Family Trusts to protect assets for the next generation

Has this happened to you? There is often a point in a person’s life when he looks at his children and grandchildren, starts thinking about how hard he worked to build his house or his business or his savings and investments, and wonders as he ages whether he will be able to still provide a financial legacy for his children. In particular, he may be worried that if he ever develops Alzheimers Disease or requires nursing home care, there will be nothing left to pass on to the next generations. This is what asset transfer planning is all about.

Decisions about transferring assets need to take into account many variables, such as the age, health and income of the senior citizen and his ability to take care of his needs once assets have been transferred. Of course, he should be sure to consider the impact  of asset transfers on his later eligibility for Medicaid should he actually need nursing home care. Additional considerations would be the situation with the children or grandchildren themselves. Is the child at risk of divorce or pursuit by creditors? Are any of the family members disabled or dependent on government programs like SSI or Medicaid or DDD where eligibility depends on the finances? Is a child a spendthrift so that giving them assets will likely result in the assets disappearing in no time? Family trusts can be a very good method to set aside assets for the family members for the long term.

The beauty of a family trust is that the assets are controlled and managed by a trustee, which can provide a layer of protection for the beneficiary. The trust can be written in a way that deals with the unique issues in the family. Special needs restrictions can insulate the assets and preserve a beneficiary’s eligibility for Medicaid or other programs. And the trust can direct just who would receive that share of the trust assets in case of the death of a beneficiary, so that the assets don’t become part of the beneficiary’s estate.

While it may be more cumbersome for assets to be managed in a trust rather than just be transferred outright to family members, there are so many opportunities to provide extra protection that the aging family patriarch or matriarch may well want to consider the use of a family legacy trust for the long-term good of the family.

Call us for family asset protection planning, and estate & elder care trust planning … 732-382-6070


Leaving employment after 65? Check into Medicare Part B right away.

Just recently someone asked me why she was being permanently surcharged on her Medicare Part B premiums. She had worked beyond age 65  When she stopped working, she then elected to pay for insurance continuation under COBRA. She started to receive her  Social Security, and automatically began receiving Medicare Part A, but opted out of Medicare Part B until after her COBRA benefits ran out. When she applied for Part B, she learned the unhappy news that she has to pay a permanently higher Part B premium, because COBRA isn’t considered “creditable coverage” that enables a person to hold off on enrolling in Medicare without penalty.

Medicare is available as primary insurance for individuals over age 65 who have paid into the system for at least 40 calendar quarters. An eligible person will automatically be eligible to receive Medicare at age 65 if they are also eligible to receive Social Security. There is no premium for Medicare Part A, which is the benefit that pays for hospital care and post-hospital subacute, rehabilitation and home care. But there is a premium for Medicare Part B, which is the insurance that pays for out-patient services, doctors visits, etc.. It’s deducted from the Social Security check of those who are also collecting Social Security.   What happens with Medicare Part B is that a person can elect not to receive it. If a person over 65 is still employed and has insurance through an employer, they may decide to save a few dollars and hold off on enrolling in Medicare Part B until they “need it.” That would typically be the point at which the individual has lost their employer-based insurance plan due to a separation from employment or retirement.

So what happened to our friend with the COBRA problem? Once she was no longer covered under the employer plan, she had to enroll in Medicare Part B during the special enrollment period which lasted 8 months from the date of her separation from employment. The fact that she was enrolled in an insurance plan under COBRA did not exempt her from this obligation. And since she didn’t enroll on time, she now has a permanent surcharge on her Part B premium.

Call us for advice on post-retirement estate and asset protection planning…


VA Publishes New Compensation Benefits Rate After .3% COLA Increase

In October 2016, the DVA announced that a .3% increase in DVA benefits rates for 2016-2017.  This increase is a reflection of the cost-of-living adjustment for this fiscal year based upon the Consumer Price Index.

Last week the DVA updated its website to reflect this increase and the new compensation benefits chart can be found at the link below:

New Compensation Benefits Rates Chart


CMS Rule banning arbitration clauses is blocked for now

A few months ago we wrote about a new rule issued by the Center for Medicare and Medicaid Services (CMS) that banned pre-litigation mandatory arbitration clauses in the admission contracts of nursing homes that receive federal Medicaid or Medicare dollars. A group of five organizations filed suit in federal district court in Mississippi, asking that the regulation be invalidated on the basis that the Agency had exceeded its statutory authority and arguing that the public policy rationale cited for the law was insufficient in light of the federal Arbitration Act. In a decision issued November 7th, the Federal District Court of the Northern District of Mississippi determined that the plaintiffs made a strong showing that they were likely to prevail after trial, and issued a preliminary injunction that prevents the agency from enforcing the regulation pending the outcome of the lawsuit. You can read the decision here. The case is called American Health Care Assn et al v Burwell et al.


Person under Guardianship still has the right to vote

When a Court enters an order in a guardianship action that finds a person to be “incapacitated,” the Court is required in New Jersey to consider the functional areas in which the person needs or does not need a surrogate decision-maker, and must fashion the least restrictive arrangement that is consistent with the individual’s best interests. The Court can structure the guardianship as a plenary guardianship or a limited guardianship. The functional areas include managing one’s own medical, financial, residential and educational decisions. In a plenary guardianship, the Guardian is appointed to make all decisions (in a manner consistent with the person’s best interests or specific expressed preferences if known). There are two fundamental rights that are not automatically removed by guardianship, but should be preserved to the person in the Judgment to avoid problems: the right to vote, and the right to marry.

The NJ Constitution in Art 2, § 1, ¶ 6, was amended in 2007 and includes the following language: “No person shall have the right of suffrage who has been  adjudicated by a court of competent jurisdiction to lack the capacity to understand the act of voting.”  This means that to remove the right of suffrage from a person who is determined to be incapacitated, the Court must conduct an inquiry specifically into the person’s ability to “understand the act of voting,”  and must place that specific finding in the Judgment.

This may not be an applicable inquiry in many cases in which the extent of the person’s cognitive impairment is patent and extreme. But there could very well be situations especially with limited guardianship in which the person has long-held or deep-seated beliefs, has regularly voted, and is able to explain the “act of voting.”  Laws do vary state by state. Given how precious the right of suffrage is, advocates for the alleged incapacitated person may well want to put this issue on the table when the case is being heard by the Judge.

Call for legal advice on guardianship issues ……. 732-382-6070