Jul 11, 2017

Be your own Social Security advocate

About 10,000 Americans turn 65 each day, reports the Pew Research Center, and Social Security offices are fielding massive numbers of inquiries as the Baby Boomers head into their benefits-collecting years. Unfortunately, studies show that staff do not consistently provide the most complete or accurate information. This can result in an applicant unknowingly leaving dollars in rightful benefits on the table.

I first reported on this problem in my September 2016 post regarding the General Accounting Office study, which led to additional training for Social Security personnel. However, a June 2017 Kiplingers article reveals that deficiencies persist, particularly involving these issues: 

  • When to start collecting: Some people will need to collect before full retirement age because of health, financial or other issues. But studies show that others collect early simply because they do not understand the monetary value of waiting. 
  • Spousal Benefits: David Frietag of the MassMutual Financial Group notes that single people have nine different ways to claim benefits, but married couples have 81 options, making their choices far more complicated. There is no-one- size-fits-all plan for optimizing a married couple's Social Security benefits. Each spouse's age, life expectancy and earnings must be considered. Additional rules apply when there has been a divorce and/or remarriage. Social Security agents do not always provide the depth of information required for married couples to choose wisely. 
  • Working and collecting benefits: If you collect benefits before your full retirement age but keep working and earn more than $16,920, Social Security deducts $1 from every $2 in benefits - but only until full retirement age is reached.

Social Security agents certainly mean well. But they are working in a very complex system, fielding a high volume of inquiries, and every applicant has individual circumstances and goals that need to be factored in in order for Social Security benefits to be maximized. Therefore, when it comes to Social Security, you must be your own advocate. There are many resources available online and at your local library.  Here are some helpful resources:




Jul 1, 2017

Living Trust Basics

The living trust, also known as the intervivos trust or revocable trust, is a useful and popular estate planning tool in Florida, and rightly so. In this post I tell you about key advantages of this versatile legal instrument. I'll also tell you about some common misconceptions regarding the living trust.

The Advantages

Advantage: Avoid probate
In Florida, probate can be a long, drawn-out process, incurring both legal fees and court fees. If your personal representative (executor) is not local, it becomes an even bigger hassle. Some probates can take months, but others can literally take years. A living trust can streamline the process, allowing your heirs to receive their distributions more quickly.

Advantage: Avoid 2nd probate for out-of-state property
If you own real estate in another state, titling that property in the name of your living trust will eliminate the need for a secondary probate in that state and associated fees.

Advantage: Privacy 
If you pass away and have a will, the will must be filed with the probate court. If you have left no valid death instrument - no will or no trust - a probate will still have to be opened up for your estate. As soon as your estate is in probate, it becomes public record. Anyone can examine the details of your estate plan. And that makes it easier for anyone unhappy with your plan -  a disgruntled, estranged child, for example - to launch a legal challenge. Fighting that challenge will cost your estate, leaving less money for your heirs.

Advantage: Greater control over distributions
You may not want certain heirs to get their inheritances in one lump sum. With a living trust, you can place certain controls and conditions on your heirs' inheritance. For example, you may want a younger beneficiary to get his/her distribution upon attaining a certain age, or a spendthrift beneficiary to receive only a limited amount of money in staggered distributions. The alternative is to have your estate pass under your will, go through probate, and leave the inheritance in a trust known as a testamentary trust under your last will and testament. Obviously, using a living trust is a more straightforward method to accomplish your goal. 

Advantage: Financial institutions more likely to honor your trust than your power of attorney
Your durable power of attorney authorizes someone to manage your financial affairs. In Florida, there is no one statutory power of attorney form. The document must only meet certain basic legal requirements. Financial institutions can be extremely picky about the document. It is not uncommon for an attorney-in-fact trying to do business for an incapacitated loved one to be turned away by a bank or brokerage because the power of attorney doesn't meet that institution's specific, unique requirements. Financial institutions are unlikely to reject the successor trustee your trust authorizes to handle your finances. 

Advantage: Retain full control until incapacity
In Florida, you may not create a "springing" power of attorney. That means that the person you designate as your agent under your power of attorney has immediate authority to act on your behalf, even if you are not incapacitated. This does not prevent you from acting, but it gives your agent legal authority equal to yours. 

Usually, with a married couple, that is not a problem. But many people are uncomfortable giving someone other than the spouse the authority to handle their affairs while they are still competent. With a living trust, you can be the sole trustee, and your successor trustee can take over for you only after documenting your incapacity. (Spouses usually designate one another as co-trustees, so both have equal authority to act. A third party, usually a child, is designated to take over when neither husband or wife can handle the finances.) 

The Misconceptions

Misconception: Creditor protection
As noted above, a living trust has many virtues. However, putting assets into your living trust does not protect them from creditors. 

Misconception: Living trust assets are not considered when applying for Medicaid benefits for long-term care
An asset in your living trust is available to you, and therefore is considered a countable asset if you apply for Medicaid for long-term care. Only an irrevocable trust can remove assets from consideration by Medicaid.

Misconception: Trustees have to be paid 
Successor trustees can be paid a fee, but if you are like most people, you will probably name a family member to serve as your successor trustee. Most family members decline to receive fees. If you do name a professional, third-party to serve as successor trustee, naturally there will be a fee for services. If you have a good reason to want a third-party successor trustee - for example, children who can't get along - those fees are money well spent for your peace of mind.

Misconception: You lose control over your assets
No!. You can buy assets, sell assets, do anything you would normally do.

Misconception: It's costly to set up and a hassle to maintain
You will have to re-title your assets in the name of your trust, but for most people this is not a big deal. (Note: some assets, such as IRAs, should not be placed in your trust. Your estate planning attorney will advise you about this.) You don't have to get any special tax numbers; you will file your taxes as you always have. And although the initial cost to set up a living trust exceeds the cost of setting up a will, it saves money at the back end in legal and administrative fees.

Misconception: Any lawyer can set up a living trust
Wrong. This is a complex instrument and the devil is in the details. Since your trust will speak for you after you are gone, there can be no ambiguity. Every "t" must be crossed and "i" dotted! Beware trust mills, non-lawyers doing estate planning, and online or preprinted forms and attorneys not experienced in estate planning. Relying on an experienced estate planning attorney can give you the assurance that you and your family will get the protections you seek.

Check out my website for more on living trusts.

Jun 11, 2017

Alan Thicke's family goes to war over late actor's estate

You don't need to be rich and famous, or have children from prior marriages, for your estate plan to run into trouble. But it sure does help. Now, the late Alan Thicke joins the roster of deceased celebrities whose families have gone to the trenches over money and control. 

Best known for his role on the sitcom Growing Pains, Thicke died suddenly in December 2016 from a ruptured aorta. He was 69. He left behind two grown sons from a prior marriage, Robin and Brennan; another son from a different marriage, Carter; and his wife of twelve years, Tanya Callau, with whom he lived on his Carpinteria, California ranch. 

To his credit, Thicke did prepare an estate plan. He had a revocable trust, written in 1988 and modified several times prior to his death, most recently in 2016. According to the trust, his three sons were to inherit the ranch, most of his personal effects, and over half of the rest of his estate. Callau would get the furnishings from the ranch, Thicke’s pensions and union death benefits, half a million dollars in life insurance, and anything else in the estate not specifically earmarked for the children. Sons Brennan and Robin were named co-trustees of the trust. 

In addition, there was a prenuptial agreement, signed by Callau prior to her 2005 marriage to Thicke. It gave her the right to continue residing on the ranch, so long as she maintained the property and paid all of its expenses. It is the apparent disconnect between the terms of the prenuptial and the trust that is fueling the family's competing claims.

Last month, Brennan and Robin filed a petition in Los Angeles County Superior Court, alleging that Callau is demanding a larger inheritance than their father's estate plan provides. Specifically, Callau is contesting the legal validity of the prenuptial agreement, which she says does not clearly distinguish between Thicke's personal property and community property (California is a community property state). If the prenuptial does not stand up to legal scrutiny, it could give Callau significant community property rights to the assets in the trust, and would therefore entitle her to far more than she is currently inheriting. 

Callau's attorney has called the prenuptial a "mess" and claims Brennan and Robin have turned down Callau's offer to take the matter to mediation. The sons' attorney refutes those points and has said: “The fact of the matter is that Alan had a career, wealth and children well before he ever met her. It was important to him to make sure that was protected and that his children were taken care of after his passing. She agreed to that. She signed it, understood it and now she’s refusing to honor it." According to some reports, the sons' petition is simply retaliation against their stepmother because she will not permit them to convert the ranch to a marijuana farm. 

You may not be a celebrity, but if you have a family, your planning must begin with an examination of your family dynamics. Our job as your "counselors at law" is to help you identify your family's strengths and weakness. Who is best suited to make certain decisions? Who is likely to create issues in the wake of your death or disability? Who gets along? Who doesn't? Who gets along well now, but might not if you are out of the picture? Only after answering these questions can we build a solid estate plan for you that will ensure your wishes are honored, and your family protected.

Jun 6, 2017

If You Knew You Had a Good Chance of Developing Alzheimer's, What Would You Do? What Should You Do?

Suppose you could find out if you have a greater-than-average chance of developing Alzheimer's Disease. Would you want to know? What would you do with this information?

One of the genetic secrets revealed in recent years is the relationship between the APOe4 gene and Alzheimer's Disease. About 40% of those who develop the late onset form of the disease (the most common form) carry this gene variant. While inheriting the APOe4 gene increases susceptibility, it by no means seals the deal; environmental factors such as diet and lifestyle also seem to play a part in determining who will or won't develop the disease.

Recently, the company 23 and Me began offering APOe4 testing. All you need to do is swab your cheek and send off a saliva sample. The company provides you with the results, which it promises will remain confidential and never be released to third parties. 

But just because you can know if you carry the gene, would you want to know? Positive results could have negative psychological ramifications. It might be a Pandora's box for someone with a low threshold for worry, creating years of anxiety over something that may never happen. Even if the results spur someone to adopt a healthier lifestyle, adhering to the regimen will not necessarily prevent the disease from manifesting.

On the other hand, someone who tests positive gets an opportunity to make important family, financial and legal plans that he/she might not otherwise make. Alzheimer's Disease is a staggeringly expensive condition. Families who don't prepare can be blindsided by the expense, which often includes long-term nursing care. Medicare does not pay for that type of care. A person who knows he/she has a heightened risk of developing Alzheimer's can take proactive steps to protect family and assets, such as Medicaid planning or purchasing long-term care insurance. 

The insurance industry is concerned about the possibility of more and more people being tested, learning they carry the gene, then purchasing long-term care insurance. A 2005 study, "Genetic Testing for Alzheimer's Disease and Its Impact on Insurance Purchasing Behavior," published in the journal Health Affairs, drew on clinical trials of 1,000 people. The study revealed - unsurprisingly - that those who have learned they carry the APOe4 gene are five times more likely than the average person to apply for long-term care insurance. If the now-readily available test becomes widely used, it could create a pool of insureds more likely to collect on their policies in the future. This would skew actuarial projections and put the long-term care insurance industry in financial jeopardy. Robert Cook-Deegan, one of the researchers who participated in the study, likens testing positive for APOe4 and then buying long-term care insurance to "...taking out a million-dollar life insurance policy the day before you know that you're going to die," adding, "The stock market would call it trading on insider information."

The study also found that applicants felt no obligation to divulge the reason they suddenly wanted a policy. While long-term care insurers are exempt from the 2008 Genetic Information Nondiscrimination Act and have the legal right to ask applicants if they have had genetic testing and to request the results, at this point most insurers do not pursue the matter. That could change if the industry finds itself under pressure. 

Still interested in getting tested for APOe4? You might want to hold off and follow the advice of Jill Goldman, genetic counselor at Columbia University's Taub Institute: Purchase long-term care insurance before you go for testing, because what you know might eventually be used against you.

May 28, 2017

Roger Ailes' Florida homestead protected from lawsuit liabilities

Roger Ailes, the media mastermind behind Fox News, died May 17 after falling at his Palm Beach home. The medical examiner attributed his death to bleeding on the brain, exacerbated by the fact that Ailes suffered from hemophilia. He leaves behind his wife, Elizabeth and a son, Zachary. Ailes was 77.

Ailes launched Fox in 1996, leaving the network last year amid a widening web of sexual harassment accusations. Two lawsuits naming him personally were ongoing at the time of his death. An individual's debts and liabilities do not disappear when the person passes away. Instead, the estate substitutes for the decedent. Attorney Gloria Allred has said she expects the lawsuits against Ailes to continue, with his estate now the target of the proceedings. 

Newsweek estimates Ailes' fortune at $100 million. He earned $20 million annually while at Fox, and took a $40 million severance package upon leaving the network. He also owned several homes, including the $36 million Palm Beach residence he purchased just after leaving Fox. That was a shrewd legal move: Ailes had recently declared himself a Florida resident, qualifying his Florida residence as homestead property. Under Florida law, homestead property is beyond the reach of creditors. Thus, unless his wife Elizabeth has waived her homestead rights, the home will pass to her, safe from any legal judgments.

In addition to availing himself of Florida homestead law, Ailes' relocation here offers other tax advantages. Since Florida has no estate tax, his estate will owe none. In terms of the federal estate tax, what is owed will depend upon the nature of the estate planning Ailes did. (Federal estate tax kicks in for all taxable assets over $5,490,000.)

The evidence fueling the two pending lawsuits against Ailes is based on private conversations he allegedly had with the plaintiffs, Andrea Tantaros and Julie Roginsky. Ailes always denied their allegations. Without him here to defend himself, the defense may be weakened. On the other hand, the plaintiffs may need to buttress their case with evidence beyond those private conversations. It is possible that Ailes' estate may now be eager to settle out of court, in order to sew up his affairs as quickly as possible.

May 18, 2017

IRS calling? This time, it may be legitimate

Consumer advocates are warning taxpayers about a new program that went into effect in April that permits the Internal Revenue Service to use private debt collection agencies. Targeted taxpayers will be those the agency has already contacted but who remain in arrears. The four companies are: Conserve - Fairport, New York; Pioneer - Horseheads, New York; Performant - Livermore, California; and CBE Group, Iowa.

The IRS tried twice before to use private companies to go after outstanding debts, without success. The last such effort, shut down in 2009, found that private collectors were not as successful as government employees in recovering funds. Nonetheless, legislation passed in 2015 calls for this third attempt.

According to some consumer advocates, the new program presents several dangers, and they warn taxpayers to be vigilant: 
  • Because private collection agencies are paid on a commission basis for every dollar they recoup, they have little incentive to inform a delinquent taxpayer about forgiveness programs or other alternatives for which the taxpayer might qualify.  
  • Heavy-handed tactics are another concern. In fact, in 2014 Pioneer's parent company was fined $97 million for misrepresentations it made to students when it worked with the Department of Education to collect outstanding student loan debts (read the story here).  
  • It will be easier for scam artists to impersonate collection agencies and attempt to defraud taxpayers into paying a debt that doesn't even exist.

To protect yourself and your loved ones, you should keep the following points in mind:


  • If a private collection agency has been authorized to contact you, the IRS will send you a letter first, informing you about which of the four agencies will be calling. That letter will be followed by a letter from the company. Thus, if you receive a call from a private debt collector demanding payment for back taxes and you have not  received these letters beforehand, chances are the call is a fraud.

  • The agency that contacts you must abide by certain rules. You cannot be threatened with arrest by law enforcement for nonpayment. The caller must be courteous and respectful of your rights, per the Fair Debt Collection Practices Act.

  • If you have any question as to whether you actually owe any back taxes, call the IRS directly at 800-829-1040. 


Click here for more information from the IRS on its private debt collection program.

May 13, 2017

Florida Homestead Exemption Hike On the 2018 Ballot

Florida voters next year will vote on whether to raise the Florida homestead exemption. The November 2018 ballot will include a constitutional amendment to increase the exemption from $50,000 to $75,000 on homes worth $100,000 or more. If 60% of voters approve, the new rate will take effect January 1, 2019.

Available to Floridians for their primary residences, the homestead exemption reduces the value of the residence for property tax assessment purposes. According to estimates, the hike would save 4.3 million state residents about $644 million. The average homeowner would see a savings of $170 annually.

The measure has its advocates and critics. In all likelihood, homeowners will vote "yes" to putting money in their pockets. Florida municipalities and counties, on the other hand, are concerned about the amendment's impact on critical services. According to various estimates, annual lost revenue for Palm Beach County would be $62.7 million; Broward County, $73.5 million; Martin County, $8 million; and St. Lucie County, $8.2 million.  

At a recent regional meeting covered by WPTV, Indian River County Administrator Jason Brown said assisted living facilities in the western part of the county could be affected by cuts to fire services. And St. Lucie County officials said the new library, scheduled to open later this year, might lack the necessary funds to operate. 

Advocates for the amendment argue that voters deserve a chance to vote on the property tax break, particularly in light of the fact that many people's home values have yet to recover from the 2008-2009 recession. The measure is sure to get plenty of press coverage as we get closer to the 2018 election.

May 9, 2017

Rule to curb senior financial exploitation coming in 2018

Older Americans are losing $2.9 billion to financial exploitation each year, according to a 2011 Met Life survey. That may be too conservative a figure, given the reluctance of victims to report the crime for reasons that include embarrassment over having been duped; fear of being labeled incompetent; and refusal to implicate family members who may be perpetrators. In fact, family members are often to blame: A 2016 Bank of America Merrill Lynch survey of its advisers found that when abuse was suspected, children of the victim were the potential culprits in most instances.
Investment firms (broker dealers) are often on the front lines of this problem. Accordingly, the Financial Industry Regulatory Authority (FINRA) has introduced guidelines (Regulatory Notice 17-11) for its members to follow when financial exploitation is suspected. These guidelines are scheduled to go into effect February 2018. Briefly, the provisions are:
  • When a senior investor opens an account, the institution is required to ask him/her for the name and contact information of a “trusted contact person” with whom the institution may communicate if exploitation is suspected. Existing customers will be asked the same question when their customer profile is updated. However, a customer who does not provide this information is not prohibited from opening an account or maintaining an existing account.
  • If an institution suspects financial exploitation of someone age 65 or older, or someone age 18 or older who it is believed cannot protect his own interests due to physical or mental impairment, it can place a temporary hold of up to 15 business days on the disbursement of funds or securities from the account. The rule applies only to suspicious disbursements of funds or securities, not to securities transactions (buying or selling stock within an account).  Once the temporary hold commences, the institution must contact the customer and the trusted contact person to investigate the matter within two business days. 
Some critics allege that the FINRA rule lacks teeth because it does not require firms to contact the appropriate law enforcement authorities and protective services. This contrasts with model legislation proposed by the North American Securities Administrators Association (NASAA). That organization's guidelines, already adopted by several states and under consideration elsewhere, has a mandatory reporting requirement. Florida has not yet adopted this legislation.
Read the new FINRA regulation (pdf), click here.

Medicare To Begin Eliminating Social Security Numbers From ID Cards

Since the launch of the Medicare program in 1965 and until today, the agency has issued ID cards bearing the beneficiary's Social Security number. This was not particularly problematic years ago. But today, the tsunami of identity theft has made it a massive problem. According to a Javelin Strategy and Research study, 15.4 million Americans lost $16 billion to identity theft in 2016. And the most valuable key scam artists have to unlock your identity is - you guessed it - your Social Security number. Getting access to it allows thieves to file fake tax returns, open up accounts in your name, and even get medical care using your identity.

Most health insurers have already removed the Social Security number from their identifying materials. Medicare has been a straggler, but that will soon change, thanks to the Medicare Access and Chip Reauthorization Act of 2015. Effective April 2018, Medicare will begin sending beneficiaries replacement cards that do NOT display the Social Security number. Instead, the identifying number will be your MBI, your Medicare Beneficiary Identifier. Replacement cards will be sent in phases, and all beneficiaries should have receive new cards by April 2019. Until then, keep your Medicare card safe and secure.

Apr 21, 2017

New Yorkers say farewell to Jimmy Breslin

If you are or were a resident of the Big Apple, you know Jimmy Breslin. Chances are you either loved or hated him. The tough-talking, hard-drinking journalist wrote prolifically about the streets and the common people of the city he was born in, lived in, loved. He famously said, "When you leave New York, you ain't going anywhere." Breslin's work brought him numerous kudos, including a Pulitzer Prize, and ample notoriety. He was Norman Mailer's running mate for mayor in 1969. And David Berkowitz, the "Son of Sam" killer, wrote to Breslin in 1977: "I read your column and find it quite informative."

Breslin died this past March at age 88 (in New York City, of course). According to papers filed in the surrogate court, his celebrity far exceeded his wealth. He left $99,000 in "copyrights in literary property" in a trust for the benefit of his wife, Ronnie Eldridge, a former member of the City Council. Evidently his publishers own most of his body of work. If anything remains in the trust after Eldridge passes, 70% will be divided among Breslin's four surviving children from his prior marriage, and 30% among Eldridge's six grandchildren from her first marriage. Eldridge also gets the assets the couple owned jointly, which include a condo and some bank accounts.

Breslin's will contained a no-contest clause, so that anyone who challenges the provisions is automatically disinherited. (Florida does not recognize no-contest clauses.)

One thing you can say about Jimmy Breslin: He was never bored. And he was never boring, either, a quality he described as "a felony." He will be missed.
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