GeriLaw | Robert Fleming, Tucson elder law attorney, and colleagues

SOCIAL SECURITY EARLY RETIREMENT DECISION CAN BE REVERSED

The attorneys at Oast & Hook are often asked, “When should I start claiming my Social Security benefits?”  Many baby boomers are facing the trade-off of claiming Social Security benefits early and receiving a lower benefit, or waiting until full retirement age or later and receiving a significantly higher benefit.  A recent article in USA Today highlights this trade-off, and discusses a little-known option that allows retirees to have the best of both worlds.

Those who claim their Social Security benefits at age 62 can retire at an earlier age, but they will receive a reduced benefit that may be insufficient later in life.  Waiting until full retirement age (age 66 for baby boomers who turn 62 this year) will result in increased monthly payments, but many boomers will therefore have to work longer.  This can be a problem for workers who dislike their jobs or want to spend more time with their families.

Most retirees don’t realize that if they claim early retirement benefits, they can later change their minds.  Mary Jane Yarrington, senior policy analyst for the National Committee to Preserve Social Security and Medicare, states that those who receive early retirement Social Security benefits can withdraw their applications, repay the benefits they have received, and file for benefits again at a later date.  This strategy will work if the retiree has saved enough money to repay the benefits, and the retiree will not have to pay interest on the benefits received.  Retirees electing this strategy could fare better than if they continued to receive the reduced benefits. 

In one example, a 70-year old retiree claimed early retirement benefits and receives $11,556 per year.  If this retiree had waited to file at age 70, then she would have received $20,000 per year.  If she wanted to withdraw her application and reapplied for benefits at age 70, then she would have to repay $79,305 (interest-free), but she would raise her standard of living by 14%.  In this example, this strategy would provide the retiree the equivalent of an inflation-indexed annuity.  This strategy is well-suited for people who took early retirement, are unhappy with that decision, and want to increase their benefits.

The strategy is not without risks.  There is a chance that the government could change the rules and eliminate the option to reapply.  Claiming early retirement benefits could also put the spouse at risk.  If the higher-earning spouse takes early retirement benefits and dies before withdrawing and reapplying, then the surviving spouse would receive reduced survivor’s benefits for the rest of his or her life.  If the higher earning retiree dies soon after repaying the benefits, then he or she would not recoup their investment; however, the surviving spouse would receive the higher survivor’s benefit.

Retirees interested in repaying and reapplying for benefits, can visit their local Social Security Administration office, or phone 800-772-1213 and make an appointment.  They will need to fill out Form 521, available at the Social Security Administration’s website, www.ssa.gov.  If the retiree’s spouse is receiving benefits based on the retiree’s earnings record, then the retiree must obtain the spouse’s consent before the application can be approved.

Andrew Hook
Oast & Hook
www.oasthook.com

R.I.P. Wyatt E.T. Fleming

Wyatt Earp, a Welsh Corgi, was nine when he first came to work at Fleming & Curti. He was a rescue dog of sorts -- his owner had gone into the nursing home, and we had represented the owner's daughter when she had to establish a guardianship, and when she asked what she was going to do with Wyatt ... well, you can correctly guess the rest of the story.

Wyatt died Monday, May 5, 2008, at the age of 13. He will be missed by many; clients, colleagues, neighbors among them. He even had a modest following among the national elder law community.

Immediately after joining our family Wyatt started going to work daily. He might have been dozing outside my office door, but he was constantly attuned to the sound of the front-office door. He quickly decided that his job was to trundle out to the reception room to greet new arrivals, most of whom reinforced his behavior by fawning over him. There was something about the conference room that particularly fascinated him; if anyone headed down the hallway toward the conference room, he padded along with them, curled up in a corner of the room and napped semi-attentively through the meeting. He never asked to be excused, never interrupted the proceedings, mostly blended with the furniture. We joked about billing him out at a mere $50/hour because he was so quiet. But he insisted on attending every meeting.

One memorable client visit drove home the value of having Wyatt on staff. A school counselor came to see us about her estate plan, and she was (as clients sometimes are) illogically nervous about talking about her own death. She sat on the edge of the office chair, talking a mile a minute, kneading Wyatt's ears aggressively. "I know why you have him in here," she said from between clenched teeth. "It's to relax me. And it's working." It probably was, but that only made me nervous about how tightly-wound she would have been without Wyatt's presence. Wyatt, incidentally, loved that client; he could handle an aggressive ear-scratching for hours (Corgis do have a lot of ear to work over).

About two years after his arrival Wyatt became disabled. He had, as we learned, been suffering from degenerative myelopathy, a neurological condition that slowly deprived him of the use of first his hind legs and ultimately even his front legs. We had him outfitted with a sort of wheelchair, and he became a notable fixture on the sidewalks in and around our office and home. Every morning and evening he would walk past the coffee shop next door; the regulars may not have known my name or the names of the patrons at the next table, but they all knew Wyatt, and many of them would have a treat to offer him. He invariably, and graciously, accepted.

In the last six months Wyatt's condition deteriorated to the point that he couldn't even use his wheelchair. Nonetheless he insisted on going to work with me every day. Even on holidays I often loaded Wyatt into the car, drove to the office, put him on the rug next to my desk, checked my e-mail, and then brightly announced that it was time to go home, that his workday was over. Somehow even the ten-minute workday made him feel like he had done enough to earn his pay, I guess.

Wyatt was an extremely gentle canine soul. He barked (his vocal cords had been cut as a puppy, years before I met him), but mostly only to let other dogs know that they needed to understand he was still in charge even though immobile. He and I bonded on some extraordinary level -- Wyatt was only the second dog I have ever had, and Freckles, the first one, died in 1969. He will be missed by many, all right, but mostly by me. His advancing disabilities meant that his formal duties had already largely passed to Andy and Chalupa, but I think even they will miss his regular suggestions about how they might better perform those duties.

Goodbye, Wyatt Earp Tomlinson Fleming. I miss you, buddy.

Robert B. Fleming
Fleming & Curti, PLC
Tucson, Arizona
www.elder-law.com
www.specialneedsalliance.com

STRUCTURED SETTLEMENTS IN CASING by Thomas D. Begley, Jr.

                It is possible to use a structured settlement in cases not involving physical injuries.  In those cases, the assignment is a non-qualified assignment that does not take advantage of the tax benefits of I.R.C. §130.  There are three companies, BARCO, NABCO, and PRUCO, each incorporated in

Barbados

that will serve as non-qualified assignees. 

                                •              Types of Cases.  Typical cases that might be appropriate for non-qualified assignments include the following:

                                                ◦              punitive damages;

                                                ◦              legal malpractice;

                                                ◦              construction defect;

                                                ◦              contract dispute;

                                                ◦              environmental;

                                                ◦              lottery annuity obligations;

                                                ◦              employment discrimination;

                                                ◦              non-wage related;

                                                ◦              attorney’s fees (including stand alone).[1]

                                •              Matrimonial Settlements.  Non-qualified assignments may be appropriate in a matrimonial settlement.  The structured settlement ensures that the spouse receiving alimony or payment of equitable distribution on a periodic basis or the child receiving child support will receive those payments on time, thereby reducing the cost of new court proceedings to resolve issues that may arise.  In cases involving a disabled party, a rated age may be used so that a higher monthly payment can be achieved with a smaller lump sum payment.

                                                The obligations of child support, equitable distribution or alimony can be transferred to BARCO, NABCO, and PRUCO, which then purchase annuities.  BARCO purchases annuities from Liberty Life Assurance Company of

Boston

, NABCO purchases from Allstate Life Insurance Company or Allstate Life Insurance Company of

New York

, and PRUCO purchases annuities from Prudential Insurance Company of

America

.  In the case of NABCO or PRUCO, if there is a Guarantee Letter issued by a U.S. company to the effect that if the non-qualified assignee fails in its obligations, all parties are protected independent of the annuity contract.[2]

Thomas D. Begley, Jr., CELA

Begley & Bookbinder, PC

ATTORNEYS AT LAW

COMMITTED TO EXCELLENCE

Specializing in Elder & Disability Law

     www.begleylawyer.com

(800) 533-7227

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[1] www.ringlerassociates.com

[2] Structured Settlements 4Real: What’s Real on Structured Settlements and Settlement Planning?, Aug. 1, 2006, http://structuredsettlements.typedpad.com.

Veterans' Benefit for Home and Assisted Living Care

One little-known benefit for veterans and their families is the Aid and Attendance (A&A) benefit.  This benefit can be used for care in an assisted living facility or for care at home.

Title 38 of the U.S. Code contains statutes regulating veterans' benefit programs.  Many of our readers are probably familiar with service-connected Veterans’ Compensation.  This compensation is provided to veterans for disabilities caused or exacerbated by military service, and it is normally expressed as compensation for a certain percentage disability.

Non-service connected benefits (pensions) are available to veterans (and some widows or widowers) who meet certain conditions.  The veterans do not have to be retired from military service, but the program is needs-based.  The veteran must have served 90 days on active duty (the requirement is longer for more recent veterans), with at least one day during wartime, and have received a discharge under conditions other than dishonorable.  The veteran must be “permanently and totally disabled” because of a non-service connected condition, or be over the age of 65 years.  Additionally, for the improved pension program, the veteran's income cannot exceed $931 per month (with no dependents) or $1,220 per month (with one dependent), the current maximum annual pension rate (MAPR). 

The A&A benefit is an increased benefit for veterans who require “care or assistance on a regular basis” to protect them from dangers in their daily living environment.  Veterans living in assisted living facilities are presumed to need this level of assistance, but the veteran should include a letter from the veteran’s personal physician regarding the veteran’s disability.  The need for A&A increases the income limit from $931 per month to $1,554 per month (with no dependents), and from $1,220 per month to $1,842 per month (with one dependent).  The MAPR for the A&A benefit, therefore, is the higher of $1,554 or $1,842 per month.  (Widows or widowers can receive a maximum of $998 per month.)  One significant feature of the pension program is that income is reduced by paid but unreimbursed medical expenses, including insurance premiums, Medicare premiums, prescriptions, dental and vision care, and the costs of an assisted living facility, in-home aid, or adult day care.  In many cases, these costs can easily reduce the applicant's income to a level that would permit the applicant to receive the benefit.  The net worth of the applicant is also considered in the evaluation for A&A; there are no hard and fast rules, but a net worth below $80,000 for a couple, or $50,000 for an individual, has been acceptable.  The VA looks to the net worth at the time of the application; there is no penalty period for the transfer of assets.  If the veteran, however, transferred property that produced a great deal of income on the previous year’s tax return, that previous year’s higher income would be reflected on the application and may affect eligibility.  Further, because the lack of a penalty for transferring asset conflicts with Medicaid requirements, elder law attorneys should advise their clients of this disconnect and plan accordingly.  The A&A benefit payments are made directly to the veteran or eligible surviving spouse, and they are specifically excluded from the definition of income for Medicaid purposes.  The benefit is reduced to $90 per month if the veteran lives in a nursing home.

Andrew Hook
Oast & Hook
www.oasthook.com

Designing a Structured Settlement by Thomas D. Begley, Jr.

In designing a structured settlement, there are a number of features that warrant careful consideration.

•  COLA. In designing a structured settlement, consideration should be given to providing a cost of living adjustment (COLA) to provide for future cost of living increases. Historically, inflation has run an average of 3% per year. Financial advisors use something called “the rule of 72's.” To determine how long it will take money to double, divide the rate of return into the number 72. For example, if a person receives a 6% rate of return on an investment, it will take 12 years to double the money. The converse would seem to apply to the structured settlement. It is anticipated that there will be a 3% inflation rate over time. Divide 3 into 72 and it will take 24 years for the monthly payments to lose half of their purchasing power. Therefore, a 3% cost of living increase should be built in to a structured settlement in order to preserve purchasing power. This will reduce the initial payments, but will give the injured party constant purchasing power over the life of the contract.

•  POPs. A structure can also be designed to provide lump-sum payments at appropriate intervals, such as at age 18 when monies may be needed for college education, if appropriate. Anticipated future needs can be met in this manner. A POP is a lump-sum distribution in an amount certain at a previously agreed upon time.

•  Lifetime Payments or Fixed Term. In many situations, the injured plaintiff has a permanent disability and will not be able to work. In those situations, it is important to obtain a structured settlement that will pay the injured person or the special needs trust for the life of the disabled person. Since tomorrow is never guaranteed, it is usually wise to obtain a guarantee period where payments will continue even after the death of the injured person. Plaintiff names a beneficiary on the contract to receive the guaranteed payments. The addition of the guarantee period will reduce the amount of the periodic payment, but elimination of the risk is usually seen as worth the price when discussing the structure with the client.

•  Deferred Payment. In cases involving a minor, the payments from the structured settlement may not be required until at time in the future such as age 18. During the meantime, the parents often provide what support the minor child will need. By deferring payment for a period of time, the funds in the structured settlement annuity can build up and the periodic payments starting at the agreed upon time will be significantly higher. The longer the payments are deferred, the larger the periodic payments will be.

• The Beneficiary. Who should be the beneficiary of the structured settlement on death of the beneficiary of the trust? If the beneficiary of the structure is the trust, the balance of the payments will be used to repay Medicaid. There appears to be no restriction in federal law on naming a family member as contingent beneficiary of the guaranteed portion or a structure upon the death of the primary beneficiary of a structure, however, state law must be consulted. The Supreme Court of New York held that there is no authority to consider any guaranteed payment remaining after the death of the trust beneficiary from the trust assets subject to the State's remainder interest.[1] This would have the effect of avoiding a payback to Medicaid since the structure would then be paid to the family member and not to the trust. Only assets remaining in the trust would be required to be paid to Medicaid. The guaranteed portion of the future payment would be includable in the estate of the deceased beneficiary. Consideration should be given to purchasing a commutation rider form the insurance company to provide for funds to pay the federal estate tax.

Thomas D. Begley, Jr., CELA

Begley & Bookbinder, PC

ATTORNEYS AT LAW

COMMITTED TO EXCELLENCE

 

Specializing in Elder & Disability Law

wwww.begleylawyer.com

(800) 533-7227

 

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[1] IMO Eddie Sanango, Supreme Court of New York, County of Kings, Index No. 41383/94 (Oct. 22, 2002).

National Healthcare Decisions Day

Governor Timothy Kaine has signed a Certificate of Recognition, designating April 16, 2008, as Healthcare Decisions Day in the Commonwealth of Virginia.  Virginia has had its own Advance Directives Day for the past two years, and this year’s effort is part of the inaugural National Healthcare Decisions Day.  The purpose of this day is to raise public awareness of the importance of planning for healthcare decisions related to end-of-life care and medical decision-making in the event that patients are unable to speak for themselves, and to encourage the specific use of advanced directives to communicate these important healthcare decisions.

In Virginia, the Health Care Decisions Act provides the specifics of the Commonwealth’s advance directives law.  It is estimated, however, that only about 15% of all Virginians have executed an advance directive, and it is estimated that less than 50% of severely or terminally ill patients have an advance directive.  One of the primary goals of National Healthcare Decisions Day is to encourage hospitals, nursing homes, assisted living facilities, continuing care retirement communities, and hospices to participate in a nationwide effort to provide clear and consistent information to the public about advance directives.

All adults in Virginia have the right to prepare an advance directive in order to put their wishes regarding medical care in writing.  There are two components to the advance directive.  The first component is the living will.  This permits an individual to state what kind of life-prolonging treatment the individual wants or does not want if diagnosed with a terminal illness and the individual is unable to express his or her wishes.  Life-prolonging treatment includes using machines, medicines and other artificial means to help individuals breathe, eat, get fluids into their bodies, have a heartbeat, and otherwise stay alive when the body cannot do these things on its own.  Medications used to keep an individual comfortable are not considered life-prolonging treatment.  Life-prolonging treatment will not help an individual recover.  Another way to look at the living will is that if an individual is in the dying process, then the individual does not want artificial means to prolong this process, but the individual might want pain-relieving medications to be administered, even if it accelerates the dying process. 
The other component of the advance directive is often called a power of attorney for healthcare.  This allows an individual to appoint an agent or agents to make medical decisions for the individual if the individual becomes incapable of making medical decisions.  The document can specifically tell the agent what kind of care the individual does or does not want.  For example, the document can give the agent the authority to work with a physician for the physician to enter a do not resuscitate order (DNR) on the individual’s behalf, but the advance directive itself is not as a DNR order.  The agent can only make medical decisions if the individual’s physician and another physician or licensed clinical psychologist examine the individual and determine in writing that the individual cannot make medical decisions for himself or herself.  As soon as the individual is capable of speaking again, decision-making authority of the agent ceases.

It is important for people to put their wishes in writing, because oral advance directives can only be created if an individual has a terminal condition and can tell his or her wishes directly to his or her physician.  Unfortunately, many terminally ill individuals may no longer be competent to discuss their wishes with their physicians.  Putting the wishes in writing reduces confusion about the patient’s desires, and also establishes clear lines of authority for decision-making.  This is important for blended families where there may be second spouses and adult children, and for younger couples where conflicts can arise between parents and spouses.  Everyone 18 years of age or over should sign an advance directive; it is not just for the elderly.  Every adult may need an agent to make medical decisions in case of a sudden illness or injury, such as an auto accident. 

Anyone 18 years of age or older can be named as an agent in an advance directive; the agent does not have to be a Virginia resident.  An alternate agent should be named in case the primary agent is unavailable to serve.  Advance directives must be witnessed by two individuals 18 years of age or older; the agents should not witness the document.  Advance directives do not need to be notarized; however, the advance directives that Oast & Hook prepares for its clients are notarized in case they need to be used in other states.  Although Virginia advance directives are designed to be valid in any state, individuals who spend a considerable amount of time in another state, should prepare an advance directive for the other state.  Advance directives can also be registered with the U.S. Living Will Registry or Docubank.

Copies of an advance directive are valid.  For this reason, Oast & Hook recommends that its clients keep the original advance directive in a secure place, and let their agents know where it is located.  They should give copies of their advance directives to their primary care physicians and all specialists.  They should also give copies to each agent, and discuss their wishes with their agents.  They should carry a copy of the advance directive in the glove compartment of their vehicles and place one on the side of their refrigerator.  It is also a good idea to take a copy of the advance directive when traveling.  Oast & Hook provides its clients with wallet cards stating that the client has executed an advance directive, and listing the names and telephone numbers of the client’s agents.  The Oast & Hook advance directive also includes a privacy act waiver, also called a HIPAA waiver, which permits the agent to talk immediately with the physicians or review medical records, even if the physicians have not declared the client incapable of making medical decisions.  This is helpful for seniors when their children do not know if they need to act as the agent for their parents and the only way they can decide is to talk with the parent’s physicians.

Andrew Hook
Oast & Hook
www.oasthook.com

What is a "Qualified Disability Trust?"

The “Victims of Terrorism Tax Relief Act of 2001” created a new tax entity: the Qualified Disability Trust. What are these trusts, and what benefits do they offer?

Revisions to section 642 of the Internal Revenue Code spell out what is required. In order to receive the special tax treatment, a trust must have been created for the sole benefit of an individual with a disability as defined by the Commissioner of Social Security. So what does the special treatment get you? A qualified disability trust can claim a personal exemption in the same amount as an individual ($3400 for tax year 2007) rather than the measly $300 permitted for other trusts.

As is so often the case with tax law, however, the code gives no hint about the real advantages or disadvantages. That’s why we’re here.

First, in order to understand the effect of qualified disability trust status one must consider general rules of trust taxation. Trusts pay taxes at the same rates as individuals – except that the graduated tax rates are very sharply compressed. In 2007, for example, a trust with $30,000 of taxable income would pay $9,543.50. An individual with the same $30,000 of taxable income would pay $4,774. In other words, the trust will incur a tax penalty of $4,769.50 just by being a trust.

The Victims of Terrorism Tax Relief Act reduces the disparity, but not by much. If our imaginary trust could meet the definition to be treated as a Qualified Disability Trust, its income tax bill would be reduced by $1,085 – but it would still pay $3,684.50 more than an individual taxpayer.

What difference does it make that trusts and individuals are taxed differently? A healthy percentage of trusts for individuals with disabilities are set up with their own money, either from personal injury lawsuits, or inheritances, or accumulated wealth. Those trusts, even though irrevocable, are inevitably taxed as “grantor” trusts, which means that the individuals claim all the income and deductions. Because of that status there is no benefit from the purported tax relief – and if there were, it would be far less than the increase in tax liability from treatment as a trust for the vast majority of them anyway.

If, however, a trust is established and funded by, say, a parent or grandparent, and the funds never belonged to the person with a disability, there may be some value to the Qualified Disability Trust treatment – though it is almost certain to be a very slight benefit. Assuming the trust is being used to pay for items benefiting the person with a disability, those payments are essentially a deduction from the trust’s taxable income. That means that unless the trust is accumulating income it will likely see no benefit from the additional deduction.

The same may not be true for the beneficiary, however. Even though the trust may pay not income tax because of its distributions for the benefit of its beneficiary, that beneficiary will have a tax liability to report. If the beneficiary is paying some tax, the extra deduction for the trust may have the effect of reducing the reportable income on which the beneficiary is taxed – and that might reduce the tax itself by between $510 and $1225. Not exactly a windfall, but better than the proverbial poke in the eye.

So who, exactly, will benefit from this provision of the Victims of Terrorism Tax Relief Act? Not, particularly, victims of terrorism. In order to benefit the following things must be true:

1. The trust cannot be a “grantor” trust – it must hold money that was a gift from someone other than the beneficiary’s estate or a lawsuit on his or her behalf.
2. The trust must have income sufficient to make the beneficiary pay some income tax – that is, its income must exceed its expenses plus the beneficiary’s deductions (including the standard deduction and personal exemptions – about $8500 for a single person with no dependents in 2007).

That all assumes, incidentally, that the law is read broadly. Under one interpretation, the only way any trust would get the modest tax benefit would be if it included a provision directing that the state should be repaid for its Medicaid expenditures on the death of the trust’s beneficiary – a provision that should not be considered, much less included, in any trust not funded with the beneficiary’s own money.

What is the practical result? In our experience, almost no trusts can meet the requirements for treatment as a Qualified Disability Trust, and any benefits are so modest as to hardly make it worth trying. Apparently no one in Washington wanted to find out what might actually amount to tax relief for trust beneficiaries with disabilities.

Robert B. Fleming
Fleming & Curti, PLC
Tucson, Arizona
www.elder-law.com

Abandonment and Elective Share

A recent Supreme Court of Virginia opinion addressed the issue of abandonment within the context of an elective share claim against a decedent’s estate.  In Purce v. Patterson (Record No. 062368, January 11, 2008), the wife had filed for divorce in 2003, but no decree of divorce had been issued prior to her death in 2005.  Her husband filed an elective share claim against her estate, and the trial court held that he had wilfully abandoned the wife, and, therefore, under Virginia Code § 64.1-16.3, he was not entitled to an elective share of her augmented estate.

The couple were married in 1988, and the wife had many health problems throughout the marriage.  The husband did not visit the wife in the hospital during her illnesses and did not take care of her when she returned home.  They had a tumultuous marriage, and they agreed that the wife would leave the marital residence, which she did in 2000.   The wife brought into the marriage several rental properties that she owned, and that she managed.  Her husband did not participate in managing the rental properties, and he did not provide any financial support to the wife after their separation.  During her final illness, the wife lived with her daughter in New Jersey; the husband did not know she was in New Jersey, and he did not visit, call, or communicate with her.

The husband asserted that his post-separation conduct is not relevant to determining whether one spouse abandoned the other.  The Supreme Court of Virginia disagreed, citing Virginia Code § 64.1-16.3(A), which addresses the period of abandonment relevant to an elective share claim:

If a husband or wife wilfully deserts or abandons his or her spouse and such desertion or abandonment continues until the death of the spouse, the party who deserted the deceased spouse shall be barred of all interest in the estate of the other by intestate succession, elective share, exempt property, family allowance, and homestead allowance.

The Court said that it was required to determine whether the wilful desertion or abandonment continued “until the death of the spouse,” and it concluded that the trial court did not err in considering facts occurring subsequent to the separation.

The husband’s remaining assignments of error challenge the sufficiency of evidence to support the trial court’s finding of abandonment.  The Supreme Court of Virginia said that this was a mixed question of law and fact.  The Court agreed with the parties that because the term “abandonment” is not defined in the statutes governing elective share claims, the principles of domestic relations law are helpful in determining the issue of abandonment under Virginia Code § 64.1-16.3.  In domestic relations cases, the term “abandonment” is generally used synonymously with “desertion.”  The Court has defined desertion as “a breach of matrimonial duty – an actual breaking off of the matrimonial cohabitation coupled with an intent to desert in the mind of the deserting party.” “Matrimonial duty” includes cooking, cleaning, support, and contributing to the well-being of the family.  The Court stated that in this case it would use the word “abandonment” to mean “a termination of the normal indicia of a marital relationship combined with an intent to abandon the marital relationship.”

The Court discussed the differences in the analysis of the evidence in the context of a domestic relations claim and an elective share claim.  The Court determined that the parties’ agreement to separate or seek a divorce does not defeat a finding of wilful abandonment, although it is relevant evidence of the termination of cohabitation.  The Court analyzed the evidence in this case and determined that the mutual decision to cease cohabitation and the filing of the divorce petition were the result of an agreement of the parties, and not the product of wilful abandonment.  The Court, however, also determined that the husband’s conduct after the separation and until the wife’s death did show a lack of support for the wife, and of the marital relationship.  The Court found nothing in the record that indicated that the husband intended to reconcile with the wife, and at the time of the wife’s death, the husband “ceased to perform any marital duties.”  The Court concluded that the evidence was sufficient to support the trial court’s holding that the husband abandoned the wife prior to and continuing until the time of her death, and the Court affirmed the judgment of the trial court that the husband was not eligible for an elective share of the wife’s augmented estate.

Andrew Hook
Oast & Hook
www.oasthook.com

Questions and Answers from Caregivers

Questions (and answers) we hear from family caregivers for the vulnerable and frail elderly:

What can I do if the bank will not honor the power of attorney I have for my parent?
This is a common problem with powers of attorney. Under current Arizona law, there is no way to force a bank, title company, or government official to accept the power of attorney. Remember that even though you are acting appropriately and in your parent's best interests, powers of attorney are frequently utilized by exploiters and thieves--the bank may not be sure that your motivations are proper, or may simply have decided not to spend the energy or time to figure out whether you are using the power properly. In our experience, it is often effective to work up the chain of authority--ask to speak to the branch manager, and if she is not helpful ask that she contact her legal department. If the bank has a customer relations division, you might be able to speak with them. You might even involve an attorney--especially the attorney who originally drafted the power of attorney.

If a relative, not previously involved, comes onto the scene and attempts to take over, can a revocable living trust be contested? What about a conservatorship? A power of attorney?
Yes, all of those legal relationships can be contested. A better question might be how difficult it would be to contest each, and how expensive--because if the legal authority is more expensive and difficult to contest, then as a practical matter it might be more effective. A power of attorney is not usually "challenged" in the courts--as a practical matter, if the contesting family member lets the banks and other entities know that there is an issue, they may be less likely to cooperate with the individual named by the power of attorney, and thus make the "challenge" easier to mount. If the issue is making the agent account for his or her actions using the power of attorney, the person who originally signed the power of attorney can insist on that information and anyone appointed as conservator (of the estate) can demand a similar accounting.

A conservatorship can be contested by filing something with the court involved in the proceedings. That usually means hiring a lawyer, though it is not required. The fact of the conservatorship will mean that there is already a court proceeding, and an attorney will ordinarily have been appointed to represent the subject of the conservatorship, so the framework for a challenge is already in place. It is also necessary for a conservator to account to the court at least once a year, so there will be an annual hearing date by which anyone objecting to the conservator's actions could file an objection. The court does not, however, routinely audit conservatorship accountings or the conservator's actions--if someone wishes to challenge the conservator, they will need to initiate the proceedings to do so.

A trust is not usually monitored by the courts, and so anyone challenging the trustee's actions will probably be required to file a proceeding to do so. The fact that the challenger must initiate a court review probably means that in most cases the trust is the most difficult to contest, but of course the circumstances in each case, including the meaning of the term "contest," will be different.

What is the difference between a "guardian" and a "conservator"?
Not every state makes the same distinction between the two terms, but Arizona uses "conservator" to refer to an individual who has been appointed to manage the money of a minor or an adult needing protection. A "guardian," on the other hand, is someone who has been appointed to make personal, living arrangement and health care decisions for an incapacitated adult or a minor child (assuming, in the case of a child, that the parents are not available to make those decisions). In some other states the terms are used differently, so be careful about terminology outside Arizona.

These questions and answers are from the Frequently Asked Questions section of our extensive website. For the entire list of questions submitted to Fleming & Curti partner Leigh Bernstein at last year's (Tucson) Mayor's Caregiver Education conference sponsored by the Alzheimer's Association Desert Southwest Chapter, see the Fleming & Curti website . While there, you can subscribe to our weekly e-newsletter, Elder Law Issues.

Six Things To Consider When Writing a Will

Recently we read an excellent primer on preparing for your first estate planning interview written by Marta Williger, a friend and elder law attorney from Munroe Falls, Ohio. We asked her to share her suggestions with our readers. Here is Martha's contribution (and note that they apply to your periodic estate planning update as well as to the first time you consider making a will):

The first major hurdle in writing a Will is procrastination. Just thinking about death and dying makes some of us a little anxious. Once past that obstacle, there are six things that you should consider to be sure that your Will meets your needs.

1. Nonprobate Property: Remember your Will controls only property that is subject to transfer through the Probate Court. Any property that you hold jointly with someone else may be "survivorship" property that passes automatically upon your death to the other owner or owners. You may own property that is "payable on death" to another person. Insurance proceeds, annuities and IRA's usually go directly to the named beneficiary rather than passing through probate. Now is a good time to review all your assets to be sure that however they are transferred at your death, they pass according to your plan and wishes.

2. Specific Bequests: A specific bequest is the gift of a particular thing or a particular amount of money. For example: "My wedding ring to my daughter, Katy," or "$200 to my nephew, Felix." When a specific bequest of an item is made, the law requires that item be appraised. It is then subject to inheritance tax at the appraised value. Depending on the value of the item, the appraiser's fee and tax may not be justified. Many people prefer to give gifts of sentimental value during their lifetime to share in the recipient's joy and appreciation. You might wish to make a specific bequest of cash as a token to grandchildren or a specific charity. In doing so, keep in mind that specific gifts are always paid first. Depending on how large or small your estate is at your time of death, your specific bequest may be far more or less proportionately than you intended. For example, suppose at the time you write your Will you have $500,000 in assets. You leave $10,000 to each of your ten grandchildren and the remaining $400,000 to be divided between your two children. Unfortunately, you fall ill and require nursing home care for the last years of your life. Your estate is reduced to $100,000. Your specific bequests are made first. This leaves nothing for your children whom you had intended to inherit the bulk of your estate.

3. Residual Gifts: After specific bequests are made, you need to decide who gets everything else. Generally, if more than one person is to share the residuary, each person would receive an equal share or some percentage for each person would be named. ("to my children equally, share and share alike" or "forty percent to my Uncle Joe and ten percent to each of my six nieces and nephews".) In dividing up your residuary be sure to consider what you want to happen if one of your beneficiaries dies before you. Would you want that person's share to go to her children, to the other beneficiaries, or somewhere else entirely?

4. Taxes: Estates over $338,000 are subject to Ohio Estate Tax. Those over $2,000,000 may be subject to federal estate tax as well. Consider whether you want all the tax paid out of the probate estate or whether persons receiving non-probate assets should pay a proportional part of the tax. If your tax burden appears very large, you may find a trust more suitable than a simple Will.

5. Minor Beneficiaries: If any of your beneficiaries could be under the age of 18, you may want to consider naming a trustee to hold the property until the child comes of age. The person you name may or may not be the child's parent. You may choose to be quite explicit in your instructions to the trustee or simply choose someone you find trustworthy and leave the details to his discretion. If your own children are young, you will want to name a guardian (and alternate guardian) to care for and raise your children. Your doing so can avoid much family turmoil in deciding with whom your child will live. Be sure to choose someone who's child raising ideas are similar to yours. Use care in choosing grandparents as guardians. While your 68 year old mother may seem the best choice to have your 5 year old, she may not be equipped at 78 to handle your 15 year old.

6. Fiduciaries: Your fiduciary is the person who will gather together all your assets, pay your bills, then distribute the remainder of your estate as you direct in the Will. The person you choose should be trustworthy, organized and patient. Be sure to name an alternate fiduciary in case the person you name is unwilling or unable to handle your estate. The law requires fiduciaries to post a "bond" (an insurance policy covering theft or error) unless you say in your Will that you do not require one. This is primarily protection for your other beneficiaries. The size of the bond is determined by the amount of probate assets. The cost of the bond is paid out of the estate. Your fiduciary is entitled to payment for the service he performs. The amount of compensation is determined by the Court. Fiduciaries will generally choose a lawyer to assist with the estate. As your life situation changes, your Will should be revised to suit your needs and desires. It is generally a good idea to review your Will every five years to be sure it reflects your wishes. Think about these six considerations each time you make a Will. Your individual situation may raise additional issues and considerations that your attorney can address.

Prepared by: Marta J. Williger
Williger & Peters
323 S Main St., Suite C
Munroe Falls, Ohio 44262
(330) 633-7373 Revised 2/12/07