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What do you have if three lawyers are buried up to their necks in cement? Not enough cement.
What is the difference between a lawyer and a vulture? A lawyer gets frequent flyer miles.
If a lawyer and an IRS agent were both drowning and you could only same one of them...would you go to lunch or read the paper?
A big thank-you to Attorney David Goldman who is based in Jacksonville, Florida who generously shared an article he wrote regarding the problems that are triggered when the elderly maneuver to avoid probate.
One of my favorite sayings when it comes to planning and elder law is that usually when you fix one problem you end up creating a brand-new problem. Then you have to determine which of the two problems is the bigger one! Anyway, this dilemma is wonderfully illustrated by Attorney Goldman in his article, and I have posted it below with his permission. Thanks Dave!
Common Mistakes Made When the Elderly Attempt to Avoid Probate.
By David Goldman with the Jacksonville based Apple Law Firm PLLC
In an effort to avoid the costs and time involved with a Florida
The most common mistakes that Florida families make include:
1. Transferring a portion or all of a home to a family member.
Often, people executed deeds that include other family members in an effort to avoid probate. The most common type of deed that people use is a life-estate deed. Normally, A life-estate deed reserves the right for the owner to live in the home for the remainder of his or her life and then upon death the property belongs to the designated family members. Although a life-estate deed avoids probate, it can cause many unforeseen problems. These problems include 1) a gift for federal income tax purposes which is often unreported and can accrue interest and penalties for years; 2) loss of the stepped up basis the recipient would receive upon the death of the original owner; 3) the inability to sell or refinance the property without the consent of all owners; and 4) the creation of a disqualifying transfer for Medicaid qualification.
Fortunately, there is a way to avoid probate without the downsides associated with a life-estate. If an Enhanced Life Estate Deed is used, the problem will not occur. The enhanced life estate deed is similar to a life-estate deed. However, an Enhanced Life Estate Deed gives the life tenant the ability to sell, convey, mortgage, or refinance the property without another person’s consent. Moreover, an Enhanced Life Estate Deed is beneficially avoids probate, maintains the stepped up basis benefit upon the death of the life tenant, does not create a gift, and is not a disqualifying transfer for Medicaid qualification purposes.
Indeed, one must use caution when executing an Enhanced Life Estate Deed, because it is possible to draft them incorrectly and create problems that will result in the necessity of a probate. Typically, this occurs for of two reasons. First, the deed does not use the correct language to keep part or all of the property outside of the life tenants estate. This occurs when one or more of the beneficiaries pre-deceases the life tenant. The second, more common reason is that the title company is not satisfied with the language of the deed and requires a probate in order to issue title insurance. In Florida, Title insurance is required when a home is sold with a mortgage. Therefore, you will not be able to sell the home without a probate to clear the title. In addition, the requirement of a probate can subject the home to claims by Medicaid under Florida’s Medicaid reimbursement program. This is not the type of deed that one should undertake without the advice and consent of a licensed Florida lawyer who has dealt with these issues.
2. A joint account holder using funds for personal benefit.
Another common technique used by the elderly to avoid probate is to create jointly owned bank accounts with other family members. For Medicaid planning purposes, all funds in such bank accounts are considered assets of the applicant, regardless of the source of the funds. Often, family members do not keep sufficient records or may use the joint account to pay bills that are not the responsibility of the applicant. Medicaid considers such transactions as “gifts” and will disqualify the recipient if they are done within 5 years of the application process. It is possible to undo these transactions, but often the family member who received the benefit is unable or unwilling to return the money.
3. Making gifts or donations to people, charities, or religious institutions.
The third major mistake of Medicaid applicants is making gifts or donations to churches or charities. As you age, the chance that you will need Medicaid increases. If you desire to continue to make donations, you must be prepared to repay the money in the event you need Medicaid coverage. There is a solution. You can make gifts conditional that in the event that such gift creates ineligibility for Medicaid coverage, the organization accepting the gift shall return the funds necessary to cure the ineligibility. However, most institutions refuse to accept gifts or donations under these circumstances.
Another problem area with gifts occurs when gifts are given to family members and friends for holidays and birthdays. While there is not a problem in making a gift to a spouse, although a gift to a child or grandchild is a problem. Often the applicant’s children understand, but it is a difficult concept to explain to the grandchildren. In these situations, we often recommend that the applicant tell the grandchild’s parent to purchase the gift for the grandchild with his or her own money.
4. Selling assets to family members for less than fair market value.
The fourth major area of problems with Medicaid eligibility occurs when the applicant has sold or given real or personal property to another for less than fair market value. The difference between the fair market value at the time of the transaction and the amount received is considered a gift and creates a disqualification period. This can happen with a vehicle, home, a piece of land, or other asset owned by the applicant. The solution is to have the person who received the funds reimburse the fair market value of the items prior to the application for coverage being filed.
5. Transferring assets to a Living Trust.
One of the more common but easily correctable mistakes is when the applicant transfers assets to a revocable trust. Often, these transfers are part of normal estate planning. It is important as people age that any estate-planning take into consideration Elder law issues and the potential need for Medicaid planning. Since the trusts are revocable, they can be revoked and the assets are returned to the applicants. It is important to do this prior to applying for Medicaid to avoid penalties.
As our family members age it is important to review and modify our planning techniques based on their individual circumstances. Often, we can accomplish the goals of probate avoidance and Medicaid eligibility with alternative tools and techniques. As the rules for eligibility become more complex it is important to deal with someone who is familiar with elder law and estate planning.
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David Goldman is an attorney with the Apple Law Firm who practices in the areas of elder law, Medicaid planning, estate planning, and Asset protection.
When you have elderly parents who live far away there is a laundry-list of challenges you face in regards to monitoring and coordinating their day-to-day care.
But perhaps one of the biggest projects you may need to undertake is moving your parents into a new household. As difficult as it is place a loved one in a nursing home, the reality is that they really can't take much with them due to the storage constraints in skilled nursing facilities. The logistics get much more challenging when your loved one is moving to a new household and they actually can take most of their stuff with them. It's a dizzying project when you live next door, but close to impossible for you to undertake if you live far away. And it's usually not practical for an elderly couple to tackle this kind of project on their own.
Luckily, there is an emerging "moving management" cottage industry that is designed to help out in these situations. Click here for a Washington Post article on this relatively new industry.
A couple of years ago, I was appointed as conservator for an elderly lady and one of the first issues to address was moving her from her apartment to an assisted living facility where she could have more supervision. I ended up using a moving manager who retained the services of a moving company, spent time with my client and determined which items were going to the new home, physically moved everything to the new space on moving day (while a family friend took my client out for half a day), unpacked everything in such a way that it resembled the original home layout as much as possible, walked my client through her new home and pointed out where everything was, and then attended to all of the items that could not fit in the apartment by obtaining the services of an auction company and donating everything that could not be auctioned off.
The luxury of leaving all of the mind-numbing details of this moving project to someone else was a relief beyond words. I simply don't know how I could have managed everything on my own.
So, if you find yourself in this kind of situation with a loved one and he/she lives in the Hartford area then please e-mail me and I will be happy to refer you to a good local moving manager. If you're not in the area then try Googling "moving managers" or "organizing services".
A man came across a striking brass rat in an antique store and decided it would look great on his desk. He paid $100 for it but was surprised when the store owner told him it was non-returnable. He said, "It's been returned twice already and I don't want to see it again."
Upon leaving the store, the man saw a couple of rats scurrying around the corner and several more were near his car. As he drove, hundreds of rats appeared from the gutters and side streets until he was nearly overwhelmed. In a panic, he threw the brass rat over the bridge railing into a river while the army of rats followed it into the depths.
The man hurried back to the store, but the owner cut him short saying, "Look, I told you there would be no returns."
The man quickly replied, "Oh no, that's fine. I was just wondering if you had a brass lawyer."
Many of my clients tend to procrastinate when it comes to finalizing their estate planning documents. They struggle over who to appoint as guardians for the kids, or who should be the "back up" executor if the surviving spouse can't act, or who's going to end up with the tool collection. Sometimes these questions can be tough ones and people "freeze up" and stress out over whether or not they're making the right decision.
As the estate planner I'm always concerned that the famous bus is going to run my clients over while the drafts of the wills sit on my desk unsigned. So I try to gently nudge my clients along towards finalizing everything.
One factor that I try to impress upon my clients is the fact that their wills are not set in stone; that my clients should conceptualize their wills as evolving documents. As developments occur in the family (if people pass away, someone becomes disabled, someone gets divorced, there's a "falling out", etc.) it is possible to tweak the documents in order to address the new family situation.
I also emphasize that tweaking the documents ("amending" the documents, in legalese) is very easy and very inexpensive, assuming that the change is not overly-complicated. I always keep the documents on my computer, or stored digitally, so re-printing the documents with a new date and a new name here or there is very easy. My fee for doing something like that runs in the two figures, not three figures.
So, don't stress out about it too much when you set up your will and other documents. Make the best decision you can given the current circumstances and facts. Then schedule a signing date with your attorney knowing that you can easily change things later if you need to.
And remember that once your documents are signed you will experience a wonderful peace-of-mind, and that's what estate planning is all about.
I think the single-biggest office technology item that has transformed the practice of law since I started my legal career has been e-mail. This is my main mode of communication with clients and colleagues and I love it. This may frustrate some clients, but I very rarely pick up my phone. The problem is that if I picked up the phone every time it rang (thereby requiring me to drop whatever I'm doing and then re-start it again after the phone conversation) my productivity level would plummet and my clients would collectively suffer. Instead,I check my voicemail messages frequently and then quickly return calls that need immediate attention.
Therefore, e-mail becomes a wonderful communication alternative. I can review messages as they come in and respond to them quickly. This process takes a fraction of the time that the same communication would take with phone calls.
The other nice thing about e-mail is the capacity to instantly send documents to clients. For example, once a client's estate planning documents are drafted and proofread, I can attach the drafts to an e-mail message and the client can have them within seconds. This is a much more appealing alternative to printing out the drafts and a cover letter, putting them in a big envelope, paying $2 or so in postage and then mailing them out so that the client can receive them a couple of days later. E-mail allows me to send documents much faster and with much less expense (with the savings passed onto the client with lower fees, of course). And if the client would rather have paper copies of the drafts then it's very easy to print them out when the e-mail arrives.
The last technology tool I would like to mention in this series of posts is, believe it or not, my MP3 player. I have a Sansa Sandisk MP3 player that I take with me on my training runs each morning. During the 1 to 1.5 hours on the road I certainly listen to some music, but I spend post of the time listening to audio books and podcasts on elder law topics. It's a great way to exercise both the body and mind at the same time. My MP3 also has an FM radio function (not available on the iPod) which allows me to tune into the latest news on NPR. Society expects us attorneys to at least have a working knowledge of what's going on in the world.
So...that's a summary of how I use practical technology to enhance my practice by making me more efficient and cutting down on costs, which is a "win" for my clients when they get their bill. If you're an attorney and you're intrigued by any of this then please feel free to contact me; I love chatting about this stuff.
Another item of law office technology that I've become a big fan of is the eFax service. In short, for a minimal monthly fee the service allows me to send and receive all of my faxes as PDF files. So, when my office receives a fax it comes in as an attachment to an e-mail message from eFax instead of being cranked out by a machine. This means that I don't have to be in the office to receive and review a fax. As long as I have access to e-mail (i.e. anywhere I can get internet access, including my smart phone) I can get my faxes. Not only is that convenient, but it saves me the cost of buying and maintaining a fax machine, the paper for the machine and a separate phone line. And that's a savings I can pass onto my clients with reasonable legal fees.
Another essential tech tool is my Palm Treo smart phone (which I plan to upgrade to something faster in a couple of months). My Treo is hermetically sealed to my left hip. There's the obvious convenience of receiving phone calls and managing voice mail from wherever I am. But the majority of my communication with clients and colleagues is now done via e-mail, and I can manage my e-mail messages from my Treo. So clients are usually pleasantly surprised with how quickly I respond to their e-mail messages since I can address them while I'm on line at the grocery store, hanging out in a waiting room, sitting in a parking lot...whenever I have "down-time". My Treo also allows me to review PDF attachments (like my faxes) and forward them on to someone else.
I also like to use logmein.com, which allows me to access my office computer from home or anywhere else I can get internet access as long as my office computer is turned on. This allows me to work on files in the early morning hours (before the kids wake up, of course) without having to trek to the office. It also allows my paralegals access to the files on my office computer so that they can work on files at home when it's convenient for them.
In light of inquiries I have received from many of my clients, colleagues and blog readers I've decided to do a post summarizing the technology-oriented model I've adopted for running my law practice, which still seems to be relatively rare in the local legal industry.
When I launched my solo practice about 2 1/2 years ago I had the administrative luxury of starting with a clean slate. I did some research on the office technology that was available and realized that there was a much more efficient and cost-effective way to operate my practice than what I experienced at the law firms where I worked in the past.
The centerpiece of my business model is the "Paper-LESS" approach. The emphasis on "less" indicates that it's essentially impossible for any law practice to be 100% paper-free, but I've come as close to it as possible. My paralegal and I have small high-speed scanners sitting next to our computer monitors and the office policy is that everything (hand-written file notes, old wills, deeds, business cards, etc.) that goes into or out of the office gets scanned and stored into the appropriate "digital file". Then the paper that was scanned is shredded unless it must be kept, which probably laccounts for ess than 5% of the paper that goes through the office.
The result is that I do not have any paper files. All my files are on the computer and each client has a main folder and sub-folders, just like a paper-based system. This means that if I need to look at any document from any client file I can have it on my computer monitor in no more than 5 mouse clicks. And if the client needs a copy of that document I simply attach the document to an e-mail message and it's off to the client in under a minute. Suffice it to say that if you're working with paper files this process takes a LOT longer.
The other benefit is that I have 3 back-up systems which back-up all of my documents every 24 hours. This helps me sleep at night because I know that if the building burns down then my law practice can be up-and-running the next day. But if I had a paper system and the building burned down then I don't see how my business can recover from that.
What do you call a lawyer gone bad? Senator.
How do you get a group of lawyers to smile for a photo? Just say "fees" instead of "cheese".
What's the difference between a lawyer and a leech? When you die a leech will stop sucking your blood and drop off.
"Itis interesting to note that criminals have multiplied of late, and lawyers have also. But I repeat myself." - Mark Twain
* Please note that these jokes and others like them are usually directed at personal injury attorneys, certainly not elder law attorneys!
As an attorney who deeply appreciates how office technology can help one run a very efficient law practice, I have been equally fascinated with the technology developments that are enhancing life for the elderly.
Imagine...tiny motion sensors in a senior's bed to detect extraordinarily restless sleeping and record how often it occurs, which can be a sign of a serious medical problem such as congestive heart failure.
More sensors unobtrusively set up over the toilet, shower, carpets and doorways to monitor movements inside an apartment. These are much more appealing than the medical warning necklaces which depend on the cooperation of the elderly user.
High-tech pill boxes which remind someone to take their pills and then alert a remote caregiver when pills aren't taken on schedule. Robotic companion pets. And all of this technology geared toward keeping a loved one as independent as possible for as long as possible in order to stave off a permanent nursing home placement.
I would argue that children who act as caregivers for elderly parents need to keep their fingers on the pulse of the world of technology and use some of these devices and approaches to make their lives easier and to improve the life and health of their loved ones.
You may want to bookmark some websites, such as the Center for Aging Services Technologies and the Interdisciplinary Center on Aging (I'll mention more of them on the blog as I run across them myself) and set up some Google Alerts to stay abreast of the latest-and-greatest. Certainly, most of the new technology products will be impractical, but you will hopefully find a few things that can make a big difference.
Please click here for a recent AP article on this topic.
