mily_WestchesterCountyEstatePlanningCounsel12--9-2010_2_ by tongxiamy

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									                ESTATE PLANNING FOR THE
                 NON-TRADITIONAL FAMILY
WHAT YOU (AND YOUR PARTNER) NEED TO KNOW TO SAFEGUARD
                     ∙ YOUR MONEY
                     ∙ YOUR HEALTH, and
                     ∙ YOUR INDEPENDENCE
                  Presented at Westchester County Estate Planning Counsel
                                    December 9, 2010



            Peter J. Strauss, Esq.
                                               Distinguished Adjunct Professor of Law
            Epstein Becker & Green, P.C.                   The New York Law School
            New York, New York 10177              250 Park Avenue 185 W. Broadway
            pstrauss@ebglaw.com                                  New York, New York
            (212) 351-4746                                    Peter.Strauss@nyls.edu

4656488.2                                                                               1
The Root of the Problem


   MORE INCAPACITATED OLDER
   PERSONS AND PERSONS WITH
          DISABILITIES




                              2
Sixty-five Plus in The United States
                  2004    2020    2030   2050

  Total           282     324     350    404
  Population
  (In Millions)
  Over 65

  Percent         12.6%   16.5%   20%    24%
  Number          36.4    54      70     80

  Over 85

  Percent         1.6%    2.1%    2.5%   5%
  Number          5       6.7     9      19



                                                3
Disabilities Affect One-fifth of All Americans

   49 million – 1 in 5 – Americans have a disability

   43% (21 million) are between 18 and 64 years of
    age

   54% (26.5 million) are over 65 years of age

   1 in 10 have severe disabilities

   9 million Americans have disabilities so severe they
    require personal assistance to perform the activities
    of daily living



                                                            4
The GOOD and BAD
       While this increase in life expectancy and the
growth of our older population is a positive
development, there is a negative side. 50% of persons
over age 85 need significant assistance in daily
functioning. Chronic disease such as arthritis, hearing
impairment, hypertension, heart disease and stroke
become more prevalent.

      The increasing prevalence of dementia among
older Americans is a major factor; it is estimated that
Alzheimer's disease is the cause of 70% of all
dementia.


                                                      5
The Need for Help With Everyday Activities
Increases With Age

85 and over                           50%



     80-84                      31%



     75-79                20%



     70-74          11%



     65-69         9%



     15-64    2%




                                            6
The Failure of Medicare
When Medicare was enacted in 1965, President
Lyndon B. Johnson stated the following prediction of
Medicare's benefits for the elderly:
      "Every citizen will be able, in his productive years when
      he is earning, to insure himself against the ravages of
      illness in his old age. No longer will illness crush and
      destroy the savings that they have so carefully put away
      over a lifetime so that they might enjoy dignity in their
      later years."




                                                                  7
Planning Ahead:
Who Manages Your Life If You Can’t
CONSEQUENCES OF FAILURE TO
PLAN: COURT IMPOSED SYSTEMS
        The absence of advance planning results in
court intervention and control. The appointment of a
guardian will be necessary. This often results in a
significant loss of independence and autonomy.
      Guardianship is an unsatisfactory system of financial and
       personal management in most cases.
      The person who may be appointed guardian may not be the
       person the incapacitated person would choose.
      This is particularly true with persons who are living
       together in a loving life partnership




                                                               8
Legal Issues Unique to Life Partners

 Guardianship issues
 Health care decisions making and
  access to health care information
 Inheritance rights and protection of the
  life partner
 Issues regarding children

 Estate tax planning




                                             9
Guardianship in New York
   New York’s law is liberal on its face
   A guardianship proceeding may be
    commenced by
       “the person with whom the person alleged to be
        incapacitated resides” MHL 81.06 (5)
       “a person otherwise concerned with the welfare
        of the person alleged to be incapacitated” MHL
        81.06 (6)
       Notice is supposed to be given to the life partner,
        but often is not at the beginning of a proceeding




                                                              10
Inheritance Rights
Decedent in New York survived by

  Spouse and issue        $50,000 + ½ of estate
  Spouse and no issue     100%
  Issue only              100%
  No spouse or issue      100% to parents

  Note: these rules apply only to assets in a person’s
  individual name, not “non-probate” assets which
  pass in accordance with beneficiary designations or
  the dispositive provisions of a trust




                                                         11
New York’s Spousal Right of Election

1/3 OF “NET ESTATE”
  Net estate is everything over which the
  decedent had control or benefit during
  lifetime
         Joint bank accounts
         Trusts
         Some retirement accounts
         POD/in trust for accounts
         US Savings bonds



                                            12
    The surviving partner in a non-traditional
    relationship with not have rights as an intestate
    distributee or be entitled to a right of election by law

    But, suppose the couple is married outside of New
    York in where same-sex couples may marry?

   See In re Estate of Kenneth Ranftle, Judge Glen,
    New York County Surrogate’s Court, NYLJ Feb. 3,
    2009, p. 27
   Judge Glen held that the surviving spouse was the
    sole distributee for purposes of probate of a will.


                                                               13
Same Sex-marriages Performed
Elsewhere and Recognized In New York
─ Other important Recent Developments
   Martinez v. County of Monroe, 50 A.D.3d
    189, 850 N.Y.S.2d 740 (4th Dep’t 2008), lv.
    To appeal denied, 10 N.Y.3d 856 (2008)

    County must grant employment benefits to a
    same-sex couple married in Canada on the
    basis they are granted to a heterosexual
    married couple. New York must recognize
    the marriage as a matter of comity;
    recognition is not contrary to New York
    public policy.

                                                  14
 Recognition   for purposes of
 divorce.   Beth R. v. Donna M., 19 Misc.3d
 724, 853 N.Y.S.2d 501 (Sup. Ct. New York
 Co. 2008); C.M. v. C.C., 2008 WL 4602380
 (Sup. Ct. New York Co. 2008)




                                              15
Executive Agency Actions
  Governor Patterson’s statement on May 17, 2008: “I
  am directing agency heads that we will recognize
  marriages conducted outside our state right here in
  New York State.”
  Memorandum, May 14, 2008: to the heads of all New
  York State agencies advising them undertake a
  review “of your agency’s policy statements and
  regulations, and those statutes whose construction is
  vested in your agency, to ensure that terms such as
  ‘spouse,’ ‘husband’ and ‘wife’ are construed in a
  manner that encompasses same-sex marriages,
  unless some other provision of law would bar your
  ability to do so.”

  http://www.observer.com/2008/patersons-message-
  same-sex-marriage

                                                      16
Executive Agency Actions, cont.
  Various state agencies have followed this
  direction. For example, the N.Y. State Civil
  Service Department recognized foreign
  same-sex marriages for benefits purposes
  for public employees. This decision was
  upheld in Lewis v. State Department of Civil
  Service, 2009 WL 137504 (App. Div. 3d
  Dep’t 2009




                                                 17
Executive Agency Actions, cont.
The New York State Department of Insurance issued a “Circular
Letter” (#27) on November 21, 2008 directing that insurance
companies must treat same-sex couples legally married
elsewhere as married for purposes of New York Insurance Law.

“…in light of the controlling authority of Martinez and several
opinions from lower New York courts consistent with that holding,
marriages between same-sex couples that are valid when entered
into outside of New York must be recognized in this State for
purposes of interpreting the Insurance Law. Thus, where an
employer offers group health insurance to employees and their
spouses, the same-sex spouse of a New York employee who
enters into a marriage legally performed outside the State is
entitled to health insurance coverage to the same extent as any
opposite-sex spouse. Moreover, the Opinion notes that its
analyses and conclusions are applicable to all other kinds of
insurance, too.”


                                                                    18
Remaining Issues
Will the New York State Department of Taxation recognize same-
sex marriages performed elsewhere for tax purposes?
        Marital deduction for estate tax purposes?
        Joint returns for income tax purposes?

 NO
 Advisory Opinion, Commissioner of Taxation and Finance,
 Office of Counsel dated May 12, 2010
 Tax Law 607 provides that the terms of personal income tax
 provisions shall have the same meaning as terms have for
 federal income tax purposes.
 “We conclude that since marriage to a same sex partner in not a
 marriage for federal income tax purposes, it is not a marriage
 for New York State personal income tax purposes”

 The same rule is currently being applied for estate tax purposes

                                                                    19
   Federal court suit (Windsor v. United States) filed on
    November 9, 2010 by a surviving spouse (Canadian same-sex
    marriage) challenging DOMA (Defense of Marriage Act) and
    the consequent result disallowing a marital deduction

   Similar suit filed in Connecticut, Pederson v. Office of
    Personnel Management

   See NY Times, New challenges to DOMA Filed in Connecticut
    and New York, 11-12-10

   Also see The High Price of Being a Gay Couple, NY Times,
    10-3-09




                                                                20
The Life Partnership Agreement

   SOLVE THE PROBLEM WITH A LIFE
    PARTNERSHIP AGREEMENT

   YOU CAN ESTABLISH LEGAL
    RIGHTS IN YOUR PARTNER
    THOUGH AN ENFORCEABLE
    CONTRACT


                                    21
The Agreement
CAN DEAL WITH
   Inheritance rights and obligation to name partner as
    beneficiary under retirement plans and life insurance

   “Equitable distribution” and “maintenance” issues if the
    relationship ends

   Provisions for children


    Should you have an contract even if
    you were married in a state where
    marriage is sanctioned?

                                                               22
Should These Traditional Planning
Techniques be Used?
   Should estate equalization be done via gifting?

   Gift tax issues – no Marital Deduction

   Suppose the relationship ends?

   In “legal” marriages divorce and equitable
    distribution can deal with the marriage’s termination

   Resolve this through the contract



                                                            23
Wills Or Trusts?
   WHAT’S THE DIFFERENCE?

   AVOID PROBATE

   WHO SHOULD BE TRUSTEE?
      Individual
      Professional trustee – Trust Company

   CHANGE BENEFICIARY DESIGNATIONS!




                                             24
Change the Balance of Power
   The probate process in New York gives
    great power to the persons who may object
    to the Will
   Don’t use the Will as the primary
    testamentary vehicle!
   The Revocable Living Trust gives the
    surviving partner control




                                                25
Protecting Children

   Adoption

   Designation of “Person in Parental relationship”
         General Obligations Law 5-1551


   Clearly define “children,” “issue,” and “descendants”
    to include the child of your partner




                                                            26
Access to Information
  Protected health care information
     Sign health care proxy
     Sign HIPAA release form


  Access to financial information
   Sign durable power of attorney

   Include authority to access information




                                              27
The Family Health Care Decisions Act
“FHCDA” - Legislative History

  The clamor for reform in heath care decision making
  led the New York Task Force on Life and the law in
  1992 to issue a report, “When Others Must Choose:
  Deciding for Patients Without Capacity,” called for a
  law that would allow for surrogate decision making
  by family members. Opposition was voiced by
  various groups that prevented passage until 2010.




                                                          28
2010 – FHCDA Passes
  On March 16, 2010, Governor Paterson signed Chapter 8 of
  the Laws of 2010 which was passed by the legislature after 17
  years of debate.

  The Governor said “After nearly twenty years of negotiations,
   New Yorkers now have the right to make health care
  decisions on behalf of family members who cannot direct their
  own care.”

  Well, almost…

  The Family Health Care Decisions Act adopts the concept of
  substituted judgment decision making - existing in all other
  states – to New York for patients who
   •    lack capacity to give informed consent
   •   did not leave clear and convincing instructions or evidence of
       their wishes
   •   or did not execute a health care proxy
                                                                        29
Key Purposes

The FHCDA establishes a system for decisions
making in order to

        Provide consent to medical treatment

        Allow for decision making at the end of life for withholding or
         withdrawal of treatment




                                                                           30
Applicability of FHCDA
    The law applies to decisions for adult patients who
    are in general hospitals or residential health care
    facilities (skilled nursing homes)
    Note: the statute uses the term “hospital” to refer to
    both types of facilities

    FHCDA does not apply to persons

   who have appointed a health care agent
   who have a guardians appointed under SCPA
    1750-b with powers to make life-sustaining
    treatment or family members who have such
    powers under 1750-b
   for whom treatment decisions can be made
    pursuant to OMH or OMRDD regulations (PHL
    section 2994-b(3)(c))
                                                             31
Determination of Incapacity
The FHCDA establishes procedures for determining when a
patient lacks capacity
         Presumption of capacity, unless there is a court determination of
      incapacity or an Art. 81 guardians “is authorized to decide about health
      care”
       Initial determination by attending physician

       Concurring determination when required:

       In a nursing home

       In a general hospital if the surrogate’s decision involves
           withdrawal or withholding of life sustaining treatment
      Special credentials are required for professionals who make the
      determination in the case of persons with mental retardation or mental
      illness
      The patient and the named surrogate must receive notice of the
      determination
      There are additional notification requirements for persons in mental
      hygiene facilities
      If the patient objects to the finding of incapacity or the choice of the
      surrogate the objection prevails unless there is a court confirmation of
      incapacity or concludes there is some other basis for overriding the
      patient’s objection                                                         32
Who Can Make the Decision -
The Surrogate
 FHCDA sets forth a list of persons, in order of priority, who may act as
 the surrogate to make decisions for an incapacitated patient
           “A guardian authorized to decide about health care pursuant
            to article 81 of the mental hygiene law” PHL 2994-(d)

              Note: although not clear, it appears that the guardian should
              be designated as the surrogate in the order of appointment
              (see section 25 of Chapter 8, laws of 2010, amending MHL
              section 81.22) (See slide 34)

             The spouse or domestic partner (as defined in FHCDA)

             An adult child

             A parent

             A brother or sister, or

             A close friend


                                                                              33
Domestic Partner
“Domestic Partner” means a person who, with respect to another
person:
      (a) is formally a party in a domestic partnership or similar
      relationship with the other person, entered into pursuant to the
      laws of the United States or of any state, local or foreign
      jurisdiction, or registered as the domestic partner of the other
      person with any registry maintained by the employer of either
      party or any state, municipality, or foreign jurisdiction; or

      (b) is formally recognized as a beneficiary or covered person
      under the other person’s employment benefits or health
      insurance; or

      (c) is dependent or mutually interdependent on the other person
      for support, as evidenced by the totality of the circumstances
      indicating a mutual intent to be domestic partners including but
      not limited to: common ownership or joint leasing of real or
      personal property; common householding, shared income or
      shared expenses; children in common; signs of intent to marry or
      become domestic partners under paragraph (a) or (b) of this
      subdivision; or the length of the personal relationship of the
      persons.

                                                                         34
The Extent of the Surrogate’s Authority

  A surrogate may make all health care decisions for the patient
  that the patient could have made if he or she had capacity

  Treatment decisions can be made without the consent of a
  surrogate if the patient had previously expressed a decision,
  orally or in writing, including with respect to a decision about
  life sustaining treatment (such a decision would need to have
  been made orally before two witnesses)

  The surrogate’s decisions must be based on the patient’s
  wishes, including his or her religious or moral beliefs. If the
  patient’s wishes are not reasonably known and cannot be
  ascertained with reasonable diligence the surrogate must
  decide in the patient’s best interests. PHL section 2994-d(4)


                                                                     35
Decisions to Withhold or Withdraw
Life-Sustaining Treatment
There are two provisions that authorize the surrogate to make
decisions about life-sustaining treatment:

1. Life-sustaining treatment can be withdrawn if
       The   treatment “would be an extraordinary burden to the patient” and
       The   attending physician and another physician determine that
                 the patient is terminally ill, i.e., is suffering from an illness or injury
               that can be expected to cause death within six months whether or not
               treatment is provided or
                  is permanently unconscious
2.   Life-sustaining treatment can be withdrawn if
           “The provision of treatment would involve such pain, suffering or other
       burden that it would reasonably be deemed inhumane or excessively
       burdensome under the circumstances and the patient has an irreversible or
       incurable condition, as determined by an attending physician with the
       independent concurrence of another physician to a reasonable degree of
       medical certainty and in accordance with accepted medical standards”
       PHL 2994-d (5)


                                                                                                36
    Questions:
   Who decides if the treatment “would be” an
    extraordinary burden?
   Who decides if the treatment is “inhumane?”


    Note that the statute states that “providing nutrition
    and hydration, without reliance on medical
    treatment, is not health care under this article and is
    not subject to this article”

    Thus, provision of food and water to a patient who
    has the ability to be fed and can swallow can not be
    refused
                                                              37
The FHCDA Is Flawed with Respect to
End of Life Decisions
  Does the statute solve the problem of New York’s
  restrictive history?

  Some patients will not fall within the standards set
  forth for making end of life decisions

  It appears that the clear and convincing evidence
  rule is still extant for such patients




                                                         38
George’s Case
  George is 79 years of age and suffers from advanced ALS (Lou
  Gehrig's disease). He can no longer move any muscles, can no
  longer speak or communicate via the computer technology he could
  formerly use to express his wishes and needs. He can no longer nod,
  blink or exert pressure on someone’s hand to signal his wishes or
  consent. He is being fed through a PEG tube which was inserted in
  his stomach in 2007. The physicians do not believe he is
  permanently unconscious nor can they state with certainty that he will
  die within 6 months.

  He is a widower and now resides in a nursing home.
  George never signed a health care proxy or living will.

  George’s daughter, Susan, has discussed with George’s treating
  physician whether she could, acting as the surrogate under the
  FHCDA, direct withdrawal of the PEG.

  Will Susan prevail?
                                                                           39
Decisions for Minor Patients

  FHCDA allows a parent or guardian of a minor to make end-of-
  life decisions for a minor child using the same standards set
  forth for adult patients
        The statute did not need to address all health care
        decisions for minors since parents already had decision
        making rights in this respect

  With respect to end of life decisions, the standards for adults
  apply

  If the physician determines the minor has capacity the minor's
  consent to withholding or withdrawing treatment is required.

  An emancipated minor does not need parent consent but the
  ethics committee must approve the decisions
                                                                    40
Adult Patients Without Surrogates

  The new law wisely deals with the case of a patient with no
  family member or friend who can act as surrogate

          For routine medical treatment, the attending physician is
           authorized to make decisions for patient’s without a surrogate

          For major medical treatment, the attending physician must consult
           with other health care professionals and a second physician must
           concur with the attending’s decision

          Decisions with respect to life-sustaining treatment, however, require
           (1) a court decision in accordance with FHCDA decision making
           standards or (2) treatment can be withheld or withdrawn if the
           attending physician and a second physician determine the treatment
           provides no medical benefit and the treatment would violate accepted
           medical standards

       The doctrine of the requirement of informed consent has been modified!

                                                                                   41
Ethics Review Committees

  Hospitals and nursing homes must establish an
  ethics review committee (ERC) with diverse
  membership.

  The ERC is charged with dispute resolution and
  provide advisory opinions, except ERC approval is
  required
  1. for decisions to withhold or withdraw life-
  sustaining treatment in nursing homes
  2. for decisions by an emancipated minor to forego
  life-sustaining treatment



                                                       42
Moral or Religious Conscious Objections

  FHCDA allows private hospitals and other providers
  to refuse to honor a decision made by a surrogate
  for moral or religious reasons, if:
        Notice is given to the patient of the facility's
         policy prior to admission
        The facility or physician transfers the patient to
         another facility or physician willing to honor
         the decision




                                                              43
Dispute between Surrogate and Physician

  Where the surrogate directs provision of life-
  sustaining treatment and a hospital or physician
  that does not wish to provide the treatment “shall
  nonetheless comply with the surrogate’s decision
  pending transfer … or judicial review….”

  The surrogate trumps the provider!
  Is this the New York standard in “medical futility”
  cases?




                                                        44
Other Provisions
   Good faith actions of surrogates, health care providers and
    ERC committee members are protected from civil and criminal
    liability
   Providers that refuse to honor a valid decision of a surrogate
    are not entitled to compensation for treatment provided, except

   Where the refusal was based on a conscious or moral
    objection
   Where the matter is being reviewed by the ERC
   Where there is a dispute between the surrogate and another
    individual on the surrogate list
   Where the provider prevails in litigation concerning the
    decisions




                                                                      45
DNR Issues

  PHL Article 29-B has been effectively rescinded for most
  patients by bringing DNR decisions under the standards and
  procedures established for surrogates under the FHCDA.

  PHL Article 29-B has been re-named Orders Not to
  Resuscitate for Residents of Mental Hygiene Facilities in order
  to preserve DNR rules for patients in mental hygiene facilities

  Chapter 8 creates a new PHL Article 29-CCC to incorporate
  and continue the provisions regarding non-hospital DNR
  orders.

  Article 29-CCC requires home health agency employees and
  hospice staff to honor non-hospital DNR orders


                                                                    46
FHCDA and the “MEDICAL FUTILITY”
ISSUE
  What if the Surrogate or a Health Care Agent acting under a proxy
  demands treatment that the physician deems to be medically
  inappropriate?

  Section 2994-f provides:
  “…if a surrogate directs the provision of life-sustaining treatment, the
  denial of which in reasonable medical judgment would be likely to
  result in the death of a patient, a hospital or individual health care
  provider that does not wish to provide such treatment shall
  nonetheless comply with the surrogate’s decision pending either
  transfer of the patient to a willing hospital or individual health care
  provider, or judicial review …

  Similarly, paragraph 5 of section 23 of Chapter 8 amends Article 29-C
  of the Public Health Law (Health Care Proxy statute), in particular
  section 2989, to the same effect.


                                                                             47
Article 81 Guardianship Law Changes
  Section 25 of Chapter 8 amends 81.22 (8), which lists the
  powers that can be granted to a personal needs guardian, to
  read as follows:

    (i) for decisions in hospitals as defined by subdivision
  eighteen of section twenty-nine hundred ninety-four-a of the
  public health law, act as the patient’s surrogate pursuant to
  and subject to article twenty-nine-CC of the public health law,
  and
    (ii) in all other circumstances, to consent to or refuse
  generally accepted routine or major medical or dental
  treatment, subject to the decision-making standard in
  subdivision four of section twenty-nine hundred ninety-four-d of
  the public health law



                                                                     48
                     Order of Appointment

•   Should all future orders appointing a guardian designate the personal
    needs guardian to be the “surrogate” under FHCDA? Yes.
•   Suggested wording for the powers of the personal needs guardian”
•   The guardian appointed herein is hereby designated as the surrogate
    for decisions in hospitals as defined by subdivision eighteen of section
    twenty-nine hundred ninety-four-a of the public health law subject to
    article twenty-nine-CC of the public health law, and in all other
    circumstances, to consent to or refuse generally accepted routine or
    major medical or dental treatment, subject to the decision-making
    standard in subdivision four of section twenty-nine hundred ninety-
    four-d of the public health law
•   What about guardians previously appointed? Will they be considered
    to be the “surrogate”?

•   Note that new PHL 2994-a (definitions) section 11 states

         “Guardian of a minor” or “guardian” means a health care
         guardian or a legal guardian of the person of a minor”
                                                                               49
Article 81 Section 81.29(e) Repealed
  Section 26 of chapter 8 repeals this section which had
  provided

  “Nothing in the article shall be construed either to prohibit a
  court from granting, or to authorize a court to grant, to any
  person the power to give consent for the withholding or
  withdrawal of life sustaining treatment, including artificial
  nutrition and hydration…”

  FHCDA gives guardians the right to make end-of-life decisions
  subject the standards set forth in the new law




                                                                    50
     The 2010 Palliative Care Information Act

   Chapter 331, Laws of 2010, adds section 2997-c to the Public
    Health Law, which provides that
   “If a patient is diagnosed with a terminal illness or condition,
    the patient’s attending health care practitioner shall offer to
    provide the patient with information counseling regarding
    palliative care and end-of-life options appropriate to the
    patient, including but not limited to: the range of options
    appropriate to the patient; the prognosis, risks and benefits of
    the various options; and the patient’s legal rights to
    comprehensive pain and symptom management at the end of
    life.”
   If the patient is incapacitated the information is to be provided
    to the person with authority to make health care decisions
   “Terminal illness or condition” means an illness or condition
    which can reasonably be expected to cause death within six
    months, whether or not treatment is provided

                                                                        51
Recommended Resources
   “The Family Health Care Decisions Act: A Summary
    of key Provisions’ Robert Swidler, NYSBA Health
    Law Journal, Spring 2010, Vol. 15, No.1

   “New York’s Family Health Care decisions Act,”
    Robert Swidler, NYSBA Journal June 2010

   www.nysba.org
       Under “For the Community” click on
       “Family Health Care Decisions Act Resource
    Center’



                                                       52
Health Care Reform, The Elderly and
Persons With Disabilities

While much depends on the effective implementation of the
Patient Protection and Affordable Care Act of 2010 as
amended by the Health Care and Education
Reconciliation Act of 2010 (2010 Health Reform), there
are many provisions that will significantly improve the
medical care services available to older Americans


2010 mid-term election results for congress and state
gubernatorial elections will effect implementation

On balance, the PPACA will have a positive effect



                                                            53
Improvements in Quality of Care and Cost Savings for
Seniors Enrolled in Medicare Advantage Plans

     11 million Medicare beneficiaries are enrolled in private
      Medicare HMOs under Part C, which accounts for 23% of
      benefit spending
     Medicare Advantage plans have been criticized because
      they have received excess payments, provide poorer
      care than regular Medicare and cost more per enrollee
      than regular Medicare
     Payments to MA plans will be reduced to levels closer to
      costs of regular Medicare
     Plans that provide high quality care will be eligible for
      bonuses
     Beginning in 2014 MA plans must spend at least 85% of
      revenues on medical benefits
     Congressional Budget Office estimates savings of $135
      billion by 2019


                                                                  54
Other Quality Improvement Provisions
     Hospitals that meet performance standards will be
      eligible for incentive payments
     Starting in 2012, a new Hospital Readmissions Reduction
      program will penalize hospitals for “excess” readmissions
     A national Medicare pilot program to deal with the
      problem of transitions from one setting to another is
      established. The concept is that by viewing patient
      needs as a continuum of care and making “bundled”
      payments to providers rather than “episodic” payments
      care will be improved, readmissions and costs reduced.
      The program is funded for 5 years but can be extended if
      it demonstrates cost saving without loss of quality.




                                                                  55
The CLASS Program
   A major failure of Medicare has been the absence of
    benefits for long term chronic care needs
   Health care reform legislation included passage of the
    Community Living Assistance Services and Supports
    (CLASS) program
   CLASS is a voluntary program funded by automatic
    employee payroll deductions
   Eligibility
          18 years of age and working (compensation sufficient to
           qualify for 1 quarter of Social Security coverage)
          Pay premiums for 5 years and work for at least 3 of the 5
           years
          Be unable to perform 2 of 3 activities of daily living or have a
           cognitive impairment that requires substantial supervision
  •   No medical underwriting! Persons who may be ineligible
      for long term care insurance will be able to buy-in to
      CLASS
                                                                              56
CLASS Premiums

   Premiums will depend on age
   No variation because of age, income or severity of
    medical condition
   Premiums are to be fixed by the Secretary of HHS
    so that the program will be fully funded by premiums
    and solvent for 75 years
   CBO estimates monthly premiums will be $123
   Premiums will remain constant unless the Secretary
    finds an increase is necessary to maintain program
    solvency




                                                           57
CLASS Benefits

   Benefits are modest
   May be used to pay for long term care costs,
    including care givers, home modification,
    technology, respite care
   Estimated average benefit is $50 per day with
    higher benefits for persons with greater needs as
    determined by the Secretary of HHS
   CBO used an average of $75 per day in scoring the
    cost of CLASS
   Eligibility for CLASS does not affect eligibility for
    other programs such as Medicaid



                                                            58
New Provisions Improving Access to Medicaid
Home and Community Based Services
   Medicaid has historically focused on institutional care

   Health care reform includes new programs and funding to
    change the balance between institutional care and home and
    community based (HCBS) benefits

   Two new Medicaid initiatives
      Community First Choice (CFC) Option
         HCBS home attendant services and supports to persons
       who have institutional level of care needs
       States that qualify under participation rules will receive an
       increase in federal funding (via an increase of 6% in their
       federal Medical Assistance Percentage)

        State Balancing Incentive Payments Program
         Authorizes 5 year grants to states that spent less than 50%
         of Medicaid long term care funds

   Other provisions modifying existing Medicaid programs
                                                                       59
More Preventative Services

   Certain preventative services will be available
    without the annual Part B deductible or 20% co-
    insurance
   Existing “Welcome to Medicare” free examination
    will be continued
   Starting in 2011 Medicare will offer annual wellness
    examinations and provision of a personalized
    prevention plan for all Medicare beneficiaries totally
    free




                                                             60
Health Care Reform:
THE “DEATH SQUAD” ISSUE
    In 1990, Medicare was amended (when George W, Bush
    was President) to define “advance directives” and require
    health care providers to “maintain written policies and
    procedures to document advance directives in patients’
    medical records, educate staff about advance directives
    and advise patients of their rights under state law to
    execute advance directives

    But there was no provision allowing Medicare to
    reimburse physicians for advance planning consultations.

    As part of health care reform, section 1233 of the new
    law requires Medicare to reimburse physicians for patient
    consultations about advance directives.



                                                                61
Other Initiatives
    Bonuses to Medicare Advantage plans that implement new programs such as
       Care management

       Patient education and self-management

       Medication management

       Patient safety

       Health information and technology



    The Medicare Independence at Home program – a demonstration project to
     pay physicians and nurse practitioners to provide primary care in the patient’s
     home
    Establishment of the Center for Medicare and Medicaid Innovations at CMS to
     develop better care delivery models, such as Patient Centered Medical
     Homes, new assessment tools and coordinated plans for Medicare
     beneficiaries with chronic care needs and chronic care interdisciplinary teams
    Development of Medicaid Health Homes (“Medical Homes”) with broad range
     of services for chronically ill persons
    Development of Interdisciplinary Community Health Teams to support Medical
     Homes


                                                                                       62
Ensuring there will be sufficient providers
  Health care reform has several provisions dealing
  with the concern that more providers will be
  needed to meet the needs of the growing senior
  population
        Providers will receive a 10% bonus for primary care
         services to Medicare beneficiaries during 2011 – 2015
        Primary care physicians treating Medicaid patients must be
         paid no less than what they receive from Medicare
        Medical schools that intend to train more primary care
         physicians will be allowed to request additional residency
         slots
        Residency programs will be allowed to count training in non-
         hospital settings towards training completion
        Medicare funding for graduate nursing education
        Rural physician and nurse practitioner training grants
        National Health Care Service Corps program creates
         scholarships and a loan repayment program for students
         who commit to service in Community Health Centers for 2 –
         4 years
                                                                        63
The Independent Payment Advisory Board

   Established to recommend ways to reduce Medicare
    spending if stating in 2014 per capita spending
    exceeds certain targets
   The Secretary of HHS is required to adopt the
    Board’s recommendations unless Congress adopts
    alternative means to achieve the same savings.
   Recommendations can not “ration” or modify
    benefits, eligibility, premiums or taxes




                                                       64
Medicare Payroll Tax, Part B Premiums,
Itemized Deduction
   In 2013, the Medicare payroll tax will be increased for
    individuals earning more than $200,000 or married couples
    earring more than $250,000 from 1.45% to 2.35%
   Also in 2013 the “high income” taxpayers will pay a new tax on
    unearned income, such as interest income, dividends,
    annuities, royalties, rent and capital gains
   The income thresholds for Part B premiums will be frozen at
    2010 levels ($85,000 for individuals and $170,000 for married
    couples)
   The current medical expense deduction “floor,” now 7.5%, will
    increase to 10% starting in 2013, but this increase is
    postponed for taxpayers 65 or older until 2017




                                                                     65
The Elder Justice Act
   The health reform law included the Elder Justice Act and the
    Patient Safety and Abuse Prevention Act
   Authorizes additional $400 million for adult protective services
    programs
   $100 million in state grants for development of new adult
    protective programs
   $325 million for state ombudsman programs
   Establishes the Elder Justice Coordinating Council charged
    with making recommendations to the Secretary of HHS on
    coordination of agency and not-for-profit organizations in
    abuse, neglect and financial exploitation
   Deals with protection of nursing home patients from abusive
    employees; creates a national program of criminal background
    checks



                                                                       66
Provisions Applicable to All Persons
   Changes in private health insurance
   New funding for state Medicaid programs
   Provisions dealing with waste, fraud and abusive
    practices in the Medicare and Medicaid




                                                       67
Medicare
45 Million Americans are enrolled in Medicare

Part A – Hospital Coverage (2010)

   •   $1,100 deductible Days 1 – 60 no co-insurance
   •   Days 61 – 90 $275 per day co-insurance
   •   Days 91 – 150 $550 per day co-insurance (lifetime
       reserve days)


Part B – Physician Services
   •   $155 deductible
   •   Higher premiums for 2009
   •   Skilled Nursing Home co-insurance (Days 21-
       100) $137.50
                                                           68
2010 Medicare Part B Premiums
You Pay          If Your Yearly Income Is
             Single               Married Couple
$96.40      $85,000 or less               $170,000 or less
   (If beneficiary has premium withheld from social security check;
       otherwise $110.50)

$154.70    $85,001-$107,000               $170,001-$214,000

$221.00    $107,001-$160,000              $214,001-$320,000

$287.30    $160,001-$214,000              $320,001-$428,000

$353.60    Above $214,000                 Above $428,000

The hidden agenda: means testing of Social Security?

                                                                      69
Medicare
        LIMITED LONG TERM CARE COSTS
Maximum of 100 days for post hospital stays of at least
3 days provided admission to the nursing home is
within 30 days of discharge and if the patient's care is
skilled; custodial care is not covered. The first 20 days
are fully covered. Days 21 through 100 have a co-
insurance of $137.50.
Home care benefits are also limited.         Medicare
beneficiaries are entitled by law to up to 35 hours a
week for “part time and intermittent” benefits but in
reality get no more than a few hours a week.



                                                        70
Medicare Part D –
Prescription Drug Coverage
Medicare beneficiaries in the U.S.            47 million

Medicare Beneficiaries enrolled in

   Medicare Part D Plans -                    27.7 million – 60%

Retirees with other “creditable coverage”      8.3 million

Other sources of coverage (i.e. V.A. benefits) 5.9 million



10% (4.7 million) of the Medicare population have no drug
  coverage




                                                                   71
Standard Medicare Prescription Drug
Benefit, 2010

                                          Plan Pays 15%;
    Enrollee Pays                        Medicare Pays 80%
         5%                                                                     $6,440 in
                                                                             Total Drug Costs
                                                                            ($4,550 out of pocket)
   Enrollee Pays                       $3,610 Coverage
      100%                             Gap (“Doughnut
                                            Hole”)
                                                                                $2,830 in
                                                                             Total Drug Costs
         Enrollee                                     Plan Pays
          Pays                                         75%
          25%                                                                  $310 Deductible
                      $447 Average Annual Premium
   NOTE: Annual premium amount based on $37.25 national average monthly beneficiary premium (CBO). Amounts for
   premium, coverage gap, and catastrophic coverage threshold rounded to nearest dollar.
   SOURCE: Kaiser Family Foundation illustration of standard Medicare drug benefit

                                                                                                                 72
Medicare Part D
Individual Out-of-Pocket Costs 2010


     Deductible                    $310
     Beneficiary share (25%)
        of next $2,520 ($2,830-
        $310=$2,520)                 630
     Gap cost                      3,610
                                  $4,550
     Premium                         447

     Total out-of-pocket          $4,997
                                           73
How Many Beneficiaries Reach the Gap?


     3.4 million Part D enrollees reached the gap in 2007

     This represents 12% of all enrollees

     Kaiser Family Foundation estimates that 15% stopped
      taking drugs when they reached the gap.




       Source: Kaiser Family Foundation, Data Spotlight, “The Coverage
       Gap” Nov. 2009


                                                                         74
Significant Reduction Of The Medicare Prescription Drug
Program (Part D) Coverage Gap

     Persons who enter the “doughnut hole” in 2010 will
      receive a one-time $250 rebate
     Beginning in 2011, the doughnut hole will be significantly
      narrowed by drug company contributions and phased in
      new Medicare contributions.
     Starting in 2011 there will be a 50% discount on brand
      name prescription drugs (provided by the pharmaceutical
      industry)
     Starting in 2011, Medicare begins to contribute to the
      cost of generic drugs
     Starting in 2013 Medicare begins to contribute to the cost
      of brand name drugs
     By 2020, Part D enrollees will be responsible for only
      25% of drug costs in the gap



                                                                   75
TAKE CONTROL!

 SET UP YOUR OWN PROPERTY MANAGEMENT
 SYSTEM to take over in the event you become
 incapacitated
      Power of Attorney
       New statute effective September 13, 2010
      Health Care Proxy
      Health Care declaration (“Living Will”)
      Revocable Living Trust




                                                  76
Should You Sign Both a Living Will
and a Proxy?
   Yes, the Living Will is clear and convincing
    evidence of your wishes
   Guides the agent’s decisions
   Helps the agent deal with guilt
   If there is no Health Care Proxy or the
    agents have died the Living Will stands
    alone and your wishes must be followed
   This is particularly true for the gay or lesbian
    couple

                                                       77
Importance of the Gifting Provision in Power of
Attorney in Non-Traditional Relationships
   Gifts of all the assets of an incapacitated
    person for Medicaid planning
   Other substantial gifts for tax planning?
   Suppose the gifts are inconsistent with a
    prior will?




                                                  78
Consider: Gift Provision – Critical in Non-
Traditional Relationships
(   ) I grant the following authority to my agent to make gifts pursuant to my
    instructions, or otherwise for purposes which the agent reasonably deems to be in
    my best interest:
    (i) make gifts on my behalf, or consent to gifts made by my spouse, if I am married at that time,
    whether outright or in trust, including, but not limited to, gifts of any real property I may own, to
    any one or more members of a class consisting of [______________], in such proportions and
    amounts, not limited to the annual federal gift tax exclusion amount pursuant to the Internal
    Revenue Code to each of such persons in any year, without regard to equality, if said gifts, in the
    sole and absolute discretion of my said agents, are in my best interests for any reason, including
    the ultimate reduction or minimization of taxes of any kind or the creation of eligibility on my part
    for government benefits or entitlements of any kind, or are for the health, support or maintenance
    of any member of the aforesaid class of persons. Any gifts made pursuant to this provision shall
    be deemed to be in my best interests. Such gifts may include, by way of example but not
    limitation, gifts of any type, whether outright, in trust, to a Uniform Transfers to Minors Act
    account or by the creation of a tuition savings account or prepaid tuition plan as defined in
    section 529 of the Internal Revenue Code, to create charitable remainder trusts, charitable lead
    trusts, grantor retained income and annuity trusts, personal residence trusts, any other type of
    irrevocable trusts or similar transfers including but not limited to split or joint purchases or to
    make loans at no or low interest, in any manner that my agents reasonably conclude will
    increase the net after tax property available to [______________] and charitable organizations. I
    also hereby grant my agent the power and authority, whether constituting a gift by me or not:
             (a) to open, modify or terminate a deposit account in my name and other joint tenants
    consisting of one or more of those individuals to whom I have authorized the agent to make gifts
    in paragraph (i) above,
             (b) to open, modify or terminate a Totten trust or similar "in trust for" account for one or
    more of those individuals to whom I have authorized the agent to make gifts in paragraph (i)
    above,
             (c) to open, modify or terminate a transfer-on-death account described in EPTL 13-4.1
    to 13-4.12 for one or more of those individuals to whom I have authorized the agent to make gifts
    in paragraph (i) above,



                                                                                                            79
Gift Provision, cont.
             (d) to change the beneficiary of any insurance policy on my life or any annuity for my
    benefit which beneficiary is one or more of those individuals to whom I have authorized the agent
    to make gifts in paragraph (i) above,
             (e) to procure new, different or additional contracts of insurance on my life or annuity
    contracts and designate the beneficiaries thereof which beneficiary or beneficiaries is one or
    more of those individuals to whom I have authorized the agent to make gifts in paragraph (i)
    above,
             (f) to designate or change the beneficiaries of any type of retirement benefit or plan
    provided such beneficiary or beneficiaries is one or more of those individuals to whom I have
    authorized the agent to make gifts in the immediately preceding sentence, and to create, change
    or terminate other property interests or rights of survivorship provided such change or
    termination benefits me or one or more of those individuals to whom I have authorized the agent
    to make gifts in paragraph (i) above.
             (g) to disclaim or renounce any property interest pursuant to the Internal Revenue Code,
    section 2518 or section 2-1.11 of the New York Estates, Powers and Trusts Law or any other
    similar or successor law, including disclaimers and renunciations in favor of the agent, provided
    the principal has authorized gifts to the agent by expressly granting such authority to the agent in
    paragraph (c) of this Statutory Gifts Rider.

(ii) To create trusts on my behalf, even though the term of such trusts may extend beyond my life,
      and to amend, modify or revoke trusts I have created, to establish accounts in supplemental
      needs trusts (“pooled trusts”) established by not-for-profit organizations for my benefit, to
      execute participation or sponsorship agreements required by such not-for-profit organizations
      and to designate beneficiaries upon my death (subject to applicable law), to fund such trusts and
      accounts and to exercise any right I have to designate successor trustees under any trust I have
      or may create; and

(iii) To make transfers and additions to any trusts created by me or by any other person under which
      trust I may be a beneficiary.



                                                                                                           80
New Statute: Public Health Law 4201
“Disposition of Remains”
New law effective August 2, 2006 authorizes the execution of a
  document called Appointment of Agent to Control Disposition
  of Remains

In addition, the statute establishes a priority list of persons who
   have the right to make such decisions in the absence of
   execution of the new form. The first priority goes to “the
   decedent’s spouse” and the second priority is given to “the
   decedent’s surviving domestic partner.”




                                                                      81
Disposition of Remains, Cont.
§ 4201. Disposition of remains; responsibility therefor. 1. As used in this section, the following terms shall
        have the following meanings, unless the context otherwise requires:

        (a)   "Cremation" means the incineration of human remains.

        (b) "Disposition" means the care, disposal, transportation, burial, cremation or embalming of the
        body of a deceased person, and associated measures.

        (c)   "Domestic partner" means a person who, with respect to another person:

              (i) is formally a party in a domestic partnership or similar relationship with the other person,
        entered into pursuant to the laws of the United States or any state, local or foreign jurisdiction, or
        registered as the domestic partner of the person with any registry maintained by the employer of
        either party or any state, municipality, or foreign jurisdiction; or
              (ii) is formally recognized as a beneficiary or covered person under the other person's
        employment benefits or health insurance; or
              (iii) is dependent or mutually interdependent on the other person for support, as evidenced by
        the totality of the circumstances indicating a mutual intent to be domestic
        partners including but not limited to:

                   Common ownership or joint leasing of real or personal property; common
         householding, shared income or shared expenses; children in common;
         signs of intent to marry or become domestic partners under subparagraph
         (i) or (ii) of this paragraph; or the length of the personal
         relationship of the persons.

                  Each party to a domestic partnership shall be considered to be the
         domestic partner of the other party. "Domestic partner" shall not
         include a person who is related to the other person by blood in a manner
         that would bar marriage to the other person in New York state. "Domestic
         partner" shall also not include any person who is less than eighteen
         years of age or who is the adopted child of the other person or who is
         related by blood in a manner that would bar marriage in New York state
         to a person who is the lawful spouse of the other person.

                                                                                                                 82
Financing Long Term Care
 DEDUCTIBILITY FOR INCOME TAX PURPOSES OF
        LONG TERM CARE EXPENSES
The Health Insurance Portability and Accountability Act
of 1996, often referred to as “HIPAA” has favorably
clarified the deductibility question of the cost of long
term care. HIPAA makes it clear that the costs of
“qualified long term care services” are to be treated as
medical care for the purposes of deduction as a
medical expense under section 213 of the IRC.
Section 321 of HIPPA adds a new IRC section
7702B(c) which defines “qualified long term care
services” as follows:


                                                       83
Long Term Care Insurance
Long-term care insurance for those who can afford it and for
those who can meet medical underwriting criteria may offer a
viable option for financing long-term home care and nursing home
costs
Long-term care insurance may also be used as an integral part of
an overall financial plan which can protect the assets of an
impaired senior citizen by financing the costs of nursing home
care during the Medicaid period of ineligibility after asset transfers
either outright or in trust are made
If you have long-term care insurance you may not need to
prematurely divest yourself of your assets and can keep your
ownership of assets until it appears that institutionalization is
necessary




                                                                         84
Long Term Care Insurance and
Income Tax
                   INDIVIDUALS
   Individual policyholders who itemize
    deductions and have tax-qualified long term
    care policies are able to claim their long term
    care insurance premiums as a medical
    expense deduction on their federal income
    tax returns. The amount of the deduction is
    based on the taxpayer’s age at the end of
    the tax year and is subject to the 7.5% of
    AGI limitation.




                                                      85
Long Term Care Insurance
And Income Tax, cont.
  Allowable medical expense deduction for 2010


                            Maximum Premium
                Age             Deduction

       40 or less               $330
       More than 40, not
        more than 50             $620
       More than 50, not
                                 $1,230
        more than 60
       More than 60, not
        more than 70             $3,290
       More than 70             $4,110

                                                 86
   Indemnity Policies – the first $260 a day is tax
    free; any amount over $260 will be taxed as
    ordinary income unless spent on a “qualified
    Long Term Care expense.”

   No includible income of reimbursement policy
    payments

   New York State Tax Credit
    A credit of 20% of the premium paid during the
    taxable year for Long Term Care Insurance
    approved by the Superintendent of Insurance
    will be allowed.
                                                       87
The Public-Private Partnership
New York has enacted a plan that allows you
to keep your assets when you apply for
Medicaid if you have a “partnership” long term
care policy
Your spouse’s assets are also protected
Problems: No income protection for the
recipient; Medicaid benefits only in New York
Connecticut also has a “partnership” plan –
Asset protection only for amount of insurance



                                                 88
Using Your Life Insurance to Pay for
Long-Term Care Costs



   “LIVING BENEFITS” RIDERS

   “LIFE SETTLEMENTS” (“VIATICAL
    SETTLEMENTS”)




                                       89
Living Benefits Riders - also known as
“Accelerated Benefits” Riders
You may be able draw down the face value of
your life insurance policy on a discounted
basis to pay for long term care
Many insurance companies provide riders
allowing for withdrawal of the face value of a
policy in the event you
   Are terminally ill
   Need permanent institutionalization or
   Need ongoing care at home



                                                 90
Life Settlements (Viatical Settlements)
It may be possible for you to sell your life
insurance policy to a private company which
will buy the death benefit on a discounted
basis
The discount will depend on the              life
expectancy and health of the insured
The funds you receive will not be counted as
income if you take the benefits because you
are a “qualified taxpayer” – meaning you are
unable to perform at least 2 “activities of daily
living”

                                                    91
Excerpt from the Brochure of a
Life Settlement Company:
 LIFE SETTLEMENT ELIGIBILITY
 To be eligible for a Life Settlement, an individual must have a life insurance policy in excess of
 $50,000 and be over 65 years of age.
                                        IDEAL PROSPECTS
            Age                     Policy Size             Policy              Health
            65-69                   $50,000 +               Any                 Serious health issue(s)
            70-79                   $50,000 +               Any                 Some health issue(s)
            80 plus                 $50,000 +               Any                 Overall good health

           DEFINITIONS
           Life Settlement: For insured individuals 65 and older or other policy owners who are looking to
           sell their life insurance policy for a net percentage of the face value.

           Viatical Settlement: For individuals diagnosed with a terminal illness with 2 years life
           expectancy or under who want to liquidate their in-force life insurance policy.

                                     VALUE LIFESM EXAMPLES
           Age:                          78 & 80                     67                      82
           Face Value:                  $2,000,000                $1,200,000             $250,000
           Cash Value:                   $163,562                  $20,000                 $5,000
           Sold For:                     $400,000                 $210,000               $149,000
           Reason:                        Lapsing               Gift to Kids          Estate Changes
           Commission:                   $80,000                   $56,000                $10,000

                                                                                                             92
Reverse Mortgages
   If you are over age 62 you may be able to borrow on the equity in your
    home without having to repay to loan until you sell it or die
   Interest accumulates
   The older you are the more you can borrow
   Leading program is HUD’s Home Equity Conversion Program (“HECM”).
    Loan can be obtained based home values capped at $625,000. The
    borrower can obtain a loan based on a percentage of the home’s value
    (no more that $625,000) based on a loan-to-value determined by taking
    age less 5.
      Example:     Home actual value                   $1 million
                   Age                                    75
                   75 – 5 = 70% x $625,000             $437,000


   Private bank “jumbo” reverse mortgages are presently not available
   It has been possible to get a reverse mortgage on a cooperative
    apartment in New York for “jumbo” loans, but HUD does not yet permit
    this for HECM loans although this is pending

                                                                         93
Congregate Care Communities

Certain congregate care facilities may
provide long term health care benefits for
residents at reasonable costs.




                                             94
Medicaid - The Payor of Last Resort
  The Medical Assistance program, commonly known as “Medicaid,” was
  created in 1965 by the same legislation that created the Medicare program.
  Medicaid is a health insurance program for the poor, providing benefits to
  persons of limited financial means.
  To be eligible
         You can own no more than $13,1001 of ‘countable’ assets
         Be a resident
         Be medically in need
  Certain property is exempt (not countable) in determining an individual's
  eligibility including
         Your home – subject to new caps of the value of equity (up to $750,000)
         Your home remains exempt so long as you; your spouse; or a minor,
         blind or disabled child resides there
         An automobile
         Essential personal property
         Funds in qualified deferred compensation plans if you are in payout
         status

  1New   York. Most states the exemption is only $2,000.


                                                                                   95
Some Good News - Trusts for Disabled
Persons Are Possible
Medicaid law recognizes the need to protect
persons with disabilities during their lifetimes,
even when they have assets
You can put your assets in a trust where
income and principal can be used for you if
       You are under 65 years of age
       The trust includes a provision that
        Medicaid is repaid from the trust when
        you die (the “pay back” provision)




                                                    96
Trusts for Disabled Persons, cont.

You can do this even if you are over 65 if you use a
trust established and managed by a not-for-profit
organization
These trusts are called Supplemental Needs Trusts
There are no waiting periods for transfers to a
supplemental needs trust for persons under age 65
For person over 65 years of age, the penalty rules
apply and there will be a transfer of asset period of
ineligibility for nursing home Medicaid benefits




                                                        97
Estate Tax Issues

No Marital Deduction


   Full use of the estate tax exemptions
   Life insurance
      “Second to die” policies

   Annual exclusion gifts
   Gifts for educational & medical purposes




Copyright 2010 Peter J. Strauss
                                               98
Biography of Peter J. Strauss
   Peter J. Strauss, is Distinguished Adjunct Professor of Law at the New York Law
    School, where he teaches Elder Law and is Co-Director of the Guardianship Clinic.
    He is also Senior Counsel of Epstein Becker & Green, P.C., a national law firm,
    based in its New York office. He has practiced trusts and estate law since 1961 and
    has special expertise in the legal problems of aging and persons with disabilities and
    is a frequent lecturer on those issues.
   Mr. Strauss is a prolific author and has written articles for various publications
    including the New York Law Journal and Bottom Line Personal and has addressed
    many national professional and consumer organizations. He is co-author of “Aging
    and the Law” a treatise for professionals published by Commerce Clearing House,
    Inc. and a consumer book, “The Complete Retirement Survival Guide: Everything
    You Need to Know To Safeguard Your Money, Your Health and Your
    Independence,” (Facts-on-File, Inc. Professor Strauss has taught Elder Law at New
    York Law School he since 1990 and is co-director of the Elder Law Clinic which he
    founded in 2003. He is a founding member (1988) and a Fellow of the National
    Academy of Elder Law Attorneys.
   Mr. Strauss has special interest in issues involving capacity for the execution of legal
    documents and the legal issues and rights of persons with respect to health care
    treatment at the end of life. He also handles guardianship matters and is known for
    his work concerning special needs trusts for persons with disabilities.
   Among the accolades Mr. Strauss has received are his designation in 2007, 2008,
    2009 and 2010 as one of the New York Metropolitan area’s “Super Lawyers” and
    “Best Lawyers.’




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