Jul 28, 2015

Domestic partners who marry can still achieve estate planning goals

If you are in a domestic partnership and have employer-sponsored health coverage or other employer-sponsored benefits for your partner, stay alert to the changing legal landscape. Many companies may phase out coverage for domestic partnerships. You may need to take steps - including marriage - in order to ensure your partner's continuing benefits.

Domestic partnership contracts can be useful for unmarried couples, both opposite-sex and same-sex, who wish to avail themselves of a partner's employer-sponsored benefits, such as health insurance. Many couples opt out of marriage and choose domestic partnerships for estate planning purposes: they want to protect the inheritance of children from a prior marriage. And of course, until June's Supreme Court ruling, same-sex couples did not even have the option of marriage.

Two thirds of Fortune 500 companies provide domestic partner benefits to same-sex couples, and of those, 62% also cover same-sex couples, according to the Human Rights Campaign. Many public employers also recognize domestic partnerships, including Palm Beach County and many states.  

Now, in light of the Supreme Court decision legalizing same-sex marriage, some employers that in the past offered domestic partner benefits are re-thinking their policies. For example, Delta Airlines, Corning and Verizon have announced they will no longer provide domestic partnership benefits, and have given their employees a grace period in which to marry, or lose benefits. Companies that have traditionally extended domestic partner benefits only to same-sex couples are considering dropping domestic partner benefits altogether.

Every employer is different, so be sure to inquire about your company's current policy. If you wish to marry now but have concerns about the estate planning ramifications, meet with an experienced estate planning attorney. A prenuptial agreement in which your spouse waives his/her right to the elective share and marital home, as well as other strategies, can be explored, giving you the freedom to marry while still meeting your estate planning goals.

Jul 19, 2015

Medicaid Personal Services Agreements must be properly structured


A Medicaid Personal Services Contract, also known as a Personal Services Agreement, can be a great strategy that permits an aging person to pay adult children for caregiving, while still preserving the parent's eligibility for long-term care Medicaid benefits. In the absence of a credible Personal Services Agreement, payments made to family caregivers during the look-back period (currently five years prior to application) will be considered "uncompensated transfers," and count against Medicaid eligibility. This is precisely what happened in the case of Widley David v. the Louisiana Department of Health and Hospitals, which I discussed in my prior post here.

But just having a contract is not sufficient. The written contract must have integrity, must be properly structured and must be adhered to. Here are some of the key elements the agreement must contain:
  • The nature and extent of the services must be specified.
  • There must be proof that the payments are in line with fair market value.
  • Documentation must be provided to prove that those services were, in fact, provided.
  • The recipient must pay income tax on the income.
  • The recipient must pay self-employment tax on the income.

If the contract does not meet these criteria, Medicaid benefits could be denied. A recent case out of New York State is informative:

New York resident David Scott signed a personal services agreement with his daughter and son-in-law. According to the document, Scott was to pay $5,000 monthly to them for caregiver services. However, the exact nature and frequency of the services were not spelled out. Nor was there any mention made of the fair market value of those services. In reality, no payments were made in some months. Other months, Scott's daughter and son-in-law would make withdrawals of varying amounts. Then, the month that Scott entered a long-term care facility, $60,000 was transferred to his daughter and son-in-law.

As you can surmise, New York State deemed the payments to be uncompensated transfers. Mr. Scott was denied Medicaid benefits. He appealed and the case made its way to the New York Supreme Court. The court upheld the ruling, stating that Mr. Scott "gave no explanation of the services that were provided other than transportation on occasion, did not submit any documentation regarding the services, and offered no proof regarding the fair market value of any services." You can read the court's decision in Scott ex rel Dana v. Zucker here.


Paying a relative for caregiving can ease the financial burden on the caregiver as well as provide the best possible care for a loved one. However, these arrangements always require careful planning and a thorough consideration of the ramifications. Contact our law office for assistance

Jul 14, 2015

Medicare proposes covering voluntary end-of-life counseling

On July 8 Medicare proposed that beginning in 2016, it will pay doctors to discuss end-of-life care options with patients who request such counseling. Although many private insurance plans already provide coverage for this purpose, the proposal is a game-changer because the vast majority of people who seek counseling are older patients covered by Medicare.

A 2014 report from the Institute of Medicine, Dying in America, documents what is commonly known: Many people spend their last days unnecessarily uncomfortable, undergoing painful and invasive treatments that fail to extend life. Medicare's proposal, contend supporters such as the American Medical Association and the AARP, would educate patients and families about the full spectrum of  options, from palliative care to more rigorous life-extending options.  

The proposal has its critics, too. The National Right to Life organization, for example, has indicated that unmonitored counseling sessions could push people into foregoing life-saving treatments. This echoes the controversy that erupted over a similar proposal that was included in the first iteration of the Affordable Care Act. At that time, Sarah Palin and others characterized Medicare-funded patient-doctor discussions about end-of-life care as a precursor to "death panels." Ultimately, coverage for end-of-life counseling was scrubbed from the legislation.

As someone who makes his living helping people plan for the future and maintain their independence, I think everyone has the right to make informed choices about how they live their lives and manage their health care. Voluntary discussions between doctors and patients can only lead to more informed choices.

Comment period for the proposal closes on Sept. 8, 2015. Coverage would begin in 2016. You can read the proposal here.

Jul 8, 2015

Should "Aging at Home" always be the gold standard for the golden years?

Ask people where they wish to grow old and the answer almost always is, at home. Aging in place has become the gold standard for the golden years, offering familiarity, continuity and comfort. 

And yet... growing old in your own home may turn out to be less comfortable than some think. In my many years of counseling families with aging parents, I have discovered that aging in place can have a darker side. It can be lonely, limiting, non-stimulating and even physically unhealthy. 

I recently ran across two articles about this issue. In his recently released book, Aging in the Right Place, University of Florida Gerontology Professor Stephen Golant argues that at-home health care providers, sellers of reverse mortgages, and the home renovation industry have oversold the notion that remaining at home is always best. He contends that the decision to remain at home, based on emotional attachments, is often made without fully understanding the potential problems, which may include inability to get out of the house,  a hard-to-navigate or even dangerous home, and reliance on family members who may be overwhelmed and unable to meet their loved one's needs. Read more of Golant's views in this Washington Post article.

This topic was also addressed in a New York Times article published recently. Aptly titled, "At Home, Many Seniors are Imprisoned by Their Independence," the article describes the day-to-day lives of seniors who have become effectively homebound as they "age in place." Read the article here.

Of course, I am not advocating not staying at home. And I completely understand the deep resistance most people have to moving, especially later in life. I am merely pointing out that the at-home choice should not be a knee-jerk reaction. Many factors must be evaluated, including health issues, proximity to family, the ability of the family or others to provide caregiving, the layout of the home, a family's financial circumstances, and more. Sometimes an assisted living environment, or even a nursing home, can do more, and better, for an older person.

We all want our aging loved ones to be healthy and happy, but we must be mindful that "aging in place," a comforting notion, is not always the best option for everyone.

Jun 30, 2015

Supreme Court upholds Obamacare: Good news for parents of special needs children

On June 25 the Supreme Court rejected the last judicial challenge to the Affordable Care Act. Parents of special needs children are breathing a sigh of relief, because the law prevents insurance companies from denying coverage to their children based on pre-existing conditions. 

With "Obamacare" the law of the land, parents with sufficient assets to provide private health insurance for their child may now find that a Special Needs Trust is no longer their best planning tool. A Special Needs Trust can preserve a disabled child's access to Medicare health benefits, among other federal benefits. However, federal law severely restricts how the trust assets may be used. Just giving the beneficiary pocket money may imperil the individual's access to governmental benefits.

If you are a parent who can afford to furnish your child with private health insurance and don't need to preserve his/her access to Medicare, it may make sense to do away with the Special Needs Trust. Instead, you may want to consider leaving assets for your child in a discretionary trust, which gives you broader latitude to determine how the beneficiary may use the money. Or, if your child is capable of managing his/her own financial affairs, you may even wish to leave funds to him/her directly.

One caveat to the above: There is still talk about Congress taking future action to eviscerate the Affordable Care Act. If we have a president in 2016 who agrees with that agenda, special needs children could still be in peril. Please contact The Karp Law Firm to discuss your options.

Jun 26, 2015

Good reverse mortgage news, but caution still advised

In my September 2014 post I told you about a change in HECM reverse mortgage regulations. That change eliminated the requirement that the non-borrower spouse pay the loan in full when the borrower dies. The new rule eliminated the threat of foreclosure for surviving non-borrower spouses, provided they continue to pay required tax and insurance on the property. 

Unfortunately, there was a BIG fly in the ointment: The new rule applied only to reverse mortgages assigned case numbers on or after August 4, 2014. That still left many non-borrower spouses at risk of being thrown out of their homes. To remedy that situation, HUD has now expanded the new policy to include reverse mortgages initiated even before August 4, 2014. You can read the new rule here.

This new ruling helps revamp the much-troubled reverse mortgage industry, as do the stricter eligibility critera for HECM loans introduced earlier this year. But caution is still in order. Beneficial under the right circumstances, taking out a reverse mortgage can wreck your financial security if you don't know all the facts ahead of time. Risks and rewards must be carefully evaluated and coordinated with your overall  estate plan. 

And those ubiquitous ads for reverse mortgages? Well, they do little to educate the public about the product's complexity. According to a recent study from the Consumer Financial Protection Bureau, such ads often contain statements that are incomplete or just plain inaccurate. The report also presents a good general introduction to the product and its risks and rewards. It's worth reading if you are considering a reverse mortgage. Read it  here.

Jun 22, 2015

Couple's estate plan left everything to America - a Fourth of July story

With Independence Day around the corner, it's fitting to pass along this article I recently read. The story's central figure did not give his life for America, but evidently, he felt American gave life to him.

Peter Petrasek fled Nazi-occupied Europe and ultimately ended up living in Seattle, where he died in 2013 at the age of 85. His wife predeceased him. They had no children. What Petrasek apparently did have was a vast appreciation for his adoptive nation. In their wills, he and his wife left everything to "America." So in May of this year, the Petrasek estate deposited a cashier's check for $847,215.57 into the U.S. Treasury.

U.S. Assistant Attorney Peter Winn, who helped arrange for the transfer of the Petraseks' funds into the U.S. Treasury, commented: "This case is interesting because it seems to be that these were two immigrants who felt grateful to have this adoptive country open its arms to them after having a hard time in eastern Europe during World War II. It really reminds you how this country was founded by immigrants, and it's pretty obvious these folks felt pretty proud they were U.S. citizens."


As an estate planner, I know first-hand that people don't want to pay a penny more in taxes than they must. So the Petrasek story is certainly unusual. But not entirely unique: One of my own clients, Maria Woods, had the same idea. Maria left Germany for the U.S. during World War II, becoming a U.S. citizen in 1970. She built a small and successful rental property business in Florida, where she died in 2004. Maria was absolutely committed to leaving the bulk of her assets to the government, and that is the way we drew up her estate plan. I think of Maria often and fondly, especially around this time of year. You can read Maria's story here.

To all, a happy and healthy Fourth of July. 

Jun 17, 2015

New Florida law to help curb elder guardianship abuse

In my post last month I told you about the flaws in Florida's elder guardianship system that have been exposed in recent investigative reports. Most court-appointed guardians of incapacitated older people try to do the right thing, but as the reports reveal, there are clearly some bad apples in the bunch. Structural problems and weak oversight in the guardianship system make it too easy for those bad apples to  mismanage a ward's funds or engage in other kinds of elder abuse.

Any competent adult may petition the court to have a guardian appointed for an allegedly incapacitated person. Because petitions are frequently filed on an emergency basis, the process can move very swiftly, and a judge may appoint an emergency guardian even before a three-person panel has had the opportunity to examine the person and render its findings. Once stripped of the right to manage his/her own finances, health care, to decide where and how to live and who to associate with, it may be nearly impossible for the ward to have those rights restored.

In an effort to curtail abuses, Florida Governor Rick Scott recently signed Florida HB5. While critics say the law does not go far enough, it's at least a start. The law goes into effect on July 1, 2015. Here, briefly, are some of its major provisions:
  • Provides specific criminal penalties for abuse or exploitation of a ward.
  • Requires that an allegedly incapacitated person and his/her attorney receive written notice no less than 24 hours prior to the hearing to determine the person's capacity.
  • Medical professionals called on to examine an elderly person's competence will be paid for their time - even if the person is found competent and the petition for guardianship is dismissed.
  • If the person is found to be incapacitated, the court must specify precisely which rights the individual is not competent to exercise that are being vested in the guardian.
  • If there is a dispute over who should be appointed guardian, the courts are required to give more consideration to the person's next of kin before appointing a professional guardian. 
  • If a professional guardian is appointed, he/she can be made the permanent guardian only if requested by the ward's next of kin (unless there are other special circumstances, or the guardian has certain skills that make that person the best choice).
  • Until now, the authority of the person's agent under his/her durable power of attorney has been automatically suspended once the process to determine the person's incapacity begins. Under the new law, if the agent is the spouse, child, parent or grandchild of the allegedly incapacitated person, the agent's authority will continue unless one or more of the following conditions are met:  (1) The person seeking guardianship provides evidence that the agent is abusing his/her power; (2) the agent's actions conflict with the person's known desires; (3) assets are being mismanaged; or (4) the power of attorney document is found to be legally invalid.
  • Similarly, if the allegedly incapacitated person has an advance health care directive, the court must indicate which powers will remain with the agent, and which will be given to the appointed guardian. The court must provide factual data to back up its decision.
Read the text of the bill here.

Jun 15, 2015

Joseph Karp named one of Florida's top attorneys

Attorney Joseph S. Karp has been named to the 2015 Super Lawyers List by Super Lawyers, a division of Thomson-Reuters. 

Less than five percent of Florida's attorneys receive this honor. Attorneys are rated based on peer review, and on several measures of professional competence that include experience, education, honors, awards, special certifications and licenses, scholarly writings and other criteria.

Mr. Karp is the founder of The Karp Law Firm, an estate planning and elder law firm with Florida offices in Palm Beach Gardens, Boynton Beach and Port St. Lucie.

Jun 13, 2015

Should parents tell their adult children what's in their estate plan?

A recent article in Wealth Management attempts to answer the question, Should parents tell their adult children about their   estate planning? Author Avi Kestenbaum advises against it, noting, "the parents are essentially begging their children to complain to them: 'Why am I getting this, or why can’t I have more or have it sooner?' Also, 'Why is that sibling getting this?' ” 

Let me weigh in on this. I agree with Kestenbaum that telling children about specific amounts and specific assets has its risks. But that doesn't mean that it's always the wrong approach, or that you can't give your children a general idea of what to expect. How much to tell, if anything, is highly personal and must be determined by your own comfort level, your assessment of your child's temperament and maturity level, and the family dynamic. Is your child responsible and hard-working, and will remain so no matter what? Do you have a child who may be inclined to get lazy if she expects a windfall? If one child is getting more than the other and you let them know, how will that knowledge affect their relationship with one another, and with you? Do you have a disabled child whose siblings will be involved in that child's future and therefore must know about the plans you are making for that child?

Just remember, you are under no obligation to tell your adult children about what you're leaving to whom. For that matter, you are not obligated to leave them anything at all! It is all up to you.
One parent-adult child discussion that is NOT optional concerns the parent's incapacity. I urge my clients to talk to their children about their incapacity plans, since more than likely they are relying on the children to step up to the plate if incapacity strikes. Discuss with your child your health care preferences, how you want your finances managed, and point your child in the direction of the documents (health care power of attorney, living will, durable power of attorney, etc.) that will give him the legal authority to manage your affairs. I am always sympathetic when I get a call from an adult child whose parent never prepared him for this eventuality. Not only is the child upset over the parent's health crisis, but is also feeling disoriented and unprepared to handle the parent's legal, financial and health issues. Talk to your child in advance - it's only fair to him, and you, that he know what will be expected of him!
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