Jul 22, 2016

Is your durable power of attorney powerless?

Just about everyone knows the importance of having a Durable Power of Attorney (DPOA). This key legal document allows you to name someone other than yourself to handle your financial affairs.  If you become incapacitated, having a DPOA can make the difference between having your attorney-in-fact smoothly handle your affairs, or your becoming the subject of a guardianship.

Unfortunately, "smoothly" is not how things always go in the real world, even if your DPOA has been drawn up by a competent estate planning attorney and every "t" has been crossed and "i" dotted.  The reason: Financial institutions subject the document to rigorous scrutiny and are notoriously reluctant to honor them. Astonishing as it may seem, in Florida there is no one, universally accepted, statutory DPOA form. Therefore, banks and other financial institutions can be as picky as they want. They may tell an agent that the DPOA was signed too long ago and is "stale"; that the bank has its own form that also needs to be signed; that the form you are presenting to them lacks certain language, etc.

A recent article in The New York Times, "Finding Out Your Power of Attorney is Powerless," catalogs the frustrations some have experienced when trying to use a power of attorney at a financial institution. In one instance, college professor Claire Ullman approached a bank in order to manage the accounts of an elderly relative who had named Ullman as her agent three years prior. The bank rejected the DPOA, and requested that a new one be signed - impossible because Ullman's relative was no longer mentally competent. "People sign these anticipating incapacity. Once incapacity arrives, it's too late to sign another one," Ullman says.

It is easy to conclude that putting an attorney-in-fact through these kinds of hoops is madness and a disservice to the public. But from the banks' point of view, there is a method to the madness. Financial elder abuse is rampant, and statistics show that it is not uncommon for an older person to be victimized by the very person authorized to handle his finances. Therefore, banks increasingly err on the side of caution, to protect themselves from liability as well as their customers from fraud.

This is not to say that the durable power of attorney is useless. It is not. It is vital. Everyone needs one. But in this day and age, you have to take some additional steps after the ink is dry, to ensure that when the time comes your agent will be able to use the document as you intend:
  • Once you've signed your DPOA, take it to your financial institution(s). Request that the legal department review it and provide you with written assurance that your agent will be allowed to use it in the future. If it is not acceptable to the bank, find out why and check back with your attorney. Your financial institution has the right not to accept it, but it is obligated to tell you why.
  • Be cautious about any bank-generated form you are asked to sign. Some of those forms contain arbitration clauses and other language that may not be favorable to you.
  • If the bank insists it will not accept your DPOA, withdraw your funds and take them to a more cooperative institution. (In fact, just saying you're going to do this will frequently encourage a balky bank to acquiesce.) If you are a client of The Karp Law Firm, call us. We can engage with the bank's legal department and often, work it out for you.
Another route many of our clients choose is setting up a living trust. In contrast to your attorney-in-fact whose authority stems from your Durable Power of Attorney, a co-trustee or successor trustee under your trust is far less likely to encounter roadblocks when managing your trust assets.

You can read the original New York Times article on this subject here

Jul 16, 2016

Chronically ill seniors, others await Florida Medical Marijuana vote

Practicing elder law and estate planning in Florida, I naturally meet a good number of seniors with serious physical ailments. Many who endure chronic pain are closely watching this November's election: Not just for the outcome of this highly unusual presidential contest, but for the fate of medical marijuana in our state.

This year's ballot includes Amendment 2, the "Florida Right to Medical Marijuana Initiative." The constitutional amendment, which must be approved by 60% of voters, would expand the use of medical marijuana, giving 450,000 residents with certain debilitating illnesses access to full-strength cannabis. Proponents argue that the plant can help alleviate symptoms of certain illnesses more effectively than opioids and other classes of drugs. That's a viewpoint with which many of my clients seem to agree, as do most Floridians: A Quinnipiac poll conducted in May shows that 80% of Florida voters support the legalization of medical marijuana. Opponents of the amendment argue that medical legalization is a slippery slope that will lead to more widespread recreational use.

Currently, under Florida's Compassionate Medical Cannabis Act of 2014, the use of medical marijuana is very limited. First, the patient must be a permanent Florida resident. The physician must be state-approved to prescribe and must have been treating the patient for at least 90 days. Low-THC (non-euphoric) cannabis may be prescribed for a medical condition that cause seizures or muscle spasms, provided all other treatment methods have been exhausted. Full-strength cannabis is permitted only for those with terminal conditions who are experiencing pain and/or nausea. Read more at the website of the Florida Department of Health Office of Compassionate Use.

Medical concerns and compassion for the ill will surely be the paramount factors determining the fate of Amendment 2. However, there is an interesting economic factor at play here, too. A study by Health Affairs has discovered that from 2010 to 2013, where medical marijuana was legalized, Medicare Part D costs declined, presumably because patients' use of more conventional painkillers decreased. Moreover, if the Drug Enforcement Agency decides to reclassify cannabis as a Schedule II drug, as is currently under consideration, insurance will pick up more of the costs for patients who rely on it.

Without a doubt, this election season has many significant ramifications for Florida as well as the nation. 

Jul 15, 2016

Felines and homebound seniors: A perfect match

My family and I have a serious soft spot for animals, so in this post I depart from the "legal stuff" to tell you about a lovely program that pairs seniors with furry feline companions. Consider it - ahem - a "fluff piece."

The humane society of Bay County, Michigan recently launched the Cats for Companionship program, which identifies homebound seniors who can benefit from having a pet and are capable of caring for it. The program provides the cat and everything else - food, toys, veterinary care - free of charge. For the adopter, the benefits of having a furry companion are well-documented: it eases stress and loneliness, reduces blood pressure, etc. And the cats, all hard-to-place older animals, get a loving home. A win-win situation.

I think this would be a wonderful program for our area, too. Of course the senior would have to reside in a place that allows pets, and not be allergic to cats. (My wife is, but we have one anyway - go figure!) Is anyone willing to take on creating such a program here?

If you have any doubt about the deep bonds that can exist between human and feline companion, check out this story of a cat that miraculously found its "missing" owner after the owner moved into a nursing home. 

Lastly, if you have a beloved pet and want to ensure its welfare if it outlives you, remember that Florida law permits your pet to be included in your estate plan. Contact our firm for more information.

Jul 12, 2016

Florida ABLE Accounts now available

Florida's ABLE program is now operational. Effective July 1 (with certain restrictions which I discuss below), an individual with a qualifying disability may preserve his/her eligibility for means-tested federal government benefits while retaining more than $2,000 in assets. Assets must be held in an ABLE account, a special type of tax-advantaged savings account authorized under the Achieving a Better Life Experience Act of 2014 (which I discussed previously here and here). A person who has established an ABLE account and who depends on vital government benefits such as Medicaid, SSI or SSDI will no longer be forced to remain impoverished to qualify for benefits, resulting in greater independence and better quality of life. Individuals who are able to join the workforce will be able to do so without fear of losing benefits. 

An ABLE account is a savings vehicle modeled on college savings plans. The disabled individual (or his/her parent, attorney in fact or other authorized individual) may open, contribute to and manage the account. The disabled individual is the owner and beneficiary. Growth is tax-free, and up to $100,000 of the account is considered a "non-countable resource" for Florida Medicaid eligibility purposes. Funds may be withdrawn tax-free for qualified disability expenses such as employment training, assistive technologies, transportation, special therapies, medical expenses, housing, education, etc. 

Visit ABLE United to learn more about eligibility requirements, how to open an account, types of investments available and more. Investment options may be chosen from pre-selected portfolios, or a custom portfolio may be put together from the options offered. 

As I noted above, there are some significant program restrictions:
  • The individual must have developed the qualifying disability by his/her 26th birthday. (Advocates are hopeful that the age limit can be raised or eliminated in the future.)
  • If the account owner has been receiving Medicaid benefits, the state must be paid back from any funds remaining in the account when the account-holder passes away. 
  • No more than $14,000 per year may be contributed by any individual to the account. 
  • Once the account reaches $418,000, no additional contributions can be made.
For these and additional reasons, families and individuals may still find a Special Needs Trust or a Pooled Trust a better choice, either in lieu of or in addition to an ABLE account. Unlike the ABLE account, there is no upper limit on contributions or total amount accumulated in a Special Needs Trust or Pooled Trust

Contact The Karp Law Firm if you wish to explore which option is best for your or your loved one's circumstances.

Jul 9, 2016

Surprise, it's ancillary probate

People who ask my firm to handle the Florida probate of a loved one's estate often have an inkling of what's ahead: just about everyone has heard horror stories about the probate courts, particularly the Florida courts. That negative reputation is overblown in some respects, especially for simple estates, but it is fair to say that the probate process can be glacially slow, require mountains of paperwork, and incur significant administrative and legal expenses. Probate can be a tedious and frustrating process for a family trying to deal with its grief, resolve family turmoil, wrap things up and move on.

So you can imagine what happens when I have to tell a family that they face more than one probate. There will be two. Or in some cases, three. Here's why: When a Florida resident owns real property in a state outside Florida, and that property is devised in a will (or if the decedent has died intestate), the out-of-state property must be probated in the state where it's located. This is called an ancillary probate. Ancillary probate entails retaining a lawyer in the other state and, of course, additional fees and delays. It is necessary because the Florida courts have no authority to transfer the title of real property to beneficiaries for property outside this state. 

This brings me to two related points. The first is that it is vital to be be forthright and thorough when discussing your assets with your estate planning attorney. This is not intended to be an infringement on your privacy. A competent attorney requires all this information to provide you with intelligent advice, including advice about possible ancillary probate. 

The second point is the danger of do-it-yourself estate planning. Many cases of unexpected ancillary probate I've encountered have their roots in the decedent's decision to create a plan using software or pre-printed forms, foregoing legal counsel. In my experience, more often than not this approach turns out to be a  penny-wise and pound-foolish. And off course, once the will-maker is gone, there's no going back to revise documents.

So how can you spare your family the inconvenience of an ancillary, out-of-state probate? If you're married you may wish to co-own the out-of-state property jointly with right of survivorship with your spouse, so it can pass without the need for probate when the first spouse dies. You can also co-own property jointly with right of survivorship with an adult child, but that presents its own problems, exposing the property to your child's potential creditors.

For the vast majority of Florida residents who own out-of-state property, the simplest and most effective solution is to create a revocable living trust and title the out-of-state property in the name of the trust. Properly done, this approach will allow your family to avoid an ancillary out-of-state probate, as well as avoid Florida probate. 

Jun 19, 2016

Medicare observation status notices, set to begin August 7, causing concern

Hospital patients on observation status are considered too sick to go home, but not sick enough to be formally admitted. Beginning August 7, Medicare beneficiaries in the hospital on observation status must be notified of that status within 24 hours, both in writing in "plain language," and verbally. Hospital staff must also be available to answer questions. 

The purpose of the NOTICE Act (short for Notice of Observation Treatment and Implication for Care Eligibility) is to inform Medicare patients of the costs they may incur when not formally admitted to the hospital. From the perspective of someone in a hospital bed, observation and formal admission may be indistinguishable, but there could be a huge difference when it comes to Medicare coverage. Patients under observation may not be covered for certain hospital services and doctors' fees, and their stay in the hospital does not count toward the three-day minimum required for Medicare to cover 20 days of subsequent skilled nursing care. 

June 17 was the last day for comments on the draft notice hospitals are required to give observation patients. Critics claim that because the notice is written on a twelfth-grade level, not the eight grade level that is standard for consumer materials, some patients may not understand it. And Rep. Lloyd Dogett of Texas, bill co-sponsor, finds the draft notice inadequate for several reasons: it does not document the actual reasons a patient is on observation status; it fails to clearly distinguish between Medicare Part A and Part B; and it does not address the fact that observation days do not count toward the three-day minimum stay required for Medicare to pick up a portion of any subsequent skilled nursing home costs. Others have expressed concern about the wording regarding drug coverage. "Self-administered drugs" - for example, blood pressure and cholesterol medications that patients usually take at home - are not covered by Medicare when administered in-hospital to an observation status patient. 

These concerns are prompting the American Hospital Association to ask for an extension of six months before they begin notifying patients. But YOU need not wait for Medicare and the hospitals to get their act together. As I noted in my prior post on this topic, Medicare patients and their loved ones must be proactive whenever a patient goes to the hospital. Find out - do not wait to be told - if you or your loved one are on observation status. If you are, you may be able to persuade your physician to reclassify your stay.That could make a huge difference in your ultimate financial responsibility.

Jun 16, 2016

Higher standard for advice on tax-advantaged retirement accounts

Federal law requires a financial advisor to put the client's best interest first when providing advice on tax-advantaged retirement accounts.    

Believe it or not, that was NOT the law until just recently. But it is today.

In the past, financial advisors working with 401ks and IRAs were required only to steer clients into "suitable" investments. With that leeway, clients might sometimes be steered into "suitable" investments that were riskier and/or paid higher fees or other incentives to the advisor, rather than into less pricey, more prudent investments. According to a report from the White House Council of Economic Advisors, such conflicts of interest, "backdoor payments" and "hidden fees" have been sucking $17 billion from Americans' retirement accounts every year. (Read report here)

Now, Americans saving for retirement will get a fairer shake. Under direction from the Obama Administration, the Department of Labor has issued a new rule requiring those advising you about tax-advantaged retirement accounts to adhere to a higher standard: a fiduciary standard. As fiduciaries, advisors will now be legally obligated to put your best interest over any other considerations. The law will go into effect in April 2017. Secretary of Labor Thomas Perez characterizes the new regulation as “…a huge win for the middle class.”

Note that the new rule does not apply to standard retail accounts. And even for retirement accounts, neither commissions or riskier investments are banned, but advisors will have to explain why they are recommending a particular investment if a less expensive or less risky one is available. 

Very important: The new rule is not at all new for "Registered Investment Advisors," who have ALWAYS been governed by the fiduciary standard. Like physicians and lawyers, they must prioritize their clients' interests over all other considerations. At Karp Financial Services, we are available to assist our clients with their retirement planning or other financial issues. If you do not currently have a Financial Advisor, want to establish a relationship with one, or just get a second opinion on your investment accounts or any other financial issue, feel free to contact us at 561-626-1130.

Jun 15, 2016

Named to Florida Super Lawyers list again!

I am delighted to announce my ten-year anniversary! Well, sort of. This is the 10th year that I have been named to Thomson Reuter's list of Florida Super Lawyers. The honor is given to outstanding attorneys who have achieved a high level of professional proficiency and peer recognition. No more than 5% of Florida lawyers earn the award each year. I am thrilled to be part of this elite group!

The Karp Law Firm's lawyers  assist clients and their families in the areas of elder law, estate planning, estate administration and litigation. You can learn more about our services here. For my professional qualifications, click here.

Jun 13, 2016

Alzheimer's Disease: Today's Realities

An online search for "Alzheimer's Disease" yields countless articles: New reports appear daily about recently discovered biomarkers, diagnostic tests, possible treatments, new medications, the latest research into potential cures. We are learning more all the time. But despite research efforts, we have yet to find the holy grail: a way to prevent or cure this increasingly prevalent disease.

How prevalent? If you are over 65 you have a one in nine chance of having the disease, according to The Alzheimer's Association's 2016 Facts and Figures report If you are lucky enough to live to age 85, your chances increase to one in three. Alzheimer's is the cause of 60% to 80% of all cases of dementia, and women are significantly more likely to be afflicted. If things keep going as they have, the nationwide incidence will triple by 2050. In Florida alone, the number of residents with Alzheimer's is expected to increase 41% by the year 2025.  

The 2016 report also presents revealing data about the toll the disease takes on caregivers. There are currently 16 million unpaid caregivers in the U.S. who are affected economically, emotionally and physically by a loved one's Alzheimer's Disease. The costs of care, the report concludes, "...can make it more difficult for individuals and families to maintain their own health and financial security." 

While it's widely believed that maintaining a healthy lifestyle has some preventive value, there is no way to guarantee that you will remain untouched by Alzheimer's. There are, however, steps you can take that can ease the toll a diagnosis would take on your family. Assessing how your family can shoulder the staggering cost of long-term care, if it becomes necessary in the future, should always be part of your estate and life planning. An experienced Florida Bar Certified Elder Law Attorney can assist you.

Your attorney can also help you put in place legal documents that will smooth the road and make the transition easier for family members in the event of your incapacityA Durable Power of Attorney for Property will allow someone to handle your financial affairs. A Health Care Surrogate will authorize someone else to make your health-related decisions if you cannot do so. All these plans should be made well in advance. But even if you have already been diagnosed with Alzheimer's Disease, so long as your mental capacity remains, you can execute these important documents. Don't delay too long, though: the progress of the disease is unpredictable and, once incapacity occurs, the only recourse may be a court-ordered guardianship. That's a trying and expensive process you and your family will want to avoid.

Perhaps in the near future, I will no longer need to advise clients about how to deal with the legal and financial ramifications of Alzheimer's Disease, because it will no longer exist. That is my hope. I'm sure it's yours, too.

Jun 8, 2016

Downsizing Tips for Seniors

Downsizing - simplifying, organizing and getting rid of clutter - can improve quality of life at any age. For seniors, it can be especially beneficial. See the tips below for seniors who are considering downsizing. This guest post is from community outreach manager Daniel LoFaso of Lourdes McKeen, a retirement and independent living facility in West Palm Beach, Florida. 

Downsizing can be helpful for seniors, creating less stress and fewer responsibilities during a time when it may be most beneficial. There are many ways to downsize various areas of your life, from cleaning out a house to getting finances in order. Some practical ways for seniors to downsize include the following suggestions:

Lighten up your life. Seniors can make a proactive move in their downsizing efforts by getting rid of clutter now. This includes the items that you are planning to give to others, such as cherished keepsakes and family heirlooms which typically are belongings that might get saved over the course of time. When cleaning out the house, you may consider starting a posterity box, which is intended for these items, and giving them to relatives or friends now in order to help downsize and make a positive step toward simpler living.

Consider communal living. When you are truly ready to downsize, consider moving into a communal living situation. This doesn’t mean that seniors have to move in with family or friends, but rather it might be pragmatic to consider relocating to a like-minded community. Many of these living situations, such as senior living communities, offer step-down living facilities that make planning for the future easier and more secure.

Some communities may offer independent living for seniors who desire the ability to come and go as they desire, while others may offer assisted living or skilled nursing (or a combination of all three) in the event that residents need more comprehensive care. Many may offer subsidized housing for those seniors with limited resources, too.

Take a look at your finances. It pays to spend some money to gain insight and information related to financial downsizing. Invest in legal representation with expertise in elder law, probate, and estate planning to make important decisions about your finances and investments. This may include setting up trusts, making charitable contributions, making long term care (LTC) considerations, and preparing a will.

Warm up to the idea of moving South. There is a reason why seniors flock to Florida once retired; the warm weather is a pleasant reprieve for many but it may also reduce the cost of living for many that are accustomed to colder climates and higher energy costs. Florida, in particular, has a lot to offer seniors and many areas are known as retirement communities. These regions might be the perfect reprieve for aging consumers looking to downsize and make life simpler. It also doesn’t hurt that Florida doesn’t have state income tax, making your retirement dollars go farther.

Do you really want to drive? If you enjoy driving or plan on using your vehicle during retirement, then by all means, do so. However, extra vehicles equate to extra costs and burdens. Where will you park? Have your insurance rates recently risen? Consider, instead, using public transportation or other means in lieu of the costs and commitments of owning or operating a vehicle. Some senior communities may offer shuttles to get residents where they need to go.

Make a donation. Downsize your life by donating goods, belongings, or resources to a worthy charity of your choice. This has the advantage of helping others that may be less fortunate, while also providing a helpful tax break for those that request documentation of the donation. Ask for a receipt of the transaction and use online calculators to figure out the tax break when completing your return.  

Downsizing has many benefits, particularly for seniors: Taking care of important matters now will make planning for the future easier, while ensuring your loved ones aren't left making decisions on your behalf. Talk with your legal expert to determine the best approach to fulfilling your final wishes and naming someone to have power of attorney over your affairs, should the time come that warrants this appointment. Be sure to complete a living will to ensure that your wishes are met and that there are no questions later regarding your care or treatment.Keep a copy with your insurance information, financial papers, and other important documents.

There are many ways to look at downsizing and it can make life a lot simpler and relaxed, particularly if you are a senior. Consider your living situation and how this may be contributing to your burdens; does it make sense to move?

Be sure to talk with a legal expert to determine how to best plan and address your finances to keep life simple but funded. Prepare documents now to ensure your final wishes are laid out and that there are no questions regarding your finances, care, and treatment when the time comes to make these tough decisions.

Downsizing now can provide a sense of security that makes retirement and aging a lot less worrisome, and that can help to make it a time to relax and enjoy the things that bring personal joy, satisfaction, and fulfillment.
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