Why did the teacher remove all desks from her classroom? What did the kids learn?
May 30, 2011
Filed under: Veterans Benefits
— Andrew Sykes @ 4:07 pm
When the children arrived at Ms. Cothren’s class on the first day of school a few years back, they were surprised to see not a single desk in the entire classroom. (With permission from the superintendent, she had them removed.)
“Ms. Cothren, where are the desks?” the children asked.
“You can’t have a desk until you tell me how you earn it,” she answered.
Kids tried out various answers.
“Our behavior?” one suggested.
“No, it is not your behavior that earned you the right to sit at a desk,” Ms. Cothren said.
“Our grades?” another tried.
Throughout the day, the same scene repeated itself. Children puzzled over why they had no desks, but no one could answer Ms. Cothren’s question. Local news crews gathered, wondering what this crazy teacher was doing.
Finally, in the last period of the day, Ms. Cothren told her students that throughout the entire day, no one had really understood how they earned the desks that ordinarily sat in the classroom. “Now I’m going to tell you,” she said.
She opened the classroom door. In walked an armed forces veteran in full uniform carrying a desk. He set it down and stood against the wall. Another veteran carried in a second desk, set it down, and stood against the wall.
In all, 27 uniformed veterans filled up the classroom with 27 desks.
“You don’t have to earn these desks,” Ms. Cothren told the students. “These guys did it for you. They put them out there for you, but it’s up to you to sit here responsibly, to learn, to be good students and good citizens, because they paid a price for you to have that desk, and don’t ever forget it.”
A lesson for all of us on Memorial Day.
Law School Interns Help Out
May 27, 2011
Filed under: Sykes Elder Law
— Andrew Sykes @ 1:03 pm
Our legal secretary Donna Dean gets a kick out of watching Bailey Flask (left) and Allison Reinersmann (right) pose for their newsletter photo.
Two interns with an interest in elder law picked up some real life experience this past semester in our office.
Bailey Flask and Allison Reinersmann, then third-year law students at the University of Pittsburgh School of Law, got the chance to put their newly minted legal skills to work at Sykes Elder Law two days a week for several months.
“I feel I’ve learned more here than in many of my substantive courses,” Ms. Reinersmann said. “In the classroom you learn theory and here you learn how to practice. Having both is what makes a good lawyer.
Ms. Flask delved into veterans benefits for aid and attendance, working on applications and improving our checklists and processes. When she had completed her first application, she hand delivered it to the local Veterans Administration office in downtown Pittsburgh.
Working as an intern requires a student to give attention to some of the practical details of a law practice. For example, does the IRS require an employer identification number when a client establishes an irrevocable trust? Not always, Ms. Flask discovered, and backed up her research with excerpts from tax code regulations and excerpts from IRS instruction forms.
Ms. Reinersmann researched and wrote a detailed memorandum on the use of an irrevocable life insurance trust as a means to protect assets from Medicaid spend-down. She also drafted petitions to be filed in Orphans’ Court, worked on an appellate brief in a Social Security disability case, and researched the standards for requesting Medicaid planning in a guardianship case.
Ms. Flask recently landed a job with the Veterans Administration. She credited her work at the firm with making her more conversant about veterans’ legal issues during her interviews with the VA.
Ms. Reinersmann has returned to the firm this summer to help out part time while she studies for the bar exam.
VA benefits for healthy vet with ill spouse – a little known secret
May 25, 2011
It’s well known that veterans benefits for aid and attendance will help pay for long term care needed by a wartime veteran, or the widow or widower of one.
But what about Jane, who needs care in an assisted living facility and is married to Bill, a World War II veteran? Any help available there?
Quite possibly, yes!
It’s a little known fact that when a veteran is over the age of 65, the VA will presume a veteran is disabled for purposes of qualifying for a benefit known as the “low income pension.” If Bill qualifies for the full benefit amount – $1,291 a month – that extra will go a long way toward paying the cost of Jane’s care.
Bill should apply if: (1) he meets the usual requirements for low income pension benefits (modest household assets, other than dishonorable discharge, etc.), and (2) cost of care exceeds household income.
Even if household income is greater than the cost of care, but not by more than $1,291, it may still be worth their while to apply for partial benefits.
What are “exempt” or “excluded” resources for Medicaid eligibility in PA?
May 23, 2011
Filed under: Featured Posts,Medicaid Planning
— Andrew Sykes @ 3:34 pm
To be eligible for Medicaid, an applicant can own only a modest amount of “resources.” But some resources are exempt, meaning they will be excluded when determining eligibility.
Exact rules vary from state to state. Here are Pennsylvania’s rules on the most common exempt resources:
Home, at least up to $500,000 in equity. Real property used as the principal place of residence by the applicant, a spouse, or dependent relatives is excluded, as long as the applicant, spouse or relatives live in the property. This exclusion also covers land and related outbuildings necessary to the operation of the home.
If the applicant is institutionalized, the residence will remain excluded if the applicant states in writing that his or her intention is to return to the residence. The statement can be provided by a person with authority to act on the applicant’s behalf, if the applicant is incapable of providing the information.
Under the Deficit Reduction Act (DRA), enacted February 8, 2006, the allowed value of an applicant’s equity interest in the home is capped at $500,000, unless the applicant’s spouse, child under age 21, or disabled child is lawfully residing in the home. States can opt to increase that amount to $750,000, but Pennsylvania has not done so. An applicant can use a reverse mortgage or home equity loan to reduce equity interest.
Household goods and personal effects. Household goods such as furnishings and equipment commonly found in a household are excluded. So are personal effects, including (but not limited to) clothing, jewelry, items of personal care, recreational equipment, musical instruments, and hobby items. Items required because of a person’s physical condition, such as prosthetic devices, dialysis machines, motorized wheelchairs, hospital beds, and similar items are excluded.
Motor vehicle. Pennsylvania regulations exclude only one motor vehicle for the applicant. If the applicant is married, the exclusion remains at one vehicle for the couple. Other motor vehicles are counted at their equity value.
Life insurance. Life insurance that does not accumulate a cash value, such as term insurance, is excluded. As to life insurance that does accumulate a cash value, Pennsylvania regulations exclude up to a maximum face value of $1,500 for each insured person. “If the life insurance of an insured person has a total face value in excess of $1,500, only the cash surrender value in excess of $1,000 shall be considered a resource to the owner.” 55 Pa. Code §178.69.
Burial spaces. An Operations Memorandum issued by the Department of Public Welfare in November 2003 provides that the value of all burial plots owned by Medicaid applicants will be excluded. The regulations specify that the burial space exclusion covers conventional gravesites, crypts, burial drawers, mausoleums, urns and similar repositories.
Irrevocable burial reserve. Burial reserves (also known as funeral reserves, funeral agreements, pre-paid funeral agreements, and burial funds) are excluded if they are deposited with a funeral director or financial institution under a written agreement providing that the funds cannot be withdrawn before the death of the named beneficiary.
The agreement may include such items and services as casket, cemetery plot, flowers, and obituary. Regulations exclude an amount that is not exorbitant. DPW may consider a reserve exorbitant if it exceeds average local costs by more than 25%. If the amount in the burial reserve exceeds this amount, the excess amount may be considered reasonable if the applicant can demonstrate that the amount is not exorbitant for the person’s situation, and that the higher amount is needed for such things as cost of transportation for the body, certain costs for a priest, minister or rabbi who is a close friend or relative, and a reasonable gift to a church or a synagogue for use of facilities for services. See, 55 Pa. Code §178.5(5)(ii).
Trade or business property essential to self-support. Real property or personal property is excluded if used in a trade or business, or by the recipient as an employee and is essential to self-support. These resources are excluded regardless of value.
Non-business property essential to self-support. Property not used in a trade or a business is excluded if it is: (1) used exclusively to produce items for home consumption (such as cows supplying milk, chickens supplying eggs, or a garden plot used for fruits or vegetables); and (2) tools, equipment, uniforms and similar items required by an employer.
Revocable burial reserve. If the burial reserve is revocable, an applicant may exclude up to $1,500, reduced by the cash value of certain life insurance policies. See, 55 Pa. Code §178.73(2).
Community spouse pension funds. IRA’s, 401(k)’s and other deferred compensation funds are excluded if owned by a “community” spouse — that is, the spouse of an applicant. See, 42 U.S.C. §1382b(a); 20 C.F.R. §416.120; 55 Pa. Code §§178.2, 178.5, and 178.61-178.84.
Other exclusions. Other, less common exclusions may also apply, including such items as disaster relief assistance, certain trusts containing assets of disabled individuals, and payments of the German or Japanese governments to certain Holocaust and World War II survivors. See generally, 42 U.S.C. §§1382b and 1396p(d)(4); 20 C.F.R. §416.1210; 55 Pa. Code §178.
Estate planning for a child out of wedlock: Advice for Arnold Schwarzenegger
May 20, 2011
Filed under: Estate Planning
— Andrew Sykes @ 3:44 pm
When the media went into a frenzy this week over revelations of Arnold Schwarzenegger’s love child, I told myself I wouldn’t waste time following the story. But every time a news item appeared on the TV or radio, I was riveted.
I’ll try to redeem myself by letting it be the inspiration for a serious discussion about the estate planning ramifications of having a child out of wedlock. Since I pretended to give advice to Maria Shriver last week, it seems only fair.
The issue about “issue.” Wills, particularly those based on will forms used by lawyers, frequently use general terms such as “issue,” “descendants,” and “my children” to identify those who will inherit. Depending on the exact wording of the will, the jurisdiction where you die, and who does the interpreting, such a general term may or may not include a child born out of wedlock.
So if Arnold had died a year ago and his will left some funds to vaguely described “issue” or “children,” Maria and her kids could have been surprised to find out the funds would need to be divided five ways instead of four.
Or perhaps Arnold might have phrased a general term in a way he hoped would include his love child, only to have the courts rule that it applied only to the children of his marriage. Looking on from the afterlife, Arnold might think that was a raw deal and wish he could travel back through time to redo his Last Will and Testament.
News coverage shows that Arnold has apparently provided well for his additional son. Presumably Arnold would want to provide for him after death as well. If that is indeed the case, Arnold should name that son specifically and spell out exactly what provisions he wishes to make.
But being specific raises a challenge in Arnold’s case. Until recently, his wife and children knew nothing about the other child. Morality issues aside, how do you keep an illegitimate child’s existence secret so that you can maintain your marriage and seek political office, but still make specific provisions in your will for that child? Which brings me to my next topic…
Husband/wife conflict. Those of us who counsel married couples in estate planning advise our clients that a husband and wife may have conflicting interests. If so, they need separate legal counsel. In most marriages, husband and wife see things the same way, are content to waive any possible conflict, and want to avoid the expense of hiring separate lawyers.
But in Arnold’s case, he would have needed his own lawyer for the past 14 years if he desired to make specific provisions for his out-of-wedlock son without revealing anything about it to his wife.
How he would have explained his need for secrecy to Maria is another matter. If she had known, you can bet she would have said “Hasta la vista, Baby!” a lot sooner.
Death Certificate File Copies: Don’t Think Twice, It’s All Right
May 18, 2011
Filed under: Estate Administration
— Andrew Sykes @ 8:31 am
A troublesome admonition appears in bold print on every Pennsylvania death certificate: “WARNING: It is illegal to duplicate this copy by photostat or photograph.”
Does that mean I’ll get in trouble if I make a photocopy for my file?
No, according to the Pennsylvania Department of Health. In a letter issued in 2005, Charles Hardester, Director of the Department’s Division of Vital Records, says it’s fine to fax or scan a death certificate, or make your own file copy:
“I am in receipt of your letter [from an inquiring attorney] dated March 15, 2005 concerning the faxing and scanning of death certificates.
“Please let me refer you to 28 Pa. Code § 1.44:
“ ‘Subject to [certain] penalties […], no person may photograph, photostat, duplicate or issue what purports to be a certified copy, certification or certificate of birth, death or fetal death except for authorized employees of the Department of Health or its local registrars of vital statistics acting in accordance with directives, regulations or law governing their official duties.’
“We have interpreted this regulation to mean that no person may duplicate in any format an official certified copy of death and attempt to use or distribute that copy in lieu of an official certified copy of death issued by the department or local registrar of legal issues.
“Further, we do recognize the necessity of official certified copies of death being part of an official file or record. Therefore, we do not see the reproduction of a certified copy of death as a file copy in violation of the regulation as long as it is part of the official file and not intended to be used for legal purposes. Be aware though, the entity receiving the scanned or faxed copy without seeing the original, might be at risk should the ‘original’ not be authentic.”
When administering an estate, it’s often convenient to provide information on a death certificate by fax, scan, or photocopy. That won’t be a problem if you follow these guidelines.
Basic Medicaid eligibility for long term care in Pennsylvania
May 16, 2011
Filed under: Medicaid Planning
— Andrew Sykes @ 9:26 am
I’m frequently asked, “What is Medicaid, and how does a person qualify?” It’s an issue I deal with constantly as an elder law attorney in Pennsylvania.
In this post I’ll give a quick introduction to this complex program, focusing mainly on basic eligibility requirements in Pennsylvania.
What is Medicaid?
It’s easy to confuse Medicaid with Medicare, but they are two different programs. Medicare is a health insurance program while Medicaid is a program that pays certain health care costs based on a person’s need and eligibility.
Medicaid provides medical assistance for the aged, blind, or disabled who meet certain financial requirements. Established by the Social Security Act of 1965, the program is administered jointly by the federal and state governments.
The Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), administers the program at the federal level, and establishes minimum requirements and general guidelines. In Pennsylvania, the Department of Public Welfare (DPW) administers Medicaid under Pennsylvania’s Medical Assistance program. The County Assistance Office administers the program at the local county level.
Qualifying for Medicaid benefits
Medicaid provides a number of programs for different recipients, including payment for long term care in a nursing facility. I’ll focus on that program in this post, since it is the one I deal with most often as an elder law attorney. (The same basic rules also apply to community-based long term care through Pennsylvania’s Waiver Program, which allows certain recipients to receive care at home.)
To qualify for Medical Assistance in Pennsylvania, one must meet the following criteria:
1. U.S. Citizen or resident alien
2. Pennsylvania resident
3. Aged (65 or over), disabled, or blind
4. Medically eligible, meaning that the person requires nursing facility care
5. Financially eligible, meaning that countable resources do not exceed $2,400. However, note that under a DPW Operations Memorandum dated 11/4/03, an applicant with an income below 300% of the Federal Benefit Rate can qualify when assets are below $8,000. (Currently, that income figure is $2,022 per month. For the latest Medicaid eligibility figures, visit our Medicaid Current Numbers page.)
If the applicant is married, the spouse will be entitled to keep some of the couple’s resources, and perhaps receive some of the applicant’s income. I’ll explain the rules for married couples in later posts.
Divorce’s effect on estate planning – advice for Maria Shriver
May 12, 2011
Filed under: Estate Planning
— Andrew Sykes @ 2:51 pm
Maria Shriver and Arnold Schwarzenegger’s announcement this week that they will separate reminded me of the various ways divorce affects a person’s estate planning.
In this post, I’ll stick to what happens in Pennsylvania. Since laws vary from state to state on this matter, you always need to see what the law provides in your jurisdiction.
So if Maria Shriver were a Pennsylvania resident, here is how I would advise her:
A number of changes take place automatically when a person divorces. It’s important to know what those are, and of course it’s best to consider updating your estate plan after any major change such as marriage, divorce, death in the family, and so on.
Without knowing what’s in your will, let me tell you generally what happens.
Unless you clearly provide otherwise, divorce automatically revokes a number of aspects of your estate plan, including any provisions of your will favoring Arnold, the designation of Arnold as your agent under power of attorney and health care agent, and beneficiary designations favoring Arnold. I’ll go through them one at a time.
Will – A divorce or (in some cases) pending divorce renders ineffective any provision of your will that favors, or even “relates to,” Arnold. A clause that gives him your entire estate is an example of a provision favoring Arnold. A provision “relating to” Arnold could include one naming him as the executor of your estate.
If you die while the divorce is pending, do those automatic changes take effect? That depends on how far along the divorce proceedings are. There are several different ways of getting divorced in Pennsylvania, and under each method, there is a different way that “grounds” for divorce are established. Once grounds are established under the Domestic Relations law, the automatic will changes take effect, but not until then. (You would also have to be “domiciled” in Pennsylvania at the time of death, meaning that you resided here with an intent to remain.)
Power of attorney (POA) – If you named Arnold as your “agent” (the person who would act –no pun intended—for you) in your POA, that part of your POA will be revoked. But the timing is different from what happens under your will. The POA change takes place as soon as either you or Arnold files for divorce.
Filing for divorce won’t nullify your POA entirely. If you named a successor agent after Arnold (always a good practice), then that person could act as your agent and the rest of your POA remains intact.
The Official Comment to this part of the POA statute notes that filing a divorce action would not affect a provision in your POA nominating a spouse to serve as a guardian. In the unlikely event a court would find that you need a guardian, and your POA nominated Arnold for that purpose, the court would need to consider whether the filing of a divorce action is good cause not to appoint Arnold as your guardian.
Health care POA – If you have a health care power of attorney, as part of an advance health care directive or separately, a designation of Arnold as your health care agent would be revoked as soon as either you or Arnold files for divorce.
Beneficiary designations – You may have named Arnold as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan, or some similar contractual arrangement.
If you die, and you have such a beneficiary designation that you could have revoked, it will become ineffective in the same way as a will provision. That is, it would be ineffective if you were divorced when you died, or if grounds for divorce were established.
This same rule applies to any “conveyance which was revocable at the time of the conveyor’s death and which was to take effect at or after the conveyor’s death.” Certain deed provisions would fit this description.
When a beneficiary designation is ineffective, it would be as if Arnold died before you did. If you named a successor beneficiary, that is who would get the benefits.
If you have provided differently - Keep in mind that these changes won’t occur if your documents show that you wanted to keep provisions relating to Arnold even if you were to divorce. A beneficiary designation could also survive depending on the wording of the designation, a court order, or a written contract between you and Arnold.
But if you did not provide differently, some of your estate planning provisions could end up being, well, terminated.
Your friendly elder law attorney
Protect your estate from scams, bad judgment with a trust
May 6, 2011
Filed under: Estate Planning,Trusts
— Andrew Sykes @ 3:08 pm
I once had a client who appeared to have fine mental faculties. You could sit and have a conversation with him about recent events, his health, and what he had for breakfast that day. He had been a savvy, successful businessman who retired to his large suburban home with a seven-figure nest egg.
Despite appearances, he had apparently developed enough of an impairment to be taken in by offers that most people would recognize as scams. He bought into them, though, and began sending money to “associates” in foreign countries. Over time, he gave away his entire fortune and maxed out his home equity line of credit. His unsuspecting wife let him handle all their finances as he had always competently done. No one in his family had any reason to think anything was wrong until it was too late and his fortune had vanished.
Here’s another example. Did you know that one alleged side effect of a drug used to treat Parkinson’s disease is compulsive gambling? A colleague of mine told me how surprised the judge was when he sought guardianship for a client who was spending his life savings on Internet gambling sites after he began taking the drug. But after hearing expert testimony on the issue, the judge granted the guardianship so that someone in the man’s family could take over his finances and make sure his bills got paid.
By having some portion of your estate in a trust, managed by a trustee (perhaps with the added safeguard of a trust protector), you have some protection against yourself and your own bad decisions if your judgment should wane in the years ahead. This is one of a number of reasons to consider a trust that offers asset protection when doing estate planning.
Reasons to use a professional administrator for a special needs trust
May 4, 2011
Filed under: Special Needs Trusts
— Andrew Sykes @ 2:20 pm
Let’s say you set up a special needs trust for Joey, your disabled grandson. You’ll need a trustee to make distributions, file tax returns, and carry out all the other duties that go along with administering a trust.
Who will you name to do all that?
Some people name a reliable family member to serve as trustee. In a later blog post I’ll explore why you might want to do that in some circumstances.
But usually, the best solution is to use a professional administrator – an organization that administers special needs trusts on a regular basis. Good choices include a trust company, the trust department of a bank, or a non-profit agency dedicated to handling special needs trust administration.
Here are the main advantages:
1. Professionalism. The best reason for using a professional organization is that it is, well, professional. The people working there know the guidelines well and they have experience making decisions about how to apply them.
If you appoint Joey’s father as his trustee, would Dad know the in-kind support and maintenance rules well enough to know how paying the rent affects Supplemental Security Income (SSI) payments? Probably not, but a well-versed trust officer could weigh the options and decide on the best course of action in any given situation.
Given the complexity of trust administration and the consequences of doing something wrong (loss of health benefits, for example), it’s often best to leave it to the pros.
2. Family relations. Leaving it to someone who knows when and how to make proper distributions, file a Form 1041 tax return, and prepare an accounting takes a heavy load of responsibility off the family.
Family relations may be better if a family member isn’t making the decisions about what the trust will pay for. Joey may resent his father, or worse, his sister making those judgments for him, and Sis may not be too thrilled about it either. If the bank handles those issues, Sis can have a simpler relationship with Joey.
3. Objectivity. An independent trustee tends to make decisions based on an objective view of the beneficiary’s needs and the purpose of the trust, unclouded by personal issues.
It’s also more likely for a family member to have a conflict of interest. For example, if Joey’s trust leaves the remainder of the trust to his brother and sister when he dies, his brother or sister would not make good choices to serve as trustee. They may be honest, but a conflict always exists between funds paid for Joey’s benefit and funds left over for his siblings.
4. Continuity. Family members have a way of dying, moving away, or becoming incapacitated over time. A professional entity tends to last longer. If one trust officer leaves, the organization simply appoints another one to handle the file. The trust can go on for years and you don’t have to worry about naming a long line of family members as successor trustees.