ElderLaw Answers Blog

Many individuals, companies and institutions make their most significant gifts to charities towards the end of the calendar year when they know how much money they have to spare.  Last year was particularly tight for a lot of givers.  Hopefully, more of us can be more generous this year.

Choosing among the many charities that can make effective use of one’s generosity can be difficult.  Should you give a little bit of money to many charities, or more to a few?  If you are in business, should you choose charities that are aligned with the work you do and who may send more business?  How can you tell how well a charity uses its money?  Is it well managed?  Does it have excessive administrative or fundraising costs?

Here are a few pointers that might help:  Give more to a few charities, rather than a little to many, so that what you give can make a difference.  Also, if you are only giving larger donations, this will provide a way to tell which charities you care most about, since it won’t feel right to give such a large amount to some of the charities you may be considering.

Do give to charities related to your business.  There’s nothing wrong with getting some benefit back from what you give and you are more likely to be familiar with these organizations and know which can make best use of your donation.

Finally, check out the charities you are considering at the Charity Navigator.  It gives ratings to the thousands of charities are around the world.  But take these ratings as a starting point only.  Because it covers the whole world, it must base its ratings on easily available information which may or may not be accurate or may only tell part of the story.  For instance, a charity may be poorly rated because it mischaractarized program expenses as administrative expenses.

Finally, however you choose, be as generous as possible.  Studies find that people who are more generous are also happier.

After Brooke Astor’s son, Anthony D. Marshall, was convicted of exploiting and defrauding his mother, we asked our viewers on the ElderLawAnswers site whether they felt he should serve jail time by being sent to jail.  By a three-quarters vote, they say “yes,” he should go to jail.

The tally continues, so if you’d like your vote to be counted on this issue, click here.

The conviction of Anthony D. Marshall for the financial exploitation of his mother, Brooke Astor, as her physical and mental health declined in her late years puts in sharp relief what is often unclear when elder abuse is claimed against family members.  What’s a gift, what’s payment for services, what’s theft, and what’s undue influence are often difficult to determine in the murky world of family relationships.

As a result, it can be difficult for prosecutors and others to decide for certain that financial or physical elder abuse has occurred and to bring charges against the accused family members.  The result is that few cases are brought in these situations.

The Astor case demonstrates that prosecutions for elder abuse are not impossible and may encourage more prosecutors around the nation to bring similar actions.  This should serve as a warning and, we hope, a deterrent to those who may take advantage of their older family members. 

It also means that those who are caring for family members should make sure that they are not wrongly accused of elder abuse.  If they are to receive payment, gifts or an inheritance in exchange for the care they provide, this must be documented.  It is better that it be documented by an independent attorney and that all family members are aware of the arrangement so no disgruntled heirs come forward and make trouble in the future.

To read more about the Astor decision, click here.

New Jersey elder law attorney Donald D. Vanarelli in his blog describes a recently decided case that highlights the need for special needs trusts.  Public benefits programs, unfortunately, are limited in what they provide and can force beneficiaries to attempt to jump countless hurdles if they need anything out of the ordinary.

In Pichardo v. N.J. Department of Human Services, Julia Pichardo appealed the state’s decision not to repair or replace her computer which it had previously provided through New Jersey’s Traumatic Brain Injury Fund.  The fund has a one computer per lifetime policy.

In this case, the court upholds the state’s policy, meaning that Ms. Pichardo must somehow come up with the funds to repair or replace her computer herself.  As Attorney Vanarelli points out, a special needs trust could be a source of such funds — without adminisistrative and court appeals — if Ms. Pichardo had such a trust.

Ever since Congress passed and President Bush signed the phase-out of the estate tax in 2001, everyone expected Congress to make a permanent change by now.  Under the current law, the threshold at which estates are taxed increased from $1 million in 2001 to $3.5 million for those dying this year.  For those dying in 2010, there is no tax no matter the size of the estate, but for those who make it to 2011, the threshold returns to $1 million.

I have long predicted that Congress would ultimately fix the threshold at $2 million, the figure in place from 2006 to 2008.  Until recently, however, the weight of opinion was that Congress would make this year’s $3.5 million figure permanent.

But, so far, Congress has not acted and it’s unlikely to act before the end of the year with health care reform and other large topics on its agenda.  The current scuttlebutt is that Congress will extend the $3.5 million threshold through 2010 and address a permanent resolution next year.

My prediction of a $2 million threshold is beginning to look more and more likely because the federal government needs the money.  With larger and larger deficits facing us for decades to come, the question is where can government cut expenses and where can it raise money with the least pain to the fewest people?  Since fewer than 1 percent of estates pay any estate tax, clearly it affects the fewest people. 

And the amount of money at stake, while a small part of the government’s entire revenue, is anything but paltry.  One estimate of the difference in revenues from 2011 to 2018 between a $1 million and a $3.5 million threshold is $200 billion.

Given the need for funds and the recent financial debacle seen as caused by many on Wall Street who do pay estate taxes, it may be hard to explain why those with estates over $2 million ($4 million for a married couple) shouldn’t pay any taxes.  This is especially so if the alternative is higher taxes or lower benefits for everyone else.

One prognosticator, John J. Scroggin, founding editor of the NAEPC Journal of Estate and Tax Planning and prior co-editor of Commerce Clearing House’s Journal of Practical Estate Planning, recently handicapped the likely outcomes as follows:  $1 million threshold - 40%; $2 million threshold - 40%; $3.5 million threshold - 10%; Congress puts off a decision beyond 2010 - 10%.  It will be interesting to see the outcome, especially for those whose estates exceed $1 million ($2 million for a married couple) — or at least for their heirs.

The  Natonal Center for Health Statistics  of the Centers for Disease Control and Prevention reports that life expectancy of Americans at birth reached an all-time high of 78 in 2007.   This ranks us 35th in the world, right behind Portugal and Ireland.

Women do better than men with a life expectancy of 80 years as opposed to 75 for men, and whites do better than blacks, whose life expectancy at birth is only 73 years. 

However, according to the report “Deaths: Preliminary Data for 2007“ it’s black men who do the worst.  Their life exectancy of 70 is seven years less than black women, whose life expectancy of 77 is higher than white men’s life expectancy of 75.

Alzheimer’s disease moved up from the seventh to the sixth cause of death between 2006 and 2007.  However, it is dwarfed in numbers by the two leading causes of death, heart disease and cancer.

While this information is interesting, it leaves a lot out.  Is life expectancy increasing because seniors are living longer or because more people are making it to their older years?  What is the life expectancy of people at age 65?  Are these extra years good years, or are they spent ill and demented?  Do the discrepancies between men and women and between whites and blacks apply equally at all ages?  For instance, are men and blacks (and especially black men) more at risk of death when they are young, or do those who survive to middle and old age also die so much younger than women and whites?

According to a Washington Post-ABC News poll conducted in mid-August, about six in 10 Americans over 65 disapprove of the way President Obama is handling health care, with 53 percent strongly disapproving. At the same time, virtually everyone over age 65 is a Medicare beneficiary, a highly popular government program. Obama’s goal is to give all Americans the health care security that makes the Medicare program so well-liked among the elderly. So why are so many seniors apparently opposed to reform? In a word, fear.

Since seniors are a key voting bloc that reliably turns out even in off-year elections, some opponents of health reform have spread the word that proposed reforms will result in cuts to Medicare and the establishment of “death panels” that will decide who among the old will be cut off from life-saving treatment. As President Obama made clear in his address to Congress last night, both of these assertions are patently false. But many of the elderly have bought into this fear mongering and are terrified. Here are the facts:

Obama and House Democrats want to cut $177 billion in federal payments to the private Medicare plans over the next decade. The federal government now pays these “Medicare Advantage” plans, on average, 14 percent more per patient than it pays for those in the traditional Medicare program. These private plans are operated by some of the nation’s largest insurers, such as UnitedHealthcare and Humana.  Obama and others argue that paying more to the Medicare Advantage plans is unfair to seniors in the traditional program.  Reducing these large handouts to private insurers who compete with traditional Medicare will only make the Medicare program financially stronger.

The House health reform bill (HR 3200) would also allegedly make Medicare benefit “cuts.” As Joseph Baker, President of the Medicare Rights Center, has explained in recent testimony: “These ‘cuts’ are actually savings that providers like hospitals have already agreed can be made in order to trim Medicare’s budget and contribute to health care reform without affecting access to care for people with Medicare.” For the past 20 years, the Medicare Rights Center has been helping Medicare beneficiaries secure the benefits they deserve. If health reform would in any way jeopardize Medicare recipients’ benefits, you can bet the Center would sound the alarm. Instead, the Center is backing health reform. Moreover, far from cutting Medicare, the House bill would invest about $320 million more in Medicare.

Now, about those “death panels”:  if you believe that, there’s a bridge in New York City you may be interested in. A provision in the House bill simply says that if a Medicare recipient wants to discuss end-of-life care with her doctor – and learn about things like advance directives, palliative care and hospice care – Medicare will pay for such counseling. The benefit is purely voluntary and payments to doctors are not based on the outcome of these talks, as some have falsely claimed. Many states have enacted or are developing similar initiatives. They recognize, as does ElderLawAnswers, that talking about end-of-life issues is better done before a crisis hits, at which point the patient may no longer be able to convey his wishes. But thanks to the “death panel” scare tactics, this worthy provision has been dropped from consideration in the Senate.

It is the greatest irony that health reform opponents – many of whom have also been longtime foes of Medicare — are telling seniors that their government-provided Medicare is threatened by government-provided health reform. Rather than buy into the message of fear, seniors should look closely at the messenger.

I’ve often commented that to call everyone over 65 a “senior” is to miss the trees for the forest.  Those in their late 60s are often the children of those in their late 80s and have very different life experiences. 

Someone born in 1924 or before will have experienced the Great Depression and may have fought in World War II.  Someone born in the late 30s or early 40s will not have been formed by either event.

Further, the older group is part of a cohort that lived longer than their parents and grandparents and contributed to a great increase in the percentage of the population over age 65, and now over age 85.  Those that followed were smaller in number relative to the greater population due to the baby drought during the 30s and World War II.  The nation’s resources in caring for seniors will not be overly strained over the next decade, but they will when the baby boomers reach age 75 and beyond.

Likewise, it is brushing with too wide a stroke to paint all baby boomers with the same brush.  Bill Clinton, George W. Bush and Barack Obama are all baby boomers, but their experiences are also quite different, with the older baby boomers being formed by the Vietnam War and its protests and the younger boomers coming of age in its aftermath.

These differences are borne out in a study commissioned by the MetLife Mature Market Institute, Boomer Bookends:Insights Into the Oldest and Youngest Boomers, starting with the moniker “baby boomer” itself.  While older boomers are comfortable with the name, the younger boomers are not.

Not surprisingly, the different groups are at different places in their lives, with the younger set much more likely to have children at home and much more likely to have two living parents. 

Despite those differences, the study also found a lot of similarities between the two groups.  Most boomers of both groups continue to work full-time.  Most are homeowners and don’t plan to move for at least five years.  Younger boomers earn more on average, with annual household income of $89,000 as opposed to $71,000 for the older group.  Surprisingly, a greater percentage of younger baby boomers – 17 percent — are providing care to an older relative than are older boomers — 14 percent.

While it appears that younger boomers identify more with the generation that followed and don’t want to be categorized as “boomers,” the two cohorts have more in common than one might expect at first.  However, this is likely to change and the differences are likely to grow as the older boomers move into retirement.  It would be interesting to revisit this study in five years.

Nicholas D. Kristof, in a recent column in The New York Times, “Until Medical Bills Do Us Part,” writes about a friend — “M” – who has been advised to divorce her husband so that she will not be impoverished paying for his anticipated long-term care needs.  She was advised to do this by a social worker at the hospital where her husband’s degenerative condition was diagnosed.

This is a second marriage for both M and her husband and they have a prenuptial agreement, which is irrelevant to issues of Medicaid eligibility.

Kristof decries a medical system that forces people to divorce “not because of irreconciliable differences but because of irreconcilable medical bills.”  We could not agree more.  This is the sad reality of our dysfunctional health care and long-term care system.

Another sad reality of our system and M’s situation, however, is that M has been getting bad legal advice.  First, in  any second  marriage in addition to a prenuptial agreement, clients should be advised to purchase long-term care insurance. 

Second, in terms of divorcing for Medicaid planning purposes, it sounds like M was getting legal advice from social workers rather than elder law attorneys.  Divorce is certainly an option, but it is not the only long-term care planning strategy available to clients.  In more than two decades of practicing elder law, not one of my clients has sought divorce for Medicaid planning purposes. 

Another sad reality of our dysfunctional system, is that citizens need qualified elder law counsel to navigate it relatively unharmed.

The financial insecurity of the economic downturn has moved more Americans to value the financial security offered by Social Security, according to a poll recently released by the National Academy of Social Insurance.  While  President Bush could not get much traction even in good economic times for his efforts to privatize Social Security, it looks like he would get even less today.

According to results of the poll, conducted by Benenson Strategy Group, 88 percent of Americans say that Social Security is more important then ever in light of the current economy.  At the same time, they’re worried about the program.  Ninety percent are concerned about its ability to pay benefits to future generations and 44 percent of non-retirees are concerned about it being there for them. 

In what appears to be a new coming to terms with reality, the poll reports that three quarters of respondents agreed that workers should contribute more to the program if necessary to preserve it.  We can hope that this signals a change from the promises of many politicians that American citizens could get something for nothing which have contributed to our nation’s personal and shared budget deficits.