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

Using Your Power of Attorney

One of the most frustrating experiences for the clients of elder law attorneys can come when a properly prepared and completely valid power of attorney is rejected by a bank, brokerage house, insurance company or other financial institution. Clients (and, more to the point, their spouses, children or other agents named in their powers of attorney) frequently call to report that "mom's bank says I can't use the power of attorney because it's not on their form."

This common problem is the topic of this week's Elder Law Issues article at the elder-law.com website. This (blog) setting allows us to collect stories from readers who have had similar problems, and it allows us to invite -- and share -- solutions from other contributing lawyers (and agents who have successfully dealt with the problem).

Under the law in most states, a financial institution can not be compelled to honor a power of attorney. In some states, however, there is authority for an action against an uncooperative bank -- though the damages may be limited to a court order requiring the bank to accept the document. Of course, one of the primary reasons clients sign powers of attorney in the first place is to avoid the cost and hassle of court proceedings, and when court involvement is required to enforce the power of attorney -- well, the whole point of simplicity and ease of administration can sometimes be lost.

Who are the culprits? Over the years it has been our experience that most brokerage houses have become comfortable with powers of attorney -- at least those drafted by a lawyer. Sometimes the lawyer may be asked to sign an affidavit that the document was properly signed, and that the lawyer is unaware of any revocation of the power of attorney; most attorneys are happy to sign such an affidavit on request (assuming, of course, that those assertions are correct).

Insurance companies may be somewhat less likely to accept a power of attorney, though that may be appropriate. Changing beneficiaries on an insurance policy may be outside the scope of the agent under most powers of attorney. The other kinds of things an agent may be trying to accomplish with an insurance company might include: (a) cashing in an annuity, or an IRA or tax-qualified retirement plan, or (b) converting an existing life insurance policy to paid-up status, or transferring ownership to the owner's living trust, or making other administrative changes to a policy. In most cases, insurance companies eventually bring themselves around to an appropriately cooperative position.

Other financial institutions may present special problems. Title insurance companies often resist transfer of real estate interests using a power of attorney, though this problem seems less common in recent years. If you want to use a power of attorney to transfer U.S. Government securities -- well, good luck.

That leaves banks. Oddly, the most recalcitrant banks seem to be the largest ones. You might assume that a larger bank would have access to good -- and responsive -- internal legal advice, and resources that let the teller figure out what local law and practice require. You'd be wrong. The very worst banks to deal with (in our experience, anyway)? Well, think stagecoaches. And San Francisco. And Italian heritage. That's two banks, if you're having a hard time counting.

Why do banks resist accepting powers of attorney? The answer is speculative, and tinged with cynicism. As the banking industry has become less personalized and more, well, impersonal, it seems to have come to rely on untrained, short-term and high-turnover staff. Rather than try to train, retain or support front line bank employees, the big organizations seem bent on reducing every policy to the simplest and most enforceable answer. That means the "answer" is usually: "no!"

Bank legal departments used to be a good resource for customers and their lawyers. No more. National banks do not like to acknowledge the existence of a legal department, and it is virtually impossible to ever get to talk to even a receptionist in the in-house legal offices they do maintain. When, by begging, flattering, cajoling and threatening, you finally get to talk to the "legal department," it almost always amounts to a trainee legal assistant who seems never to have met a lawyer, either professionally or socially.

So banks tend to insist on the use of their two-paragraph "powers of attorney," sometimes referred to as their "short-form" or "signature card" powers. There is nothing in the law of any state requiring anyone to rely on those documents, of course -- but that doesn't stop the banks. Those are the forms they are most familiar with, and the training curve is very simple if you only accept one, standardized document as a power of attorney.

Related to this phenomenon is the growing practice by some banks (and a handful of other financial institutions) to rely on their own playbooks for other legal proceedings. Death in the family? Produce "letters testamentary" (forget that your state may not use that language -- that's what the playbook written in North Carolina, or Missouri, or wherever, says to ask for). Does your state have a "small estates affidavit" procedure to avoid the necessity of probate proceedings (and, therefore, the issuance of "letters")? Don't expect anyone except at the highest echelons of the bank to have any idea what you're talking about. You have the "letters of personal representative" (that's what we would call them in Arizona)? Oh, good -- but you'd better have a certified copy of the death certificate, too. What, you say? It's impossible to get a probate started on a living person? Of course it is -- but the bank's playbook says you need to prove the death to the bank, too. It's not good enough to satisfy the probate court that the account owner is deceased.

We could go on and on. Perhaps, if there are comments, questions or an invitation to tell horror stories, we will. But the bottom line is this: dealing with banks, and sometimes with other financial institutions, can be difficult and even sometimes nearly impossible. Despite the best efforts of legislators to simplify the probate process, and to provide for non-court alternatives like powers of attorney, the frustrating reality is that in recent years it has gotten harder, rather than easier, to get even simple financial transactions completed when you are dealing with an incapacitated or deceased account holder. We wish it wasn't that way, and that we didn't spend so much of our time dealing with this frustration, but the only way we see to fix the problem is to buy a bank. Sadly, we're a little short of pocket change just now.

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

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

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.

Understanding Caregiver Stress

The National Care Planning Council recently published an article on caregiver stress.  A 2003 study of caregivers by a research team at the Ohio State University has proven that the off-repeated adage "stress can kill you" is true. The focus of the investigation was the effect that the stress of caregiving had on caregivers. The team, led by Janice Kiecolt-Glaser, Ph.D., reports on a six-year study of elderly people caring for spouses with Alzheimer's disease. The study not only found a significant deterioration in the health of caregivers when compared to a similar group of non-caregivers, but it also found that the caregivers had a 63% higher death rate than the control group.

The demands on a caregiver result in a great deal of stress. It is often observed in publications about the elderly that stress can induce illness and depression. The resulting poor health can further decrease the effectiveness of the caregiver and in some cases, as proven by the study mentioned above, even cause premature death.

Stress can be defined as a physiological reaction to a threat. The greater the threat - the greater the level of stress. A threat is a real or perceived action against our person. Threats may include the anticipated possibility of death or injury but may also include challenges to our self-esteem, social standing or relationships to others, or a threat may simply be a potential or real disruption of our established routines. What is stressful to one person may not be to another. For example, bumper-to-bumper traffic might be stressful to the executive who is late for an important meeting, but to the delivery driver who has no deadline and is being paid by the hour, it may be a welcome respite to relax and listen to the radio.

Stress produces real physical changes. In some unknown way the fears in an individual’s mind, both conscious and subconscious, cause the hypothalamus and pituitary glands, deep in the brain, to initiate a cascade of hormones and immune system proteins that temporarily alter the body. This is a normal human physiological response inherent to the human body when a threat is perceived – real or not. It is often called the "fight-or-flight response" or the "stress response". The purpose is to give us clearer thought and increased strength as well as to activate the immune system to deal with potential injury and to repair potential wounds. When the perceived threat is removed, assuming no damage is done, the body returns to normal.

A team of researchers at the Ohio State University Medical Center has found a chemical marker in the blood that shows a significant increase under chronic stress and is linked to an impaired immune system response in aging adults. The team, led by Dr. Janice Kiecolt-Glaser, reports in the June 30, 2003, issue of Proceedings of the National Academy of Sciences on a six-year study of elderly people caring for spouses with Alzheimer's Disease. With the caregivers, the team found a four-fold increase in an immune system protein – interleukin 6 (IL-6) – as compared to an identically matched control group of non-caregivers. Only the stress of caregiving correlated to the marked increase of IL-6 in the caregiver group. All other factors, including age, were not significant to the outcome. Even the younger caregivers saw an increase in IL-6.

The study also found that the caregivers had a 63% higher death rate than the control group. About 70% of the caregivers died before the end of the study and had to be replaced by new subjects. Another surprising result was that high levels of IL-6 continued even three years after the caregiving stopped. Dr. Glaser proposes the prolonged stress may have triggered a permanent abnormality of the immune system.

IL-6 is only one cytokine – an immune system mediator protein – in a cascade of endocrine hormones and cytokines that are released when the brain signals a person is threatened with harm, injury, undue mental or physical stress or death. The hormones prepare the body to react quickly by increasing heart rate, making muscles more reactive, stimulating thought, altering sugar metabolism, and producing many more changes that result in the "rush" people experience when they think they may be harmed.

The problem is if this response is initiated frequently and over a long period, then it can have a dangerous effect on the body. This constant initiation of the stress response is common among caregivers – especially those caring for loved ones with dementia. Providing supervision or physical assistance many hours a week and over a period of years turns out to be extremely stressful. This type of stress is often unrelenting, occurring day after day and week after week. And the long-term effects of this stress are more pronounced in middle-aged and older people who are precisely the group most likely offering long-term care to loved ones.

Prolonged high levels of IL-6 and the accompanying hormones and cytokines have been linked to: cardiovascular disease, type II diabetes, frequent viral infections, intestinal, stomach and colon disorders, osteoporosis, periodontal disease, various cancers and auto immune disorders such as lupus, rheumatoid arthritis and multiple sclerosis. Alzheimer's, dementia, nerve damage and mental problems are also linked to high IL-6. Wounds heal slower, vaccinations are less likely to take and recovery from infectious disease is impaired. People who have depression also have high levels of IL-6. Depression in caregivers is about eight times higher than the non-caregiving population.

Andrew H. Hook
Oast & Hook
www.oasthook.com

Summary of Public Benefit and Tax Numbers Adjusted Annually

Summary of Public Benefit and Tax Numbers Adjusted Annually
by Andrew Hook and Thomas Begley

There are a great many public benefit numbers and tax numbers that are adjusted on an annual basis.  The following are current numbers for 2008.

Medicaid

$1,911 Income Cap

$104,400 Maximum Community Spouse Resource Allowance (CSRA)

$20,880 Minimum CSRA

$2,610  Maximum Minimum Monthly Maintenance Needs Allowance (MMMNA)

$1,711.25 MMMNA (until June 30, 2008)

$1,750 MMMNA (July 1, 2008 until June 30, 2009)

$525 Excess Shelter Allowance (July 1, 2007 until June 30, 2008)

Social Security

2.3% For 2008 there has been a 2.3% increase for Social Security

Benefits

$2,185  The Maximum Social Security benefit for a single individual for 2008

$637 Supplemental Security Income (SSI) – Single

$956 Supplemental Security Income (SSI) – Couple

$7,644 Maximum Annual SSI benefit

$11,472 Maximum Annual SSI benefit

$940 Substantial Gainful Activity (SGA) – Disabled

$1,570 SGA – Blind

7.65% Tax Rate Employee

15.30% Tax Rate Self Employed

$670 Trial Work Period

$102,000 Maximum Social Security Wage Base

$1,050 Quarter of Coverage

Medicare

A) Part A

$128.00 Medicare Co-Payment – Skilled Nursing Facility (SNF)

$1,024 Hospital Deductible

$256 Per day/Co-Insurance Day 61 -90

$512 Per day/Co Insurance Day 91-150

Part A Premium (for voluntary enrollees only)

  $233/mth With 30-39 quarters of Social Security coverage

$423/mth With 29 or fewer quarters of Social Security coverage

B) Part B

$135.00 Medicare Part B Deductible

Medicare Part B - Single or Married and Filing Separate return

Part B Income-Related Premium

Beneficiaries who file an individual tax return with income:	Beneficiaries who file a joint tax return with income:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $82,000	Less than or equal to $164,000	$0.00	$96.40
Greater than $82,000 and less than or equal to $102,000	Greater than $164,000 and less than or equal to $204,000	$25.80	$122.20
Greater than $102,000 and less than or equal to $153,000	Greater than $204,000 and less than or equal to $306,000	$64.50	$160.90
Greater than $153,000 and less than or equal to $205,000	Greater than $305,000 and less than or equal to $410,000	$103.30	$160.90
Greater than $205,000	Greater than $410,000	$142.90	$238.40

In addition, the monthly premium rates to be paid by beneficiaries who are married, but file a separate return from their spouse and lived with their spouse at some time during the taxable year are:

Beneficiaries who are married but file a separate tax return from their spouse:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $82,000	$0.00	$96.40
Greater than $82,000 and less than or equal to $120,000	$103.30	$199.70
Greater than $130,000	$142.00	$238.40

Standard Part D Cost-Sharing for 2008

On April 2, 2007 CMS issued information about Part D cost-sharing for 2008:

$27.93 Base Beneficiary Premium 

$275.00 Deductible

$2,510.00 Initial Coverage Limit

$4,050.00 Out-of-pocket Threshold 

$5,726.25 Total Covered Part D Drugs to Get to Catastrophic Limit

$2.25 Catastrophic cost-sharing: Generic/ Preferred Drug

 

Low-Income Subsidy Co-Payments (LIS)

Full Benefit Dual Eligibles w/incomes

  ≤ 100% Federal Poverty Level

$1.05 Generic/Preferred Drugs

$0.00 Above Catastrophic Limit

Full Benefit Duals with Incomes

>100% Federal Poverty Level &

Other Full-Subsidy Eligible Beneficiaries

$2.25 Generic/preferred drugs

$0.00  Above Catastrophic Limit

Partial Subsidy Eligible Beneficiaries

  $56.00  Deductible 

  15% Co-insurance to ICL

  $2.25 Generics above catastrophic limit

  $5.60 Others above catastrophic limit 

Tax

A) $12,000 Annual Gift Tax Exclusion

$128,000 Gifts to Non-Citizen Spouse

$10,700 Income Level/Maximum Tax Estates and Trust

$357,700 Income Level/Maximum Single Individual Income Tax

$2,000,000 Federal Estate Tax Exemption

$3,500 Personal Exemption

$1,600 FICA Wage Threshold

$7,000 FUTA Wage Base

$5,000 Maximum IRA Contribution

$1,000 “Catchup” IRA Contribution

$101,000 Applicable Allowable Limit Roth IRA Single Taxpayer

$159,000 Applicable Allowable Limit Roth IRA Married Taxpayer Filing

Jointly

Long-Term Care Insurance

$270 Exclusion from income taxation of daily LTC insurance benefits

Tax Deduction of LTC Premium

$310 40 years old or less

$580 41 to 50 years old

$1,150 51 to 60 years old

$3,080 61 to 70 years old

$3,850 more than 70 years old

§28.01.06 Standard and Poor’s 500 Index

1.9% average S&P dividend yield January 1, 2008.

Explanation of Terms-

Medicaid

B) Income Cap. Many states use an income cap to determine eligibility for some or all Medicaid Programs. These are known as income cap states. Generally the income cap is calculated at 300% of the maximum federal SSI benefit rate for a single individual.

C) CSRA. The Medicaid Catastrophic Recovery Act was designed to avoid impoverishing a community spouse where one spouse is institutionalized. Some states permit the community spouse to retain all countable resources up to the maximum CSRA. Other states permit the community spouse to retain one half of the countable resources not to exceed to maximum CSRA and to retain all countable resources up to the minimum CSRA.

D) MMMNA. Under MCCA the Community Spouse is entitled to a Minimum Monthly Maintenance Needs Allowance. If the income of the Community Spouse falls below the MMMNA, the Community Spouse can retain income from the Institutionalized Spouse to bring the Community spouse up to the MMMNA. Some states permit the Community Spouse to keep all of the income up to the Maximum MMMNA. In other states, the MMMNA is made up to two components, the basic allowance and the excess shelter allowance. Excess Shelter Allowance is calculated by totaling the Shelter Expenses of the Community Spouse. These expenses are limited to rent, a mortgage (including principal and interest), taxes and insurance, utility expenses, and maintenance charges for condominium or co-op. Some states use a flat amount or amounts for the utility allowance.

Social Security

A) Cost of Living. Social Security benefits are indexed to inflation and are adjusted annually to reflect increases in the cost of living.

B) Maximum Social Security Benefit. Social Security Benefits fall into three categories: Social Security Retirement, Social Security Disability Income (SSDI) and Supplemental Security Income (SSI). Social Security Retirement and Social Security Disability Income (SSDI) are based on payments made into the Social Security System by wage earners during their working careers. SSI is a welfare program. There is a maximum Social Security Benefit for any single individual. This is also adjusted annually.

C) SSI Benefit. There is a maximum federal benefit for SSI for single persons and a separate maximum for married couples. Some states provide a state supplement to the federal benefit. There is also a maximum annual SSI benefit.

D) Substantial Gainful Activity. To be eligible for either SSDI or SSI, the applicant must be disabled as defined in the Social Security Act. The statute references the applicant’s inability to perform “substantial gainful activity.” Substantial gainful activity is the ability to earn more than a certain amount published by the Social Security Administration (SSA) on an annual basis. There are two income levels to determine substantial gainful activity. One is for the general population and one is for blind.

E) Trial Work Period. During a trial work period, a Social Security beneficiary receiving disability benefits may test his or her ability to work and still be considered disabled. Social Security does not consider services performed during the trial work period as showing that the disability has ended until services have been performed in at least 9 months (not necessary consecutive months) in a rolling 60 month period. Any month in which earnings exceed the trial work period amount is considered a month of service for the individuals trial work period. The trial work period amount is adjusted annually.

F) Social Security Wage Base. There is a Social Security tax imposed on income up to the maximum Social Security Wage Base. Income in excess of the wage base is not subject to the Social Security tax.

G) Insured Status. To be eligible for Social Security Retirement Benefits or Disability Benefits, a worker must have insured status. This means the wage earner must accumulate a certain number of quarters of coverage. The wage earner is “fully insured” for life if he or she has 40 quarters of coverage. The wage earner is currently insured if he or she has 6 quarters of coverage during a 13 quarter period ending with the quarter in which the person became entitled to benefits. The amount of earnings required for a quarter of coverage is adjusted annually.

Medicare

A) Medicare Part A. Medicare is a medical insurance program that pays for a broad range of medical services. Generally, Medicare Part A covers hospitalization and certain limited coverage in skilled nursing facilities as well as the first 100 days of home care and hospice benefits for the terminally ill. There are premiums, co-payments, deductibles and maximums per spell of illness.

B) Medicare Co-Payment – Skilled Nursing Facility. If a person is eligible for Medicare in a skilled nursing facility, Medicare pays the first 20 days in full but days 21 to 100, the Medicare recipient pays a co-payment and Medicare pays the balance.

C) Deductible. Under Medicare Part A, Hospital coverage is limited to 90 days per spell of illness. For 60 days there is a deductible which is adjusted annually.

D) Co Insurance. For the next 30 days of hospitalization, the patient pays co-insurance of 25% of the deductible. For days 91 to 150 for spell of illness, utilizing “lifetime reserve days”, there is a co-payment of one half of the deductible.

E) Medicare Part B. Medicare Part B covers physicians, diagnostic tests, medical equipment, ambulance services, outpatient physical and speech therapist, certain home care and prostheses. Medicare Part B is available to persons over 65 years of age or eligible for Part A and who are receiving SSDI after two years.

F) Medicare Part B Deductions. There is a deduction for services covered by Medicare Part B. The amount of the deduction is adjusted annually.

G) Premiums. Under Medicare Prescription Drug Improvement and Modernization Act, beneficiaries pay premiums depending on their income. Premiums are adjusted annually.

H) Medicare Part D. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act of 2003) provides a prescription drug benefit known as Medicare Part D. To be eligible, individuals must be eligible for either Part A or Part B of Medicare. Individuals may obtain the prescription coverage either through a standalone prescription drug plan (PDP) or through a Medicare Advantage Plan (MA-PD).

Tax

A) Annual Gift Tax Exclusion. Tax payers are permitted to make gifts up to a certain amount each year without any gift tax consequences. This is known as the annual gift tax exclusion. The exclusion is indexed to inflation.

B) Gifts to Non-Citizen Spouse. The estate and gift tax marital deduction is not allowed for transfers to a spouse or a surviving spouse who is not a U.S. Citizen. The concern is that the non-citizen spouse will leave the country and avoid federal estate tax. For federal gift tax purposes, the maximum that a spouse can give to a non-citizen spouse is adjusted annually.

C) Income Level/Maximum Tax, Estates and Trust/Single Individual Income Tax. Generally, it is advantageous to distribute income from estates and trusts to individuals rather than pay the tax at the estate or trust tax level. Under the federal Internal Revenue Code, income is taxed on a graduated basis. The maximum income tax rate is 35%. The maximum income tax rate for an estate or trust is achieved at a much lower level of income than the maximum tax rate for an individual.

D) Federal Estate Tax Exemption. There is an exemption from the federal estate tax for each taxpayer’s estate. This is sometimes known as the unified credit. Under current law the amount of the exemption is scheduled to change from $2,000,000 in 2008 to $3,500,000 in 2009. The tax is scheduled to be repealed in 2010 but the tax is scheduled to be reinstated at the $1,000,000 in 2011.

E) Personal Exemption. Each taxpayer is entitled to a personal exemption which is adjusted annually. If a person pays more than 50% of support of a relative and a relative had gross income for the year less than the personal exemption amount and has not filed a joint return with his or her spouse and the person paying the support may claim the relative as a dependant on the person’s federal income tax return.

F)        Federal Insurance Contributions Act (FICA) Wage Base. Social Security and Medicare Part A taxes are imposed on all employers and employees on cash wages in excess of the threshold in any calendar year. Social Security Old Age, Survivors, and Disability Insurance (OASDI) taxes are limited to the Social Security wage base. There is no limit for the imposition of the tax for Medicare Part A.

G) Federal Unemployment Tax Act ( FUTA) Wage Base. If an employee receives total cash wages in excess of the FUTA Wage Base in any calendar quarter, Federal Unemployment Taxes must be withheld.

H) Deductible Contribution Traditional IRA. Taxpayers are permitted to take a tax deduction for contributions to a traditional IRA. The deducti9be amount is $5,000 for 2008. In addition taxpayers 50 years and over are entitled to a “catchup” contribution of $1,000 per year. In calendar year 2008, a maximum deductible contribution is indexed to inflation in increases in multiples of $500.

I) Applicable Dollar Limit Roth IRA. Generally a Roth IRA is treated in the same manner as a Traditional IRA. However, no deduction is allowed for contributions. Contribution limits are the same as for Traditional IRA’s. The bonified adjusted gross income of a single taxpayer to be eligible to contribute to a Roth IRA, the taxpayers adjusted gross income cannot exceed the applicable dollar amount. The applicable dollar amount for married taxpayer filing a joint return is $159,000. The applicable dollar amount for a single taxpayer is $101,000.

Eligible Long-Term Care Insurance

A) Exclusion from Taxable Income. A person who is insured under a qualified long-term care insurance policy is entitled to an exclusion from taxable income a daily amount of long term care insurance benefit. This is adjusted annually for inflation.

B)       Premium Deduction. A portion of the premium for long-term care insurance is deductible as a medical expense. The amount of the allowable deduction depends on the age of the policy holder and is adjusted annually.

Standard and Poor’s 500 Index

The Standard and Poor’s 500 Index (S&P 500) is an index consisting of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large-cap universe. Companies are selected by a team of analysts and economists at Standard and Poor’s. The S&P 500 is a market-value weighted index – each stock’s weight in the index is proportionate to its market value. The front-end yield is the average dividend yield for the entire group of stocks. 

Note:  The information in this blog can be found in the forthcoming 2008 Cumulative Supplement to Representing the Elderly or Disabled Client by Thomas D. Begley Jr. and Andrew H. Hook, (Warren, Gorham & Lamont of RIA, 2008). 

How to talk with your parents about aging

We see it all the time. The adult children of aging parents come to our offices looking for direction. Yes, they have legal questions (How do I start using my power of attorney without disturbing or offending Dad? How will Mom ever be able to pay for nursing home care?). Often, however, their questions are much more vague, and much more difficult.

What these clients often need is counseling, advice and reassurance. It is hard to initiate conversations with parents. It is hard to begin the shift to parenting our parents. When they were parenting us they had Dr. Spock for help, and we had Dr. Brazelton in our turn. But there isn't a good single guidebook for this process. And it is becoming much more commonplace.

Yesterday, with NPR on the car radio, I practically had to pull over to give my full attention to one of the best conversations I have ever heard on the subject. "Talk of the Nation," with Lynn Neary filling in for Neal Conan, devoted its January 17, 2007, program to "How to talk to parents about aging." With guests Amy Dickinson ("Ask Amy") and Joseph Coughlin (from the MIT AgeLab), the half-hour program was a goldmine of small nuggets and reinforcement.

I loved it. I predict you will, too -- whether you are looking for help dealing with your own aging parents, or are an elder law attorney or other professional in the aging network. You can get transcripts, you can read and contribute to the "Talk of the Nation" blog, or you can listen to the program itself online at the NPR site. I'm a big fan of NPR generally, and this excellent program provides good support for that view.

Robert B. Fleming
Fleming & Curti, PLC
Tucson, Arizona

NAELA, NELF, CELA, ACTEC -- What does it all mean?

All you want to do is to find a lawyer to draft a simple will and powers of attorney. You ask your friends, but no one has a referral they feel unequivocally good about. A little online searching reveals that there are any number of organizations, credentials and qualifications–but how on earth do you figure out which lawyer actually knows something about estate planning, or Medicaid eligibility, or special needs trusts, guardianship and conservatorship (or whatever your elder law problem actually might be)? Let us give you a primer so you can identify the candidates.

NAELA (the National Academy of Elder Law Attorneys) is probably the first place to look. Any lawyer in the country who does any significant amount of elder law (and that term is generally understood to include all the categories in the previous paragraph) probably belongs. There are about 5000 members, and the organization has been around for twenty years.

To belong to NAELA all you have to provide is proof that you are a lawyer and a $375 check each year. Even though the dues are not high, they serve as a low-level filter–those who sign up tend to actually work in the trenches of elder law. The organization has the best continuing legal education programs, the best camaraderie and the best sharing of any professional organization around.

There are actually several “flavors” of NAELA. Advanced elder law practitioners formed a subdivision of the organization two years ago; the Council of Advanced Practitioners (NAELA/CAP) is a highly selective group who meet separately once a year, exchange more sophisticated practice ideas and share much closer personal and professional connections.

Then there are the NAELA Fellows. Each year a small handful of NAELA members are selected to be Fellows, based on their reputations in the national and local communities, their hard work in the field, and their writing and speaking. The Fellows are the best-known, hardest-working elder law attorneys in the country–and there are fewer than 100 of them.

NAELA members who want to announce their availability for particular types of elder law work can sign up for the NAELA Experience Registry. Other than a certification that you are familiar with the area you sign up for, and payment of an annual fee, there is no requirement that you prove knowledge, experience or capability. Still, participation in the Experience Registry can be an indication of real interest in an area of elder law.

NELF (the National Elder Law Foundation) was an outgrowth of NAELA but is a separate entity. Its primary function is to operate an elder law certification program, and to grant successful applicants the CELA (Certified Elder Law Attorney) designation. CELAs must pass a full-day written exam (which has a famously low pass rate) and establish that they have real experience in the field.

ACTEC (the American College of Trust and Estate Counsel) is an entirely separate organization with some overlap but a significant difference. ACTEC Fellows (the name for all members) have to have been nominated by an existing Fellow; there is no application process and no way to sign up other than to get invited after a year-long vetting process. ACTEC Fellows tend to dress nicer, drink finer wines (not nearly as much beer) and belong to larger law firms than NAELA members.

There are, in addition, several for-profit organizations focused on estate planning and other elder law sub-specialties. Membership in any one of these may indicate that the lawyer takes the practice seriously, is trying to improve his or her skills through continuing education, and is committed enough to the practice to pay a (sometimes hefty) fee. Those organizations include the National Network of Estate Planning Attorneys (NNEPA), the American Academy of Estate Planning Attorneys (AAEPA), and Wealth Counsel. Each of those organizations has its staunch partisans; even a cursory look at their websites will illustrate that their primary focus is on their membership, rather than providing public information or referrals.

There are at least two national organizations for lawyers who practice in the special needs arena. One, the Special Needs Alliance, is a non-profit organization with an invitation-only membership structure. The other, the Academy of Special Needs Planners, is a membership group open to anyone who is interested enough in the field to pay its hefty membership fee.

In addition to all of that, your state bar association and/or Supreme Court may have created a legal specialty in estate planning, tax, elder law, or related fields–or in more than one of those. State specialization usually indicates a serious peer review process, a challenging written examination, and a higher requirement for continuing legal education to maintain the certification. Arizona, for example, provides certification for "Estate and Trust" lawyers as well as Tax practitioners, and also recognizes the CELA designation described above.

Should you demand that your new lawyer have one or more of the credentials described here? No, not necessarily–though you might ask further questions if he or she does not belong to any of these professional associations. The websites of each may give you some leads to locate experienced and competent practitioners in your area.

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

Emergency Contact Information

This weekend I was siting in my conference room with a couple discussing their estate planning. I looked out the conference room window and saw an elderly lady trip, fall and hit the pavement. I ran outside and found her lying on the pavement bleeding from the head. She was disoriented and frightened. We immediately called 911 and asked her who we should call to advise them about her fall. She could not give me a name or number for anyone to call.

When the paramedics arrived they recommended she be taken to the hospital. Prior to being taken to the hospital, she told me that she was a member of a local church. My office administrator accompanied her to the hospital. I was able to locate a friend by contacting the church. The friend went to the hospital and relieved my office administrator who had remained with her.

However, this incident called to my attention the importance of keeping an up to date list of contact persons with their addresses and phone numbers in our wallets. The list should include any persons who have been designated as an agent under a medical power of attorney. I am considering providing my clients with a form to use to create this list.

Andrew H. Hook, CELA, CFP
OAST & HOOK, P.C.
521 Middle Street Mall
Portsmouth, Virginia 23704
757-399-7506

hook@oasthook.com