Power of Attorney isn’t just a “form”

I’ve been thinking a lot about Power of Attorney issues lately because of a variety of problems my clients have encountered. A power of attorney is a document that reflects a relationship created between one person and another person in which the principal person appoints the other person as their “Agent and attorney-in-fact” with power to carry out different kinds of transactions for the principal.  This is a fiduciary relationship in which one person trusts the other to act on their behalf. The document spells out the limits of the powers given. New Jersey has a power of attorney statute, N.J.S.A. 2B:46-1 et seq. Many states have their own laws. A document signed in another state should be usable in New Jersey, but it may be met with confusion or suspicion by the business which is being asked to accept it.

One of my clients was trying to assist her family member, who at the time was a patient in New York. She found a New York power of attorney form on line. New York, unlike New Jersey, has a “statutory POA” in a prescribed form. The family member signed it in front of a notary. Later, the patient came to New Jersey. When my client took the document to the bank in NJ in order to have her name listed as “POA” to write checks, the bank refused to accept it because it turned out the form was a very old form that had been replaced by the State of New York some years ago, so it wasn’t valid on the day it was signed.

In another situation, the agent showed me a power of attorney which allowed banking transactions and sale of real estate, but that was all. He didn’t have authority to hire people for her, sign contracts, deal with her annuities and stocks, and many other tasks.

There are also cases where the principal signs a banking power of attorney on a form provided by their bank, which lists the account numbers. Well that authorization isn’t good for anything other than transactions on the listed accounts.

Other clients have brought in powers of attorney that require two agents to act together, yet one of them is out of state or is fighting with the other so now nothing can get done. Or the document isn’t notarized, which means it will not be accepted by the county clerk if the agent is selling the property. Of course, if the document doesn’t allow gift transfers, the agent cannot do gifting. Another issue is that some POAs are not “durable” — they only are usable while the principal is of sound mind. Or they may be “springing” and only become effective once the doctor certifies (to the satisfaction of the third party) that the principal is incapacitated.

If you want someone such as your child to be able to fully assist you with elder care planning when the time comes, it is vital that you sign a comprehensive general durable general power of attorney which is properly witnessed and notarized. The advice of an attorney will help ensure that you establish the POA relationship that will fully serve your needs.

Call us for advice on power of attorney, trusts, estate and elder care planning … 732-382-6070

“Material omissions” in CCRC promotional materials can support a cause of action for consumer fraud

The following case illustrates the necessity to pore through the fine print when making a major investment such as a move into a Continuing Care community. In this case, the individual needed to pursue a lawsuit.

Continuing Care Retirement Communities (“CCRC”) in New Jersey are regulated by the NJ Department of Community Affairs (NJDCA). When a person wants to move into such a community, they select the unit they wish to occupy and pay an entrance fee based on the value of the unit. In a common scenario, the elderly individual has sold their home and is using the proceeds to pay the entrance fees. The individual is not actually buying the land or the unit. There are generally several different options available, including some sort of refundable option. Click here to see a Consumer handbook published by the NJ DCA: CCRC consumer handbook

Springpoint Senior Living Inc. operates a  CCRC in New Jersey. In DeSimone v. Springpoint Senior Living Inc., App. Div.case no.  09-2-6912 (decided June 2015), the occupant of the unit had died and her Estate sought a refund of 90% of the entrance fee, which is what was allegedly promised in the advertising and in oral and written promotional information. However, the actual contract provided that the amount of the refund would be the lesser of the entrance fee or the fee paid by the next incoming occupant of that unit. The Executor of her estate sued, alleging a violation of the  NJ Consumer Fraud Act and the NJ Continuing Care Retirement Community Regulation and Financial Disclosure Act. CCRC Regs NJAC 5 19  The suit also alleged that the defendant corporation committed fraud and negligent misrepresentation and violated the implied covenant of good faith and fair dealing which is an implicit part of  contracts. The trial court granted the motion of the defendant to dismiss the claim for failure to state a cause of action, and denied leave to amend the complaint. On appeal, the Appellate Division reversed, in an unpublished opinion, and held that the plaintiff was entitled to try his case. The Court held that failure to disclose these limiting variables, if proven, could constitute a violation of the statutes at issue. 

The moral of this story is that the devil is in the details, and consumers have remedies when sellers misrepresent or omit the material details.


A Veterans Day story – remembering my Pop, Walter “Wally” Ershow

At the start of World War II, my Pop went to officer’s training school and then enlisted in the Army Air Corps. He was commissioned as a Second Lieutenant, and became a radar navigator. He was assigned as the Bombardier on a B-17 “Flying Fortress” with the 15th Air Force, 2nd Bomb Group, 20th squadron, based at Amendola in the Apuglia region of southeastern Italy, until the end of the war in May, 1945. He flew on 23 missions. Pop had been pulled off of crew #7621 at the last minute before shipping out, and was reassigned to #7619. Well every man in #7619 survived the war despite flying  scores of bombing missions — and crew #7621 unfortunately lost many men during its missions over Germany with the 8th Air Force stationed in England.

After combat crew training in Ardmore, OK,  the men waited anxiously in Lincoln, NE for their orders to ship out. My grandmother Minnie Reinfeld Ershowsky actually travelled all the way out there from Newark on the trains so she could see my Pap and after that, his brother Barrett. She wrote  emotional letters home every day  to my grandfather — I still have those original letters, written on the hotel stationery. Pop wrote in his war Memoir, “We had some fine parties in Lincoln at the Cornhusker and Capitol Hotels. The local beers were Stites and Griesiedicks and we always seemed to be looking for it. Well, these were to be our last days in the States, hopefully just for awhile, and we wanted to live every minute to the last second. We had a farewell party attended by all including … my Mother …. Some of the food was brought all the way from New Jersey and Pennsylvania.” Nana Minnie had arranged for a full supply of Reinfeld’s salamis and pastramis from the family butcher business in Newark. The crew was assigned to fly a B-17G to Europe. Taking the provisions with them, they called it their Flying Delicatessen and headed out the day before Thanksgiving, 1944.

Pop loved the flying, especially the view from above, and liked to have fun no matter what the circumstance. He wrote in his memoirs: “Frank and I shared the nose compartment of the B-17; he was Navigator and I was Bombardier. I always liked the idea of being the first one on the plane to get anyplace since my position was in the extreme forward end of the plane, surrounded by plexiglass for excellent visibility.” He admittes though that ” I did feel somewhat exposed even though thin gauge aluminum was not any more protection.”  He also loved meeting people in all these different countries. On their way to Europe, they had fun in their stop in the Azores: ” … The Azores was a tropical paradise compared to Newfoundland. Warm weather, lush vegetation, and plenty of cheap booze. The island was a throwback to rural 18th century life. The Portuguese soldiers on guard duty around the base all had bottles of Espumant” (Champagne) stashed in their clothing and we stocked up at the club for a party in the barracks that was memorable.  The four crews cut loose and we all bought ourselves hangovers that lasted for a couple of days. The flight surgeon fixed us up and we reluctantly left this little paradise for North Africa.”

After landings in French Morocco, and Tunis they eventually they made it to Italy.  As he described it, “We were ferried up to the 2nd bomb group by a couple of flack-happy combat veterans. The pilot decided to buzz the Italian hilltop towns and dropped to the deck and we went roaring over these towns practically at roof top level.” The mood of the new flyers turned somber as they headed up the Adriatic Coast and realized that they were looking down over  power stations, railroad yards and houses that had been reduced to wreckage by German bombing campaigns. During the course of his service, he was impressed and dismayed by what he described as the Germans’ ability to dispatch  “well trained labor battalions that worked at night and then camouflaged the damaged area to look like it was still destroyed and then [get] the [bombed] railroad lines running very quickly again.” He never lost his hope or his dedication to the cause of defeating the Nazis. Many times his plane came out of a mission with “large parts ..  blown out” but miraculously, he was never injured.

Decades later, when the memoirs were written as part of a Crew project in the late 80’s, Pop could still remember in detail the weather and the clothing they wore. Just try to imagine being inside the B-17 with its narrow central walkway, or trying to nimbly operate the controls of the plane when dressed like this: ” Unless our boots and shoes were kept dry they froze up at the sub-freezing temperatures at high altitude and it took awhile to thaw them out when we came back from a mission. We were not supposed to wear our flying boots except in the plane, but everyone wore them all the time. Our new heated suits and alpaca-line overhauls and jackets were a big improvement over the sheepskin-lined pants and jackets we formerly used at high altitudes because we were able to move around more freely even though we had many layers of clothing; GI 2 piece long johns (usually wool), olive drab wool pants and shirt, sweater (sometimes), electrically heated pants and jacket that connected to electric gloves and boot liners,parachute harness with British type quick release, Mae West jacket (life preserver) and when over the target area, an armored flak jacket and helmet on top of all this. We looked like space walkers …” He told me that each man also wore his silk pilot’s scarf every day, for good luck.

Pop brought his music everywhere. We have photos of him standing in front of Army Air Force tents in Italy, playing an accordion. He played guitar, harmonica, banjo and mandolin as well. He learned to speak Italian and travelled around when he could, often looking for his many cousins who were on other bases. For the rest of his life we was proud of his service and made sure to pass on stories of the heroism and adventures of his fellow airmen to anyone who would listen.

Share your stories. Ask your relatives to share their stories of their military experiences with you. Create a legacy.

Call us at 732-382-6070 for help with veterans and elder care legal issues … 732-382-6070

Changing a Trust to reduce your access to funds can cause a Medicaid transfer penalty

In Maurice Needham vs. Director of the Office of Medicaid, the Massachusetts Court of Appeals upheld a transfer penalty imposed by the State Medicaid program after the Medicaid applicant obtained a court order amending his trust. There was a revocable Trust containing Needham’s house, and an irrevocable Trust for Needham’s benefit which was the sole beneficiary of the revocable Trust. Needham had created both Trusts (he was the “settlor.”) In the Irrevocable Trust, the trustee was directed to accumulate the principal and to use it for Needham’s future needs without regard to the interest of the remaindermen (his children). When Needham applied for Medicaid benefits, the Agency concluded that the assets in the Trusts were countable, available assets, and denied his application due to excess resources because under federal law, the Medicaid applicant is only allowed to have $2,000 in countable available resources.

After requesting an administrative hearing/appeal, Needham went to Court and sought a court order reforming the irrevocable Trust, to remove him as the beneficiary. This “reformation” was ordered by the Court based on a Stipulation signed by Needham and the co-Trustees, and the order said it was effective “ab initio,” meaning, back to the beginning of the Trust. Next, in the administrative tribunal, the Administrative Law Judge decided that the action to reform the Trust was an uncompensated  transfer of assets, and that a transfer penalty would be imposed which would delay the receipt of benefits. The next appeal was to the Courts. The trial court reversed the administrative ruling, and decided that it was bound by the Court order and that “ab initio,” the Trust only existed in a form which would not be a countable resource. On appeal by the State, the Massachusetts Appeals Court reversed.

The Court explained its rationale as follows: “The issue before us is not whether the trust was reformed as a matter of State law. The issue is whether MassHealth is required to recognize a reformation as a matter of Federal law when determining whether there has been a disqualifying transfer. The answer to that question in this case is no. Were the answer different, persons of means would be permitted to enjoy otherwise countable assets held in trust throughout their lives, transfer those assets for less than fair market value by reforming the trust ab initio when their health declines, and thereby obtain Medicaid payment for long-term nursing home care without complying with the waiting period imposed by Federal law.”

There is a limit on the resources a Medicaid applicant can have.  When it comes to a Trust that is created with the assets of the applicant or their spouse which is not a bona fide Special Needs Trust , federal law at 42 USC 1396p(d)(3)(B) says that “(i) if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual, the portion of the corpus from which, or the income on the corpus from which, payment to the individual could be made shall be considered resources available to the individual.” New Jersey’s counterpart regulation is at NJAC 10:71-4.11.

 The related legal issue is that when an individual takes action to reduce his access or ownership of an asset, there is generally the risk that a transfer penalty will be imposed if he applies for benefits within 5 years of doing that. 42 USC 1396p(c) [federal law] and NJAC 10:71-4.10.

 There are times that a Trust has to be reformed because the way it is written is a mistake on the part of the scrivener (the person who wrote the trust) or the way it is written doesn’t match up with the intention of the settlor. Court proceedings for trust reformation are not uncommon. However, what looks like an ordinary state court proceeding can have an unexpected impact on Medicaid eligibility — that’s the “law of unintended consequences.” Now, the judges in New Jersey make a point of telling such parties that while the Court has jurisdiction to enter the relief the party is looking for, the court cannot make a determination about the impact the action may have with regard to Medicaid eligibility. That is an issue between the applicant, the agency, and federal law. Matter of A.N.

As I like to say, careful planning can prevent a crisis. The best time to avoid potential Medicaid eligibility problems is before the cows are out of the barn, and well before they kick the lantern over and set the  on shed on fire (I’m giving a nod to Miss O’Leary of folk song fame).

Call for advice on Medicaid eligibility, trust reformation, and preparation of Medicaid applications … 732-382-6070

A Cautionary Tale: Estate distribution is “income” that affects eligibility for NJ Homestead Rebate

A New Jersey homeowner’s  acceptance of a $90,000 inheritance from his late sister’s estate in 2014 resulted in loss of his eligibility for the Homestead Rebate, because the inheritance was countable as “income.” . Although receipt of an inheritance by an estate beneficiary is not “income” under NJ or federal income tax regulations, it is still considered income under the NJ Homestead Rebate Act.

The Superior Court, Appellate Division, affirmed the decision of the NJ Division of Taxation in an unpublished decision called Burns v. Dir., Div. of Taxation, Tax Ct. (DeAlmeida, J.T.C.), case #  35-5-8269. Evidently, the homeowner had not wanted to receive the distribution from the Estate and decided he would share it with the family. However, instead of Disclaiming the assets — which would have caused the money to pass as if he had predeceased his sister — he received the distribution in 2014, placed it into his bank account, and then in 2015, gave away $78,000 of this money to other relatives by issuing checks from the account.  

The Homestead Rebate program uses a definition of income that is different than you find in the income tax code. It is similar to what you find in the PAAD program (Prescription Assistance for the Aged and Disabled). For 2014,  the income limit to maintain base year taxes was $85,553 and the income limit to receive a reimbursement was $70,000. In the case I’m discussing, the homeowner’s receipt and use of the $90,000 put him over the limit for the entire program, so he could get no rebate.

In my experience, it’s not uncommon for people to choose to share an inheritance with others. However, there are many laws that impact on that decision, and as we see here, the decision can have an adverse effect on the nice donor. Careful consideration with an attorney of available strategies could have prevented this problem, or at least forewarned the homeowner of what was to come.

Call us for legal advice on entitlement to different government benefit programs, and for estate & trust administration advice and service … 732-382-6070