Who takes care of the unbefriended elderly?

A critical part of the estate planning process involves the client’s selection of an appropriate person to look out for the client when it’s time for end-of-life decision-making, so that this person can be named in the Health Care Proxy and given access to medical records via a HIPAA Release.. This endeavor seems simple enough, except when there is no one in the client’s life who the client feels may be able or willing to step forward. Perhaps the client’s children have moved far away and are unavailable in an emergency. Perhaps the client is estranged from family and does not want to involve them or friends in the most intimate of decisions. Or perhaps the client simply has outlived her family and friends and there is no one available to look out for her.

Clients like these are known in the elder care world as the “unbefriended elderly.” Roughly 10 years ago, the American Bar Association estimated that 4% of seniors fell into this category. I think that number is now significantly higher, as the size of the typical family has continued to shrink and longevity continues to increase. A terrific article on the New York Times web site discusses the problems which occur for these folks in identifying advocates for end-of-life care.

Under Massachusetts law, employees of hospitals, nursing homes, rest homes, and other “facilities” licensed by the Departments of Public Health, Mental Health and Developmental Disabilities may not act as health care agents unless those employees are actually related to the elder. Thus, doctors, nurses and other employees who may actually have the most intimate knowledge of the elder’s wishes and medical needs are generally barred from acting as a health care agent under a health care proxy. If such persons cannot serve, where does that leave the elder?

Some elder law attorneys will act as health care agents and advocates. I (and most of the elder law attorneys I know) am uncomfortable taking on such a role for my clients for several reasons. First, my training is in law, not social work or medicine, and I do not feel that I have the skills to take on such a task, particularly for persons who I do not know well. Second, my malpractice insurance coverage likely does not extend to making decisions which are clearly medical and not legal in nature. Third, I really cannot promise that I will be available at the drop of a hat to fly to the hospital at the expense of other clients who have the right to expect that I will be diligent in performing work for them. In short, I don’t think it’s fair to my clients or myself that I take on such a role for people to whom I’m not closely related or who are not very close friends. It’s certainly not a role I would wish to assume unless I have known the client for a very long time.

When these situations arise in my practice, I strongly recommend the involvement of a willing geriatric care manager (GCM). These professionals are generally nurses or social workers by training. They have experience navigating medical systems, and physicians are going to be more comfortable speaking with a GCM about medical issues than to a lawyer. A GCM will also cost much less than an attorney to perform such tasks with a level of skill that a lawyer simply will not have. Not all GCMs are comfortable taking on such a responsibility, however.

But what about the situation where the unbefriended elder lacks the funds to hire a GCM? This is a situation which frequently occurs in nursing homes, where the elder’s funds have long been exhausted. As the article notes, there are some non-profits which will step up and have their GCMs or social workers serve, but identifying such organizations is not easy. If there is no health care proxy, then a guardianship may be required if the elder is no longer competent. Since Massachusetts does not have a public guardianship commission, the unbefriended elder will be assigned the next attorney or volunteer on the judge’s list of (usually) uncompensated guardians. This situation is, in my opinion, entirely unsatisfactory.

So… what to do? If you are an unbefriended elder, talk to a geriatric care manager about whether she would be willing to act as your health care agent, and don’t hesitate to ask whether she would continue to act in this role if you run out of funds. Have an elder law attorney draft a health care proxy which makes it clear that the health care agent has the power to authorize or not authorize types of treatment. Make sure you speak with your GCM regularly so that she can get to know you, your values, and your medical needs. But whatever you choose to do, pick your health care agent while you have the ability to find someone who will take care of you.

Looking to Claim Florida Residency? Not So Fast.

Yes, it’s August. But soon enough your thoughts may turn to packing up the car and heading south to enjoy a warmer winter. If you are heading to Florida, don’t just assume that you can escape Massachusetts taxes just because you put a Florida plate on your car.

One estate and financial planning issue that comes up for “snowbirds” who split their time between Massachusetts and Florida is just which state is the snowbird’s legal “home,” or “domicile.”  The Department of Revenue’s (DOR) general rule is that the snowbird must live in Florida for at least 183 days a year and have largely severed social, business and other ties to Massachusetts to be considered a Florida domiciliary. If you try to claim that you are a Florida resident and file a non-resident income tax return,  The burden will be on the snowbird to prove to DOR that you are no longer domiciled in the Commonwealth for the purpose of taxation of Massachusetts-sourced income.

To establish nonresidency, the snowbird needs to show such things as: the degree to which has the snowbird severed social and familial ties with the Commonwealth, the relocation of any business activity, changes in the registration of the car and voter registration, whether the snowbird is permanently employed in Florida, whether Massachusetts bank accounts have closed, and the degree of involvement in the new Florida community.  If the snowbird cannot establish the facts of nonresidency to the satisfaction of DOR, then all “Massachusetts-source income” (including ordinary income and capital gains) will continue to be subject to income and estate taxation and the snowbird will continue to be required to file the Massachusetts resident income tax return. Failure to file the correct tax return may subject the snowbird to fees and penalties.

Similarly, the estates of Massachusetts residents are subject to graduated estate taxation if they exceed $1 million. If the personal representative of a deceased snowbird with a sizable estate incorrectly tries to claim that the decedent was a Florida resident at the time of death in the hope of avoiding estate and fiduciary income taxes, the estate could face significant additional costs, and the heirs of the estate might try to hold the personal representative personally liable for the reduced size of the inheritance.

Thus, it’s a good idea for seniors who think they might want to call themselves Florida residents to avoid paying taxes to speak first with a Massachusetts CPA or tax attorney to see if they have a valid argument that they are no longer domiciled in Massachusetts. The money spent on such a consultation will be far less than the potential cost of a DOR audit.

A few words about how I help with after-the-last-minute planning

I get called on a not-infrequent basis about what I like to call the “five minutes after midnight” planning crisis. The caller is usually a child of an elder who has already been admitted to a nursing home, whose first words are something like “Dad’s been placed in a nursing home — how do I protect the money for Mom?”

Here’s a little information about the process I follow to answer the question.

Once I get some information on Mom and Dad’s health and a quick outline of their assets (do they have a house? how much money is in the bank? etc.), I’ll set up an appointment and send out a questionnaire and a list of documents I want Mom and the child to bring with them to our first appointment. I hope that by the end of the first appointment, I have a clear picture of the family’s finances, know how legal title to the home is held, and know the couple’s sources of income.

I will let Mom know that the house is safe as long as she is living in it. However, since MassHealth will put a lien on the house in order to be reimbursed for Dad’s care, I usually want to see it transferred into Mom’s name. Not only does this avoid the lien, but Mom may need the proceeds from the sale of the house someday to pay for assisted living or for other purposes. I will also let Mom know that she’s entitled to keep $115,920 as the Community Spouse Resource Allowance, plus the family car and personal effects. Additional assets may be spent down on such things as necessary repairs to the house, prepayment of funeral arrangements, medical expenses, and legal and geriatric care management fees. The excess assets could also potentially be converted into a special type of annuity for Mom which would pass muster with MassHealth, providing her with additional income. I will also assess whether I have enough information to determine if some or all of Dad’s income could be deemed to Mom, so that she has enough (according to government standards) to live on. I will also advise Mom to update her estate plan so that if she should die first, some or all the assets will go into a trust under the will for Dad’s benefit, allowing the children to pay for needs not covered by MassHealth while allowing Dad to remain eligible for public benefits.

So the answer to the child’s question is YES — we probably can protect much, if not all, of Mom and Dad’s assets and give Mom as good a quality of life as possible.

The next question which needs to be addressed will be what are the legally appropriate steps for doing so. For that reason, I want to see Dad’s Durable Power of Attorney (DPOA), because that document will tell me how much work will need to be done in order to preserve funds for Mom. It is common for a DPOA to limit transfers and gifts to other people to an amount equal to the federal gift tax exclusion limit (currently $14,000 per year per person). The DPOA might also not give Mom, if she is Dad’s attorney-in-fact, the power to make gifts to herself. That may be fine in some circumstances, but it won’t work if the goal is to transfer as many of the couple’s assets into Mom’s name as possible as quickly as possible. If the DPOA sets a limit on what can be transferred or doesn’t grant the attorney-in-fact the necessary powers to transfer Dad’s assets to Mom, then I am going to have to advise the attorney-in-fact that she will need to get a judge’s permission to retitle the assets by means of a Petition for a Single Transaction in the Probate Court.

So, it IS possible to do after-the-last-minute planning. However, to do it successfully, you need to work with an elder law attorney who knows the laws and the procedures for doing so.

Having the talk about end-of-life care

Unfortunately, failing to tell loved ones and physicians what type of care you would want if you suffer from an illness which will eventually lead to your death is all too common an experience. It is important that Massachusetts residents have a Health Care Proxy (HCP), which designates an agent to make medical decisions on behalf of an incapacitated person. However, the HCP is not a substitute for candid conversation. If the health care agent named in the HCP does not actually know one’s wishes — or is not around or available to articulate them — then a person could well receive unwanted aggressive treatment in a medical emergency.

So, there are several things which someone who makes a health care proxy needs to do.

First, you need to provide a copy of the HCP to your primary care provider and to the hospital where you primarily receive treatment. If your primary care doctor is affiliated with a hospital system, the doctor may be able to scan your health care proxy into a central system where it will be visible to all the doctors and hospitals in that system.

Second, you need to talk to your health care agent, alternate health care agent, physicians and family members about your wishes. You may think that your loved ones and doctors know what you might want, but if you are at risk of developing or have developed a serious illness, you need to be candid with those people about your views concerning treating illness or withholding treatment. This is particularly important for people with chronic illnesses, who should have regular conversations as the illness progresses. Remember that people are not mind-readers and that they may have an impression of what you might want based on conversations held years ago, when you may have had different opinions about treatment than you may have now.

Third, Massachusetts residents with late-stage illness should talk to their care provider about MOLST (Medical Orders for Life-Sustaining Treatment).  Unlike a health care proxy, which is a legal document, the MOLST is prepared by the treating physician and patient together and made a part of the medical record. It contains specific information concerning the patient’s desires for how end-of-life care should be managed under different scenarios.  This sounds like a good idea — as long as the paperwork actually follows the patient in either electronic or paper form. It is a good idea for any patient with a MOLST in place to have a copy prominently posted in the house (say, on the refrigerator door) so that EMTs will know not to start CPR or other treatment if you do not want it and provide a copy to your health care agent.

Betting on Death — Part Two

My last post discussed one form of betting on your death – “stranger oriented life insurance” (“STOLI”) –a practice which is illegal in Massachusetts. However, another variation of betting on your death – life settlements – is trending towards legitimacy. Unlike STOLI, which involves third party solicitation of a person to purchase then “flip” a life insurance policy, the life settlement industry focuses on persuading people who already own life insurance policies to sell their policies. Though heavily regulated, life settlements are legal in most states, including Massachusetts.

In a life settlement, a life insurance policy holder can sell rights to the payout of his insurance policy in exchange for a lump sum. Since the buyer also agrees to take on the cost of premiums upon a sale, how much a buyer is willing to pay for the policy depends in part on the cold reality of how soon the buyer thinks the seller is likely to die. In order to value a life insurance policy, prospective buyer companies do actuarial research and request medical examinations of policyholders to try to determine whether the policy holder’s life expectancy will likely to be short enough to make the deal worth it. Owners of life insurance policies may be able to “shop” the policy among potential buyers various and entertain multiple offers from interested investors.

Proponents of life settlements argue that allowing people to sell their life insurance policies gives them another opportunity to lead financially comfortable and self-sufficient lives. This opportunity is especially powerful since prospective sellers of life settlements are often elderly or infirm individuals who see the sale of their policy as one of the only means available to them of generating significant funds in a short amount of time. Critics of the industry counter that a life settlement reduces the value of the assets that would otherwise be passed onto loved ones after the insured’s death – funds which may be needed by the survivor. Further, life settlements subvert the traditional model of the insurance industry. While traditional insurers benefit from having their policy holders living and paying their premiums as long as possible, companies buying policies perversely benefit from an earlier death of the original policy holder. There can also be significant tax consequences for the insured which must be carefully considered.

Ultimately, the decision to sell a life insurance policy to a third party is a highly personal decision and one that may be replete with significant legal and tax consequences. Speak with a trusted elder law attorney, accountant or financial adviser before moving forward with such a sale.

Betting on Death — Part One

Imagine that you are an elderly retiree who has recently been hit with a sizable amount of debt.  One day you receive a phone call from an insurance agent who proposes the following deal:

1.         You take out a good-size life insurance policy.

2.         For the first two years, the insurance company would pay your premiums and allow you to name your beneficiary on the policy.

3.         After two years pass, you would be required to sell your insurance policy to the insurance company in exchange for a sizable lump sum.

Even though this plan seems vaguely macabre, you appear to benefit either way:  Either your loved ones would get the policy payout upon your death, or you would get the lump sum sales payment after two years seemingly for free – all you would have to give the insurance company is your name and some personal information about your health.   The company may even sweeten the deal by offering you a cash sign-up bonus.  Would you accept the agent’s offer?

The above scenario illustrates an increasingly common example of “stranger oriented life insurance” (“STOLI”). Massachusetts and several other states have banned STOLI because life insurance contracts specify that a life insurance policy must be taken out in order to benefit the policy holder and his loved ones.  When a policy holder is persuaded to take the policy out for a third party’s benefit, the “life insurance” no longer serves its intended purpose of financially protecting the insured’s loved ones after the insured’s death.

There are several risks for seniors who get involved in a STOLI scheme.  For one, if the insurer is told that the STOLI policy is void because it is illegal, the insurer may turn around and sue the policy holder or her estate for damages even though it was not the policy holder’s idea to take out the insurance policy in the first place.  (However, since these policies are illegal in Massachusetts, the policy holder or his estate would have a strong counterclaim against both the insurer and the salesman under our state’s consumer protection laws.)  Also, since insurance companies who buy STOLI policies benefit after the policy holder dies, these companies often want to keep careful records of the policy holder’s health status.  Consequently, many elders involved in STOLI schemes complain of being harassed by insurance companies demanding that they complete frequent and lengthy surveys about personal health questions long after they sold their policies.  Finally, the purchase of a STOLI insurance policy might create a disincentive to taking out a legitimate insurance policy, which could become problematic if the senior’s health declines and the senior becomes uninsurable. Thus, even if these policies were legal in Massachusetts, I wouldn’t recommend them to my clients.

However, there is another way to bet on death that is legal in Massachusetts – life settlements. I’ll explore this issue in my next posting.

Happy Mother’s Day!

It’s Mother’s Day – what did you give her? How about peace of mind?

If your mother does not have an estate plan, start talking to her — perhaps in one conversation, perhaps over time — about the peace of mind for both her and you which comes from knowing that her affairs are in order. Ask her about her fears and concerns if she can’t care for herself and see how you can turn the conversation into an opportunity to talk about planning for the future. She needs to hear — gently and diplomatically — how much you would like to help her, but she needs to create the documents which will allow you to do that — not just a Will, but a Durable Power of Attorney, Health Care Proxy, Advance Directive and HIPAA (Medical) Release. Then talk to her about finding the right attorney to help. An experienced elder law attorney can counsel your mother about her options and educate her about how her documents will work. Of course, if your mother is in eastern or central Massachusetts, I’d be pleased to help. Otherwise, you can find an elder law attorney at http://www.naela.org.

Massachusetts regulations on unsafe drivers have been issued.

From the Boston Globe:

State health regulators Wednesday morning unanimously approved rules that define when a person is too cognitively or functionally impaired to drive safely.

 

The state Public Health Council, an appointed panel of physicians, consumer advocates, and professors, adopted the rules after a brief discussion, to give health care providers guidance in evaluating when drivers should be required to give up their car keys.

 

The rules, which are expected to take effect in several weeks, make clear that age and illness are not by themselves factors that would disqualify a person from having a license. Instead, the decision will be based on “observations or evidence of the actual effect” that an impairment may have on a person’s ability to drive safely, according the regulations, which were developed based on public hearings and advice from medical specialists.

 

Cognitive impairment is defined as an impediment that “limits a person’s ability to sustain attention, avoid distraction, understand the immediate driving context, and refrain from impulsive responding.”

 

Some council members said the next step after approving the new rules should be to ensure that the information is widely disseminated to health care providers .

 

John Auerbach, state public health commissioner and chair of the council, said his department will ask the state agency that licenses physicians, the Board of Registration in Medicine, to include the new rules on its website where physicians must renew their licenses.

 

The council acted at the direction of the Legislature, which in 2010 passed a law that encouraged providers and police to report suspected impaired drivers to the Registry of Motor Vehicles, by giving them immunity from lawsuits. The law also prohibits people over 75 from renewing their licenses online; they must visit a registry branch and take a vision test.

 

Age-related safety concerns became a flashpoint in 2010 after a series of car accidents involving older drivers.

The idea that some of my clients are still driving when they lack the insight that they are too physically or mentally impaired is scary. Hopefully physicians will feel empowered by the new regulations to more freely report patients who have no business being behind the wheel.

Welcome to my new home!

Greetings and welcome to the new Massachusetts Elder Law Blog! Now that I’ve moved over from Blogger, I’m pleased to (virtually) see you here.

I invite you to send questions which can be answered in this format to info@goldenlawcenter.com (please don’t include any personal information).  Make sure to include the word “blog” in your header so that your note makes it past the spam filter.

Alzheimer’s knows no class — not even one-time potential Supreme Court candidates

From today’s edition of the American Bar Association’s e-journal:

Karen Williams was chief judge of a federal appeals court and a potential Supreme Court nominee when her family noticed some changes in her personality. Williams, who headed the Richmond, Va.-based 4th U.S. Circuit Court of Appeals, was at the peak of her career, the Greenville News (sub. req.) reports. When she began repeating herself and forgetting names, her family assumed she was too busy. “We started noticing something wasn’t right,” according to Williams’ husband, Charlie Williams II. “But we couldn’t put our finger on it,” he tells the publication. And then after Williams was involved in two minor car accidents in two weeks, tests revealed devastating news: Williams was in the early stages of early-onset Alzheimer’s disease. In 2009, at the age of 58, Williams retired from the bench. Williams’ son, Charlie Williams III, told the Greenville News that today his mother cannot be left alone for more than 15 minutes. She comes to work with her husband and son, but a secretary must help take care of her. The family has helped raise more than $38,000 for the Alzheimer’s Association, and Williams’ son says he hopes that researchers will eventually find a cure for the disease, which affects about one in eight Americans.

“There are good days and bad days,” Charlie Williams III told the publication. “It’s amazing to see one day how things seem like they’re normal, and the very next day … to see her look at somebody she has known for 30 years and can’t come up with their name. It’s pretty tough.”