Author: drussellcfp (Page 2 of 10)

IRA Funds Protected from the Claims of Guardian

August 24, 2022 / drussellcfp

A Florida Appeals court has ruled that a special appointed guardian does not have a claim for guardianship expenses against a deceased’s IRA accounts. ( Araguel v. Bryan, (Fla. Dist. Ct. App., No. 1D20-2789, August 17, 2022).

According to the court transcript, In October of 2019, Jane Kaigler Araguel became unable to care for herself. As a result, both of her children, Patrick J. Araguel, III, and Leslie Ladon Bryan, petitioned the trial court to become her emergency temporary guardian and the guardian of her person and property. Instead of appointing either of the children, the trial court appointed a professional emergency temporary guardian. In June of 2020, Ms. Araguel died.

After Mrs. A died, the trial court approved the Guardian’s motion to use her assets — including her IRAs — to pay for the guardian’s expenses, his attorney’s fees, and other costs associated with the guardianship.

IRA Creditor Protection

IRA’s are considered contract property, meaning that the owner of the IRA contracts with an IRA Custodian, to hold and invest the IRA funds, and to pay the funds directly to the contract’s named beneficiary(ies) upon the death of the IRA owner. As such, IRA assets do not pass through the owner’s Last Will and Testament, unless the owner’s estate is listed as the IRA beneficiary.

Protection of IRAs from the claims of creditors depends on the state of residence of the IRA owner. Most states have adopted some kind of creditor protection for IRA assets similar to the protection available for qualified retirement plans (ie. 401k, Profit Sharing, Pension Plans, etc.) that are governed by a Federal Law under the acronym ERISA. Simply stated, these assets are excluded from creditor claims such as bankruptcy and litigant claims, except for fraudulent transfers or a divorcing spouse. For a more detailed discussion about IRA creditor protection, click here.

Back to the Case

Mrs. A’s son appealed the trial court’s ruling, arguing that the IRA contracts were not subject to possession and management by the guardian upon Mrs. A’s death and that the death proceeds should have been immediately delivered over to the IRA beneficiaries. Furthermore, he argued that the IRA’s were protected from creditor claims under Florida law, and should therefore not be available to the Guardian for expenses incurred by the Guardian.

After a discussion of the specific meaning of words contained in the various Florida statutes, the court applied a “plain meaning of the terms ‘claim’ and ‘creditor,’ to rule in favor of the Plaintiff, Mrs. A’s son, and reversed the lower court’s decision. To read the full court transcript, click here.

Key Takeaways

A properly executed Durable Power of Attorney granted to one or both of Mrs. A’s sons could have avoided a court-appointed guardianship and allowed either or both of them to manage her assets upon her incapacity.
A revocable living trust that owned Mrs. A’s assets could have been used along with a Durable Power of Attorney to ensure continuity of the management of her financial affairs upon her incapacity.
IRA’s often represent a significant percentage of an individual’s estate, yet what happens to them upon the owner’s death is controlled by a single piece of paper on file with the IRA Custodian, not the owner’s Last Will and Testament. Beneficiary forms should be regularly reviewed.
Seek the advice of a qualified estate attorney when drafting any of these legal arrangements.

Being Social May Be Key to ‘Sense of Purpose’ as You Age

August 22, 2022 / drussellcfp

Researchers from Washington University in St. Louis found that positive connections with other people were associated with a sense of purposefulness in older adults. Having a sense of purpose is defined as the extent to which a person feels that they have personally meaningful goals and directions guiding them in life.

Source: Being Social May Be Key to ‘Sense of Purpose’ as You Age – Consumer Health News | HealthDay

Nursing Home’s Arbitration Agreement Found ‘Unconscionable’

August 19, 2022 / drussellcfp

In 2021, The 8th U.S. Circuit Court of Appeals gave the green light to a federal regulation that allows nursing homes to use arbitration agreements with residents, but prevents them from making the agreements a prerequisite for admission. Several nursing homes had filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) challenging the new regulation. However, the court upheld the regulation, stating in its opinion that,

“In our view, it is reasonable for CMS to conclude that regulating the use of arbitration agreements in LTC facilities furthers the health, safety, and well-being of residents, particularly during the critical stage when a resident is first admitted to a facility,”

A recent case in Pennsylvania ruled that a nursing home’s arbitration agreement requiring a resident, “Fay V.” to pay half the costs of arbitration was “unconscionable.” Kohlman v. Grane Healthcare Company (Pa. Super 118, J-A25034-21, July 5, 2022). The ruling arose after the estate for Ms. V., who died three months after admission, filed a wrongful death lawsuit against the nursing home and other defendants.

According to the court transcripts, at the time of her admission, Fay V. was 67 years old and was suffering from a number of conditions, including congestive heart failure, diabetes, and pressure ulcers. The nursing home’s assessment of her condition at the time of her admission reported that “she was alert and oriented and had no memory problems or dementia, but that she was also suffering from anxiety and sometimes had trouble concentrating.”

It’s assessment also reported that ‘Fay’s vision was impaired to the point that even with glasses, she was ‘not able to see newspaper headlines but can identify objects.’ Yet upon her admission to Highland Park, she signed a number of documents, including a seven-page Nursing Services Agreement, a two-page Agreement to Arbitrate Disputes (the Arbitration Agreement), and a Resident Representative Agreement concerning the handling of her finances, in which Decedent designated herself as her representative.

In trial court, the court ruled the Arbitration Agreement as unconscionable (excessively unreasonable) because Decedent was in pain and was medicated at the time that she signed the Arbitration Agreement, Decedent was alone when she was asked to sign the Arbitration Agreement, had no opportunity to read the Arbitration Agreement and was not given a copy to review, and the provisions of the Arbitration Agreement were not fully read or explained to Decedent.

Source: Nursing Home’s Arbitration Agreement Found ‘Unconscionable’ — and Unenforceable — in Wrongful Death Suit

Daughter and partner try to force the sale of parent’s home.

August 18, 2022 / drussellcfp

A Massachusetts case illustrates the care that must be exercised when giving property interests to others and how those interests are titled. Donald and Suzanne Bragdon owned their home as Tenants by Entirety, a form of holding title available only to married individuals. They subsequently conveyed one-half of their home to their daughter, Laurie Durken, and her partner, Terrence McCarthy as co-joint tenants between all four of them, but also retained a life estate in the property. A retained life estate divides property ownership into two parts – one part for the living owner, and one part for the residual owner that only vests after the living owner’s death.

So, we have three forms of holding title going on here – a tenancy by entirety for half the house between Donald and Suzanne, a joint tenancy between all four individuals for the other half of the house, and a retained life estate in the entire property by Donald and Suzanne. Whether or not this was intentional planning I do not know, but it’s a recipe for disaster and it nearly occurred for Donald and Suzanne but for the protection against forced division that their various titling gave them.

Sadly, Laurie and Terrence sought to partition the property – essentially force the sale of it presumably because they needed the money. As you would expect, Donald and Suzanne objected to this idea of forcibly selling their home, and ultimately the conflict wound up in court. Laurie and Terrence argued that they owned a “possessory” right in the property regardless of the existence of the retained life estate that gave them the right to partition. Donald and Suzanne said the life estate superseded any right of possession Laurie and Terrence may have until after their deaths.

After examination of the deeds executed between the four, the courts agreed with Donald and Suzanne.

McCarthy and Durkan relinquished their prior possessory undivided one-half interest in the property by voluntarily signing onto the 2013 deed as grantors. Thus, the Bragdons are entitled to the benefit of the presumption that one who signs an instrument has read and understood its contents and has assented to its terms and legal effect. By the 2013 deed, the Bragdons hold a life estate in 100% of the property, and McCarthy and Durkan hold the remainder interest in 100% of the property. As McCarthy and Durkan do not hold any present possessory interest in the property, they are not entitled to partition. Their petition for partition must be dismissed.

Source: MCCARTHY vs. BRAGDON, MISC 20-000118

The lesson here is to seek competent legal advice when it comes to gifting property interests to 3rd parties and forms of holding title. A knowledgeable attorney will not only understand the operation of title law but can also give guidance and warnings about these kinds of what-if scenarios. In this case, an ounce of prevention would have been worth more than the pound of cure.

Click to read or download our Guide to Holding Title

Most People Are Confused by Medicare

August 17, 2022 / drussellcfp

Financial Planners are failing big time to educate their age 65 or over clients about one of the most significant financial decisions they will make. Medicare applicants are confused about which health plan is right for them. Many seniors do not know enough about plan components, are bombarded by Medicare advertising, and lack the knowledge to choose a plan that meets their needs.

These are the conclusions of a newly released study by Sage Growth Partners, a national health care consultancy. Key findings in the study include:

Only 20% of Medicare-eligible individuals have a good understanding of Original Medicare; only 31% have a good understanding of Medicare Advantage.
63% are “overwhelmed” by Medicare advertising; only 31% of respondents “strongly agree” that they can make effective selection decisions.
More than half (58%) stay in their current Medicare plan each year rather than reviewing their plan options and enrolling in the best plan for their evolving needs.
33% have a financial advisor, but only 2% use that advisor to help with plan selection.

Source: New Report Reveals Significant Gaps in Medicare Knowledge Among Older Adults

Regarding their experience with working with Medicare as an institution, respondents to the survey rated their experience with Medicare as “poor to terrible.”

Respondents who were newly eligible for Medicare (those aged 64) give
their experience the lowest possible score (-50). The only age group to give it a positive score were those aged 76 and older. By comparison, cable TV providers, notorious for low customer approval, have an average NPS (Net Promotor Score) score of +2.

Check out our 2022 Flipbook Guide to Medicare for a comprehensive explanation of Medicare Parts A, B, C, & D as well as the Medicare Supplemental policy options.

Most Have No Plan for Long Term Care

August 15, 2022 / drussellcfp

HGC, an Aging-In-Place research and product development company based in Connecticut partnered with non-profit Arctos Foundation to survey Americans’ preparedness for long term care.

Key findings:

70% of respondents have no advance directive in place, and just one in ten have l ong-term care insurance.

Most respondents have not spoken with a family member or loved one about wishes for Long Term Care.

Those with a spouse or partner are more likely to expect a need for long-term care services and supports, but are no more likely to have long-term care insurance in place.

Source: Independent Research | HCG Secure

To help families understand and discuss the issues surrounding planning for long term care, we have two excellent flipbooks on the topic of Essential Estate Planning, and Understanding Long Term Care.

Joke-Telling Robots in Nursing Homes

August 11, 2022 / drussellcfp

“I went on a date with a Roomba last week — it totally sucked.”

Like a scene out of The Jetson’s, robots are now entertaining residents in nursing homes with stand up jokes, while also monitoring their health. By reading biometric data off of resident wrist bands, the robots are able to greet residents by name, know if they have missed medication, or detect depressed moods.

Source: So, a robot walks into a nursing home…

Adopt a Code of Honor when caring for an aging loved one.

August 9, 2022 / drussellcfp

I am fortunate that both my mom (93) and mother-in-law (86) are still living and doing quite well. As I have visited with them and their close friends, there is a tremendous amount of wit and wisdom to glean from these encounters. Unfortunately, one of the things I have also witnessed in our culture is a loss or lack of honor towards those who have lived more years than most. I would like to challenge myself and the reader to make a resolution for 2022 to honor our older citizens – especially our parents. What does it mean to honor an older person? Often hearing a familiar principle from a different cultural context can clarify its meaning. In recent years, I’ve attempted to learn more about the ancient philosophies of Taoism, Confucianism, and Buddhism. These belief systems share many core principles with the Judeo-Christian ethics and scriptures that are more familiar to us Westerners than these less represented traditions.

Take the concept of Filial Piety, one of the eight virtues of Confucianism. Scholars attribute the Eight Virtues to a line in the Sage Emperor Guan’s Book of Enlightenment, saying

“It is through Filial Piety, Sibling Harmony, Dedication, Trustworthiness, Propriety, Sacrifice, Honor, and Sense of Shame that we become fully human.”

Filial Piety means to be good to one’s parents; to take care of one’s parents; to engage in good conduct not just towards parents but also outside the home so as to bring a good name to one’s parents and ancestors. The Fung Loy Kok Institute of Taoism further expounds on the concept of filial piety by stating,

“You should also attend to your parents’ well-being. There are three basic needs you must provide for your parents. First, you should provide for their food and clothing. Second, when they are ill, you must take responsibility for nursing them back to health. Third, when they die, you must provide them with proper burial and care for their graves. As a son or daughter, whether you are rich or poor, whatever profession you are engaged in, whether you are married or not, whether you have children or not, if you can perform these three deeds with sincerity and dedication, your parents will be happy while they are alive and rest in peace when they are deceased. Your parents cared for you without selfish interests. Your mother carried you in her womb for ten lunar months and nursed you for three years. Your parents constantly tended to your needs while you were growing up. You should show your gratitude to them by fulfilling the virtue of filial piety.

For we Westerners, the concept of Filial Piety is rooted in both the Old and New Testament scriptures. Exodus 20:12 commands,

“Honor your father and your mother, so that you may live long in the land the LORD your God is giving you.” (New International Version). Ephesians 6:2-3 repeats the same command and adds parenthetically “which is the only command with a promise.”

When parents age to the point where they lose independence or capacity to perform certain functions of daily living, families should adopt and adhere to a personal code of honor that maintains the dignity that the older person deserves. In a curriculum developed to teach adult children how to be effective financial caregivers, I provide a model code of honor that is available for download here.

Social Isolation Affects Heart Health, Cognition

August 8, 2022 / drussellcfp

Two new studies show the effects that social isolation and loneliness can have on cardiovascular health and cognitive decline.

The two studies provided several compelling links between social engagement and mental or physiological health. Some of the findings include:

Social isolation and loneliness are common but are under-recognized as contributing to cardiovascular and brain health.
The lack of social connection is associated with an increased risk of premature death from all causes, especially among men.
People who experience social isolation or loneliness are more likely to experience chronic stress and depression. Depression can also lead to social isolation.

Source: Social Isolation Affects Heart Health, Cognition

NPR report shows nursing homes are suing family and relatives to collect debts.