January, 2007 ABA ESTATE PLANNING, PROBATE & TRUST COMMITTEE Newsletter
General Practice, Solo and Small Firm Division:
Chair - Kenneth Vercammen, Edison, NJ
In this issue:
1. Elder Law Committee meeting
2. For Medicaid Applications, Having an Attorney Can Be Crucial
3. Types of Life Insurance
4 Continuing Care Retirement Communities
5 "CONFIDENTIAL WILL QUESTIONNAIRE" form
6. Happy 2007
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1. Elder Law Committee meeting
Saturday February 10, 2007 11am-12pm
Hyatt Regency, Johnson I Room, 3rd level Miami, Florida
Coordinator: Kenneth A. Vercammen, Esq. - co-author
"Nuts & Bolts of Elder Law", Edison, NJ
American Bar Association General Practice Section
Contact American Bar Association's ITS at 800-421-0459 for free registration. If you are attending, email Kenneth Vercammen, Esq at Kenv@njlaws.com
Main Topic:
Elder Law Practice- Changes in the law and ideas to Improve Your Practice by Giving Clients What They Want and Need, plus Marketing and Expanding an Elder Law Practice
Elder Law may be the biggest practice area of your career. 50,000 baby boomers/ day turning 60 and soon to be on Medicaid and needing your help.
Other Topics:
New Medicaid Law 2006- Protect yourself from inaccurate advice and malpractice
Getting referrals from other professionals
The aftermath of the Terry Schiavo case.
Email newsletters
How to get more referrals and repeat business
How to manage telephone conversations with your clients
Marketing with written fee agreements
-Networking the Internet without backlash
-Ethics and marketing without violating the Rules of Professional Conduct
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2. For Medicaid Applications, Having an Attorney Can Be Crucial
By Dana E. Bookbinder, Esquire
Given the convoluted and ambiguous set of provisions that are our federal and state Medicaid laws, it is a wonder how any lawmaker could expect individuals, especially seniors with compromised health, to apply for benefits on their own. Federal regulations require Medicaid caseworkers to be helpful to those who file for benefits, but state and federal budgetary constraints have created a reality that is much more frustrating than the printed law would suggest. Many individuals file applications unprepared for the minutiae that will delay the processing of their application for several months or cost them tens of thousands of dollars in health care expenses. Fortunately, the public is becoming increasingly aware of the difference that an attorney can make with Medicaid applications.
The most common obstacle to obtaining a timely Medicaid approval is the failure to provide the Medicaid office with complete information. The amount of paperwork required with each application is burdensome, and under new federal law, last year it became potentially more burdensome. In addition to comprehensive financial information dating back three (soon to be five) years, Medicaid applicants must submit a variety of documents such as marriage licenses, birth records, deeds, affidavits, etc. to support their applications. The documentation required varies somewhat with each case, but the paperwork is oppressive for even the most organized individual. When a senior is dealing with his spouse’s ailing health and his own limitations, the task of applying for benefits becomes overwhelming.
The most daunting obstacle to a Medicaid approval is the Deficit Reduction Act of 2005. This Act extended the three-year lookback to five, creating much more homework for anyone seeking benefits. It also changed the rules regarding transfers of assets and created partial month penalties. Whereas the old rules granted Medicaid eligibility for a certain period of whole months, the new laws grant or deny Medicaid for partial month periods. With regard to certain assets such as annuities and promissory notes which may be held by Medicaid applicants, the new law confuses most Medicaid caseworkers rather than guides them. The result is that many more Medicaid applications have to be sent up from the county level, where the applications are originally filed, to central state offices for review. In New Jersey, the Division of Medical Assistance and Health Services in Trenton has been collecting applications that include trusts, annuities, and notes for several months. This is slowing the entire process.
To those who do not practice elder law, it is always unbelievable that the counties implement certain Medicaid eligibility policies which are not necessarily written down. Other policies are handed down from the state office to the county supervisors through memos that do not reach the public until after the supervisors begin to implement them. For instance, the firm recently learned that such a memo was disseminated among the counties concerning prepaid funerals and whether the Medicaid eligibility rules permitted prepaying a funeral luncheon.
Because much of what affects those applying for Medicaid is not part of the written law, different county Medicaid offices enforce different procedures for filing applications. Certain eligibility requirements also vary from county to county. Some counties permit applications by mail, some permit non-lawyers to represent the applicant at the meeting to file the paperwork, and others are stricter, only permitting certain family members or attorneys to represent the individual applicant. Partial month penalties as required under the Deficit Reduction Act have begun to be imposed by Burlington County, for instance, yet not by the other local counties as of this writing. Counties also vary in the levels of proof they require to permit a child of a Medicaid applicant to retain his or her parent’s house in his own name with no Medicaid penalty.
Finally, another difficulty is obtaining Medicaid approval is the public benefit numbers themselves. These figures on which Medicaid eligibility hinges change each year. Certain figures are updated each January and others in July. They include income and asset caps. To many seniors’ surprise, they also include strict limitations on the amount of assets that spouses of Medicaid recipients may retain.
The Medicaid application process and eligibility laws may be designed for the public’s use, but they are complex and burdensome. They are especially daunting for the population they are designed to assist. Especially in a time when our government is tightening the budget and implementing restrictive laws such as the Deficit Reduction Act, it is crucial for families to obtain legal counsel. Failure to plan ahead can severely impact a family’s financial status, especially if there is a spouse involved who wishes to maintain his or her home.
Tom Begley Jr. and Begley & Bookbinder, P.C. is an Elder, Medicaid & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. Please mention Kenneth Vercammen's office when calling to make an appointment for Medicaid representation.
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3. Types of Life Insurance
By Pavese-McCormick Insurance
Here is some information about what are known as "permanent" (or "cash-value") life insurance policies that, unlike term life, are designed to last the rest of your life:
* "Permanent" life insurance includes a buildup of value in cash in addition to your death benefit. You can borrow against your cash value. You can even take out some of that cash value, but your death benefit will be reduced. What is cash value? It's that part of a permanent life insurance policy not needed for so-called "mortality expenses." The greater your risk of dying in the near term, the greater the mortality expense to your insurer.
* Cash-value life policies have premiums that are higher at the
beginning than they would be for the same amount of term
insurance. The part of the premium not used to cover the yearly
cost for mortality and other expenses is invested by the company
and builds up a cash value that you may use in a variety of ways.
Here are some specific examples of cash-value or permanent life
insurance:
* Whole (or Ordinary) Life -- The premium and the death benefit
don't change much in whole life policies. You pay so much a month
for a given death benefit. However, dividends to policyholders
can increase the coverage or decrease the premium.
* Universal Life -- This is the flexible life insurance. You can
change your premium and your death benefit at any time, although
a substantial increase in the coverage usually requires you to
prove you are still in good health.
* Variable Life -- This is a hybrid whole/universal coverage in
which the death benefit is dependent on the investment
performance of the insurance company's assets. And you get to
choose the investment vehicle -- money market fund, bond fund or
stock fund -- for your premium. If your investments do well, your
policy's cash value and death benefit will increase. If not,
they'll go down, but most variable life policies won't let your
death benefit drop below a certain level. However, it's possible
a company will charge you for a guaranteed death benefit.
So are permanent life policies, as opposed to term life, best for
you? In general, if you have significant assets, its better (and
less risky) to have some sort of cash-value policy.
But which one?
Actually, it's more important to buy the coverage from an insurer
that has the best chance of performing well in the future; an
insurer that has low expenses and mortality costs. Such an
insurer will be able to offer better terms, including higher
death benefits, higher cash value and lower premiums.
Pavese-McCormick is one of the rare companies that doesn't just talk customer service, they set the standard for it."
Pavese-McCormick 3759 Route One South
Monmouth Junction, N.J. 08852
Phone (732) 247-9800, Ext. 2003
Fax (732) 875-1083
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4 Continuing Care Retirement Communities (CCRC’s) BEFORE WRITING THE CHECK TO THE CCRC, CHECK OUT THE LAW ON THE ENTRANCE FEE
By Dana E. Bookbinder, Esquire of Begley & Bookbinder, P.C
Continuing Care Retirement Communities (CCRC’s) are becoming increasingly popular choices for aging couples and single individuals looking for leisurely social environments that provide flexibility in care options. Often, clients call upon the firm to review such contracts and point out potentially problematic provisions. Even outside the contracts, both tax and Medicaid law present issues for individuals to consider before writing their CCRC entrance checks.
Entrance Fees and the IRS
Moving into a qualified continuing care retirement community may have unforeseen tax consequences. Typically, the qualified continuing care facility will require that an individual pay an “entrance fee” along with monthly payments. The entrance fee is frequently refundable when the individual moves out or the contract is otherwise terminated. Since the entrance fee is refundable, the IRS treats the entrance fee as a loan made from the CCRC resident to the facility. Because the CCRC resident does not receive interest on the loan (or at least not a market rate of interest), the IRS views it as a below-market rate loan and, subject to certain exemptions, will impute interest income to the individual.
In a move that may help certain prospective and current CCRC residents, Congress recently passed the Tax Increase Prevention and Reconciliation Act of 2005 (TIRPA). The law, which was signed by the President on May 17, 2006, generally favors upper-income individuals but does mitigate tax consequences regarding CCRC entrance fees. The new law, however, only applies to calendar year 2006 through 2010. Old legislation will apply to calendar years after 2010 (unless Congress acts to extend the new law).
Below-market loans after 2005 and before 2011
A loan made by an individual (or his spouse) who is age 62 or older during the calendar year to a qualified continuing care facility pursuant to continuing care contract is not subject to the below-market interest rate rules which would otherwise impute interest income to the CCRC resident.
For this purpose, a continuing care contract is generally a written agreement between the individual and a qualified continuing care facility (discussed below) under which: (1) the individual or individual’s spouse may use a qualified continuing care facility for their life or lives; (2) the individual (or spouse) will be provided housing, as appropriate for the health of such individual or individual’s spouse, (i) in an independent living unit (which has additional available facilities outside such unit for the provision of meals and other personal care) and (ii) in an assisted living facility or a nursing facility, as is available in the continuing care facility; and (3) the individual (or spouse) will be provided assisted living or nursing care as the health of such individual (or spouse) requires, and as is available in the continuing care facility.
For this purpose, a qualified continuing care facility means: (1) one or more facilities that are designed to provide services under continuing care contracts; (2) that include an independent living unit, plus an assisted living or nursing facility, or both; and (3) substantially all of the independent living unit residents of which are covered by continuing care contracts. A nursing home is not a qualified continuing care facility.
Below-market loans after 2010
A loan made by an individual (or his spouse) who is age 65 or older during the calendar year to a qualified continuing care facility pursuant to continuing care contract is not subject to the below-market interest rate rules if the aggregate amount of loans between the lender (or the lender’s spouse) and the qualified continuing care facility does not exceed a certain amount, indexed for inflation. For 2006, prior to the President enacting legislation that reduced the age of the lender from 65 to 62 and eliminating the ceiling on the amount of the loan, the maximum amount of the loan subject to exclusion was $163,300. In addition, there are certain other requirements that must be met in order for a continuing care facility to be a “qualified continuing care facility.”
Entrance Fees and Medicaid Law
February 8, 2006 President Bush signed radical changes to Medicaid eligibility rules into law, making it significantly more difficult for individuals to qualify for benefits to pay for their long term care. This legislation known as the Deficit Reduction Act of 2005 (DRA) renders CCRC entrance fees as countable assets for Medicaid eligibility purposes provided that 1) the individual may use the funds to pay for care if other assets are insufficient; 2) any or all of the fee is refundable when the individual dies or terminates the CCRC contract; and 3) the entrance fee does not confer an ownership interest in the CCRC. Under this law, the entrance fee will significantly work to delay an individual’s eligibility for Medicaid and radically limit or eliminate a Medicaid applicant’s spouse’s opportunity to retain assets other than the entrance fee.
The Deficit Reduction Act also permits CCRCs to prohibit residents from transferring assets to expedite their Medicaid eligibility and instead require them to spend the assets they listed on their admissions paperwork on care. This provision potentially precludes individuals from legal asset protection planning for public benefits.
While CCRC’s offer many advantages and comforts to its residents, the decision to move into one has many legal ramifications that should be carefully considered by families and their attorneys.
Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania.
The Firm provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227.
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5 "CONFIDENTIAL WILL QUESTIONNAIRE" form
This form is used by Kenneth Vercammen's Office in non complicated Estate Planning
Please fill out completely and fax or mail back. This form is extremely important. Your accuracy and completeness in responding will help me best represent you. All sections and information must be filled out prior to sitting down with the attorney.
Please be sure to check all appropriate boxes. If "NONE", please state "NONE". If "NOT APPLICABLE", please state "N/A".
PLEASE PRINT CLEARLY
1. Your Full Name:
____________________________________________________
First Last
2. IF MARRIED OR SEPARATED, complete (a) and (b) below:
(a) Spouse's Full Name:
___________________________________________________
First Last
3. Your Street Address: ____________________________________
City ____________________ State ____ Zip Code _________
4. Telephone Numbers:
Cell: ___________________ ________________________
Day: ____________________/Night: ________________________
5. E-mail address: __________________
6. Referred By: __________ 7. Today's Date ____________
If referred by a person, is this a client or attorney? ___________________
Do you want a Living Will telling hospitals and doctors not to prolong your life by artificial means, i.e. Terri Schiavo; Karen Quinlan? Yes ________ No _____
Do you want a Durable Power of Attorney in the event of your physical or mental disability to help you with financial affairs? Yes ________ No ________
How can we help you? What are your questions/other important info?
___________________________________________________________
8. Your Sex: [ ] Male [ ] Female
9. Your Marital Status: [ ] Single [ ] Married [ ] Separated [ ] Divorced [ ] Widowed
10. Your Date of Birth: _____________ SS # _______________
Month Day Year
11. Spouse Date of Birth: _____________ SS # ______________
Month Day Year
12. If you are the parent or legal guardian of a minor child or minor children, please check here. [ ]
2. ESTATE EXECUTOR
The person charged with administering/Probating your estate, paying taxes and/or other debts, preserving, managing, and distributing estate assets and property is called an Executor. This person should be one in whom you have trust and confidence. Your SPOUSE is usually named as primary Executor, followed by the child who lives closest to you.
Please provide the following information about the person you wish to name to serve in this capacity.
1. PRIMARY Choice of Executor/Personal Representative:
Name: _______________________ _______________________
First Last
Relationship: _______________ Address: ______________
2. SECOND Choice of Executor:
This individual will serve in the event that the primary executor/personal representative is not alive at the time of your death, or is unable to serve.
Full Name: ___________________________ _________________
First Last
Relationship: _______________ Address: ____________________
The two proposed Executors must be filled out prior to meeting the attorney.
Asset Information- Must Be Completed - If none, write “none”
House/Real Estate Address ____________________________
Estimate Total Real Estate Value: _____________ Approx mortgage ________________
Bank Accounts, Stocks, CDs and Assets: ______________________
Approximate Amount _____________________
Beneficiaries of Bank Accounts (if none write "none") ________________
Other Major Assets (if none, write "none"): ______________________
Approximate Life Insurance: _____________ Beneficiary __________
In the Will- Who do you want to get your assets:
Beneficiary (1) _______________________ Relationship _______________
Beneficiary (2) _______________________ Relationship _______________
Beneficiary (3) _______________________ Relationship _______________
[It is required by New Jersey Court Rules that assets and beneficiaries be filled out prior to seeing the attorney]
Any Specific Bequests of Money and Property:
___________________________________________________________
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[ ] A. MARRIED PERSONS WITH CHILD(REN) OR GRANDCHILD(REN).
Generally most married people provide that, upon their death, property will be distributed as follows:
1. Your estate (all property and assets not owned jointly with another person) will be distributed to your surviving spouse.
2. If your spouse predeceases you, then your estate will be divided in equal shares among all of your living children, If any child shall predecease you, then that child's share to their children (grandchildren).
Names of Children: ______________________________ Age: ______
______________________________ Age: ______
______________________________ Age: ______
LIST THE NAMES AND AGES OF ALL CHILDREN EVEN IF THEY ARE OLDER THAN EIGHTEEN. IF NO CHILDREN, WRITE NONE.
III. GUARDIAN(S) OF MINOR CHILD(REN)
[Skip this section if you have NO minor children and DO NOT want a trust. There are substantial additional fees for preparation of a Trust]
The surviving parent of a minor child is ordinarily entitled to be the GUARDIAN of that child. In the case of simultaneous death of you and your spouse, or if you are a single parent, you should appoint a Guardian for your minor child. It is advisable, prior to the completion of this Questionnaire, to make sure that your proposed Guardian(s) is (are) willing to serve as Guardian(s). In addition, the Guardian will also hold the monies for the minor children UNLESS you direct us otherwise. In your Will you can have any adult serve as Trustee of monies for minor children.
Provide the following information about the person(s) you select to be Guardian(s)/Trustee(s). In the event my spouse predeceases me, I name as GUARDIAN(S)/ TRUSTEE(S):
1. PRIMARY Choice of GUARDIAN / TRUSTEE:
Full Name: _______________________________________
Relationship: ______________________________________
2. SECOND Choice of GUARDIAN / TRUSTEE:
Full Name: _______________________________________
Relationship: _____________________________________
Are there any beneficiaries with special needs, or receiving SSI or SDD? Please answer in detail
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[ ] B. MARRIED PERSONS WITH NO CHILD(REN) OR GRANDCHILD(REN).
Generally most married people with no child(ren) or grandchild(ren) provide that upon their death their property will be distributed as follows:
1. Your estate (all property and assets not owned jointly with another person) will be distributed to your surviving spouse, but
2. If your spouse predeceases you, then your estate will be distributed to your living parent, or equally to your living parents.
3. But should both of your parents predecease you, then your estate will distributed equally to your brothers and sisters or equally to the children of a predeceased brother or sister.
Please check B above only if you wish your property distributed precisely and exactly as indicated in section B, 1 through 3, above.
Additional information on Wills, Probate and Elder Law available at www.njlaws.com
[ ] C. DIVORCED OR WIDOWED PERSONS WITH CHILD(REN) OR GRANDCHILD(REN). Generally, most divorced or widowed persons with child(ren) or grandchild(ren) provide that upon their death property will be distributed as follows: 1. Your estate (all property and assets not owned jointly with another person) will be distributed in equal shares to all of your living child(ren).
2. But if one or more of your children predeceases you, that deceased child's share will be distributed to his or her child(ren), your grandchild(ren) in equal shares
[ ] D. ALTERNATE PLAN OF DISTRIBUTION - You may list specific gifts to individuals and/or divide your estate among several individuals by listing percentages to each, making sure that the percentages total 100%. You may add additional sheets if necessary or use the back of this form. There are additional Will preparation fees if there are gifts, called specific bequests.
PLEASE WRITE DOWN ANY QUESTIONS YOU HAVE HERE or anything else important that we should be aware. Use back of this page for additional important information:
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ESTATE PLANNING
Your estate may be subject to Federal Estate Taxation if the total of your assets exceeds $1,500,000. If your assets exceed $1,500,000 and you desire estate planning to avoid or reduce your estate tax or require a Trust to protect a spouse, please advise Mr. Vercammen. A Standard Will is not designed to address estate tax issues. We do not do Tax Planning or Medicaid Planning.
WILLS:
T 1- Parents with minor children and trust for children ___________
T 2- Parents no spouse _________
T 3- Unmarried _______
T 4- Parents without trust _______
T 5- Unified Credit Trust over $1 million? ______
PAYMENT WILL BE MADE BY: (Please circle one)
Check, Credit Card (Visa, Mastercard, American Express) or Cash
Payment is required for Will, Power of Attorney and other document preparation at the first consult and prior to any documents being drafted. We charge a $100.00 consultation fee, which is credited to the preparation of the Will or other document. This $150.00 fee is non-refundable even if the documents are not prepared. If there are any changes to a draft Will, Power of Attorney, or other document, there will be a minimum charge of $75.00 per revision. The Will needs to be signed within 21 days of initial consult or an additional fee of $100.00 will be charged. This form was filled out by:
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6. Happy 2007
I would like to thank my friends for another banner year in 2006. This year was our single best year for my office. So many of you were kind enough to tell others about our services. Since 1985 I have helped individuals and businesses with legal matters. With changing laws, it is important that you remind your client that estate planning documents should be updated to reflect their most valuable investments. As you know, all business must grow, and one of the safest ways to grow is to get referrals from satisfied clients.
May 2007 bring happiness and good health to you and those you love.
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7. Send us your articles & ideas
General Practice, Solo and Small Firm Division:
Elder Law Committee and the ESTATE PLANNING, PROBATE & TRUST COMMITTEE
Who We Are
This committee focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. This committee also serves as a network resource in educating attorneys regarding Elder Law situations.
To help your practice, we feature in this newsletter edition a few articles and tips on marketing and improving service to clients. But your Editor and chairs can't do it all. Please send articles, suggestions or ideas you wish to share with others.
Let us know if you are finding any useful information or anything you can share with the other members. You will receive written credit as the source and thus you can advise your clients and friends you were published in an ABA publication. We will try to meet you needs.
We also seek articles on Elder Law, Probate, Wills, Medicaid and Marketing. Please send your marketing ideas and articles to us. You can become a published ABA author.
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The Elder Law Committee of the ABA General Practice Division is directed towards general practitioners and more experienced elder law attorneys. The committee consistently sponsors programs at the Annual Meeting, the focus of which is shifting to advanced topics for the more experienced elder lawyer.
This committee also focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. This committee also serves as a network resource in educating attorneys regarding Elder Law situations.
Kenneth Vercammen, Esq. co-Chair
We will also provide tips on how to promote your law office, your practice and Personal Marketing Skills in general. It does not deal with government funded "legal services" for indigent, welfare cases.
KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
(Fax) 732-572-0030
