Wealth and Honor

Helping Families Navigate the Financial Challenges of Age Transitions

Month: October 2019

What the new “Patient-Driven Payment Model” could mean for Medicare nursing home care.

October 29, 2019 /

On October 1, 2019, the Centers for Medicare & Medicaid Services (CMS) began implementing a new payment system for Medicare-covered nursing home care. The payment system is called the “Patient Driven Payment Model” (PDPM). PDPM creates a new set of financial incentives for nursing homes to consider when admitting and discharging residents, as well as providing resident care.

According to the Long Term Care Community Coalition, some of the incentives created under the new payment model could result in less advantageous care for some Medicare-covered nursing home care.

Families with loved ones who may be eligible for Medicare-covered nursing home care need to educate themselves on how this new payment model could impact the quality of care their family member may receive after hospital discharge.

Joint Statement: The Patient Driven Payment Model What Does It Mean For Residents? – Nursing Home 411

Addressing the 800lb gorilla: Most financial scammers of the elderly are family.

October 24, 2019 /

A recent Barron’s article discusses ways in which adult children can protect their parents from financial fraud. Elder Financial Abuse is estimated to defraud older Americans of somewhere between the disparate estimates of $3Billion to $35Billion a year. The large disparity is due to the number of data sources, and estimations of unreported abuse, but suffice it to say, it is a problem.

While the elaborate means scammers take to defraud our aging parents of their resources are popular to write about, focusing on these threats ignores where 85-90% of defrauding takes place – within the immediate family of the victim. According to a report by the National Committee on Aging,

Over 90% of all reported elder abuse is committed by an older person’s own family members, most often their adult children, followed by grandchildren, nieces and nephews, and others.

Source: National Committee on Aging

My friend and colleague, Cynthia Healy, has years of experience investigating elder financial abuse, and she produced this short segment on family theft. Other resources can be found on her website gogrey.com.

The best way to address this 800 lb gorilla is to teach the virtue of honor in our family systems, and specifically how honor shapes the attitudes or actions that we take towards our elderly parents and/or their resources. Much of the familial elder financial abuse is subtle and occurs out of a sense of entitlement, the perpetrator justifying his actions under the guise of “mom won’t miss this.”

Still for those adult children who do honor their parents and their parents’ possessions, these articles offer practical and relational advice.

To help aging parents protect themselves, their grown children must tactfully broach the subject of their vulnerability. The key is to adopt an attitude of empathy and non-judgment, says Amy Nofziger, director of fraud victim support at AARP, an advocacy organization for older Americans. “Always start the conversation with empathy and compassion, and don’t be paternalistic,” she advises.

Source: Advisors Offer Precautions on Keeping Financial Scammers Away. – Barron’s

Too much trustee discretion prevents elderly beneficiary from Medicaid eligibility.

October 21, 2019 /

A New York Appeals court recently affirmed the State’s Medicaid division’s decision to deny Medicaid eligibility to the beneficiary of a trust, arguing that the trust gave the trustee too much discretionary authority. The case underscores the need to have an experienced attorney familiar with local Medicaid rules, draft trust documents where protecting Medicaid eligibility is a major concern.

In this instance, the applicant’s son was trustee of a living trust established for the benefit of the applicant. As trustee, the son took out a home equity loan using trust assets as collateral, and used the loan proceeds to pay for his father’s living and caregiving expenses. Once the trust assets were depleted, the father applied for Medicaid benefits but was denied because the State ruled that the trust assets were available to the applicant, and imposed the required “look-back rule” in denying eligibility.

In upholding the State’s determination, the Appeals Court stated:

Because the trust instrument gave the trustees broad discretion in the distribution of the trust principal, including for petitioner’s benefit, the agency did not err in concluding that the principal is an available resource for purposes of petitioner’s Medicaid eligibility determination

For the full text of the ruling, click here.

To live longer, here are some steps you can take – The Washington Post

October 10, 2019 /

Today happens to be my birthday…and I’m spending it not writing this post, but trout fishing in Colorado, so happy 59th birthday to me! I will relish this last year of my fifth decade, but I’m also in denial that it’s all downhill from here. I intend to do all that I can to stay physically and mentally healthy for several more decades.

A recent article by Christie Aschwanden in the Washington Post outlines some simple rules for me – and hopefully others – to follow.

The rules are pretty simple — regular exercise most of all, healthy eating (and drinking), adequate sleep and staying socially engaged

Source: To live longer, here are some steps you can take – The Washington Post

Elderly hoarders must pay up or lose home. The Times – Apalachicola, FL

October 8, 2019 /

An elderly couple in Royal Palm Beach Florida has racked up over $400,000 of fines from citations received due to the deplorable condition of their home. 

Ralph and Marguerite McCormack, age 75 and 71, are reported to have dementia, have no children or close family, and suffer from a hoarding addiction.  Conditions were so bad at their home that investigators had to wear hazmat suits and gas masks just to enter their home.

The McCormack’s cleaned up their home in 2018 and want to sell it and use the proceeds to fund assisted living for both of them but at least one judge is taking a harsh stance,

“We are here at your mercy,” said attorney Jason Evans. “What happens now in this moment will affect them for their remaining days.”

But Doug MacGibbon, the special magistrate, denied the request. He said the hefty fines “are all self-inflicted wounds” from violations “that could have been cleaned up by” the McCormacks. 

The McCormacks filed an appeal Aug. 17 in Palm Beach County Circuit Court. Unless a judge overturns MacGibbon’s decision, the village can foreclose on the house.

“I can’t believe the village can be so vicious,” said Lisa Kline Goldstein, an attorney for the McCormacks, who specializes in elder law.

Source: $443,000 in fines: Elderly hoarders must pay up or lose home – News – The Times – Apalachicola, FL

Seniors will soon have their own IRS tax form – CBS News

October 8, 2019 /

If you are one of the millions of procrastinating filers whose 2018 federal income tax return is due today and you happen to be over 65, you may welcome a new tax form being introduced by the IRS for 2019.

The new Form 1040-SR should allow seniors to file taxes without benefit of an accountant.A published draft of the new form has lines for specific retirement income streams, such as Social Security benefits, IRA distributions, pensions and annuities.It also uses large print and removes shading around boxes that some older tax filers complained about.

Source: Seniors will soon have their own IRS tax form – CBS News

Dying with Debt

October 3, 2019 /

At some point in our lives we may ask ourselves: “If I die and have debt, who or what will be responsible for paying back those I owe?”

One survey from Experian found that 73% of Americans are likely to die with debt. Another from Credit.com found that 73% of people who died between October and December of 2016 had outstanding debt. The average bill they left on the table was $61,554.

The laws regarding debt after death are defined by each state so there isn’t a single answer to the question above for everyone. On most occasions, the only time a family member would be responsible for your debt is if they cosigned a loan with you. People generally do not inherit another person’s debt. When we die, a new entity emerges, called our estate. An “Estate” represents your assets and your liabilities. Upon death, a legal process called “Probate” (which is the first step of administering the estate of a deceased person), will resolve your debts and distribute your remaining assets to your heir(s). Creditors may legally seize assets within your estate (money or property) in order to cure a debt owed to them. If you have no assets, your creditors may have to take a loss on your debts. Depending on the state you live in, a creditor has a fixed amount of time to make a claim against your estate for payment.

There is a legal pecking order as to who is allowed first claim to retrieve money from your estate. The higher priority goes to funeral expenses, administrative expenses, and federal taxes. The estate may then pay off expenses from the last illness and state taxes. At the bottom of the barrel are unsecured creditors, like credit card companies. Generally, all debts must first be paid by the estate before any remaining assets are distributed to an heir. An outstanding credit card balance, for example, must be paid before any money or gifts can be distributed to an heir. If there are not enough assets to pay the debts, then all assets and property will be sold to pay down as much of the debt as possible and the heir will inherit nothing.

In the case of secured debts (e.g. home mortgage or auto loans), property (which is collateral) may be distributed with its debt. For example, you own a car worth $15,000 and the loan on the car is $7,500. If you die and leave that car to someone, it will become that person’s obligation to pay off the loan. Except for certain situations (which include joint property or joint debt), creditors are unlikely to go after surviving family members when a debt cannot be paid by your estate money. The majority of married couples have joint accounts and joint debt. In these situations, a surviving spouse will be held legally responsible for the debt of their deceased spouse even if they did not generate the debt themselves. This is something that will often cause problems for surviving spouses who financially cannot pay off old debt and meet their everyday needs.

If a creditor contacts a surviving family member about a debt of a relative who has died, the family member should give the creditor the contact information of the decedent’s representative. The representative is responsible for paying any outstanding debts from the estate. If a will exists, the representative is known as the executor; if there is no will, the representative is known as the administrator.

In community property states (where married couples are considered to own their property, assets, and income jointly) credit accounts opened during marriage are automatically considered to be joint accounts. This could affect what your spouse will have to pay, depending on the debt that you incurred. The following states are community property states:
• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

One important exception to these general rules is if there is unpaid Federal Estate Tax. In a recent Nebraska case, a beneficiary who received property from his mother by gift and at the mother’s death was personally liable for the unpaid estate and gift tax. The beneficiary received four parcels of real estate from his mother by gift or at death. Gift and estate tax returns were not filed by the decedent or her estate. The IRS determined that the estate owed gift and estate taxes, plus penalties and interest, so the court ordered the sale of two properties owned by the beneficiary to satisfy the estate and gift tax liabilities.

To conclude, when you pass away, your estate is responsible for paying off any balances owed by you, not your family. If your estate goes through probate, your administrator (or executor) will look at your debts and assets and, guided by the laws of your state, determine in what order your bills should be paid. The remaining assets will be distributed to your heirs according to your will or state law.

Sources:

Sullivan, B. 2018, January 11. State of Credit: 2017. Retrieved from https://www.experian.com/blogs/ask-experian/state-of-credit/

DiGangi, C. 2017, March 31. Americans Are Dying With an Average of 62K of Debt. Retrieved from http://blog.credit.com/2017/03/americans-are-dying-with-an-average-of-62k-of-debt-168045/

Saret, L. 2019, September 23. Widtfeldt v. Commissioner, U.S. Dist. Court, D. Nebraska: Beneficiary Personally Liable for Unpaid Estate + Gift Taxes. Retrieved from https://wealthstrategiesjournal.com/2019/09/23/widtfeldt-v-commissioner-u-s-dist-court-d-nebraska-beneficiary-personally-liable-for-unpaid-estate-gift-taxes-sept-17-2019/ .

House Calls Provide Better Care and Save Money. Why Don’t More Use Them?

October 1, 2019 /

At least 2 million older adults would benefit from home-based primary care, according to Health Affairs. Because these patients have difficulty getting to an office visit, they frequently end up in emergency rooms or hospitals.

Per-patient savings range from $1,000 to $4,000 annually through reduced hospital and nursing home stays, emergency room trips and specialist visits, according to research cited by the American Academy of Home Care Medicine.

According to the American Academy of Home Care Medicine, the CMS Independence at Home Demonstration, part of the Affordable Care Act, estimated that Medicare would save $10 to $15 billion total over a 10-year period if home-based primary care were extended nationally to those on Medicare who are homebound.

Source: House Calls Provide Better Care and Save Money. Why Don’t More Use Them?

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