Uber app.

The company conducted a 15-day review of the situation at the two airports, saying it has “reached crisis levels.” They found that scammers are making as many as 2,300 illegal rides each week.

Uber filed an official complaint with the Port Authority of New York and New Jersey, which manages the metro-area airports. Company spokesman Josh Mohrer wrote a letter requesting the department to investigate the problem, saying, “In recent weeks, the conditions at the terminal have noticeably worsened.”

Identity theft, credit card fraud and related crimes are serious charges that require skilled defense. An experienced attorney can fight on the accused person’s behalf to avoid jail time.

Devon Guishard led the identity theft ring. He and Tameek White were charged with felony grand larceny in the September 26, 2015 scam. Patricia Fields and Michael Maurice Grayson were charged with felony identity theft.

Grayson and Fields adopted the identities of a Florida doctor and a retired FBI agent from Ohio in order to obtain financing for the vehicle. They forged their U.S. passport cards and drivers’ licenses. The duo also used the victims’ Social Security numbers and forged their signatures on various applications and purchase papers, including registration and insurance.

According to the Westchester County District Attorney’s Office, White brought a down payment of $9,000 to the car dealership so that the purchase would appear genuine. White updated Guishard about the sale’s progress via cellphone. Guishard arrived at the dealership when the transaction was completed and drove the vehicle away.

The group intended to resell the vehicle in other states. Investigators located the stolen car in Texas. Authorities found the identity theft ring conducted similar luxury car scams elsewhere in New York, as well as Arizona, California, Maryland, New Jersey and Texas.

White was sentenced on August 5 to time served in jail. Fields and Grayson each face between one to three years in prison. Guishard will be sentenced to two to four years in prison.

According to the Union Leader, the student is looking to hold liable the school district and two of his former coaches. The school district had filed a motion to dismiss, and the judge denied this request. This ruling was reaffirmed upon a motion for reconsideration.

Plaintiff suffered a spinal cord injury during a preseason football practice in 2010 that rendered him quadriplegic. He was just 15-years-old at the time, and was a member of the school’s junior varsity team.

Today, he’s 21 and his entire life has been significantly altered.

Legal counsel for the school district continues to assert that recreational use statutes should allow the district to claim immunity. New Hampshire, just like Florida, has a recreational use statute. Governmental agencies as a rule have sovereign immunity from injury lawsuits, except where they have provided a waiver of liability in certain instances. In New Hampshire, those rules are spelled out in RSA 507-B:5. In Florida, the sovereign immunity waiver is spelled out in F.S. 768.28.

Florida’s recreational use statute, as codified in F.S. 375.251, states that owners or lessees of land who open it to the public for free and recreational use enjoy immunity for injuries suffered on that site. However, this statute primarily deals with premises liability. In this case, the school is accused of liability for failure to ensure the coaches gave instruction to players pertaining to the risk of serious injury if tackling was attempted without players keeping their heads up.

This practice marked the team’s first contact practice, wherein the team was wearing pads in their uniform. Plaintiff alleges that at no point was there any evaluation of whether plaintiff or others:

• Understood how to properly and safely conduct a tackle;
• Knew the critical importance of keeping one’s head up during a tackle;
• Was physically able to tackle.

Court records show the personal injury occurred the very first time plaintiff attempted a tackle in a drill against a running back. He put his head down and charged, colliding, head-on with the knee of the oncoming call barrier. As a result of the impact, plaintiff suffered a broken neck.

Plaintiff accuses the coaches and the school for negligent training and negligent supervision.

Although playing sports for a team is a key part of the school experience for many youth. However, there are some inherent risks of personal injury involved in certain sports. Generally speaking, coaches are not strictly liable for injuries, which means plaintiffs need to show negligence and – with regard to school districts – overcome assertions of sovereign immunity. Whether an injury is compensable will depend on a number of factors, including:

• Whether the athlete signed a waiver of liability;
• What level of involvement the school district had in organizing/ overseeing the sport;
• What degree of training the coaches had;
• What degree of training coaches gave to students.

We may also look to see whether the school district or property owner had an insurance policy that would cover student athlete injuries incurred in the accident.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Judge reaffirms ruling not to dismiss paralyzed football player’s lawsuit against Nashua School District, coaches, Oct. 18, 2016, By Kimberly Houghton, Union Leader

More Blog Entries:

No Child Injuries in Miami School Bus, Man Hospitalized, Sept. 29, 2016, Miami Child Injury Lawyer Blog

by Thomas D. Begley, Jr., CELA

There are a number of alternatives to a Third Party Special Needs Trusts. These include the following:

• Disinherit a Child. The problem with this strategy is that one cannot be certain that public benefits, as we know them today, will continue forever. Many public benefits have been cut back in recent years and there is no guarantee that current benefits will not be reduced as well. Many parents who have severely disabled children, whose needs are covered by public benefits, will consider disinheriting the children, but they should be made aware that current public benefits may not be there when the child needs them in the future.

• Leave Money to the Child. The problem with this approach is that unless the funds being left to the child are very significant, they may not last long if the child’s needs, particularly medical needs, are great. It is usually better to maintain public benefits and establish a trust for needs or wants that will not be covered by public benefits.

• Leave Funds to Sibling. This is the common strategy that frequently backfires. The idea is to leave the share of the person with disabilities to a brother or sister with the understanding that the brother or sister will use that money to care for the child with disabilities. The problems occur when the child to whom the funds are left is sued by a creditor, is divorced, or simply says, “I want to use this money for myself, not in the Will says that I have to use it for my sibling with disability and I am not going to use for that purpose.” Sometimes it is the sibling that makes this decision, but frequently it is the spouse of the sibling who pushes for that result.

• Pooled Trust. A Pooled Trust is a good solution for relatively small amounts of money. If the trust is less than $100,000, Pooled Trust makes sense. If it is between $100,000 and $200,000, a Pooled Trust should be compared to a Third Party Special Needs Trust. If the amount involved is in excess of $200,000, a Third Party Special Needs Trust is almost always the best solution.

• ABLE Account. New Jersey has adopted legislation authorizing ABLE accounts. These accounts are expected to come into existence sometime in the Fall. A problem is that not more than the gift tax annual exclusion amount can be contributed to an account in any one year and no beneficiary can have more than one account. The annual exclusion gift tax exemption for 2016 is $14,000. So, if the inheritance is $14,000 or less, an ABLE account might make sense.

by Thomas D. Begley, Jr., CELA

New Jersey has passed the Achieving a Better Life Experience ACT (“ABLE”). While the Act has passed, it will take some time to implement. Many commentators believe that by the end of the year accounts will be authorized.

Under the ABLE Act, people with disabilities and their families may set up special savings accounts similar to 529 Plans to be used for disability-related expenses. Earnings on these accounts are non-taxable. Generally, if the fund does not exceed $100,000, it will not be counted for Supplemental Security Income (“SSI”) purposes. If the fund exceeds $100,000 then SSI will be suspended, but Medicaid can be continued so long as the total amount in the account does not exceed the amount authorized for 529 Plans. To be eligible, an individual must become disabled prior to age 26 and be disabled. If the individual receives Supplemental Security Disability Income (“SSDI”) or SSI or files a Disability Certification under IRS Regulations, she will be considered disabled.

Funds can be used for education, housing, transportation, employment training, support, assistive technology, personal support services, health, prevention and wellness, financial management and administrative fees as well as legal fees and expenses for oversight and monitoring.

The total amount contributed to an ABLE account in any one calendar year by all contributors cannot exceed the amount of the federal annual gift tax exclusion, which for 2016 is $14,000. The drawback to these accounts is on the death of the account owner, any funds remaining in the account must be used to repay Medicaid for any funds advanced on behalf of the account holder. The best strategy seems to be to use these accounts for small gifts. Normally, these accounts would be used for gifts from parents. As long as the gifts are less than $14,000 per year and do not accumulate very much, these accounts might make sense. However, because of the Medicaid payback, it does not make sense to have these accounts grow. A Third Party Special Needs Trust is a much better option, if the amount involved is significant.

The advantages of an ABLE account are the tax-free income. However, realistically this is not a significant advantage because the income on small accounts is low and the other income of the beneficiary with a disability is usually low, so the tax saving sounds more attractive than it actually is. A second advantage is that there is a minimal cost to establishing the account when compared to establishing a Pooled Trust or a Third Party Special Needs Trust. A third advantage is that distributions from an ABLE account for the beneficiary’s food and shelter do not reduce the beneficiary’s SSI payment.

The disadvantages are the Medicaid payback and the possible loss of SSI. Because of the Medicaid payback, it makes little sense to build up a large account. The SSI benefit of approximately $750 per month is a significant benefit that should be protected.

Ideally, ABLE accounts appear to be useful if they are in the $25,000 to $50,000 range, but not for larger accounts. A Pooled Trust or Special Needs Trust would be more appropriate.

A Manhattan federal jury found Larry Davis, 65, and his company guilty of defrauding the Port Authority of New York and New Jersey. His company, DCM Erectors Inc., won contracts to work on the World Trade Center site destroyed by the September 11, 2001, terrorist attacks. Davis pretended he was promoting a minority-owned businesses in order to obtain almost $1 billion for the construction.

Prosecutors claimed that in 2007 Davis was awarded contracts that required him to allocate millions of dollars to hiring subcontractors that were minority or women-owned businesses. Davis set up two fake firms to help him obtain contracts. He paid bribes to have documents signed for submission to the Port Authority. Meanwhile, DCM or other firms affiliated with the contractor carried out the construction.

The scheme earned him $256 million for work on the Freedom Tower and a $330 million contract for the World Trade Center Transportation Hub. Prosecutors claimed the amount paid to Davis’s firm ultimately surged to nearly $1 billion when he claimed more funds were needed to complete the construction. The Mississauga, Ontario, resident was arrested in 2014. He will be sentenced on November 15 and faces up to 40 years in prison.

by Thomas D. Begley, Jr., CELA

There are four main issues to be considered in drafting any trust involving a potential Medicaid recipient. These include:

• Availability;
• Transfer of asset penalty;
• Payback provision; and
• Tax considerations, including income, gift and estate taxes.

Let’s examine each of these issues in the context of a DASNT.

Availability. The assets in the DASNT would not be available, because the trust would be designed to give the trustee complete discretion with respect to distributions. Standard Third-Party Special Needs Trust language would be used in designing the trust. The standard DAT language would also be included. Because of the special needs provisions, the assets in the trust are not counted as assets of the beneficiary.

Transfer of Asset Penalty. There would be no transfer of asset penalty imposed upon the grantor, usually a parent or grandparent, by SSI and Medicaid, because there is a statutory exemption^[1] from the penalties for transfers of assets to or for the sole benefit of individuals with disabilities. For a child with a disability, there is no age limit. If the beneficiary of the DASNT is an individual other than a child, there is an age limit of 65.

Payback. Whether a “sole benefit of” trust is subject to a Medicaid payback is open to question. New Jersey takes the position that such a trust must include a Medicaid payback and this issue has not been litigated.

Tax Considerations

• Income. The income generated by a DASNT is taxed to the beneficiary.

• Gift. There would be a gift from the grantor to the trust for gift tax purposes.

• Estate tax. The assets in the trust would be excluded from the estate of the grantor, but included in the estate of the beneficiary.

[1] 42 U.S.C. §1396p(c)(2)(B).

By Thomas D. Begley, Jr., CELA

The Concept

A sole benefit of trust is a creature of HCFA Transmittal 64.’ These trusts have traditionally been used in crisis planning. They can be established for the benefit of disabled persons—a Disability Annuity Trust (“DAT”).2 The idea is that assets would be transferred to an irrevocable trust for the sole benefit of the disabled individual. The assets in the trust were then paid out to the beneficiary on an actuarially sound basis using the actuarial tables contained in HCFA Transmittal 64.;i However, some states, including New Jersey, maintain that despite the clear language in HCFA Transmittal 64, the language in the statute “sole benefit of” means that a Medicaid payback provision is required. Because the assets were transferred to an irrevocable trust “for the sole benefit of” a disabled individual, the transfer is not subject to the Medicaid transfer penalty rules.

This is a particularly useful device where (1) there are highly appreciated assets and utilization of the trust makes it possible for a “step up” in basis to be obtained, and (2) advanced planning has not been done and the transfer of assets to children would result in significant periods of Medicaid ineligibility. There are two issues to be considered in utilizing “for the sole benefit of” trusts: transfer rules and availability.

Transfer of Asset Penalty

A sole benefit of trust is exempt from the Medicaid transfer of asset penalties.

Age limit

If the sole benefit of trust is established for a disabled child, there is no age limit.

Sole Benefit of child

The trust can be established for a disabled child age 65 or older.4

Sole benefit ofother disabled individual

If the sole benefit of trust is established for an individual other than a child, the other individual must be under age 65 years of age and disabled.5

Definition of sole benefit of

HCFA Transmittal 64 deals with transfers of assets and treatment of trusts.6 For the sole benefit of is defined as follows:

A transfer is considered to be for the sole benefit of a spouse, blind or disabled child, or a disabled  individual if the transfer is arranged in such a way that no individual or entity except for the spouse, blind or disabled child, or disabled individual can benefit from the assets transferred in any way, whether at the time of the transfer or at any time in the future. For a transfer or trust to be considered for the sole benefit of one of these individuals, the instrument or document must provide for the spending of funds involved for the benefit of the individual on a basis that is actuarially sound based on the life expectancy of the individual involved.7

Despite the clear definition of sole benefit of in HCFA Transmittal 64, many states, including New Jersey, require that the sole benefit of trust have a provision requiring a payback on the death of the beneficiary to the state Medicaid agency.

The key issue concerning trusts “for the sole benefit of” is availability. In a private letter, HCFA, now CMS, has taken the position that a trust established for the sole benefit of a community spouse under HCFA Transmittal 64 is an available resource.8 HCFA maintained that there is a material difference between a standard annuity and an “annuitized” trust. HCFA states:

A standard annuity can protect the funds used to purchase the annuity from being counted as resources in determining eligibility for Medicaid. However, there is a fundamental difference between a standard annuity and the “annuitized” trust you established. A standard annuity requires the actual purchase of a commodity; i.e., the annuity itself. A specific amount of money is given to the entity selling the annuity, in return for which the entity contractually agrees to provide an income stream for a specified period of time. Upon completion of the transaction, the buyer no longer owns the funds used to purchase the annuity. Instead, the buyer owns the annuity itself. If the annuity is irrevocable, as most annuities are, the buyer cannot reclaim ownership of the funds used to purchase the annuity. The buyer is only entitled to the income stream purchased and only for as long as the annuity stipulates. This is essentially the same as the purchase of any item or product where funds are exchanged for ownership of something else.

Therefore, it is clear from this letter that assets in a sole benefit of trust are available to the beneficiary of the trust.

Therefore, if the beneficiary is receiving Social Security Disability Income (“SSDI”) and Medicare, a DAT is appropriate. Beneficiaries receiving Supplemental Security Income (“SSI”) and Medicaid must utilize a Disability Annuity Special Needs Trust.

An advantage of a DAT are there is no transfer of asset penalty. However, a Medicaid payback is required on the death of the beneficiary of the trust. Income from the trust is taxed to the beneficiary. There is a gift for gift tax purposes, but because of the $5,450,000 lifetime exemption, this is not a major consideration for most people. The assets of the trust would be included in the estate of the beneficiary of the trust, not the Grantor.

Begley Law Group, P.C. has served the Southern New Jersey and Philadelphia area as a life-planning firm for over 85 years. Our attorneys have expertise in the areas of Personal Injury Settlement Consulting, Special Needs Planning, Medicaid Planning, Estate Planning, Estate & Trust Administration, Guardianship, and Estate & Trust Litigation.

1 HCFA Transmittal 64 § 325 7.

2 HCFA Transmittal 64 § 3258.9B.

1 HCFA Transmittal 64 § 3258.9B.

* 42 U.S.C. § 1396p(c)(2)(B)(iii).

5 42 U.S.C. § 1396p(c)(2)(B)(iv).

6 HCFA Transmittal 64 § 3257.

7 HCFA Transmittal 64 § 3257(B)(6).

8 Letter dated April 16, 1998, from Robert A. Streimer, Disabled and Elderly Health Programs Group, Center for Medicaid and State Operations, Health Care Financing Administration, to Jean Galloway Ball.

Among the injuries some allege they sustained: Broken bones, loss of consciousness, torn ligaments, torn tendons and emotional trauma. One even suffered a fractured spine, according to court records.

The Associated Press reports the plaintiffs include 14 concertgoers as well as three employees. The employees would be unable, per workers’ compensation laws, to sue their own employer, but they could potentially hold third parties accountable if those individuals or entities contributed to their injuries. Attorneys for the plaintiffs insist the defendants – including the performers – didn’t take appropriate precautions to protect the crowd. 

As one plaintiff attorney explained, this was a concert set up on a lawn. There were no chairs and there were no aisles. Further, there was a reported lack of security. The performers were then motioning for the crowd to get closer, and as one lawyer explained, that combination of facts created a serious problem.

The entity that operates the venue announced after the incident that it had “secured” the railing section that had fallen. A representative stated the company was working with authorities as well as its own structural engineers to piece together the cause of the railing collapse, and in the meantime, a safety zone has been established to block a section of space between the crowd (at future concerts) and the railing. Plaintiff’s lawyers said the reconfiguration is a “post accident admission” that the new set-up was the way it should have been structured all along.

Following the accident, the artists were called off stage and the concert had been canceled.

Incidents like this aren’t necessarily common, but there have certainly been enough of them over the years for our Miami personal injury lawyers to know the basic precedent for prevailing. Basically, it comes down to foreseeability. At the core, these types of cases are premises liability, and what the court will want to review evidence that indicates the defendants, as individuals of ordinary intelligence, should have anticipated the dangers that these acts created for others.

Some elements injured parties may want to consider:

• How serious were the injuries incurred? Plaintiffs usually need to be able to show they suffered some degree of damage that affected their daily lives, at least temporarily. Broken bones, a fractured spine and emotional injuries – these are all things that could have short- and long-term consequences.
• What caused the injury? Plaintiffs have to be able to show the defendant was liable. Here, individuals were crushed by the crowd. But what caused the crowd to press forward the way it did? Should the defendants have anticipated this? Where there reasonable actions they might have taken to mitigate that danger?

Miami is a major hot spot for concerts and other live entertainment events. If you are injured at these venues, contact an experienced injury attorney to help you determine whether you have a case.

If you have been injured at a Miami concert, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Lawsuit filed over railing collapse at Snoop Dogg concert, Aug. 24, 2016, By Megan Trimble, Associated Press

More Blog Entries:

Safeco Ins. Co. v. Fridman – Proving Wage Loss Damages After Car Accident, Aug. 22, 2016, Miami Personal Injury Attorney Blog

The 17-year-old girl struck the rear of the motorcycle as she attempted to cross Route 15 at the same time the 47-year-old motorcyclist was passing. The motorcyclist died of multiple blunt force injuries within minutes of the crash, according to the death certificate.

The teen has not been charged with any criminal offense, but was cited for making an unsafe lane change and having three other teens in the vehicle at the time of the crash, a violation of New Jersey’s graduated driver’s license program. She also did not have a red decal on the license plate of her vehicle indicating she was a teen driver, as required by Kyleigh’s Law. New Jersey is the only one to have a teen driver decal law. The law also sets an 11 p.m. curfew for drivers with a learner’s permit, restricts the number of passengers to one, unless accompanied by a parent or guardian, and bars teen drivers from using handheld electronic devices.

The lawsuit alleges that as a result of the teen’s negligence and recklessness, the motorcyclist was severely injured, suffered great pain and mental anguish and ultimately died soon after impact as a result of his injuries. His widow, son and stepson are seeking undisclosed compensation and asserting loss of consortium. The lawsuit contends that her father, the owner of the vehicle, “negligently entrusted operation of the vehicle” to his daughter and he allegedly knew she was driving in violation of the state’s graduated license law.

Losing a loved one unexpectedly can be extremely difficult and painful. Even when liability appears straightforward, the case can drag on for months, even years. The wait will often put victims in a financial predicament. Do they accept the insurance company’s inadequate settlement offer to avoid pay the bills and possibly avoid home foreclosure?

While Litigation Funding Corporation cannot bring back a loved one, we can help put an end to the financial struggles most plaintiffs face while waiting for a settlement to be reached. Litigation funding is a non-recourse cash advance to help take care of life’s necessities (mortgage, rent, food, utilities, gas, car payments, medical expenses, transportation, etc.). Eligibility is based on attorney representation and a strong case. Once these qualifications are met, the application process is quick and easy; it takes less than five minutes online or over the phone. Next, we will obtain basic information about the case from the plaintiff’s attorney. After our underwriters review the information, if the case is approved, funds can be available within 24 – 48 hours. There are no credit checks, employment verifications, or monthly payments. Repayment is made from the proceeds of the case, and there is obligation to repay the cash advance if the case is lost. That is correct – we only get paid back the cash advance if our client successfully settles.

For more information or a free, no obligation consultation, contact Litigation Funding Corporation at 1.866.LIT.FUND or complete our online contact form to get started.

Danny Juliano, 50, still had check-signing authority for the Woodbrooke Estates Home Owners Association, where he was a past president. The 629-unit townhouse and condo development is located in Rossville, Staten Island.

Authorities claim that over a period of more than three years, Juliano made cash withdrawals of $366,380, telling the association board that he was taking advantage of cheap prices for pool supplies in New Jersey.

Prosecutors said that Juliano was indicted on charges of grand larceny and tax fraud, because he did not report the funds he received as income. His attorney said that he was released on his own recognizance and would be required to surrender his passport within 72 hours. The homeowners association declined to comment to the New York Daily News.

According to NYPD payroll records, Juliano worked as an evidence and property control specialist.

Embezzlement and related charges are serious crimes that require a sophisticated defense. People accused of such crimes are innocent until proven guilty, and an experienced criminal defense attorney can help protect their rights.

http://www.nydailynews.com/new-york/350g-nyc-embezzlement-nypd-property-control-specialist-article-1.2642077

by Thomas D. Begley, Jr., CELA

The Concept. A sole benefit of trust is a creature of HCFA Transmittal 64.[1] These trusts have traditionally been used in crisis planning. They can be established for the benefit of disabled persons—a Disability Annuity Trust (“DAT”).[2] The idea is that assets would be transferred to an irrevocable trust for the sole benefit of the disabled individual. The assets in the trust were then paid out to the beneficiary on an actuarially sound basis using the actuarial tables contained in HCFA Transmittal 64.[3] However, some states, including New Jersey, maintain that despite the clear language in HCFA Transmittal 64, the language in the statute “sole benefit of” means that a Medicaid payback provision is required. Because the assets were transferred to an irrevocable trust “for the sole benefit of” a disabled individual, the transfer is not subject to the Medicaid transfer penalty rules.

This is a particularly useful device where (1) there are highly appreciated assets and utilization of the trust makes it possible for a “step up” in basis to be obtained, and (2) advanced planning has not been done and the transfer of assets to children would result in significant periods of Medicaid ineligibility. There are two issues to be considered in utilizing “for the sole benefit of” trusts: transfer rules and availability.

Transfer of Asset Penalty. A sole benefit of trust is exempt from the Medicaid transfer of asset penalties. If the sole benefit of trust is established for a disabled child, there is no age limit.

Age Limit.

• Sole benefit of disabled child. The trust can be established for a disabled child age 65 or older.[4]
• Sole benefit of other disabled individual. If the sole benefit of trust is established for an individual other than a child, the other individual must be under age 65 years of age and disabled.[5]

Definition of sole benefit of. HCFA Transmittal 64 deals with transfers of assets and treatment of trusts.[6] For the sole benefit of is defined as follows:

A transfer is considered to be for the sole benefit of a spouse, blind or disabled child, or a disabled individual if the transfer is arranged in such a way that no individual or entity except for the spouse, blind or disabled child, or disabled individual can benefit from the assets transferred in any way, whether at the time of the transfer or at any time in the future. For a transfer or trust to be considered for the sole benefit of one of these individuals, the instrument or document must provide for the spending of funds involved for the benefit of the individual on a basis that is actuarially sound based on the life expectancy of the individual involved.[7]

Despite the clear definition of sole benefit of in HCFA Transmittal 64, many states, including New Jersey, require that the sole benefit of trust have a provision requiring a payback on the death of the beneficiary to the state Medicaid agency.      

Therefore, if the beneficiary is receiving Social Security Disability Income (“SSDI”) and Medicare, a DAT is appropriate. Beneficiaries receiving Supplemental Security Income (“SSI”) and Medicaid must utilize a Disability Annuity Special Needs Trust.

[1] HCFA Transmittal 64 § 3257.

[2] HCFA Transmittal 64 § 3258.9B.

[3] HCFA Transmittal 64 § 3258.9B.

[4] 42 U.S.C. § l396p(c)(2)(B)(iii).

[5] 42 U.S.C. § l396p(c)(2)(B)(iv).

[6] HCFA Transmittal 64 § 3257.

[7] HCFA Transmittal 64 § 3257(B)(6).

by Thomas D. Begley, Jr., CELA

Funding

Many clients who use Children’s Trusts as part of their Medicaid planning are non-crisis planning clients. They either have an early diagnosis or are elderly but in good health. They are doing advance planning and want a sense of independence. They do not want all of their assets in a trust. Good practice dictates that the lawyer have a discussion with the client and determine how much the client feels should be kept out of the trust to give the client a feeling of comfort. The client should understand that the funds retained outside the trust are at risk, unless they are transferred to children to be held pursuant to the terms of a Family Agreement. Ideally, the trust will be funded with the least amount of assets possible. In calculating how much to put in the trust, the client can carve out assets that can be used in the future for the following:

• Amount of Community Spouse Resource Allowance (CSRA);
• Amount of the anticipated spend down as set forth in the client’s Asset Protection Plan;
• Key money to gain admission to a facility; or
• Any amount of money the client is willing to lose. Typically, a single client will want to retain $50,000 – $100,000 of assets and risk losing that amount in order to preserve a sense of independence. To a certain extent, this will be determined by the medical condition of the client.

Ideal Assets

Ideal assets to fund a Children’s Trust would include appreciated real estate, such as a primary residence or a vacation home, or appreciated securities. There are significant tax advantages in utilizing trusts for these assets as opposed to transferring outright to children. Careful consideration must be given to rental real estate, because the parent would no longer be entitled to the rent after the property is transferred to the Children’s Trust.

Bad Assets

Bad assets to use in funding trusts include retirement accounts, deferred annuities, and government bonds with significant accumulated interest. The problem is the transfer of those assets would result in immediate income tax. To the extent possible, these assets should be left outside the trust.

Tax Considerations

Income Tax

A Children’s Trust can be designed as a grantor trust so that the grantor pays the tax on any income, or .a non-grantor trust where the income is taxed either to the trust itself or to the beneficiary, depending on the design of the trust.

Gift Tax

A Children’s Trust can be designed so that the Grantor retains a limited power of appointment over the trust corpus. The limited power of appointment would enable the Grantor to appoint the remainder of the trust to a limited class of people. Limited power of appointment could be either testamentary or inter vivos.

Estate Tax

If the trust is designed as a grantor trust, then the assets in the trust will be included in the estate of the grantor for estate tax purposes. The Children’s Trust can be designed so that it is not a grantor trust and the assets in the trust would be excluded from the estate of the grantor for estate tax purposes. In determining how to draft the trust, the capital gain tax saving resulting from a step-up in basis must be weighed against any estate tax savings. Usually, payment of the New Jersey estate tax is the lesser of the two evils.

But a new legal trend is emerging, one that involves the responsibility of those communicating on the other end. In a number of instances in different states, third parties that knowingly engage in text communication with drivers – or encourage drivers to engage in distracting activities – are being named as defendants in personal injury lawsuits. Success on this front has been varied, but it’s something our Miami car accident attorneys believe is worth exploring when there is evidence the crash was caused by distraction.

A recent article on Vocativ explored this burgeoning legal realm.

Let’s look at the recent case of Gallatin v. Gargiulo, and the decision handed down by a Pennsylvania county common pleas court judge. According to court records, decedent/ motorcyclist was slowing down to make a right turn when at the same time, a woman was operating a vehicle owned by defendant. She was behind the decedent motorcyclist at the time. It is alleged that the female driver was text messaging on her cell phone at the time of the crash, in violation of state law, and that she as inattentive and distracted, causing her to strike the motorcycle ahead of her, resulting in decedent’s fatal injuries. The complaint alleges that the female driver was texting at the time with her boyfriend/ owner of the car. Plaintiff, administrator of decedent’s estate, then sued not only the driver, but also the vehicle owner – not for vicariously liability by way of his ownership of the car, but for direct negligence for knowingly texting with someone while they were driving.

The judge noted there was no precedent in Pennsylvania that specifically spells out the duties or liability of a sender of a text message to a person who is driving. However, it took note of a ruling by the Superior Court of New Jersey in Kubert v. Best. In that case, the New Jersey court held the sender of a text message could be potentially liable if a car accident is caused by texting, but only if the sender knew or had special reason to know the recipient would view the text while driving and therefore be distracted. In Gallatin, plaintiff alleged defendant knew or should have known his girlfriend with whom he was texting was driving her vehicle and was therefore distracted. The assertion was that the actions of defendant aided or encouraged the driver to be distracted and thus provided a basis for establishing liability.

The court noted that while all plaintiff’s assertions had not yet been proven, if they were true, they could serve as the basis for establishing liability, based on the ruling in Kubert.

More recently, a Georgia man filed a lawsuit against Snapchat for “encouraging” motorists to drive distracted with creation of an app that captures one’s speed and superimposes the that recording on an image.

If you have been a victim of distracted driving, we can help.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Texting a Person While They’re Driving Could Land You in Jail, May 3, 2016, By Jennings Brown, Vocativ

More Blog Entries:

Car Accident Lawsuit Names Snapchat as Defendant, May 3, 2016, Miami Car Accident Lawyer Blog

by Thomas D. Begley, Jr., CELA

Purpose

Income Only Trusts are a means by which seniors transfer assets to a trust rather than to their children. Seniors tend to view transfers to trusts as protection, while they tend to view transfers to children as gifts. Trusts provide them with a sense of dignity and security.

Requirements

Income only trusts are permitted by OBRA-93.[1] They must be irrevocable. The trust instrument provides that the grantor or the grantor’s spouse receive all of the income from the trust, but has no access to principal.

Design of the Trust

In order to structure the trust as a Grantor Trust and to receive a step up in basis on death, practitioners often give the grantor a right to substitute and reacquire property and/or a limited power of appointment. The grantor can reserve the right to income, but the trust must absolutely prohibit any access to principal by the grantor or grantor’s spouse. The trust can permit the trustee to make distributions to third parties, such as children.

When Income Only Trusts are Useful

There are a number of reasons why transfers to an Income Only Trust should be considered in lieu of transfers to children. When transferring assets to the Income Only Trust, the grantor can retain the right to receive income. The principal will not be counted as an asset, but there will be a transfer of asset penalty if the transfer occurs during the five-year lookback period.

If the elderly parent transfers assets to children, rather than put them in a trust, certain risks must be anticipated. These risks can be avoided if the assets are put in a trust. The risks of an outright transfer include:

• Claims of creditors. The claims of the creditors of the adult children could be satisfied through the assets of the parent, if the parent makes outright transfers to the children.

• Matrimonial action. If a child to whom assets are transferred is subsequently divorced, the transferred assets may become subject to a claim of equitable distribution. While the law dictates that assets transferred from a parent to a child are not subject to equitable distribution, practitioners in the field of family law indicate that judges often find ways to give additional assets, other than the transferred assets, to the other spouse. In addition, the assets transferred could affect alimony or support rights or obligations.

• Bad habits. If a parent transfers assets to a child who is a gambler, a drug addict, an alcoholic, or a spendthrift, the assets may be squandered and no longer available to the parent.

• Death of Child. If the child dies holding the parent’s assets in the child’s name, the assets will likely pass by Will or Intestacy to the spouse or children of the deceased child.

• Capital Gains Tax. If a parent has highly appreciated assets and transfers them to children, the transfer is subject to carryover basis and will result in the children paying significant capital gains tax in the future. If the highly appreciated assets are transferred to an Income Only Trust, since the trust is a grantor trust and the assets will be included in the estate of the parent on death, the children will receive a “step up” in basis and will be able to avoid paying significant capital gains taxes.

Planning Considerations

Availability

The principal in the Income Only Trust would not be considered an available resource, but the income would be available to the recipient of the income.

Transfer of Asset Penalty

The problem with Income Only Trusts is that if money remains in the trust at the death of the grantor, it is subject to Medicaid estate recovery. If assets are distributed out of the trust during the lifetime of the grantor, there is a transfer of asset penalty. The transfer to the Income Only Trust would be subject to the Medicaid and Supplemental Security Income (“SSI”) transfer of asset penalties. There is an issue as to whether a transfer from an Income Only Trust is subject to transfer of asset penalties. New Jersey takes the position that a distribution of principal from an Income Only Trust to a third party constitutes a transfer of an income interest. The penalty is calculated by multiplying the annual income by the actuarial life expectancy of the income beneficiary and dividing by the divisor. In states with a broad definition of estate recovery that would include assets in a Living Trust, it is necessary to distribute assets from the Income Only Trust at the time of the Medicaid application.

No payback provision is required for an Income Only Trust.

Ideal assets to fund an Income Only Trust are appreciated assets. Retirement accounts are not suitable, because the income tax would have to be paid on the withdrawal of the assets prior to funding the trust.

Tax Consequences

An Income Only Trust can be designed as a grantor trust. The trust assets are unavailable for Medicaid, but there are some potentially significant tax benefits to the grantor. The Internal Revenue Code contains certain requirements for a grantor trust.[2]

• Income tax. Income is taxed at the grantor’s individual tax rate, which is usually less than the trust’s compressed tax rate.

• Capital gains exclusion for sale of principal residence. Capital gains tax treatment is maintained. This is particularly important if the trust is funded with a primary residence. The §121 exclusion from capital gains tax can be maintained and the beneficiary can receive a step-up in basis on the death of the grantor, if the property has not been sold during the lifetime of the grantor. The trust must contain a provision that the trustee must allocate the gain on the sale of the home to principal and not to income. The benefit of the capital gains tax can be achieved for non-home appreciated assets as well.

• Estate Since the trust is a grantor trust, the entire value of the estate would be included in the grantor’s estate for federal estate tax purposes.[3]

Estate Recovery

The assets in the Income Only Trust would not be subject to estate recovery in states having a probate definition of estate, but would be included in states having a broad definition of estate for estate recovery purposes, such as New Jersey.

Elective Share

State Medicaid agencies require that a Medicaid recipient who is predeceased by a spouse assert the Medicaid recipient’s right to an elective share against the estate of the predeceased spouse.[4] Failure to do so is considered a transfer of assets subject to the Medicaid transfer penalty rules. If an Income Only Trust for the benefit of the community spouse provides for distribution to the children on the death of the community spouse, then these assets, in most states, would be subject to the elective share provisions. The surviving Medicaid recipient would, therefore, have an obligation to assert his or her right to the elective share against the trust assets. Failure to do so would constitute a transfer for Medicaid eligibility purposes.

Funding the Income Only Trust

Ideally, the trust will be funded with the least amount of assets possible. In calculating how much to put in the trust, the client can carve out assets that can be used in the future for the following:

• Community Spouse Resource Allowance (CSRA)
• Spend down
• Key money to gain admission to a facility
• Any amount of money the client is willing to lose 

Good/Bad Assets for Funding Trust

• Ideal assets. Ideal assets to fund an Income Only Trust would include appreciated real estate, such as a primary residence or a vacation home, or appreciated securities. There are significant tax advantages in utilizing trusts for these assets as opposed to transferring outright to children.

• Bad assets. Bad assets to use in funding trusts include retirement accounts, deferred annuities, and government bonds with significant accumulated interest. The problem is the transfer of those assets would result in immediate income tax. To the extent possible, these assets should be left outside the trust.

[1] 42 U.S.C. § 1396p(d)(3)(B).

[2] I.R.C. §§ 673–677.

[3] I.R.C. §§ 1014, 2036, 2038; Treas.Reg. §§ 1.1014-2(a)(3), (b).

by Thomas D. Begley, Jr., CELA

Purpose

Income Only Trusts are a means by which seniors transfer assets to a trust rather than to their children. Seniors tend to view transfers to trusts as protection, while they tend to view transfers to children as gifts. Trusts provide them with a sense of dignity and security.

Requirements

Income only trusts are permitted by OBRA-93.[1] They must be irrevocable. The trust instrument provides that the grantor or the grantor’s spouse receive all of the income from the trust, but has no access to principal.

Design of the Trust

In order to structure the trust as a Grantor Trust and to receive a step up in basis on death, practitioners often give the grantor a right to substitute and reacquire property and/or a limited power of appointment. The grantor can reserve the right to income, but the trust must absolutely prohibit any access to principal by the grantor or grantor’s spouse. The trust can permit the trustee to make distributions to third parties, such as children.

When Income Only Trusts are Useful

There are a number of reasons why transfers to an Income Only Trust should be considered in lieu of transfers to children. When transferring assets to the Income Only Trust, the grantor can retain the right to receive income. The principal will not be counted as an asset, but there will be a transfer of asset penalty if the transfer occurs during the five-year lookback period.

If the elderly parent transfers assets to children, rather than put them in a trust, certain risks must be anticipated. These risks can be avoided if the assets are put in a trust. The risks of an outright transfer include:

• Claims of creditors. The claims of the creditors of the adult children could be satisfied through the assets of the parent, if the parent makes outright transfers to the children.

• Matrimonial action. If a child to whom assets are transferred is subsequently divorced, the transferred assets may become subject to a claim of equitable distribution. While the law dictates that assets transferred from a parent to a child are not subject to equitable distribution, practitioners in the field of family law indicate that judges often find ways to give additional assets, other than the transferred assets, to the other spouse. In addition, the assets transferred could affect alimony or support rights or obligations.

• Bad habits. If a parent transfers assets to a child who is a gambler, a drug addict, an alcoholic, or a spendthrift, the assets may be squandered and no longer available to the parent.

• Death of Child. If the child dies holding the parent’s assets in the child’s name, the assets will likely pass by Will or Intestacy to the spouse or children of the deceased child.

• Capital Gains Tax. If a parent has highly appreciated assets and transfers them to children, the transfer is subject to carryover basis and will result in the children paying significant capital gains tax in the future. If the highly appreciated assets are transferred to an Income Only Trust, since the trust is a grantor trust and the assets will be included in the estate of the parent on death, the children will receive a “step up” in basis and will be able to avoid paying significant capital gains taxes.

Planning Considerations

Availability

The principal in the Income Only Trust would not be considered an available resource, but the income would be available to the recipient of the income.

Transfer of Asset Penalty

The problem with Income Only Trusts is that if money remains in the trust at the death of the grantor, it is subject to Medicaid estate recovery. If assets are distributed out of the trust during the lifetime of the grantor, there is a transfer of asset penalty. The transfer to the Income Only Trust would be subject to the Medicaid and Supplemental Security Income (“SSI”) transfer of asset penalties. There is an issue as to whether a transfer from an Income Only Trust is subject to transfer of asset penalties. New Jersey takes the position that a distribution of principal from an Income Only Trust to a third party constitutes a transfer of an income interest. The penalty is calculated by multiplying the annual income by the actuarial life expectancy of the income beneficiary and dividing by the divisor. In states with a broad definition of estate recovery that would include assets in a Living Trust, it is necessary to distribute assets from the Income Only Trust at the time of the Medicaid application.

No payback provision is required for an Income Only Trust.

Ideal assets to fund an Income Only Trust are appreciated assets. Retirement accounts are not suitable, because the income tax would have to be paid on the withdrawal of the assets prior to funding the trust.

Tax Consequences

An Income Only Trust can be designed as a grantor trust. The trust assets are unavailable for Medicaid, but there are some potentially significant tax benefits to the grantor. The Internal Revenue Code contains certain requirements for a grantor trust.[2]

• Income tax. Income is taxed at the grantor’s individual tax rate, which is usually less than the trust’s compressed tax rate.

• Capital gains exclusion for sale of principal residence. Capital gains tax treatment is maintained. This is particularly important if the trust is funded with a primary residence. The §121 exclusion from capital gains tax can be maintained and the beneficiary can receive a step-up in basis on the death of the grantor, if the property has not been sold during the lifetime of the grantor. The trust must contain a provision that the trustee must allocate the gain on the sale of the home to principal and not to income. The benefit of the capital gains tax can be achieved for non-home appreciated assets as well.

• Estate Since the trust is a grantor trust, the entire value of the estate would be included in the grantor’s estate for federal estate tax purposes.[3]

Estate Recovery

The assets in the Income Only Trust would not be subject to estate recovery in states having a probate definition of estate, but would be included in states having a broad definition of estate for estate recovery purposes, such as New Jersey.

Elective Share

State Medicaid agencies require that a Medicaid recipient who is predeceased by a spouse assert the Medicaid recipient’s right to an elective share against the estate of the predeceased spouse.[4] Failure to do so is considered a transfer of assets subject to the Medicaid transfer penalty rules. If an Income Only Trust for the benefit of the community spouse provides for distribution to the children on the death of the community spouse, then these assets, in most states, would be subject to the elective share provisions. The surviving Medicaid recipient would, therefore, have an obligation to assert his or her right to the elective share against the trust assets. Failure to do so would constitute a transfer for Medicaid eligibility purposes.

Funding the Income Only Trust

Ideally, the trust will be funded with the least amount of assets possible. In calculating how much to put in the trust, the client can carve out assets that can be used in the future for the following:

• Community Spouse Resource Allowance (CSRA)
• Spend down
• Key money to gain admission to a facility
• Any amount of money the client is willing to lose

Good/Bad Assets for Funding Trust

• Ideal assets. Ideal assets to fund an Income Only Trust would include appreciated real estate, such as a primary residence or a vacation home, or appreciated securities. There are significant tax advantages in utilizing trusts for these assets as opposed to transferring outright to children.

• Bad assets. Bad assets to use in funding trusts include retirement accounts, deferred annuities, and government bonds with significant accumulated interest. The problem is the transfer of those assets would result in immediate income tax. To the extent possible, these assets should be left outside the trust.

[1] 42 U.S.C. § 1396p(d)(3)(B).

[2] I.R.C. §§ 673–677.

[3] I.R.C. §§ 1014, 2036, 2038; Treas.Reg. §§ 1.1014-2(a)(3), (b).

According to authorities, the pill mill filled fraudulent prescriptions for over one million doses of pain medication, including oxycodone and hydromorphone. The highly addictive prescription pain pills have an estimated street value in excess of $16 million, authorities said.

Authorities said that the defendants used unlicensed medical workers as well as doctors to issue fraudulent prescriptions for medications that were then sold throughout South Florida. Prescriptions issued by the center were found as far away as Pennsylvania, New Jersey and Delaware.

The defendants face charges including conspiracy to sell illegal drugs, conspiracy to sell oxycodone, and racketeering. They will be prosecuted by the Office of Statewide Prosecution, part of the Attorney General’s Office. There is a 25-year mandatory minimum prison sentence associated with the drug trafficking conspiracy charges.

People who fraudulently or negligently prescribe medications that cause harm to users may also face civil lawsuits. People who are injured as a result of pharmaceutical negligence may be able to obtain compensation through a lawsuit. Contact Joyce & Reyes for more information.

If you need to speak with a auto accident lawyer, Call Joyce & Reyes at 1.888.771.1529 or visit more of http://www.joyceandreyespa.com/.

PARENTS of CHILDREN with SPECIAL NEEDS

S P E C   M E E T I N G

Saturday, March 19, 2016

1:00pm – 2:30pm

Chestnut Hill Library, 8711 Germantown Avenue, Philadelphia

“Special Needs Trusts & Guardianship”

Tom Begley, Esq. and Ethan Ordog ,Esq.

of the Begley Law Group, PC

Dedicated to the needs of people with disabilities and the elderly, Begley Law Group, PC, has served the Philadelphia area and New Jersey for 75 years.  SPECIAL PARENTS OF EXCEPTIONAL CHILDREN (SPEC), a group founded and run by parents of children with special needs, invites you to come and share with other parents the triumphs and challenges of raising a child with special needs.  SPEC’s purpose is to provide support and information. We meet monthly during the school year and welcome parents and caregivers of children of all ages and types of special needs.

Come at 12:30pm for light refreshments and to meet other parents. The meeting starts promptly at 1:00pm.

No RSVP is necessary. Paid parking is available at the lot behind Top of the Hill Plaza, entrance on Bethlehem Pike. The Library is close to the terminus of the 23, L and 94 buses and the final stops of the Chestnut Hill East and West train linesFor more information, directions, to volunteer, offer to bring refreshments, or to get

[An article originally published in the Straight Word, March 2016.]

By Thomas D. Begley, Jr., CELA

A Self-Settled Special Needs Trust is funded with the assets of the individual trust beneficiary. These trusts usually involve funds received as a result of a personal injury, inheritance, alimony, or child support. Under federal law, 1 a Self­Settled Special Needs Trust may be established by a parent, grandparent, guardian or court. In cases involving an adult with capacity court involvement is often unnecessary, so it is convenient to have the trust established by a parent or grandparent. In some states, such as New Jersey, it is possible to establish a “dry trust.” This means that the trust is established but not funded until a later date. In other states, a trust is not established until it is funded with at least a nominal amount of money. These are called “seed trusts.” In a strange but significant case,2 the parents of Stephany Draper sought to establish a self­settled special needs trust for a personal injury settlement that Stephany was receiving. Under the federal statute, a parent of the trust beneficiary is permitted to establish a self-settled special needs trust but the individual is not. Stephany was a competent adult who had executed a power of attorney appointing her parents as agents. The trust was funded by the personal injury settlement. It should be noted that Stephany’s parents did not use the power of attorney to establish the trust. The Social Security Administration (SSA) held the trust to be invalid. There could be no question but that Stephany is the type of person whom Congress intended to benefit from a self-settled special needs trust. What went wrong?

Generally, under traditional trust rules, a trust does not come into existence until it is first funded. The person who first funds the trust is considered the person who established the trust. However, some states, such as New Jersey, permit the establishment of a “dry” or “empty” trust, while other states require that a trust be seeded to be valid. These are called “seed trusts.”

When the parents established the trust, they made no reference to acting as agents under the power of attorney for Stephany. If they had been acting as agents, they would be acting on Stephany’s behalf and the trust would be invalid, because it would have been established by an individual. What the parents did not do was either recite its status as a dry trust and cite the statutory authority, or treat it as a seed trust and fund it with the parents’ money (i.e., $10). It is not entirely clear that treating the trust as a dry trust would have satisfied SSA. Had the parents paid the $10 into the trust, it is likely SSA would have recognized the trust as a valid trust. It should be noted that at the Hearing before the Administrative Law Judge, the Drapers did not rely on the fact that South Dakota permitted dry trusts.

In the appeal to the Federal District Court, counsel for the plaintiffs further confused the issue by stating that the trust is created by the funder and that the trust was funded by the parents using a power of attorney from Stephany. Under traditional trust doctrine, the person who first funds the trust is the establishor. The problem with plaintiff’s counsel’s argument is that if Stephany’s parents usecl a Power of Attorney from Stephany to fund Stephany’s trust, this would mean that Stephany funded the trust ancf was, therefore, the establisher. The Trial Judge noted that the amount of money placed in the trust was the exact amount of the personal injury settlement. This supported the argument of SSA that since Stephany’s money funded the trust, Stephany was the establisher of the trust and, thus, the trust was invalid. The court never determined whether South Dakota was a dry trust state or a seed trust state. The court found that Stephany’s trust was never an empty trust.

It was funded with Stephany’s money and, therefore, she was the establishor.

The Drapers could have avoided the problem had they funded the trust with $10 of their own money. They may also have avoided the problem if they had recited reliance on the South Dakota trust statute declaring that South Dakota recognizes dry trusts.

In the appeal to the 8111 Circuit, the issue was first funding. Unfortunately, the 8111 Circuit upheld the District Court with the result that Stephany’s trust was determined to be invalid, because it was established by Stephany. Essentially, the court held that the person who first funds the trust is the establishor of the trust.

So where does Draper leave us? At a recent conference at Stetson Law School, Ken Brown and Eric Skidmore, from the Social Security Administration (SSA), indicated that SSA is now taking the position that whoever first funds the trust is the establishor of the trust regardless of whether state law authorizes dry trusts. SSA trust reviewers are looking at trusts to determine if a parent deposited $10 or more of the parent’s money. One way to do this is to send Social Security a trust with a $10 bill attached. A better way would be to open a trust bank account with $10 and deposit that $10 before the personal injury settlement is deposited. It is always best practice in selecting a trustee for a First-Party or Third-Party Special Needs Trust to use a corporate fiduciary rather than an individual. The rules for administering these trusts are extremely complex. SSI and Medicaid rules change constantly, and individuals do not have the time or the expertise to keep up with these changes. Improper administration of a Special Needs Trust will cause SSI and/or Medicaid to declare the trust to be invalid. Failure to open a trust bank account with $10 and deposit that first and then deposit the personal injury settlement, may result in the trust being held to be invalid. This is one more technicality.

Although this raises another issue. If a Special Needs Trust is funded with the assets of a third party, it is a Third-Party Special Needs Trust. If a Special Needs Trust is funded with the assets of the beneficiary of the trust, it is a First-Party or Self-Settled Special Needs Trust. What Social Security is now requiring is a hybrid. The trust would be first funded with the assets of a third party (i.e., the parents) and then funded with the assets of the trust beneficiary; however, the trust would be considered a Self-Settled Special Needs Trust.

by Thomas D. Begley, Jr., CELA

New Jersey has now enacted the Achieving a Better Life Experience Act (“ABLE”). It is understood that by Fall this Act will be ready for implementation. The question will then remain: “What is the best option? Should the parent intending to set aside money for a child with disabilities establish an ABLE account or a Third Party Special Needs Trust?” Generally speaking, if the individual would be the beneficiary became disabled prior to attaining age 26, then an ABLE account might be considered, if the account will be small. There is very little point to establishing an ABLE account for a significant amount of money. There are two primary advantages to an ABLE account: (1) the income builds up tax free, and (2) the cost of establishing and administering the account is relatively small. The disadvantage is that on the death of the beneficiary any funds remaining in the account must go first to repay Medicaid for medical assistance paid during the beneficiary’s lifetime.

Therefore, it would seem that if the account is to be relatively small (i.e., $25,000), an ABLE account might make sense. However, once the account exceeds that amount it probably makes more sense to transfer the funds to a Pooled Trust Third-Party Subaccount. While there is a set-up fee and administrative costs, there are also benefits and there is no Medicaid payback. For accounts between $25,000 and $100,000, a Pooled Trust probably makes more sense. This is true even though the Pooled Trust does not enjoy the advantage of tax-free income. The truth of the matter is that on an account of $100,000, the income tax savings is minimal. The beneficiary is also usually in a low tax bracket.

Once the account exceeds $100,000, a Third-Party Special Needs Trust probably makes sense. Yes, there are costs of establishing and administering the trust, but there is no Medicaid payback on death. Once an ABLE account reaches $100,000, the beneficiary’s Supplemental Security Income (“SSI”) is suspended. If the funds are in the Third-Party Special Needs Trust, SSI remains in effect. Between the benefit of the SSI payment and the advantage of no Medicaid payback, the cost of establishing and administering the Third-Party Special Needs Trust probably makes the most sense.

by Thomas D. Begley, Jr., CELA

New Jersey has passed the Achieving a Better Life Experience ACT (“ABLE”). While the Act has passed, it will take some time to implement. Many commentators believe that by Fall accounts will be able to be opened.

Under the ABLE Act, people with disabilities and their families may set up special savings accounts similar to 529 Plans to be used for disability-related expenses. Earnings on these accounts are non-taxable. Generally, if the fund does not exceed $100,000, it will not be counted for Supplemental Security Income (“SSI”) purposes. If the fund exceeds $100,000 then SSI will be suspended, but Medicaid can be continued so long as the total amount in the account does not exceed the amount authorized for 529 Plans. To be eligible, an individual must become disabled prior to age 26 and be disabled. If the individual receives Supplemental Security Disability Income (“SSDI”) or SSI or files a Disability Certification under IRS Regulations, she will be considered disabled.

Funds can be used for education, housing, transportation, employment training, support, assistive technology, personal support services, health, prevention and wellness, financial management and administrative fees as well as legal fees and expenses for oversight and monitoring.

The total amount contributed to an ABLE account in any one calendar year by all contributors cannot exceed the amount of the federal annual gift tax exclusion, which for 2016 is $14,000. The drawback to these accounts is on the death of the account owner, any funds remaining in the account must be used to repay Medicaid for any funds advanced on behalf of the account holder. The best strategy seems to be to use these accounts for small gifts. Normally, these accounts would be used for gifts from parents. As long as the gifts are less than $14,000 per year and do not accumulate very much, these accounts might make sense. However, because of the Medicaid payback, it does not make sense to have these accounts grow. A Third Party Special Needs Trust is a much better option, if the amount involved is significant.

The advantages of an ABLE account are the tax-free income. However, realistically this is not a significant advantage because the income on small accounts is low and the other income of the beneficiary with a disability is usually low, so the tax saving sounds more attractive than it actually is. The other advantage is that there is a minimal cost to establishing the account when compared to establishing a Pooled Trust or a Third Party Special Needs Trust.

The disadvantages are the Medicaid payback and the possible loss of SSI. Because of the Medicaid payback, it makes little sense to build up a large account. The SSI benefit of approximately $750 per month is a significant benefit that should be protected.

Ideally, ABLE accounts appear to be useful if they are in the $25,000 to $50,000 range, but not for larger accounts. A Pooled Trust or Special Needs Trust would be more appropriate.

New York’s Van Dyke Money Gang used a Western Union money order scheme to net more than $1.5 million in 2015, the article says. The Neighborhood Crips of New Jersey created fake gift cards for retail outlets. And multiple South Florida gangs filed false tax returns under stolen identities in order to steal refunds.

The AP quoted Al Pasqual, a fraud consultant at Javelin Strategy and Research, who characterized the shift as a simple case of risk versus reward.

Pasqual posed the question, “Why would you spend time on the street slinging crack when you can get 10 years under federal minimums, when in reality you can just bone up on how to make six figures and when you get caught you’re doing six months?”

Pasqual said that while some gangs use the white-collar schemes as a side business to fund operations selling drugs and guns, others have adopted them as their primary means of making money.

The NYPD is adapting by coordinating personnel from the grand larceny division with those from the gang unit and other divisions.

By Thomas D. Begley, Jr., Esquire, CELA

[This article originally appeared in The Barrister.]
There are a number of situations in a personal injury case where probate issues must be addressed. Most Personal Injury attorneys
work with experienced Probate Counsel to ensure that the process goes very smoothly. Once the Executor or Administrator has been appointed, that person may serve as Plaintiff in the litigation. If the Plaintiff dies during the course of the litigation, the Executor or Administrator may be substituted as Plaintiff on behalf of the estate. Situations Requiring Probate Counsel
• Wrongful Death Cases. One or more persons are deceased and a personal representative, either an Executor or Administrator,
must be appointed to prosecute the claim in trial court.
• Plaintiff Dies During Litigation. Occasionally, a plaintiff will die during the course of litigation, and a personal representative
must be appointed to continue the litigation.
• Settlements for Minor or Incapacitated Persons. In some states, a trial court will not approve a trust, such as a special
needs trust, for the benefit of a minor or incapacitated person. Probate court approval is required. In cases involving minor or incapacitated persons, the court frequently retains jurisdiction and requires approval of distributions. In many instances, a
budget can be submitted and approved by the court so that future court approval is only necessary for deviations from the budget.
• Guardianship. In some instances a guardian must be appointed for a minor or incapacitated person. The role of the guardian appointed to prosecute the litigation ends when the litigation is completed. In most instances involving an incapacitated person over age 18. a permanent guardian must be appointed to manage either the person or property, or both,
of the incapacitated person.
• Multi-jurisdictional Litigation. In some cases, such as mass torts, litigation involves plaintiffs in many different states. Competent probate counsel must be located in the appropriate states.

Important Steps in Probate

The Executor/Administrator’s job is to perform certain legal obligations. An Executor/Administrator can be held personally liable for failure to administer the estate properly. Administration of the estate includes the collection and management of assets, paying taxes, distributing any assets or making distributions of bequests, whether personal or charitable in nature, as the deceased directed under the provisions of the Will or as provided for in the Intestate law.

Important steps in probate include the following:

• Probate. In a case where there is a Will, the Executor/Administrator must probate the Will with the Surrogate of thenCounty in which the decedent resided at the time of death and become appointed as the Executor/Administrator of the Estate. The Surrogate will issue a Short Certificate evidencing this appointment. In cases where the individual died without a Will, Letters of Administration must be obtained from the Surrogate.  The Executor/Administrator will present the Short Certificate to financial institutions and others to prove authority to transact business on behalf of the estate.
• Notice of Probate. A Notice of Probate form must be filed with all heirs-at-law and next-of-kin within 60 days after probate. A proof of mailing must be sent to the Surrogate within 10 days.
• Inventory. An inventory of all assets must be prepared and date of death values obtained. Appraisals must be obtained for all real estate and for valuable personal property. These appraisals are important to obtain a step-up in basis to the fair market value as of the date of death. This will affect the beneficiary’s future capital gains tax liability. The appraisals will also be needed to prepare and file any New Jersey estate or inheritance taxes or federal estate taxes.
• Obtain Date of Death Values. The Executor/Administrator will obtain values of all of the decedent’s assets owned by the decedent at the time of death including, but not being limited to, the personal injury settlement, tangible personal property, bank accounts, securities, employee benefits, IRAs. automobiles, businesses, life insurance policies, E and EE Bonds, H Bonds, annuities, and refunds due to the decedent.
• Employer Identification Number. An Employer Identification Number (EIN) must be obtained for the estate.
• Administration. After gathering the assets, the Executor/Administrator must see that they are properly invested. The Executor/Administrator may have to liquidate or run a business or manage a securities portfolio.
• Payment of Debts. All debts of the estate must be paid.
• Retirement Plans. Retirement assets must be analyzed and beneficiary designations must be followed.
• Life Insurance. Life insurance claims must be filed.
• Asset Preservation and Management. The Executor/Administrator will take steps to preserve assets, such as vacant real estate, including obtaining appropriate insurance and securing the property against theft and vandalism.
• Tax Returns. Tax returns must be filed including a federal and state income tax return (Form 1040) for the year of the decedent’s death. The Executor/Administrator can file these returns or arrange for the decedent’s usual tax preparer to do so. Form 1040 Estimated Tax Returns must also be filed, where appropriate. These returns must be filed by April 15, of the year following the decedent’s death. New Jersey estate tax and inheritance tax returns must be filed. The New Jersey estate tax return must be filed within nine months of the date of the decedent’s death, and the New Jersey inheritance tax return must be filed within eight months. Federal estate tax returns (Form 706) must be filed where required. This return must be filed within nine months of the date of the decedent’s death. Income tax returns (Form 1041) must be filed for any estate or trust. Gift tax returns (Form 709) must be filed where appropriate. In addition, if the decedent owned real estate out of state, the Executor/ Administrator must file ancillary probate in that state. and 111e non­resident tax returns in that state.

• Child Support. Prior to making distribution. a child support judgment search must be obtained, and any outstanding child support judgments must be satisfied from the beneficiary’s share of the estate.

• Commissions. Executor/ Administrator’s commissions must be calculated and paid. unless waived.

• Specific Bequests. If a Will has left specific bequests. those bequests must be distributed to the beneficiaries within one year of probate.

• Accounting. An accounting must be filed with all beneficiaries and a Release and Refunding Bond must be obtained from beneficiaries prior to making final distribution. There are three ways to handle the accounting. One is a Waiver of Accounting. This is typically used where there is a small. close-knit family and everyone simply signs a Waiver releasing the Executor/ Administrator from liability without a full accounting. Next, there is an Informal Accounting. The Executor/ Administrator Lists all of the assets comprising the estate, all of the income received in detail, a detail of all disbursements. a list of remaining assets and a proposal for distribution of those assets. A third way to handle the accounting is a Formal Accounting. This is an accounting that will be approved by the Court. The rules are very detailed and very specific. Generally, either a Waiver of Accounting or an Informal Accounting is the preferred method.

Who Should Serve as Executor/ Administrator?

The Executor/ Administrator should be a responsible person. Typically. it is a spouse or adult child. The Executor/ Administrator should be in a position to devote suflkient time to administering the estate, and should have enough sense to retain counsel to assist.

Ethan Ordog of Begley Law Group will be presenting at the 2016 Elder Care Legal Forum sponsored by the Estate and Financial Planning Council of Southern NJ.

The theme for this forum is “It Takes A Village: A Collaborative Approach to the Clinical,
Legal and Financial Components of Integrated Eldercare.”  Additional co-sponsors are Samaritan Healthcare & Hospice and Virtua SeniorWise Care Management.

The forum is on February 25, 2016 at the Mansion on Main Street in Voorhees, New Jersey. It will start at 7:45 am with a continental breakfast and dedicated time to network with colleagues and visit vendor tables. There will be two educational sessions with a break in the middle for additional networking. The event will end at 12pm with closing remarks and a prize drawing.

– For More Information and to Register, Click Here

by Thomas D. Begley, Jr., CELA

Settlement Protection Trusts can be very useful tools in the settlement of a personal injury case. A Settlement Protection Trust is very flexible. However, it cannot be used where an individual is receiving means-tested public benefits. A Settlement Protection Trust is essentially a Support Trust designed to provide for the health, education, maintenance and support of the trust beneficiary.

A budget is prepared and the trustee can often simply write a monthly check to the beneficiary, so that the beneficiary can pay all of his or her monthly bills. In other cases, the beneficiary will simply obtain a credit card and send the credit card bills to the trustee for payment, so long as the expenditures are within the agreed-upon budget. The budget should be designed so that the money will last as long as the plaintiff lives, if that is possible.

When to Use a Settlement Protection Trust

Minor or Incapacitated Person—Plaintiff Not Receiving Means-Tested Public Benefits

In these situations, a Settlement Protection Trust is ideal. If there is a minor or incapacitated person, the monies can be deposited into the Settlement Protection Trust rather than the probate court.

In cases involving a minor or incapacitated person, the establishment of the Settlement Protection Trust must be approved by the court.

Competent Adult Not Receiving Means-Tested Public Benefits

Where a competent adult is not receiving public benefits, both New Jersey and Pennsylvania allow distributions to be made from income and principal without court approval. The beneficiary enjoys the advantages of the Settlement Protection Trust, and the trust serves to protect the settlement from being squandered by the injured plaintiff or being coveted by family members and friends.

Large Settlement—Client Receiving Means-Tested Public Benefits

In many large settlements, the client may be receiving SSI and Medicaid. In some cases, the Medicaid benefit may be modest and, therefore, unnecessary. In other cases, the Medicaid benefit may be significant, but can be replaced by insurance under the Affordable Care Act or a combination of Medicare and private insurance. In these cases, it is often beneficial to consider giving up the public benefits in exchange for greater flexibility in administration and avoiding the Medicaid payback.

by Thomas D. Begley, Jr., CELA

Mental Health Liens

In New Jersey, a person with a mental illness who is over age 18 and is being treated in a state psychiatric hospital shall be liable for the full cost of his treatment, maintenance, and all necessary related expenses.[1] Although this statute does include a repayment obligation, it does not appear to impose a lien, particularly with respect to personal injury claims.

Traumatic Brain Injury Fund

The New Jersey Traumatic Brain Injury Fund is the payer of last resort for costs of post-acute care, services, and financial assistance provided to survivors of traumatic brain injury, particularly with respect to rehabilitative and long-term care needs not covered by private insurance or public benefits programs.[2] The fund provides up to $15,000 a year in benefits, not to exceed a total expenditure of $100,000 per eligible person. The fund has a first-priority claim to any monies received by the person with traumatic brain injury as the result of a settlement or other payment made in connection with the traumatic brain injury.[3]

Catastrophic Illness in Children Relief Fund

As its name suggests, the Catastrophic Illness in Children Relief Fund is a New Jersey program that provides assistance to children and their families whose medical expenses extend beyond the families’ available resources.[4] In the case of an illness or condition for which the family, after receiving fund assistance, recovers damages for the child’s medical expenses pursuant to a settlement or judgment in a legal action, the family is required to reimburse the fund for the amount of assistance received, or for the portion of assistance covered by the amount of the damages, subject to a credit for the expenses of obtaining the recovery.[5] The Fund administrators have the authority to negotiate settlement of its reimbursement claims.[6]

[1] N.J.S.A. 30:4-60(c)(1).

[2] N.J.S.A. 30:6F-1 et seq.

[3] N.J.S.A. 30:6F-6(b).

[4] N.J.S.A. 26:2-148 et seq.

[5] N.J.S.A. 26:2-154(b).

[6] N.J.S.A. 26:2-154.1.

By Thomas D. Begley, Jr.

WHAT IS ESTATE PLANNING?

Estate planning is the process by which an individual defines his or her goals for passing assets to beneficiaries and chooses appropriate tools and strategies for achieving those goals. The process begins with a careful analysis of one’s situation, objectives, and potential tax liability. Only after all of those factors have been considered is it possible to select the tools and strategies that will allow assets to pass in the most effective manner.

It is important to coordinate estate planning decisions with broader financial plans. Absent adequate financial planning, even the best estate plan can easily fail. Just as important is getting an early start on estate planning to help mitigate undesirable outcomes in the event of a disability or incapacitation, both of which affect a majority of individuals at some point in life. For example, there is a 58% lifetime probability of suffering a disability lasting at least 90 days and requiring assistance with the management of property and affairs. There is approximately a 55% chance of eventually requiring some form of long-term care, whether home care, assisted living, or nursing home care, all of which can have a devastating impact on life savings.

HOW DO LIFE CIRCUMSTANCES IMPACT ESTATE PLANNING?

Life circumstances have a significant impact on estate planning decisions. When developing an estate plan, it is important to consider the following:

Grandchildren. Do you want to take your grandchildren into consideration when designing your estate plan and documents?
– If so, would you like to leave your children a token amount (i.e. $1,000, $25,000, etc.)?
– Would you prefer to set aside one share of your estate for each of your children and one
share to be divided equally among your grandchildren? For example, if you have three
children, would you consider dividing your estate into four shares, one for each of your
children and one to be divided equally among your grandchildren?
– Have you established 529 plans for your grandchildren?
– Do you have custodial arrangements for your grandchildren under the Uniform Gifts to
Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA)?

Blended family issues. A family with children from more than one marriage is considered
“blended.” If you and/or your spouse or any of the children have blended families, you will need to consider a number of questions.

– If you have children from a previous marriage, is your goal to provide for your spouse first,
and then for your children?
– Do you want to ensure that your children receive an inheritance either at your death or the
death of your spouse?
– If any of your children have sons or daughters from previous marriages, do you want to
ensure that your grandchildren from those marriages receive an inheritance?
– Do you want your son- or daughter-in-law’s children from a previous marriage to receive an
inheritance?
– Do you have a prenuptial agreement?
– Do you have a contract to make a will?
– Do you have a mutual waiver of elective share?

Disability. One in 10 American families has a member with disabilities. Many persons with disabilities are entitled to means-tested public benefits, such as Supplemental Security Income (SSI), Medicaid, and housing assistance. Receiving an inheritance could cause such individuals to lose their benefits. To prevent that outcome, it is necessary to establish a special needs trust that holds the inherited assets for the person with disabilities. This allows the person to benefit from the inheritance while maintaining critical benefits.

Non-citizen spouses. If you are married, and your spouse is not a U.S. citizen, there are limits to how much can be left to him or her without triggering a significant tax liability. The solution may be to establish a Qualified Domestic Trust. The rules of this trust are complex, but must be considered to protect your spouse’s inheritance.

Problem sons- or daughters-in-law. Given that 50% of marriages end in divorce, many parents are concerned about their children’s spouse, who may be spendthrifts, abusive, or domineering. One solution is to establish a bloodline trust, which ensures that assets left to a child can only be passed to blood relatives and cannot be squandered by abusive or improvident in-laws.

Problem heirs. A trust may be designed to protect assets in an appropriate manner when there are children or grandchildren with problems such as the following:
– AIDS
– Drug addiction
– Alcoholism
– Criminal behavior
– Spendthrift behavior
– Inability to hold a job

Different treatment for different children. In cases where one’s children have different strengths, weaknesses, or needs, it may be appropriate to treat them differently from an estate planning perspective. For example, some parents may want to disinherit children. In such cases, stating the reason in the will or trust can prevent confusion later on when a judge may wonder if the disinheritance was intentional.

Children and grandchildren in need of incentives.
When there are children or grandchildren who seem to lack motivation, parents may want to establish a trust that provides incentives to achieve certain goals, such as graduating from a four-year college or obtaining a good job. Thought should be given to the types of goals that are desirable and appropriate incentives for achieving those goals.

Caregivers. Many people require caregivers at some point in life. Some caregivers are honest and caring and become much like family members over time. Others are unscrupulous and predatory. Establishing a trust can help protect your assets from the latter.

Business ownership. If you own a business, it is important to have a business succession plan that spells out what will happen to the entity upon your death. Business entity records must be kept up-to-date. There should be an Employment Agreement, as well as a Shareholders’ Agreement, if there is more than one shareholder.

Pets. If you wish to provide for your pets, to ensure their continued well-being, you will need to decide who will care for them and how much will be required for their maintenance. Some pet owners establish pet trusts to fund lifelong expenses, including those for food and veterinary care.

Charities. If you wish to support one or more charities through your estate plan, you will need to consider how much to leave to the charity(/ies) and how the bequest will be made.

Vacation homes. If you own a vacation home or a home in a vacation area, consideration should be given to associated income, gift, and estate tax issues. If your intention is to leave the home to future generations, an agreement should be signed during your lifetime, to spell out how the property will be managed after your death. For example, the agreement should: indicate who will pay the taxes, develop a schedule allocating time blocks to various family members, and make and/or pay for necessary repairs.

WHAT SHOULD YOU KNOW ABOUT TAXES?

When developing an estate plan, there are five taxes that need to be considered.

Federal estate tax. Currently, there is a federal estate tax on all estates in excess of $ $5,450,000 in 2016. The tax is 35% on the excess amount.

New Jersey estate tax. There is a New Jersey estate tax on all estates in excess of $675,000. With proper planning, a married couple can effectively increase the exemption to $1,350,000. The estate tax rate ranges from 0% to 16%.

New Jersey inheritance tax. There is a New Jersey inheritance tax based on the relationship between the decedent and the person receiving the inheritance. The tax rate ranges from 0% to 15%. There is no inheritance tax on transfers to lineal ascendants (i.e. grandparents), descendants (i.e. children and grandchildren), or spouses or qualified domestic partners. There is an inheritance tax on siblings, in-laws, other relatives, and friends.

Gift tax. Currently, there is an annual federal gift-tax exclusion of $14,000 per person. Married couples can potentially split gifts to enjoy a total annual exclusion of $28,000. Additionally, there is a $5,450,000 lifetime exemption. In 2016 the combined lifetime gift tax exemption for a married couple is $10,900,000. It is important to track changes in the law, which may affect this exemption amount.

Income tax. It is important to consider the income tax consequences of various strategies for both you and your beneficiaries.

WHAT ESTATE PLANNING TOOLS ARE AVAILABLE?

Depending on one’s situation and goals, it is possible to benefit from numerous estate planning tools.

Wills. A will is a document that spells out how an individual wants his or her estate to be distributed at death. Distributions can be made outright or through a trust. A will also appoints an executor, whose function is to probate the will, gather all assets, pay all bills, file all necessary tax returns, prepare an accounting, and make distributions in accordance with the terms of the will.

– Guardians. If you have minor or disabled children, the will should also appoint a guardian. That individual will often live with the children and look after them during minority or disability.

– Trustees. When appropriate, the will should also name a trustee. The trustee’s job is to invest the trust assets and make distributions in accordance with the terms established in the trust.

Living wills/health care agents. A living will, sometimes called a health care power of attorney, has two components. The first part of a living will addresses the need to appoint someone to make medical decisions on an individual’s behalf when he or she is unable to do so due to incapacitation. These medical decisions do not include end-of-life decision making. The second component of a living will addresses end-of-life decision making. This applies only in situations when the individual is unconscious and/or otherwise unable to make medical decisions, and there is no hope of recovery or of regaining a meaningful quality of life. If there is hope of recovery or of regaining a meaningful quality of life, the living will does not apply.

There are four options with respect to the second component of a living will/health care power of attorney, but only the first three are advisable.
1. Terminate life.
2. Continue aggressive treatment.
3. Authorize a loved one to make decisions without guidance, if and when the time comes.
4. Leave the decision up to the courts. Failure to choose one of the first three options places an individual in the position of having the matter go to court, where a judge will make a decision as to whether or not life should be continued.

Financial power of attorney. Sometimes called a general durable power of attorney, a financial power of attorney gives the agent the right to make financial decisions on behalf of an individual. Standard provisions should include:
– A reference to the New Jersey Banking Power of Attorney Act.
– A listing of any real estate by street address or tax block and lot.
– Specific language agreed to by the National Association of Securities Dealers and the American Bar Association, authorizing the agent to deal with securities.
– Power to make gifts, including any conditions or restrictions on such gifts.

Living trusts.
-Revocable living trusts. A living trust is a document designed to avoid probate. It can be used to save estate and inheritance taxes, but it is not required for that purpose. The same tax savings can be achieved through a properly drafted will. It is almost always appropriate to use a living trust if you own real estate outside your state of residence, in order to avoid ancillary probate. The advantage is that the trust can easily be amended or changed at any time. The disadvantage is that assets in a revocable living trust are included in your estate.

– Irrevocable living trusts. An irrevocable trust is one that cannot be changed. Such a trust can be designed so that the assets it holds are not included in a person’s estate for estate tax purposes. Typically, irrevocable trusts own life insurance policies when the insured does not want the proceeds included in his or her taxable estate.

Special Needs Trusts. A Special Needs Trust can be established for a disabled beneficiary. The trust is designed so that the disabled person will not lose his or her public benefits, such as SSI, Medicaid, or low-income housing, upon the receipt of an inheritance.

HOW SHOULD YOU TITLE ASSETS AND MAKE BENEFICIARY DESIGNATIONS?

Many assets pass outside the will. When developing an estate plan, it is important to ensure that such assets are properly titled and that beneficiary designations are accurate and up to date.

Among the assets that pass outside the will are jointly owned property, which automatically goes to the survivor, and property in trust, which goes to the beneficiar(y/ies) in accordance with the terms of the trust. Life insurance, retirement plan assets, and annuities are also paid directly to the named beneficiaries. Married couples who wish to achieve tax savings should avoid joint ownership of assets and retitle assets as necessary. Typically, the assets are divided about equally between husband and wife, with consideration given as to which asset gets transferred to whom. If you have life insurance policies, IRAs, and other retirement accounts and/or annuities, you must consider beneficiary designations based on your estate planning goals. For each asset, it is necessary to name both primary and contingent beneficiaries.

WHAT ABOUT LONG TERM CARE PLANNING?

Many people carefully plan for the transfer of their estate, taking steps to minimize taxes, only to see their assets eroded by long term care expenses. The cost of long term care, whether home care, assisted living, or nursing home care, can easily exceed $100,000 a year. Since approximately 55% of all individuals over age 65 require some form of long term care, it is important to consider this potential risk when developing estate and financial plans. A good long term care insurance policy will pay for virtually all forms of long term care, including adult day care, home care, assisted living, and nursing home care. The best time to purchase long term care insurance is before age 60, when premiums are far more affordable. Studies show that 25% of applicants aged 65 are rejected because they are deemed uninsurable.

Long term care policies can be customized to control costs. You should consider factors including:
The type of care covered
The amount of daily benefits
Elimination periods
The length of coverage
Premiums
Inflation riders
The financial strength of the insurance company

WHAT SHOULD YOU KNOW ABOUT INVESTMENT PLANNING?

During the estate planning process, attorneys often find that clients have made significant investment mistakes. Such mistakes could jeopardize your ability to achieve maximum investment returns, as well as your ability to realize estate planning goals. To help address this situation, Begley Law Group encourages you to follow this 12-step process:
1. Set goals. Identify and put into writing your investment goals.

2. Consolidate. Consolidate all of your assets into one investment account. That account should then be invested in a diversified manner.

3. Utilize. Utilize professional management. Retain a professional investment manager. Usually the increased cost is more than offset by increased investment performance and reduced risk. You can minimize costs by using a fee-based, rather than commission-based, advisor.

4. Be objective. Make investment decisions in an objective, rather than emotional, manner. This can help you avoid the common pitfall of buying at market highs and selling at market lows.

5. Start early. Start saving as early as possible to benefit from the enormous power of compounded investment earnings.

6. Buy and hold. Use a buy-and-hold strategy, avoiding speculation and day trading, and focusing on good stocks in solid companies.

7. Avoid. Avoid tax-driven investment decisions. Tax shelters frequently make poor investments.

8. View. View your home as “personal.” Consider your home a place to live, rather than an investment. despite the fact that the value of homes does tend to increase significantly over time.

9. Diversify. Diversify across different asset classes to help reduce investment risk and increase returns. Asset allocation is the chief factor influencing investment returns.
10. Understand. Understand inflation risk. Historically, the annual rate of inflation has been about 3%.
Individuals who attempt to avoid investment risk by purchasing certificates of deposit usually receive little or no investment return after paying taxes on the interest income and factoring in inflation.

11. Monitor. Monitor investment performance and rebalance investment allocations at least once a year.

12. Review. Review your estate and financial plans periodically. If you are over age 65 and have assets in excess of $1 million, excluding your home, review your plans annually. Also review your plans whenever relevant laws change or when you experience life changes such as:

– Marriage
– The birth of a child
– Divorce
– The death of a spouse or beneficiary
– A second marriage
– The onset of disability
– A significant change in income or assets
– A change of residence from one state to another
– The marriage of children
– The divorce of children

Begley Law Group, P.C. has served the Southern New Jersey and Philadelphia area as a life-planning firm for over 75 years. Our attorneys have expertise in the areas of personal injury settlement consulting, special needs planning, Medicaid planning, estate planning, estate & trust administration, guardianship, and estate & trust litigation. Contact us today to begin the conversation.

by Thomas D. Begley, Jr., CELA

Situations requiring probate counsel include:

• Wrongful Death Cases

• Plaintiff Dies During Litigation

• Settlements for Minor or Incapacitated Persons

• Guardianship

• Multijurisdictional Litigation Involving Probate

The Executor/Administrator’s job is to perform certain legal obligations. An Executor/Administrator can be held personally liable for failure to administer the estate properly. Administration of the estate includes the collection and management of assets, paying taxes, distributing any assets or making distributions of bequests, whether personal or charitable in nature, as the deceased directed under the provisions of the Will or as provided for in the Intestate law. Important steps in probate include the following: Probate of the Will or Application for Letters of Administration, preparation and filing of a Notice of Probate, compilation of an inventory of all estate assets, obtaining appraisals of real and personal property, obtain date of death values of all estate assets, obtaining an employer identification number, investment of estate assets during the course of administration, analysis of retirement plan assets, filing claims for life insurance, and preserving and managing estate assets. The Executor/Administrator must also file federal and state income tax returns (Form 1040) for the year of the decedent’s death. The Executor/Administrator can file these returns or arrange for the decedent’s usual tax preparer to do so. Form 1040 Estimated Tax Returns must also be filed, where appropriate. These returns must be filed by April 15 of the year following the decedent’s death. New Jersey estate tax and inheritance tax returns must be filed. The New Jersey estate tax return must be filed within 9 months of the date of the decedent’s death, and the New Jersey inheritance tax return must be filed within 8 months. Federal estate tax returns (Form 706) must be filed where required. This return must be filed within 9 months of the date of the decedent’s death. Income tax returns (Form 1041) must be filed for any estate or trust. Gift tax returns (Form 709) must be filed where appropriate. In addition, if the decedent owned real estate out of state, the Executor/Administrator must file ancillary probate in that state, and file non-resident tax returns in that state. The Executor/Administrator must also determine whether any beneficiary has outstanding child support obligations. Finally, the Executor/Administrator must file an accounting for all of the funds that were handled during the administration of the estate.

Presmil Masson Jr. was arrested June 1 on six counts of manslaughter and two counts of racketeering. Pam Bondi, the Attorney General of Florida, had announced previously that eight people had been charged in relation to the alleged pill mill operation that operated throughout Florida, including at the Real Care Medical Group office in Plantation.

Bondi said Dr. Lynn Averill and seven others sold oxycodone to drug dealers and addicts. All of the suspects, with the exception of Masson, were arrested on May 27 at locations throughout Florida, New Jersey and Illinois. According to the charges, the drugs were sold to patients for between $1 and $5 per pill.

Averill and Masson, if convicted of manslaughter and racketeering, face up to 180 years in prison. The other defendants, if convicted, face maximum penalties ranging from 60 to 180 years in prison.

When drugs are improperly prescribed or distributed, whether through an illegal pill mill operation or through other means, and such action causes injury or death, then the victim or the victim’s family may be able to file a lawsuit for pharmaceutical negligence to obtain compensation for their loss. Contact Joyce & Reyes for more information.

If you need to speak with a personal injury lawyer, Call Joyce & Reyes at 1.888.771.1529 or visit more of http://www.joyceandreyespa.com/.

by Thomas D. Begley, Jr., Esquire, CELA

Generally, “all income from whatever source derived” is considered gross income by the Internal Revenue Service (“IRS”).[1] However, income received as a result of a personal physical injury or a physical sickness is not considered income by the IRS.[2] However, punitive damages are considered taxable income.[3]

Origin of the Claims Test

The determining factor with respect to the treatment of litigation recoveries is the “origin of the claim” test. “The origin and character of the claim upon which an expense was incurred rather than the potential consequence upon the fortunes of the taxpayer” is the controlling test.[4] Generally, a claim for physical injuries or sickness qualifies for an exclusion.[5] Cases may arise that are a mixture of physical injury and emotional distress. The treatment of claims in that situation will depend on the origin of the underlying claim.[6] The IRS is not bound by an allocation in the release or even the court order. It is important that the parties substantiate the origin of the claim for tax purposes. Factors to be determined in determining the origin of the claim include:[7]

• Allegations in the complaint;
• The legal issues involved;
• The nature and objectives of the litigation ;
• The defense as asserted;
• The purposes for which amounts claimed as deductible were expended; and
• The background of the litigation and all facts pertaining to the case or controversy.

The burden of proof is on the recovering party to demonstrate what portion of a recovery is taxable and what is non-taxable.[8]

Physical Injury

The physical injury generally involves a touching that produces physical harm. The physical harm must be observable bodily harm.[9] Therefore, it would appear that most settlements involving sexual abuse victims are subject to taxation, because there is seldom observable bodily harm. Emotional distress is not treated as a physical injury or physical sickness.[10] However, damages for emotional distress would be excludable from income, unless they flowed from a related physical injury. However, in a Worker’s Comp claim, personal injuries are sufficient. Physical injuries are not required,[11] because they are not tort-based claims.

Derivative Claims

In certain cases, such as wrongful death cases, the proceeds paid in connection with the wrongful death claim are excluded from income, even for parties who suffer a non-physical injury because the wrongful death victim did suffer a physical injury. The derivative claims are entitled to the same income tax exclusion, because the origin of the claim is the underlying physical injury to the decedent. The survival claim is excluded from income, because of the physical injury to the decedent; however, the survival claim is included in federal and New Jersey estate tax and New Jersey inheritance tax. Disability insurance payments are taxable if the premiums for the disability insurance were paid by the employer, but are excluded from tax if the premiums were paid by the employee. Generally, payments for defamation are taxable income, unless there is a physical injury or physical sickness from which the defamation flowed.[12]

Valuation

Once the claim results in a settlement or award, the value is clear. However, as of the date of the decedent’s death, it is not certain whether there will be a recovery or, if so, how much. For taxation purposes, what is the value of the claim as of the death of the decedent? For estate tax purposes, the date of death value controls. The value of a claim as of the decedent’s death will depend, to a certain extent, on the stage at which the lawsuit was as of the date of death. An opinion of an accountant or another personal injury attorney concerning the likelihood of bringing the decedent’s suit to judgment or settlement as of the time of the decedent’s death can be persuasive.   The Tax Court has dealt with this issue.^[13] The Davis court approved certain factors to be taken into account in reducing valuation, including but not being limited to, costs of litigation, hazards of litigation, and the time delay in receiving funds. An expert report might include the basis of the claim, nature of defenses, the prospects for obtaining a judgment based on the factors in existence at the time of death, and the nature and extent of discovery.

Defamation

Under common law, defamation is a traditional tort. However, any recovery for defamation is taxable income, unless there is a physical injury or physical sickness from which the defamation flowed.[14]

Confidentiality Agreement

Confidentiality agreements may be taxable income. The issue arises out of the United States Tax Court case Avis v. Commissioner.[15] Dennis Rodman, a basketball player for the Chicago Bulls, kicked a photographer. The photographer brought suit, which settled for $200,000. The release stated that part of the consideration was that terms of the agreement and release be kept confidential. The release also contained a liquidated damage clause to the effect that if there was a material breach of the confidentiality agreement, Rodman would be entitled to $200,000. The court held that the dominant reason for the settlement was because of the plaintiff’s physical injuries, but there was a separate payment for the confidentiality clause. The court allocated $120,000 of the settlement for the physical injuries and $80,000 for the confidentiality agreement. The $80,000 allocated to the confidentiality agreement was taxable.

One solution to avoid the tax is to include reciprocal promises of confidentiality in the release without additional consideration.

[1] I.R.C. §61.

[2] I.R.C. §104.

[3] I.R.C. §104, O’Gilvie v. United States, 519 U.S.C. 79 (1996).

[4] The United States v. Gilmore, 83 S. Ct. 623 (1963).

[5] I.R.C. §104(a)(2).

[6] I.R.C. §104(a)(2).

[7] Boagni v. Commissioner, 59 T.C. 708 (1973).

[8] Sager Glove, Corp. v. Commissioner, 311 F.2d 210 (7th Cir. 1962).

[9] P.L.R. 20041022.

[10] I.R.C. §104(a)(5).

[11] I.R.C. §104(a)(1).

[12] Anderson v. Commission, T.C. Memo 2003-168 aff’d 194 Fed. App.’s 47 (9^th Cir. 2004).

[13] Davis v. CIR, TCM (CCH), 2365 (1993).

[14] Henderson v. Commissioner, T.C. Memo 2003-168, aff’d, 104 Fed. App’x. 47 (9th Cir. 2004).

[15] T.C. Memo 2003-329 (Dec. 1, 2003).

by Thomas D. Begley, Jr., Esquire, CELA

When a defendant causes the death of another individual by a wrongful act or negligence, that person shall be liable for damages. There are two components of the claim. One is a Survival Claim, and the other is the Wrongful Death Claim. The Survival Claim is brought by the estate, either by the executor under a will or the administrator, if the decedent died intestate. For monies received under the Survival Claim, there is usually some confusion about who is entitled to the damages payable to the estate. Generally, the monies are paid to the individuals who would inherit under the New Jersey Intestate statute. This means that the surviving spouse would take 100%. However, there is an exception, if the decedent is survived by a surviving spouse and one or more surviving decedents. In this case, they are entitled to equal proportions for purposes of recovery, notwithstanding the New Jersey Intestacy statute. So, if they are a family with a surviving spouse and three children, each claimant would take 25%.

Under the Wrongful Death Claim, the court allocates damages in such a way to result in a fair and equitable apportionment among claimants, taking into account the age of the dependents, their physical and mental condition, the necessity or desirability of providing them with educational facilities, their financial condition, and the availability to them of other means of support, present and future, and any other relevant factors that will contribute to a fair and equitable portion of the amount recovered.

A major issue is how much should be allocated to the Survival Claim and how much to the Wrongful Death Claim. In many cases, one consideration is New Jersey estate tax and, in some cases, federal estate tax is an issue. Occasionally, New Jersey inheritance tax must also be considered. If the Survival Claim exceeds $5,430,000 in 2015, it is subject to federal estate tax. If the Survival Claim exceeds $675,000, it is subject to New Jersey estate tax. If the beneficiaries of the estate are not blood relatives of the decedent, there will be New Jersey inheritance tax. Monies allocated to the Wrongful Death Claim are not subject to federal or state estate taxes or inheritance taxes. Neither the Survival Claim nor the Wrongful Death Claim are subject to federal or state income taxes.

The second issue is Medicare, Medicaid, ERISA and other liens. Liens would attach to the Survival Claim, but not to the Wrongful Death Claim.

by Thomas D. Begley, Jr., Esquire, CELA

Generally, “all income from whatever source derived” is considered gross income by the Internal Revenue Service (“IRS”).[1] However, income received as a result of a personal physical injury or a physical sickness is not considered income by the IRS.[2] However, punitive damages are considered taxable income.[3] The determining factor with respect to the treatment of litigation recoveries is the “origin of the claim” test. “The origin and character of the claim upon which an expense was incurred rather than the potential consequence upon the fortunes of the taxpayer” is the controlling test.[4]

The physical injury generally involves a touching that produces physical harm. The physical harm must be observable bodily harm.[5] Therefore, it would appear that most settlements involving sexual abuse victims are subject to taxation, because there is seldom observable bodily harm. Emotional distress is not treated as a physical injury or physical sickness.[6] However, damages for emotional distress would be excludable from income, if they flowed from a related physical injury. However, in a Worker’s Comp claim, personal injuries are sufficient. Physical injuries are not required,[7] because they are not tort-based claims.

In certain cases, such as wrongful death cases, the proceeds paid in connection with the wrongful death claim are excluded from income, even for parties who suffer a non-physical injury because the wrongful death victim did suffer a physical injury. The derivative claims are entitled to the same income tax exclusion. The survival claim is excluded from income, because of the physical injury to the decedent; however, the survival claim is included in federal and New Jersey estate tax and New Jersey inheritance tax. Disability insurance payments are taxable if the premiums for the disability insurance were paid by the employer, but are excluded from tax if the premiums were paid by the employee. Generally, payments for defamation are taxable income, unless there is a physical injury or physical sickness from which the defamation flowed.[8]

[1] I.R.C. §61.

[2] I.R.C. §104.

[3] I.R.C. §104, O’Gilvie v. United States, 519 U.S.C. 79 (1996).

[4] The United States v. Gilmore, 83 S. Ct. 623 (1963).

[5] P.L.R. 20041022.

[6] I.R.C. §104(a)(5).

[7] I.R.C. §104(a)(1).

[8] Anderson v. Commission, T.C. Memo 2003-168 aff’d 194 Fed. App.’s 47 (9^th Cir. 2004).

by Thomas D. Begley, Jr., CELA

As the population of the United States tend to age and Baby Boomers begin retiring in large numbers, there are a number of problems that will affect the elderly that need to be addressed.

• Retirement Income. In 2012, people age 65 and older had an average income of $31,742, but the median income was less than $19, 604. About 30% of older Americans receive pensions. The median was $12,000. Only 46.5% of older Americans reported income from personal savings, but half receive $255 or less per year. The mean was $3,233 per year. Only 20% of older Americans had dividend income with the median amount being $1,200.[1] Social Security is the only source of income for 25% of older adults in New Jersey.[2] It is generally estimated that for a comfortable retirement a person must have an income equal to 70% of salary in the year just before retirement. Most experts advise saving 10% per year of one’s annual income beginning at age 25. Social Security plays a vital role in reducing poverty. Almost 90% of people age 65 or older receive some of their family income from Social Security. The Social Security Retirement System is expected to be able to pay full benefits through 2033. Thereafter, only 75% of benefits will be funded. The Disability Insurance Trust Fund paying disability benefits to disabled workers is expected to be solvent through only 2016, at which point only 81% of benefits can be funded. This problem has been discussed nationally for over 20 years, and Congress has always managed to dodge the hard decisions. The replacement of pensions with 401k plans has been disastrous for low-income workers. Workers in the top fifth in income account for 72% of total savings in retirement accounts.

• Health Care. Health care spending has increased significantly. While this spending has declined over the last three years, the Brookings Institute believes that health care will continue to grow 1.2% faster than GDP over the next 20 years and will consume close to 25% of GDP. Health care costs will continue to grow at GDP plus 1.2% for the foreseeable future.[3] A couple, both age 65 in 2012, living an average life expectancy, could need as much as $220,000 to cover premiums for health insurance coverage and out-of-pocket expenses during retirement. It is estimated that these households should expect medical bills to consume 61% of their Social Security payments by 2027.[4]

Medicare. Medicare covers only about one-half of retiree health expenses. Medicare has three components: Hospital Insurance (HI) or Medicare Part A; Supplemental Medical Insurance (SMI) consisting of Medicare Part B and Part D. The SMI program is not threatened with insolvency, because premiums are reset on an annual basis based on actual expenditures. The Trustees of the Federal Hospital Insurance Fund estimate that the HI Program can remain solvent until 2030. Again, this is a problem that has been discussed nationally for over 20 years and Congress has refused to m

[1] Sources of Income for Older Americans 2012, Ke Bin Wu, AARP Public Policy Institute, www.aarp.org.

[2] The Elder Economic Security Standard Index for New Jersey.

[3] Brookings Papers on Economic Activity, www.brookings.edu.

[4] Fidelity Estimates Couples Retiring in 2013 Will Need $220,000 to Pay Medical Expenses Throughout Retirement, www.fidelity.com.

by Thomas D. Begley, Jr., CELA

New Jersey is an income cap state for purposes of nursing home level of long-term care services. Nursing home level of services includes nursing homes, assisted living and most home care. The income cap is 300% of the Federal Benefit Rate (FBR). For 2015, 300% of the FBR is $2,199. This figure is indexed for inflation. This means that if an individual’s income exceeds $2,199 in 2015, they would not be eligible for Medicaid long-term care services. Historically, individuals with income in excess of the income cap were eligible for Medicaid in a nursing home setting, because New Jersey had a “Medically Needy” program. This enabled individuals to spend down income to obtain Medicaid eligibility. The Medically Needy program applied only to nursing home care and not to assisted living or home care.

New Jersey has obtained a waiver from the federal government to abolish the Medically Needy program. In place of the Medically Needy program, New Jersey will not permit Miller Trusts. Under a Miller Trust, monies in excess of the income cap are deposited into a trust known as a Miller Trust or Qualified Income Trust (QIT). Any income deposited into the Miller Trust is non-countable. A problem typically arises when an individuals has both Social Security and a pension. Let’s suppose an individual has Social Security income of $2,000 per month and pension income of $1,500 per month. That would place that individual over the income cap of $2,199 per month. Under the New Jersey regulation, 100% of either source must be placed into the Miller Trust. In our example, either 100% of the individual’s Social Security or 100% of the individual’s pension could be deposited into the Miller Trust and bring the applicant’s income down below the income cap.

The Miller Trust must meet certain conditions:

• it must contain only income of the individual;
• it must not contain resources, such as income from the sale of real or personal property or money from a savings account;
• it must be irrevocable;
• it must have a trustee to manage administration of the trust and expenditures from the trust as set forth in federal and state law;
• New Jersey must be first beneficiary of all remaining funds up to the amount paid for Medicaid benefits upon the death of the Medicaid recipient; and
• income deposited in the QIT can only be used for specific post-eligibility treatment of income and to pay for costs of care.

From the Miller Trust only certain expenses are permitted. These include the following:

• $20 maximum bank fee;
• trustee’s fees;
• medical expenses;
• Personal Needs Allowance (PNA);
• Minimum Monthly Maintenance Needs Allowance (MMMNA); and
• any balances paid to the care provider.

The PNA is $35 per month for a nursing home resident, $107 per month for an assisted living resident; and $2,199 per month for an individual receiving home care. The MMMNA is $1,966.25 per month for the community spouse increased by a certain calculation for an excess shelter allowance and reduced by any other income being received by the community spouse. The trustee is almost always going to be an individual who is unfamiliar with trusts, so, in the author’s opinion, it is simpler to pay only the bank fees and the provider out of the trust and pay all of the other expenses listed above out of the funds not deposited into the trust.

The trust can be established by the individual trust beneficiary, someone holding a power of attorney on behalf of the individual, or the trust beneficiary’s guardian.

The trustee can be the spouse, child, someone holding a power of attorney on behalf of the beneficiary, or a guardian for the beneficiary, but cannot be the trust beneficiary. Whether a facility can serve as trustee is an open question. The trustee does not have to post bond. Statutory trustee’s fees are 6% of income; however, Division of Medical Assistance and Health Services (DMAHS) has not indicated what constitutes income. If all monies deposited into the trust are income, the trustee will receive a fee, if only monies remaining in the trust after payment of all disbursements are considered income, there will, in effect, be no trustee’s commissions. The state has published a template for a Miller Trust. It makes sense to use this template, because Medicaid workers will be familiar with it. If the lawyer drafts his or her own trust document, it will undoubtedly have to be sent to Trenton for review, and the application process will be significantly delayed. If a trustee resigns, the resigning trustee must provide an accounting. A successor trustee should be named in the document, and that trustee will take over responsibility for trust administration. If there is a trustee resignation, notice must be given to the remainder beneficiaries, to DMAHS, and to the County Board of Social Services (CBSS).

While the trust is being administered, there must be annual accountings to CBSS. The accounting must list all checks, including the date, the check number, the amount, and the payee. Receipts for all trust expenditures must also be provided. The accounting must also include the balance in the trust, copies of bank statements, and any change in the beneficiary’s income or resources. The accounting is given at the time of redetermination.

The trust will terminate if Medicaid medical assistance is no longer being provided or if the beneficiary is no longer over the income cap. This might occur if the individual is receiving annuity income for a term of years and the term of years expires. Upon termination, there must be notification to DMAHS and a payback. Theoretically, remainder beneficiaries can be named to receive any monies in the trust in excess of the payback, but no one will take a trip around the world on this money.

The trust must contain a spendthrift provision. The assets in the trust must be non-assignable. The trust must contain payback provisions. Anyone currently on the Medically Needy program will be grandfathered. It is likely that individuals will be grandfathered even upon redetermination. However, if a situation arises where an individual is on Medicaid pending the sale of a home and the home is then sold rendering the individual no longer eligible for Medicaid, upon reapplication will that individual be grandfathered? Likely, the answer is no, but DMAHS has not yet clarified this issue. Under Medically Needy the resource limit was $4,000 for an individual and $6,000 for a married couple. That resource limit is now reduced to $2,000 for an individual and $3,000 for a couple. The trust must be approved by CBSS and reviewed annually by DMAHS.

By Thomas D. Begley Jr.

WHAT SHOULD YOU KNOW ABOUT LONG-TERM CARE?

Long-term care is an area of growing concern to older Americans and their families. Approximately 70% of individuals age 65 or older eventually require some form of long-term care. Whether that consists of home healthcare, assisted living or nursing home care, the costs can be substantial. Without adequate planning, long-term care costs can quickly deplete a lifetime of savings. That, in turn, can jeopardize the financial security of a surviving spouse and undo any plans for transferring wealth to children.

Given the complexity of long-term care planning and the potential for costly errors, it is important to retain an experienced Elder Law attorney to guide you through the process. 

HOW CAN YOU PLAN FOR LONG-TERM CARE NEEDS?

Generally, the long-term care planning process involves:

• Identifying and prioritizing goals.
• Tax planning.
• Considering funding alternatives.
• Choosing appropriate planning tools.
• Applying for Medicaid, as necessary.

WHAT ARE YOUR GOALS?

The first step in long-term care planning is identifying goals and priorities. Typically, individuals want to:

• Obtain the best quality of care for the person in need.
• Maintain financial security for the healthy spouse.
• Avoid becoming a burden on children.
• Preserve a legacy for children.
• Avoid Medicaid lien on homes.
• Understand and plan appropriately for taxes, including:
  • Income tax.
  • Gift tax.
  • Federal estate tax.
  • New Jersey estate tax.
  • New Jersey inheritance tax.
  • Capital Gains tax.

WHAT SHOULD YOU KNOW ABOUT TAX PLANNING?

As you consider which assets might be used to fund long-term care and which you would like to leave to your children, it is important to understand the income tax ramifications of the following:

• Medical deductions. It is possible to take a medical deduction for qualified long-term care costs. For nursing home care, the deduction usually is equal to 100% of the cost of care. For assisted living and home care, it usually is a portion of the cost of care.

• Carryover basis. If a parent transfers assets to a child, the parent’s cost, known as the basis, carries over to the child, becoming his or her cost basis. This exposes the child to substantial capital gains taxes when the asset is sold.

• Step up in basis. If a parent leaves a child an asset that has increased in value, the child’s cost basis “steps up” to the fair market value of the asset at the parent’s death. This saves the child a significant capital gains tax bill when the asset is sold.

• Retirement plans. The tax treatment of qualified retirement plan assets makes them a good source of funding for long-term care, if funds are needed. While distributions are taxable (since the funds have grown on a tax-deferred basis while in the account), taxes are at least partially offset by the medical deduction, provided the funds are used for long-term care. Since there is no step up in basis on these assets, passing them to children would have capital gains as well as ordinary income tax consequences.

• Deferred annuities. Annuities in which the income has been deferred provide another good source of long-term care funding. When the income is withdrawn, it is taxable at ordinary income tax rates. But those taxes can be at least partially offset by the medical deduction if income is used for long-term care. If the annuity is transferred to a child; however, the entire deferred income is immediately taxable, and there is no step up in basis.

• Interest on E, EE, H, and I bonds. Long-term care costs also may be funded with these types of bonds. To the extent that the bonds have deferred interest, which has not been taxed, that interest is taxable when the bonds are redeemed. But those taxes can be offset, at least partially, by the medical deduction, as long as the funds are used for long-term care. If these bonds are passed on to children, there is no step up in basis.

• Gain on the sale of a home. As a general rule, if you have resided in a home as your principal residence for two of the five years preceding the date of sale, you are entitled to a $250,000 exclusion from capital gains tax, if single, or a $500,000 exclusion if you are married.

• Capital gains tax. There is a federal capital gains tax levied at the rate of up to 20% on profit from the sale of appreciated assets, such as homes and securities. There is also New Jersey income tax on this profit.

HOW WILL YOU PAY FOR LONG-TERM CARE?

There are five ways to pay for long-term care: private pay, long-term care insurance, Medicare, Veterans Administration benefits, and Medicaid.

Private pay

Paying for long-term care privately is the least desirable option since few families can afford the $100,000+/- annual price tag over an extended period of time.

Long-term care insurance

While long-term care insurance is an excellent way to pay for care, only 6- 8% of the elderly have this type of insurance. There are four reasons people don’t buy long-term care insurance:

• Lack of awareness. The industry has not done an adequate job marketing this product.

• It is estimated that only 10- 20% of the elderly can afford the long-term care insurance.

• At age 65, 25% of long-term care insurance policy applicants are rejected for health reasons.

• Since most people are optimists and prefer not to consider unpleasant outcomes, they don’t think they’ll need it. This proves to be the wrong decision 60% of the time. Unfortunately, the consequences of this mistake can be financially devastating to individuals and their families.

When buying long-term care insurance, it’s important to consider these factors:

• The type of care covered.
• The amount of daily benefits.
• Elimination periods.
• Inflation riders.
• Pre-existing condition clauses.
• The length of coverage.
• Guaranteed renewability.
• Waiver of premiums.
• The financial strength of the insurance company.

Medicare

If you expect to have Medicare cover long-term care costs, you should know that it:

• Offers extremely limited payment for home care and no payment for assisted living.

• Will pay for a nursing home stay only under certain conditions. The patient must have had a Medicare-covered stay in a hospital lasting at least three days and must have entered a nursing home to obtain skilled care within 30 days of discharge from the hospital.

• Will not pay for custodial care. The patient must receive skilled care to qualify for Medicare. If that level of care stops, the Medicare payment will stop. Examples of needs requiring skilled care include insertion of a feeding tube, five day per week rehabilitation, and insulin dependence.

• Will pay for a maximum of 100 days. That amount of coverage is not guaranteed and is a maximum, not a minimum. There is a co-insurance from day 21 through day 100. For 2015, the co-insurance rate is $157.50 per day. That may be covered if the patient has the appropriate Medi-gap policy.

Veterans’ benefits

If you believe you are eligible to have Veterans’ benefits cover long-term care costs, you should be aware of the following:

• Federal VA nursing homes. A veteran whose disability is 70% or more service-related is entitled to free lifetime nursing home coverage, regardless of means. These individuals are given priority for admission to federal VA facilities. Veterans who do not have a service-related disability are means-tested to determine eligibility for payment. As a practical matter, these individuals are unlikely to gain admission to a federal VA facility.

• VA Aid & Attendance benefits. Veterans Aid & Attendance benefits are available to certain veterans. These individuals must have served for at least two years of active duty and one day must have been during a war. There are income and resource eligibility tests. Aid & Attendance is available to veterans and to spouses of deceased veterans. For 2015, the monthly benefit for a veteran with dependents is $2,120, for a single veteran $1,788, and for the spouse of a deceased veteran $1,149.

• State VA benefits. The New Jersey Veterans Administration operates three Old Soldiers’ Homes for New Jersey veterans and their families. They are located in Paramus, Edison and Vineland. Veterans, spouses of veterans, surviving spouses, and, in some cases, parents, may be eligible to enter these facilities. Space is limited, and there is often a long waiting list. The monthly rate for Veterans who are not financially qualified is much lower than that for private nursing homes. Financially-eligible veterans qualify for a subsidy, which further reduces the cost dramatically. In some instances, a spouse remaining at home is entitled to retain a portion of the resident’s income for certain expenses.

Medicaid

If you may need to rely on Medicaid to cover long-term care costs, you should be aware of the following:

• Income limits. For 2015, there is an income cap of $2,199 per month for Medicaid eligibility. However, if an individual’s income exceeds that cap, a Miller Trust can be established to obtain income eligibility. Under a Miller Trust, a portion the Medicaid applicant’s income is deposited into a trust to bring the remaining income under the income cap. This is a legal fiction that makes no sense, but it enables many individuals to obtain Medicaid in nursing homes, assisted living facilities, and at home who would not otherwise be eligible.

• The Minimum Monthly Maintenance Needs Allowance. Medicaid regulations provide that if the applicant is married, the spouse remaining at home is entitled to a minimum monthly allowance. In some situations, if there is a shortfall, the difference can be retained from the income of the spouse requiring care. For the period of July1, 2014, through June 30, 2015, the Minimum Monthly Maintenance Needs Allowance is $1,966.25 and the Excess Shelter Allowance threshold is $589.88 per month for certain housing expenses.

• Resource limits. Persons receiving Medicaid generally can have assets of no more than $2,000. Certain assets are excluded, such as a home (occupied by a community spouse or child who is under age 21, blind or disabled), an automobile, personal effects, prepaid funeral expenses, medical equipment, inaccessible resources (such as an estate in probate), term life insurance, whole life insurance with a maximum face value of $1,500, and a $2,000 personal needs account.

If there is a joint account owned by the applicant “or” another individual, Medicaid takes the position that the entire account is a countable resource for the Medicaid applicant. If the account is owned by the applicant “and” another individual, Medicaid assumes that there was a transfer of assets when the applicant(‘s/s’) child was added to the account, but that each joint owner owns a pro rata share of the account. If the child contributes the assets and later withdraws them, there is no transfer-of-asset penalty. The child bears the burden of proof regarding whether he or she made a contribution to the account.

• Pooling of assets. If a Medicaid applicant is married, the resources of both spouses are pooled to determine Medicaid eligibility. A snapshot of the couple’s resources is taken as the first moment of the first day of the first month in which one of the spouses receives an institutional level of care, even if that care is delivered at home. The well spouse is entitled to a Community Spouse Resource Allowance, but the remaining assets must be spent down prior to Medicaid eligibility.

The Community Spouse Resource Allowance is 1/2 of the countable resources with a maximum of $119,220 and a minimum of $23,844 for 2015.

• Transfer-of-assets rules. Medicaid has strict requirements regarding the transfer of assets from an applicant to his or her children or other parties.

• Medicaid imposes a 60-month (five-year) lookback for transfers of assets. This means that Medicaid will review the applicant’s relevant financial records going back five years to determine whether funds have been transferred during that time period.

• If assets were transferred during the lookback period, Medicaid imposes a penalty. That penalty, which is a period of ineligibility for Medicaid, is calculated by dividing the amount transferred by the average cost of a nursing home in New Jersey determined by the Division of Medical Assistance and Health Services. Unfortunately, this divisor is always less than the actual cost of care.

Penalties may be for a period of months or partial months. The larger the transfer, the longer the period of ineligibility. The penalty does not begin until the applicant is eligible for an institutional level of care, is otherwise financially eligible for Medicaid (i.e. has spent down assets to $2,000) and has no other period of ineligibility outstanding.

For example, assume that a person transferred $50,000 within the lookback period, triggering a seven-month penalty or period of ineligibility for Medicaid. The penalty period would begin when that person was already in a nursing home, had spent down assets to $2,000 and had no other period of ineligibility outstanding. Consequently, the individual would have no money with which to pay for the nursing home care for seven months.

• Acceleration strategies. There are many strategies available to accelerate the date of Medicaid eligibility. These strategies fall into two categories spend down and transfers.

Spend Down. It is possible to spend down assets through:

• Repayment of debt.
• Payment for services.
• Purchase of personal effects.
• Making home improvements.
• Prepayment of funeral expenses.
• Purchase of an automobile for a healthy spouse.
• Purchase of a home for a healthy spouse.
• Purchase of a life estate.
• Establishment of a care agreement.

Transfers. Despite the five-year lookback, in many instances, it is still possible to transfer assets. For example, some transfers are exempt from Medicaid transfer-of-asset penalties. In some cases, tax advantages can be achieved by transferring assets. Additionally, assets may be transferred from one spouse to another through divorce.

Transfer alternatives. There are several ways to transfer assets.

• It is important to consider whether a transfer should be made outright to children or to a trust. Outright transfers have many risks. They can expose assets to the children’s creditors or make them available in a divorce settlement. If grandchildren plan to apply for college financial aid, the transferred assets will need to be disclosed on the application, potentially resulting in a reduction of elimination of aid. Additionally, when assets are transferred to the children, they will lose the step up in basis they would have received if the assets were passed after the parent’s death. The principal residence exclusion on the sale of the home will be lost as well.

If assets are transferred to a grantor trust, the trust can be designed so that, at the parent’s death, the assets will receive a step up in basis. That will result in significant tax savings for the children. The trust also can stipulate that the income tax on the trust assets will be paid by the parent. If a home is transferred to a trust and later sold, the trust can be established to preserve the $250,000 or $500,000 exclusion from capital gains tax on the sale of a principal residence. Additionally, trusts can eliminate risk factors associated with outright transfers to children. Even if a child is serving as trustee, the assets would not be subject to the claims of that child’s creditors or become involved in an action for divorce. These assets would not need to be disclosed on a grandchild’s application for college financial aid.

Several types of trusts are used when Medicaid planning is at issue. All of these trusts are irrevocable.

• Children’s trusts. Assets are transferred to a trust, and the parent does not reserve the right to receive income from those assets. If the parent receives Medicaid and transfers assets out of the trust, there is the risk that there may be a transfer-of-asset penalty. That penalty would be imposed by multiplying the parent’s annual income by his or her life expectancy and dividing the sum by the state divisor.

• Donee trusts. This type of trust is appropriate when a parent transfers assets to children, outright, but the children plan to later establish a trust to hold the transferred assets.

• Disability annuity trusts. If a parent has a disabled child, assets can be transferred to a disability annuity trust for that child’s benefit.

• Disability annuity special needs If a parent has a disabled child who is receiving SSI and Medicaid, assets must be transferred to a disability annuity trust wrapped within a special needs trust in order to preserve the child’s benefits.

Care agreements. In many cases, a child provides care to a parent. To accommodate such an arrangement, the child may move into the parent’s home or the parent may move into the child’s home. Alternatively, the child may provide care while retaining a separate residence from the parent if the parent resides in a nursing home or assisted living facility. It is possible for the parent to compensate the child for this care, effectively transferring assets to the child. This can be done without triggering a penalty, provided that three requirements are met:

• There must be a written care agreement.
• Payment can be made only for care provided after the date of the agreement.
• Compensation must be reasonable.

Note that the income paid to the child is taxable because it is for services. In some circumstances, the parent must withhold from the child for FUTA and FICA. Withholding from income tax is not required unless both parties agree. Medicaid resists these care agreements and great caution must be taken in properly drafting the documents and in delivering appropriate services.

There are several ways to transfer a home.

• Transfer outright to children. A common mistake is for parents to transfer a home outright to children. This results in a number of negative consequences.
  • Loss of control. The parent loses control over the home.
  • Gift taxes. Since the home is worth more than $14,000, it exceeds the allowable annual exclusion gift.
  • Carryover basis. The parent’s cost basis in the home carries over to the children. In some cases, the parent purchased the home many years before, and there has been significant appreciation. Eventually, the children will have to pay capital gains tax on that appreciation.
  • Loss of principal residence exclusion. The $250,000/$500,000 principal residence exclusion is lost since the parent no longer owns the home.
  • Loss of real estate tax benefits. The homestead tax rebate, Veteran’s deduction, senior citizen’s deduction, tax freeze, and ability to itemize deductions are all lost.

• Transfer, reserving a life estate/right to use or occupy. When the home is transferred to children, but the parent reserves a life estate or right to use and occupy it, the following occur:
  • The parent retains control. The children cannot sell or mortgage the house without the parent(‘s/s’) signature on the deed or the mortgage.
  • Gift tax exemption. A gift tax exemption can be filed as long as the value of the home does not exceed $5,430,000. In most cases, there will be no taxes due.
  • Step up in basis. At the parent(’s/s’) death, the children receive a step up in basis on the value of the home, which reduces their capital gains tax liability.
  • Real estate tax benefits. The homestead tax rebate, Veteran’s deduction, senior citizen’s deduction, estate-tax freeze, and ability to itemize deductions on income tax returns are all retained.
  • Loss of principal residence exclusion. The principal residence exclusion is lost. This is an important consideration if the home is sold during the parent’s lifetime.

• Transfer to a grantor trust. The home also may be transferred to a grantor trust, with the following outcome:
  • Control of the home vests in the trustee rather than the parent.
  • Gift tax exclusion. There is no gift tax due when the gift is to a grantor trust.
  • Step up in basis. The children receive a step up in basis at the parent(’s/s’) death.
  • Loss of real estate tax benefits. The homestead tax rebate, Veteran’s deduction, senior citizen’s deduction, estate tax freeze, and ability to itemize deductions on income-tax returns are all lost.
  • Principal residence exclusion. This can be maintained.

• Sell a remainder interest. A parent can sell a child a remainder interest in the home and retain a life estate. It is likely that Medicaid will require the parent to live in the home for one year for this strategy to be effective. The value of the remainder interest is determined by tables published by the federal government. The older the parent, the greater value of the life estate. At age 75, the life estate is worth approximately 52% and the remainder interest is worth approximately 48%. If the parent had a home valued at $200,000, the child would pay approximately $96,000 for the remainder interest. At the parent’s death, the child would own the $200,000 home.

• Purchase a life estate in the child’s home. The flip side of the sale of a remainder interest is for the parent to purchase a life estate in the home of the child. Again, the federal government’s life estate tables are used. If the child has a home with equity of $200,000 and the parent is age 75, the parent can pay the child $104,000 in exchange for a deed granting him or her a life estate in the home. The parent must actually move into the home and reside there for at least one year. If there is a mortgage on the home, this would reduce the equity purchased by the parent. Consideration also must be given to the “due on sale” clause in the child’s mortgage and to capital gains tax liability.

• Reverse mortgages. In many instances, children provide financial support to their parents to bridge the gap between the parent(’s/s’) income and the parent(‘s/s’) expenses. In order to ensure that these funds will be repaid if the parent ever requires long-term care, it is good practice to record a mortgage against the parent’s estate to secure the funds advanced by the children.

Medicaid estate recovery

At the death of a Medicaid recipient, the state is entitled to recover from his or her estate. In New Jersey, an estate includes all assets in the name of the decedent, as well as assets in which the decedent had an interest through joint tenancy, tenancy in common, right of survivorship, a living trust, or another arrangement. Effectively, this means that if a husband and wife own a home together and the husband is a Medicaid recipient, at his death, Medicaid can file a lien on the home. If the home is owned as tenants by the entirety, which is the usual way married couples own homes, the lien will be for 100% of the value of the home. In Pennsylvania, estate recovery is limited to the probate estate. The recovery will be for all Medicaid benefits received after age 55. No recovery will be made if there is a surviving spouse or a surviving child who is under age 21, blind, or permanently and totally disabled. Life estates established during the parent(’s/s’) lifetime are exempt from estate recovery. Recovery cannot be made against the estate of the surviving spouse. If a lien is placed against the home, the spouse will not be forced from the home, but Medicaid will want payment if the home is sold or the spouse dies.

WHAT TOOLS ARE AVAILABLE FOR LONG-TERM CARE PLANNING?

• Asset protection plan. An asset protection plan is designed to help you achieve your goals despite the barriers erected by Medicaid and tax laws.

• If you are married, you and your spouse probably have reciprocal wills, through which you leave everything to each other. When one spouse requires nursing home care, it is important to review existing wills. Generally, it is best to leave unchanged the will of the disabled spouse. However, the will of the other spouse should be revised so that, if he or she dies first, assets are not left to the disabled spouse.

• Living will. Your living will should be reviewed to ensure that it contains appropriate instructions regarding end-of-life decisions. Specifically, it should state the types of treatment you do or do not want in the event that you are either brain dead or terminal, and two physicians and a family member have agreed that there is no hope of your recovery.

• Power of attorney. Your powers of attorney should be reviewed for adequacy. Often, powers of attorney are missing such elements as the right to make gifts or do banking in accordance with the New Jersey Durable Power of Attorney Act. Additionally, many powers of attorney fail to include a reference to real estate that is to be sold. Prior to the sale of real estate, many title companies require that the street address and block and lot of the property be included in the power of attorney.

• Children’s trust. Establishing a trust for the benefit of children often offers tax advantages. It also can help to avoid the risk of making outright transfers to children, such as the risk of creditor actions or the loss of assets in a divorce.

• For most clients, the primary goal of long-term care planning is to protect their home. While many clients feel they should deed their home outright to their children, this often is not a good solution because of the risk factors and adverse tax effects. There are; however, a number of other strategies available to achieve this goal.

• Care agreement. If a child cares for a parent, it is possible for the parent to pay for that care, effectively transferring assets in a manner that will not trigger a Medicaid penalty. This must be done pursuant to a written care agreement.

WHAT SHOULD YOU KNOW ABOUT APPLYING FOR MEDICAID?

Medicaid applications are filed with the Board of Social Services for the county in which the care is being provided even if the applicant lived in a different county. Applicants must report all assets under penalty of perjury. The Board of Social Services has 30 days to approve or deny an application, but typically, the process takes about 60 days. Applicants have a right to appeal in the event of a denial. Medicaid can be granted retroactively for three months prior to the date of application if the Medicaid applicant was eligible at that time. Otherwise, eligibility begins on the first day of the month following the Medicaid application.

Medicaid eligibility rules are complex, and it is possible for errors to result in a delay in eligibility. In such cases, the facility must be paid by the family on a private-pay basis until Medicaid eligibility is granted. Given the potential for this outcome, many applicants choose to have an elder law attorney represent then during the application process. An elder law attorney also can help with periodic redeterminations for Medicaid eligibility. These occur annually for recipients on the Medicaid Only program and every six months for those on the Medically Needy program.

WORKING WITH BEGLEY LAW   GROUP

For over 70 years, the attorneys of the elder and disability law firm Begley Law Group have been dedicated to helping clients plan for long-term care concerns. We have expertise in all aspects of elder law and provide clients with the most up-to-date information and advice. The firm participates in the formulation of legislation related to elder law issues. We also advocate for the rights of seniors on both national and state levels.

Clients requiring long-term care planning can benefit from our Asset Protection Planning program, designed to help identify goals and find the best strategies and solutions for achieving them. At the initial meeting, we will discuss your situation and ascertain your needs. We will then advise you of our fee, which is a flat rate that covers everything within the scope of the service.

LONG TERM CARE SELF-DIAGNOSTIC TEST

Many clients involved in long-term care planning find it useful to complete the following Self-Diagnostic Test. Please take a few minutes to answer these questions.

1.  Am I willing to risk all that I have accumulated through a lifetime of hard work and disciplined saving, including my home, my car, and all of my liquid assets, rather than take the time to plan for the future?       □ Yes     □ No

2. Do I understand that the cost of planning is insignificant when compared to the cost of paying for long-term care?   □ Yes   □ No

3. Do I understand that the risk of my needing some form of long-term care (e.g., home care, assisted living, nursing home care) is roughly 70%?      □ Yes     □ No

4. Do I know what long-term care will cost? $________________

5. Do I know how I will pay for that care if I need it?____________________________________________

6. Do I know what the impact will be on my spouse and children if I spend $100,000 ± per year on long-term care?__________________________________________________________________________

7. Should I explore the possibility of buying long-term care insurance?     □ Yes     □ No

If no, why not?___________________________________________________________________________

8. Should I hope this problem never arises and ignore it?     □ Yes     □ No

9. Should I take steps to try to protect my life savings now?      □ Yes     □ No

What are my reasons for these decisions?____________________________________________________

________________________________________________________________________________________

10. Do I understand that if I become sick, it may be impossible for my spouse or children to care for me, regardless of how much they are committed to doing so?     □ Yes     □ No

11. Are my wills, trusts, living wills, powers of attorney and other legal documents up to date?   □ Yes     □ No

by Thomas D. Begley, Jr., Esquire, CELA

For purposes of Medicaid long-term care services, New Jersey has always been an income cap state. That means that an individual’s income must not exceed 300% of the Federal Benefit Rate (FBR). Beginning January 1, 2015 that means that an individual’s monthly income cannot exceed $2,199. Historically, individuals in nursing homes were able to qualify for a “Medically Needy” program to spend their income down and qualify for Medicaid. Individuals requiring care in assisted living or at home were not eligible for the Medically Needy program and could not become eligible for Medicaid, if their income exceeded the cap.

New Jersey has obtained a waiver from the federal government whereby the state will abolish the Medically Needy program and individuals will be authorized to establish “Miller Trusts.” Miller Trusts are legal fiction. Under that program, individuals may deposit their excess income into a trust, and that income is not counted for income eligibility purposes. The money in the trust must be distributed for very limited purposes. These Miller Trusts are also known as Qualified Income Trusts (QITs).

QIT must meet certain conditions:

• they must contain only income of the individual;
• they must not contain resources, such as income from the sale of real or personal property or money from a savings account;
• they must be irrevocable;
• they must have a trustee to manage administration of the trust and expenditures from the trust as set forth in federal and state law;
• New Jersey must be first beneficiary of all remaining funds up to the amount paid for Medicaid benefits upon the death of the Medicaid recipient; and
• income deposited in the QIT can only be used for specific post-eligibility treatment of income and to pay for costs of care.

There will no longer be a Medically Needy program even for nursing home Medicaid recipients, although current recipients will be grandfathered. Funds must be deposited in a trust bank account. Bank charges cannot exceed $20 per month. The Social Security Number of the beneficiary of the trust is used not an EIN.

The trust can be established by the trust beneficiary or someone acting under a power of attorney or legal guardianship acting on behalf of the trust beneficiary.

The Honorable Ronald E. Bookbinder, Assignment Judge of Burlington County, presented the award. Ordog clerked for Bookbinder in 2007 and 2008.

The Robert W. Criscuolo Award is presented annually to an attorney who demonstrates significant involvement and contributions to the Bar Association, to community service and to other civic activities. He or she must be in good standing in the Association and must be either under the age of 36 or have been practicing law for five years or less. The prestigious award is named for the late Robert W. Criscuolo, a former name partner of Parker McCay.

A partner at Begley Law Group, Ordog concentrates his practice in guardianship and in estate and trust litigation and administration. He is licensed to practice law in New Jersey and the U.S. District Court for the District of New Jersey, and he is a member of the New Jersey Bar Association and the bar associations of Burlington and Camden counties. He is presently the chair of the Burlington County Probate Committee and on the board of directors for United Cerebral Palsy of Philadelphia.

Ordog received his law degree from Roger Williams School of Law in Bristol, Rhode Island. While attending Roger Williams, he was a law school ambassador. He completed his undergraduate studies at Moravian College in Bethlehem, Pennsylvania, graduating cum laude with a political science degree.

A dump truck driver slammed into the back of a Nissan Altima stopped at a red light on a New Jersey road. The impact sent the two vehicles through a guardrail and into a lake. When police arrived on scene, they found the dump truck completely on top of the Altima, which was submerged more than two hours before emergency personnel were able to remove it from the water. The driver of the Nissan was pronounced dead at the scene; the driver of the truck was treated at the hospital and released.

Witnesses told police the dump truck driver was traveling at a high rate of speed and driving erratically and a prosecutor alleges the he caused three other accidents earlier the same day. Shortly before noon, the truck driver rear-ended an automobile at a light. In less than three hours, he was involved in a three-vehicle accident in which he was issued a summons for careless driving. Shortly after driving away from that accident, he drove across a lawn causing damage. He has been charged with one count of second-degree death by auto, and was also issued five motor vehicle citations: reckless driving, careless driving, operating a commercial vehicle without a proper license, and failure to observe a traffic signal. An attorney for the negligent truck driver alleges that his client had been recently diagnosed with diabetes and was suffering from erratic blood sugar at the time. An initial review of the toxicology reports shows no sign of drugs or alcohol in his system.

In auto accidents where negligence or wrongdoing is involved, the at-fault driver can be held liable for the injuries, damages and losses. The family of deceased victim can file a wrongful death claim seeking compensation for damages such as funeral and burial expenses, loss of future income, pain and suffering, and loss of love and companionship. Unfortunately, the legal process can take upwards of several months to years before compensation is received. During this time, if they need financial assistance to pay the bills, litigation funding may be the answer.

Insurers will delay the case as long as they can and low-ball a settlement offer so families in financial distress will feel pressure to settle for less than full compensation. Obtaining auto accident litigation funding can neutralize this tactic and provide plaintiffs the ability to pay the bills, and avoid eviction, bankruptcy, and ruined credit.

If you need cash now to relieve the burden and constant worry of waiting for compensation that you are entitled to, turn to litigation funding. With Litigation Funding Corp., there are no upfront fees, no credit checks, and no payments until the case settles; best of all, you keep the money if you lose your case. Our one-page application can be completed in less than five minutes or call one our legal funding specialists. Once received, we will do the rest. We will contact your attorney and get the necessary documents; if approved, we will wire funds directly into your bank account, usually in less than 48 hours. The cash advance can be used for anything you need, but most victims will use it to pay the mortgage or rent, medical expenses, funeral expenses, or ongoing household bills.

Don’t settle for pennies on the dollar; let us provide your litigation financing so litigation can run its course and provide a fair settlement. Call at 1.866.548.3863 now!

Issues associated with pregnancy include anxiety, nausea, fatigue and distraction — factors that could contribute to driver error. In order to avert accidents during pregnancy, a doctor and researcher from the Institute for Clinical Evaluative Sciences suggested that women take ever greater care to drive defensively and be alert at all times as their pregnancy progresses. The study went so far as to state that safe driving is a component of good prenatal care.

Although the study is interesting, many find the results to be questionable. It did not account for any other contributing factors, like medical conditions, weather or distracted driving. An E.R. doctor at Meadowlands Hospital Medical Center in Secaucus, New Jersey questioned why the study did not find that the risk of an accident was higher in the first trimester, when many women feel their worst.

Whatever studies show about the statistical risks of driving while pregnant, it is imperative to drive with care. Pay attention to the road. Minimize distractions. Do not drive while feeling sick. Do not drive if you cannot get behind the wheel safely and comfortably.

Lee, Gober and Reyna – If you need a personal injury lawyer or help with an auto accident, motorcycle accident, wrongful death, or burn injury case, contact Lee, Gober and Reyna by visiting http://www.lgrlawfirm.com or calling 512.800.8000

To commemorate the occasion, PLAN held a wonderful event on June 5th at the New Jersey Law Center, located at One Constitution Square in New Brunswick, NJ. The festivities included cocktails, hors d’oeuvres, a special celebrity silent fundraising auction and a keynote address by Sarah Helena Vazquez, national motivational speaker, advocate, and author.

In addition that evening, PLAN honored several distinguished individuals who have made significant and long-term contributions in improving outcomes and enhancing the quality of life for persons with developmental disabilities or mental health challenges in New Jersey. Among those honored was Begley Law Group’s Thomas D. Begley Jr. who received the group’s Legal Champion Award.

PLAN/NJ was originally formed as the “ARC of New Jersey Community Trust Project,” in 1987 
when it was chartered to help parents and caregivers plan for the future care of a loved one with a disability.  Today, the non-profit, social service agency continues to help more than 500 individuals all 21 counties in New Jersey, with various mental health disabilities and mental health challenges in New Jersey including autism, cerebral palsy, intellectual disabilities, traumatic brain injury and severe mental illness such as schizophrenia and bi-polar disorder.

Public benefits must always be considered in the settlement of a personal injury case.  They are important for two reasons:  (1) whether there is a lien to repay the public benefits, and (2) whether the plaintiff’s continued eligibility for public benefits depends on the establishment of a self-settled special needs trust.  Common public benefits include the following:

Supplemental Security Income (SSI) 

SSI is a monthly payment from the Social Security Administration to the SSI recipient.  The maximum payment for an individual for 2014 is $721 per month.[1]  For many people this is a significant benefit.  Over a calendar year, it is $9,132.  With inflation adjustments over a five-year period it might amount to $50,000.  SSI is essentially a welfare program.  It is “means-tested,” which means that there are income and asset tests to determine eligibility.  SSI does not have a lien against a personal injury settlement, but a special needs trust is required to maintain the plaintiff’s eligibility.

Social Security Disability Income (SSDI) 

The amount of the SSDI benefit, like Social Security Retirement, is based on the amount the worker paid into the system during his working career.  This is known as a PIA.  SSDI has no lien against the personal injury settlement and a special needs trust is not required to maintain eligibility.

Medicaid 

Medicaid is a medical payment program.  It provides very broad coverage.  There are a number of variations on this program.  One is straight Medicaid.  If a person’s income is less than $972 per month, he or she is aged, blind or disabled, and has assets of less than $2,000, he or she is eligible for Medicaid.  Another variation is New Jersey Family Care.  This is an income-based program.  There is no asset test.  Medicaid has a lien against a personal injury settlement.  A special needs trust is required to preserve eligibility for regular Medicaid, but not for New Jersey Family Care.

Affordable Care Act (ACA) 

The ACA is funded with Medicaid dollars for individuals who have income less than 138% of the Federal Poverty Level.  While it is unclear from the legislation and regulations and there has been no case law, it would appear that if an individual is receiving a Medicaid subsidy under the ACA, then there would be a lien against the personal injury settlement to the extent that Medicaid dollars were paid.  There is no asset test for ACA insurance, but to the extent the assets produce income, it affects eligibility and premiums.  Generally, a special needs trust would not be required.

Medicaid Waiver 

There are a number of Medicaid Waiver Programs in New Jersey.  Typically, these programs have an income cap of $2,163 per month for 2014 and an asset test of $2,000.  Medicaid Waiver Programs typically provide home care and care in residential settings such as group homes, assisted living facilities, and nursing homes.  Medicaid Waiver Programs have liens against personal injury settlements and special needs trusts are required in order to maintain eligibility.

Medicare 

Medicare is essentially a medical insurance program.  To be eligible, an individual must be over age 65 or disabled and receiving SSDI or Railroad Retirement Disability or suffer from End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).  Coverage is very broad, but there are copayments, deductibles, and premiums.  There is a Medicare lien against a personal injury settlement, but a special needs trust is not required to preserved eligibility.

Medicare Advantage 

A Medicare Advantage Plan is essentially a Medicare HMO.  Medicare Advantage Plans must provide all of the benefits covered by Medicare and they do offer additional coverage relating to deductibles and copayments.  Clients often purchase Medicare Advantage Plans rather than stay with Traditional Medicare, so that a Medicare Supplement is not required.  Medicare Advantage has a lien against personal injury settlements and a special needs trust is not required in order to maintain Medicare Advantage.

Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamps)  

SNAP provides assistance to eligible individuals and families to assist in the purchase of food.  There is an income test related to total household income.  There is also an asset test.  There is no lien against a personal injury settlement.  A special needs trust is often required to maintain benefits.

Federally-Assisted Housing 

Federally-Assisted Housing provides housing assistance, usually rental assistance, to low-income individuals and families.  There is a Regional Income limit for purposes of determining eligibility and, if an individual or family is determined to be eligible, the individual typically pays 30% of his or the family’s actual adjusted gross income as rent.  There is no lien against a personal injury settlement for federally-assisted housing.  There is no asset test, but income from assets is considered income.  A special needs trust is sometimes, but not always, required to maintain eligibility.

Temporary Assistance to Needy Families (TANF) 

The TANF program in New Jersey is called WorkFirst NJ.  The program provides temporary cash assistance and many other support services.  The program known as General Assistance is part of the WorkFirst NJ program and provides benefits to families or individuals even if they do not have children.  There is a lien against the personal injury settlement.

Therefore it is critical to obtain correct information from clients, so that liens can be satisfied, trusts can be established where necessary, and MSA accounts can be set up in appropriate cases.

This is the second part of a two-part article dealing with the impact of Windsor on taxation and public benefits.  This article will examine the impact of Windsor on public benefits planning.

In United States v. Windsor,[1] the United States Supreme Court declared §3 of the Defense of Marriage Act (DOMA) unconstitutional.  This section limited marriage to a union between one man and one woman.  Windsor did not apply to §2 of DOMA, which permits states to refuse to recognize the actions of another state on the issue of same-sex marriage.  Therefore, a couple married in New Jersey would have a valid marriage because the marriage was celebrated in a state that recognizes same-sex marriages.  However, if that same couple then moved to Pennsylvania, §2 of DOMA permits Pennsylvania to refuse to recognize the valid marriage celebrated in New Jersey.

• SSI.  The Social Security Administration (SSA) has taken the position that post-Windsor[2] for a same-sex married couple to be entitled to SSI benefits as a married couple, the applicant must have been married and domiciled in a state recognizing same-sex marriages.  Same-sex marriage is relevant in the SSI context in the application of SSI deeming rules and benefit amounts.[3]  In other words, if a member of a married couple applied for SSI, the income and resources of the other spouse would be deemed to the applicant’s spouse.  This could not have a positive effect, but could have a negative effect on the applicant’s eligibility.  Also, if there are two eligible spouses, the combined SSI benefit is only $1,082 per month for 2014[4] as opposed to $721[5] per month for a single individual or $1,442 for two unmarried individuals.  In this case, the marriage penalty is $360 per month.
• SSDI.  SSA has taken the position that to be eligible for SSDI, the applicant must have been married in a state recognizing same-sex marriages and domiciled in a state recognizing those marriages.[6]

• Lump Sum Death Benefits.  With respect to lump-sum death benefits, Social Security will recognize a claim assuming the same-sex couple was married in a state that recognizes same-sex marriages and that the deceased spouse was domiciled at the time of death in a state that recognizes same-sex marriages.[7]

• SSDI – Spousal Survivor Benefits.  To be eligible, the marriage must have been performed in a state recognizing same-sex marriages and the decedent must have been domiciled in a state recognizing same-sex marriages at the time of death.[8]

• Medicaid and CHIP.  The Centers for Medicare and Medicaid Services (CMS) has issued guidelines on how Windsor will affect Medicaid and the Children’s Health Insurance Program (CHIP).[9]  CMS has stated that there is two-prong test for many of these public benefits.  One is the state of celebration.  Was the marriage celebrated in a state that recognizes same-sex marriages?  Two is the state of domicile.  Does the same-sex couple reside in a state that recognizes same-sex marriages?

Medicaid is a joint federal/state program.  Funding comes partly from the federal government and partly from the state government.  Therefore, state law in the state of domicile must be considered.

Under the CMS guidance, CMS takes the position that to apply for Medicaid benefits the marriage must have been celebrated in a state that recognizes same-sex marriages and the couple must be domiciled in a state that recognizes same-sex marriages.  Suppose a same-sex couple is married in New Jersey and later applies for Medicaid in New Jersey.  Since New Jersey is the state of celebration and domicile, Medicaid should recognize the marriage.  This means that the assets of the community spouse would be deemed to the institutional spouse, and the community spouse would be entitled to keep the Community Spouse Resource Allowance, which is one-half of the couple’s combined countable assets with a maximum of $117,240 for 2014.[10]

The community spouse would also be entitled to the Minimum Monthly Maintenance Needs Allowance (MMMNA), which until June 30, 2014, is $1,938.75,[11] and which will increase to $1,966.25 for the period July 1, 2014 until June 30, 2015.[12]

• Medicare.  SSA has announced that Medicare Advantage Plans must provide coverage of post-hospital extended care services to Medicare enrollees through a home skilled care nursing facility, if the enrollee elects to receive coverage from such a facility and if the facility either has a contract with the MA organization or agrees to accept substantially similar payment under the same terms and conditions that apply to similar skilled nursing facilities that contract with the MA organization.[13]

• Veterans Benefits.  For most federal Veterans benefits, the same-sex marriage must be celebrated in a state that recognizes same-sex marriages, but there is no requirement that the applicant be domiciled in a state recognizing such benefits at the time of application.[14]

CHART

THE EFFECT OF WINDSOR ON TAXATION AND

PUBLIC BENEFIT PROGRAMS

R = Required; NR = Not Required

This is the first of a two-part article on tax and public benefits planning for same-sex couples.  In the 2013 case of United States v. Windsor,[1] the Supreme Court of the United States declared §3 of the Defense of Marriage Act (DOMA) unconstitutional.  Section 3 was drafted to prohibit the payment of federal benefits to same-sex married couples.  It should be noted, however, that Windsor did not apply to §2 of DOMA, which prohibits any state from being forced to recognize the actions of another state on the issue of same-sex marriage.  As a result, there is importance attached to the state in which the marriage was celebrated and also to the state in which the couple is domiciled.  As of the writing of this article, the following states recognize same-sex marriages:  California, Connecticut, Delaware, District of Columbia, Hawaii, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Washington.  For purposes of federal taxation, federal law applies and the IRS has not taken a state-by-state approach to the issue of validity of the marriage.[2]  For IRS purposes, if the marriage was celebrated in a state recognizing same-sex marriage, the IRS will deem the marriage to be valid regardless of the state in which the couple resides.  If a couple marries in New Jersey and remains domiciled in New Jersey, New Jersey would be the state of celebration and also the state of domicile, and the IRS would recognize the marriage for federal income, estate, and gift tax purposes.  If the couple married in New Jersey but moved to Pennsylvania, a state that does not recognize same-sex marriages, the IRS takes the position that federal law trumps state law and the same-sex couple would be subject to the benefits and burdens of any married couple with respect to federal income, estate, and gift tax purposes.

For income tax purposes, some of the issues involved are:

• Joint Returns.  Same-sex couples, regardless of their domicile, will be permitted to file income tax returns jointly so long as the marriage was celebrated in a state that recognizes same-sex marriages.  If the same-sex couple moves from New Jersey to Pennsylvania, Pennsylvania would not be required to recognize the marriage and would require that each member of the couple file separate state income tax returns.[3]  For federal income tax purposes, the married couple will be subject to the “marriage penalty” (i.e., the increased taxation to which the married couple may be subject by virtue of their combined incomes on their Federal 1040).  The same-sex couple will also be able to enjoy the many benefits of married filing jointly such as the higher likelihood of increased itemized deductions if the couple incurs significant medical expenses.

• Sale of a Principal Residence.  Capital gains of up to $250,000 per person or $500,000 for a married couple are excluded from the calculation of gain on the sale of a primary residence so long as the taxpayer used the home as his or her primary residence for two out of the five years preceding the date of the sale.[4]  However, the creditor protection associated with tenancy by the entirety planning should be available for same-sex couples domiciled in New Jersey, but would not be available for same-sex couples domiciled in states that do not recognize same-sex marriages.  Real estate law is a state law function.

• Alimony and Child Support.  Alimony and child support will become an issue with respect to same-sex couples.  In the heterosexual community, 50% of all marriages end in divorce.  There is no reason to believe that the same ratio would not apply in the same-sex community.  If a same-sex couple becomes divorced, there may be an obligation for spousal support through alimony or for child support.  In the event that alimony and child support are subject to federal income tax laws, they will be treated the same as any other married couple no matter where the couple is domiciled for federal income tax purposes.

• Amend Prior Returns. It may be possible for same-sex couples to amend prior returns.  If a couple celebrated a marriage in a state recognizing same-sex marriage they may be entitled to a refund had they filed as married filing jointly.  It is suggested that same-sex married couples consult with their tax preparers.

• Federal Estate Tax.  Windsor was a federal estate tax case.  Under both Windsor and the IRS Notice, for federal estate tax purposes the marriage will be recognized regardless of the state of domicile.  The portability of the unused exemption for the first-to-die spouse will be available.  Planning to achieve a basis adjustment on death will be possible.

• Federal Gift Tax.  For gift tax purposes, joint gifting will now permit same-sex couples to use the annual exclusion more aggressively.  For 2014, the annual exclusion is $14,000.  If the other spouse joins in the gift, this can be increased to $28,000 per person per year.

In conclusion, Windsor will have a positive effect on federal income, estate, and gift tax planning for same-sex married couples.

Prior to July 1, 2002, the New Jersey estate tax was a “sponge” or “pick up” tax that was essentially based on the federal estate tax.  On July 1, 2002, the tax was decoupled from the federal estate tax.  The New Jersey estate tax is now imposed upon the transfer of an estate that would have been subject to federal estate tax under the Internal Revenue Code in effect on December 31, 2001.  Essentially, this means that if a decedent’s estate exceeds $675,000, a New Jersey estate tax return must be filed within nine months of the date of death and any tax due must be paid within nine months.  The tax rate is graduated and tops out at 16%.  The tax can be significant.  For example, on an estate of $2,040,000, the tax is $106,800.

There are three main options to avoid the New Jersey estate tax.  The first option is to change residence to a state that does not have death taxes.  Twenty states have either an estate tax, an inheritance tax, or both.  These include:  Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, and Washington.  There are limited options to residents of those states to avoid such taxes.  For many individuals, this is easier said than done.  Many seniors are reluctant to move away from children and grandchildren and some seniors have children with special needs and the seniors feel compelled to live nearby.  The second option is to make inter vivos gifts to children, other heirs, or charities to reduce the size of the individual’s estate, or even to bring the individual below the state death tax exemption.  The third option for married couples is to utilize a Spousal Lifetime Access Trust.

Spousal Lifetime Access Trust

Purpose

The purpose of a Spousal Lifetime Access Trust (SLAT) is to avoid or reduce state death taxes.  The concept was originally used to avoid or reduce federal estate taxes, but with the increase of the federal estate tax exemption, this is no longer an issue for most people.  Of the 20 states that have either a state estate or inheritance tax, only one, Connecticut, has a gift tax.  The idea is to make lifetime gifts to an irrevocable trust that would then be excluded from the estate of the donor upon death.

Design

The SLAT must be an irrevocable trust.  Essentially, the SLAT is a by-pass trust funded during the donor’s lifetime.  The difference is that typically, a bypass trust is funded on death, while the SLAT is funded during lifetime either using the state gift tax exemption in Connecticut or without regard to state gift taxes in those states that do not have a gift tax.  The SLAT is designed to provide for payment of income and principal to the spouse and, if desired, to descendants as well. Distributions can be at the trustee’s discretion, but normally distributions would be in accordance with the HEMS standard.  The idea is to make the funds in the SLAT available to the non-donor spouse and descendants without including them in the estate of the donor.  Not only the assets, but also any income produced by the assets would be excluded from the donor’s estate.

The beneficiary/spouse may be a trustee of the trust for his or her benefit, but prudence would dictate a co-trustee other than the donor.

When to Use

Normally, a SLAT would be appropriate for an older couple facing a significant state death tax.  For example, if a husband is in poor health and there is no need for the healthy spouse to fund a SLAT in reverse.

Reciprocal Trust Doctrine

Under the “Reciprocal Trust” doctrine, if an individual creates a trust for another person who creates an identical (reciprocal) trust for the first party, then courts “uncross” the trusts and treat the situation as though each person created a trust for his or her own benefit.  In order to avoid the application of the Reciprocal Trust doctrine, the following strategies might be considered:

1. Trust.  Only have one spouse establish a trust for the other.
2. Separate Trustees.  Have each spouse create a separate trust, but use different trustees or have different rights or establish the two trusts at different times.  It should be noted that there is no “safe harbor” to follow with respect to reciprocal trusts.

In conclusion, a Spousal Lifetime Access Trust is a tool to be used in the right situations that can effect significant New Jersey estate tax savings for clients and their families.

As a condition of Medicaid eligibility, a Medicaid applicant is required to assign to the state any rights to payment of medical care from any third party.[1]  If the individual fails to pursue the claim, the state has the option of pursuing it.  Federal law requires that each state Medicaid program have procedures for determining the legal liability of third parties to pay for medical assistance provided by the state’s Medicaid plan, and for recovery from third parties of the cost of medical assistance provided, whenever recovery is feasible.[2]  In New Jersey, the Attorney General is responsible to enforce any rights against third parties for recovery of liens.[3]  A Medicaid lien applies only to medical assistance related to the injury and the lien applies only to payments made from the date of the injury to the date of settlement.  Where there are multiple parties involved in an action, the Medicaid lien applies only to assets recovered by the personal injury victim, if no medical expenses were paid as a result of the injury to other parties such as parents or spouses.  Where the third party suffered no physical injury resulting in any payment by Medicaid, but who have only a derivative claim, no Medicaid lien attaches to their claim.

A Medicaid lien may be reduced by procurement costs.  Procurement costs are counsel fees, costs or other expenses incurred by the recipient or the recipient’s attorney.[4]  In 2006, the United States Supreme Court in the case of Arkansas Department of Health and Human Services v Ahlborn[5] held that the State Medicaid Agency was only entitled to recover from that portion of the settlement earmarked for medical expenses.  The court held that the agency could only recover a pro rata share of its claim, which is determined by the ratio that the settlement amount bears to the reasonable value of the total claim.  By taking advantage of an Ahlborn reduction, the plaintiff was guaranteed some compensation for pain and suffering, economic damages, and other losses sustained as a result of the injury.  If the settlement was less than the true value of the case because of limits on insurance, issues with liability or other mitigating factors, both the plaintiff and the State Medicaid Agency shared the loss proportionately.

The issue has always been how to determine the true value of the claim.  The three principal ways of making this determination are through an Expert Witness Report citing similar cases and explaining why the case in question resolved for less than true value, utilizing Jury Verdict, which is the method used by the Division of Medical Assistance and Health Services in New Jersey, or by a Court Order.  A Court Order may be obtained allocating the settlement on various categories of damages.  The State Medicaid Agency should be notified of any such hearing.

In cases where a special needs trust was involved for purposes of preserving the plaintiff’s future eligibility for Medicaid, an issue frequently arose as to whether the Medicaid lien had to be satisfied prior to funding the special needs trust, or whether it could be satisfied from the payback provision on the death of the plaintiff/trust beneficiary.  In Cricchio v. Pennisi, a New York Court of Appeals ruled that Medicaid is entitled to repayment of the lien prior to funding the special needs trust..[6] New Jersey has followed the same reasoning as Cricchio.[7]  The Health Care Financing Administration (HCFA), now CMS, takes the position that if a special needs trust is funded prior to satisfaction of the Medicaid lien, the individual will lose Medicaid eligibility.[8]

At the end of 2013, Congress passed the Bipartisan Budget Act of 2013 (BBA 2013).  Beginning on October 1, 2014, states will be required to seek reimbursement from portions of personal injuries recoveries beyond what is directly attributable to past medical expenses.  Under the amended statute,[9] the state is deemed to have acquired not only the right to payment by third parties for health care items or services, but also to “any payment by [a] third party” with respect to legal liability to make payments for assistance provided by the state.  Also under the amended statute,[10] applicants must assign to the state their rights for “any payment for a third party that has a legal liability to pay for care and services under the plan” as opposed to simply assigning their rights to payment for medical care by a third party.  The BBA also carves out an express exception to the Medicaid anti-lien provisions to allow for rights acquired by or assigned to the state under 42 U.S.C. §§1396a(a)(25)(H) and 1396k(a)(1)(A).  Therefore, under the amended statute, the states’ assigned rights extended to any payments from a third party with legal liability to pay for care or services available under the plan.  CMS has adopted the broad policy that states are required to seek reimbursement from portions of tort recoveries not attributable to medical expenses.[11]  These amendments supersede Ahlborn.

These amendments become effective on October 1, 2014.  It is not clear from the legislation whether this date will apply to applications for reduction made as of that date, to cases settled as of that date, or to injuries sustained as of that date.  If the amendments remain in effect, litigation is sure to follow.  AAJ and other advocacy groups are working to repeal this amendment.

This provision in the Bipartisan Budget Act amounts to a tax on catastrophically disabled individuals who may be left with little or no recovery after payment of the Medicaid lien. In fact, the policy may be counterproductive in that it will lessen plaintiffs’ incentive to pursue otherwise valid claims.  The ironic result may be that with fewer plaintiffs pursuing claims, the supposedly revenue-raising amendments actually states’ total reimbursements.[12]

Begley Law Group’s Tom Begley Jr. will be one of two people honored during the 25th anniversary celebration of Planned Lifetime Assistance Network of New Jersey.

A founding member of the Begley Law Group and the Special Needs Alliance, Begley will be presented with the PLAN NJ Legal Champion Award for a 40-year career devoted to the disabled and elderly.  The ceremony will be held June 5 at 6 p.m. at the New Jersey Law Center in New Brunswick.

Planned Lifetime Assistance Network of New Jersey, PLAN NJ, a nonprofit social service agency will celebrate 25 years of serving individuals with severe developmental disabilities and mental health challenges and hope to expand awareness of resources available to residents during the special event this summer.

For more details, here is a link to the full article in the Burlington County Times.

1. Liens.  It is important to determine at the outset of the case and then reaffirm at the conclusion of the case whether the plaintiff is receiving any public benefits.  Is the plaintiff receiving Medicare?  If so, there will likely be a Medicare lien and this must be satisfied from the settlement proceeds.  If the plaintiff is receiving SSDI, he will receive Medicare within two years after his Disability Determination.  It is good practice to obtain a Conditional Payment Letter prior to mediation, and later obtain a Final Payment Letter from CMS.
2. Medicaid Lien.  If the plaintiff is receiving SSI, he automatically receives Medicaid in New Jersey.  Even if the plaintiff is not receiving SSI, he may be receiving Medicaid under a waiver program.  It is important to ascertain whether the plaintiff is receiving Medicaid and, if so, to obtain a Medicaid Payoff Letter.
3. Other Liens.  Other liens  must be addressed.
4. Medicare Set-Aside Arrangement (MSA).  If the plaintiff is receiving Medicare or has a reasonable expectation of receiving Medicare within 30 months, an MSA should be considered even in a third party liability (TPL) case.

Determine the following:

• Is plaintiff receiving benefits from Social Security Disability Insurance (SSDI)?
• Is plaintiff receiving benefits from Railroad Retirement Disability (RRD)?
• Has plaintiff applied for SSDI?
• Has plaintiff applied for RRD?
• Is plaintiff appealing an SSDI denial?
• Is plaintiff appealing an RRD denial?
• Does plaintiff suffer from End Stage Renal Disease?
• Does plaintiff suffer from ALS?
• Will the plaintiff be receiving any further treatment related to this injury?

1. Structured Settlement.  Has a structured settlement been considered?  Has a proper allocation been made between a lump sum and a structured settlement?  It is always good to have a lump sum if the plaintiff wants to buy a home, a vehicle, take a vacation, or buy personal effects as a television, etc.  It is ALWAYS wise to set aside an emergency fund in a lump sum.  Generally, a balance of 50% lump sum, 50% structure makes sense, but this ratio varies on a case-by-case basis.
2. Investment Management.  If the plaintiff is receiving a significant lump sum for all or a portion of a settlement, have a recommended expert money manager to assist in investing the funds.
3. Special Needs Trust.  If the beneficiary is receiving any means-tested public benefits including, but not being limited to, SSI, Medicaid, Medicaid Waiver, SNAP (formerly Food Stamps),  Section 8 Housing, or Group Home, a Special Needs Trust should be considered.  The plaintiff should be disabled and have a Disability Determination from the Social Security Administration.  If he does not have such a determination, could he apply?
4. Settlement Preservation Trust.  If the individual is a minor, an incapacitated person, or a young adult, has a Settlement Preservation Trust been considered?  If there is a large settlement where money management is important, has a Settlement Preservation Trust been considered?  If there is to be a structured settlement, has a Settlement Preservation Trust been considered?  If the plaintiff has a structured settlement, he can sell it on the open market.  If the structured settlement is held by a Settlement Preservation Trust, it is much more likely that the structured settlement will not be sold.  The trustee of the Settlement Preservation Trust will manage the money in such a way to avoid needing to sell the annuity contract.  In addition, the trustee will withhold consent to the sale of the structured settlement in almost all instances.
5. Tax Issues.  Have income, estate and gift tax issues been considered?
6. Estate Planning Documents.  Does the injured plaintiff have a Will, Living Will, and Power of Attorney? Are all of his beneficiary designations on life insurance, annuities, and IRAs appropriate?
7. Estate Planning Documents – Parents.  In the case of a plaintiff who has a disability, do the parents have estate planning documents including Wills, Living Wills, Powers of Attorney, and Third Party Special Needs Trust?  If the parents die and leave money to the child with a disability, he will lose his public benefits.  By utilizing a Third Party Special Needs Trust, the child’s public benefits may be maintained and the child can enjoy the inheritance from the parents.
8. Medical Insurance.  Does the plaintiff have adequate medical insurance?  Even if the plaintiff has Medicaid and Medicare, better insurance may be available.  Not all providers accept Medicaid.  Medicare has deductibles, copayments, and maximums per spell of illness.  Any plaintiff having Medicare should have either a Medicare Supplement or convert to Medicare Advantage.  If the plaintiff has a pre-existing condition as a result of the injury, a Medicare Supplement may not be available, but a conversion to Medicare Advantage is possible during an open enrolment period.  A number of alternatives are available to obtain private medical insurance.
9. Public Benefits.  Has the plaintiff applied for all public benefits for which he may be eligible?
10. Probate.  Is probate necessary?  In a wrongful death case probate is almost always necessary.  In addition to qualifying as an executor or administrator, it is often necessary to file a federal or New Jersey estate tax return or a New Jersey inheritance tax return based on the amount of the personal injury settlement and any other assets the estate of the deceased plaintiff may have.

The tragedy has prompted his community to call for increased crossing safety for students in the area. According to recent Streetsblog data, this victim was the eleventh New York City resident under 13 to be killed by a driver in 2013.

The young victim was walking to school with his older sister when the truck’s driver turned into a crosswalk. He was rushed to Elmhurst General Hospital, where he was pronounced dead. The siblings were within a half-block of their school at the time of the accident. No crossing guard was posted at the intersection.

The driver, Mauricio Osorio-Palominos of Newark, New Jersey, is employed by RoadTex Transportation Corporation. His truck’s back wheels struck the third-grader as he entered the intersection.

Osorio-Palominos, 51, waited at the scene of the incident. Police arrested and charged him with driving with a suspended license (aggravated unlicensed operation of a motor vehicle in the third degree) and with operating a vehicle in violation of safety rules.

More charges and lawsuits may be yet to come, but not all of them may be directed against Osorio-Palominos. After such a tragic accident, investigators must examine all possible factors and faults. Did the school have a duty to post a traffic guard? Why was the driver permitted to work for RoadTex with a suspended license? Was visibility at the intersection impaired, and was the roadway maintained properly?

While no lawsuit will bring this child back to his family, careful investigation and thorough legal proceedings may help bring some recompense and justice.

We Focus our Practice Exclusively on Wrongful Death and Critical Injury Cases – Contact a personal injury lawyer at The Lietz Law Firm by calling 866-554-1238 or learn more by visiting http://www.lietzlaw.com/.

It is a crime to expose or exhibit one’s sexual organs in public or on the private premises of another in Florida (or if the suspect can be seen from private premises) in a vulgar or indecent manner, or to be naked in public except in any place provided or set apart for that purpose. A mother’s breastfeeding of her baby does not under any circumstance violate this section.  Exposure of a sexual organ is a first degree misdemeanor punishable by up to one year on jail, 12 months probation, or a combination of both.

Most people charged with this crime are hoping to eventually seal or expunge their arrest record.  In order to be eligible, the defendant would have to have the case dismissed through the filing of a motion, be found not guilty at trial, or receive a withhold of adjudication.  That is why it is important to retain an experienced criminal attorney for this charge.

It appears Kellen Winslow’s defense will be that he allegedly pulled over to a parking lot to smoke what he thought at the time was a legal substance. He allegedly changed his clothes in his vehicle as not to smell like smoke when he returned home. Kellen allegedly is arguing that absolutely nothing inappropriate that took place.  The substance was allegedly synthetic marijuana. Winslow pleaded not guilty to the pot charge and police didn’t charge him with lewdness because she chose not to file charges or come forward to testify against him. If the substance was synthetic marijuana and it is legal in New Jersey to possess this substance, he may end up with all charges dismissed against him.  How good was that defense if the witness did come forward to testify against him?  Allegedly, the police seized two open jars of Vaseline found on the console of his vehicle, and when an investigating officer approached the car, “Winslow sprang to an upright position.”  With that corroborating evidence, it might have been a tougher case to defend, but in the end Winslow may get lucky and end up with all the criminal charges dropped.  If you have been arrested for a sex crime in Polk County, retain an experienced criminal lawyer to defend you in court.

CALL NOW AND SPEAK TO AN EXPERIENCED SEX CRIMES ATTORNEY WHO HAS HANDLED AND TRIED THESE TYPES OF CASES.

THOMAS C. GRAJEK 863-688-4606

 EXPERIENCE COUNTS – CALL NOW

Office – Lakeland, FL

Experienced criminal attorney handling all child pornography, sexting, voyeurism, sexual battery, assault, lewd and lascivious, and child molestation crimes in PolkCounty and Florida.

The U.S. Judicial Panel on Multidistrict Litigation (MDL) said that 9,961 actions were pending in the Yasmin/Yaz MDL as of May 14. The MDL is No. 2100 in U.S. District Court, Southern District of Illinois. Bayer Healthcare Pharmaceuticals is the manufacturer of both Yasmin, which received FDA approval in 2001, and Yaz, which was approved by the FDA in 2006. Both drugs are oral contraceptives that combine a fourth generation progestin, drospirenone, with estrogen to prevent pregnancy.

The lawsuits against Bayer allege that the plaintiffs developed serious medical issues caused by their use of Yasmin or Yaz. The injuries include gall bladder complications, stroke, deep vein thrombosis, heart blockage and blood clots.

Bayer Pharmaceuticals said in its February 28, 2013 annual report that it had reached agreements to settle the claims of about 4,800 U.S. plaintiffs, for a total amount of approximately $1 billion. The settlements do not include an admission of liability.

In March, Reuters reported that Bayer agreed to settle several state lawsuits in New Jersey, California and Pennsylvania that alleged that gall bladder injuries were caused by Yasmin or Yaz. The settlement reportedly called for plaintiffs who suffered gall bladder injuries to be paid $2,000 and plaintiffs who had their gall bladders removed to be paid $3,000.

In June, the Canadian Broadcasting Corporation reported that Health Canada documents showed that Yasmin and Yaz are suspected in the deaths of women who died suddenly from blood clots. Health Canada is the Canadian equivalent of the FDA in the United States. In April of last year, the agency issued a warning informing consumers about blood clotting as a possible side effect of Yaz and Yasmin.

The Health Canada document said that doctors and pharmacists had reported 23 deaths and more than 600 adverse reactions associated with Yasmin or Yaz. The adverse reactions were reported between 2007 and February 2013. More than half of the deaths were of women under the age of 26, with the youngest being 14. The report came shortly after a Canadian judge certified a class-action lawsuit alleging that the drugs caused life-threatening blood clots.

In April 2012 the FDA issued a similar warning, saying that drospirenone-containing birth control drugs may be associated with a higher risk of blood clots.

Bob Briskman is a Chicago malpractice attorney with Briskman Briskman & Greenberg. To learn more call 1.877.595.4878 or visit http://www.briskmanandbriskman.com/.

If you know the person you want to text (or call, for that matter) is on the road, it is best simply to wait. But in the end, it is solely the responsibility of the driver to avoid distraction. Or is it?

A recent case in New Jersey may have punched a hole in that theory. Just before an 18-year-old man there veered out of his lane and struck a husband and wife on a motorcycle, he had received a text message from a friend. The trial court dismissed a claim that the friend might be liable in the accident. The appeals court ruled that there was not enough evidence against the friend for the claim, but they left the door open for such arguments in the future, saying that third-party texters could be held liable if they know the recipient of the text message is driving a car.

It remains to be seen whether the legal standard will be upheld or applied in other states. While the actual legal risk one faces in sending texts to drivers is remote, the personal responsibility is clear: if the recipient is behind the wheel, the message can wait.

If you need to speak with a auto accident lawyer, Call Joyce & Reyes at 1.888.771.1529 or visit more of http://www.joyceandreyespa.com/.

A memorial ceremony has been held for 25 military veterans whose cremains were left unclaimed by family members. The cremains will be recognized in a ceremony inNew Jerseyand then the ashes will be laid to rest inWashington, in a military cemetery there.

The unclaimed cremains include those from seven veterans born in the 1830s or ’40s, and may be from the Civil War, There are also cremains from 12 veterans of World War I and as many as ten others from more recent conflicts.

Francis Carrasco is the chairman of New Jersey Mission of Honor, an organization working to reunite unclaimed ashes of veterans with family members or, barring that, a formal burial. Carrasco said that, as a Vietnam vet, he feels he knows what it is like to be disrespected and pushed aside. The unclaimed veterans deserve better.

Most of the 25 military veterans recently interred were left at Garden State Crematorium inNorth Bergen,New Jersey; the veterans were all fromBergenandHudsoncounties. New Jersey Mission of Honor worked with the parent company to locate the families of the vets prior to interment.

New Jersey Mission of Honor, started in 2009, aims to coordinate with state veterans’ organizations to find, properly identify and properly inter any unclaimedU.S.veteran cremains. To date, New Jersey Mission of Honor has located the cremains of almost 200 veterans with surviving family members and has formally buried 105 more. The oldest cremains located so far date from a vet who fought in the Mexican Border War between 1915 and 1918.  New Jersey Mission of Honor also looks for unclaimed veteran cremains left behind at hospitals, crematoriums, veterans’ homes, prisons and senior homes.

The cremains of veterans that are unclaimed can remain in the basements of funeral homes for decades. Determining the next of kin for relocated cremains can take months or even years. New Jersey Mission of Honor is also working with cremains of an additional 75 vets, looking for their next of kin. Each veteran is buried within a mahogany urn and with an American flag.

New Jersey Mission of Honor is entirely funded by private donations and is comprised entirely of volunteers from non-profit groups and veteran organizations.

Legal Help for Veterans, PLLC fights for veterans rights. We fight to make sure you get the benefits you deserve from the Department of Veterans Affairs. To learn more or contact an attorney about your Post Traumatic Stress, Traumatic Brain Injury, Mental Health, Sexual Assault, Hearing Loss and Tinnitus, Total Disability Based on Individual Unemployability, Medical Malpractice, or Aid and Attendance claim, visit http://www.legalhelpforveterans.com/ or call 800.693.4800

We’ve probably all seen the driver who can’t stay in his lane or who is driving dangerously slow all so the driver can text while driving.

But it’s dangerous.  It’s so dangerous that study after study finds that it’s significantly more dangerous than even driving while intoxicated. (And heaven knows we see too many clients injured in wrecks caused by texting and driving.)

Thus, we can all understand (I hope) that if someone is texting while driving and causes a wreck, then the law ought to hold that person accountable for the harms the person causes others.

But what about the person who sends a text to someone that person knows is driving?  Should the person sending a text to a known driver be potentially liable if the driver is in a wreck while reading or responding to the text?

That’s now a possibility in New Jersey.  Earlier this month, a state appellate court ruled that third-party texters could bear responsibility in texting-related car wrecks.  In reaching the opinion, the court wrote, “when a texter knows or has special reason to know that the intended recipient is driving and is likely to read the text message while driving, the texter has a duty to users of the public road to refrain from sending the driver a text at that time.”  However, the Court specifically said that they are not holding that someone who texts to a person driving is liable for that person’s negligent actions.

Could this happen in Texas?

It’s doubtful.  Our legislature and court systems are extremely conservative, and I have a hard time believing that they would reach the same conclusion.

But we should still heed the warning.  If you know a friend or family member is driving, don’t text them.  Wait until they’re somewhere safe to read your message.

Some parts of Florida have seen an increase in the use of heroin, a substance startlingly similar to oxycodone, the painkiller abuser’s typical drug of choice. Meanwhile, New Jersey seems to be in the position Florida was in just a few years ago, with law enforcement officials there reporting on the deliberate widespread improper prescription of painkillers.

According to the Tampa Tribune, sharp increases in the use of heroin have been reported in some Florida cities.

“[Oxycontin] is nothing but synthesized heroin,” Sgt. Rick Mills of the Tampa Police Department told the Tribune. Mills added that the medical examiner had told him drug-related deaths had fallen.

The article illustrates that anyone can become addicted to painkillers – not just the poor or disenfranchised.

“It’s everybody,” said Mark Detrio, a detective with the Tampa PD. “You see upper-class people, or college kids who didn’t put two-and-two together.”

Just as drug addicts are finding substitutes for oxycodone, those who would engage in the shady business of pill mills are finding states with lax laws now that Florida has cracked down.

Officials in New Jersey recently completed a two-year investigation into the state’s painkiller trade. Their 74-page report says painkillers and heroin have become prevalent in the state’s suburbs, with even affluent communities seeing a marked increase in drug trade.

In 2011, New Jersey had 1,008 drug-related deaths, an increase of more than 20 percent over 2010. Of those, oxycodone was involved in 337, and heroin was mixed with other drugs was involved in 368.

If you need to speak with a personal injury lawyer, Call Joyce & Reyes at 1.888.771.1529 or visit more of http://www.joyceandreyespa.com/.

A man who never obtained a medical degree or even a license was discovered to have worked at numerous New York hospitals. He was only outed when a five-year-old patient died after he had been seen by the fake doctor.

According to the information available, the man claimed that he graduated from a Canadian university. An investigation following the child’s death revealed that although he did attend the university he claimed he did, he did not earn enough credits to graduate. After leaving university, he then went to medical school in another location for a year, while working as a resident at a hospital in New Jersey. He was booted out of the program due to incompetence.

The fraud artist was able to secure a New York state medical license in 2007 by claiming he graduated from the Canadian university. Prior to the death of a five-year-old patient, he continued to practice in several other hospitals, including one in Ogdensburg. That sojourn ended when he left after an unnamed “unfavorable incident.”

Whatever the incident was that caused the fake doctor to leave was never mentioned or revealed to the next hospital he applied to work at, Wellsville Hospital. Federal officials tracking his lack of verifiable documentation said he was negligently dangerous by putting people’s lives in jeopardy. In addition, the man was also fraudulently received $230,000 from various health insurance entities.

This kind of trickery at the expense of innocent patients is abhorrent and the families of surviving victims, and those who died as a result of this man’s egregious actions, should consider filing a wrongful death action — a civil lawsuit to hold the man accountable for the trail of tears he left behind while holding himself out to be a medical doctor.

Should you ever find yourself in a situation like this one, or even one that has harmed you medically and/or physically, in some manner, seek the experienced legal counsel of an Austin personal injury lawyer. Justice will not be denied in cases where medical negligence is evident.

Perlmutter & Schuelke, LLP is one of the premier trial firms in Austin Texas. Contact a wrongful death attorney by calling 512-476-4944 or learn more at http://www.civtrial.com/.

——–

Today’s Senior Magazine, August 2013 – New Jersey residents have a new tool through which they can ensure that their health care wishes are carried out by all medical providers.  Signed into law on December 21, 2011 by Governor Chris Christie, the New Jersey POLST (Practitioner Orders for Life Sustaining Treatment) legislation became effective February 22, 2013.  The legislation enables patients to use a standard new form to express their health care wishes and help patients and families with end-of-life care planning.  Unlike a legal document such as an Advance Health Care Directive/Living Will or Health Care Proxy, the POLST is a doctor’s order. 

The new form is to be printed in green or on green colored paper and is to stay with the patient at all times at home or in a healthcare facility. By law, the directives contained on the form must be followed by healthcare professionals.  Jane Knapp, of Right at Home, an in-home agency, attended four training sessions on the POLST and is among the very few individuals in New Jersey trained on the POLST since the law was enacted.  According to Knapp, only a primary care physician or an Advanced Practice Nurse (APN) is legally allowed to complete a POLST on behalf of an individual. 

Aside from being a doctor’s order, the other significant difference between the POLST and a legal Advance Directive is the specific time frame and limited si

tuations which the POLST is designed to cover.  The Advance Directive may be thought of as a broad framework out of which a care plan can be developed while a POLST is specifically designed for individuals with limited life expectancies and can be more specific in addressing the patient’s current condition.  Knapp points out, “The key to POLST is it’s within the context of your own personal diagnosis … it’s very specific … It’s the now; it’s not the future.”

It is recommended that the POLST be reviewed frequently, and if there is a change in medical condition or residential setting, it may be changed accordingly.  Whereas advance directives are designed to apply throughout an individual’s life unless his preferences change, Knapp stated, “The POLST is about immediacy… Every adult should have an Advance Directive but not every adult should have a POLST.”

Goals of Care

The POLST form contains two essential parts, the “Goals of Care” and the “Medical Interventions.” The “Goals of Care” section describes how one would like to live his or her life in the time he has left. The “Medical Interventions” section includes the patient’s preferences on life sustaining treatments including cardiopulmonary resuscitation, intubation, mechanical ventilation, artificially administered nutrition and/or hydration, and other specific medical interventions.

Patients should review their POLST forms regularly since they are so specific.  For example, if a patient has cancer and then goes into remission, his preferences regarding life sustaining treatment may have changed.  He should therefore sign a new POLST.  If a cancer patient grows weary of medical testing or treatment and changes care preferences, a new POLST should be signed.  In fact, according to Knapp, with each change of residence or transition of care – for example, a new hospitalization or entry into rehabilitation – the POLST should at least be reviewed.  The urgency to continually update the form may well prompt more doctor  visits.

Since the POLST is designed for patients who face end-of-life care decisions, the form should be kept in an obvious place in a patient’s home such as on the refrigerator or by the telephone.  Patients are supposed to keep the original POLST with them while their doctor’s office maintains a copy.  Of course, with each new POLST, the old original plus the copies should be destroyed to avoid confusion.

POLST v. Legal Healthcare Directives

While the goals of the POLST certainly overlap with advance directives, such as living wills and health care proxies, a POLST is not designed to replace a traditional Advance Directive.  For example, a health care proxy or power of attorney appoints an individual who will serve as a patient’s health care agent.  This person has the authority to communicate with a patient’s medical team based on instructions that the patient has provided in his or her Advance Directive.  The health care agent can speak for the patient if the patient is unable to speak for himself.  The health care agent can act whether the patient has a terminal end stage illness or whether the condition is not life threatening.  Since it is possible for any individual to contract a sudden serious illness or injury, it is highly recommended that everyone age 18 and older has a healthcare directive.

Unlike a healthcare directive, the POLST does not name a healthcare agent and only focuses specifically on end-of-life decision making.  In fact, it is designed to be completed only by individuals with life-limiting illnesses.  If an individual lacks capacity to communicate his wishes enough for a POLST to be completed, a health care proxy, under an Advance Directive, can complete the POLST for him.

In addition to appointing a healthcare proxy, advance directives exceed the scope of medical issues covered by the POLST by including powers such as the authority to hire medical care providers on the patient’s behalf, do whatever is necessary to keep the patient in his or her own home even if he needs long-term care, hire psychiatric support if necessary, change healthcare personnel and visitation rights.

New Jersey is not alone in implementing the use of the POLST.  The vast majority of states already have POLST programs or they are in the process of developing them.  According to an article printed in the Cleveland Clinic Journal of Medicine in July 2012, the POLST has already been shown to improve a patient’s control over his or her health care.  The form is designed to provide clear instructions about patient preferences that are easy to follow.

Once more physicians receive training to help patients effectively use the POLST, it will be a powerful tool to give patients control.  It also vastly improves the communication between the patient and healthcare providers since it is a form easily recognizable by any medical professional treating the patient.  Nevertheless, all adults should have an Advance Directive to address expected and unexpected situations when a patient cannot communicate for himself.  The best decisions are generally made in advance in non-emergency situations and, now more than ever, those who plan ahead can customize and truly control their medical treatment.

DANA E. BOOKBINDER, Esq. advises seniors and families on asset protection for long term care expenses, disability planning, estate planning, and estate administration.  She practices elder law with Begley Law Group, P.C., in Moorestown, Princeton, and Stone Harbor, New Jersey. 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 often lectures to civic and retirement groups, is a frequent speaker for New Jersey State Bar Association Institute of Continuing Legal Education, and has appeared on radio and television to discuss planning for seniors.

JANE KNAPP, Marketing Director for Right At Home, an in-home care assistance and skilled nursing provider,  has been involved at the State level, as the POLST form has evolved, and works to promote understanding of its appropriate use.  She serves as Chairman of the Tri-County Regional Ethics Committee (TREC) and is part of the NJ State Ethics Consortium for Long-Term Care.

For additional information:  visit the POLST national Web site – http://www.ohsu.edu/polst

Contact Dana Bookbinder at 856-787-4227/dbookbinder@begleylawgroup.com

Contact Jane Knapp at 856-795-9707 / jane@rahsj.com

Texas Gov. Rick Perry passed House Bill 2383, allowing Texas residents who hold a life insurance policy of at least $10,000 to sell it via a life settlement. The money typically goes directly into a nonrefundable account from which long-term care expenses are paid, not directly back into the pocket of the senior. Texas Medicaid does not include life settlement proceeds in asset assessment while determining an individual’s Medicaid nursing home benefits eligibility. A similar bill is being considered in other states, including Florida, California, Louisiana, Kentucky, Montana, North Carolina and New Jersey.

The seniors who are considering selling their life insurance policies are typically doing so because they have been told that Medicaid coverage qualifications demand it, say elder care advocates. But, they caution, not all assets are counted. While a senior’s assets are not to exceed $2,000 for eligibility, home ownership, a car, and personal property are exempt. So is a life insurance policy; the “cash value” is countable, if the total face value exceeds $1,500. The “cash value” is what the life insurance company would pay out if the policy were cancelled, while the “face value” is what the beneficiaries would get when the senior died.

Is a life settlement the way to cover your long-term care needs? It depends on the situation. It may not make sense to sell your policy. Elder law attorneys have been assisting clients with private intra-family life settlement transactions for years. In these transactions a child will typically purchase his or her parent’s life insurance policy for its cash value in order to qualify for Medicaid. As long as the policy is sold for at least its cash value, Health and Human Services will not impose a transfer penalty. While the new law is not particularly useful, it draws attention to an important Medicaid planning strategy. .

Before making any decisions regarding paying for long-term care, consult with an elder law attorney to explore your long-term options.

The Hale Law Firm believe the right solution to your estate planning, elder law, or probate needs can be identified in a free initial consultation with one of our attorneys and counselors at law. To learn more, visit http://www.thehalelawfirm.com/ or call 972.351.0000

By Jordan Rau
Kaiser Health News
More than 2,000 hospitals — including some nationally recognized ones — will be penalized by
the government starting in October because many of their patients are readmitted soon after
discharge, new records show.

Together, these hospitals will forfeit more than $280 million in Medicare funds over the next
year as the government begins a wide-ranging push to start paying health care providers based on
the quality of care they provide.

With nearly one in five Medicare patients returning to the hospital within a month of discharge,
the government considers readmissions a prime symptom of an overly expensive and
uncoordinated health system. Hospitals have had little financial incentive to ensure patients get
the care they need once they leave, and in fact they benefit financially when patients don’t
recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year,
costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate
has remained steady at around 19 percent for several years, even as many hospitals have worked
harder to lower theirs.

The penalties, authorized by the 2010 health care law, are part of a multipronged effort by
Medicare to use its financial muscle to force improvements in hospital quality. In a few months,
hospitals also will be penalized or rewarded based on how well they adhere to basic standards of
care and how patients rated their experiences. Overall, Medicare has decided to penalize 71
percent of the hospitals whose readmission rates it evaluated, the records show.

The penalties will fall heaviest on hospitals in New Jersey, New York, the District of Columbia,
Arkansas, Kentucky, Mississippi, Illinois and Massachusetts, a Kaiser Health News analysis of
the records shows. Hospitals that treat the most low-income patients will be hit particularly hard.

A total of 307 hospitals nationally will lose the maximum amount allowed under the health care
law: 1 percent of their base Medicare reimbursements. Several of those are top-ranked
institutions, including Hackensack University Medical Center in New Jersey, North Shore
University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical Center in Boston, a
teaching hospital of Harvard Medical School.

“A lot of places have put in a lot of work and not seen improvement,” said Dr. Kenneth Sands,
senior vice president for quality at Beth Israel. “It is not completely understood what goes into an
institution having a high readmission rate and what goes into improving” it.

Sands noted that Beth Israel, like several other hospitals with high readmission rates, also has
unusually low mortality rates for its patients, which he says may reflect that the hospital does a
good job at swiftly getting ailing patients back and preventing deaths.

Penalties Will Increase Next Year

The maximum penalty will increase after this year, to 2 percent of regular payments starting in
October 2013 and then to 3 percent the following year. This year, the $280 million in penalties
comprise about 0.3 percent of the total amount hospitals are paid by Medicare.

According to Medicare records, 1,910 hospitals will receive penalties less than 1 percent; the
total number of hospitals receiving penalties is 2,217. Massachusetts General Hospital in Boston,
which U.S. News last month ranked as the best hospital in the country, will lose 0.53 percent of
its Medicare payments because of its readmission rates, the records show. The smallest penalties
are one hundredth of a percent, which 49 hospitals will receive.

Dr. Eric Coleman, a national expert on readmissions at the University of Colorado School of
Medicine, said the looming penalties have captured the attention of many hospital executives.
“I’m not sure penalties alone are going to move the needle, but they have raised awareness and
moved many hospitals to action,” Coleman said.

The penalties have been intensely debated. Studies have found that African-Americans are more
likely to be readmitted than other patients, leading some experts to be concerned that hospitals
that treat many blacks will end up being unfairly punished.

Hospitals have been complaining that Medicare is applying the rule more stringently than
Congress intended by holding them accountable for returning patients no matter the reason they
come back.

Hospitals That Serve Poor Are Hit Harder Than Others

Some safety-net hospitals that treat large numbers of low-income patients tend to have higher
readmission rates, which the hospitals attribute to the lack of access to doctors and medication
these patients often experience after discharge. The analysis of the penalties shows that 80
percent of the hospitals that have a lot of low-income patients will lose Medicare funds in the
fiscal year starting in October. Sixty-seven percent of the hospitals treating few poor patients are
going to be penalized, the analysis shows.

“It’s our mission, it’s good, it’s what we want to do, but to be penalized because we care for
those folks doesn’t seem right,” said Dr. John Lynch, chief medical officer at Barnes-Jewish
Hospital in St. Louis, which is receiving the maximum penalty.

“We have worked on this for over four years,” Lynch said, but those efforts have not substantially
reduced the hospital’s readmissions. He said Barnes-Jewish has tried sending nurses to patients’
homes within a week of discharge to check up on them, and also scheduled appointments with a
doctor at a clinic, but half the patients never showed. This spring, the hospital established a team
of nurses, social workers and a pharmacist to monitor patients for 60 days after discharge.

“Some of the hospitals that are going to pay penalties are not going to be able to afford these
types of interventions,” said Lynch, who estimated the penalty would cost Barnes-Jewish $1
million.

Atul Grover, chief public policy officer for the Association of American Medical Colleges, called
Medicare’s new penalties “a total disregard for underserved patients and the hospitals that care
for them.” Blair Childs, an executive at the Premier healthcare alliance of hospitals, said: “It’s
really ironic that you penalize the hospitals that need the funds to manage a particularly difficult
population.”

Medicare disagreed, writing that “many safety-net providers and teaching hospitals do as well or
better on the measures than hospitals without substantial numbers of patients of low
socioeconomic status.” Safety-net hospitals that are not being penalized include the University of
Mississippi Medical Center in Jackson and Denver Health Medical Center in Colorado, the
records show.

Bill Kramer, an executive with the Pacific Business Group on Health, a California-based
coalition of employers, said the penalties provide “an appropriate financial incentive for hospitals
to do the right thing in terms of preventing avoidable readmissions.”

The government’s penalties are based on the frequency that Medicare heart failure, heart attack
and pneumonia patients were readmitted within 30 days between July 2008 and June 2011.
Medicare took into account the sickness of the patients when calculating whether the rates were
higher than those of the average hospital, but not their racial or socio-economic background.

The penalty will be deducted from reimbursements each time a hospital submits a claim starting
Oct. 1. As an example, if a hospital received the maximum penalty of 1 percent and it submitted
a claim for $20,000 for a stay, Medicare would reimburse it $19,800.

The Centers for Medicare & Medicaid Services has been trying to help hospitals and community
organizations by giving grants to help them coordinate patients’ care after they’re discharged.
Leaders at many hospitals say they are devoting increased attention to readmissions in concert
with other changes created by the health law.

Sally Boemer, senior vice president of finance at Mass General, said she expected readmissions
will drop as the hospital develops new methods of arranging and paying for care that emphasize
prevention. Readmissions “is a big focus of ours right now,” she said.

Gundersen Lutheran Health System in La Crosse, Wis., and Intermountain Medical Center in
Murray, Utah, were among 887 hospitals where Medicare determined the readmission rates were
acceptable. Those hospitals will not lose any money, nor will another 346 hospitals that had too
few cases for Medicare to evaluate. On average, the readmissions penalties were lightest on
hospitals in Utah, South Dakota, Vermont, Wyoming and Oregon, the analysis shows. Idaho was
the only state where Medicare did not penalize any hospital.

Even some hospitals that won’t be penalized are struggling to get a handle on readmissions.
Michael Baumann, chief quality officer at the University of Mississippi Medical Center, said
in-house doctors had made headway against heart failure readmissions by calling patients at
home shortly after discharge. “It’s a fairly simple approach, but it’s very labor intensive,” he said.

The problems afflicting many of the center’s patients—including obesity and poverty that makes
it hard to afford medications—make it more challenging. “It’s a tough group to prevent
readmissions with,” he said.

Compression Therapy Reduces Blood Clots in Stoke Patients, Study Finds

New research shows that inexpensive leg compression devices help prevent fatal blood clots in stroke patients.

The thigh-length sleeves promote blood flow by periodically filling with air and gently squeezing the legs. Vascular PRN, based in Tampa, Fla., is a leading national distributor of intermittent pneumatic compression (IPC) therapy equipment. Greg Grambor, the company’s president, commented on the study.  “Compression therapy has been around for over 20 years,” Grambor said. “Many doctors have already come to rely on this equipment for safe, effective, and affordable prevention of deep vein thrombosis. I’m glad this new research was done, and I hope it will help convince more doctors to give it a try.”  Deep vein thrombosis (DVT) is the formation of a blood clot inside a vein deep within the body. It is common in stroke patients and immobile patients and can also occur in healthy people on long flights where movement is restricted. When a clot detaches, it can then become lodged in the arteries of the lungs, causing a potentially life-threatening pulmonary embolism.

The study involved nearly 3,000 stroke patients at over 100 hospitals across the United Kingdom. Results showed 8.5 percent of patients treated with compression devices developed blood clots, versus 12.1 percent of patients who received alternative treatments.  “Many patients at risk of DVT are prescribed blood thinning drugs,” Grambor added. “But these drugs increase the risk of bleeding, which is quite dangerous for stroke patients as it may lead to bleeding in the brain.”

So far, no study has conclusively shown that blood thinners increase the survival rate of stroke patients. Doctors at the European Stroke Conference, held in London on May 31, 2013, discussed the study’s findings. Professor Martin Dennis of the University of Edinburgh said that the UK’s guidelines for treatment of stroke should be revised to recommend IPC treatment for all patients at high risk of DVT. Currently, they only recommend it in cases where blood thinners are unsuccessful or too risky.

Each year, some 15 million people worldwide suffer a stroke. One third of strokes are fatal and another third result in permanent disability.

By Jordan Rau
Kaiser Health News
More than 2,000 hospitals — including some nationally recognized ones — will be penalized by
the government starting in October because many of their patients are readmitted soon after
discharge, new records show.

Together, these hospitals will forfeit more than $280 million in Medicare funds over the next
year as the government begins a wide-ranging push to start paying health care providers based on
the quality of care they provide.

With nearly one in five Medicare patients returning to the hospital within a month of discharge,
the government considers readmissions a prime symptom of an overly expensive and
uncoordinated health system. Hospitals have had little financial incentive to ensure patients get
the care they need once they leave, and in fact they benefit financially when patients don’t
recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year,
costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate
has remained steady at around 19 percent for several years, even as many hospitals have worked
harder to lower theirs.

The penalties, authorized by the 2010 health care law, are part of a multipronged effort by
Medicare to use its financial muscle to force improvements in hospital quality. In a few months,
hospitals also will be penalized or rewarded based on how well they adhere to basic standards of
care and how patients rated their experiences. Overall, Medicare has decided to penalize 71
percent of the hospitals whose readmission rates it evaluated, the records show.

The penalties will fall heaviest on hospitals in New Jersey, New York, the District of Columbia,
Arkansas, Kentucky, Mississippi, Illinois and Massachusetts, a Kaiser Health News analysis of
the records shows. Hospitals that treat the most low-income patients will be hit particularly hard.

A total of 307 hospitals nationally will lose the maximum amount allowed under the health care
law: 1 percent of their base Medicare reimbursements. Several of those are top-ranked
institutions, including Hackensack University Medical Center in New Jersey, North Shore
University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical Center in Boston, a
teaching hospital of Harvard Medical School.

“A lot of places have put in a lot of work and not seen improvement,” said Dr. Kenneth Sands,
senior vice president for quality at Beth Israel. “It is not completely understood what goes into an
institution having a high readmission rate and what goes into improving” it.

Sands noted that Beth Israel, like several other hospitals with high readmission rates, also has
unusually low mortality rates for its patients, which he says may reflect that the hospital does a
good job at swiftly getting ailing patients back and preventing deaths.

Penalties Will Increase Next Year

The maximum penalty will increase after this year, to 2 percent of regular payments starting in
October 2013 and then to 3 percent the following year. This year, the $280 million in penalties
comprise about 0.3 percent of the total amount hospitals are paid by Medicare.

According to Medicare records, 1,910 hospitals will receive penalties less than 1 percent; the
total number of hospitals receiving penalties is 2,217. Massachusetts General Hospital in Boston,
which U.S. News last month ranked as the best hospital in the country, will lose 0.53 percent of
its Medicare payments because of its readmission rates, the records show. The smallest penalties
are one hundredth of a percent, which 49 hospitals will receive.

Dr. Eric Coleman, a national expert on readmissions at the University of Colorado School of
Medicine, said the looming penalties have captured the attention of many hospital executives.
“I’m not sure penalties alone are going to move the needle, but they have raised awareness and
moved many hospitals to action,” Coleman said.

The penalties have been intensely debated. Studies have found that African-Americans are more
likely to be readmitted than other patients, leading some experts to be concerned that hospitals
that treat many blacks will end up being unfairly punished.

Hospitals have been complaining that Medicare is applying the rule more stringently than
Congress intended by holding them accountable for returning patients no matter the reason they
come back.

Hospitals That Serve Poor Are Hit Harder Than Others

Some safety-net hospitals that treat large numbers of low-income patients tend to have higher
readmission rates, which the hospitals attribute to the lack of access to doctors and medication
these patients often experience after discharge. The analysis of the penalties shows that 80
percent of the hospitals that have a lot of low-income patients will lose Medicare funds in the
fiscal year starting in October. Sixty-seven percent of the hospitals treating few poor patients are
going to be penalized, the analysis shows.

“It’s our mission, it’s good, it’s what we want to do, but to be penalized because we care for
those folks doesn’t seem right,” said Dr. John Lynch, chief medical officer at Barnes-Jewish
Hospital in St. Louis, which is receiving the maximum penalty.

“We have worked on this for over four years,” Lynch said, but those efforts have not substantially
reduced the hospital’s readmissions. He said Barnes-Jewish has tried sending nurses to patients’
homes within a week of discharge to check up on them, and also scheduled appointments with a
doctor at a clinic, but half the patients never showed. This spring, the hospital established a team
of nurses, social workers and a pharmacist to monitor patients for 60 days after discharge.

“Some of the hospitals that are going to pay penalties are not going to be able to afford these
types of interventions,” said Lynch, who estimated the penalty would cost Barnes-Jewish $1
million.

Atul Grover, chief public policy officer for the Association of American Medical Colleges, called
Medicare’s new penalties “a total disregard for underserved patients and the hospitals that care
for them.” Blair Childs, an executive at the Premier healthcare alliance of hospitals, said: “It’s
really ironic that you penalize the hospitals that need the funds to manage a particularly difficult
population.”

Medicare disagreed, writing that “many safety-net providers and teaching hospitals do as well or
better on the measures than hospitals without substantial numbers of patients of low
socioeconomic status.” Safety-net hospitals that are not being penalized include the University of
Mississippi Medical Center in Jackson and Denver Health Medical Center in Colorado, the
records show.

Bill Kramer, an executive with the Pacific Business Group on Health, a California-based
coalition of employers, said the penalties provide “an appropriate financial incentive for hospitals
to do the right thing in terms of preventing avoidable readmissions.”

The government’s penalties are based on the frequency that Medicare heart failure, heart attack
and pneumonia patients were readmitted within 30 days between July 2008 and June 2011.
Medicare took into account the sickness of the patients when calculating whether the rates were
higher than those of the average hospital, but not their racial or socio-economic background.

The penalty will be deducted from reimbursements each time a hospital submits a claim starting
Oct. 1. As an example, if a hospital received the maximum penalty of 1 percent and it submitted
a claim for $20,000 for a stay, Medicare would reimburse it $19,800.

The Centers for Medicare & Medicaid Services has been trying to help hospitals and community
organizations by giving grants to help them coordinate patients’ care after they’re discharged.
Leaders at many hospitals say they are devoting increased attention to readmissions in concert
with other changes created by the health law.

Sally Boemer, senior vice president of finance at Mass General, said she expected readmissions
will drop as the hospital develops new methods of arranging and paying for care that emphasize
prevention. Readmissions “is a big focus of ours right now,” she said.

Gundersen Lutheran Health System in La Crosse, Wis., and Intermountain Medical Center in
Murray, Utah, were among 887 hospitals where Medicare determined the readmission rates were
acceptable. Those hospitals will not lose any money, nor will another 346 hospitals that had too
few cases for Medicare to evaluate. On average, the readmissions penalties were lightest on
hospitals in Utah, South Dakota, Vermont, Wyoming and Oregon, the analysis shows. Idaho was
the only state where Medicare did not penalize any hospital.

Even some hospitals that won’t be penalized are struggling to get a handle on readmissions.
Michael Baumann, chief quality officer at the University of Mississippi Medical Center, said
in-house doctors had made headway against heart failure readmissions by calling patients at
home shortly after discharge. “It’s a fairly simple approach, but it’s very labor intensive,” he said.

The problems afflicting many of the center’s patients—including obesity and poverty that makes
it hard to afford medications—make it more challenging. “It’s a tough group to prevent
readmissions with,” he said.

Compression Therapy Reduces Blood Clots in Stoke Patients, Study Finds

New research shows that inexpensive leg compression devices help prevent fatal blood clots in stroke patients.

The thigh-length sleeves promote blood flow by periodically filling with air and gently squeezing the legs. Vascular PRN, based in Tampa, Fla., is a leading national distributor of intermittent pneumatic compression (IPC) therapy equipment. Greg Grambor, the company’s president, commented on the study.  “Compression therapy has been around for over 20 years,” Grambor said. “Many doctors have already come to rely on this equipment for safe, effective, and affordable prevention of deep vein thrombosis. I’m glad this new research was done, and I hope it will help convince more doctors to give it a try.”  Deep vein thrombosis (DVT) is the formation of a blood clot inside a vein deep within the body. It is common in stroke patients and immobile patients and can also occur in healthy people on long flights where movement is restricted. When a clot detaches, it can then become lodged in the arteries of the lungs, causing a potentially life-threatening pulmonary embolism.

The study involved nearly 3,000 stroke patients at over 100 hospitals across the United Kingdom. Results showed 8.5 percent of patients treated with compression devices developed blood clots, versus 12.1 percent of patients who received alternative treatments.  “Many patients at risk of DVT are prescribed blood thinning drugs,” Grambor added. “But these drugs increase the risk of bleeding, which is quite dangerous for stroke patients as it may lead to bleeding in the brain.”

So far, no study has conclusively shown that blood thinners increase the survival rate of stroke patients. Doctors at the European Stroke Conference, held in London on May 31, 2013, discussed the study’s findings. Professor Martin Dennis of the University of Edinburgh said that the UK’s guidelines for treatment of stroke should be revised to recommend IPC treatment for all patients at high risk of DVT. Currently, they only recommend it in cases where blood thinners are unsuccessful or too risky.

Each year, some 15 million people worldwide suffer a stroke. One third of strokes are fatal and another third result in permanent disability.