The Connecticut Elder Law Blog

Disabled Population in U.S. is Rising

The U.S. Census Bureau recently released a report indicating that in 2005 there were 54.4 million Americans (19% of the U.S. population) who were disabled and 12% of the disabled population suffered from a "severe disability". 

The CB reports on this every three years, and these numbers are significantly higher than they were in 2002 when 51.2 million or 18% of the population was disabled. 

If you have 15 or 20 minutes to spare it's definitely worth clicking here to see the full report since it goes into a lot of detail and gives us a solid picture of the role that disability plays in American society.

Congrats to QU Business Students!

Two students from Quinnipiac Univeristy (my law school alma mater), Chris Lupfer and Griffin McGrath beat out ten other student teams in the Venture Enterprise category of the Fall 2008 Connecticut Collegiate Business Plan Competition, which took place in New Haven on December 5th. 

Not only that, but the winning business plan submission was for "ActiveOwl", which is an online social network destination for active adults and wired seniors.  Sounds like the Baby Boomer and senior version of Facebook!  Anyway, the team was given a $1,000 grant to help get their business off the ground, and I hope they do just that because I have a bunch of clients who would have a lot of fun with it.

Congratulations Chris and Griffin...you made QU proud!

Possible Tax Benefit for Caregiver Children

Perhaps 2008 was the year in which you made the extraordinary commitment of moving Mom or Dad (or both) into your house to live with you so that you could provide continuous care and keep them out of a nursing home.  If you made that commitment this year and have stuck with it this long then you are to be commended; it's a tremendous sacrifice and chances are that it turned out to be at least ten times harder than you thought it was going to be.  

Anyway, the purpose of this post is to let you know about a significant tax benefit that you should take advantage of.  One caregiver client recently commented that his experience with taking care of Dad at home is proof-positive that "what goes around comes around".  In other words, when he was a child he depended on Dad to take care of him, and now he's doing the same for Dad.

Just remember that the IRS rewards you when someone depends on you, so make sure you take a "dependency exemption" on your 2008 income tax return for taking care of Mom/Dad.  Also, if you have shelled out money for their medical expenses, then it may be possible to write those expenses off as well.

If you have an accountant you should call him/her to talk about the details.  Or if you live in the Hartford County area and you don't have an accountant but would like a referral please let me know.

Big Kudo's for the Dominion Foundation!

The spirit of giving is alive and well at Dominion Resources, one of the country's largest energy producers.  Its philanthropic arm, the Dominion Foundation, recently announced that it will donate over $1 million to food banks in the communities in which it operates, including $32,500 in Connecticut, mostly to food banks in the Groton-New London area.

Food banks nationwide have been pushed to the max these days for obvious reasons, and millions of our seniors who are on fixed incomes depend on such resources for sustenance on a regular basis.  This is a wonderful example of greatly-needed philanthropy...thanks so much, Dominion!

Merry Christmas!

Merry Christmas and Happy Holidays everyone! 

First comment: Make sure to take some time today to celebrate the senior members of your family who are still with you.  Regardless of the situation, try to remember that the elderly are positive facets of the family and society in general.  They can impart a great deal of wisdom (yes, many Alzheimer's patients are still capable of doing this) and they are a valuable testimony to your family's past.

Second comment:  You should not be reading this post today!  And no, I didn't draft this post this morning...I drafted it a few days ago and scheduled it for publication today.  Now, shut off the computer and join or contact the rest of the family and celebrate the holiday season!

Check Out CMS Nursing Home Rankings

The Centers for Medicare & Medicaid Services (CMS) has released its star-based ratings (one to five stars) of 16,000 nursing homes across the country, including 241 homes in Connecticut.  The ratings are based on state inspections, staffing and ten other quality-of-care measurements.

Click here to see CMS's nursing home comparisons and please bookmark it if you have senior family members who may need nursing home placement in the foreseeable future.  This will prove to be an invaluable resource, but don't forget to take the initiative and visit nursing homes that you are considering as well.

The Fed's Pull an About-Face...Take Those RMD's for '08! Quickly!

There has been some discussion for a while about a plan to help out seniors who are forced to take "required minimum distributions", known as RMD's, out of their IRA's (as well as 401K's and other retirement accounts,which have the same RMD requirement) and suffer the income tax consequences of doing so. 

RMD's are a specific amount of money, based on your life expectancy and the balance in the account, that must be taken as taxable income each year starting at the age of 70 1/2.  Technically, the deadline for your first RMD is April 1st of the year following the year in which you turn 70 1/2. 

Anyway, the tax code wields a pretty big stick for those who decide to ignore this requirement.  The penalty, which is 50% of the amount that was supposed to be withdrawn, is usually more than enough motivation for an IRA owner to fully comply. 

But in light of the decimation of everyone's IRA's the thought was that it seemed cruel to accelerate the decimation by continuing the obligation to take RMD's.  In fact, Congress apparently reached a bipartisan proposal for suspending RMD's for 2008 & 2009, and many retirement owners have been delaying the withdrawal of their '08 RMD in light of the plans.

Well, the Treasury Department has pulled the plug on such plans and there will be no suspension of the RMD requirement this year or next year.  Lovely.

So, if you've been putting off the RMD this year, it's time to get moving... and fast!  You should contact your account sponsor and find out the quickest way to withdraw the RMD before the end of the year, which is only eight days away!

Example of a Huge Medicaid Pitfall for Joint Account Owners...

I have always cautioned clients about the potentially adverse effects that joint accounts can have on one's estate plan.  But I now have a client whose joint account has created an enormous Medicaid eligibility problem!  In fact, the situation would make for a fascinating question on a law school exam.  However, the client is anything but fascinated about the predicament.

To summarize the scenario, two sisters own a joint account that has been fully funded by only one sister who was frail.  The healthy sister was named as a joint owner (this is where the mistake occurred, which I'll explain later) simply to help the frail sister manage the account.  The plan was that if the frail sister died then the healthy sister would simply distribute the relatively substantial account to the frail sister's children.

Well, as with many things in life, it ain't that simple.  The frail sister passed away and the surviving sister's age and health is now such that a nursing home placement and a Medicaid application within five years is firmly within the realm of possibility.  This means that the surviving sister can't distribute the account funds to her nieces and nephews without jeopardizing future Medicaid eligibility and serious financial consequences.

After much meditation I've worked out the best solution possible (as far as I can tell), which is too complicated to summarize for a blog post, but suffice it to say that only time will tell if the nieces and nephews will ever see the money that their mother intended for them.

The big mistake?  The healthy sister should have been designated as a POA on the account, not as an account owner.  If that simple change-of-title were made then everything would have worked out as intended.  Alas...

So, the take-home lesson is that if you're going to set up a joint account you need to think through what would happen if one of the joint owners passed away.  Would the resulting ownership status be favorable or not?  And, of course, I will add that always-self-serving comment...you may want to get input from a competent estate planning attorney.

High-Tech Security for Seniors

I have become a huge fan of practical technology over the last couple of years, and I incorporate a great deal of technology in running my law practice in order to increase efficiency and lower overhead costs (both are good-news items for my clients).  So I am always excited to hear accounts of how new technology is enhancing the lives of our seniors.

One example is the "Portal Monitor", developed by Indiana University.  The system includes a hidden camera which takes pictures of the outside of a senior's front door when the doorbell is activated or when someone leaves or enters the house.  The photo's are then instantly sent to cell phones of designated people, such as family members or helpful neighbors.  This system can be invaluable in situations when predators (intending either physical or financial abuse) come calling or if the senior tends to wander. 

Click here to learn more about this fascinating project.

Get the Right Kind of Special Needs Trust

Most of my clients who sit down to discuss estate planning for their special needs child are surprised to hear that there are actually two types of special needs trusts, one of them being much more appealing than the other.  The question of which one you need to use is based on the source of the trust funding.

If the trust is funded by assets that belong to the special needs child (usually by way of a personal injury settlement, or possibly an inheritance from a well-meaning relative) then it's called a "self-settled" or "D4A" trust, referring to the IRS code.  This is not an ideal situation because the law requires that the trust include a "pay-back" provision.  Such a provision states that upon the death of the special needs child the remaining trust funds must go to the State, up to the amount that the State has contributed towards the care of your child.  It essentially allows the State to get reimbursed and it's possible that you would not be able to have the money go to family members instead.  It depends on how much the State has helped out your child.

If the money going into the trust comes from a source other than the special needs child (presumably the parents and possibly other relatives), then it's called a "third party" special needs trust, and this is the type of trust that you want because you don't need a pay-back provision for the State.  Upon the death of your child, the remaining trust funds can go to family members, charities, churches or anywhere else you would like it to go.

So...if you have a special needs trust it's worth taking the time to review it and make sure that it doesn't have that pay-back provision unless it has to.  You'd be surprised by how many special needs trusts I review where the attorney unnecessarily included a pay-back provision.