Mar 14, 2018

Karp Law Firm Helps Sponsor Tribute to Senior Volunteers

The Karp Law Firm is one of the sponsors of the Area Agency on Aging's 26th annual Prime Time Awards Breakfast. The May 24 event honors seniors in Palm Beach, Martin, St. Lucie, Okeechobee and Indian River counties who have made outstanding contributions in volunteer work. If you know a senior volunteer who deserves to be nominated, you can download the nomination form here. There are a variety of nomination categories - for example, Foster Grandparent, Law Enforcement, etc.

If you wish to attend the breakfast, find more information here. We will be there!

Mar 11, 2018

Prince's Estate Descends Into Chaos

Many music critics put the late rock icon Prince in a class all his own: unimaginably talented and prolific, churning out hit after hit such as "Purple Rain"and "When Doves Cry." But in one respect the Grammy Award-winning musician was like many ordinary Americans: He neglected his estate planning. He died intestate in 2016, at which time I wrote in this blog: "You can bet we'll be hearing more about Prince's estate over the next weeks, months, and yes, even years." And that's precisely what has unfolded. Prince's family is locked in legal battle, and massive legal fees are draining the estate. 

Born Prince Rogers Nelson, Prince died at age 57 on April 21, 2016. He was found in an elevator at his Paisley Park mansion and studio in Minnesota. An investigation determined the cause of death to be an accidental opioid overdose. He had no wife, children or parents living. A search turned up no will, and his sister indicated that she believed there never was one.

Bremer Trust National Association was appointed temporary manager of the estate. Its parent company had dealings with Prince and therefore it had some familiarity with his business affairs. Carver County Judge Kevin Eide noted that Bremer “...walked into personal and corporate mayhem where the Decedent’s personal and business affairs were in disarray, a criminal investigation was being undertaken, assets and records were voluminous and scattered, and numerous monetary and heirship claims were about to cascade upon them.”

And cascade they did. To date, 45 people have come forward to claim a piece of the estate's estimated millions. One person stated she is Prince’s niece; two others presented themselves as grand-nieces. Others claimed to be Prince’s half-siblings by various men, alleging that John Nelson, Prince’s presumptive father, was not his true biological father. Even Prince’s one-time security guard said he was a relative. In the end, Judge Eide rejected most of the heirship claims (although some appeals are still ongoing) and identified six rightful heirs: one full sister, and five half-siblings. 

From the start, the heirs tangled over the management of the estate. At this point, there are two major camps in opposition: On one side are half-siblings Sharon Nelson, Norrine Nelson and John R. Nelson; and on the other side, half-brothers Omarr Baker and Alfred Jackson, and full sister Tyka Nelson.

In January 2017, Tyka asked the court to replace Bremer as personal representative. The judge awarded the job to Comerica Bank. At the same time, the judge denied the beneficiaries' request to appoint a “co-personal representative” to serve as mediator between them and Comerica. He noted that the siblings had demonstrated little ability to agree on anything regarding the estate. Getting them to unanimously agree on a co-personal representative would likely exacerbate tension and unnecessarily drain even more money from the estate, he reasoned. 

Comerica’s inventory of Prince's assets found $18,719,062 in cash. Prince owned several homes and lots in Minnesota, in addition to the Paisley Park property. He owned numerous automobiles at the time of his death, including a 1997 Lincoln Town Car, 2004 Cadillac, 1992 Thunderbird, 1995 Jeep, and a 2010 Mercedes. Other assets amounting to millions were held in various music companies. Perhaps the most valuable asset of all is a treasure trove of unreleased master tapes. These tapes could translate into 30 albums, and are estimated to be worth $200 million or more.

In October of last year, the three Nelson half-siblings, dissatisfied with Comerica's management of the estate, requested it be replaced as fiduciary. They complained that Comerica had moved their brother's master tapes from Paisley Park to a facility in California, without their authorization. Comerica responded that (1) the beneficiaries were informed of the move; (2) a temperature- and humidity-controlled facility was needed to protect the tapes from further water and mold damage they'd undergone; and (3) since Paisley Park had been converted into a museum and was open to the public, the tapes needed to be in a more secure location. "Building (or repairing) a relationship requires engagement from all parties and, to date, the personal representative has not had willing partners in the Nelsons," Comerica stated. 

Most recently, the TMZ celebrity news site reported that the six heirs at least have one thing they can agree on: They are all concerned about the enormous legal and administrative fees draining the estate and diminishing their ultimate inheritance. It reportedly costs about $600,000 per month just to manage the estate. Comerica recently billed out at $125,000 per month. Another law firm that is handling the tax-related issues billed $440,000 in November 2017 alone. Prince's lack of tax planning is going to take a big bite from the estate, too.

Even cohesive families can descend into back-biting when a loved one has provided no road map for how assets are to be distributed. The attorneys at The Karp Law Firm can help you set up an estate plan that encourages family harmony and puts as much money as possible into your family's pockets... not the lawyer's.

Mar 9, 2018

Social Security Underpaying Some Widowed Spouses

In my July 2017 post I addressed why it is important to educate yourself about Social Security benefits, and to not rely solely on advice from the agency. A recent report from the Inspector General provides fresh support for this notion.

The Inspector General's audit revealed that Social Security staff often fail to inform widowed spouses that they can claim survivor benefits yet still delay taking their own benefits until age 70. As a result, the audit estimates that 82% of widowed spouses entitled to receive benefits are being underpaid. If you can delay taking benefits, the rewards can be substantial: According to the Social Social Security Administration, you will get 132% of your monthly benefit if you wait until age age 70 to collect.

The report states, in part: “We did not find any evidence SSA had informed claimants of the option to delay their retirement application when they applied for benefits, as required. We also found that SSA did not have systems controls in place to alert its employees when they should inform [widows] of their option to delay their applications for retirement benefits.”

You can read the original report from the Inspector General  here. Some helpful resources to learn about Social Security benefits are:

Feb 28, 2018

Harper Lee's Estate Plan Built For Privacy

If you are someone who values privacy – in life and in death – take a page from Harper Lee. The author of the Pulitzer Prize-winning novel “To Kill a Mockingbird,” Lee was a ferociously private individual. And she designed her estate plan to keep things that way. 

In college, Lee was known as a loner. In later life, she used her wealth to donate to philanthropic causes, and tried to keep her donations anonymous. She shunned publicity. Although she accepted the Presidential Medal of Freedom in 2006, she seldom showed up to personally accept other awards. In a rare 2011 interview  Lee said she'd stopped writing because "I wouldn't go through the pressure and publicity I went through with To Kill a Mockingbird for any kind of money."

Lee died in her sleep in February 2011 at the age of 89.  She had signed a will just six days before her death. That will, filed in an Alabama court, was sealed at the request of Lee’s personal representative, Tonja Carter. However, The New York Times successfully petitioned to unseal the document, arguing it is a matter of public record. The court agreed, and this week it was unsealed. The newspaper reported its findings in a February 28, 2018 article.

Her will was a pourover will. This is the kind of will we establish for our clients who establish trusts. The will simply directs Lee's probatable assets to be transferred into a trust she had established earlier in 2011. And the trust, of course, is a private document. Consequently, we still don’t know who will get her assets, nor the exact extent of them. Lee never married or had children. She has one niece and three nephews, but we do not know what, if anything, her trust leaves to them. Nor do we know what institutions might get possession of her letters and other items.

What we do know is that her estate is worth millions. “To Kill a Mockingbird” sells more than a million copies a year and generates $3 million in annual sales. The royalties and copyrights are valuable. Later this year, a “Mockingbird” graphic novel will be released. And a play based on the novel is scheduled to open on Broadway in 2018. We also know Lee spent little of her millions. The New York Times article notes that prior to moving to an assisted living facility, Lee was often seen in her hometown, Monroeville, Alabama, shopping at the dollar store, washing clothes at the laundromat, and ordering  $6 catfish plates at David’s Catfish House. So her estate plan accomplished just what she accomplished in life: it protected her privacy. 

Contact our law firm if you wish to discuss your own estate plan!  

Feb 25, 2018

Holocaust Survivor, Marathoner, Volunteer

Nat Shaffir has seen more than most. A lot more. Born in 1936 in Romania, he later managed to escape Nazi-occupied Europe. He was shot at while serving as a paratrooper in the Israeli army. He made his way to the United States. At the age of 65, Shaffir took up running marathons. He has run 11 so far and hopes to complete another race this year.

As one of the youngest Holocaust survivors, he volunteers at the U.S. Holocaust Museum in Washington, D.C., telling his own story and the story of so many who, unlike him, didn't survive. "I'm their voice," says Shaffir.
Shaffir is a hero and an outstanding volunteer. There are more like him among us. In May, the Karp Law Firm will help sponsor the Palm Beach County Area Agency on Aging's Prime Time Awards, honoring outstanding senior volunteers in our own communities, including Palm Beach, Martin, St. Lucie, Indian River and Okeechobee counties. When nominations open up, we'll share with you how to nominate your own hero volunteers.

For now, check out Nat Shaffir's biography on the U.S. Holocaust Memorial site.

Feb 22, 2018

Fines Reduced for Many Nursing Home Violations: What It May Mean For Your Loved One

In keeping with its goal of reducing bureaucracy and eliminating unnecessary regulations, the Trump Administration has scaled back penalties levied on federally funded nursing homes for violations of certain safety and quality standards.  It has also made it more difficult to deny payments to nursing homes for such violations.

Violations are not rare. A 2017 Kaiser Health News report states that since 2013, 4 out of every 10 nursing homes have been found guilty of at least one serious violation. The most common violations include mistreatment, failure to protect residents from avoidable accidents, neglect, and bedsores. 

Predictably, these new policies from the Centers for Medicare and Medicaid Services (CMS) have been met with opposition or approval from different quarters. One thing is certain: It more important than ever to thoroughly research facilities when placing a loved one, and to keep an eye on the care your loved one receives once placed. At the end of this post I will point you to several resources for evaluating nursing homes. But first, let's discuss the new policies.  

New Policies and Fines
  • Pre-Arbitration Clause Now Permitted. The Obama Administration introduced a new rule prohibiting pre-arbitration clauses in nursing home admissions contracts. The rule - never implemented due to a court challenge - would have guaranteed residents and families the right to sue nursing homes in court for fraud, abuse, neglect, etc. That rule is now officially rescinded and pre-arbitration clauses continue to be permitted in nursing home admission agreements.
  • Daily Fines Not Recommended For Violations Occurring Pre-Inspection. CMS now encourages state authorities to refrain from imposing daily fines for violations that occurred prior to an inspection and instead, levy one-time fines. Industry groups had argued that retroactive daily fines for violations that had already been fixed by the inspection date were pointless. Others argue that the new policy could end up shielding nursing homes from fines for egregious mistakes, above the maximum per-incident fine of  $20,965. The CMS still suggests daily fines for major violations discovered during inspection.
  • Fines Discouraged For One-Time Mistakes. CMS' current policy is that while intentional disregard of patient health and safety justifies fines, one-time errors, even for serious violations, are not necessarily appropriate.
  • 18-Month Exemption for Drug-Related Safety Rules. In November 2017, nursing homes were granted an 18-month exemption from fines for violations related to several new rules designed to reduce the use of various psychotropic drugs.

Advocates and Critics

Advocates for the nursing home industry applaud the changes. Seema Verma, head of the Centers for Medicare and Medicaid Services, notes that reducing paperwork will increase the quality time staff can spend with residents. The American Health Care Association, the industry's main trade organization, claims that prior rules were more focused on catching wrongdoing than helping nursing homes to improve. “It is critical that we have relief,” Mark Parkinson, the group’s president, wrote in a December 2016 letter to the president-elect. 

On the other hand, patient advocates argue that easing of penalties endangers vulnerable residents. Recently Senators Amy Klobuchar and Richard Blumenthal sent a letter to CMS requesting that it reconsider the changes. They write: “It is abundantly clear that when health or safety is compromised, when errors occur, or in the worst cases, when patients are harmed, there must be a wide range of strong enforcement actions available to ensure that these adverse events are not repeated, precious federal dollars are not wasted, and most importantly, lives are not lost.” A senior attorney at the Center for Medicare Advocacy, Toby Edelman, claims that CMS is “not seeing their responsibility as helping to assure the health and welfare of residents. They’re working to please their customers, the nursing homes.”

What You Should Do Now: Research and Monitor!

The relaxed fines make it more important than ever for you to thoroughly research a nursing home in which you are considering placing a loved one, and to continuously monitor your loved one's welfare once he/she is there. 

  • Visit. It is imperative to actually visit the facility, especially on weekends and evenings. Ask questions of nursing staff, administrators, residents and residents' family members. Try the food. Ask about use of restraints, psychotropic drugs, staff ratios, staff turnover. Is there special care for those with dementia? How does the place look and smell? Is the facility within a reasonable distance so that family and friends can visit?  
  • Check Out Nursing Home Compare. Also check out Medicare Nursing Home Compare. While the 5-star ratings will be "frozen" for 12 months to allow criteria to be updated, serious deficiencies will still be reported on the site. 
  • Be Careful About Signing Admissions Agreements. Since pre-arbitration clauses are still legal in admissions contracts, know that signing such a clause means you are giving up your right to sue if your loved one suffers injury or neglect. Make sure you read the paperwork carefully. For guidance on what to look for when you are signing admissions paperwork, see my prior post.
  • More Information. Additional detailed guidelines on how to find a good nursing home can be found here:

Feb 8, 2018

New Medicare Cards Are Coming (And Bringing Along New Scams, Of Course)

Starting in April 2018, new Medicare cards will be mailed to 60 million Medicare beneficiaries. Mandated by the Medicare Access and Chip Reauthorization Act of 2015, the new cards will not display your Social Security number. Instead, your card will display a randomly generated, 11-character beneficiary identification unique to you. It is expected that this new format will reduce identity theft.

Here are some other facts to know about the new card and the rollout:

  • The cards will be mailed out in phases. Sorry, Floridians, you will not be among the first to receive them. The first recipients will be residents of the mid-Atlantic states, along with California, Oregon, Alaska and Hawaii. 
  • Even people living in the same state may not get their cards on the very same date. So if your neighbor receives the new card before you receive yours, don't worry.
  • All your benefits will remain the same. 
  • The roll-out process is expected to be completed in 2019.
  • Beginning Jan. 1, 2020 health care providers will no longer accept the old cards.
  • When you get your new card, destroy the old one by shredding it or otherwise destroying it. Remember, it still has your Social Security number on it!
  • Even though your new card doesn't display your Social Security number, the information on it is private and valuable. Keep the card secure.
  • You do not need to do anything to request the card. It will be sent to you automatically.
  • Not surprisingly, scammers are already seizing on the issuance of new cards as an opportunity to fleece the public. There have been reports of Medicare beneficiaries receiving calls in which they are told they must pay a fee to secure the new card, or provide their Social Security number to the caller. If you get a call like this, hang up and call 1-800-MEDICARE to report it!

Feb 6, 2018

The Step-Up in Basis Remains, For Now

There was talk last year in Congress about doing away with the step-up in basis for inherited assets. My office has recently received several inquiries regarding whether the Tax Cuts and Jobs Act eliminated the step-up. Happily, it did not. And that's good news for anyone who wants to pass along highly appreciated assets to loved ones.

If you're wondering how the step-up works, here's a primer:

When you give away a highly appreciated asset, the recipient must pay capital gains taxes on the asset when he/she sells it. (No income tax is due on the gift, however). If you give it away during your lifetime, the recipient will owe capital gains tax based on the original cost basis. For example, let's say you bought stock in Company XYZ in 1970 for $200 and now you transfer it to your son. If he then sells the stock for $1,000, he will owe capital gains tax on  $800 (the difference between the sales price and the original cost basis: $1,000 - $200).

If on the other hand your son inherits the stock from you at your death, the stock gets a step-up in basis. This means that for tax purposes, the value of the gift is pegged to its value on the date of death, not to its original cost basis. So, if the stock is worth $900 when he inherits it and when he sells it is is worth $1,000, capital gains will be due on only the $100 difference (the difference between the sales price and the step up in basis: $1,000 - $900). 

You can see why we generally advise clients who wish to pass along highly appreciated capital assets to loved ones to avoid doing so during their lifetimes and instead, to leave the asset to loved ones through their estate plan. Of course, every situation is different and you should consult with your own estate planning attorney regarding the best option for your circumstances.

Another reason one must be very careful about giving gifts during one's lifetime is the possible negative impact on Medicaid eligibility.

Contact the Karp Law Firm for advice on how to handle these issues!

Jan 28, 2018

New federal law addresses increasing incidence of elder abuse by court-appointed guardians

The Elder Abuse Prevention and Prosecution Act became law in October, 2017. The result of rarely-seen bipartisan cooperation in Washington, the law seeks to stem the growing tide of elder abuse and fraud by court-appointed guardians, as well as curb other forms of elder exploitation.

As I noted in a prior post, there is growing concern about elder abuse perpetrated by guardians appointed by the court to handle incapacitated persons' affairs. With lax oversight, an unethical guardian can too easily neglect a ward or plunder his/her assets. Fortunately, most court-appointed guardians are good souls trying to best serve their wards. But, as reports from around the country reveal, not all court-appointed guardians are well-intended, and the problem is getting worse as the population ages.

Florida has introduced some new regulations to better supervise court-appointed guardians. Now, with the Elder Abuse Prevention and Prosecution Act, the federal government is stepping up to the plate, too. The law designates federal resources to help monitor and prosecute elder abuse and exploitation cases. Some of its key provisions are:

  • The Justice Department will assign a minimum of one U.S. assistant attorney (an "elder justice coordinator") to every federal judicial district. The individual will have the authority to investigate complaints about wrongdoing by court-appointed guardians, prosecute cases, and train and bring in FBI agents to recognize, investigate and pursue such cases.   
  • The Federal Trade Commission will also appoint an Elder Justice Coordinator responsible for "coordinating and supporting the enforcement and consumer education efforts and policy activities of the Federal Trade Commission on elder justice issues." The FTC will be required to submit an annual report to Congress regarding all the cases of elder fraud it handled that year.
  • The Department of Justice will post cases of elder abuse handled by the federal law enforcement and publish them on its website.
  • To crack down on scammers preying on the elderly, more severe penalties are introduced. These enhanced penalties will apply to cases in which  the victim is over age 55; defrauding is done by telemarketing, email, text message, or instant electronic message; and the scam gets the victim to participate in a business opportunity, commit to a loan, or participate in a medical study. Enhanced penalties include mandatory forfeiture of property or assets the perpetrator has acquired, as well as property the perpetrator used to defraud the victim.

Of course, the best way to avoid being victimized by an unethical court-appointed guardian is to make legal plans so that you never become the subject of a court-ordered guardianship. At the very least, a well-crafted durable power of attorney and medical surrogate are needed. These plans must be made before incapacity strikes. Check out The Karp Law Firm website for strategies to avoid guardianship.

Read the text of the new law here.

Jan 12, 2018

Teen hearthrob David Cassidy cuts out daughter, leaves everything to son

Another legend gone too soon. The Partridge Family heartthrob and Fort Lauderdale resident David Cassidy died on November 21, 2017 as a result of liver and kidney failure. He was 67. As noted in a 2017 post, Cassidy was diagnosed in 2015 with dementia. Both his father and mother, actors Jack Cassidy and Evelyn Ward, suffered from dementia. He had ceased performing a few years earlier, no longer able to remember the lyrics to his songs.

Cassidy's will cuts out his oldest child, Katie. He and her mother never married. Cassidy did not participate in her upbringing, although they reportedly had somewhat more contact in recent years. His will bequeaths his music memorabilia to his three half brothers, Patrick, Ryan and Shaun. The rest of his estate - estimated at a surprisingly modest $150,000 considering his earlier fame – goes to his son, Beau, 26.

Cassidy had financial difficulties, along with longtime drug and alcohol problems. He had declared bankruptcy in 2015 and was forced to sell his waterfront Ft. Lauderdale home for $1.85 million. At the time of his death, he still owed about $103,000 to his lawyers. Therefore, it's doubtful that Beau will see much of anything from his father's estate. Estate creditors must be paid before anything is distributed to beneficiaries. 

A sad end for someone who delivered so much happiness to others during his career.
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