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.

Apr 14, 2017

When advance directives are ignored

When we discuss end-of-life wishes with clients, some clients say they want everything possible done to keep them alive, regardless of their physical condition or possible outcome. If they can hang on for a while longer, they reason, there might be some medical advance around the corner that restores their health. If that is your inclination, you have every right to direct your health care providers to pull out all the stops.

On the other hand, you also have the right to reject extraordinary medical procedures that could result in what you consider an unacceptable quality of life. In my experience, that attitude is far more common. But disturbingly, according to an April 10, 2017 New York Times article, the right to refuse medical treatment is sometimes not honored, even when patients have made the appropriate legal preparations. The logic of many medical providers seems to be to err on the side of caution: After all, someone who has been resuscitated can be disconnected from life support, but you can't bring someone back from death. 

One instance mentioned in the article is that of Beatrice Weisman. In 2013, at age 83, Weisman was hospitalized after having a severe stroke. A resident of Maryland, she had a Physician's Order for Life Sustaining Treatment, or POLST. (POLST is under development in Florida but not yet available here. In states that do permit them, a seriously ill or frail patient or his/her health care surrogate may establish, in consultation with the individual's doctors, guidelines for the types of treatments the patient should or should not receive. The POLST is different from the advance directives now available in Florida because it is an actual physician's medical order, an official part of the patient's medical record.)

Weisman's POLST indicated she was not to receive CPR in the event of pulmonary or coronary failure. It was located in her medical chart at her bedside. Nonetheless, when hospital staff found her in bed turning blue, they rushed to save her. She was defibrillated and received epinephrine injections. Several of her ribs were broken during the administration of CPR. Weisman survived. After a few years of physical therapy and round-the-clock care - paid for out-of-pocket by her family - she remains bedbound, attached to a feeding tube and catheters, and suffering from dementia. The family has sued the hospital for keeping her alive against her express wishes. Says her son: "I'm happy to see my mother each day, but I'm also seeing her suffer each day."

As we live longer and longer, it is inevitable that more cases of this type will occur. The courts seem inclined to side with plaintiffs. For example, the Georgia Supreme Court recently rejected a hospital's claim of immunity, stating, "It is the will of the patient or her designated agent, and not the will of the health care provider, that controls."

Of course, being revived against one's wishes is not always a function of overeager doctors and hospital staff.  It is all too common for a healthy person to have a valid living will prepared, yet fail to notify his/her family or health care agent that it exists, or where it can be found. Many people just stick it in a file cabinet or lock it up in a bank vault, and forget about it. And once someone becomes cognitively incapacitated, he/she may not be able to tell others that the document even exists. 

Your best bet to ensure your end-of-life wishes are honored is to make sure your physicians, family, friends and health care agent know about your advance directives, where they are located, and how they can be accessed. Some suggest downloading the documents to your mobile phone and to your loved ones' mobile phones, too.

Read about the various types of Florida advance directives here.
Read the original New York Times article on this subject here.
Read about the POLST form, currently in the planning stages in Florida, here.

Apr 9, 2017

Penn Treaty fails: What does this mean for you if you want long-term care coverage?

Thousands of people across the nation hold long-term care policies from Penn Treaty Insurance Company. The company and its American Network Insurance subsidiary have been in dire financial straits since at least 2001. With the company short the $4 billion necessary to cover claims, a Pennsylvania court in March gave the go-ahead for Penn to liquidate. The court reasoned that liquidation provided the best outcome for policyholders in a bad situation. 

What happens to policyholders now? 
State insurance guaranty associations will now pick up the benefits for policyholders. According to estimates from the Long Term Care Group of the Guaranty Association, Florida is on the hook for about $354 million. However, in most states there is a cap on payouts. In Florida, the limit on individual payouts is $300,000. Some states have higher limits; in Connecticut and California, for example, it is $500,000. Note: To be covered, you must continue to pay your premiums. Read Penn Treaty's information for existing policyholders here

How could this happen? 
The long-term care insurance industry emerged about two decades ago in response to the needs of an aging population. Many companies underestimated the cost of coverage, however. Actuarial projections and premium structures failed to anticipate the number of policyholders who would claim benefits or let policies lapse. Penn Treaty had particularly lax underwriting standards; some of my clients who were turned down by other carriers were often able to secure Penn Treaty policies. A low-interest-rate environment also affected insurance companies' projected return on assets. As profits faltered, several carriers left the market, and those that remained raised premiums. The good news is, the insurers that survived are now doing a better job of underwriting.

Should You Get Long-Term Care Insurance? 
As with any form of insurance, there are no certainties, only  probabilities, risks and rewards to be weighed. Peace of mind should be figured into your calculations, too. In general, I am in favor of it. First, as noted above, traditional policies are now better underwritten and the companies in the market are more solid. Also, as I will explain later, new kinds of policies are available today that were not available just a few short years ago. 

Here are a few facts and figures to consider: 
  • A 2015 report from The Centers for Medicare and Medicaid Services notes that at least 70% of those over 65 will need long-term care services at some point in their lives. 
  • A 2014 report from the Centers for Disease Control and Prevention finds that the average stay in a long-term care facility is 845 days. 
  • According to a 2015 Genworth Financial report, the average cost for a nursing home in a private room in Florida statewide is $265 per day. Based on an average stay of 845 days, the total cost is $223,925. (In some parts of the state, a private room can cost far more - as much as $505 daily.).
  • Medicare does not cover long-term care. 
  • Medicaid, which has been the saving grace for many of my clients, may continue to be available for those who do the proper planning. Even so, the fate of the Medicaid program is uncertain in the current political climate.
  • In Florida, it is very difficult to get Medicaid assistance for at-home care. The waiting list is near interminable. If one is able to qualify and secure assistance, it is usually only for 4 hours per day.
  • Veterans Benefits may be available to certain elderly and aged veterans or their widows, but it is widely expected that the Veterans Administration will tighten its eligibility requirements in the near future.
  • You are more likely to qualify for and get better prices on long-term care insurance if you apply when you are younger and healthier.
  • Many of my clients say they do not want to spend their children's inheritances on long-term care. Understood - but without long-term care insurance, they may end up depleting their nest egg anyway, all the while having deprived themselves and their family of the peace of mind that comes from knowing there is coverage if the worst comes to pass. 

Types of Policies Available
Traditional: As noted above, traditional long-term care policies still are available from certain carriers. You should always investigate the ratings for these companies before you buy. Moodys, Standard & Poors and other organizations rate these companies for financial soundness.

Hybrid policies: There are both life insurance policies and annuities which may be purchased with a long-term care rider. Also, if you have an existing life insurance policy or annuity, you may be able to use the policy to purchase a new policy with a long-term care rider. If you want to cancel the policy or never file a claim, you may be entitled to a return of premium on an annuity policy, or for a life-insurance type policy, to a death benefit.

Here is a chart I originally posted in 2014 that will help you understand the differences between traditional and hybrid policies. If you would like to investigate purchasing long-term care insurance, contact my office and we can put you in touch with someone who can assist you.   

Traditional Policy
Hybrid Policy
You pay the premium annually or in periodic installments.
Annuities and most life insurance policies: you pay a lump sum at the inception of the policy. No additional premiums thereafter. Some life insurance policies may offer annual premiums.
Policy Lapse
Policy will lapse if you fail to keep up with the premiums. No refunds. No benefits from premiums paid to date.
Policy remains in force after initial payment, except life insurance policies with annual premiums, which must be paid.
Premium Increases
Premium increases may occur if company gets approval for increase from State Insurance Commissioner.
No increases.
Filing a Claim
When you file a claim and if your policy has a waiver of premium clause, you will not have to continue to pay premiums.
With a lump sum annuity or life insurance policy, you may owe no additional premiums. With the life insurance policies that have additional premiums, you will have to make payments even after you have filed a claim, unless you have a waiver of premium clause in your policy.
If You Never File a Claim
No return on what you’ve paid in.
On an annuity type policy, you will be entitled to a lump-sum payment when you cash in the policy, or upon your death. With a life insurance policy, you will be entitled to a death benefit as scheduled.
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